<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
COMMUNITY FINANCIAL CORP.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
_________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
5. Total fee paid:
_________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
COMMUNITY FINANCIAL CORP.
240 E. Chestnut Street
Olney, Illinois 62450-2295
(618) 395-8676
March 27, 1997
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Community Financial Corp. (the
"Company") which will be held on Monday, April 28, 1997, at the
Holiday Motel, located at 1300 South West, Olney, Illinois at
1:00 p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Annual
Meeting. During the meeting, we will also report on the
operations of Community Bank and Trust, N.A. (the "Bank"), the
Company's wholly owned subsidiary. Directors and officers of the
Company and the Bank will be present to respond to any questions
the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING FORM OF PROXY AS SOON AS
POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING.
Your vote is important, regardless of the number of shares you
own. This will not prevent you from voting in person but will
assure that your vote is counted if you are unable to attend the
meeting.
On behalf of the Board of Directors and all the employees of
the Company and the Bank, I wish to thank you for your continued
support.
Sincerely,
/s/ Shirley B. Kessler
Shirley B. Kessler
President and Chief Executive Officer
<PAGE>
<PAGE>
________________________________________________________________
COMMUNITY FINANCIAL CORP.
240 E. Chestnut Street
Olney, Illinois 62450-2295
________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 28, 1997
________________________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Annual Meeting") of Community Financial Corp.
(the "Company") will be held at the Holiday Motel, located at
1300 South West, Olney, Illinois on Monday, April 28, 1997, at
1:00 p.m., local time.
A Proxy Statement and Proxy Card for the Annual Meeting are
enclosed.
The Annual Meeting is for the purpose of considering and
acting upon the following matters:
1. The election of two directors of the Company; and
2. Such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on March 17, 1997, are the stockholders
entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used if
you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Steven Walser
Steven Walser
Secretary
Olney, Illinois
March 27, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
COMMUNITY FINANCIAL CORP.
240 E. Chestnut Street
Olney, Illinois 62450-2295
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
April 28, 1997
________________________________________________________________
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished to stockholders of
Community Financial Corp. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies
to be used at the Annual Meeting of Stockholders (the "Annual
Meeting") which will be held at the Holiday Motel, located at
1300 South West, Olney, Illinois on Monday, April 28, 1997, at
1:00 p.m., local time, and at any adjournment thereof. The
accompanying Notice of Annual Meeting and Proxy Card and this
Proxy Statement are being first mailed to stockholders on or
about March 27, 1997.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
Regardless of the number of shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), owned, it
is important that stockholders be represented by proxy or present
in person at the Annual Meeting. Stockholders are requested to
vote by completing the enclosed proxy card and returning it
signed and dated in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces
provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED,
PROXIES WILL BE VOTED FOR THE APPROVAL OF THE SPECIFIC PROPOSALS
PRESENTED IN THIS PROXY STATEMENT. Proxies marked as abstentions
will not be counted as votes cast. In addition, shares held in
street name which have been designated by brokers on proxy cards
as not voted will not be counted as votes cast. Proxies marked
as abstentions or as broker nonvotes, however, will be treated as
shares present for purposes of determining whether a quorum is
present.
A proxy may be revoked at any time prior to its exercise by
the filing of a written notice of revocation with the Secretary
of the Company, by delivering a duly executed proxy bearing a
later date to the Secretary of the Company at the address listed
above, or by attending the Annual Meeting and voting in person.
________________________________________________________________
VOTING SECURITIES AND SECURITY OWNERSHIP
________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Common Stock. Stockholders of record as of the
close of business on March 17, 1997 (the "Record Date") are
entitled to one vote for each share of Common Stock then held.
As of the Record Date, there were 2,370,612 shares of Common
Stock issued and outstanding. The presence, in person or by
proxy, of at least one-third of the total number of shares of
Common Stock outstanding and entitled to vote will be necessary
to constitute a quorum at the Annual Meeting.
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect to
such ownership pursuant to the Securities Exchange Act of 1934.
