The Community Financial Corporation Reports Operating Results for the Three and Six Months Ended June 30, 2019

Published

WALDORF, Md., July 24, 2019 (GLOBE NEWSWIRE) -- The Community Financial Corporation (NASDAQ: TCFC) (the “Company”), the holding company for Community Bank of the Chesapeake (the “Bank”), reported its results of operations for the second quarter and six months ended June 30, 2019. The Company reported net income for the three months ended June 30, 2019 (“2019Q2”) of $3.6 million or diluted earnings per share of $0.65 compared to a net income for the second quarter of 2018 (“2018Q2”) of $2.3 million or a diluted earnings per share of $0.42. The 2018Q2 results included merger and acquisition costs net of tax of $546,000. Merger and acquisition costs did not impact earnings per share for 2019Q2. The Company’s return on average assets (“ROAA”) and return on average common equity (“ROACE”) were 0.84% and 8.99% in 2019Q2 compared to 0.59% and 6.34% in 2018Q2. For the three months ended March 31, 2019 (“2019Q1”), net income, diluted earnings per share, ROAA and ROACE were $3.9 million, $0.70, 0.91% and 9.85%, respectively. Net income for the six months ended June 30, 2019 (“2019YTDQ2”) was $7.5 million or $1.35 per diluted share compared to net income of $3.6 million or $0.64 per diluted share for the six months ended June 30, 2018 (“2018YTDQ2”). The first six months results in 2018 included merger and acquisition costs net of tax of $2.7 million. Merger and acquisition costs did not impact earnings per share in 2019YTDQ2. The impact of merger and acquisition costs resulted in a reduction to 2018YTDQ2 earnings per share of approximately $0.48. The Company’s ROAA and ROACE were 0.88% and 9.41% in 2019YTDQ2 compared to 0.45% and 4.84% in 2018YTDQ2. The Company completed the acquisition of County First Bank (“County First”) on January 1, 2018, increasing the Company’s asset size by $200 million to just under $1.6 billion.  As of December 31, 2018 (“at 2018Q4”), the Company’s assets were just under $1.7 billion. The Company closed four of the five acquired County First branches during May of 2018. The La Plata downtown branch remains open. County First closed its Fairfax, Virginia loan production office prior to the legal merger. The first six months of 2018 included operating expenses to support the merged operations with County First Bank. The closure of four branches and reductions in headcount during the second quarter of 2018 positively impacted the Company’s operating expense run rate in the second half of 2018. Management Commentary During the six months ended June 30, 2019, the Bank stabilized net interest margin, controlled expenses, continued to organically grow loans and improved credit quality. In the second quarter of 2019, net interest margin was stable increasing slightly from 3.31% in 2019Q1 to 3.33% in 2019Q2. An inverted yield curve as well as strong competition, contributed to net interest margin contraction in the second half of 2018 and the first quarter of 2019. Projected loan growth for 2019 ranges between 5%-7%.  We continue to evaluate loan opportunities in light of marginal and total funding costs. Net interest margins should be positively impacted if Federal Reserve rate cuts steepen the yield curve. The Company improved on-balance sheet liquidity over the last 18 months. Our loan to deposit ratio decreased from 103.1% at December 31, 2017 to 92.2% at June 30, 2019 (“at 2019Q2”). At the same time, wholesale funding, which includes brokered deposits and Federal Home Loan Bank advances, decreased from $262.9 million or 18.6% of assets at December 31, 2017 to $80.4 million or 4.6% of assets at June 30, 2019. Increased liquidity provides more opportunities to lower our funding costs over time. We are pleased with progress in decreasing nonperforming assets in 2019. Although, OREO expenses were slightly elevated in the second quarter, overall nonperforming assets have decreased $8.3 million from $34.1 million at December 31, 2018 to $25.8 million at June 30, 2019. Non-accrual loans, OREO and TDRs to total assets decreased 55 basis points to 1.47% at June 30, 2019 compared to 2.02% at December 31, 2018.  The second quarter OREO expense was related to an offer of $1.8 million to buy a commercial building and is expected to settle in the third or fourth quarter of this year.   Management remains committed to controlling expenses. In the second quarter of 2019, the efficiency ratio and net operating expense to average assets were 62.9% and 1.83%, respectively. These ratios were impacted by the higher than anticipated OREO charges, and if adjusted for this activity were 60.1% and 1.74%, respectively (See Non-GAAP reconciliation schedules). The Company has successfully integrated the County First acquisition into its existing franchise. The Company has returned to organic growth between 6%-7%. We believe current market disruptions will provide opportunities for continued organic growth. Highlights at and for the three and six months ended June 30, 2019 include: Net interest margin increased two basis points from 3.31% in 2019Q1 to 3.33% in 2019Q2. Net interest income increased $222,000 from $13.0 million in 2019Q1 compared to $13.3 million in 2019Q2. Accretion interest and nonaccrual interest impacted (increased) net interest margin by four basis points and five basis points in 2019Q1 and 2019Q2, respectively. 2019Q2 loan yields and overall interest-earning asset yields increased three basis points to 2019Q1 to 4.83% and 4.54%, respectively, compared to 2019Q1. The Bank’s cost of funds increased two basis points to 1.27% for the comparable periods. Nonperforming assets continued to improve in the second quarter of 2019. Non-accrual loans, OREO and TDRs to total assets decreased 55 basis points to 1.47% at June 30, 2019 compared to 2.02% at December 31, 2018.  Classified assets as a percentage of assets decreased 32 basis points to 2.10% at June 30, 2019 from 2.42% at December 31, 2018. During the second quarter, gross loans increased 7.0% annualized or $24.0 million from $1,363.2 million at March 31, 2019 (“at 2019Q1”) to $1,387.2 million at 2019Q2. Year to date gross loans increased 6.0% annualized or $40.3 million from $1,346.9 million at 2018Q4 to $1,387.2 million at 2019Q2. The Company’s average contractual interest rates for loans continued to increase. Loan yields on repricing and new loans increased during 2018 and continued during the second quarter of 2019, influenced by increases in the federal funds target rate and loan growth in higher yielding portfolios. End of period projected loan yields have increased since the third quarter of 2017. The following table is based on contractual interest rates and does not include the amortization of deferred costs and fees or assumptions regarding non-accrual interest:    Weighted End of Period Contractual Interest Rates    June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 (dollars in thousands) EOP Contractual Interest rate EOP Contractual Interest rate EOP Contractual Interest rate EOP Contractual Interest rate EOP Contractual Interest rate             Commercial real estate 4.66% 4.63% 4.61% 4.56% 4.55% Residential first mortgages 3.95% 3.94% 3.93% 3.90% 3.91% Residential rentals 4.84% 4.79% 4.77% 4.75% 4.76% Construction and land development 5.45% 5.41% 5.32% 5.13% 5.22% Home equity and second mortgages 5.62% 5.62% 5.39% 5.14% 5.14% Commercial loans 5.89% 5.91% 5.76% 5.59% 5.53% Consumer loans 6.60% 6.88% 6.93% 6.91% 6.83% Commercial equipment  4.60% 4.54% 4.52% 4.47% 4.47% Total Loans 4.70% 4.68% 4.64% 4.57% 4.56%                   Total deposits increased $64.8 million or 4.53% to $1,494.4 million at 2019Q2 compared to 2018Q4. Non-interest bearing demand deposits have increased $17.3 million or 8.3% to $226.7 million at 2019Q2 compared to $209.4 million at 2018Q4. The Bank typically experiences transaction deposit volatility during the first quarter as our business customers use transaction account balances to pay expenses and taxes accrued in the prior year.  Transaction accounts decreased $13.3 million in first quarter of 2019 while time deposits increased $22.8 million. During the second quarter of 2019, transaction accounts increased $64.5 million while time deposits decreased $9.2 million.Net income in 2019Q2 decreased $250,000 to $3.6 million, or $0.65 per share, compared to $3.9 million, or $0.70 per share, in the prior quarter. The Company’s ROAA and ROACE were 0.84% and 8.99% in 2019Q2 compared to 0.91% and 9.85% in the prior quarter. The Company had no material adjustments to operating net income1 in 2019Q2 and 2019Q1 and operating earnings per share, operating ROAA and operating ROACE were the same. The slight decrease in earnings was primarily the result of increased noninterest expense for OREO valuation allowances to adjust values to a ratified contract and elevated professional fees related to strategic projects that are not expected to impact the Company’s average run rate in future quarters. These decreases to earnings were partially offset by increased net interest income, a lower loan loss provision and increased noninterest income. The Company’s quarterly expense run rate is expected to range between $8.6 and $8.8 million for the remaining quarters of 2019.      