As filed with the Securities and Exchange Commission on October 2, 2017

Registration No. 333-220455​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

THE COMMUNITY FINANCIAL CORPORATION

(Exact name of the registrant as specified in its charter)

William J. Pasenelli
Vice Chairman, President and
Chief Executive Officer
3035 Leonardtown Road
Waldorf, Maryland 20601
(301) 645-5601
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and the conditions to the closing of the merger described herein have been satisfied or waived.

If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:   ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of  “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY — SUBJECT TO COMPLETION — DATED OCTOBER 2, 2017

Proxy StatementProspectus

MERGER PROPOSED — YOUR VOTE IS NEEDED

To the Stockholders of County First Bank:

On July 31, 2017, The Community Financial Corporation, a Maryland corporation (which we refer to as “Community Financial”), Community Bank of the Chesapeake, a Maryland-chartered commercial bank and wholly-owned subsidiary of Community Financial (which we refer to as “Community Bank”), and County First Bank, a Maryland-chartered bank (which we refer to as “County First”), entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of Community Bank and County First. Under the terms of the merger agreement, County First will merge with and into Community Bank with Community Bank continuing as the surviving bank which we refer to as the “merger.”

At the effective time of the merger, each outstanding share of the common stock, par value $1.00 per share, of County First (which we refer to as “County First common stock”), except for (i) dissenting shares and (ii) specified shares of County First common stock owned by County First, Community Financial or Community Bank, will be converted into the right to receive (x) 0.9543 shares (such number being referred to as the “exchange ratio” and such shares being referred to as “stock consideration”) of the common stock, par value $0.01 per share, of Community Financial (which we refer to as the “Community Financial common stock”), together with cash in lieu of fractional shares, (y) $1.00 in cash (which we refer to as “cash consideration”), and (z) a contingent amount of cash, ranging from $0 to $2.24 per share (such per share amount of cash being referred to as the “contingent cash consideration”), that will be determined in accordance with the terms of the merger agreement by dividing the aggregate value of certain County First assets by the number of shares of County First common stock outstanding at the effective time of the merger. The maximum aggregate amount of the contingent cash consideration that may be paid in the merger is $2,154,303. In this proxy statement/prospectus, we refer to the number of shares of Community Financial common stock, the cash consideration and the contingent cash consideration that a County First stockholder will receive in the merger, together with cash in lieu of fractional shares, as the “merger consideration.”

Although the number of shares of Community Financial common stock that holders of County First common stock (which we refer to as the “County First stockholders”) will be entitled to receive is fixed, the market value of the stock consideration will fluctuate with the market price of Community Financial common stock and will not be known at the time County First stockholders vote on the merger. The amount of contingent cash consideration that County First stockholders will be entitled to receive, if any, will also not be known at the time County First stockholders vote on the merger. Further, as described in more detail elsewhere in this proxy statement/prospectus, under the terms of the merger agreement, if the average price of Community Financial common stock over a specified period of time decreases below certain specified thresholds, County First would have a right to terminate the merger agreement, unless Community Financial elects to increase the cash consideration. On July 31, 2017, the last full trading day before the public announcement of the merger, the closing price of Community Financial common stock was $37.11, and on September 29, 2017, the most recent trading day practicable before the printing of this proxy statement/prospectus, the closing price of Community Financial common stock was $35.37. Based on the $37.11 closing price of Community Financial common stock on the NASDAQ Global Select Market (which we refer to as the “NASDAQ”) on, July 31, 2017, the last full trading day before the public announcement of the merger, the per share value of the stock consideration was equal to $35.41 and the per share value of the merger consideration was equal to $36.41 assuming no contingent cash consideration is paid in the merger, and $38.65 assuming that the maximum amount of contingent cash consideration is paid in the merger, in each case with cash paid in lieu of fractional shares. Based on the $35.37 closing price of Community Financial common stock on the NASDAQ on, September 29, 2017, the latest practicable trading day before the printing of this proxy statement/prospectus, the per share value of the stock consideration was equal to $33.75 and the per share value of the merger consideration was equal to $34.75 assuming no contingent cash consideration is paid in the merger, and $36.99 assuming that the maximum amount of contingent cash consideration is paid in the merger. Based on the exchange ratio of 0.9543 and the number of shares of County First common stock on September 29, 2017 (which includes the number of shares of County First common stock underlying County First’s restricted stock awards as of September 29, 2017), the maximum number of shares of Community Financial common stock estimated to be issuable at the effective time of the merger is 918,527. We urge you to obtain current market quotations for Community Financial (trading symbol “TCFC”) and County First (trading symbol “CUMD”).

County First will hold a special meeting of its stockholders (which we refer to as the “County First special meeting”) in connection with the merger. At the County First special meeting, the County First stockholders will be asked to vote to approve the merger agreement and related matters as described in this proxy statement/prospectus. Under Maryland law approval of the merger agreement requires the affirmative vote of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at the County First special meeting.

The County First special meeting will be held on November 15, 2017, in Room 113E of the Center for Business and Industry at the College of Southern Maryland, located at 8730 Mitchell Road, La Plata, Maryland 20646, at 10:00 a.m., local time.

The County First board of directors unanimously recommends that County First stockholders vote “FOR” the approval of the merger agreement and the transactions contemplated thereby and “FOR” the adjournment of the County First special meeting, if necessary or appropriate, to solicit additional proxies in favor of the approval of the merger agreement.

This proxy statement/prospectus describes the County First special meeting, the merger, the documents related to the merger and other related matters. Please carefully read this entire proxy statement/prospectus, including the section entitled “Risk Factors” beginning on page 17, for a discussion of the risks relating to the proposed merger. You can also obtain information about Community Financial from documents that Community Financial has filed with the Securities and Exchange Commission (which we refer to as the “SEC”).

Douglas T. Mitchell
President and Chief Executive Officer
County First Bank

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Community Financial or County First, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is [•], 2017, and it is first being mailed or otherwise delivered to the stockholders of County First on or about October 10, 2017.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of County First Bank:

County First will hold the County First special meeting at 10:00 a.m., local time, on November 15, 2017, in Room 113E of the Center for Business and Industry at the College of Southern Maryland, located at 8730 Mitchell Road, La Plata, Maryland 20646 to consider and vote upon the following matters:

•

A proposal to approve the Agreement and Plan of Merger, dated July 31, 2017, by and among The Community Financial Corporation, Community Bank of the Chesapeake and County First Bank, pursuant to which County First Bank will merge with and into Community Bank of the Chesapeake, as more fully described in this proxy statement/prospectus (which we refer to as the “County First merger proposal); and

​

•

A proposal to adjourn the County First special meeting, if necessary or appropriate, to solicit additional proxies in favor of the County First merger proposal (which we refer to as the “County First adjournment proposal”).

​

We have fixed the close of business on September 29, 2017, as the record date for the County First special meeting (which we refer to as the “County First record date”). Only County First stockholders of record as of the County First record date are entitled to notice of, and to vote at, the County First special meeting, or any adjournment of the County First special meeting. Under Maryland law the approval of the County First merger proposal requires the affirmative vote of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at the County First special meeting. The County First adjournment proposal will be approved if a majority of the votes cast on such proposal at the County First special meeting are voted in favor of such proposal.

The County First board of directors has unanimously approved the merger agreement, has determined that the merger agreement and the transactions contemplated thereby are advisable and in the best interests of County First and its stockholders, and unanimously recommends that County First stockholders vote “FOR” the County First merger proposal and “FOR” the County First adjournment proposal.

Your vote is very important. We cannot complete the merger unless County First’s stockholders approve the County First merger proposal.

Regardless of whether you plan to attend the County First special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of County First, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. You may also vote through the Internet or by telephone by following the instructions on the accompanying proxy card. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

This proxy statement/prospectus provides a detailed description of the County First special meeting, the merger, the documents related to the merger and other related matters. We urge you to read the proxy statement/prospectus, including any documents incorporated in the proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

BY ORDER OF THE BOARD OF DIRECTORS,

Douglas T. Mitchell
President and Chief Executive Officer

REFERENCES TO ADDITIONAL INFORMATION

The Community Financial Corporation

This proxy statement/prospectus incorporates important business and financial information about Community Financial from documents filed with the SEC that are not included in or delivered with this proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by Community Financial at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this proxy statement/prospectus, at no cost by contacting Community Financial at the following address:

The Community Financial Corporation
3035 Leonardtown Road
Waldorf, Maryland 20601
Attention: Stockholder Relations
(240) 427-1036

County First Bank

County First does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, and accordingly does not file documents and reports with the SEC.

If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of County First common stock, please contact County First at:

County First Bank
202 Centennial Street
P. O. Box 2752
La Plata, Maryland 20646
Attention: Karen Zamostny
(301) 934-2265, ext. 1152

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than November 8, 2017, in order to receive them before the County First special meeting.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated [•], and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document, and neither the mailing of this document to County First stockholders nor the issuance by Community Financial of shares of Community Financial common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding County First has been provided by County First and information contained in this document regarding Community Financial has been provided by Community Financial.

See “Where You Can Find More Information” beginning on page 93 for more details.

TABLE OF CONTENTS

i

​

ii

QUESTIONS AND ANSWERS

The following are some questions that you may have about the special meeting and merger and brief answers to those questions. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the special meeting and merger. For details about where you can find additional important information, please see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

Unless the context otherwise requires, references in this proxy statement/prospectus to “Community Financial” refer to The Community Financial Corporation, a Maryland corporation, “Community Bank” refer to Community Bank of the Chesapeake, a Maryland-chartered commercial bank, and “County First” refer to County First Bank, a Maryland-chartered bank.

Q:

What is the Merger?

​

A:

Community Financial, Community Bank and County First entered into the merger agreement on July 31, 2017. County First will merge with and into Community Financial’s wholly owned bank subsidiary, Community Bank, with Community Bank continuing as the surviving bank.

​

A copy of the merger agreement is included in this proxy statement/prospectus as Annex A.

The merger cannot be completed unless, among other things, the holders (which we refer to as the “County First stockholders”) of two-thirds of the common stock, par value $1.00 per share, of County First (which we refer to as the “County First common stock”) approve the merger agreement (which we refer to as the “County First merger proposal”).

The completion of the merger is subject to the fulfillment of additional customary conditions, which are discussed in the section of this proxy statement/prospectus entitled “The Merger Agreement — Conditions to Complete the Merger” beginning on page 61.

Q:

Why am I receiving this proxy statement/prospectus?

​

A:

We are delivering this document to you because it is a proxy statement being used by the County First board of directors (which we refer to as the “County First board”) to solicit proxies of the stockholders of County First, as applicable, in connection with approval of the merger and related matters.

​

In order to approve the merger agreement and the transactions contemplated thereby, including the merger, County First has called a special meeting of the County First stockholders (which we refer to as the “County First special meeting”). This document also serves as a notice of the County First special meeting, and describes the proposals to be presented at the special meeting.

In addition, this document is also a prospectus that is being delivered to County First stockholders because Community Financial is offering shares of Community Financial common stock to County First stockholders in connection with the merger.

This proxy statement/prospectus contains important information about the merger. This document also contains important information about the proposals being voted on at the County First special meeting. You should read this document carefully and in its entirety. The enclosed materials allow you to have your shares voted by proxy without attending the County First special meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

Q:

In addition to the approval of the merger agreement and the merger, what else are County First stockholders being asked to vote on at the County First special meeting?

​

A:

In addition to voting on the County First merger proposal, County First is soliciting proxies from the County First stockholders with respect to a proposal to adjourn the County First special meeting, if necessary or appropriate, to solicit additional proxies in favor of the County First merger proposal (which we refer to as the “County First adjournment proposal”). Completion of the merger is not conditioned upon approval of the County First adjournment proposal.

​

1

Q:

What will County First stockholders be entitled to receive in the merger?

​

A:

If the merger is completed, each outstanding share of County First common stock, except for (i) specified shares of County First common stock owned or held, other than in a bona fide fiduciary or agency capacity or in satisfaction of a debt previously contracted, by Community Financial, County First or a subsidiary of either and (ii) shares dissenting shares whose holders have validly exercised and perfected their appraisal rights under Maryland law (which we collectively refer to as the “excluded shares”), will be converted into the right to receive 0.9543 shares (such number being referred to as the “exchange ratio”) of Community Financial common stock, (y) $1.00 in cash, and (z) a contingent amount of cash, ranging from $0 to $2.24 per share (such per share amount of cash being referred to as the “contingent cash consideration”), that will be determined in accordance with the terms of the merger agreement by dividing the aggregate value of certain County First assets by the number of shares of County First common stock outstanding at the effective time of the merger (which we refer to as the “effective time”). County First stockholders who would otherwise be entitled to receive a fractional share of Community Financial common stock upon the completion of the merger will instead be entitled to receive an amount in cash (rounded to the nearest cent) by multiplying such fraction by the closing price of Community Financial common stock on the NASDAQ Global Select Market for the trading day immediately preceding the closing date.

​

Q:

What will Community Financial stockholders be entitled to receive in the merger?

​

A:

Community Financial stockholders will not be entitled to receive any merger consideration and will continue to hold the shares of Community Financial common stock that they held immediately prior to the completion of the merger.

​

Q:

How will the merger affect County First restricted stock awards?