The following table sets forth information regarding the shares
of Common Stock beneficially owned as of the Record Date by
persons who beneficially own more than 5% of the Common Stock,
each of the Company's directors, including Chief Executive
Officer Shirley B. Kessler, each executive officer of the Company
named in the Summary Compensation Table set forth under "Proposal
I -- Election of Directors -- Executive Compensation -- Summary
Compensation Table" and all of the Company's directors and
executive officers as a group.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock
Persons Owning Beneficially Owned Percent
Greater than 5% at Record Date (1) of Class
- ------------------- ---------------------- --------
<S> <C> <C>
Community Financial Corp. 210,767 (2) 8.9%
Employee Stock Ownership Plan
240 E. Chestnut Street
Olney, Illinois 62450-2295
Wellington Management Company, LLP 157,500 6.6
75 State Street
Boston, Massachusetts 02109
Directors:
- ---------
Michael F. Bauman 11,990 .5
William O. Cantwell 9,600 .4
Roger A. Charleston 30,950 1.3
Charles M. DiCiro 15,950 .7
John D. Eagleson (3) 8,157 .3
Brad A. Jones 15,850 .7
Shirley B. Kessler 33,748 1.4
Clyde R. King 9,940 .4
Allen D. Welker 8,617 .4
Executive Officers:
- ------------------
Wayne H. Benson 32,265 1.3
Executive Vice President
Douglas W. Tompson 22,506 .9
Chief Financial Officer
All directors and executive 199,573 8.3
officers of the Company
as a group (11 persons)
<FN>
_____________
(1) Includes stock held in joint tenancy, stock owned as tenants in
common, stock owned or held by a spouse or other member of the
individual's household, and stock in which the individual either
has or shares voting and/or investment power. Each person or
relative of such person whose shares are included herein
exercises sole (or shared with a spouse or other relative) voting
and dispositive power as to the shares reported. Amounts shown
include 1,983, 1,983, 1,983, 1,983, 1,983, 1,983, 8,675, 1,983,
1,983, 7,723, 5,290 and 37,552 shares which may be acquired by
Directors Bauman, Cantwell, Charleston, DiCiro, Eagleson, Jones,
Kessler, King and Welker, Messrs. Benson and Tompson and by all
directors and executive officers of the Company as a group,
respectively, upon the exercise of options exercisable within 60
days of the Record Date. Does not include shares with respect to
which Directors Bauman, Charleston and Jones have "voting power"
by virtue of their positions as trustees of the trusts holding
210,767 shares under the Company's ESOP and 105,800 shares under
the Company's Management Recognition Plan ("MRP"). The shares
held by the MRP trust are voted in the same proportion as the
ESOP trustees vote the shares held in the ESOP trust.
(2) These shares are currently held in a suspense account for future
allocation and distribution among participants as the loan used
to purchase the shares is repaid. The ESOP trustees vote all
allocated shares in accordance with the instructions of the
participating employees. Unallocated shares and allocated shares
for which no instructions have been received are voted by the
trustees in the manner directed by the Company's Board of
Directors, and in the absence of such direction from the
Company's Board of Directors, the ESOP trustees shall have sole
discretion as to the voting of such shares. At December 31,
1996, 21,160 shares had been allocated.
(3) Mr. Eagleson served as a director during the 1996 fiscal year and
is not standing for reelection.
</FN>
</TABLE>
2<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
General
The Company's Board of Directors consists of eight members.
The Company's Articles of Incorporation require that directors be
divided into three classes, as nearly equal in number as
possible, with approximately one-third of the directors elected
each year. At the Annual Meeting, two directors will be elected
for a term expiring at the 2000 Annual Meeting. The Board of
Directors has nominated Shirley B. Kessler and Clyde R. King to
serve as directors for a three-year period. Both nominees are
currently members of the Board. Under Illinois law and the
Company's Articles of Incorporation, directors are elected by a
majority of the votes cast at a meeting at which a quorum is
present.
It is intended that the persons named in the proxies
solicited by the Board of Directors will vote for the election of
the named nominees. If either nominee is unable to serve, the
shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may
recommend or the size of the Board may be reduced to eliminate
the vacancy. At this time, the Board knows of no reason why
either nominee might be unavailable to serve.
The following table sets forth, for each nominee for
director and continuing director of the Company, his or her age,
the year he or she first became a director of the Bank, which is
the Company's principal operating subsidiary, and the expiration
of his or her term as a director. All such persons were
appointed as directors in 1994 in connection with the
incorporation and organization of the Company. Each director of
the Company also is a member of the Board of Directors of the
Bank.
<TABLE>
<CAPTION>
Year First
Age of Elected as Current
December 31, Director of Term
Name 1996 the Bank to Expire
- ----- ------------ ----------- ---------
<S> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
Shirley B. Kessler 62 1987 1997
Clyde R. King 69 1974 1997
DIRECTORS CONTINUING IN OFFICE
Michael F. Bauman 50 1990 1998
Roger A. Charleston 53 1989 1998
Brad A. Jones 41 1992 1998
William O. Cantwell 71 1987 1999
Charles M. DiCiro 70 1976 1999
Allen D. Welker 70 1979 1999
DIRECTOR EMERITUS
Charles R. Jones (1) 71
<FN>
_____________
(1) Mr. Jones resigned from the Board of Directors in December
1986 and was named Director Emeritus in January 1987.
</FN>
</TABLE>
3<PAGE>
<PAGE>
Set forth below is information concerning the Company's
directors. Unless otherwise stated, all directors have held the
positions indicated for at least the past five years.
