<PAGE>
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
---------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended: Commission File Number 0-18279
March 31, 1997
Tri-County Financial Corporation
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Maryland 52-0692188
- ------------------------------- ---------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3035 Leonardtown Road
Waldorf, Maryland 20601
- --------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 645-5601
Securities Registered Pursuant to Section 12(g) of Act:
Capital Stock, Par Value $.01 per Share
---------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Number of Shares of Capital Stock
Outstanding as of April 30, 1997 792,484
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
Consolidated Financial Statements
March 31, 1997 and December 31, 1996
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Page
Index
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Statements of Financial Condition at
March 31, 1997 and December 31, 1996 2
Consolidated Statements of Operations for the Three-Month
Periods Ended March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended March 31, 1997 and 1996 4-5
Notes to Unaudited Consolidated Financial Statements 6
Management's Discussion and Analysis 7-11
PART II - OTHER INFORMATION 12
SIGNATURES 13
</TABLE>
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 1997 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks $ 644,046 $ 1,111,894
Interest-bearing deposits in other banks 4,238,768 2,791,718
------------ ------------
Total cash and cash equivalents 4,882,814 3,903,612
INVESTMENT SECURITIES AVAILABLE
FOR SALE - At fair value, amortized cost of $10,697,663
and $11,117,063, respectively 10,858,962 11,265,358
INVESTMENT SECURITIES HELD TO
MATURITY - At amortized cost, fair value of $751,824
and $863,757, respectively 751,824 863,757
MORTGAGE-BACKED SECURITIES AVAILABLE
FOR SALE - At fair value, amortized cost of $43,236,722
and $42,473,979, respectively 43,046,812 42,470,319
MORTGAGE-BACKED SECURITIES HELD TO
MATURITY - At amortized cost, fair value of $866,645
and $919,349, respectively 840,549 883,887
LOANS RECEIVABLE - Net 114,057,376 111,024,921
STOCK IN FEDERAL HOME LOAN BANK - At cost 1,300,000 1,300,000
LOANS HELD FOR SALE 413,250 1,011,930
ACCRUED INTEREST RECEIVABLE 1,267,658 1,165,191
NET PREMISES AND EQUIPMENT 3,910,299 3,824,568
OTHER ASSETS 642,987 607,014
------------ ------------
TOTAL ASSETS $181,972,531 $178,320,557
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $137,633,358 $134,818,992
Advances from Federal Home Loan Bank 24,000,000 24,000,000
Notes payable and other borrowings 941,294 733,466
Advance payments by borrowers for taxes and insurance 1,075,203 715,171
Accounts payable, accrued expenses, and other liabilities 522,559 724,055
Current income taxes 230,238 77,190
------------ ------------
Total liabilities 164,402,652 161,068,874
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 7,550 7,510
Capital surplus 5,769,043 5,724,729
Stock dividend distributable 834,635 -
Retained earnings 11,096,841 11,430,666
Unearned ESOP shares (120,628) -
Net unrealized (loss) on investment securities and
mortgage-backed securities available for sale (17,562) 88,778
------------ ------------
Total stockholders' equity 17,569,879 17,251,683
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $181,972,531 $178,320,557
============ ============
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
<S> <C> <C>
INTEREST REVENUES:
Interest and fees on loans $2,612,717 $2,530,610
Interest on mortgage-backed securities 738,747 560,374
Interest and dividends on investment securities 224,965 255,997
---------- ----------
Total interest revenues 3,576,429 3,346,981
---------- ----------
INTEREST EXPENSES:
Deposits 1,409,647 1,352,739
Federal Home Loan Bank advances 321,448 181,713
Notes payable and other borrowings 2,536 82,605
---------- ----------
Total interest expenses 1,733,631 1,617,057
---------- ----------
NET INTEREST INCOME 1,842,798 1,729,924
LOAN LOSS PROVISION 60,000 60,000
---------- ----------
Net interest income after loan loss provision 1,782,798 1,669,924
---------- ----------
OTHER INCOME:
Loan appraisal, credit and miscellaneous charges 85,548 67,756
Gain on sale of loans held for sale 43,742 41,220
Service charges 115,010 73,874
Other 26,673 18,004
---------- ----------
Total other income 270,973 200,854
---------- ----------
OPERATING EXPENSES:
Employee compensation and benefits 561,727 536,576
Occupancy expense 94,199 92,692
Federal insurance premium and surety bond premiums 35,118 87,054
Data processing expense 56,651 59,302
Advertising 38,855 15,322
Depreciation 40,800 38,141
Other 302,412 238,070
---------- ----------
Total operating expenses 1,129,762 1,067,157
---------- ----------
INCOME BEFORE INCOME TAXES 924,009 803,621
INCOME TAXES 347,700 285,934
---------- ----------
NET INCOME $ 576,309 $ 517,687
---------- ----------
EARNINGS PER SHARE (Note 2):
Primary $ .70 $ 0.64 (1)
On a fully diluted basis .70 0.64 (1)
</TABLE>
(1) Restated to reflect 1997 stock dividends
See notes to consolidated financial statements.