​

A:

At the effective time, each restricted stock award granted by County First will become fully vested and each holder of such restricted stock awards will be entitled to receive the per share merger consideration for each share of County First common stock held by such holder.

​

Q:

Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time that the merger is completed?

​

A:

Perhaps. The value of the merger consideration may fluctuate between the date of this proxy statement/​prospectus and the closing date because the market value for Community Financial common stock fluctuates.

​

Q:

How does the County First board recommend that I vote at the County First special meeting?

​

A:

The County First board unanimously recommends that you vote “FOR” the County First merger proposal and “FOR” the County First adjournment proposal.

​

Q:

When and where is the County First special meeting?

​

A:

The County First special meeting will be held in Room 113E of the Center for Business and Industry at the College of Southern Maryland, located at 8730 Mitchell Road, La Plata, Maryland 20646 on November 15, 2017, at 10:00 a.m., local time.

​

Q:

What do I need to do now?

​

A:

Please carefully read and consider the information contained in and incorporated by reference into this proxy statement/prospectus. After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly as described under “— Q:   How do I vote?” immediately below. In order to assure that your shares are represented and voted at the County First special meeting, please submit your proxy as instructed on the accompanying proxy card even if you currently plan to attend the County First special meeting in person.

​

2

Q:

How do I vote?

​

A:

You may vote “FOR,” “AGAINST” or “ABSTAIN” on any proposal. The procedures for voting are as follows:

​

Voting by Proxy:

If you hold your shares in your name as a stockholder of record, you may vote by mail, through the Internet or by telephone.

•

To vote through the Internet, please follow the instructions on the accompanying proxy card as soon as possible. The instructions in the enclosed proxy card contain the applicable deadlines and other information about voting your shares through the Internet.

​

•

To vote by mail, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Please respond promptly to ensure your proxy card is mailed sufficiently in advance to ensure receipt prior to the County First special meeting.

​

•

To vote by telephone, please follow the instructions on the accompanying proxy card as soon as possible. The instructions in the enclosed proxy card contain the applicable deadlines and other information about voting your shares by telephone.

​

If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received or will receive from your bank or broker.

If the County First special meeting is postponed or adjourned for any reason, at any subsequent reconvening of the County First special meeting all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the County First special meeting, except for any proxies that have at that time effectively been revoked or withdrawn, even if the proxies had been effectively voted on the same or any other matter at a previous meeting.

Voting in Person at the County First Special Meeting:

If you hold your shares in your name as a stockholder of record and wish to attend the County First special meeting and vote in person, you may request a ballot when you arrive. “Street name” stockholders who wish to vote in person at their special meeting will need to obtain a legal proxy from the institution that holds their shares.

Q:

What constitutes a quorum for the County First special meeting?

​

A:

The presence at the County First special meeting, in person or by proxy, of holders representing at least a majority of the issued and outstanding shares of County First common stock entitled to be voted at the County First special meeting will constitute a quorum for the transaction of business at the County First special meeting. The subsequent withdrawal from the meeting of a stockholder or the refusal of a stockholder present or represented by proxy at the meeting to vote does not negate the presence of quorum at the meeting. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

​

Q:

What is the vote required to approve each proposal at the County First special meeting?

​

A:

County First merger proposal:

​

•

Standard: Approval of the County First merger proposal requires the affirmative vote of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at the County First special meeting.

​

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the County First special meeting, or fail to instruct your bank or broker how to vote with respect to the County First merger proposal, it will have the effect of a vote against the County First merger proposal.

​

3

County First adjournment proposal:

•

Standard: Approval of the County First adjournment proposal requires the affirmative vote of a majority of the votes cast by County First stockholders entitled to vote at the County First special meeting.

​

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the County First special meeting, or fail to instruct your bank or broker how to vote with respect to the County First adjournment proposal, it will have no effect on the County First adjournment proposal.

​

Q:

Why is my vote important?

​

A:

If you do not vote, it will be more difficult for County First to obtain the necessary quorum to hold the County First special meeting. If you are a County First stockholder, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, or abstention with respect to the County First merger proposal will have the same effect as a vote against the proposal, even though such approval is a condition to the completion of the merger. The merger agreement must be approved by the affirmative vote of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at the County First special meeting. The County First board unanimously recommends that the County First stockholders vote “FOR” the County First merger proposal.

​

Q:

If my shares of common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

​

A:

No. Your bank or broker cannot vote your shares without instructions from you. You should instruct your bank or broker how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank or broker.

​

Q:

Can I attend the meeting and vote my shares in person?

​

A:

Yes. All stockholders of County First, including stockholders of record and stockholders who hold their shares “in street name” through banks, brokers, nominees or any other holder of record, are invited to attend the meeting. Holders of record of County First common stock can vote in person at the County First special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at your meeting. If you plan to attend the County First special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. County First reserves the right to refuse admittance to anyone without proper proof of share ownership. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without County First’s express written consent.

​

Q:

Can I change my vote?

​

A:

Yes. If you are a holder of record of County First common stock, you may change your vote or revoke any proxy at any time before it is voted by (i) signing and returning a proxy with a later date, (ii) delivering a written revocation letter to County First’s corporate secretary, (iii) attending the County First special meeting in person, notifying the corporate secretary and voting by ballot at the County First special meeting or (iv) voting through the Internet or by telephone at a later time. Attendance at the County First special meeting by itself will not automatically revoke your proxy. A revocation or later-dated proxy received by County First after the vote will not affect the vote. County First’s corporate secretary’s mailing address is: County First Bank, Attn: Corporate Secretary, 202 Centennial Street, P. O. Box 2752, La Plata Maryland 20646.

​

If you hold your shares of County First common stock in “street name” through a bank or broker, you should contact your bank or broker to change your vote or revoke your proxy.

4

Q:

Will County First be required to submit the County First merger proposal to its stockholders even if the County First board has withdrawn, modified or qualified its recommendation?

​

A:

Yes. Unless the merger agreement is terminated before the County First special meeting, County First is required to submit the County First merger proposal to its stockholders even if the County First board has withdrawn, modified or qualified its recommendation.

​

Q:

What are the U.S. federal income tax consequences of the merger to County First stockholders?

​

A:

The obligations of County First and Community Financial to complete the merger are subject to, among other customary closing conditions described in this proxy statement/prospectus, the receipt by each of County First and Community Financial of the opinion of its counsel to the effect that the merger will be treated as a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”). Assuming that the merger qualifies as a reorganization under the Code, holders of County First common stock who exchange their shares of Country First common stock in exchange for a combination of shares of Community Financial common stock, cash, and contingent cash consideration pursuant to the merger generally will recognize gain (but not loss) equal to the lesser of (1) the excess, if any, of the sum of the cash consideration and contingent cash consideration received and the fair market value of the shares of Community Financial common stock received pursuant to the merger over that holder’s adjusted tax basis in his, her or its shares of County First common stock surrendered, and (2) the amount of cash consideration and contingent cash consideration received by that holder in exchange for their shares of County First common stock pursuant to the merger. In addition, a holder of County First common stock generally will recognize gain with respect to any cash received instead of fractional shares of Community Financial common stock.

​

You should read the section of this proxy statement/prospectus entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 67 for a general discussion of the material U.S. federal income tax consequences of the merger. The U.S. federal income tax consequences described above may not apply to all holders of County First common stock. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the merger to you.

Q:

Are County First stockholders entitled to dissenters’ rights?

​

A:

Holders of shares County First common stock are entitled to exercise dissenters’ rights in connection with the County First merger proposal. For further information, see “The Merger — Dissenters’ Rights” beginning on page 45.

​

Q:

If I am a County First stockholder, should I send in my County First stock certificates now?

​

A:

No. Please do not send in your County First stock certificates with your proxy. Promptly following the completion of the merger, an exchange agent will send you instructions for exchanging County First stock certificates for the merger consideration. See “The Merger Agreement — Conversion of Shares; Exchange of Certificates” beginning on page 50.

​

Q:

What should I do if I hold my shares of County First common stock in book-entry form?

​

A:

You are not required to take any special additional actions if your shares of County First common stock are held in book-entry form. Promptly following the completion of the merger, shares of County First common stock held in book-entry form automatically will be exchanged for shares of Community Financial common stock in book-entry form, cash consideration, contingent cash consideration, if any, and cash to be paid in exchange for fractional shares, if any.

​

Q:

Whom may I contact if I cannot locate my County First stock certificate(s)?

​

A:

If you are unable to locate your original County First stock certificate(s), you should contact American Stock Transfer & Trust Company, LLC, County First’s transfer agent, at (800) 937-5449 or 6201 15th Avenue, Brooklyn, New York 11219.

​

5

Q:

What should I do if I receive more than one set of voting materials?

​

A:

County First stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of County First common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of County First common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of County First common stock that you own.

​

Q:

When do you expect to complete the Merger?

​

A:

Community Financial and County First currently expect to complete the merger in the first quarter of 2018. However, neither Community Financial nor County First can assure you of when, or if, the merger will be completed. The completion of the merger is subject to the fulfillment of customary closing conditions, including the approval by the County First stockholders of the County First merger proposal and the receipt of necessary regulatory approvals.

​

Q:

What happens if the merger is not completed?

​

A:

If the merger is not completed, County First stockholders will not receive any consideration for their shares in connection with the merger. Instead, County First will remain an independent company and its common stock will continue to be quoted and traded on the OTCQB Marketplace. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by County First to Community Financial. For a more detailed discussion of the circumstances under which such a payment would be required to be paid, please see the section of this proxy statement/prospectus entitled “The Merger Agreement — Termination Fee” beginning on page 64.

​

Q:

Whom should I call with questions?

​

A:

If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of County First common stock, please contact Karen Zamostny at (301) 934-2265, ext. 1152, or County First’s proxy solicitor, Morrow Sodali LLC, at (800) 662-5200 (stockholders toll free) or (203) 658-9400 (banks and brokerage firms).

​

6

​

​

​

Community Financial Common Stock

​

​

County First Common Stock

​

​

Implied Value of Merger Consideration (assuming minimum ($0) amount of contingent cash consideration)

​

​

Implied Value of Merger Consideration (assuming maximum ($2.24) amount of contingent cash consideration)

​

July 31, 2017

​

​

​

$

37.11

​

​

​

​

$

21.50

​

​

​

​

$

36.41

​

​

​

​

$

38.65

​

​

September 29, 2017

​

​

​

$

35.37

​

​

​

​

$

34.00

​

​

​

​

$

34.75

​

​

​

​

$

36.99

​

​

7

8

​

9

​

10

​

11

12

13

​

​

​

As of and for the Six Months Ended June 30,

​

​

As of and for the Year Ended December 31,

​

​

​

​

2017

​

​

2016

​

​

2016

​

​

2015

​

​

2014

​

​

2013

​

​

2012

​

​

​

​

(in thousands, except per share data)

​

Results of Operations

​

​

​

​

​

​

​

​

Tax-equivalent interest income

​

​

​

$

26,317

​

​

​

​

$

23,240

​

​

​

​

$

48,047

​

​

​

​

$

43,873

​

​

​

​

$

41,759

​

​

​

​

$

39,678

​

​

​

​

$

40,293

​

​

Interest expense

​

​

​

​

4,710

​

​

​

​

​

3,952

​

​

​

​

​

8,142

​

​

​

​

​

7,345

​

​

​

​

​

6,698

​

​

​

​

​

7,646

​

​

​

​

​

10,604

​

​

Tax-equivalent net interest income

​

​

​

​

21,607

​

​

​

​

​

19,288

​

​

​

​

​

39,905

​

​

​

​

​

36,528

​

​

​

​

​

35,061

​

​

​

​

​

32,032

​

​

​

​

​

29,689

​

​

Provision for loan losses

​

​

​

​

756

​

​

​

​

​

991

​

​

​

​

​

2,359

​

​

​

​

​

1,433

​

​

​

​

​

2,653

​

​

​

​

​

940

​

​

​

​

​

2,529

​

​

Net interest income after provision for loan losses

​

​

​

​

20,851

​

​

​

​

​

18,297

​

​

​

​

​

37,546

​

​

​

​

​

35,095

​

​

​

​

​

32,408

​

​

​

​

​

31,092

​

​

​

​

​

27,160

​

​

Non-interest income

​

​

​

​

1,927

​

​

​

​

​

1,627

​

​

​

​

​

3,360

​

​

​

​

​

3,299

​

​

​

​

​

4,093

​

​

​

​

​

4,174

​

​

​

​

​

4,410

​

​

Non-interest expenses

​

​

​

​

14,909

​

​

​

​

​

14,532

​

​

​

​

​

29,159

​

​

​

​

​

28,418

​

​

​

​

​

26,235

​

​

​

​

​

24,844

​

​

​

​

​

23,804

​

​

Income before taxes

​

​

​

​

7,869

​

​

​

​

​

5,392

​

​

​

​

​

11,747

​

​

​

​

​

9,976

​

​

​

​

​

10,266

​

​

​

​

​

10,422

​

​

​

​

​

7,766

​

​

Income tax expense

​

​

​

​

2,984

​

​

​

​

​

2,046

​

​

​

​

​

4,416

​

​

​

​

​

3,633

​

​

​

​

​

3,776

​

​

​

​

​

3,771

​

​

​

​

​

2,776

​

​

Net income

​

​

​

​

4,885

​

​

​

​

​

3,346

​

​

​

​

​

7,331

​

​

​

​

​

6,343

​

​

​

​

​

6,490

​

​

​

​

​

6,651

​

​

​

​

​

4,990

​

​

Per Share Data

​

​

​

​

​

​

​

​

Net income – basic per share

​

​

​

$

1.05

​

​

​

​

$

0.73

​

​

​

​

$

1.59

​

​

​

​

$

1.36

​

​

​

​

$

1.35

​

​

​

​

$

1.90

​

​

​

​

$

1.57

​

​

Net income – diluted per share

​

​

​

​

1.05

​

​

​

​

​

0.72

​

​

​

​

​

1.59

​

​

​

​

​

1.35

​

​

​

​

​

1.35

​

​

​

​

​

1.88

​

​

​

​

​

1.57

​

​

Dividends declared per common share

​

​

​

​

0.20

​

​

​

​

​

0.20

​

​

​

​

​

0.40

​

​

​

​

​

0.40

​

​

​

​

​

0.40

​

​

​

​

​

0.40

​

​

​

​

​

0.40

​

​

Book value per common share

​

​

​

​

23.51

​

​

​

​

​

22.01

​

​

​

​

​

22.54

​

​

​

​

​

21.48

​

​

​

​

​

20.53

​

​

​

​

​

19.52

​

​

​

​

​

19.34

​

​

Period End Balances

​

​

​

​

​

​

​

​

Total assets

​

​

​

$

1,392,688

​

​

​

​

$

1,233,401

​

​

​

​

$

1,334,257

​

​

​

​

$

1,143,332

​

​

​

​

$

1,082,878

​

​

​

​

$

1,023,824

​

​

​

​

$

981,639

​

​

Total investment securities(1)