THE COMMUNITY FINANCIAL CORPORATION   Three Months Ended    dollars in thousands June 30, 2019 March 31, 2019 $ Variance % Variance Operations Data:         Interest and dividend income $  18,118 $  17,797 $  321  1.8% Interest expense    4,859    4,760    99  2.1% Net interest income    13,259    13,037    222  1.7% Provision for loan losses    375    500    (125) (25.0%) Noninterest income    1,253    1,061    192  18.1% Noninterest expense    9,116    8,405    711  8.5% Income before income taxes    5,021    5,193    (172) (3.3%) Income tax expense    1,394    1,316    78  5.9% Net income $  3,627 $  3,877 $  (250) (6.4%)            Operating net income increased $746,000 or 25.9% to $3.6 million in 2019Q2 compared to $2.9 million in 2018Q2. The Company’s operating ROAA and operating ROACE were 0.84% and 8.99% in 2019Q2 compared to 0.73% and 7.82% in 2018Q2. Operating diluted earnings per share were $0.65 and $0.52, respectively, for the comparable periods. Operating net income increased $1.3 million or 20.3% to $7.5 million in 2019YTDQ2 compared to $6.2 million in 2018YTDQ2. The Company’s operating ROAA and operating ROACE were 0.88% and 9.41% in 2019YTDQ2 compared to 0.79% and 8.49% in 2018YTDQ2. Operating diluted earnings per share were $1.35 and $1.12, respectively, for the comparable periods. Improved earnings were the result of a change in the funding composition of the Bank’s interest-bearing liabilities, the control of operating costs, and organic loan growth partially offset by decreasing margins. Noninterest expense of $9.1 million in 2019Q2 increased $711,000 compared to $8.4 million in the prior quarter, primarily due to   higher OREO expenses and professional fees related to strategic projects. Salaries and benefits are expected to increase between two and four percent in 2019 compared to 2018. The higher range is based on Company meeting incentive plan targets. We believe the Company’s quarterly expense run rate will range between $8.6 and $8.8 million for the remaining quarters of 2019. The following is a summary breakdown of noninterest expenses comparing 2019Q2 and 2019Q1:              Three Months Ended     (dollars in thousands) June 30, 2019 March 31, 2019 $ Change   % Change  Salary and employee benefits $  4,881 $  4,803 $  78  1.6% OREO Valuation Allowance and Expenses    432    56    376  671.4% Operating Expenses    3,803    3,546    257  7.2% Total Noninterest Expense $  9,116 $  8,405 $  711  8.5%  The GAAP efficiency ratio was 62.82% in 2019Q2 compared to 59.62% in 2019Q1. The non-GAAP (or “operating”) efficiency ratio2, which excludes merger and acquisition costs, OREO gains and losses and other non-core activities, was 60.11% in 2019Q2 compared to 59.46% in 2019Q1. Net Income The Company reported net income for 2019Q2 of $3.6 million or diluted earnings per share of $0.65 compared to a net income of $2.3 million or $0.42 per diluted share for 2018Q2. There were no merger and acquisition costs in 2019Q2 and no impact to earnings per share. The 2018Q2 results included merger and acquisition costs net of tax of $546,000, resulting in a $0.10 decline in earnings per share. The Company’s ROAA and ROACE were 0.84% and 8.99% in 2019Q2 compared to 0.59% and 6.34% in 2018Q2. Net income in 2019YTDQ2 was $7.5 million or $1.35 per diluted share compared to net income of $3.6 million or $0.64 per diluted share in 2018YTDQ2. There were no merger and acquisition costs in 2019YTDQ2 and no impact to earnings per share. The first six months of 2018 results included merger and acquisition costs net of tax of $2.7 million, resulting in a $0.48 decline to earnings per share. The Company’s ROAA and ROACE were 0.88% and 9.41% in 2019YTDQ2 compared to 0.45% and 4.84% in 2018YTDQ2. The $3.9 million increase to net income in 2019YTDQ2 compared to 2018YTDQ2 was primarily due to decreased noninterest expense of $3.9 million, of which $3.6 million related to merger and acquisition costs incurred during 2018YTDQ2. In addition, the Company’s 2019YTDQ2 expense run rate was $286,000 lower than 2018YTDQ2 for all other noninterest expenses. The Company began to realize cost savings from the County First acquisition in the second half of 2018 with the closing of four branches and an operations center, an overall reduction in headcount and the elimination of duplicate processes and vendors. In addition, net interest income and noninterest income increased $995,000 and $382,000, respectively comparing 2019YTDQ2 to 2018YTDQ2. Partially offsetting the improvements to pre-tax income was increased income tax expense of $1.3 million for 2019YTDQ2 compared to 2018YTDQ2. Net Interest Income Net interest income increased 6.8% or $848,000 to $13.3 million in 2019Q2 compared to $12.4 million in 2018Q2. Net interest margin at 3.33% in 2019Q2 decreased eight basis points from 3.41% in 2018Q2. Average interest-earning assets were $1,594.6 million for the second quarter of 2019, an increase of $136.9 million or 9.4%, compared to $1,457.7 million for the same quarter of 2018. Accretion interest and nonaccrual interest increased net interest margin by five basis points and one basis point in 2019Q2 and 2018Q2, respectively. The below table provides information on the impact of changes in volume and rate for the three months ended June 30, 2019 and 2018:  Three Months Ended June 30, 2019 compared to June 30, 2018   Due to   dollars in thousands Volume   Rate   Total       Loan portfolio (1)$  1,059  $  824  $  1,883 Investment securities, federal funds sold and interest bearing deposits   360     121     481 Total interest-earning assets$  1,419  $  945  $  2,364       Savings   (1)    6     5 Interest-bearing demand and money market accounts   321     538     859 Certificates of deposit   65     632     697 Long-term debt    (127)    49     (78)Short-term debt   (74)    92     18 Subordinated notes   -     -     - TRUPs   -     15     15 Total interest-bearing liabilities $  184  $  1,332  $  1,516 Net change in net interest income$  1,235  $  (387) $  848       (1) Average balance includes non-accrual loans  Net interest income increased 3.9% or $995,000 to $26.3 million in 2019YTDQ2 compared to $25.3 million in 2018YTDQ2. Net interest margin at 3.32% in 2019YTDQ2 decreased 15 basis points from 3.47% in 2018YTDQ2. Average interest-earning assets were $1,585.9 million for the first six months of 2019, an increase of $128.6 million or 8.9%, compared to $1,457.3 million for the same period of 2018. The below table provides information on the impact of changes in volume and rate for the six months ended June 30, 2019 and 2018: Six Months Ended June 30, 2019 compared to June 30, 2018   Due to   dollars in thousands Volume   Rate   Total       Loan portfolio (1)$  1,914  $  1,372  $  3,286 Investment securities, federal funds sold and interest bearing deposits   710     272     982 Total interest-earning assets$  2,624  $  1,644  $  4,268       Savings   (2)    12     10 Interest-bearing demand and money market accounts   778     1,243     2,021 Certificates of deposit   (27)    1,369     1,342 Long-term debt    (341)    124     (217)Short-term debt   (228)    297     69 Subordinated notes   -     -     - TRUPs   -     48     48 Total interest-bearing liabilities $  180  $  3,093  $  3,273 Net change in net interest income$  2,444  $  (1,449) $  995       (1) Average balance includes non-accrual loans  Noninterest Income and Noninterest Expense Noninterest income at $1.3 million in 2019Q2 increased $352,000 compared to 2018Q2. The increase was primarily due to increased miscellaneous fees and service charges of $212,000 and unrealized gains of $65,000 on equity securities in 2019Q2 compared to unrealized losses of $78,000 on equity securities in 2018Q2. Noninterest income at $2.3 million in 2019YTDQ2 increased $382,000 compared to 2018YTDQ2. The increase was primarily due to increased miscellaneous fees and service charges of $195,000 and unrealized gains of $121,000 on equity securities in 2019YTDQ2 compared to unrealized losses of $78,000 on equity securities in 2018YTDQ2.   Noninterest expense decreased $633,000 or 6.5%, to $9.1 million in 2019Q2 compared to $9.7 million in 2018Q2, of which $741,000 of the variance was due to merger and acquisition costs incurred during 2018Q2. The Company’s 2019 expense run rate has been positively impacted by the increased efficiencies from the County First acquisition and management’s continued focus on containing expense growth. The Company’s quarterly expense run rate is expected to range between $8.6 and $8.8 million for remaining quarters of 2019. The second quarter 2019 increase above $8.8 million run rate was primarily due to OREO valuation allowances to adjust values to a ratified contract and elevated professional fees related to strategic projects that are not expected to impact the Company’s average run rate in future quarters. Adjusted noninterest expense, which excludes merger-related expenses and OREO related expenses decreased $87,000, or 1.0%, to $8.7 million in 2019Q2 compared to $8.8 million in 2018Q2. The Company’s GAAP efficiency ratio was 62.82% in 2019Q2 compared to 73.23% in 2018Q2. The operating efficiency ratio, which excludes merger and acquisition costs, OREO gains and losses and other non-core activities, was 60.11% and 65.51% for the same periods. The Company’s GAAP net operating expense ratio was 1.83% in 2019Q2 compared to 2.24% in 2018Q2. The non-GAAP net operating expense ratio, which excludes merger and acquisition costs, investment gains and losses, OREO gains and losses and other non-core activities, was 1.74% and 1.97% for the same periods. The following is a summary of noninterest expense:    Three Months Ended June 30,     (dollars in thousands)  2019  2018  $ Change  % Change  Salary and employee benefits $  4,881 $  5,129    (248) (4.8%) OREO Valuation Allowance and Expenses    432    237    195  82.3% Merger and acquisition costs    -    741    (741) (100.0%) Operating Expenses    3,803    3,642    161  4.4% Total Noninterest Expense $  9,116 $  9,749 $  (633) (6.5%)  Noninterest expense decreased $3.9 million or 18.2%, to $17.5 million in 2019YTDQ2 compared to $21.4 million in 2018YTDQ2, of which $3.6 million of the variance was due to merger and acquisition costs incurred during 2018YTDQ2. The Company’s 2019 expense run rate has been positively impacted by the increased efficiencies from the County First acquisition and management’s continued focus on containing expense growth. As previously explained second quarter elevated expenses for OREO valuation allowances and professional fees are not expected to impact the Company’s average run rate in future quarters. Adjusted noninterest expense, which excludes merger-related expenses and OREO related expenses decreased $423,000, or 2.4%, to $17.0 million in 2019YTDQ2 compared to $17.5 million in 2018YTDQ2. Overall the decreases in adjusted noninterest expenses comparing 2019YTDQ2 to 2018YTDQ2 were due primarily to decreases in salary and employee benefits of $492,000 and other operating expenses of $177,000 related to the reduction of County