Shirley B. Kessler - is the President and Chief Executive
Officer of the Company and the Bank. She joined the Bank in
1967 and has served as President and Chief Executive Officer
since December 1986. Her responsibilities include the overall
management of the Company and the Bank and the establishment of
objectives, policies and strategic plans. Mrs. Kessler is a past
President of the Olney Chamber of Commerce and is a Board member
for several civic organizations, including the Richland County
Economic Development Corporation, and is a past Board member of
the Olney Central College Foundation and the local chapter of Big
Brothers/Big Sisters of America. Mrs. Kessler also is a Trustee
of Illinois Eastern Community College.
Clyde R. King - Mr King is retired. Mr. King formerly owned
and operated King's Furniture Store.
Michael F. Bauman - Mr. Bauman is retired. Mr. Bauman was
formerly the co-owner of Bauman Cement, Inc., which is a seller
and processor of cement in Olney. Mr. Bauman is the Chairman of
the City of Olney Police and Fire Boards and a Committee Member
of the Secretary of State Antique Auto Events Committee, and was
the Chairman of the 1993 Secretary of State Antique Auto Show
held in Springfield, Illinois. Mr. Bauman was elected to the
School Board of East Richland Community Unit Schools in November
1995.
Roger A. Charleston - Mr. Charleston is a civil engineer and
the owner of Charleston Engineering, a consulting firm located in
Olney.
Brad A. Jones - Mr. Jones is the co-owner and manager of
Rural King Supply, a retail farm and home store located in Olney.
Mr. Jones also is a member of the Olney Chamber of Commerce.
William O. Cantwell - Mr. Cantwell has been retired since
1988. He presently serves as President and Director of the Good
Samaritan of Richland County Program, and has previously served
as a Member of Council and Treasurer of the Student Loan Fund of
Trinity Lutheran Church in Olney.
Charles M. DiCiro - Col. DiCiro serves as Chairman of the
Board of the Company and the Bank. Col. DiCiro is a retired
Colonel of the United States Army and presently is self-employed
raising cattle. From 1988 to 1992, Col. DiCiro served as member
of the 19th Congressional District Selection Board for Service
Academy Appointments.
Allen D. Welker - Mr. Welker retired from his position as a
Postmaster for the United States Post Office in 1987. He has
been active in the Good Samaritan of Richland County Program and
has also served on several committees of the Immanuel United
Methodist Church.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to
executive officers of the Company who do not serve on the Board
of Directors.
<TABLE>
<CAPTION>
Age at
December 31,
Name 1996 Title
- ---- ------------- -----
<S> <C> <C>
Wayne H. Benson 43 Executive Vice President
Douglas W. Tompson 45 Chief Financial Officer
</TABLE>
Wayne H. Benson - Mr. Benson joined the Bank in 1984 as the
Branch Manager of the Bank's Lawrenceville Branch and currently
serves as the Company's and the Bank's Executive Vice President.
As such, he is in charge of the Company's and the Bank's
operations, regulatory compliance and establishing the savings
and
4<PAGE>
<PAGE>
lending rates for the Bank. Mr Benson has also been involved in
coaching local youth athletic teams and is a member of the Elks
Lodge.
Douglas W. Tompson - Mr. Tompson has served as the Bank's
Chief Financial Officer since 1988. Prior to that time, he was
the Assistant Corporate Comptroller for Champion Laboratories,
Inc. Mr. Tompson has also been involved as a Cub Scout Leader
and in coaching local youth athletic teams, and has served on
several committees at the St. Joseph Catholic Church and held
several offices in the Olney and state level Elks Lodge.
COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Company and the Bank meet
monthly and may have additional special meetings. During the
year ended December 31, 1996, the Board of Directors of the
Company met 18 times and the Board of Directors of the Bank met
16 times. No director attended fewer than 75% in the aggregate
of the total number of Company or Bank Board of Directors
meetings held during the year ended December 31, 1996 and the
total number of meetings held by committees on which he served
during such fiscal year. The Bank's Board of Directors has
standing Audit, Executive, Nominating and Compensation
Committees.
The Bank's Board of Directors has an Audit Committee
comprising Directors John D. Eagleson, Brad A. Jones, Charles M.
DiCiro and Michael F. Bauman, who serves as Chairman. The
Committee met two times during the year ended December 31, 1996
to examine and approve the audit report prepared by the
independent auditors of the Bank and its subsidiary, to review
and recommend the independent auditors to be engaged by the Bank,
to review the internal audit function and internal accounting
controls, and to review and approve conflict of interest and
audit policies.
The Executive Committee of the Company and the Bank consists
of Directors William O. Cantwell, who serves as Chairman, John D.
Eagleson, Allen D. Welker and Clyde R. King. The Committee meets
only as needed and is charged with the responsibility of
overseeing the business of the Company and the Bank. The
Committee has the power to exercise most powers of the Board of
Directors in the intervals between meetings of the Board, and any
activity is reported to the Board monthly. The Executive
Committee of the Bank did not meet during the year ended December
31, 1996.