​

​

​

​

161,130

​

​

​

​

​

147,609

​

​

​

​

​

162,280

​

​

​

​

​

144,536

​

​

​

​

​

126,445

​

​

​

​

​

134,648

​

​

​

​

​

159,825

​

​

Total loans(2)

​

​

​

​

1,132,429

​

​

​

​

​

995,515

​

​

​

​

​

1,079,519

​

​

​

​

​

909,200

​

​

​

​

​

862,409

​

​

​

​

​

799,130

​

​

​

​

​

747,641

​

​

Total deposits

​

​

​

​

1,087,806

​

​

​

​

​

993,475

​

​

​

​

​

1,038,825

​

​

​

​

​

906,899

​

​

​

​

​

869,384

​

​

​

​

​

821,295

​

​

​

​

​

820,231

​

​

Total borrowings

​

​

​

​

154,029

​

​

​

​

​

93,588

​

​

​

​

​

144,559

​

​

​

​

​

91,617

​

​

​

​

​

76,672

​

​

​

​

​

70,476

​

​

​

​

​

61,527

​

​

Total stockholders’ equity

​

​

​

​

109,293

​

​

​

​

​

102,366

​

​

​

​

​

104,426

​

​

​

​

​

99,783

​

​

​

​

​

116,559

​

​

​

​

​

110,730

​

​

​

​

​

79,047

​

​

​

14

​

​

​

As of and for the Six Months Ended June 30,

​

​

As of and for the Year Ended December 31,

​

​

​

​

2017

​

​

2016

​

​

2016

​

​

2015

​

​

2014

​

​

2013

​

​

2012

​

​

​

​

(in thousands, except per share data)

​

Results of Operations

​

​

​

​

​

​

​

​

Interest income

​

​

​

$

4,130

​

​

​

​

$

4,054

​

​

​

​

$

8,060

​

​

​

​

$

7,656

​

​

​

​

$

7,505

​

​

​

​

$

7,548

​

​

​

​

$

7,918

​

​

Interest expense

​

​

​

​

183

​

​

​

​

​

194

​

​

​

​

​

387

​

​

​

​

​

420

​

​

​

​

​

483

​

​

​

​

​

678

​

​

​

​

​

944

​

​

Net interest income

​

​

​

​

3,947

​

​

​

​

​

3,860

​

​

​

​

​

7,673

​

​

​

​

​

7,236

​

​

​

​

​

7,022

​

​

​

​

​

6,870

​

​

​

​

​

6,974

​

​

Provision for loan losses

​

​

​

​

—

​

​

​

​

​

105

​

​

​

​

​

210

​

​

​

​

​

378

​

​

​

​

​

410

​

​

​

​

​

350

​

​

​

​

​

390

​

​

Net interest income after provision for loan losses

​

​

​

​

3,947

​

​

​

​

​

3,860

​

​

​

​

​

7,463

​

​

​

​

​

6,858

​

​

​

​

​

6,612

​

​

​

​

​

6,520

​

​

​

​

​

6,584

​

​

Non-interest income

​

​

​

​

313

​

​

​

​

​

345

​

​

​

​

​

742

​

​

​

​

​

1,232

​

​

​

​

​

720

​

​

​

​

​

754

​

​

​

​

​

762

​

​

Non-interest expenses

​

​

​

​

3,273

​

​

​

​

​

3,458

​

​

​

​

​

6,561

​

​

​

​

​

6,480

​

​

​

​

​

6,340

​

​

​

​

​

5,966

​

​

​

​

​

5,857

​

​

Income before taxes

​

​

​

​

987

​

​

​

​

​

642

​

​

​

​

​

1,644

​

​

​

​

​

1,610

​

​

​

​

​

992

​

​

​

​

​

1,308

​

​

​

​

​

1,489

​

​

Income tax expense

​

​

​

​

346

​

​

​

​

​

212

​

​

​

​

​

545

​

​

​

​

​

468

​

​

​

​

​

296

​

​

​

​

​

450

​

​

​

​

​

524

​

​

Net income

​

​

​

​

641

​

​

​

​

​

430

​

​

​

​

​

1,099

​

​

​

​

​

1,142

​

​

​

​

​

696

​

​

​

​

​

858

​

​

​

​

​

965

​

​

Net income available to common stockholders

​

​

​

​

641

​

​

​

​

​

430

​

​

​

​

​

1,099

​

​

​

​

​

1,142

​

​

​

​

​

696

​

​

​

​

​

858

​

​

​

​

​

965

​

​

Per Share Data

​

​

​

​

​

​

​

​

Net income – basic per share(1)

​

​

​

$

0.67

​

​

​

​

$

0.45

​

​

​

​

$

1.16

​

​

​

​

$

1.21

​

​

​

​

$

0.74

​

​

​

​

$

1.02

​

​

​

​

$

1.17

​

​

Net income – diluted per share(1)

​

​

​

​

0.67

​

​

​

​

​

0.45

​

​

​

​

​

1.16

​

​

​

​

​

1.21

​

​

​

​

​

0.74

​

​

​

​

​

1.02

​

​

​

​

​

1.17

​

​

Book value per common share(1)

​

​

​

​

26.86

​

​

​

​

​

25.94

​

​

​

​

​

26.36

​

​

​

​

​

25.6

​

​

​

​

​

24.66

​

​

​

​

​

24.72

​

​

​

​

​

24.67

​

​

Dividends paid

​

​

​

​

0.15

​

​

​

​

​

0.10

​

​

​

​

​

0.25

​

​

​

​

​

0.25

​

​

​

​

​

0.59

​

​

​

​

​

0.89

​

​

​

​

​

0.99

​

​

Period End Balances

​

​

​

​

​

​

​

​

Total assets

​

​

​

$

236,196

​

​

​

​

$

226,423

​

​

​

​

$

224,836

​

​

​

​

$

226,427

​

​

​

​

$

209,480

​

​

​

​

$

207,922

​

​

​

​

$

198,692

​

​

Total investments(2)

​

​

​

​

39,814

​

​

​

​

​

49,093

​

​

​

​

​

49,385

​

​

​

​

​

56,977

​

​

​

​

​

51,732

​

​

​

​

​

13,351

​

​

​

​

​

14,247

​

​

Total loans(3)

​

​

​

​

156,017

​

​

​

​

​

140,502

​

​

​

​

​

157,691

​

​

​

​

​

140,545

​

​

​

​

​

131,219

​

​

​

​

​

134,310

​

​

​

​

​

143,588

​

​

Total deposits

​

​

​

​

208,574

​

​

​

​

​

198,227

​

​

​

​

​

197,751

​

​

​

​

​

199,193

​

​

​

​

​

184,209

​

​

​

​

​

182,914

​

​

​

​

​

174,054

​

​

Total borrowings(4)

​

​

​

​

—

​

​

​

​

​

1,724

​

​

​

​

​

—

​

​

​

​

​

1,317

​

​

​

​

​

717

​

​

​

​

​

1,003

​

​

​

​

​

1,171

​

​

Total stockholders’ equity

​

​

​

​

25,863

​

​

​

​

​

24,646

​

​

​

​

​

25,310

​

​

​

​

​

24,277

​

​

​

​

​

23,278

​

​

​

​

​

22,894

​

​

​

​

​

22,495

​

​

​

15

​

​

​

Community Financial Historical

​

​

County First Historical

​

​

Pro Forma Combined(1)

​

​

Per Equivalent County First Share(2)

​

Book value per share:

​

​

​

​

​

At June 30, 2017

​

​

​

$

23.51

​

​

​

​

$

26.87

​

​

​

​

$

25.36

​

​

​

​

$

24.20

​

​

At December 31, 2016

​

​

​

$

22.54

​

​

​

​

$

26.36

​

​

​

​

$

24.56

​

​

​

​

$

23.44

​

​

Cash dividends declared per share:

​

​

​

​

​

Six months ended June 30, 2017

​

​

​

$

0.20

​

​

​

​

$

0.15

​

​

​

​

$

0.20

​

​

​

​

$

0.19

​

​

Year ended December 31, 2016

​

​

​

$

0.40

​

​

​

​

$

0.25

​

​

​

​

$

0.40

​

​

​

​

$

0.38

​

​

Basic earnings per share:

​

​

​

​

​

Six months ended June 30, 2017

​

​

​

$

1.05

​

​

​

​

$

0.67

​

​

​

​

$

1.00

​

​

​

​

$

0.96

​

​

Year ended December 31, 2016

​

​

​

$

1.59

​

​

​

​

$

1.16

​

​

​

​

$

1.55

​

​

​

​

$

1.47

​

​

Diluted earnings per share:

​

​

​

​

​

Six months ended June 30, 2017

​

​

​

$

1.05

​

​

​

​

$

0.67

​

​

​

​

$

1.00

​

​

​

​

$

0.96

​

​

Year ended December 31, 2016

​

​

​

$

1.59

​

​

​

​

$

1.16

​

​

​

​

$

1.55

​

​

​

​

$

1.47

​

​

​

16

RISK FACTORS

In addition to general investment risks and the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the section “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 23 you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

Because the market price of Community Financial common stock may fluctuate, and because County First stockholders may be entitled to receive contingent cash consideration ranging from $0 to $2.24 per share, County First stockholders cannot be certain of the precise value of the merger consideration they will be entitled to receive.

Upon completion of the merger, each outstanding share of County First common stock will be converted into the right to receive 0.9543 shares of Community Financial common stock and $1.00 in cash for each share of County First common stock they hold. County First stockholders may also receive contingent cash consideration ranging from $0 to $2.24 per share. The maximum aggregate amount of contingent cash consideration that may be paid in the merger to all County First stockholders is $2,154,303. The amount of contingent cash consideration to be paid in the merger, if any, will be based on the value received by County First in connection with the sale, resolution or disposition of certain identified assets prior to closing. There can be no assurance that County First will sell, resolve or otherwise dispose of any of the identified assets or that County First stockholders will receive any contingent cash consideration in the merger at all. Additionally, there will be a lapse of time between the date of this proxy statement/​prospectus, the date of the County First special meeting and the date on which County First stockholders entitled to receive the merger consideration actually receive the merger consideration. The market value of Community Financial common stock may fluctuate during these periods as a result of a variety of factors, including general market and economic conditions, changes in Community Financial’s businesses, operations and prospects and regulatory considerations, many of which are outside of the control of Community Financial and County First. At the time of the County First special meeting, County First stockholders will not know the actual market value of shares of Community Financial common stock they will receive on the date the merger consideration is received, nor will they know the value of any contingent cash consideration that will be paid in the merger, if any. Consequently, County First stockholders must decide whether to approve the merger agreement without knowing the actual value of the merger consideration they will receive when the merger is completed.

The market price of Community Financial common stock after the merger is completed may be affected by factors different from those affecting the market price of County First or Community Financial common stock currently.

Upon completion of the merger, County First stockholders will become Community Financial stockholders. Community Financial’s business differs in important respects from that of County First, and, accordingly, the results of operations of the combined company and the market price of Community Financial common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Community Financial and County First. For a discussion of Community Financial’s business and of some important factors to consider in connection with that business, see the documents incorporated by reference in this proxy statement/​prospectus and referred to under “Where You Can Find More Information” beginning on page 93.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have a material adverse effect on the combined company following the Merger.