-3-
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 576,309 $ 517,687
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 60,000 60,000
Provision for depreciation and amortization 74,143 64,413
Amortization of premium/discount on mortgage-backed
securities and investments (24,987) (24,967)
Provision for deferred income tax benefit (6,300) (10,863)
Increase in interest receivable (102,467) (135,536)
Decrease in deferred loan fees (213) (58,173)
(Decrease) increase in accounts payable, accrued expenses,
and other liabilities (123,947) 177,130
Increase in other assets (117,899) (114,777)
Origination of loans available for sale (1,449,280) (2,700,155)
Gain on sales of loans available for sale (43,742) (41,220)
Proceeds from sale of loans available for sale 2,091,702 2,577,220
Proceeds from disposition of foreclosed real estate 155,135 -
------------ ------------
Net cash provided by operating activities 1,088,454 310,759
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (3,380,205) (2,174,968)
Principal collected on loans 7,705,869 12,811,333
Principal collected on mortgage-backed securities
held to maturity 43,338 66,278
Loans originated or acquired (10,918,739) (12,038,131)
Purchase of mortgage-backed securities available for sale (2,057,471) (1,995,000)
Proceeds from sale or redemption of mortgage-backed
securities available for sale 1,311,736 359,734
Proceeds from sale or redemption of investment securities
available for sale 3,805,309 2,775,152
Principal collected on investment securities held to maturity 114,205 -
Purchase of premises and equipment (147,281) (149,983)
------------ ------------
Net cash used in investing activities (3,523,239) (345,585)
------------ ------------
</TABLE>
(Continued)
-4-
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 2,814,366 2,598,791
Proceeds from Federal Home Loan Bank advances 8,000,000 20,500,000
Payments of maturing Federal Home Loan Bank advances (8,000,000) (21,750,000)
Net increase in other short-term borrowings 239,587 254,732
Net increase in advance payments by borrowers for taxes and insurance 360,032 472,462
Exercise of stock options 44,354 103,563
Payments on notes payable (44,352) (139,121)
--------------- ---------------
Net cash provided by financing activities 3,413,987 2,040,427
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 979,202 2,005,601
CASH AND CASH EQUIVALENTS - JANUARY 1, 3,903,612 4,050,219
--------------- ---------------
CASH AND CASH EQUIVALENTS - March 31, $ 4,882,814 $ 6,055,820
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Accounting Policies:
Cash equivalents include short-term amounts due from banks.
Noncash transactions:
Cash paid during the six months for:
Interest $ 1,726,042 $ 1,641,829
Income taxes 200,000 -
</TABLE>
Tri-County Financial Corporation declared a 5% stock dividend payable April 15,
1997, and April 15, 1996, to shareholders of record on March 7, 1997, and March
4, 1996, respectively. The corporation also declared a $0.10 per share cash
dividend to shareholders of record on March 7, 1997, payable on April 15, 1997;
and March 4, 1996, payable on April 15, 1996. Retained earnings in the amount of
$834,635 in 1997 and $599,886 in 1996 was transferred to capital surplus and
common stock to reflect these dividends.
(Concluded)
See notes to consolidated financial statements.
-5-
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
- -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
General - The consolidated financial statements of Tri-County Financial
Corporation (the Company) and its wholly owned subsidiary, Community Bank
of Tri-County (the Bank) included herein are unaudited; however, they
reflect all adjustments consisting only of normal recurring accruals that,
in the opinion of Management, are necessary to present fairly the results
for the periods presented. Certain information and note disclosures
normally included in financial statements prepared in accordance with
Generally Accepted Accounting Principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. The Company believes that the disclosures are adequate to make
the information presented not misleading. The results of operations for
the three months ended March 31, 1997 are not necessarily indicative of
the results of operations to be expected for the remainder of the year.
It is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report for the year ended December 31,
1996.