The Company's full Board of Directors acts as a nominating
committee for the purpose of considering potential nominees to
the Board of Directors. During the year ended December 31, 1996,
the Company's Board of Directors met once as a nominating
committee. In its deliberations, the Board, functioning as a
nominating committee, considers the candidate's knowledge of the
banking business and involvement in community, business and civic
affairs, and also considers whether the candidate would allow the
Board to continue its geographic diversity that provides for
adequate representation of its market area. The Company's
Articles of Incorporation set forth procedures that must be
followed by stockholders seeking to make nominations for
directors. In order for a stockholder of the Company to make any
nominations, he or she must give written notice thereof to the
Secretary of the Company not less than thirty days nor more than
sixty days prior to the date of any such meeting; provided,
however, that if less than forty days' notice of the meeting is
given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Company not later
than the close of business on the tenth day following the day on
which notice of the meeting was mailed to stockholders. Each
such notice given by a stockholder with respect to nominations
for the election of directors must set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice; (ii) the principal occupation or
employment of each such nominee; and (iii) the number of shares
of stock of the Company which are beneficially owned by each such
nominee. In addition, the stockholder making such nomination
must promptly provide any other information reasonably requested
by the Company.
The Bank's full Board of Directors acts as a compensation
committee. While acting as a compensation committee, the Board
evaluates the compensation and fringe benefits of the directors,
officers and employees,
5<PAGE>
<PAGE>
recommends changes, and monitors and evaluates employee morale.
Directors of the Bank who also are officers of the Bank abstain
from discussion and voting on matters affecting their
compensation. The Bank's Board met one time as a compensation
committee during the year ended December 31, 1996.
In addition to the committees described above, the Board of
Directors of the Bank has standing Asset/Liability, Loan and
Trust Committees.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth
cash and noncash compensation for fiscal 1996, 1995 and 1994
awarded to or earned by the Chief Executive Officer and the two
highest paid executive officers of the Company or the Bank whose
salary and bonus earned in fiscal 1996 exceeded $100,000. No
other executive officer received salary and bonus in excess of
$100,000 during the fiscal years ended December 31, 1996, 1995 or
1994.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation(1) ---------------------------
Name and ---------------------- Restricted Securities
Principal Stock Underlying All Other
Position Year Salary Bonus Award(s) Options(#) Compensation
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shirley B. Kessler 1996 $114,737 $45,076 $204,128 (2) 43,378 $10,251 (3)
President and Chief 1995 110,000 52,115 -- -- 6,600
Executive Officer 1994 85,062 72,141 -- -- 10,000
Wayne H. Benson 1996 82,697 32,488 165,246 (2) 38,617 26,395 (3)
Executive Vice 1995 78,000 36,954 -- -- 4,680
President 1994 61,480 58,615 -- -- --
Douglas W. Tompson 1996 81,667 32,084 165,246 (2) 26,450 2,436 (3)
Chief Financial 1995 77,000 36,480 -- -- 2,316
Officer 1994 56,132 51,851 -- -- --
<FN>
_____________
(1) Executive officers of the Bank receive indirect compensation
in the form of certain perquisites and other personal
benefits. The amount of such benefits received by the named
executive officers in fiscal 1996 did not exceed 10% of the
executive officer's salary and bonus.
(2) Value shown in the table is based on the closing price of the
Common Stock of $13.125 as quoted on the Nasdaq National
Market System on the date of grant, January 12, 1996. The
restricted Common Stock awarded vests at the rate of 20% per
year following the date of grant, with the first 20% having
vested on January 12, 1997. As of December 31, 1996, based on
the closing sale prices of the Common Stock of $12.75, as
reported on the Nasdaq National Market System, the aggregate
value of the restricted Common Stock held by Ms. Kessler and
Messrs. Benson and Tompson was $198,296, $160,525 and
$160,525, respectively. In the event the Company pays
dividends with respect to its Common Stock, when shares of
restricted stock vest and/or are distributed, the holder will
be entitled to receive any cash dividends and a number of
shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of restricted Common Stock
between the date the restricted stock was awarded and the date
the restricted is distributed, plus interest on cash
dividends, provided that dividends paid with respect to
unvested restricted stock must be repaid to the Company in the
event the restricted stock is forfeited prior to vesting.
(3) Includes contributions of $4,934, $4,934 and $2,436 made by
the Bank in fiscal 1996 for the account of Ms. Kessler, Mr.
Benson and Mr. Thompson, respectively, pursuant to the Bank's
401(k) Thrift Plan and $5,317 and $21,461 paid by the Company
to a trust for the benefit of Ms. Kessler and Mr. Benson,
respectively, pursuant to Supplemental Executive Retirement
Agreements with such individuals.
</FN>
</TABLE>
6<PAGE>
<PAGE>
Option Grants in Fiscal Year 1996. The following table
contains information concerning the grant of stock options during
the year ended December 31, 1996 to the executive officers named
in the Summary Compensation Table set forth above.