First employee head count in the second half of 2018. These decreases to expenses were partially offset by increased professional fees of $246,000. The Company’s GAAP efficiency ratio was 61.24% in 2019YTDQ2 compared to 78.64% in 2018YTDQ2. The operating efficiency ratio was 59.79% and 63.92% for the same periods. The Company’s GAAP net operating expense ratio was 1.78% in 2019YTDQ2 compared to 2.47% in 2018YTDQ2. The non-GAAP net operating expense ratio, which excludes merger and acquisition costs, investment gains and losses, OREO gains and losses and other non-core activities, was 1.74% and 1.95% for the same periods. The following is a summary breakdown of noninterest expense:   Six Months Ended June 30,     (dollars in thousands)  2019  2018  $ Change  % Change  Salary and employee benefits $  9,684 $  10,176 $  (492) (4.8%) OREO Valuation Allowance and Expenses    488    351    137  39.0% Merger and acquisition costs    -    3,609    (3,609) (100.0%) Operating Expenses    7,349    7,280    69  0.9% Total Noninterest Expense $  17,521 $  21,416 $  (3,895) (18.2%)  Balance SheetTotal assets increased $67.2 million, or 4.0%, to $1.76 billion at 2019Q2 compared to total assets of $1.69 billion at 2018Q4 primarily due to increases in net loans of $40.5 million. In addition total assets increased $9.2 million for investments, $5.3 million for cash,  $2.2 million for OREO and $9.7 million in right of use assets for operating leases recorded in accordance with the new lease standard which was effective for the Company on January 1, 2019. All other assets increased $272,000.  The Company’s loan pipeline was approximately $112.0 million at June 30, 2019. The following tables breakdown of growth for 2019Q2 and 2019YTDQ2 by portfolio:              Annualized  BY LOAN TYPE June 30, 2019 % March 31, 2019 % $ Change% Change                Commercial real estate $  917,948 66.18% $  891,165 65.37% $  26,783 12.02%  Residential first mortgages    156,670 11.29%    156,653 11.49%    17 0.04%  Residential rentals    121,990 8.79%    124,518 9.13%    (2,528)-8.12%  Construction and land development    35,662 2.57%    32,798 2.41%    2,864 34.93%  Home equity and second mortgages    35,866 2.59%    36,746 2.70%    (880)-9.58%  Commercial loans    67,617 4.87%    70,725 5.19%    (3,108)-17.58%  Consumer loans    967 0.07%    851 0.06%    116 54.52%  Commercial equipment     50,466 3.64%    49,720 3.65%    746 6.00%  Gross loans    1,387,186 100.00%    1,363,176 100.00%    24,010 7.05%  Net deferred costs (fees)    1,363 0.10%    1,261 0.09%    102 32.36%  Total loans, net of deferred costs $  1,388,549   $  1,364,437   $  24,112 7.07%                                         Annualized  BY LOAN TYPE June 30, 2019 % December 31, 2018 % $ Change% Change                Commercial real estate $  917,948 66.18% $  878,016 65.18% $  39,932 9.10%  Residential first mortgages    156,670 11.29%    156,709 11.63%    (39)-0.05%  Residential rentals    121,990 8.79%    124,298 9.23%    (2,308)-3.71%  Construction and land development    35,662 2.57%    29,705 2.21%    5,957 40.11%  Home equity and second mortgages    35,866 2.59%    35,561 2.64%    305 1.72%  Commercial loans    67,617 4.87%    71,680 5.32%    (4,063)-11.34%  Consumer loans    967 0.07%    751 0.06%    216 57.52%  Commercial equipment     50,466 3.64%    50,202 3.73%    264 1.05%  Gross loans    1,387,186 100.00%    1,346,922 100.00%    40,264 5.98%  Net deferred costs (fees)    1,363 0.10%    1,183 0.09%    180 30.43%  Total loans, net of deferred costs $  1,388,549   $  1,348,105   $  40,444 6.00%   The acquisition of County First and 2018 organic loan growth changed the composition of the loan portfolios during 2018.  The growth in the commercial real estate portfolio should increase asset sensitivity over time’ Commercial real estate increased from 63.25% of gross loans at 2017Q4 to 66.18% at 2019Q2. The relative decrease in residential first mortgage balances should also increase asset interest rate sensitivity. Regulatory concentrations for non-owner occupied commercial real estate and construction at 2019Q2 were $602 million or 312% and $140 million or 72%, respectively. Acquired and non-acquired loans consist at June 30, 2019 and December 31, 2018 were as follows:          BY ACQUIRED AND NON-ACQUIRED June 30, 2019 % December 31, 2018 %         Acquired loans - performing $  88,353 6.37% $  103,667 7.70%Acquired loans - purchase credit impaired ("PCI")    2,772 0.20%    3,220 0.24%Total acquired loans    91,125 6.57%    106,887 7.94%Non-acquired loans**    1,296,061 93.43%    1,240,035 92.06%Gross loans    1,387,186      1,346,922  Net deferred costs (fees)    1,363 0.10%    1,183 0.09%Total loans, net of deferred costs $  1,388,549 0.00% $  1,348,105 0.00%         ** Non-acquired loans include loans transferred from acquired pools following release of acquisition accounting FMV adjustments.  At 2019Q2 acquired performing loans, which totaled $88.4 million, included a $1.5 million net acquisition accounting fair market value adjustment, representing a 1.66% “mark” and PCI loans which totaled $2.8 million, included a $684,000 adjustment, representing a 19.78% “mark.” Total deposits increased $64.8 million or 4.53% (9.06% annualized) to $1,494.4 million at 2019Q2 compared to 2018Q4. Non-interest bearing demand deposits have increased $17.3 million or 8.3% to $226.7 million (15.2% of deposits) at 2019Q2 compared to $209.4 million (14.7% of deposits) at 2018Q4. The Bank typically experiences a reduction in transaction deposits during the first quarter as our business customers use transaction account balances to pay expenses and taxes accrued in the prior year.  Transaction accounts decreased $13.3 million in first quarter of 2019 while time deposits increased $22.8 million. During the second quarter of 2019, transaction accounts increased $64.5 million while time deposits decreased $9.2 million.  Reciprocal deposits are used to maximize FDIC insurance available to our customers. Under the Federal Deposit Insurance Act reciprocal deposits are no longer considered brokered deposits unless they exceed 20% of a bank’s liabilities or $5.0 billion. Reciprocal deposits increased $40.0 million or 17.0% to $274.9 million at 2019Q2 compared to $234.9 million at 2018Q4.  Reciprocal deposits as a percentage of the Bank’s liabilities at 2019Q2 were 17.6%. At 2019Q2 and 2018Q4 total deposits consisted of $1,454.4 million and $1,376.5 million in retail deposits and $40.0 million and $53.1 million in brokered deposits. The Bank increased retail deposits $389.3 million or 39.4% during 2018 to $1,376.5 million at December 31, 2018 as a result of the acquisition of County First and organic growth, largely due to growth in municipal relationships. Municipal relationships include multiple accounts with treasury and cash management services, included operating and other accounts. Typically the relationships include other services and products such as payroll, lock box services, positive pay, and automated clearing house transactions. Management believes that the diversity of products and services safeguard the stability of the relationships.  Most of the municipal relationships’ balances are maintained in reciprocal deposits. To ensure available liquidity the Company has enhanced procedures to track municipal deposit concentrations and manage the impact of seasonal balance fluctuations.   At 2019Q2 the Company has on-balance sheet liquidity of $173.2 million, which consists of cash and cash equivalents, available for sale (“AFS”) securities and equity securities carried at fair value through income. The Company generally does not pledge AFS securities. The Company had $222.5 million in available FHLB lines at June 30, 2019, which does not include any pledged AFS securities. In addition, there was $50.8 million in unpledged held-to-maturity securities available for pledging. The Company uses brokered deposits and other wholesale funding to supplement funding when loan growth exceeds core deposit growth and for asset-liability management purposes. Wholesale funding as a percentage of assets decreased to 4.58% or $80.4 million at 2019Q2 compared to 6.43% or $108.5 million at 2018Q4.  Wholesale funding includes brokered deposits and Federal Home Loan Bank (“FHLB”) advances. Wholesale funding has decreased from 18.63% at December 31, 2017 (“2017Q4”) because of the Bank’s increased liquidity from organic deposit growth and the 2018 acquisition. Liquidity improved with the increase in transaction deposits and decrease in wholesale funding that began in 2018. The Company’s net loan to deposit ratio decreased from 103.1% at 2017Q4 to 92.2% at 2019Q2 and 93.5% at 2018Q4.  Total stockholders’ equity increased $9.2 million, or 4.0%, to $163.6 million at 2019Q2 compared to $154.5 million at 2018Q4. This increase primarily resulted from net income of $7.5 million, an increase in accumulated other comprehensive income of $2.9 million and net stock related activities in connection with stock-based compensation and ESOP activity of $126,000. These increases to stockholders’ equity were partially offset by decreases due to common dividends paid of $1.3 million, and repurchases of common stock of $17,000. The Company increased its quarterly dividend from $0.10 in 2018Q4 to $0.125 in 2019. The Company’s ratio of tangible common equity to tangible assets increased to 8.63% at 2019Q2 from 8.41% at 2018Q43. The Company’s Common Equity Tier 1 (“CET1”) ratio was 10.36% at 2019Q2 and 2018Q4. The Company remains well capitalized at June 30, 2019 with a Tier 1 capital to average assets (leverage ratio) of 9.48% at 2019Q2 compared to 9.50% at 2018Q4. Asset Quality Non-accrual loans and OREO to total assets decreased 28 basis points from 1.62% at 2018Q4 to 1.34% at 2019Q2. Troubled debt restructured loans (“TDRs”) decreased $4.5 million or 67.1%, from $6.7 million at 2018Q4 to $2.2 million at 2019Q2.  