updated 5/10/2011 10:16:33 AM ET 2011-05-10T14:16:33

STAUNTON, Va., May 10, 2011 (GLOBE NEWSWIRE) -- Community Financial Corporation (Nasdaq:CFFC), a holding company whose sole subsidiary is Community Bank, Staunton, Virginia, today reported results for the quarter and fiscal year ended March 31, 2011. For the quarter ended March 31, 2011, Community Financial reported earnings of $1,032,000, or $0.19 per diluted common share, compared to $919,000, or $0.17 per diluted common share, for the same period last year. The increase in net income for the current quarter compared to the March 31, 2010 quarter was primarily due to a decrease in the provision for loan losses of $253,000, an increase in net interest income of $241,000 and a decrease in noninterest expense of $425,000, partially offset by an increase in income taxes of $848,000. The decrease in the provision for loan losses is related to both a decrease in our anticipated charge-offs and a decrease in our lending, primarily construction, for the current quarter compared to the March, 2010 quarter. Charge-offs net of recoveries for the quarter ended March 31, 2011 were $3.0 million compared to $788,000 for the March 31, 2010 quarter.

Total interest income decreased by $372,000, or 5.2% to $6,775,000 during the March 31, 2011 quarter compared to the March 31, 2010 quarter. The decrease was the result of both a decline in the yield on interest earning assets and a decrease in the volume of interest earning assets. Total interest expense decreased by $613,000, or 35.7% to $1,102,000 for the fourth quarter of 2011 compared to the same period in 2010 as a result of both the decrease in the interest rates paid on interest-bearing liabilities and the decrease in the volume of interest-bearing liabilities, in particular, our certificates of deposit. The interest rate spread increased by 42 basis points to 4.60% for the quarter ended March 31, 2011 compared to 4.18% for the same period in 2010.

Non-interest income increased by $43,000, or 8.4% to $920,000 for the quarter ended March 31, 2011 compared to the March 31, 2010 quarter. The increase in non-interest income is due to both an increase in transaction account charges and loan fees. Non-interest expenses decreased $425,000, or 10.9% to $3,482,000 for the March 31, 2011 quarter compared to the March 31, 2010 quarter. The decrease in non-interest expenses was due primarily to federal deposit insurance premiums and compensation decreases, partially offset by an increase in real estate owned expenses.

Community recorded net income for the fiscal year ended March 31, 2011 of $1,522,000 or $0.18 diluted earnings per common share, compared to net income of $3,592,000 or $0.65 diluted earnings per common share for fiscal year ended March 31, 2010. The decrease in net income for the fiscal year ended March 31, 2011 compared to the fiscal year ended March 31, 2010 was attributable primarily to an increase in the provision for loan loss of $4,139,000. Net interest income increased over fiscal 2010 due to an increase in the interest rate spread for the fiscal year ended March 31, 2011 compared to March 31, 2010. The interest rate spread increased by 42 basis points to 4.34% for the fiscal year ended March 31, 2011 compared to 3.92% for the same period in 2010.      

The Company's total assets decreased $17.0 million, or 3.1% to $530.2 million at March 31, 2011 from $547.2 million at March 31, 2010 due to a decrease in loans receivable, principally construction loans, of $23.8 million. The $19.4 million, or 4.9% decrease in total deposits to $379.0 million at March 31, 2011, is due to a decrease in time deposits, partially offset by an increase in interest-bearing transaction accounts. Stockholders' equity increased $911,000, or 1.9% to $49.9 million at March 31, 2011, from $49.0 million at March 31, 2010, due to earnings for the year ended March 31, 2011 and partially offset by cash dividend payments on our preferred stock.

At March 31, 2011, non-performing assets totaled approximately $16.6 million or 3.12% of assets compared to $17.7 million or 3.24% of assets at March 31, 2010. Our allowance for loan losses to non-performing assets was 47.4% and to total loans was 1.61% at March 31, 2011 compared to 45.5% and 1.58%, respectively at March 31, 2010. The allowance for loan losses was determined based on the degree of impairment on individual loans after an evaluation by management. The decrease in non-performing assets consisted of a decrease of $8.4 million of nonaccrual loans, which included residential permanent and construction loans, and commercial real estate loans, offset by an increase of $7.2 million of real estate owned and repossessed assets. Charge-offs net of recoveries for the fiscal year ended March 31, 2011 were $8.4 million compared to $1.9 million for the year ended March 31, 2010. Also the Bank's regulatory risk-based capital increased from 11.25% at March 31, 2010 to 12.28% at March 31, 2011.