<TABLE>
<CAPTION>
Potential Realizable
Percent Value at Assumed
Number of of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to for Option Term (2)
Options Employees in Exercise Expiration ---------------------
Name Granted (1) Fiscal Year Price Date 5% 10%
- ---- --------------- ------------ --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Shirley B. Kessler 43,378 23.4% $13.125 1/12/06 $358,172 $907,468
Wayne H. Benson 38,617 20.9 13.125 1/12/06 318,860 807,868
Douglas W. Tompson 26,450 14.3 13.125 1/12/06 218,397 553,334
<FN>
_________________
(1) All options become exercisable at the rate of 20% per year
following the date of grant, with the first 20% having
become exercisable on January 12, 1997.
(2) Represents the difference between the aggregate exercise
price of the options and the aggregate value of the
underlying Common Stock at the end of the expiration date
assuming the indicated annual rate of appreciation in the
value of the Common Stock as of the date of grant, January
12, 1996, based on the closing sale price of the Common
Stock as quoted on the Nasdaq National Market System.
</FN>
</TABLE>
Year-End Option Values. The following table sets forth information
concerning the value as of December 31, 1996 of options held by the executive
officers named in the Summary Compensation Table set forth above.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year-End at Fiscal Year-End (1)
-------------------------- -------------------------
NAME All Exercisable Exercisable/Unexercisable
- ---- -------------------------- -------------------------
<S> <C> <C>
Shirley B. Kessler 43,378 --/--
Wayne H. Benson 38,617 --/--
Douglas W. Tompson 26,450 --/--
<FN>
______________
(1) At December 31, 1996, the fair market value of underlying
Common Stock of $12.75 as quoted on the Nasdaq National
Market System was below the exercise price of the options.
</FN>
</TABLE>
No options were exercised during fiscal year 1996, and no
options held by any executive officer of the Company repriced
during the past ten full fiscal years.
Employment Agreements. The Company and the Bank have
entered into employment agreements (the "Employment Agreements")
with Mr. Benson and Mr. Tompson (collectively, the "Employees"),
the Executive Vice President and the Chief Financial Officer,
respectively. In such capacities, the Employees are responsible
for overseeing certain operations of the Bank and the Company and
for implementing the policies adopted by the Boards of Directors
of both the Company and the Bank. Such Boards believe that the
Employment Agreements assure fair treatment of the Employees in
relation to their careers with the Company and the Bank by
assuring them of some financial security.
7<PAGE>
<PAGE>
The Employment Agreements became effective on June 29, 1995
and currently provide Mr. Benson and Mr. Tompson with annual base
salaries of $82,697 and $81,667, respectively. Each Employment
Agreement provides for a three year term. On each anniversary
date from the date of commencement of the Employment Agreements,
the term of employment may be extended for an additional one-year
period beyond the then effective expiration date, upon a
determination by the Board of Directors that the performance of
each Employee has met the required performance standards and that
each Employment Agreement should be extended. The Employment
Agreements provide the Employees with salary reviews by the Board
of Directors not less often than annually, as well as inclusion
in any discretionary bonus plans, retirement and medical plans,
customary fringe benefits and vacation and sick leave. An
Employment Agreement will terminate upon an Employee's death or
disability, and is terminable for "just cause" as defined in the
Employment Agreements. In the event of termination for just
cause, no severance benefits are available. If the Employee is
terminated without just cause, the Employee will be entitled to a
continuation of his salary and benefits from the date of
termination through the remaining term of the Employment
Agreement plus an additional 12-month period, but not to exceed
three years' salary. Severance benefits payable to an Employee
or to his estate will be paid in a lump sum or in installments,
as the Employee elects. If an Employment Agreement is terminated
due to an Employee's "disability" (as defined in the Employment
Agreements), the Employee will not be entitled to a continuation
of his salary and benefits. In the event of an Employee's death
during the term of his Employment Agreement, the Employee's
estate will be entitled to receive his salary through the last
day of the calendar month in which the death occurred. An
Employee may voluntarily terminate his Employment Agreement by
providing 60 days' written notice to the Boards of Directors of
the Bank and the Company, in which case the Employee is entitled
to receive only his compensation, vested rights and benefits up
to the date of termination.
The Employment Agreements provide that in the event of an
Employee's involuntary termination of employment in connection
with, or within one year after, any change in control of the Bank
or the Company, other than for "just cause," the Employee will be
paid within 10 days of such termination an amount equal to the
difference between (i) 2.99 times his "base amount," as defined
in Section 280G(b)(3) of the Internal Revenue Code, and (ii) the
sum of any other parachute payments, as defined under Section
280G(b)(2) of the Internal Revenue Code, that the Employee
receives on account of the change in control. "Control"
generally refers to the acquisition, by any person or entity, of
the ownership or power to vote more than 25% of the Bank's or
Company's voting stock, the control of the election of a majority
of the Bank's or the Company's directors, or the exercise of a
controlling influence over the management or policies of the Bank
or the Company. In addition, under the Employment Agreements, a
change in control occurs when, during any consecutive two-year
period, directors of the Company or the Bank at the beginning of
such period cease to constitute a majority of the Board of
Directors of the Company or the Bank, unless the election of
replacement directors was approved by a majority vote of the
initial directors then in office. The Employment Agreements with
the Bank provide that within 5 business days of a change in
control, the Bank shall fund, or cause to be funded, a trust in
the amount of 2.99 times each Employee's base amount, that will
be used to pay the Employees amounts owed to them upon
termination, other than for just cause, within one year of the
change in control. The amount to be paid to an Employee from
this trust upon his termination is determined according to the
procedures outlined in the Employment Agreements with the Bank,
and any money not paid to an Employee is returned to the Bank.