Before the merger can be completed, Community Financial and County First must obtain approvals from the FDIC and the Maryland Office of the Commissioner of Financial Regulation. Community Financial submitted applications to the FDIC on September 14, 2017 and to the Maryland Office of the Commissioner of Financial Regulation on September 14, 2017. As of the date of this proxy statement/

17

prospectus these applications all remain outstanding. In determining whether to approve these applications, the regulatory agencies consider a variety of factors, including the regulatory standing of each party and the factors described under the section of this proxy statement/prospectus entitled “The Merger — Regulatory Approvals Required for the Completion of the Merger” beginning on page 47. An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or delay their receipt. These regulators may impose conditions on the completion of the merger or require changes to the terms of the merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or imposing additional costs on or limiting the revenues of the combined company following the completion of the merger, any of which might have a material adverse effect on the combined company following the completion of the merger. For more information, see the section of this proxy statement/prospectus entitled “The Merger — Regulatory Approvals Required for the Merger” beginning on page 47.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Community Financial and County First have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Community Financial’s ability to successfully combine and integrate the businesses of Community Financial and County First in a manner that permits growth opportunities and does not materially disrupt existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, employees and other constituents or to achieve the anticipated benefits and cost savings of the merger. The loss of key employees could adversely affect Community Financial’s ability to successfully conduct its business, which could have an adverse effect on Community Financial’s financial results and the value of its common stock. If Community Financial experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause Community Financial and/or County First to lose customers or cause customers to remove their accounts from Community Financial and/or County First and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of County First and Community Financial during this transition period and for an undetermined period after completion of the merger on the combined company. In addition, the actual cost savings of the merger could be less than anticipated.

Certain County First directors and executive officers have interests in the merger that may differ from the interests of County First stockholders.

The County First stockholders should be aware that certain County First directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of County First stockholders generally. The County First board was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that County First stockholders vote in favor of the County First merger proposal and certain related matters and against alternative transactions.

The material interests considered by the County First board were as follows:

•

The indemnification by Community Financial and Community Bank of current and former directors, officers and employees of County First against all costs and expenses, among other things, for certain legal actions pertaining to the fact that the person was a director, officer or employee of County First or arising in connection with the transactions contemplated by the merger agreement;

​

•

Maintenance by Community Financial of County First’s directors’ and officers’ liability insurance policy;

​

18

•

The awards of restricted stock that County First has made to Douglas T. Mitchell and William J. Groves II under its equity incentive plan. As a result of the merger, each unvested restricted stock award will fully vest immediately prior to the effective time and each holder will be entitled to receive the per share merger consideration for each share of County First common stock held by such holder;

​

•

The employment agreement with Douglas T. Mitchell provides for a cash severance payment in the event of an involuntary termination of employment without cause or voluntary termination of employment with “good reason” (as defined in the agreement) during the period beginning three months before and ending two years after a change in control;

​

•

The change in control agreements with Charles A. Bryer and William J. Groves II, provide for a cash severance payment in the event of an involuntary termination of employment without cause or voluntary termination of employment for “good reason” (as defined in the agreement) on or after a change in control;

​

•

The separation and consulting agreement with Mr. Mitchell, which shall become effective upon Mr. Mitchell’s termination of employment on the closing date, which provides for payments and benefits to be made in full satisfaction of Mr. Mitchell’s rights under his employment agreement in connection with his termination thereunder. The agreement also sets forth the terms of Mr. Mitchell’s consulting arrangement with Community Financial following the closing date;

​

•

The split dollar life insurance agreement between County First and Douglas T. Mitchell that will remain in effect upon Mr. Mitchell’s termination of employment following a change in control; and

​

•

That, pursuant to the merger agreement one member of County First’s board of directors will be appointed as a member of the Community Financial and Community Bank boards of directors. The board appointee, E. Larry Sanders, III, was determined by Community Financial in consultation with County First.

​

For a more complete description of these interests, see the section of this proxy statement/prospectus entitled “The Merger — Interests of Certain County First Directors and Executive Officers in the Merger” beginning on page 42.

Termination of the merger agreement could negatively impact County First or Community Financial.

If the merger agreement is terminated, there may be various consequences. For example, County First’s or Community Financial’s businesses may have been impacted adversely by the failure to pursue other opportunities due to management’s focus on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of County First common stock or Community Financial common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, County First may be required to pay to Community Financial a termination fee of  $1.5 million.

Community Financial and County First will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on County First or Community Financial. These uncertainties may impair County First’s or Community Financial’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with County First or Community Financial to seek to change existing business relationships with County First or Community Financial. Retention of certain employees by County First or Community Financial may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with Community Financial. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with County First or Community Financial, County First’s business or Community Financial’s business could be harmed. In addition, subject to certain exceptions, County First has agreed to operate its business in the

19

ordinary course prior to closing, and each of County First and Community Financial has agreed to certain restrictive covenants. See the section of this proxy statement/prospectus entitled “The Merger Agreement — Covenants and Agreements” beginning on page 54 for a description of the restrictive covenants applicable to County First and Community Financial.

If the merger is not completed, Community Financial and County First will have incurred substantial expenses without realizing the expected benefits of the merger.

Each of Community Financial and County First has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, Community Financial and County First would have to recognize these expenses without realizing the expected benefits of the merger.

The merger agreement limits County First’s ability to pursue alternative acquisition proposals and requires County First to pay Community Financial a termination fee of  $1.5 million under limited circumstances, including circumstances relating to acquisition proposals for County First. Additionally, certain provisions of County First’s articles of incorporation and bylaws may deter potential acquirers.

The merger agreement prohibits County First from initiating, soliciting, knowingly encouraging or knowingly facilitating certain third-party acquisition proposals. For more information, see the section of this proxy statement/prospectus entitled “The Merger Agreement — Agreement Not to Solicit Other Offers” beginning on page 60. The merger agreement also provides that County First must pay Community Financial a termination fee in the amount of  $1.5 million in the event that the merger agreement is terminated under certain circumstances, including County First’s failure to abide by certain obligations not to solicit acquisition proposals. See the section of this proxy statement/prospectus entitled “The Merger Agreement —Termination Fee” beginning on page 64. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of County First from considering or proposing such an acquisition. Each director of County First, solely in his or her capacity as a County First stockholder has entered into a voting agreement with Community Financial, pursuant to which each such director has agreed to vote all shares of County First common stock over which he or she exercises sole disposition and voting rights in favor of the County First merger proposal and certain related matters, and against alternative transactions. As of the County First record date, (i) the County First directors that are party to the voting agreement exercised sole disposition and voting rights with respect to 179,823 shares of County First common stock, representing 18.7% of the outstanding shares of County First common stock. For more information see the section of this proxy statement/prospectus entitled “The Merger Agreement — County First Voting Agreement” beginning on page 65. Additionally, certain provisions of County First’s articles of incorporation or bylaws or of the Maryland law could make it more difficult for a third-party to acquire control of County First or may discourage a potential competing acquirer.

The shares of Community Financial common stock to be received by County First stockholders as a result of the merger will have different rights from shares of County First common stock.

The rights of County First stockholders are currently governed by the Maryland Financial Institutions Code, Maryland General Corporation Law, County First’s articles of incorporation and County First’s bylaws. Upon completion of the merger, County First stockholders will become Community Financial stockholders and their rights as stockholders will then be governed by the Maryland General Corporation Law, Community Financial’s articles of incorporation and Community Financial’s bylaws. The rights associated with County First common stock are different from the rights associated with Community Financial common stock. See the section of this proxy statement/prospectus entitled “Comparison of Stockholders’ Rights” beginning on page 73 for a discussion of the different rights associated with Community Financial common stock.

20

Holders of County First and Community Financial common stock will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Holders of County First and Community Financial common stock currently have the right to vote in the election of the board of directors and on other matters affecting County First and Community Financial, respectively. Upon the completion of the merger, each County First stockholder who receives shares of Community Financial common stock will become a Community Financial stockholder with a percentage ownership of Community Financial that is smaller than the stockholder’s percentage ownership of County First. It is currently expected that the former County First stockholders as a group will receive shares in the merger constituting approximately 16.5% of the outstanding shares of Community Financial common stock immediately after the merger. As a result, current Community Financial stockholders as a group will own approximately 83.5% of the outstanding shares of Community Financial common stock immediately after the merger. Because of this reduced ownership percentage, County First stockholders may have less influence on the management and policies of Community Financial than they now have on the management and policies of County First, and current Community Financial stockholders may have less influence than they now have on the management and policies of Community Financial. Upon consummation of the merger, Community Financial has agreed to increase the size of the board of directors of Community Financial to eleven (11) members and appoint one (1) current member of the County First board of directors, to be designated by Community Financial after consultation with County First, to the Community Financial board of directors to serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies and to take appropriate steps to cause such member of the board of directors of County First to be nominated to stand for election at Community Financial’s next annual meeting of stockholders to serve in the class of directors whose term expires at the 2021 annual meeting of stockholders. Additionally, Community Financial will cause Community Bank to increase the size of its board of directors to sixteen (16) members and appoint one (1) current member of the County First board of directors, to be designated by Community Financial after consultation with County First, to the board of directors of Community Bank to serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies and to take appropriate steps to cause such member of the board of directors of County First to be nominated to stand for election at Community Bank’s next annual meeting of stockholders to continue serving on its board of directors. Community Financial and Community Bank have each determined, after consultation with County First, to appoint E. Larry Sanders, III, to the boards of directors of Community Financial and Community Bank.

Holders of County First common stock have dissenters’ or appraisal rights with respect to the County First merger proposal.

Dissenters’ rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value of their shares as determined in accordance with the Maryland Financial Institutions Code instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Maryland law provides that a stockholder is not entitled to demand the fair value of his or her shares of stock in any transaction if the stock is listed on a national securities exchange. Because the County First common stock is not listed on a national securities exchange the holders of County First common stock are entitled to dissenters’ or appraisal rights in the merger.

If the merger does not constitute a reorganization under Section 368(a) of the Code, then the holders of County First common stock may be responsible for payment of additional U.S. income taxes related to the merger.

County First and Community Financial believe that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. However, if the United States Internal Revenue Service (the “IRS”) determines that the merger does not qualify as a reorganization under Section 368(a) of the Code, then the exchange of County First common stock pursuant to the merger would be a taxable transaction. In that case, the merger would be treated for federal income tax purposes as if County First had transferred all of its assets and liabilities to Community Bank in exchange for the stock consideration, cash consideration and contingent cash consideration in a taxable asset sale and then liquidated in a taxable liquidation. Because each holder of County First common stock (other than dissenting shares and certain

21

other shares described herein) is entitled to receive a combination of the stock consideration, cash consideration, and the contingent cash consideration, each such holder will be responsible for additional U.S. income taxes related to the stock consideration received in the merger. Each such holder of County First common stock would recognize a gain or loss equal to the difference between the (i) the sum of the fair market value of Community Financial common stock and the amount of cash consideration and contingent cash consideration received by such holder in the merger and (ii) such holder’s adjusted tax basis in the shares of County First common stock exchanged therefor.

22

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements. These forward-looking statements may include: management plans relating to the merger; the expected timing of the completion of the merger; the ability to complete the merger; the ability to obtain any required regulatory, stockholder or other approvals; any statements of the plans and objectives of management for future operations, products or services, including the execution of integration plans relating to the merger; any statements of expectation or belief; projections related to certain financial metrics; and any statements of assumptions underlying any of the foregoing. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Neither Community Financial nor County First assumes any duty and does not undertake to update forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Community Financial or County First anticipated in its forward-looking statements and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those included under Item 1A “Risk Factors” in Community Financial’s Annual Report on Form 10-K, those disclosed in Community Financial’s other periodic reports filed with the SEC, as well as the possibility: that expected benefits of the merger may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the merger may not be timely completed, if at all; that prior to the completion of the merger or thereafter, Community Financial’s and County First’s respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies relating to the merger; that required regulatory, stockholder or other approvals are not obtained or other customary closing conditions are not satisfied in a timely manner or at all; that Community Financial and County First may face reputational risks and the reaction of the companies’ customers, employees and other constituents to the merger; and that management’s time may be diverted to merger-related matters. For any forward-looking statements made in this proxy statement/prospectus or in any documents, Community Financial and County First claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results.

23

THE COUNTY FIRST SPECIAL MEETING

This section contains information for County First stockholders about the County First special meeting that County First has called to allow its stockholders to consider and vote on the County First merger proposal and the County First adjournment proposal. County First is mailing this proxy statement/prospectus to you, as a County First stockholder, on or about October 10, 2017. This proxy statement/prospectus is accompanied by a notice of the County First special meeting and a form of proxy card that the County First board is soliciting for use at the County First special meeting and at any adjournments of the County First special meeting.

Date, Time and Place of the County First Special Meeting

The County First special meeting will be held in Room 113E of the Center for Business and Industry at the College of Southern Maryland, located at 8730 Mitchell Road, La Plata, Maryland 20646 at 10:00 a.m., local time, on November 15, 2017. On or about October 10, 2017, County First commenced mailing this proxy statement/prospectus and the enclosed form of proxy to its stockholders entitled to vote at the County First special meeting.

Matters to Be Considered at the County First Special Meeting

At the County First special meeting, you, as a County First stockholder, will be asked to consider and vote upon the following matters:

•

the County First merger proposal; and

​

•

the County First adjournment proposal.

​

Recommendation of the County First Board

The County First board has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of County First and its stockholders, has unanimously approved the merger agreement and unanimously recommends that the County First stockholders vote “FOR” the County First merger proposal and “FOR” the County First adjournment proposal. See the section of this proxy statement/prospectus entitled “The Merger — County First’s Reasons for the Merger; Recommendation of the County First Board of Directors” beginning on page 34 for a more detailed discussion of the County First board’s recommendation.