2. EARNINGS PER SHARE
Primary and fully diluted earnings per share, as adjusted for the stock
dividend, have been computed based on weighted-average common and common
equivalent shares outstanding, as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1997 1996
<S> <C> <C>
Primary 827,097 808,456
Fully diluted 828,162 808,456
</TABLE>
3. NEW ACCOUNTING PRONOUNCEMENTS
Effective for periods ending after December 15, 1997, Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," is
applicable for computing and presenting earnings per share (EPS) for
entities, such as the Company, with publicly held common stock or
potential common stock. This statement simplifies the standards for
computing EPS, making them comparable to international EPS standards. It
replaces the presentation of primary EPS with a presentation of basic EPS.
It also requires dual presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation. If the Company had adopted SFAS No. 128 as of March 31, 1997,
it would have reported basic and diluted EPS of $0.74 and $0.70
respectively.
* * * * * *
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
On March 31, 1997, Tri-County Federal Savings Bank converted its charter to that
of a commercial bank and began operations as Community Bank of Tri-County.
Tri-County Financial Corporation owns 100% of the issued and outstanding common
stock of Community Bank of Tri-County (the Bank), which is the principal asset
of the Company. Tri-County Financial Corporation does not presently own or
operate any subsidiaries other than the Bank and its subsidiary and the entities
are collectively referred to as "the Company."
The Bank is well positioned to operate as a community-oriented commercial bank.
Functioning as a thrift, the Bank's operations had gradually expanded into the
community bank market since the product lines available to the thrift were
similar to those of a commercial bank. Seasoned bank officers were recruited for
the branches and the corporate team, and business was conducted to attract more
commercial customers. The hurdle faced by Bank personnel was the customer
perception that thrifts are more limited in the types of transactions they can
undertake than are banks. This charter change allows the Bank to adequately
address the total financial needs of its communities rather than just
concentrate on residential lending. For the business community, having a local
decision center provides the Bank with a considerable advantage over those
institutions with headquarters in distant cities and states.
The Company is primarily engaged in the business of obtaining funds in the form
of savings deposits and investing such funds in mortgage loans on residential
and commercial real estate and various types of consumer and other loans,
mortgage-backed securities, and investment and money market securities. The
Company's earnings, therefore, are primarily dependent upon its net interest
income, which is determined by the Company's interest rate spread (the
difference between the yields earned on its interest-earning assets and the
rates paid on its interest-bearing liabilities) and the relative holdings of
interest-earning assets and interest-bearing liabilities. Also of significance
to the Company's net income is its noninterest expenses, income taxes, provision
for estimated loan losses, and other noninterest income.
The Company's deposit flows and cost of funds are determined by interest rates
on competing investments and general market rates of interest. Lending
activities are affected by consumer demand, the interest rates in the market,
and the level of funds available. The Company grants loans throughout the
Southern Maryland area. Its borrowers' ability to repay is, therefore, dependent
upon the economy of Southern Maryland.
-7-
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
March 31, March 31,
1997 1996
<S> <C> <C>
Condensed Income Statement
Interest Income. . . . . . . . . . . . . $ 3,576,429 $ 3,346,981
Interest Expense . . . . . . . . . . . . 1,733,631 1,617,057
Net Interest Income. . . . . . . . . . . 1,842,798 1,729,924
Provision for Loan Losses. . . . . . . . 60,000 60,000
Other Income . . . . . . . . . . . . . . 270,973 200,854
Operating Expenses . . . . . . . . . . . 1,129,762 1,067,157
Income Before Income Taxes . . . . . . . 924,009 803,621
Income Tax Expense . . . . . . . . . . . 347,700 285,934
Net Income . . . . . . . . . . . . . . . 576,309 517,687
Per Common Share
Primary Earnings . . . . . . . . . . . . 0.70 0.64
Cash Dividends Declared. . . . . . . . . 0.10 0.10
Book Value . . . . . . . . . . . . . . . 23.27 23.09
</TABLE>
RESULTS OF OPERATIONS
The Company reported net income of $576,000 and $517,000 during the three months
ended March 31, 1997 and 1996, respectively, representing a $59,000 or 11.3%
increase for the three months ended March 31, 1997 compared to the comparable
period in 1996. The increase in net income resulted from the $113,000 increase
in net interest income, a $70,000 increase in noninterest income, which more
than offset increases of $63,000 in noninterest expenses, and a $62,000 increase
in income tax expense relating to the increased earnings.
Interest and Dividend Income
Interest and dividend income on investment securities declined as a result of
the exercise of calls embedded in several of the Bank's securities. The Federal
Reserve Board's action to raise interest rates in mid March may affect the
prepayment speeds on mortgage related investments to a limited degree and may
ultimately result in slowing down the pace of this economic expansion.