The Employment Agreements also provide for a similar lump sum
payment to be made in the event of an Employee's voluntary
termination of employment within one year following a change in
control, upon the occurrence, or within 90 days thereafter, of
certain specified events following the change in control, which
have not been consented to in writing by an Employee, including
(i) the requirement that the Employee perform his principal
executive functions more than 35 miles away from the Bank's
current primary office, (ii) a material reduction in the
Employee's base compensation as then in effect, (iii) the failure
of the Company or the Bank to maintain existing or substantially
similar employee benefit plans, including material vacation,
fringe benefits, stock option and retirement plans, as the same
may be changed by mutual agreement from time to time, or with
benefits substantially similar to those provided to him under any
employee benefit plan in which the Employee is a participant at
the time of the change in control, (iv) the assignment to the
Employee of duties and responsibilities which are materially
different from those normally associated with his position with
the Bank, (v) a material reduction in the Employee's authority
and responsibility, and (vi) the failure to re-elect the Employee
to the Company's or the Bank's Board of Directors if he is
serving on the Board on the date of the change in control. The
aggregate payments that would be made to Mr. Benson and Mr.
Tompson assuming termination of their employment under the
foregoing circumstances at December 31, 1996, would have been
approximately $247,264
8<PAGE>
<PAGE>
and $244,214, respectively. These provisions may have an anti-
takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. In the event that an
Employee prevails over the Company and the Bank in a legal
dispute as to the Employment Agreements, he will be reimbursed
for his legal and other expenses.
Supplemental Executive Retirement Agreements. In order to
secure the continuing services of Ms. Kessler and Messrs. Benson
and Tompson (collectively, the "Executives"), the Bank entered
into supplemental executive retirement agreements (the "SERAs")
with the Executives effective January 1, 1995. Pursuant to the
terms of the SERAs, each year the Bank will credit an account for
each Executive with the amount, if any, by which (i) the sum of
any annual additions allocated to the Executive's account under
the ESOP and any other tax-qualified, defined contribution plan
maintained by the Bank or the Company (measured without regard to
the limitations on annual additions imposed under Internal
Revenue Code Section 415), exceeds (ii) the limit imposed on
annual additions by Internal Revenue Code Section 415(c)(1) and
any regulations thereunder. In addition, if the limitation
imposed by Section 415(e) of the Internal Revenue Code reduces
the benefit that the Executive accrues under any defined benefit
pension plan maintained by the Bank, the Bank shall, as soon as
practicable after the close of the plan year in which said
reduction occurs, contribute to the Executive's account an amount
equal to the present value of such reduction.
Upon an Executive's termination of employment with the
Company or the Bank, for reasons other than death or removal for
"just cause," the Bank will pay the balance of the Executive's
account to the Executive in ten substantially equal annual
installments. In the event that the Executive dies before all
benefit payments have been made to him, the Bank shall pay to the
Executive's beneficiary (or estate, if he has no beneficiary) a
lump sum payment, within 60 days following the Executive's death,
in an amount equal to the balance of the Executive's account.
Termination for "just cause" (as defined in the SERAs) would
result in the forfeiture of all benefits under the SERAs. In the
event of a change in control (as defined in the SERAs), the
balance in the Executive's account shall be due and payable to
the Executive in one lump sum payment within 10 days following
such change in control. The Bank has established an irrevocable
grantor trust to hold assets in order to provide a source of
funds to assist it in meeting its liabilities under the SERAs.
The assets of such trust will remain general assets of the Bank
and be subject to the claims of its general creditors.
Deferred Compensation Plan. The Bank's Board of Directors
has established the Deferred Compensation Plan for the exclusive
benefit of members of the Bank's Board of Directors who are not
employees of the Bank, the Bank's President and Executive Vice
President and such other executive officers of the Bank which the
Board of Directors may identify by resolution as being eligible
to participate in the Deferred Compensation Plan. Pursuant to
the terms of the Deferred Compensation Plan, directors may elect
to defer the receipt of all or part of their future fees, and
other plan participants may elect to defer receipt of up to 25%
of their future compensation. Deferred amounts will be credited
to a bookkeeping account in the participant's name, which will
also be credited quarterly with the investment return which would
have resulted if such deferred amounts had been invested, based
upon the participant's choice, in either Common Stock or in a
fund with a return equal to the Bank's annual rate of interest on
one year certificates of deposit. Participants may determine the
time and form of benefit payments and may cease future deferrals
any time. Changes in participant elections generally become
effective only as of the following January 1st, except that (i)
elections designating a beneficiary or ceasing future
contributions will be given immediate effect, and (ii)
participants may change elections as to the timing or form of
distributions only with respect to subsequently deferred
compensation. The Bank contributes the aggregate amounts
deferred to a trust associated with the Deferred Compensation
Plan to assist it in meeting its obligations under the Deferred
Compensation Plan. Contributions to such trust are made on a
quarterly basis and the funds will be used for eventual payments
to participants.