County First Record Date and Quorum

The County First board has fixed the close of business on September 29, 2017, as the County First record date for determining the County First stockholders entitled to receive notice of, and to vote at, the County First special meeting.

As of the County First record date, there were 962,513 shares of County First common stock outstanding and entitled to notice of, and to vote at, the County First special meeting held by 397 holders of record. Each share of County First common stock entitles the holder to one vote at the County First special meeting on each proposal to be considered at the County First special meeting.

The presence at the County First special meeting, in person or by proxy, of holders representing at least a majority of the issued and outstanding shares of County First common stock entitled to be voted at the County First special meeting will constitute a quorum for the transaction of business at the County First special meeting. Abstentions and broker non-votes, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the County First special meeting.

Required Vote; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

County First merger proposal:

•

Standard: Approval of the County First merger proposal requires the affirmative vote of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at the County First special meeting.

​

24

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the County First special meeting, or fail to instruct your bank or broker how to vote with respect to the County First merger proposal, it will have the same effect as a vote against the County First merger proposal.

​

County First adjournment proposal:

•

Standard: Approval of the County First adjournment proposal requires the affirmative vote of a majority of the votes cast by County First stockholders entitled to vote at the County First special meeting.

​

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the County First special meeting, or fail to instruct your bank or broker how to vote with respect to the County First adjournment proposal, it will have no effect on the County First adjournment proposal.

​

Shares Held by Officers, Directors and Certain Stockholders

As of the County First record date, the directors and executive officers of County First and their affiliates beneficially owned and were entitled to vote approximately 216,553 shares of County First common stock, representing approximately 22.5% of the shares of County First common stock outstanding on that date.

Each of County First’s directors, in his or her capacity as a County First stockholder, has entered into a voting agreement with Community Financial, pursuant to which each such director has agreed to vote all shares of County First common stock over which he or she exercises sole disposition and voting rights in favor of the County First merger proposal and certain related matters and against alternative transactions. As of the County First record date, (i) the County First directors that are party to the voting agreement exercised sole disposition and voting rights with respect to 179,823 shares of County First common stock, representing approximately 18.7% of the outstanding shares of County First common stock. For more information regarding the voting agreement, see the section of this proxy statement/prospectus entitled “The Merger Agreement — County First Voting Agreement” beginning on page 65. As of the County First record date, Community Financial did not beneficially hold any shares of County First common stock.

Voting by Proxy or in Person; Incomplete Proxies

Any County First stockholder may vote by proxy or in person at the County First special meeting.

If you hold your shares of County First common stock in your name as a stockholder of record and wish to attend the County First special meeting and vote in person, you may request a ballot when you arrive.

If you hold your shares of County First common stock in your name as a stockholder of record, you may alternatively vote by proxy by mail, through the Internet or by telephone:

•

To vote by mail, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Please respond promptly to ensure your proxy card is mailed sufficiently in advance to ensure receipt prior to the County First special meeting.

​

•

To vote through the Internet, please follow the instructions on the accompanying proxy card as soon as possible. The instructions in the enclosed proxy card contain the applicable deadlines and other information about voting your shares through the Internet.

​

•

To vote by telephone, please follow the instructions on the accompanying proxy card as soon as possible. The instructions in the enclosed proxy card contain the applicable deadlines and other information about voting your shares by telephone.

​

County First requests that County First stockholders vote as soon as possible by completing and signing the accompanying proxy card and returning it to County First in the enclosed postage-paid envelope, through the Internet, or by telephone. When the accompanying proxy card is returned properly executed, you will be appointing the “proxies” named in the proxy card to vote your shares for you at the

25

County First special meeting. The shares of County First common stock represented by your properly executed proxy card will be voted at the County First special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned without indication as to how to vote, the shares of County First common stock represented by the proxy card will be voted (i) “FOR” the County First merger proposal and (ii) “FOR” the County First adjournment proposal.

If you vote through the Internet or by telephone, you do not need to sign and return a proxy card. Under Maryland law, you will be appointing the proxies to vote your shares on the same terms as are described above and with the same authority as if you completed, signed and returned a proxy card. The authority you will be giving the proxies is described in the proxy card.

Every County First stockholder’s vote is important. Accordingly, each County First stockholder should sign, date and return the enclosed proxy card, or vote through the Internet or by telephone, whether or not the County First stockholder plans to attend the County First special meeting in person. Sending in your proxy card or voting on the Internet or by telephone will not prevent you from voting your shares personally at the meeting, since you may revoke your proxy at any time before it is voted.

Shares Held in “Street Name”

If you are a County First stockholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. County First’s stockholders should check the voting form used by that firm to determine whether you may vote by telephone or the Internet. You may not vote shares held in street name by returning a proxy card directly to County First or by voting in person at the County First special meeting unless you obtain a “legal proxy” from your broker, bank or other nominee. Furthermore, brokers, banks or other nominees who hold shares of County First common stock on behalf of their customers will not vote your shares of County First common stock or give a proxy to County First to vote those shares with respect to the County First merger proposal without specific instructions from you, as brokers, banks and other nominees do not have discretionary voting power on such proposal.

To ensure that your shares are represented at the County First special meeting and voted in the manner you desire, it is important that you instruct your bank, broker or other holder of record as to how it should vote your shares.

Revocability of Proxies and Changes to a County First Stockholder’s Vote

If you are the record holder of shares of County First common stock, you have the power to change your vote at any time before your shares of County First common stock are voted at the County First special meeting by:

•

attending and voting in person at the County First special meeting;

​

•

giving notice of revocation of the proxy at the County First special meeting;

​

•

delivering to the Corporate Secretary of County First at 202 Centennial Street, P. O. Box 2752, La Plata, Maryland 20646 (i) a written notice of revocation or (ii) a duly executed proxy card relating to the same shares, bearing a date later than the proxy card previously executed; or

​

•

if you appointed the proxies through the Internet or by telephone, you can go to the same Internet website or use the same telephone number that you previously used to appoint the proxies, and then change your voting instructions.

​

The proxies will follow the last voting instructions received from you before the County First special meeting. Attendance at the County First special meeting will not in and of itself constitute a revocation of proxy.

If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the County First special meeting. If your shares are held in “street name” and you have instructed a bank, broker or other nominee to vote your shares of County First common stock, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

26

Solicitation of Proxies

This solicitation is made on behalf of the County First board, and County First will pay for the solicitation of proxies from the County First stockholders. In addition to soliciting proxies by mail, Morrow Sodali LLC, County First’s proxy solicitor, will assist County First in soliciting proxies from the County First stockholders. County First has agreed to pay approximately $11,000, plus expenses, for these services. County First will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions. Additionally, directors, officers and employees of County First may solicit proxies personally and by telephone. None of these directors, officers and employees will receive additional or special compensation for soliciting proxies.

Attending the County First Special Meeting

All County First stockholders, including holders of record and County First stockholders who hold their shares through banks, brokers, nominees or any other holder of record are invited to attend the County First special meeting. County First stockholders of record can vote in person at the County First special meeting. If you are not a County First stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the County First special meeting. If you plan to attend the County First special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. County First reserves the right to refuse admittance to anyone without proper proof of share ownership. The use of cameras, sound recording equipment, communications devices or any similar equipment during the County First special meeting is prohibited without County First’s express written consent.

Delivery of Proxy Materials to County First Stockholders Sharing an Address

As permitted by the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), only one copy of this proxy statement/prospectus is being delivered to multiple County First stockholders sharing an address unless County First has previously received contrary instructions from one or more such stockholders. This is referred to as “householding.” County First stockholders who hold their shares in “street name” can request further information on householding through their banks, brokers or other holders of record. On written or oral request to County First’s proxy solicitor, Morrow Sodali LLC, at 470 West Avenue, Stamford, Connecticut 06902, or by telephone at (800) 662-5200 (stockholders toll free) or (203) 658-9400 (banks and brokerage firms), County First will promptly deliver a separate copy of this proxy statement/prospectus to a stockholder at a shared address to which a single copy of the document was delivered.

Assistance

If you need assistance in completing your proxy card, have questions regarding County First’s special meeting or would like additional copies of this proxy statement/prospectus, please contact County First’s proxy solicitor Morrow Sodali LLC, at 470 West Avenue, Stamford, Connecticut 06902, or by telephone at (800) 662-5200 (stockholders toll free) or (203) 658-9400 (banks and brokerage firms).

27

THE COUNTY FIRST PROPOSALS

Proposal 1 — County First Merger Proposal

County First is asking its stockholders to approve the merger agreement and the transactions contemplated thereby, including the merger. County First stockholders should read this proxy statement/​prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this proxy statement/​prospectus as Annex A.

After careful consideration, the County First board unanimously approved the merger agreement, having determined that the merger agreement and the transactions contemplated thereby, including the merger, were advisable and in the best interests of County First and County First’s stockholders. See the section of this proxy statement/prospectus entitled “The Merger — County First’s Reasons for the Merger; Recommendation of the County First Board of Directors” beginning on page 34 for a more detailed discussion of the County First board’s recommendation.

The County First board unanimously recommends a vote “FOR” the County First merger proposal.

Proposal 2 — County First Adjournment Proposal

The County First special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the County First special meeting to approve the County First merger proposal. If, at the County First special meeting, the number of shares of County First common stock present or represented by proxy and voting in favor of the County First merger proposal is insufficient to approve the County First merger proposal, County First intends to move to adjourn the County First special meeting in order to enable the County First board to solicit additional proxies for approval of the County First merger proposal. In that event, County First will ask its stockholders to vote upon the County First adjournment proposal, but not the County First merger proposal.

In this proposal, County First is asking its stockholders to authorize the holder of any proxy solicited by the County First board on a discretionary basis to vote in favor of adjourning the County First special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from County First stockholders who have previously voted.

The County First board unanimously recommends a vote “FOR” the County First adjournment proposal.

28

INFORMATION ABOUT COMMUNITY FINANCIAL

Community Financial, headquartered in Waldorf, Maryland, is the holding company for Community Bank of the Chesapeake. Community Bank of the Chesapeake is a Maryland-chartered commercial bank with commercial banking powers that offers a broad range of commercial banking, retail banking, mortgage and wealth management services throughout the tri-county area in Southern Maryland and the greater Fredericksburg market in Virginia. With $1.39 billion in assets at June 30, 2017, Community Financial operates 11 banking offices and five financial centers throughout the tri-county area in Southern Maryland and the greater Fredericksburg market in Virginia.

Community Financial common stock is traded on the Nasdaq Global Select Market under the symbol “TCFC.”

Community Financial’s principal executive office is located at 3035 Leonardtown Road, Waldorf, Maryland 20601 and its telephone number at that location is (301) 645-5601. Additional information about Community Financial and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

INFORMATION ABOUT COUNTY FIRST

County First, headquartered in La Plata, Maryland, is a full-service business and retail banking institution, which operates five full-service banking offices throughout Southern Maryland and one administrative office in La Plata, Maryland. County First offers a comprehensive range of commercial banking products and services to small-to-medium sized businesses, not-for-profit organizations, professional service firms and individuals in the Southern Maryland area. As of June 30, 2017, County First total assets were approximately $236 million.

County First’s common stock is traded on the OTCQB Marketplace under the symbol “CUMD.”

County First’s principal executive office is located at 202 Centennial Street, La Plata, Maryland 20646 and its telephone number at that location is (301) 934-2265. Additional information about County First and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

29

THE MERGER

The following discussion contains certain information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this proxy statement/​prospectus and incorporated by reference. We urge you to read carefully this entire proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the merger.

Structure of the Merger

Each of the Community Financial board and County First board has unanimously approved the merger agreement. The merger agreement provides that County First will merge with and into Community Bank, with Community Bank being the surviving entity in the merger.

At the effective time of the merger, each issued and outstanding share of County First common stock, except for the excluded shares, will be converted into the right to receive 0.9543 shares of Community Financial common stock and $1.00 in cash for each share of County First common stock they hold. County First stockholders may also receive, in the aggregate, additional contingent cash consideration of up to $2,154,303 (representing a maximum potential per share value of  $2.24) based upon the resolution of certain identified assets prior to closing. No fractional shares of Community Financial common stock will be issued in connection with the merger, and County First stockholders will instead be entitled to receive cash in lieu thereof.

County First stockholders are being asked to approve the merger agreement and the merger. See the section of this proxy statement/prospectus entitled “The Merger Agreement” beginning on page 49 for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

From time to time, the board of directors of County First has considered various strategic alternatives to enhance and maximize stockholder value and growth opportunities for County First. County First management and the County First board of directors frequently discussed County First’s performance on a stand-alone basis, including the creation of value to stockholders through organic growth. The board of directors determined that organic growth would not provide stockholders desired liquidity and it would be challenging to reach a desirable efficiency ratio given County First’s size. The board of directors also had concerns about turnover of executive management, the regulatory burden and complexity of the banking model shifting from credit risk to compliance risk, and the cost of capital to expand County First. The board of directors has also observed considerable consolidation in the financial institutions industry occurring in recent years.