Non-accrual loans, OREO and TDRs to total assets decreased 55 basis points from 2.02% at 2018Q4 to 1.47% at 2019Q2. Non-accrual loans decreased $5.9 million from $19.3 million at 2018Q4 to $13.3 million at 2019Q2. The decrease in non-accrual loans during the first six months was largely the result of approximately $3.8 million of one classified relationship that was moved into OREO during the first quarter. In addition, a $1.8 million non-accrual loan was sold at carrying value with no charge-offs in 2019Q1. At 2019Q2, $10.8 million or 81% of total non-accruals of $13.3 million relate to four customer relationships.  At 2018Q4, $15.3 million or 79% of total non-accruals of $19.3 million related to four customer relationships. Non-accrual loans of $2.7 million (20%) were current with all payments of principal and interest with no impairment at 2019Q2. Delinquent non-accrual loans were $10.6 million (80%) with specific reserves of $886,000 at 2019Q2. Classified assets decreased $3.9 million from $40.8 million at 2018Q4 to $36.9 million at 2019Q2. Management considers classified assets to be an important measure of asset quality. The following is a breakdown of the Company’s classified and special mention assets at June 30, 2019, March 31, 2019 and December 31, 2018, 2017, 2016 and 2015, respectively: Classified Assets and Special Mention Assets (dollars in thousands) As of 6/30/2019 As of 3/31/2019 As of 12/31/2018 As of 12/31/2017 As of 12/31/2016 As of 12/31/2015 Classified loans             Substandard $  26,146  $  24,277  $  32,226  $  40,306  $  30,463  $  31,943  Doubtful    -     -     -     -     137     861  Loss    -     -     -     -     -     -  Total classified loans    26,146     24,277     32,226     40,306     30,600     32,804  Special mention loans    -     -     -     96     -     1,642  Total classified and special mention loans $  26,146  $  24,277  $  32,226  $  40,402  $  30,600  $  34,446                Classified loans    26,146     24,277     32,226     40,306     30,600     32,804  Classified securities    435     465     482     651     883     1,093  Other real estate owned    10,307     10,949     8,111     9,341     7,763     9,449  Total classified assets $  36,888  $  35,691  $  40,819  $  50,298  $  39,246  $  43,346                Total classified assets as a percentage of total assets  2.10%  2.08%  2.42%  3.58%  2.94%  3.79% Total classified assets as a percentage of Risk Based Capital  18.82%  18.52%  21.54%  32.10%  26.13%  30.19%  The Company reported a $375,000 provision for loan loss expense in 2019Q2 compared to $400,000 in 2018Q2. The provision for loan loss in 2019YTDQ2 was $875,000 compared to $900,000 in 2018YTDQ2. Allowance for loan loss levels decreased to 0.79% of total loans at 2019Q2 compared to 0.81% at 2018Q4. The allowance as a percentage of non-acquired loans decreased five basis points to 0.84% at 2019Q1 from 0.89% at 2018Q4. Net charge-offs in 2019YTDQ2 were $933,000 compared to net charge-offs of $690,000 in 2018YTDQ2. Management’s determination of the adequacy of the allowance is based on a periodic evaluation of the portfolio with consideration given to: overall loss experience; current economic conditions; size, growth and composition of the loan portfolio; financial condition of the borrowers; current appraised values of underlying collateral and other relevant factors that, in management’s judgment, warrant recognition in determining an adequate allowance. Improvements to baseline charge-off factors for the periods used to evaluate the adequacy of the allowance as well as improvements in some qualitative factors, such as improvements in classified assets were offset by increases in other qualitative factors, such as increased portfolio growth and concentrations. The specific allowance is based on management’s estimate of realizable value for particular loans. Management believes that the allowance is adequate. About The Community Financial Corporation - Headquartered in Waldorf, MD, The Community Financial Corporation is the bank holding company for Community Bank of the Chesapeake, a full-service commercial bank with assets of approximately $1.7 billion.  Through its branch offices and commercial lending centers, Community Bank of the Chesapeake offers a broad range of financial products and services to individuals and businesses.  The Company’s banking centers are located at its main office in Waldorf, Maryland, and branch offices in Waldorf, Bryans Road, Dunkirk, Leonardtown, La Plata, Charlotte Hall, Prince Frederick, Lusby and California, Maryland; and downtown Fredericksburg, Virginia. More information about Community Bank of the Chesapeake can be found at www.cbtc.com. Use of non-GAAP Financial Measures - Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures.  The Company’s management uses these non-GAAP financial measures, and believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company.  Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Forward-looking Statements - This news release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results. These forward-looking statements include, without limitation, those relating to the Company’s and Community Bank of the Chesapeake’s future growth and management’s outlook or expectations for revenue, assets, asset quality, profitability, business prospects, net interest margin, non-interest revenue, allowance for loan losses, the level of credit losses from lending, liquidity levels, capital levels, or other future financial or business performance strategies or expectations, and any statements of the plans and objectives of management for future operations products or services, including the expected benefits from, and/or the execution of integration plans relating to the County First acquisition; or any other acquisition that we undertake in the future; plans and cost savings regarding branch closings or consolidation; any statement of expectation or belief; projections related to certain financial metrics; and any statement of assumptions underlying the foregoing. These forward-looking statements express management’s current expectations or forecasts of future events, results and conditions, and by their nature are subject to and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein.  Factors that might cause actual results to differ materially from those made in such statements include, but are not limited to: the synergies and other expected financial benefits from the County First acquisition, or any other acquisition that we undertake in the future; may not be realized within the expected time frames; changes in The Community Financial Corporation or Community Bank of the Chesapeake’s strategy, costs or difficulties related to integration matters might be greater than expected; availability of and costs associated with obtaining adequate and timely sources of liquidity; the ability to maintain credit quality; general economic trends; changes in interest rates; loss of deposits and loan demand to other financial institutions; substantial changes in financial markets; changes in real estate value and the real estate market; regulatory changes; the impact of government shutdowns or sequestration; the possibility of unforeseen events affecting the industry generally; the uncertainties associated with newly developed or acquired operations; the outcome of litigation that may arise; market disruptions and other effects of terrorist activities; and the matters described in “Item 1A Risk Factors” in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2018, and in its other Reports filed with the Securities and Exchange Commission (the “SEC”). The Company’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required under the rules and regulations of the SEC. Data is unaudited as of June 30, 2019. This selected information should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. CONTACTS:  William J. Pasenelli, Chief Executive OfficerTodd L. Capitani, Chief Financial Officer888.745.2265  ____________________________________________ 1 The Company defines operating net income as net income before merger and acquisition costs and the one-time deferred tax adjustment recorded for Tax Cuts and Jobs Act in the three months ended December 31, 2017.  Operating earnings per share, operating return on average assets and operating return on average common equity is calculated using adjusted operating net income. See non-GAAP reconciliation schedules. 2 The Company maintains GAAP and non-GAAP measures for net operating expenses and noninterest expenses to calculate non-GAAP ratios. Adjusted net operating expense and adjusted noninterest expense exclude merger and acquisition costs, OREO gains and losses and expenses, and gains and losses on the sale of investments and other assets not considered part of recurring operations. See Reconciliation of GAAP and non-GAAP financial measures for the calculation of the below ratios: Efficiency Ratio - noninterest expense divided by the sum of net interest income and noninterest income. Net Operating Expense Ratio - noninterest expense less noninterest income divided by average assets. 3 The Company had no intangible assets prior to January 1, 2018. Therefore, tangible common equity and tangible assets were the same as common equity and total assets.       