Change of Control Severance Agreements. Effective June 29,
1995, each of the Company and the Bank entered into severance
agreements (the "Severance Agreements") with Shirley B. Kessler.
The Severance Agreements will terminate on the earlier of (a)
three years after the effective date of the Severance Agreements
or (b) the date on which Ms. Kessler terminates employment with
the Bank, provided that the rights under the Severance Agreements
will continue following termination of employment if the
Severance Agreements were in effect at the date of the change in
control. On each annual anniversary date from the date of
commencement of the Severance
9<PAGE>
<PAGE>
Agreements, the term of the Severance Agreements may be extended
for additional one year periods beyond the then effective
expiration date, upon a determination by the Board of Directors
that the performance of Ms. Kessler has met the required
performance standards and that such Severance Agreements should
be extended.
The Severance Agreements provide that in the event of Ms.
Kessler's involuntary termination of employment in connection
with, or within one year after, any change in control of the Bank
or the Company, other than for "just cause," Ms. Kessler will be
paid within 10 days of such termination an amount equal to the
difference between (i) 2.99 times her "base amount," as defined
in Section 280G(b)(3) of the Internal Revenue Code, and (ii) the
sum of any other parachute payments, as defined under Section
280G(b)(2) of the Internal Revenue Code, that she receives on
account of the change in control. "Control" generally refers to
the acquisition, by any person or entity, of the ownership or
power to vote more than 25% of the Bank's or Company's voting
stock, the control of the election of a majority of the Bank's or
the Company's directors or the exercise of a controlling
influence over the management or policies of the Bank or the
Company. In addition, under the Severance Agreements, a change
in control occurs when, during any consecutive two-year period,
directors of the Company or the Bank at the beginning of such
period cease to constitute a majority of the Board of Directors
of the Company or the Bank, unless the election of replacement
directors was approved by a majority vote of the initial
directors then in office. The Severance Agreement with the Bank
provides that within five business days of a change in control,
the Bank shall fund, or cause to be funded, a trust in the amount
of 2.99 times Ms. Kessler's base amount, that will be used to pay
amounts owed to Ms. Kessler upon termination other than for just
cause within one year of the change in control. The amount to be
paid to Ms. Kessler from this trust upon her termination is
determined according to the procedures outlined in the Severance
Agreements, and any money not paid to Ms. Kessler is to be
returned to the Bank. The Severance Agreements also provide for
a similar lump sum payment to be made in the event of the
voluntary termination of employment within one year following a
change in control, upon the occurrence, or within 90 days
thereafter, of certain specified events following the change in
control, which Ms. Kessler has not consented to in writing,
including (i) requiring Ms. Kessler to perform her principal
executive functions more than 35 miles from the Bank's current
primary office, (ii) materially reducing Ms. Kessler's base
compensation as then in effect, (iii) failing to maintain
existing employee benefit plans, including material vacation,
fringe benefits, stock option and retirement plans as the same
may be changed by mutual agreement from time to time, or with
benefits substantially similar to those provided to her under any
employee benefit plan in which Ms. Kessler is a participant at
the time of the change in control, (iv) assigning duties and
responsibilities to Ms. Kessler which are materially different
from those normally associated with her position with the Bank,
(v) materially diminishing Ms. Kessler's authority and
responsibility, and (vi) failing to reelect Ms. Kessler to the
Board of Directors if she is serving on the Board on the date of
the change in control. The aggregate payments that would be made
to Ms. Kessler assuming her termination of employment under the
foregoing circumstances at December 31, 1996 would have been
approximately $343,064. These provisions may have an anti-
takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. In the event that Ms.
Kessler prevails over the Company or the Bank in a legal dispute
as to the Severance Agreements, she will be reimbursed for her
legal and other expenses.
DIRECTOR COMPENSATION
Each nonemployee member of the Company's Board of Directors
receives an annual fee of $10,000, except for the Chairman of the
Board of Directors who receives an annual fee of $12,500. These
fees include compensation for all Board and committee meetings
attended. Directors also are eligible to participate in the
Community Bank & Trust, N.A. Deferred Compensation Plan (the
"Deferred Compensation Plan"). See " -- Executive Compensation
- -- Deferred Compensation Plan." In addition, on January 12, 1996
upon stockholder approval of the Company's 1996 Stock Option and
Incentive Plan and Management Recognition Plan, all non-employee
directors received awards of 3,967 shares of restricted Common
Stock and options to acquire 9,918 shares of Common Stock, and
Shirley B. Kessler, the President and Chief Executive Officer and
a director of the Company and the Bank, received awards of 15,552
shares of restricted Common Stock and options to acquire 43,378
shares of Common Stock. All such awards vest at the rate of 20%
per year from the date of the award.