At March 31, 2011, Community Bank was classified as a "well capitalized" institution. Community Bank, the wholly owned subsidiary of Community Financial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Verona, Lexington, Buena Vista and Virginia Beach. Community Financial Corporation is traded on the Nasdaq Capital Market, under the symbol CFFC.

Except for the historical information in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including, but not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and non-performing assets in our loan portfolio, resulting in our allowance for loan losses not being adequate to cover actual losses which may require us to materially increase our reserves, changes in economic conditions in the Company's market areas, changes in the financial condition or business prospects of the Company's borrowers, changes in policies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interest rates and the relationship between long and short term rates, operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

Community Financial Corporation (Nasdaq:CFFC)
       
Selected Financial Condition Data      
(Dollars in thousands)     Percent
  Unaudited   Increase
  March 31, 2011 March 31, 2010 (Decrease)
       
Total assets $530,243 $547,180 (3.1)%
Loans receivable, net 478,293 502,126 (4.7)
Investment securities 2,237 1,771 26.3
Real estate owned and repossessed assets 10,384 3,182 226.3
Deposits 379,045 398,420 (4.9)
Borrowings 98,445 97,096 1.4
Stockholders' equity 49,923 49,012 1.9
       
       
Selected Operations Data      
(Dollars in thousands)      
  Three Months Ended Percent
   (Unaudited) Increase
  March 31, 2011 March 31, 2010 (Decrease)
       
Interest income $6,775 $7,147 (5.2)%
Interest expense 1,102 1,715 (35.7)
Net interest income 5,673 5,432 4.4
Provision for loan losses 1,479 1,732 (14.6)
Net interest income after provision for loan losses 4,194 3,700 13.3
Noninterest income 920 877 4.9
Noninterest expense 3,481 3,907 10.9
Income tax expense(benefit)  599 (249) 340.6
Net income  1,032 919 12.3
Effective dividend on preferred stock (188) (188) ------
Net income available to common stockholders 844 731 15.5
       
      Percent
  At or for the Quarter Ended Increase
  March 31, 2011 March 31, 2010 (Decrease)
       
Return on average equity 8.34% 7.49% 11.3%
Return on average assets .78 .67 16.4
Interest rate spread 4.60 4.18 10.0
Diluted earnings per common share .19 0.17 11.8
Dividends paid on common shares .00 .00 0.0
       
       
  Year Ended Percent
   (Unaudited) Increase
(Dollars in thousands) March 31, 2011  March 31, 2010 (Decrease)
       
Interest income $27,585 $28,198 (2.2)%
Interest expense 5,612 8,081 (30.6)
Net interest income 21,973 20,117 9.2
Provision for loan losses 8,170 4,031 102.7
Net interest income after provision for loan losses 13,803 16,086 (14.2)
Noninterest income 4,089 3,850 6.2
Noninterest expense 15,527 14,995 3.5
Income tax expense 843 1,349 (37.5)
Net income 1,522 3,592 (57.6)
Effective dividend on preferred stock (753) (753) ------
Net income available to common stockholders 769 2,839 (72.9)
       
       
       
Other Selected Data     Percent
  At or for the Year Ended Increase
  March 31, 2011 March 31, 2010 (Decrease)
       
Return on average equity 3.04% 7.45% (59.2)%
Return on average assets 0.28 .67 (58.2)
Interest rate spread 4.34 3.92 10.7
Non-performing assets(1) to total assets 3.12 3.24 (3.7)
Allowance for loan losses to total loans 1.61 1.58 1.9
Allowance for loan losses to nonperforming      
 assets  47.4 45.5 4.2
 
(1) Includes nonaccrual loans, and other real estate owned and repossessed assets. 
       
Per Share Data     Percent
  At or for the Year Ended Increase
  March 31, 2011 March 31, 2010 (Decrease)
       
Diluted earnings per common share $0.18 $0.65 (72.3)%
Book value per common share 8.55 8.34 2.5
Dividends paid on common shares .00 .00 0.0
Common shares outstanding 4,361,658 4,361,658 0.0
CONTACT: R. Jerry Giles, Senior Vice President/Chief Financial Officer
         TELEPHONE #:  540-886-0796

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