Noninterest Income
Contributing to the increase in earnings for the first quarter were increases in
loan service charges resulting from higher commercial loan volume, which
generates higher per loan appraisal and other fees, and increased gains on sales
of loans originated for the purpose of reselling. Overall loan originations were
lower by approximately 16.1% in the first 3 months of 1997 as compared to 1996.
The available market pricing was such that a similar level of gains was
recognized on a lower sales volume. Bank mergers and mortgage company
restructurings have left the Bank as one of a few long-standing, stable and
reputable sources of funds for the Southern Maryland market.
An effort has been made to identify the customer services the Bank provides
which can be used to generate additional revenues. This led to the imposition of
fees for the use of the Bank's ATMs by non-customers. In addition, Bank
customers have been utilizing certain negotiable order of withdrawal account
features which
-8-
<PAGE>
have a related service fee. These items resulted in a $41,000, or 55%, increase
in service charge income in the three months ended March 31, 1997 as compared to
the comparable period in 1996.
Operating Expense
The increase in operating expenses was held to $63,000, or 5.9% for the first
three months of 1997 as compared to the first three months of 1996. Compensation
related expenses increased $25,000, or 4.7%, as the Bank expanded its branch
network to include a traditionally designed full service office in Bryans Road,
Maryland in October 1996 and a "micro" branch, utilizing limited square footage
to provide full customer service, at Charles County Community College in
February 1997.
In connection with the conversion to a commercial bank, the level of stationery,
printing and certain supplies costs increased $29,000, or 103%, as the entire
inventory had to be replaced with items reflecting the new corporate name. In
addition, advertising costs incurred to publicize and promote the conversion and
its ensuing benefits to the customers and communities went from $15,000 to
$39,000, an increase of 154%.
The benefit to the Bank of the BIF/SAIF recapitalization in the fall of 1996 is
clearly seen in the $52,000 reduction in federal insurance and surety bond
premiums for the first three months of 1997 as compared to the first three
months of 1996.
Earnings Per Share
Primary earnings per share for the three months were $.70 per share or $.06
higher than for the corresponding period in 1996. Book value on a per share
basis reflects only a nominal .8% increase primarily because the number of
shares outstanding was increased by the 5% stock dividend and also as a result
of the exercise of stock options by members of the senior management team and
the board of directors.
FINANCIAL CONDITION
Assets
Total assets as of March 31, 1997 grew $3.7 million to $182 million from the
December 31, 1996 level of $178.3 million. This reflects a growth rate of 2.0%
as compared to 1.5% asset growth during the previous year. Heavy development of
the Southern Maryland area as a bedroom community for Washington, DC workers and
military base expansion in the Bank's market area continues to keep the real
estate market strong despite higher long term real estate loan rates. Loan
growth was $2.4 million or 2.2% for the three month period as compared to a
decline of $.6 million or .57% for the three months ended March 31, 1996. Loan
origination volume in 1997 was 16.1% lower than in the comparable period in
1996; however, in 1997 fewer loans were originated for sale and subsequently
sold than during the first three months of 1996.
-9-
<PAGE>
In connection with the charter conversion, the Bank is adopting a business plan
that focuses on originating more consumer and commercial loans, while creating a
mortgage subsidiary to handle the production and sale of residential loans.
The allowance for loan losses is maintained at a level believed by management to
be adequate to absorb potential losses inherent in the loan portfolio.
Management's determination of the adequacy of the allowance is based on a
periodic evaluation of the portfolio with consideration given to the overall
loss experience; current economic conditions; volume, growth and composition of
the loan portfolio; financial condition of the borrowers; and other relevant
factors that, in management's judgment, warrant recognition in providing an
adequate allowance. The Bank's allowance for loan losses was increased $60,000
during the first three months of 1997 in accordance with management's policy
described above.
The Company's holdings of investment securities declined $518,000 since December
31, 1996. Several securities experienced early payoff since the issuer was able
to obtain better rates by calling the investment and reissuing it at the more
attractive long-term rates currently available in the market.
The level of property and equipment balances increased $85,000 as branch network
expansion continued through construction of the "micro" branch described above.
In addition, continued upgrade of the branch teller system equipment has
required expenditures for computer equipment.
Liabilities
Liability growth was controlled to stay in line with the change in asset levels.
Deposit growth was 2.1% for the first quarter of 1997. The deposit base provides
a source of funds at a lower average rate than could be realized by borrowing.