10<PAGE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors and officers. These
loans currently are made in the ordinary course of business with
the same collateral, interest rates and underwriting criteria as
those of comparable transactions prevailing at the time and to
not involve more than the normal risk of collectibility or
present other unfavorable features. Under current law, the
Bank's loans to directors and executive officers are required to
be made on substantially the same terms, including interest
rates, as those prevailing for comparable transactions and must
not involve more than the normal risk of repayment or present
other unfavorable features. Furthermore, all loans above the
greater of $25,000 or 5%, of the Bank's capital and surplus
(i.e., up to $1.4 million) to such persons must be approved in
advance by a disinterested majority of the Board of Directors.
At December 31, 1996, the Bank's loans to directors and executive
officers, not including unused limits under credit cards, totaled
$490,000, or 1.43%, of the Company's stockholders' equity, at
that date.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________
Larsson, Woodyard, & Henson, CPAs, which was the Company's
independent auditors for the 1996 fiscal year, has been retained
by the Board of Directors to be the Company's auditors for the
1997 fiscal year. A representative of Larsson, Woodyard &
Henson, CPAs is expected to be present at the Annual Meeting and
will have the opportunity to make a statement if he or she so
desires.
________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
________________________________________________________________
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers and directors and all persons who own more
than ten percent of the Common Stock ("Reporting Persons") are
required to file reports detailing their ownership and changes of
ownership in the Common Stock and to furnish the Company with
copies of all such ownership reports that are filed. Based
solely on the Company's review of the copies of such ownership
reports which it has received in the past fiscal year or with
respect to the past fiscal year, or written representations that
no annual report of changes in beneficial ownership were
required, the Company believes that during fiscal year 1996 and
prior fiscal years all Reporting Persons have complied with these
reporting requirements.
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this proxy statement and matters incident to the conduct
of the Annual Meeting. However, if any other matters should pro-
perly come before the Annual Meeting, it is intended that proxies
in the accompanying form will be voted in respect thereof in
accordance with the determination of a majority of the Board of
Directors.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation therefor.
The Company's 1996 Annual Report to Stockholders, including
financial statements, is being mailed to all stockholders of
record as of the close of business on the Record Date. Any
stockholder who has not received a copy
11<PAGE>
<PAGE>
of such Annual Report may obtain a copy by writing to the
Secretary of the Company. Such Annual Report is not to be
treated as a part of the proxy solicitation material or as having
been incorporated herein by reference.
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the proxy materials
of the Company for the Annual Meeting of Stockholders for the
year ending December 31, 1997, any stockholder proposal to take
action at such meeting must be received at the Company's
executive offices at 240 E. Chestnut Street, Olney, Illinois
62450-2295 by no later than November 27, 1997. Any such
proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Steven Walser
Steven Walser
Secretary
March 27, 1997
Olney, Illinois
_________________________________________________________________
ANNUAL REPORT ON FORM 10-K
_________________________________________________________________
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO EACH
STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST TO
CORPORATE SECRETARY, COMMUNITY FINANCIAL CORP., 240 E. CHESTNUT
STREET, OLNEY, ILLINOIS 62450-2295
_________________________________________________________________
12<PAGE>
<PAGE>
REVOCABLE PROXY
________________________________________________________________
COMMUNITY FINANCIAL CORP.
OLNEY, ILLINOIS
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1997
The undersigned hereby appoints Brad Jones, Roger Charleston
and Michael Bauman, with full powers of substitution, to act as
attorneys and proxies for the undersigned, to vote all shares of
the common stock of Community Financial Corp. which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held at the Holiday Motel, located at 1300
South West, Olney, Illinois, on Monday, April 28, 1997, at 1:00
p.m. (the "Annual Meeting"), and at any and all adjournments
thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of both
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Shirley B. Kessler
Clyde R. King
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR EITHER INDIVIDUAL
NOMINEE, INSERT THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.
________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED
PROPOSITION.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING,
INCLUDING MATTERS RELATING TO THE CONDUCT OF THE ANNUAL MEETING,
THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof, then the power of
said attorneys and prior proxies shall be deemed terminated and
of no further force and effect. The undersigned may also revoke
his proxy by filing a subsequent proxy or notifying the Secretary
of his decision to terminate his proxy.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting and
a Proxy Statement dated March 27, 1997.
Dated: _______________________, 1997
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed
card. When signing as attorney, executor, administrator, trustee
or guardian, please give your full title. Corporation proxies
should be signed in corporate name by an authorized officer. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