Beginning at the end of the first quarter of 2016, the County First Executive Committee began preliminary meetings with certain investment banks to consider the possibility of engaging in a merger transaction with another bank. Throughout 2016, the Executive Committee deliberated on the impact of such a transaction on County First and its stockholders and customers, and the Committee met with consultants, investment banks, and legal advisors to receive advice and counsel. In the fourth quarter of 2016, investment banks submitted proposals to represent County First in matters relating to a merger transaction.

In December 2016, County First engaged Boenning to act as County First’s financial advisor in connection with a possible sale, merger, or other combination transaction of County First or its assets. As financial advisor, Boenning advised the County First board of directors on relevant aspects of a potential transaction, prepared an estimated valuation range with respect to County First, and prepared a confidential information memorandum describing, among other things, County First’s history and business, operations, management background, facilities, and historical financial performance. With the assistance of County First’s management, Boenning assembled a list of potential transaction partners to approach regarding a transaction.

30

On January 16, 2017 County First received an unsolicited indication of interest from Company A. Boenning met with the County First board of directors on January 24, 2017 to provide (i) a preliminary estimate of the potential value County First may receive in a sale, (ii) a list of potential transaction partners for County First, (iii) an overview of a competitive sales process Boenning could conduct for County First, and (iv) an overview of the Company A indication of interest. The board of directors elected not to pursue the indication of interest from Company A at this time, but authorized Boenning to prepare materials along with County First to ultimately solicit indications of interest.

On February 9, 2017, the board of directors reviewed and approved 14 potential transaction partners, which included Company A, and authorized Boenning to solicit the interest of these parties in pursuing a transaction with County First. Boenning confidentially communicated with the potential partners, 9 of which executed confidentiality agreements, received the confidential information memorandum, and ultimately received access to a virtual data room (“VDR”) containing preliminary due diligence information on County First.

Boenning requested that potential partners submit indications of interest by March 7, 2017. The indications of interest were expected to address, among other things, the form of consideration, pricing structure, plans for County First employees and management, any contingencies to consummating the transaction, and proposed timing to complete due diligence and close a transaction. Boenning received indications of interest from seven of the potential partners outlining proposed terms for a transaction, including Community Financial.

On March 13, 2017 the County First board of directors, along with Boenning and County First’s legal advisor, Hunton & Williams LLP (which we refer to as “Hunton & Williams”), met to consider the indications of interest received by the potential partners. Boenning presented an overview of the potential partners, including with respect to financial matters, stock performance, valuation, and comparative performance. Boenning also explained certain financial and non-financial terms included in the Indications of Interest, the proposals in relation to comparable transactions, and the next steps that County First would take if it were to proceed. The board of directors, along with Boenning and Hunton & Williams, discussed the merits of the proposals, including the proposed merger consideration, quality of the consideration being offered, the mix of consideration, performance history and prospects of the proposed partners, and other issues.

The board of directors considered continuing the due diligence process with certain potential partners and determined that County First would not grant exclusivity to any specific party at this time. The board of directors authorized Boenning to invite Company A and Company B (which presented the highest offers) to conduct further due diligence on County First and submit revised indications of interest. In addition, the Board authorized the potential inclusion of two alternate parties, one of which was Community Financial, should either of the first two parties elect not to submit a revised indication of interest. Upon communication from County First to one of the alternate parties, Company C, that County First was not prepared to proceed further with that party at such time, Company C nonetheless submitted a revised, unsolicited indication of interest with a higher price on March 17, 2017. Company C was invited to proceed to the next stage in the process along with Companies A and B.

Between April 4, 2017 and April 7, 2017, Boenning sent a letter to Companies A, B and C, requesting that each party submit a revised non-binding proposal for the acquisition of all of County First’s outstanding common stock. The letter requested that each bid specifically address certain details regarding transaction consideration, structure of the transaction, any walk-away provision, matters regarding management, employees, and directors, and expected timing of the transaction, among other key issues. Boenning requested that revised non-binding proposals be submitted by April 10, 2017.

Company C elected not to submit a revised indication of interest because it felt that, given that Company C was not in County First’s market, Company C believed it would need to retain certain key management personnel of County First in order to continue to execute on its business strategy. Company C was not confident that it would be able to retain these personnel after consummation of a transaction.

Company B elected not to submit a revised indication of interest based on what Company B described as a “modeling error” in its initial acquisition model.

31

Boenning continued communications with Company A to determine if County First could provide Company A more time and information to allow Company A to be positioned to submit a revised indication of interest. Company A said they would submit a revised indication of interest, but later decided not to proceed due to issues regarding the due diligence process and the auction format of the process. On April 17, the Chairman of the County First board of directors, E. Larry Sanders, III, met with the Chief Executive Officer of Company A to further inquire about Company A’s interest in proceeding and its additional needs with respect to timing and information. On April 19, Company A communicated that it was withdrawing from the process.

On April 21, 2017, the County First Executive Committee met with Boenning and Hunton & Williams to discuss why the three potential partners had elected not to submit revised indications of interest and whether to invite Community Financial into the bidding process. Based upon County First’s continued review of strategic alternatives and potential transaction partners, a transaction with Community Financial at its previously proposed terms appealed to County First as an opportunity to merge with a larger banking institution, provide economies of scale, and ease the regulatory burden that is disproportionally onerous to smaller banks. The Executive Committee instructed Boenning to contact Community Financial to determine its interest in a possible acquisition of County First with the expectation that Community Financial would submit a revised indication of interest. On April 21, 2017, Boenning contacted Vice Chairman, President and Chief Executive Officer of Community Financial, William Pasenelli, regarding Community Financial’s interest in reengaging in the process with County First. Mr. Pasenelli communicated that he would meet with the Community Financial board of directors on April 24, 2017 and would respond after that meeting. On April 24, 2017, Mr. Pasenelli told Boenning that Community Financial would be interested in reengaging in the process with County First on the original terms of their initial March 7, 2017 indication of interest, provided that Community Financial was provided with an exclusivity period to conduct further due diligence. Boenning communicated this information to the County First.

On April 26, 2017, the board of directors approved an exclusivity agreement with Community Financial (the “Exclusivity Agreement”), providing generally that County First would work exclusively with Community Financial toward the completion of a possible acquisition of County First by Community Financial.

Following the execution of the Exclusivity Agreement, Community Financial promptly began conducting further due diligence with respect to County First through expanded access to the VDR. During the week of May 8th, Community Financial conducted an onsite review of County First’s loan portfolio, with assistance from a third party credit review firm. Additionally, on May 15th, the management teams of Community Financial and County First met at an offsite location to allow Community Financial to conduct further due diligence review of the financial and operating condition of County First. Community Financial continued its due diligence efforts on County First throughout May.

The Exclusivity Agreement required that Community Financial confirm its interest in acquiring County First on the business terms outlined in its initial March 7, 2017 indication of interest in order for the exclusivity period to extend for another 30 days beyond the original 30-day period ending on May 27, 2017. On May 26, 2017, Community Financial communicated to County First that it would not be in a position to confirm the original proposed financial terms as outlined in its initial March 7, 2017 indication of interest as a result of certain due diligence findings regarding certain assets, but Community Financial was still interested in pursuing a transaction if the parties were able to find a way to factor such assets into a final transaction structure. On May 31, 2017, the County First Executive Committee met with Boenning to discuss this communication.

On June 7, 2017, Mr. Sanders and the President and Chief Executive Officer of County First, Douglas T. Mitchell, met with Mr. Pasenelli and the Chairman of the Community Financial board of directors, Michael L. Middleton, to discuss the concerns of Community Financial that arose during the due diligence process. Based on the meeting, the parties felt that the concerns regarding the certain County First assets could be sufficiently addressed by structuring a contingent portion of the purchase price that related to those assets.

To provide for the completion of due diligence efforts, the parties agreed to extend the time period for which the Exclusivity Agreement would remain effective. On June 12, 2017, the parties executed an amendment to the Exclusivity Agreement changing the potential termination date of such agreement to

32

July 12, 2017. On June 23, 2017, Community Financial submitted a revised non-binding indication of interest to acquire 100% of the outstanding stock of County First for an exchange ratio of 0.9800 shares of Community Financial common stock plus up to $1.19 per share in contingent cash consideration based upon the resolution, prior to closing, of certain identified assets. Following negotiations occurring over the next two weeks, on June 29, 2017, Community Financial submitted a revised indication of interest to acquire 100% of the stock of County First for an exchange ratio of 0.9800 shares of Community Financial common stock, plus an increase in the contingent cash consideration to up to $2.24 per share, still based upon the resolution of certain identified assets prior to the closing of the proposed transaction.

Following receipt of the revised indication of interest, the County First board of directors discussed the terms of Community Financial’s indication of interest and the structure of the proposed transaction. The board of directors considered, among other things, the amount and form of the consideration being offered, the financial condition and earning prospects of County First, the cost savings and synergies of the proposed transaction to the parties, and the effect of the potential transaction on County First, its employees and customers, the communities in which County First operates, and the stockholders of County First. As a result of its deliberation, the board of directors approved the indication of interest from Community Financial as of June 29, 2017. The board of directors also authorized the executive officers of County First to begin negotiating a definitive agreement with respect to a potential transaction with Community Financial. Pursuant to Community Financial’s proposal, stockholders of County First would receive common stock of Community Financial. The board of directors directed the executive officers of County First to conduct reverse due diligence with respect to Community Financial and Community Bank. The parties also amended the Exclusivity Agreement to extend the exclusivity period to July 31, 2017.

Community Financial continued to conduct additional diligence on County First throughout July, and in the latter half of July 2017, County First conducted extensive reverse due diligence with respect to Community Financial and Community Bank. Management of each party, with the assistance of their respective financial and legal advisors, held various meetings to discuss due diligence and other transactional matters, including specifically disposition of the contingent assets.

During this time, counsel for each party began the process of negotiating the definitive agreement. On July 11, 2017, Community Financial’s legal advisor, Kilpatrick Townsend & Stockton LLP (which we refer to as “Kilpatrick Townsend”), delivered the initial draft of the definitive merger agreement to County First’s counsel. Related to this, County First authorized Boenning to begin its process of rendering a fairness opinion with respect to the Merger Consideration received by County First (and ultimately the stockholders of County First) in connection with the merger. Counsel to County First and Community Financial continued negotiating the terms of the merger agreement throughout the latter half of July 2017. As part of these negotiations, Community Financial proposed a modification of the structure of the consideration proposed in the non-binding indication of interest designed to deliver County First’s stockholders the same total consideration proposed in the non-binding indication of interest. Following review by County First and Boenning, and discussion amongst County First’s board of directors, the proposed exchange ratio was modified from 0.9800 shares of Community Financial common stock for each share of County First common stock to 0.9543 shares of Community Financial common stock plus $1.00 per share in cash consideration for each share of County First common stock. The contingent cash consideration remained unchanged at up to $2.24 per share in potential contingent cash consideration.

On July 31, 2017, the board of directors of County First held a meeting at which the merger agreement and merger were reviewed and discussed at length. Counsel presented an overview of fiduciary duties and the due diligence that was performed with respect to Community Financial and Community Bank. Counsel then discussed in detail the terms of the transaction, including Merger Consideration, representations and warranties, covenants, the concept of the “fiduciary out” provision and related matters. Representatives of Boenning and Hunton & Williams, reviewed the merger agreement and Boenning delivered its preliminary verbal fairness opinion, which is discussed in more detail in the section of this proxy statement/prospectus entitled “The Merger — Opinion of County First’s Financial Advisor” beginning on page 36, that the consideration to be received by the common stockholders of County First in the transaction was fair from a financial point of view. Boenning’s preliminary verbal fairness opinion was subsequently confirmed via a written opinion delivered to County First’s board of directors. After exploring and evaluating all of its

33

options, the County First board of directors concluded that the merger with Community Financial was in the best interests of County First and its stockholders, employees, and the communities that it serves. At the conclusion of the meeting, the County First board of directors unanimously approved the merger agreement and the merger.

Community Financial also held a board meeting on July 31, 2017, and its board of directors unanimously approved the merger agreement and the merger. The parties executed the merger agreement and certain related documents that same day and the transaction was announced via a joint press release that evening after the closing of U.S. equity markets.