The Bank will be focusing on attracting customers disgruntled by the shrinking
pool of locally run banks in the Southern Maryland community. Loan demand was
low compared to the first three months of 1996; the funds obtained through
increased deposit account balances were sufficient to meet this demand without
increasing the level of Advances from the FHLB.
Advance payments by borrowers for taxes and insurance increased $360,000 and the
balance will continue to increase until the real estate tax payments due for the
majority of the Bank's loan customers are paid in September. The Bank was able
to utilize the $240,000 increase in the Treasury Tax and Loan deposits account,
provided by customers who make their required payments to the Internal Revenue
Service through the Bank, in meeting daily cash needs.
The current tax liability balance increased in the first quarter of 1997 as a
result of the taxes related to the earnings recorded in that period. At December
31, 1996, the tax liability was low because substantial estimated tax payments
had been paid to the government prior to the $820,000 special FDIC insurance
assessment. This tax deductible expense substantially lowered the Bank's 1996
tax liability so that the tax liability outstanding at the end of the year was
only $77,000.
Accounts payable, accrued expenses and other liabilities declined $201,000, or
27.8%, in the first quarter of 1997. This decline was related to the payment of
retirement plan accruals which are generally made soon after each year end and
to the payment of incentive compensation accruals that had been made at December
31, 1996 once the performance results were known for the year.
Stockholders' Equity
Stockholders' equity increased $318,000 or 1.8% to $17.6 million at March 31,
1997 compared to $17.3 million at December 31, 1996. This reflects the net
income of $576,000 for the three month period, a
-10-
<PAGE>
$106,000 decline in unrealized holding gains on investment and mortgage-backed
securities available for sale, $44,000 realized from the exercise of outstanding
stock options by members of senior management and the board of directors and a
reserve for the $.10 per share cash dividend declared, payable on April 15,
1997. A shift in the components of stockholders' equity occurred as a result of
the declaration of a 5% stock dividend to shareholders; this resulted in a
transfer of $834,000 from retained earnings to stock dividend distributable.
REGULATORY MATTERS
The Bank is subject to Federal Reserve Board capital requirements as well as
statutory capital requirements imposed under Maryland law. At March 31, 1997,
the Bank's leverage and risk-based capital was 9.37% and 17.43%, respectively.
These levels are well in excess of the required 3.0% and 8.0% ratios required by
the Federal Reserve Board.
-11-
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
--------------------------------
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings
-----------------
Not Applicable.
Item 2 - Changes in Securities
---------------------
Not Applicable.
Item 3 - Defaults Upon Senior Securities
-------------------------------
Not Applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable.
Item 5 - Other Information
-----------------
None.
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
None.
-12-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tri-County Financial Corporation:
Date: May 14, 1997 By: /S/ Michael L. Middleton
---------------------- ------------------------
Michael L. Middleton, President
and Chairman of the Board
Date: May 14, 1997 By: /S/ Henry A. Shorter, Jr.
---------------------- -------------------------
Henry A. Shorter, Jr.
Secretary
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,882,814
<INT-BEARING-DEPOSITS> 4,238,768
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 53,905,774
<INVESTMENTS-CARRYING> 1,592,373
<INVESTMENTS-MARKET> 1,618,469
<LOANS> 114,470,626
<ALLOWANCE> 1,180,145
<TOTAL-ASSETS> 181,972,531
<DEPOSITS> 137,633,358
<SHORT-TERM> 12,509,545
<LIABILITIES-OTHER> 1,828,000
<LONG-TERM> 12,431,748
0
0
<COMMON> 7,550
<OTHER-SE> 17,562,329
<TOTAL-LIABILITIES-AND-EQUITY> 181,972,531
<INTEREST-LOAN> 2,612,717
<INTEREST-INVEST> 224,965
<INTEREST-OTHER> 738,747
<INTEREST-TOTAL> 3,576,429
<INTEREST-DEPOSIT> 1,409,647
<INTEREST-EXPENSE> 1,733,631
<INTEREST-INCOME-NET> 1,842,798
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,129,762
<INCOME-PRETAX> 924,009
<INCOME-PRE-EXTRAORDINARY> 924,009
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 576,309
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
<YIELD-ACTUAL> 4.21
<LOANS-NON> 500,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,120,102
<CHARGE-OFFS> 0
<RECOVERIES> 43
<ALLOWANCE-CLOSE> 1,180,145
<ALLOWANCE-DOMESTIC> 1,180,145
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