THE COMMUNITY FINANCIAL CORPORATION     SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)            Three Months Ended      CONDENSED CONSOLIDATED INCOME STATEMENT June 30, March 31, December 31, September 30, June 30,      (dollars in thousands, except per share amounts )  2019   2019   2018   2018   2018       Interest and Dividend Income                  Loans, including fees  $  16,366  $  16,129  $  15,461  $  15,085  $  14,483         Interest and dividends on securities    1,677     1,623     1,536     1,311     1,211         Interest on deposits with banks    75     45     45     88     60       Total Interest and Dividend Income    18,118     17,797     17,042     16,484     15,754                        Interest Expense                  Deposits    3,966     3,768     3,486     2,835     2,405         Short-term borrowings    235     334     125     142     217         Long-term debt    658     658     606     746     721       Total Interest Expense    4,859     4,760     4,217     3,723     3,343                        Net Interest Income (NII)    13,259     13,037     12,825     12,761     12,411         Provision for loan losses    375     500     465     40     400                        NII After Provision For Loan Losses     12,884     12,537     12,360     12,721     12,011                         Noninterest Income                Loan appraisal, credit, and misc. charges    138     58     42     81     7       Gain on sale of asset    -     -     -     -     1       Unrealized gains (losses) on equity securities    65     56     5     (8)    (78)      Income from bank owned life insurance    222     217     225     227     224       Service charges    828     730     794     770     747       Total Noninterest Income    1,253     1,061     1,066     1,070     901                        Noninterest Expense                Salary and employee benefits    4,881     4,803     4,633     4,739     5,129       Occupancy expense    753     806     867     744     739       Advertising    163     197     167     165     180       Data processing expense     755     720     786     769     782       Professional fees    606     418     293     442     426       Merger and acquisition costs    -     -     5     11     741       Depreciation of premises and equipment    166     189     202     207     202       Telephone communications    66     52     47     62     69       Office supplies    33     37     37     31     41       FDIC Insurance    160     175     158     185     113       OREO valuation allowance and expenses    432     56     141     165     237       Core deposit intangible amortization    175     181     187     193     199       Other    926     771     718     779     891       Total Noninterest Expense    9,116     8,405     8,241     8,492     9,749                          Income before income taxes    5,021     5,193     5,185     5,299     3,163         Income tax expense    1,394     1,316     1,371     1,441     828       Net Income $  3,627  $  3,877  $  3,814  $  3,858  $  2,335                                         THE COMMUNITY FINANCIAL CORPORATION     SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED) - Continued                            CONDENSED CONSOLIDATED BALANCE SHEETS June 30, March 31, December 31, September 30, June 30,      (dollars in thousands, except per share amounts )  2019   2019   2018   2018   2018       Assets                Cash and due from banks  $  26,894  $  16,711  $  24,064  $  26,718  $  16,718       Federal funds sold    8,350     -     5,700     36,099     -       Interest-bearing deposits with banks    3,102     2,997     3,272     8,778     3,667       Securities available for sale (AFS), at fair value    130,212     128,400     119,976     107,962     79,026       Securities held to maturity (HTM), at amortized cost    95,657     95,495     96,271     97,217     100,842       Equity securities carried at fair value through income    4,603     4,511     4,428     4,359     4,367       Non-marketable equity securities held in other financial institutions   209     209     209     249     249       Federal Home Loan Bank (FHLB) stock - at cost    3,236     3,874     3,821     2,547     4,311       Loans receivable    1,388,549     1,364,437     1,348,105     1,308,654     1,291,537       Less: allowance for loan losses    (10,918)    (10,846)    (10,976)    (10,739)    (10,725)      Net Loans    1,377,631     1,353,591     1,337,129     1,297,915     1,280,812       Goodwill    10,835     10,835     10,835     10,708     10,603       Premises and equipment, net    22,575     22,922     22,922     22,433     22,472       Premises and equipment held for sale    -     -     -     -     600       Other real estate owned (OREO)    10,307     10,949     8,111     8,207     8,305       Accrued interest receivable    5,431     5,331     4,957     5,032     4,786       Investment in bank owned life insurance    36,734     36,513     36,295     36,071     35,843       Core deposit intangible    2,450     2,625     2,806     2,993     3,186       Net deferred tax assets    5,915     6,232     6,693     6,999     6,624       Right of use assets - operating leases    9,729     10,044     -     -     -       Other assets    2,578     708     1,738     2,122     3,877                        Total Assets $  1,756,448  $  1,711,947  $  1,689,227  $  1,676,409  $  1,586,288                        Liabilities and Stockholders' Equity                                 Liabilities                Deposits                Non-interest-bearing deposits $  226,712  $  214,432  $  209,378  $  217,151  $  214,249       Interest-bearing deposits    1,267,730     1,224,735     1,220,251     1,235,220     1,109,619       Total deposits    1,494,442     1,439,167     1,429,629     1,452,371     1,323,868       Short-term borrowings    10,000     35,000     35,000     5,000     36,500       Long-term debt    30,403     20,419     20,436     20,451     30,467       Guaranteed preferred beneficial interest in                  junior subordinated debentures (TRUPs)    12,000     12,000     12,000     12,000     12,000       Subordinated notes - 6.25%    23,000     23,000     23,000     23,000     23,000       Lease liabilities - operating leases    9,797     10,080     -     -     -       Accrued expenses and other liabilities    13,161     13,201     14,680     13,439     13,207                        Total Liabilities    1,592,803     1,552,867     1,534,745     1,526,261     1,439,042                        Stockholders' Equity                Common stock     56     56     56     56     56       Additional paid in capital    84,613     84,497     84,396     84,246     84,106       Retained earnings    78,689     75,757     72,594     69,295     66,021       Accumulated other comprehensive income (loss)    1,044     (473)    (1,846)    (2,633)    (2,182)      Unearned ESOP shares    (757)    (757)    (718)    (816)    (755)                       Total Stockholders' Equity    163,645     159,080     154,482     150,148     147,246                        Total Liabilities and Stockholders' Equity $  1,756,448  $  1,711,947  $  1,689,227  $  1,676,409  $  1,586,288                        Common shares issued and outstanding    5,582,438     5,581,521     5,577,559     5,575,024     5,574,511                                         THE COMMUNITY FINANCIAL CORPORATION     SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED) - Continued            Three Months Ended      SELECTED FINANCIAL INFORMATION AND RATIOS June 30, March 31, December 31, September 30, June 30,      (dollars in thousands, except per share amounts )  2019   2019   2018   2018   2018       KEY OPERATING RATIOS                Return on average assets     0.84 %   0.91 %   0.93 %   0.96 %   0.59 %     Return on average common equity    8.99     9.85     10.01     10.29     6.34       Average total equity to average total assets    9.38     9.27     9.27     9.34     9.32       Interest rate spread    3.06     3.05     3.11     3.22     3.21       Net interest margin     3.33     3.31     3.35     3.43     3.41       Cost of funds    1.27     1.25     1.14     1.03     0.94       Cost of deposits    1.10     1.07     0.99     0.84     0.74       Cost of debt    3.97     3.68     3.84     3.68     3.17       Efficiency ratio     62.82     59.62     59.33     61.40     73.23       Efficiency ratio - Non-GAAP **    60.11     59.46     58.30     60.09     65.51       Non-interest expense to average assets    2.12     1.98     2.00     2.11     2.47       Net operating expense to average assets    1.83     1.73     1.74     1.85     2.24       Net operating expense to average assets - Non-GAAP **    1.74     1.73     1.71     1.80     1.97       Avg. int-earning assets to avg. int-bearing liabilities    121.15     120.52     121.51     121.38     121.22       Net charge-offs to average loans    0.09     0.19     0.07     0.01     0.05       COMMON SHARE DATA                Basic net income per common share $  0.65  $  0.70  $  0.69  $  0.70  $  0.42       Diluted net income per common share    0.65     0.70     0.69     0.70     0.42       Cash dividends paid per common share    0.125     0.125     0.10     0.10     0.10       Basic - weighted average common shares outstanding    5,559,821     5,558,137     5,551,962     5,551,184     5,551,123       Diluted -  weighted average common shares outstanding    5,559,821     5,558,137     5,551,962     5,551,184     5,551,123                        ASSET QUALITY                Total assets $  1,756,448  $  1,711,947  $  1,689,227  $  1,676,409  $  1,586,288       Gross loans    1,387,186     1,363,176     1,346,922     1,307,737     1,290,415       Classified assets    36,888     35,691     40,819     37,369     43,536       Allowance for loan losses    10,918     10,846     10,976     10,739     10,725                        Past due loans - 31 to 89 days    2,187     771     1,134     6,499     582       Past due loans >=90 days    10,459     5,701     11,110     9,666     12,347       Total past due loans (1)    12,646     6,472     12,244     16,165     12,929                        Non-accrual loans (2)     13,288     13,815     19,282     16,350     14,492       Accruing troubled debt restructures (TDRs)    2,196     6,652     6,676     9,839     9,864       Other real estate owned (OREO)    10,307     10,949     8,111     8,207     8,305       Non-accrual loans, OREO and TDRs $  25,791  $  31,416  $  34,069  $  34,396  $  32,661       ASSET QUALITY RATIOS                Classified assets to total assets    2.10 %   2.08 %   2.42 %   2.23 %   2.74 %     Classified assets to risk-based capital    18.82     18.52     21.54     20.12     23.88       Allowance for loan losses to total loans    0.79     0.80     0.81     0.82     0.83       Allowance for loan losses to non-accrual loans    82.16     78.51     56.92     65.68     74.01       Past due loans - 31 to 89 days to total loans     0.16     0.06     0.08     0.50     0.05       Past due loans >=90 days to total loans    0.75     0.42     0.82     0.74     0.96       Total past due (delinquency) to total loans     0.91     0.47     0.91     1.24     1.00       Non-accrual loans to total loans     0.96     1.01     1.43     1.25     1.12       