County First’s Reasons for the Merger; Recommendation of the County First Board of Directors

In reaching a determination to approve the merger agreement and the transactions contemplated thereby, including the merger, County First’s board of directors considered a number of factors, both positive and negative, and potential benefits and detriments of the merger to County First and its stockholders. County First’s board of directors also consulted with executive management of County First, Boenning, and Hunton & Williams. County First’s board of directors identified the following factors and benefits of the merger that, among others, the board of directors believes support its decision and recommendation:

•

The business, operations, management, financial and regulatory condition, asset quality, earnings and prospects of County First, Community Financial, and Community Bank compared to the risks and challenges associated with the continued operation of County First independent of Community Financial and Community Bank, and the related presentations of County First management, Boenning, and Hunton & Williams;

​

•

County First management’s due diligence review of Community Financial and Community Bank, conducted in conjunction with Boenning and with the consultation and advice of Hunton & Williams;

​

•

Analysis of Boenning and County First management, with the assistance of Hunton & Williams, of the prospects of County First continuing to operate independent of Community Financial and Community Bank;

​

•

The efforts of County First management and Boenning in marketing County First to interested parties;

​

•

The financial information and analyses presented by Boenning to the board of directors, and Boenning’s opinion to the board of directors to the effect that, as of the date of such opinion, based upon and subject to the factors and assumptions set forth in such opinion, the consideration in the merger agreement was fair from a financial point of view to County First’s stockholders;

​

•

County First management’s view that the merger will allow for enhanced opportunities for County First’s clients, customers and other constituencies within the communities in which County First operates, and County First management’s view that the potential synergies and diversification from the merger relating to enhanced product offerings and customer service opportunities exceeded the level the board of directors believed to be reasonably achievable by County First on a basis independent of Community Financial and Community Bank;

​

•

The common strategic vision shared by Community Financial, Community Bank, and County First with respect to the future of County First as a focused regional financial service provider serving all segments of our communities;

​

•

The potential for County First to achieve economies of scale as a result of the merger, and the enhanced presence of County First in the Southern Maryland and Northern Virginia areas as a result of the merger;

​

•

The anticipated cost savings from expected efficiencies to be achieved in operations and systems, and the ability of County First to respond to increasing regulation and compliance requirements;

​

34

•

The fact that Community Financial intends to retain a substantial portion of the employees of County First and that those employees remaining with the surviving bank will be given the opportunity to participate in employee benefit plans and compensation opportunities that are substantially comparable to the employee benefit plans and compensation opportunities that are generally made available to similarly situated employees of Community Financial and its Subsidiaries;

​

•

The review by the board of directors with Boenning and Hunton & Williams of the structure of the merger and the financial and other terms of the merger agreement, including the adequacy of the merger consideration, not only in relation to the mixed stock and cash consideration offered for County First’s common stock, but also in relation to the historical, present and anticipated future operating results and financial position of County First;

​

•

The fact that County First’s stockholders will have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Community Financial’s common stock following the merger;

​

•

The fact that County First’s stockholders will gain liquidity through receipt of Community Financial’s common stock;

​

•

The expectation that the merger will be treated for U.S. federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Code, and County First’s stockholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the completion of the merger, except with respect to the cash consideration, contingent cash consideration, and any cash received instead of fractional shares of Community Financial common stock;

​

•

The conclusion of the board of directors that Community Financial’s financial condition, earnings and prospects make it more likely that County First will have a superior financial condition, increased financial stability, and better future access to capital, greater ability to spread business strategy execution risks across a larger enterprise and additional options for future potential strategic alternatives on an independent basis;

​

•

The likelihood that the merger will be completed in compliance with applicable law, including the likelihood that the regulatory approvals needed to consummate the merger will be obtained in a timely fashion; and

​

•

The ability of the board of directors under the merger agreement to withdraw or modify their recommendation in favor of the merger agreement under certain circumstances, including the ability to terminate the merger agreement in connection with a superior proposal subject to payment of the termination fee of  $1.5 million.

​

In addition to taking into account the foregoing factors, County First’s board of directors also considered the following potentially negative factors in reaching its decision to approve the merger agreement:

•

The possibility that the merger agreement may not be consummated, or that completion of the merger may be unduly delayed, for reasons beyond the control of County First, Community Financial, or Community Bank;

​

•

The regulatory approvals required to complete the merger, the potential length of the regulatory approval process and the risks that the regulators could impose conditions constituting a material adverse effect that would allow either party to terminate the merger agreement or refuse to consummate the merger;

​

•

The potential for diversion of management and employee attention, and for employee attrition, during the period prior to the completion of the merger and the potential effect on County First’s business and relations with customers, service providers and other stakeholders (including creditors), whether or not the merger is completed;

​

35

•

The risk that certain members of County First’s senior management might choose not to remain employed with the surviving bank following consummation of the merger;

​

•

The requirement that County First conduct its business in the ordinary course and the other restrictions on the conduct of its business prior to completion of the merger, which may delay or prevent County First from undertaking business opportunities that may arise pending completion of the merger;

​

•

The fact that because the stock consideration in the merger is a fixed exchange ratio of shares of County First’s common stock to Community Financial’s common stock, County First’s stockholders could be adversely affected by a decrease in the trading price of Community Financial’s common stock during the pendency of the merger, although County First’s stockholders could also benefit from any increase in the trading price of Community Financial’s common stock during the pendency of the merger;

​

•

The potential that the non-solicitation covenants and the termination fee provisions in the merger agreement could have the effect of discouraging an alternative proposal for County First;

​

•

The costs to be incurred in connection with the merger, including the transaction expenses arising from the merger agreement and merger;

​

•

The risk that potential benefits and synergies sought in the merger may not be realized or may not be realized within the expected time period, and the risks associated with the integration of County First with Community Bank, although the board of directors believes that such risk is manageable in light of similar culture and joint due diligence efforts; and

​

•

The interests that certain officers and/or directors of County First have in the merger.

​

County First’s Board of Directors unanimously recommends that you vote “FOR” the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby.

Opinion of County First’s Financial Advisor

Boenning and Scattergood, Inc. is acting as financial advisor to County First in connection with the merger. Boenning is a registered broker-dealer providing investment banking services with substantial expertise in transactions similar to the merger. As part of its investment banking activities, Boenning is regularly engaged in the independent valuation of businesses and securities in connection with mergers, acquisitions, underwriting, private placements and valuations for estate, corporate and other purposes.

On July 31, 2017, Boenning rendered its oral opinion, which was subsequently confirmed in writing, to the County First board of directors that, as of such date, the merger consideration to be received by the holders of County First’s common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Boenning’s written opinion dated July 31, 2017, which sets forth the assumptions made, matters considered and limitations of the review undertaken, is attached as Annex C to this proxy statement/prospectus and is incorporated herein by reference. You are urged to, and should, read this opinion carefully and in its entirety in connection with this proxy statement/prospectus. The summary of Boenning’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Boenning’s opinion does not reflect any developments that may occur or may have occurred after the date of its opinion and prior to the completion of the merger.

No limitations were imposed by County First on the scope of Boenning’s investigation or the procedures to be followed by Boenning in rendering its opinion. Boenning was not requested to, and did not, make any recommendation to the County First board of directors as to the form or amount of the consideration to be paid to the County First stockholders, which was determined through arm’s length negotiations between the parties. In arriving at its opinion, Boenning did not ascribe a specific range of values to County First. Its opinion is based on the financial and comparative analyses described below.

36

In connection with its opinion, Boenning, among other things:

(i)

reviewed the historical financial performances, current financial positions and general prospects of Community Financial and County First and reviewed certain internal financial analyses and forecasts prepared by the management of County First;

​

(ii)

reviewed the merger agreement, dated July 31, 2017;

​

(iii)

reviewed and analyzed the stock market performance of Community Financial and County First;

​

(iv)

studied and analyzed the consolidated financial and operating data of Community Financial and County First;

​

(v)

reviewed the pro forma financial impact of the merger on Community Financial, based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies determined by senior management of Community Financial and County First;

​

(vi)

considered the financial terms of the merger between Community Financial and County First as compared with the financial terms of comparable bank and bank holding company mergers and acquisitions;

​

(vii)

met and/or communicated with certain members of Community Financial’s and County First’s senior management to discuss their respective operations, historical financial statements and future prospects; and

​

(viii)

conducted such other financial analyses, studies and investigations as Boenning deemed appropriate.

​

Boenning’s opinion was given in reliance on information and representations made or given by Community Financial and County First, and their respective officers, directors, auditors, counsel and other agents, and on filings, releases and other information issued by Community Financial and County First including financial statements, financial projections, and stock price data as well as certain information from recognized independent sources. Boenning did not independently verify the information concerning Community Financial and County First nor other data which Boenning considered in its review and, for purposes of its opinion, Boenning assumed and relied upon the accuracy and completeness of all such information and data. Boenning assumed that all forecasts and projections provided to it had been reasonably prepared and reflected the best currently available estimates and good faith judgments of the management of Community Financial and County First as to their most likely future financial performance. Boenning expressed no opinion as to any financial projections or the assumptions on which they were based. Boenning did not conduct any valuation or appraisal of any assets or liabilities of Community Financial or County First, nor have any such valuations or appraisals been provided to Boenning. Additionally, Boenning assumed that the merger is, in all respects, lawful under applicable law.

With respect to anticipated transaction costs, purchase accounting adjustments, expected cost savings and other synergies and financial and other information relating to the general prospects of Community Financial and County First, Boenning assumed that such information had been reasonably prepared and reflected the best currently available estimates and good faith judgment of the management of Community Financial and County First as to their most likely future performance. Boenning further relied on the assurances of management of Community Financial and County First that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Boenning was not asked to and did not undertake an independent verification of any of such information and Boenning did not assume any responsibility or liability for the accuracy or completeness thereof. Boenning assumed that the allowance for loan losses indicated on the balance sheets of Community Financial and County First was adequate to cover such losses; Boenning did not review individual loans or credit files of Community Financial and County First. Boenning assumed that all of the representations and warranties contained in the merger agreement and all related agreements were true and correct, that each party under the agreements will perform all of the covenants required to be performed by such party under the agreements, and that the conditions precedent in the agreements were not waived. Boenning assumed that the merger will qualify as a tax-free reorganization for federal income tax purposes. Also, in rendering its

37

opinion, Boenning assumed that in the course of obtaining the necessary regulatory approvals for the consummation of the merger no conditions will be imposed that will have a material adverse effect on the combined entity or contemplated benefits of the merger, including the cost savings and related expenses expected to result from the merger.

Boenning’s opinion is based upon information provided to it by the management of Community Financial and County First, as well as market, economic, financial and other conditions as they existed and could be evaluated only as of the date of its opinion and accordingly, it speaks to no other period. Boenning did not undertake to reaffirm or revise its opinion or otherwise comment on events occurring after the date of its opinion and did not have an obligation to update, revise or reaffirm its opinion. Boenning’s opinion does not address the relative merits of the merger and the other business strategies that County First’s board of directors has considered or may be considering, nor does it address the underlying business decision of County First’s board of directors to proceed with the merger. Boenning expressed no opinion as to the value of the shares of Community Financial common stock when issued to holders of outstanding County First common stock pursuant to the merger agreement or the prices at which the shares may trade at any time. Boenning’s opinion is for the information of County First’s board of directors in connection with its evaluation of the merger and does not constitute a recommendation to the board of directors of County First in connection with the merger or a recommendation to any stockholder of County First as to how such stockholder should vote or act with respect to the merger.

In connection with rendering its opinion, Boenning performed a variety of financial analyses that are summarized below. This summary does not purport to be a complete description of such analyses. Boenning believes that its analyses and the summary set forth herein must be considered as a whole and that selecting portions of such analyses and the factors considered therein, without considering all factors and analyses, could create an incomplete view of the analyses and processes underlying its opinion. The preparation of a fairness opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, Boenning considered the results of all of its analyses as a whole and did not attribute any particular weight to any analyses or factors considered by it. The range of valuations resulting from any particular analysis described below should not be taken to be Boenning’s view of the actual value of County First.

In its analyses, Boenning made numerous assumptions with respect to industry performance, business and economic conditions, and other matters, many of which are beyond the control of County First or Community Financial. Any estimates contained in Boenning’s analyses are not necessarily indicative of actual future values or results, which may be significantly more or less favorable than suggested by such estimates. Estimates of values of companies do not purport to be appraisals or necessarily reflect the actual prices at which companies or their securities actually may be sold. No company or transaction utilized in Boenning’s analyses was identical to County First or Community Financial or the merger. Accordingly, an analysis of the results described below is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other facts that could affect the public trading value of the companies to which they are being compared. None of the analyses performed by Boenning was assigned a greater significance by Boenning than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Boenning. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which County First’s common stock or Community Financial’s common stock may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions and other factors that influence the price of securities.

In accordance with customary investment banking practice, Boenning employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses that Boenning used in providing its opinion on July 31, 2017. Some of the summaries of financial analyses are presented in tabular format. In order to understand the financial analyses used by Boenning more fully, you should read the tables together with the text of each summary. The tables alone do not constitute a complete description of Boenning’s financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Boenning. The summary data set forth below do not represent and should

38

not be viewed by anyone as constituting conclusions reached by Boenning with respect to any of the analyses performed by it in connection with its opinion. Rather, Boenning made its determination as to the fairness to the holders of County First’s common stock of the merger consideration, from a financial point of view, on the basis of its experience and professional judgment after considering the results of all of the analyses performed. Accordingly, the data included in the summary tables and the corresponding imputed ranges of value for County First should be considered as a whole and in the context of the full narrative description of all of the financial analyses set forth in the following pages, including the assumptions underlying these analyses. Considering the data included in the summary tables without considering the full narrative description of all of the financial analyses, including the assumptions underlying these analyses, could create a misleading or incomplete view of the financial analyses performed by Boenning.

In connection with rendering its opinion and based upon the terms of the merger agreement, Boenning assumed the effective per share merger consideration to be $39.17 based on (i) the fixed exchange ratio of 0.9543 shares of Community Financial common stock for each share of County First common stock, (ii) Community Financial’s 10-day average common stock price of  $37.65 on July 25, 2017, (iii) the cash consideration price of  $1.00 per share, and (iv) the contingent cash consideration of up to $2.24 per share. Based on an effective per share price of  $39.17, the aggregate indicated merger consideration including $2.24 per share of contingent cash consideration, was $37.7 million. The effective offer price of  $39.17 per County First share amounted to 147.1% and 31.4x County First’s tangible book value per share and earnings per share, respectively, as of and for the twelve months ended March 31, 2017. Excluding the contingent cash consideration of  $2.24 per share, the effective per share merger consideration was $36.93 and the aggregate merger consideration was $35.5 million, which amounted to 138.7% and 29.6x County First’s tangible book value per share and earnings per share, respectively, as of and for the twelve months ended March 31, 2017. Based on the fixed exchange ratio of 0.9543 shares of Community Financial common stock for each share of County First common stock, the annual cash dividend to County First stockholders on a relative basis would have been $0.38 per share for the twelve months ended March 31, 2017. These per share annual cash dividends compare to County First’s current annualized cash dividend that it expects to pay over the next twelve months of  $0.30 per share.