Non-accrual loans and TDRs to total loans     1.12     1.50     1.93     2.00     1.89       Non-accrual loans and OREO to total assets    1.34     1.45     1.62     1.46     1.44       Non-accrual loans, OREO and TDRs to total assets     1.47     1.84     2.02     2.05     2.06                        COMMON SHARE DATA                Book value per common share $  29.31  $  28.50  $  27.70  $  26.93  $  26.41       Tangible book value per common share**    26.93     26.09     25.25     24.47     23.94       Common shares outstanding at end of period    5,582,438     5,581,521     5,577,559     5,575,024     5,574,511                        OTHER DATA                Full-time equivalent employees    195     192     189     190     195       Branches    12     12     12     12     12       Loan Production Offices    5     5     5     5     5                        CAPITAL RATIOS                 Tier 1 capital to average assets    9.48 %   9.41 %   9.50 %   9.51 %   9.46 %     Tier 1 common capital to risk-weighted assets    10.36     10.39     10.36     10.30     10.32       Tier 1 capital to risk-weighted assets    11.19     11.24     11.23     11.18     11.23       Total risk-based capital to risk-weighted assets    13.54     13.64     13.68     13.67     13.78       Common equity to assets    9.32     9.29     9.15     8.96     9.28       Tangible common equity to tangible assets **    8.63     8.57     8.41     8.21     8.49                        ** Non-GAAP financial measure. See reconciliation of GAAP and NON-GAAP measures.            (1) Delinquency excludes Purchase Credit Impaired ("PCI") loans.                (2) Non-accrual loans include all loans that are 90 days or more delinquent and loans that are non-accrual due to the operating results or cash flows of a customer. Non-accrual loans can include loans that are current with all loan payments. At June 30, 2019 and December 31, 2018, the Company had current non-accrual loans of $2.7 million and $8.1 million, respectively.                                        THE COMMUNITY FINANCIAL CORPORATION     SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED) - Continued           This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger and acquisition costs, OREO gains and losses and OREO expenses, and gains and losses on sales of investments or other assets, that are not considered part of recurring operations.  These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.            Three Months Ended        June 30, March 31, December 31, September 30, June 30,      (dollars in thousands, except per share amounts )  2019   2019   2018   2018   2018                        RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES              Efficiency ratio - GAAP basis                Noninterest expense $  9,116  $  8,405  $  8,241  $  8,492  $  9,749       Net interest income plus noninterest income    14,512     14,098     13,891     13,831     13,312                        Efficiency ratio - GAAP basis  62.82%  59.62%  59.33%  61.40%  73.23%                       Efficiency ratio - Non-GAAP basis                Noninterest Expense $  9,116  $  8,405  $  8,241  $  8,492  $  9,749       Non-GAAP adjustments:                Merger and acquisition costs    -     -     (5)    (11)    (741)      OREO valuation allowance and expenses    (432)    (56)    (141)    (165)    (237)      Noninterest expense - as adjusted    8,684     8,349     8,095     8,316     8,771                          Net interest income plus noninterest income    14,512     14,098     13,891     13,831     13,312       Non-GAAP adjustments:                (Gains) losses on sale of asset    -     -     -     -     (1)      Unrealized (gains) losses on equity securities    (65)    (56)    (5)    8     78       Net interest income plus noninterest income - adjusted $  14,447  $  14,042  $  13,886  $  13,839  $  13,389                        Efficiency ratio -Non-GAAP basis  60.11%  59.46%  58.30%  60.09%  65.51%                                        Net operating exp. to average assets ratio - GAAP basis                Average Assets $  1,721,196  $  1,699,188  $  1,644,808  $  1,606,853  $  1,579,645                        Noninterest expense    9,116     8,405     8,241     8,492     9,749       less: noninterest income    (1,253)    (1,061)    (1,066)    (1,070)    (901)      Net operating exp. $  7,863  $  7,344  $  7,175  $  7,422  $  8,848       Net operating exp. to average assets - GAAP basis  1.83%  1.73%  1.74%  1.85%  2.24%                       Net operating exp. to average assets ratio -Non-GAAP basis               Average Assets $  1,721,196  $  1,699,188  $  1,644,808  $  1,606,853  $  1,579,645                        Net operating exp.    7,863     7,344     7,175     7,422     8,848       Non-GAAP adjustments noninterest expense:                 Merger and acquisition costs    -     -     (5)    (11)    (741)      OREO valuation allowance and expenses    (432)    (56)    (141)    (165)    (237)      Non-GAAP adjustments non interest income:                Gains (losses) on sale of asset    -     -     -     -     1       Unrealized gains (losses) on equity securities    65     56     5     (8)    (78)      Net operating exp.-adjusted $  7,496  $  7,344  $  7,034  $  7,238  $  7,793       Net operating exp. to average assets - Non-GAAP basis  1.74%  1.73%  1.71%  1.80%  1.97%                          THE COMMUNITY FINANCIAL CORPORATION SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA (UNAUDITED)           Six Months Ended   CONDENSED CONSOLIDATED INCOME STATEMENT      (dollars in thousands, except per share amounts ) June 30, 2019 June 30, 2018  Interest and Dividend Income        Loans, including fees  $  32,495  $  29,209     Interest and dividends on securities    3,300     2,306     Interest on deposits with banks    120     132   Total Interest and Dividend Income    35,915     31,647          Interest Expense        Deposits    7,734     4,361     Short-term borrowings    569     500     Long-term debt    1,316     1,485   Total Interest Expense    9,619     6,346          Net Interest Income (NII)    26,296     25,301     Provision for loan losses    875     900          NII After Provision For Loan Losses     25,421     24,401          Noninterest Income      Loan appraisal, credit, and misc. charges    196     60   Gain on sale of asset    -     1   Unrealized gains (losses) on equity securities    121     (78)  Income from bank owned life insurance    439     450   Service charges    1,558     1,499   Total Noninterest Income    2,314     1,932          Noninterest Expense      Salary and employee benefits    9,684     10,176   Occupancy expense    1,559     1,505   Advertising    360     339   Data processing expense     1,475     1,465   Professional fees    1,024     778   Merger and acquisition costs    -     3,609   Depreciation of premises and equipment    355     401   Telephone communications    118     168   Office supplies    70     81   FDIC Insurance    335     311   OREO valuation allowance and expenses    488     351   Core deposit intangible amortization    356     404   Other    1,697     1,828   Total Noninterest Expense    17,521     21,416            Income before income taxes    10,214     4,917     Income tax expense    2,710     1,361   Net Income $  7,504  $  3,556          THE COMMUNITY FINANCIAL CORPORATION SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA (UNAUDITED) - Continued           Six Months Ended    June 30, 2019 June 30, 2018  KEY OPERATING RATIOS      Return on average assets     0.88 %   0.45 % Return on average common equity    9.41     4.84   Average total equity to average total assets    9.32     9.30   Interest rate spread    3.06     3.28   Net interest margin     3.32     3.47   Cost of funds    1.26     0.89   Cost of deposits    1.08     0.68   Cost of debt    3.81     2.84   Efficiency ratio     61.24     78.64   Efficiency ratio - Non-GAAP**    59.79     63.92   Non-interest expense to average assets    2.05     2.71   Net operating expense to average assets    1.78     2.47   Net operating exp. to average assets - Non-GAAP**    1.74     1.95   Avg. int-earning assets to avg. int-bearing liabilities    120.84     121.16   Net charge-offs to average loans    0.14     0.11   COMMON SHARE DATA      Basic net income per common share $  1.35  $  0.64   Diluted net income per common share    1.35     0.64   Cash dividends paid per common share    0.25     0.20   Weighted average common shares outstanding:        Basic    5,558,984     5,549,428     Diluted    5,558,984     5,549,428          ** Non-GAAP financial measure. See reconciliation of GAAP and NON-GAAP measures.           THE COMMUNITY FINANCIAL CORPORATION SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA (UNAUDITED) - Continued        This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger and acquisition costs, OREO gains and losses and OREO expenses, and gains and losses on sales of investments or other assets, that are not considered part of recurring operations.  These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.    Six Months Ended     June 30, 2019 June 30, 2018         RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES    Efficiency ratio - GAAP basis      Noninterest expense $  17,521  $  21,416   Net interest income plus noninterest income    28,610     27,233          Efficiency ratio - GAAP basis  61.24%  78.64%         Efficiency ratio - Non-GAAP basis      Noninterest Expense $  17,521  $  21,416   Non-GAAP adjustments:      Merger and acquisition costs    -     (3,609)  OREO valuation allowance and expenses    (488)    (351)  Noninterest expense - as adjusted    17,033     17,456          Net interest income plus noninterest income    28,610     27,233   Non-GAAP adjustments:      (Gains) losses on sale of asset    -     (1)  Unrealized (gains) losses on equity securities    (121)    78   Net interest income plus noninterest income - adjusted $  28,489  $  27,310          Efficiency ratio -Non-GAAP basis  59.79%  63.92%                Net operating exp. to average assets ratio - GAAP basis      Average Assets $  1,710,253  $  1,580,586          Noninterest expense    17,521     21,416   less: noninterest income    (2,314)    (1,932)  Net operating exp. $  15,207  $  19,484   Net operating exp. to average assets - GAAP basis  1.78%  2.47%         Net operating exp. to average assets ratio -Non-GAAP basis     Average Assets $  1,710,253  $  1,580,586          Net operating exp.    15,207     19,484   Non-GAAP adjustments noninterest expense:       Merger and acquisition costs    -     (3,609)  OREO valuation allowance and expenses    (488)    (351)  Non-GAAP adjustments non interest income:      Gains (losses) on sale of asset    -     1   Unrealized gains (losses) on equity securities    121     (78)  Net operating exp.-adjusted $  14,840  $  15,447   Net operating exp. to average assets - Non-GAAP basis  1.74%  1.95%     THE COMMUNITY FINANCIAL CORPORATION  RECONCILIATION OF NON-GAAP MEASURES  THREE MONTHS ENDED (UNAUDITED)              Reconciliation of US GAAP Net Income, Earnings Per Share (EPS), Return on Average Assets (ROAA) and Return on Average Common Equity  (ROACE) to Non-GAAP Operating Net Income, EPS, ROAA and ROACE   This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger and acquisition costs and the fourth quarter 2017 income tax expense attributable to the revaluation of deferred tax assets as a result of the reduction in the corporate income tax rate under the recently enacted Tax Cuts and Jobs Act. These expenses are not considered part of recurring operations, such as “operating net income,” “operating earnings per share,” “operating return on average assets,” and “operating return on average common equity.” These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.                         (dollars in thousands, except per share amounts) June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018                         Net income  (loss) (as reported) $  3,627  $  3,877  $  3,814  $  3,858  $  2,335  Impact of  Tax Cuts and Jobs Act    -     -     -     -     -  Merger and acquisition costs (net of tax)    -     -     4     8     546  Non-GAAP operating net income  $  3,627  $  3,877  $  3,818  $  3,866  $  2,881                          Income before income taxes (as reported) $  5,021  $  5,193  $  5,185  $  5,299  $  3,163  Merger and acquisition costs ("M&A")    -     -     5     11     741  Adjusted pretax income    5,021     5,193     5,190     5,310     3,904  Income tax expense    1,394     1,316     1,372     1,444     1,023  Non-GAAP operating net income  $  3,627  $  3,877  $  3,818  $  3,866  $  2,881              GAAP diluted earnings per share ("EPS") $  0.65  $  0.70  $  0.69  $  0.70  $  0.42  Non-GAAP operating diluted EPS before M&A $  0.65  $  0.70  $  0.69  $  0.70  $  0.52              GAAP return on average assets ("ROAA")   0.84%  0.91%  0.93%  0.96%  0.59% Non-GAAP operating ROAA before M&A  0.84%  0.91%  0.93%  0.96%  0.73%             GAAP return on average common equity ("ROACE")  8.99%  9.85%  10.01%  10.29%  6.34% Non-GAAP operating ROACE before M&A  8.99%  9.85%  10.02%  10.31%  7.82%             Net income (as reported) $  3,627  $  3,877  $  3,814  $  3,858  $  2,335  Weighted average common shares outstanding    5,559,821     5,558,137     5,551,962     5,551,184     5,551,123  Average assets $  1,721,196  $  1,699,188  $  1,644,808  $  1,606,853  $  1,579,645  Average equity    161,376     157,443     152,406     150,013     147,295     THE COMMUNITY FINANCIAL CORPORATION   RECONCILIATION OF NON-GAAP MEASURES   YEARS ENDED (UNAUDITED)          Reconciliation of US GAAP Net Income, Earnings Per Share (EPS), Return on Average Assets (ROAA) and Return on Average Common Equity  (ROACE) to Non-GAAP Operating Net Income, EPS, ROAA and ROACE     This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger and acquisition costs. These expenses are not considered part of recurring operations, such as “operating net income,” “operating earnings per share,” “operating return on average assets,” and “operating return on average common equity.” These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.           Six Months  (dollars in thousands, except per share amounts) June 30, 2019 June 30, 2018                Net income (as reported) $  7,504  $  3,556   Impact of  Tax Cuts and Jobs Act    -     -   Merger and acquisition costs (net of tax)    -     2,681   Non-GAAP operating net income  $  7,504  $  6,237                 Income before income taxes (as reported) $  10,214  $  4,917   Merger and acquisition costs ("M&A")    -     3,609   Adjusted pretax income    10,214     8,526   Income tax expense    2,710     2,289   Non-GAAP operating net income  $  7,504  $  6,237          GAAP diluted earnings per share ("EPS") $  1.35  $  0.64   Non-GAAP operating diluted EPS before M&A $  1.35  $  1.12          GAAP return on average assets ("ROAA')   0.88%  0.45%  Non-GAAP operating ROAA before M&A  0.88%  0.79%         GAAP return on average common equity ("ROACE")  9.41%  4.84%  Non-GAAP operating ROACE before M&A  9.41%  8.49%         Net income (as reported) $  7,504  $  3,556   Weighted average common shares outstanding    5,558,984     5,549,428   Average assets $  1,710,253  $  1,580,586   Average equity    159,420     147,005      THE COMMUNITY FINANCIAL CORPORATION RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)            Reconciliation of US GAAP total assets, common equity, common equity to assets and book value to Non-GAAP tangible assets, tangible common equity, tangible common equity to tangible assets and tangible book value. This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain performance measures, which exclude intangible assets.  These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.                      (dollars in thousands, except per share amounts) June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018           Total assets $  1,756,448  $  1,711,947  $  1,689,227  $  1,676,409  $  1,586,288 Less: intangible assets          Goodwill    10,835     10,835     10,835     10,708     10,603 Core deposit intangible    2,450     2,625     2,806     2,993     3,186 Total intangible assets    13,285     13,460     13,641     13,701     13,789 Tangible assets $  1,743,163  $  1,698,487  $  1,675,586  $  1,662,708  $  1,572,499            Total common equity $  163,645  $  159,080  $  154,482  $  150,148  $  147,246 Less: intangible assets    13,285     13,460     13,641     13,701     13,789 Tangible common equity $  150,360  $  145,620  $  140,841  $  136,447  $  133,457            Common shares outstanding at end of period    5,582,438     5,581,521     5,577,559     5,575,024     5,574,511            GAAP common equity to assets  9.32%  9.29%  9.15%  8.96%  9.28%Non-GAAP tangible common equity to tangible assets  8.63%  8.57%  8.41%  8.21%  8.49%           GAAP common book value per share $  29.31  $  28.50  $  27.70  $  26.93  $  26.41 Non-GAAP tangible common book value per share $  26.93  $  26.09  $  25.25  $  24.47  $  23.94    THE COMMUNITY FINANCIAL CORPORATIONAVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME UNAUDITED  For the Three Months Ended June 30, For the Three Months Ended  2019   2018  June 30, 2019 March 31, 2019     Average     Average     Average     Average Average   Yield/ Average   Yield/ Average   Yield/ Average   Yield/dollars in thousandsBalance Interest Cost Balance Interest Cost Balance Interest Cost Balance Interest CostAssets                       Interest-earning assets:                       Loan portfolio $  1,354,456 $  16,366  4.83% $  1,266,830 $  14,483 4.57% $  1,354,456 $  16,366 4.83% $  1,344,656 $  16,129 4.80%Investment securities, federal funds                       sold and interest-bearing deposits   240,160    1,752 2.92%    190,849    1,271 2.66%    240,160    1,752 2.92%    232,433    1,668 2.87%Total Interest-Earning Assets   1,594,616    18,118 4.54%    1,457,679    15,754 4.32%    1,594,616    18,118 4.54%    1,577,089    17,797 4.51%Cash and cash equivalents   20,306        25,142        20,306        17,661    Goodwill   10,835        10,280        10,835        10,835    Core deposit intangible   2,564        3,316        2,564        2,743    Other assets   92,875        83,228        92,875        90,860    Total Assets$   1,721,196      $   1,579,645      $   1,721,196      $   1,699,188     3                       Liabilities and Stockholders' Equity                       Interest-bearing liabilities:                       Savings$  70,472 $  18 0.10% $  74,470 $  13 0.07% $  70,472 $  18 0.10% $  70,536 $  17 0.10%Interest-bearing demand and money                       market accounts   683,572    1,655 0.97%    550,872    796 0.58%    683,572    1,655 0.97%    680,188    1,705 1.00%Certificates of deposit   472,118    2,293 1.94%    458,801    1,596 1.39%    472,118    2,293 1.94%    449,962    2,046 1.82%Long-term debt    20,189    148 2.93%    37,560    226 2.41%    20,189    148 2.93%    20,425    146 2.86%Short-term debt   34,874    235 2.70%    45,824    217 1.89%    34,874    235 2.70%    52,422    334 2.55%Subordinated Notes   23,000    359 6.24%    23,000    359 6.24%    23,000    359 6.24%    23,000    359 6.24%Guaranteed preferred beneficial interest                        in junior subordinated debentures   12,000    151 5.03%    12,000    136 4.53%    12,000    151 5.03%    12,000    153 5.10%                        Total Interest-Bearing Liabilities   1,316,225    4,859 1.48%    1,202,527    3,343 1.11%    1,316,225    4,859 1.48%    1,308,533    4,760 1.46%                        Noninterest-bearing demand deposits   218,381        216,968        218,381        209,321    Other liabilities   25,214        12,855        25,214        23,891    Stockholders' equity   161,376        147,295        161,376        157,443    Total Liabilities and Stockholders' Equity$   1,721,196      $   1,579,645      $   1,721,196      $   1,699,188                             Net interest income  $  13,259     $  12,411     $  13,259     $  13,037                          Interest rate spread    3.06%     3.21%     3.06%     3.05%Net yield on interest-earning assets    3.33%     3.41%     3.33%     3.31%Ratio of average interest-earning                       assets to average interest bearing                       liabilities    121.15%     121.22%     121.15%     120.52%Average loans to average deposits    93.76%     97.37%     93.76%     95.37%Average transaction deposits to total average deposits **   67.32%     64.74%     67.32%     68.09%                        Cost of funds    1.27%     0.94%     1.27%     1.25%Cost of deposits    1.10%     0.74%     1.10%     1.07%Cost of debt    3.97%     3.17%     3.97%     3.68%                        Note: Loan average balance includes non-accrual loans. There are no tax equivalency adjustments. There was $209,000, $152,000 and $172,000 of accretion interest  for the three months ended June 30, 2019 and 2018, and March 31, 2019, respectively.** Transaction deposits exclude time deposits.                         THE COMMUNITY FINANCIAL CORPORATION  AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME   UNAUDITED      For the Six Months Ended June 30,     2019   2018         Average     Average    Average   Yield/ Average   Yield/   dollars in thousandsBalance Interest Cost Balance Interest Cost   Assets              Interest-earning assets:              Loan portfolio $  1,349,583 $  32,495  4.82% $  1,270,075 $  29,209 4.60%   Investment securities, federal funds              sold and interest-bearing deposits   236,318    3,420 2.89%    187,228    2,438 2.60%   Total Interest-Earning Assets   1,585,901    35,915 4.53%    1,457,303    31,647 4.34%   Cash and cash equivalents   18,991        25,595       Goodwill   10,835        10,213       Core deposit intangible   2,653        3,397       Other assets   91,873        84,078       Total Assets$   1,710,253      $   1,580,586        6              Liabilities and Stockholders' Equity              Interest-bearing liabilities:              Savings$  70,504 $  35 0.10% $  74,706 $  25 0.07%   Interest-bearing demand and money              market accounts   681,889    3,360 0.99%    524,082    1,339 0.51%   Certificates of deposit   461,101    4,339 1.88%    463,995    2,997 1.29%   Long-term debt    20,306    293 2.89%    43,933    510 2.32%   Short-term debt   43,600    569 2.61%    61,094    500 1.64%   Subordinated Notes   23,000    719 6.25%    23,000    719 6.25%   Guaranteed preferred beneficial interest               in junior subordinated debentures   12,000    304 5.07%    12,000    256 4.27%                  Total Interest-Bearing Liabilities   1,312,400    9,619 1.47%    1,202,810    6,346 1.06%                  Noninterest-bearing demand deposits   213,876        218,327       Other liabilities   24,557        12,444       Stockholders' equity   159,420        147,005       Total Liabilities and Stockholders' Equity$   1,710,253      $   1,580,586                       Net interest income  $  26,296     $  25,301                    Interest rate spread    3.06%     3.28%   Net yield on interest-earning assets    3.32%     3.47%   Ratio of average interest-earning              assets to average interest bearing              liabilities    120.84%     121.16%   Average loans to average deposits    94.55%     99.14%   Average transaction deposits to total average deposits **   67.70%     63.78%                  Cost of funds    1.26%     0.89%   Cost of deposits    1.08%     0.68%   Cost of debt    3.81%     2.84%                  Note: Loan average balance includes non-accrual loans. There are no tax equivalency adjustments. There was $381,000 and $473,000 of accretion interest during the six months ended June 30, 2019 and 2018, respectively. ** Transaction deposits exclude time deposits.                THE COMMUNITY FINANCIAL CORPORATION SUMMARY OF LOAN PORTFOLIO (UNAUDITED) (dollars in thousands)                      BY LOAN TYPE June 30, 2019 % March 31, 2019 % December 31, 2018 % September 30, 2018 % June 30, 2018 %                     Commercial real estate $  917,948 66.18% $  891,165 65.37% $  878,016 65.18% $  847,945 64.84% $  828,445 64.20%Residential first mortgages    156,670 11.29%    156,653 11.49%    156,709 11.63%    156,565 11.97%    163,090 12.64%Residential rentals    121,990 8.79%    124,518 9.13%    124,298 9.23%    125,383 9.59%    127,469 9.88%Construction and land development    35,662 2.57%    32,798 2.41%    29,705 2.21%    28,788 2.20%    28,647 2.22%Home equity and second mortgages    35,866 2.59%    36,746 2.70%    35,561 2.64%    36,360 2.78%    37,026 2.87%Commercial loans    67,617 4.87%    70,725 5.19%    71,680 5.32%    62,083 4.75%    57,519 4.46%Consumer loans    967 0.07%    851 0.06%    751 0.06%    730 0.06%    801 0.06%Commercial equipment     50,466 3.64%    49,720 3.65%    50,202 3.73%    49,883 3.81%    47,418 3.67%Gross loans    1,387,186 100.00%    1,363,176 100.00%    1,346,922 100.00%    1,307,737 100.00%    1,290,415 100.00%Net deferred costs (fees)    1,363 0.10%    1,261 0.09%    1,183 0.09%    917 0.07%    1,122 0.09%Total loans, net of deferred costs $  1,388,549   $  1,364,437   $  1,348,105   $  1,308,654   $  1,291,537                                            BY ACQUIRED AND NON-ACQUIRED June 30, 2019 % March 31, 2019 % December 31, 2018 % September 30, 2018 % June 30, 2018 %                     Acquired loans - performing $  88,353 6.37% $  98,136 7.20% $  103,667 7.70% $  107,142 8.19% $  115,157 8.92%Acquired loans - purchase credit impaired ("PCI")   2,772 0.20%    3,227 0.24%    3,220 0.24%    3,511 0.27%    3,839 0.30%Total acquired loans    91,125 6.57%    101,363 7.44%    106,887 7.94%    110,653 8.46%    118,996 9.22%Non-acquired loans**    1,296,061 93.43%    1,261,813 92.56%    1,240,035 92.06%    1,197,084 91.54%    1,171,419 90.78%Gross loans    1,387,186      1,363,176      1,346,922      1,307,737      1,290,415  Net deferred costs (fees)    1,363 0.10%    1,261 0.09%    1,183 0.09%    917 0.07%    1,122 0.09%Total loans, net of deferred costs $  1,388,549   $  1,364,437   $  1,348,105   $  1,308,654   $  1,291,537                       ** Non-acquired loans include loans transferred from acquired pools following release of acquisition accounting FMV adjustments.    THE COMMUNITY FINANCIAL CORPORATION  SUMMARY OF LOAN PORTFOLIO (UNAUDITED)                      June 30, 2019 December 31, 2018 (dollars in thousands) PCI All other loans** Total % PCI All other loans** Total %                   Commercial real estate $  1,725 $  916,223 $  917,948 66.18% $  1,785 $  876,231 $  878,016 65.18% Residential first mortgages    451    156,219    156,670 11.29%    466    156,243    156,709 11.63% Residential rentals    327    121,663    121,990 8.79%    897    123,401    124,298 9.23% Construction and land development    -    35,662    35,662 2.57%    -    29,705    29,705 2.21% Home equity and second mortgages    269    35,597    35,866 2.59%    72    35,489    35,561 2.64% Commercial loans    -    67,617    67,617 4.87%    -    71,680    71,680 5.32% Consumer loans    -    967    967 0.07%    -    751    751 0.06% Commercial equipment     -    50,466    50,466 3.64%    -    50,202    50,202 3.73% Gross loans    2,772    1,384,414    1,387,186 100.00%    3,220    1,343,702    1,346,922 100.00% Net deferred costs (fees)    -    1,363    1,363 0.10%    -    1,183    1,183 0.09% Total loans, net of deferred costs $  2,772 $  1,385,777 $  1,388,549   $  3,220 $  1,344,885 $  1,348,105                     **All other loans include loans transferred from acquired pools following release of acquisition accounting FMV adjustments. There were no acquired loans before December 31, 2017.        THE COMMUNITY FINANCIAL CORPORATION  ALLOWANCE FOR LOAN LOSSES   THREE MONTHS ENDED (UNAUDITED)              (dollars in thousands) June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018             Beginning of period $  10,846  $  10,976  $  10,739  $  10,725  $  10,471              Charge-offs    (333)    (742)    (254)    (219)    (164) Recoveries    30     112     26     193     18  Net charge-offs    (303)    (630)    (228)    (26)    (146)             Provision for loan losses    375     500     465     40     400  End of period $  10,918  $  10,846  $  10,976  $  10,739  $  10,725              Net charge-offs to average loans (annualized)  -0.09%  -0.19%  -0.07%  -0.01%  -0.05%             Breakdown of general and specific allowance as a percentage of gross loans       General allowance $  9,737  $  9,788  $  9,796  $  9,729  $  9,359  Specific allowance    1,181     1,058     1,180     1,010     1,366    $  10,918  $  10,846  $  10,976  $  10,739  $  10,725  General allowance  0.70%  0.72%  0.73%  0.74%  0.73% Specific allowance  0.09%  0.08%  0.08%  0.08%  0.11% Allowance to gross loans  0.79%  0.80%  0.81%  0.82%  0.83%             Allowance to non-acquired gross loans  0.84%  0.86%  0.89%  0.90%  0.92%             Allowance+ Non-PCI FV Mark $  12,410  $  12,540  $  12,836  $  12,735  $  12,882  Allowance+ Non-PCI FV Mark to gross loans  0.89%  0.92%  0.95%  0.97%  1.00%    THE COMMUNITY FINANCIAL CORPORATION  SUMMARY OF  DEPOSITS (UNAUDITED) (dollars in thousands)      June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 (dollars in thousands) Balance % Balance % Balance % Balance % Balance % Noninterest-bearing demand $  226,712 15.17% $  214,432 14.90% $  209,378 14.65% $  217,151 14.95% $  214,249 16.18% Interest-bearing:                     Demand    458,686 30.69%    411,029 28.56%    437,170 30.58%    448,299 30.87%    307,986 23.26% Money market deposits    277,823 18.59%    272,994 18.97%    266,160 18.62%    274,039 18.87%    281,975 21.30% Savings    70,652 4.73%    70,873 4.92%    69,892 4.89%    71,003 4.89%    73,142 5.52% Certificates of deposit    460,569 30.82%    469,839 32.65%    447,029 31.27%    441,879 30.42%    446,516 33.73% Total interest-bearing    1,267,730 84.83%    1,224,735 85.10%    1,220,251 85.35%    1,235,220 85.05%    1,109,619 83.82%                       Total Deposits $  1,494,442 100.00% $  1,439,167 100.00% $  1,429,629 100.00% $  1,452,371 100.00% $  1,323,868 100.00%                       Transaction accounts $   1,033,873  69.18% $   969,328  67.35% $   982,600  68.73% $   1,010,492  69.58% $   877,352  66.27%                          Source: The Community Financial Corporation

In This Story