Comparison of Selected Companies to County First.   Boenning reviewed and compared the multiples and ratios of the current trading price of County First’s common stock to County First’s book value, tangible book value, and latest twelve months earnings per share, such multiples referred to herein as the pricing multiples, with the median pricing multiples for the current trading prices of the common stock of a peer group of 14 selected publicly traded Maryland, Pennsylvania, and Virginia banks and thrifts with assets between $175 million and $300 million and tangible equity/assets greater than 7%, excluding merger targets. Boenning applied the resulting range of pricing multiples for the peer group specified above to the appropriate financial results without the application of any control premium, referred to as the unadjusted trading price.

(1)

Peer metrics are based on prices as of market close on July 25, 2017.

​

(2)

Based on the effective merger consideration of  $39.17, as a result of Community Financial’s 10-day average closing stock price of  $37.65 on July 25, 2017, including the contingent cash consideration of up to $2.24 per share.

​

(3)

Based on the effective merger consideration of  $36.93, as a result of Community Financial’s 10-day average closing stock price of  $37.65 on July 25, 2017, excluding the contingent cash consideration of up to $2.24 per share.

​

39

Comparison of Selected Companies to Community Financial.   Boenning reviewed and compared the multiples and ratios of the current trading price of Community Financial’s common stock to Community Financial’s book value, tangible book value, and latest twelve months earnings per share, such multiples referred to herein as the pricing multiples, with the median pricing multiples for the current trading prices of the common stock of a peer group. The peer group consisted of 14 selected publicly traded Maryland and Virginia banks and thrifts with assets between $1 billion and $2.5 billion, excluding merger targets and mutual holding companies.

(1)

Metrics are based on prices as of market close on July 25, 2017.

​

Analysis of Bank Merger Transactions.   Boenning analyzed certain information relating to recent transactions in the banking industry (excluding recapitalizations and those involving mutual holding companies), consisting of  (i) 76 selected nationwide bank and thrift transactions announced since January 1, 2015 with target assets between $200 million and $400 million, referred to below as Group A; (ii) 13 selected Mid-Atlantic bank and thrift transactions announced since January 1, 2015 with target assets between $200 million and $400 million, referred to below as Group B; (iii) 6 selected nationwide bank and thrift transactions announced since January 1, 2015 with target assets between $200 million and $400 million, tangible equity to tangible assets between of 9.0% and 13.0%, latest twelve months return on average equity greater than 0.0%, and NPAs/assets between 2.0% and 5.0%, referred to below as Group C; and (iv) 25 selected nationwide bank and thrift transactions announced since January 1, 2017 with target assets between $200 million and $400 million, referred to below as Group D. Boenning then reviewed and compared the pricing multiples of the offer price and the median pricing multiples of the selected transaction values for Group A, Group B, Group C and Group D.

(1)

Based on the effective merger consideration of  $39.17, as a result of Community Financial’s 10-day average closing stock price of  $37.65 on July 25, 2017, including the contingent cash consideration of up to $2.24 per share.

​

(2)

Based on the effective merger consideration of  $36.93, as a result of Community Financial’s 10-day average closing stock price of  $37.65 on July 25, 2017, excluding the contingent cash consideration of up to $2.24 per share.

​

Present Value Analysis.   Applying present value analysis to County First’s theoretical future earnings, dividends and tangible book value, Boenning compared the offer price for one share of County First’s common stock to the present value of one share of County First’s common stock on a stand-alone basis.

40

The analysis was based upon management’s projected earnings growth, a range of assumed price/earnings ratios, a range of assumed price/tangible book value ratios and a 13.0% discount rate, which was determined using the Capital Asset Pricing Model and the Build-Up Method, both of which take into account certain factors such as the current risk free rate, the beta of bank stocks compared to the broader market and the risk premiums for small, illiquid stocks and for commercial bank stocks, as well as comparable company returns on tangible common equity. The average of the three methods was approximately 13.0%. Boenning derived the terminal price/earnings multiple of 14.0x and terminal price/​tangible book value multiple of 95.0% from the approximate median in the County First peer group analysis. Sensitivity analyses for terminal price/earnings and price/tangible book ranged from 10.0x to 18.0x and 75.0% to 115.0%, respectively. The present value of County First’s common stock calculated on a stand-alone basis ranged from $9.56 to $23.05 per share with a midpoint of  $15.39 based on price/earnings multiples and from $14.06 to $21.87 per share with a midpoint of  $17.88 per share based on price/tangible book value multiples, compared to the effective merger consideration price of  $39.17 per share. This analysis does not purport to be indicative of actual future results and does not purport to reflect the prices at which shares of County First’s common stock may trade in the public markets. A present value analysis was included because it is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, including earnings growth rates, dividend payout rates and discount rates.

Pro Forma Merger Analysis.   Boenning analyzed certain potential pro forma effects of the merger, assuming the following: (i) the merger is completed in the fourth quarter of 2017; (ii) each share of County First’s common stock will be eligible to receive consideration of  $39.17 in cash or 0.9543 shares of Community Financial common stock, including the cash consideration price of  $1.00 per share and the contingent cash consideration of  $2.24 per share, or an effective $39.17 per County First shares as of July 25, 2017; (iii) estimated pre-tax cost savings equal to $4.2 million of County First’s last twelve months non-interest expense ended March 31, 2017; (iv) estimated one-time transaction related costs of  $6.0 million pre-tax are expensed prior to closing; (v) County First performance was calculated in accordance with County First management’s earnings forecasts; (vi) Community Financial performance was calculated in accordance with Community Financial management’s earnings forecasts; and (vii) certain other assumptions pertaining to costs and expenses associated with the transaction, intangible amortization, opportunity cost of cash and other items. The analyses indicated that, for the full years 2017 and 2018, the merger (excluding transaction expenses) would be accretive to the combined company’s projected earnings per share and accretive to County First’s equivalent earnings per share and cash dividends per share while dilutive to County First’s equivalent tangible book value per share. The actual results achieved by the combined company may vary from projected results and the variations may be material.

As described above, Boenning’s opinion was just one of the many factors taken into consideration by the County First board of directors in making its determination to approve the merger.

Boenning, as part of its investment banking business, regularly is engaged in the valuation of assets, securities and companies in connection with various types of asset and security transactions, including mergers, acquisitions, private placements, public offerings and valuations for various other purposes, and in the determination of adequate consideration in such transactions. In the ordinary course of Boenning’s business as a broker-dealer, it may, from time to time, purchase securities from, and sell securities to, Community Financial and County First or their respective affiliates. In the ordinary course of business, Boenning may also actively trade the securities of Community Financial and County First for its own account and for the accounts of customers and accordingly may at any time hold a long or short position in such securities.

Upon completion of the merger with Community Financial, Boenning will receive a fee from County First equal to 1.00% of the aggregate value of the merger consideration for its services, of which a portion of such fee was payable upon the rendering of its Fairness Opinion and the execution of the definitive merger agreement. Boenning’s fee for rendering the fairness opinion was not contingent upon any conclusion that Boenning reached or upon completion of the merger. The Company has also agreed to reimburse Boenning for any customary reimbursable expenses it incurs during its engagement and to indemnify Boenning against certain liabilities that may arise out of Boenning’s engagement.

41

Boenning has not had any material relationship with Community Financial or County First during the past two years in which compensation received was deemed material or was intended to be received as a result of the relationship between Boenning and Community Financial or County First. Boenning may provide investment banking services to Community Financial in the future, although as of the date of Boenning’s opinion, there was no agreement to do so.

Boenning’s opinion was approved by Boenning’s fairness opinion committee. Boenning did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by the officers, directors, or employees of any party to the merger agreement, or any class of such persons, relative to the compensation to be received by the holders of County First’s common stock in the merger.

Interests of Certain County First Directors and Executive Officers in the Merger

In considering the recommendation of the County First board that you vote to approve the merger agreement, you should be aware that certain of County First’s directors and executive officers have interests in the merger that are different from, or in addition to, those of County First’s stockholders generally. The County First board was aware of and considered those interests, among other matters, in reaching its decisions to (i) approve and adopt the merger agreement and the transactions contemplated thereby and (ii) resolve to recommend the approval of the merger agreement to County First stockholders. County First’s stockholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve the merger agreement. These interests are described in more detail below.

Treatment of County First Restricted Stock Awards

At the effective time, each unvested restricted stock award will fully vest and be converted into the right to receive, without interest, the merger consideration payable for each share of County First common stock subject to the restricted stock award. Mr. Groves will vest in 2,500 shares at the effective time.

Employment Agreement between County First and Douglas T. Mitchell

County First maintains an employment agreement with Douglas T. Mitchell, its President and Chief Executive Officer that provides for a severance benefit if, during the period beginning three months before and ending two (2) years after a change of control, County First or its successor terminates Mr. Mitchell’s employment for reasons other than cause (as defined in the agreement) or Mr. Mitchell voluntarily terminates employment with “good reason,” (as defined in the agreement) such severance benefit to be in the form of a lump-sum cash payment equal to two times Mr. Mitchell’s current annual base salary.

Mr. Mitchell’s current base salary is $250,000 and it is currently estimated that he would be entitled to receive severance payments totaling $500,000 under his employment agreement in connection with the consummation of the merger and his termination of employment.

Mr. Mitchell’s employment agreement also contains non-interference restrictions pursuant to which he has agreed, for a period of one (1) year, not to engage directly or indirectly, for himself or any other person, or induce or attempt to induce any customers, suppliers, officers, employees, contracts, consultants, agents or representatives of or any other person that has a business relationship with County First, to terminate or reduce the extent of that relationship.

Payments or benefits payable to the executive officer under the employment agreement will be reduced to the extent that such payments or benefits would result in the loss of deductibility to County First or its successor under Section 280G of the Code and imposition of excise taxes on the executive officer under Section 4999 of the Code.

Change-in-Control Agreements between County First and Charles A. Bryer and William J. Groves II

County First maintains a change in control agreement with each of Charles A. Bryer and William J. Groves II that provides for a lump-sum cash severance payment in the event of an involuntary termination of employment without cause (as defined in the agreement) or a voluntary termination of employment by an executive for “good reason” (as defined the agreements) on or after a change in control. The severance benefit provided under the change in control agreements is equal to one (1) times the highest rate of base

42

salary paid to the executive during the year of the executive’s termination of employment or either or the two (2) calendar years immediately preceding the executive’s termination of employment. The 2017 base salaries for Mr. Bryer and Mr. Groves are $144,065 and $143,222, respectively.

Payments or benefits payable to the executive officer under the change in control agreements will be reduced to the extent that such payments or benefits constitute, in the aggregate, a “parachute payment” under Section 280G of the Code.

Separation and Consulting Agreement between Community Financial, Community Bank and Douglas T. Mitchell

The separation and consulting agreement entered into with Douglas T. Mitchell, Community Financial and Community Bank, on July 31, 2017 becomes effective upon his termination of employment on the closing date. The separation and consulting agreement provides for a $500,000 lump sum severance payment in full satisfaction of all rights under Mr. Mitchell’s employment agreement in connection with his termination thereunder, such severance payment to be made within thirty (30) business days following Mr. Mitchell’s termination date. In consideration of this severance payment, Mr. Mitchell agrees to execute a general release of claims in the form attached to the separation and consulting agreement. Mr. Mitchell will continue to be subject to the non-interference restrictive covenant under his employment agreement following his separation from service for a period of one year. The separation and consulting agreement also sets forth the terms and conditions of Mr. Mitchell’s consulting engagement with Community Financial and Community Bank. The agreement provides for a consulting term of six (6) months (“consulting period”) and a consulting fee of  $20,000 per month. During the consulting period, Community Financial and Community Bank anticipate that Mr. Mitchell will provide services and advice regarding integration and transition planning in connection with the merger. Under the agreement, Mr. Mitchell will not be required to provide the consulting services for more than one day per week during any part of the consulting period, and the parties intend that the consulting services will not exceed twenty percent of the average amount of Mr. Mitchell’s services during the three years before his termination. If Mr. Mitchell’s service is terminated by Community Financial or Community Bank for reasons other than cause before the end of the consulting period, he will be entitled to continued payment of the monthly consulting fees for the remainder of the consulting period. In addition, the separation and consulting agreement transfers ownership of Mr. Mitchell’s current bank-owned car to Mr. Mitchell as of the effective time.

Payments or benefits payable to the executive officer under the separation and consulting agreement will be reduced to the extent that such payments or benefits would result in the loss of deductibility to County First or its successor under Section 280G of the Code and imposition of excise taxes on the executive officer under Section 4999 of the Code.

Salary Continuation Agreements

County First maintains salary continuation agreements with Mr. Mitchell and Mr. Bryer to provide them with additional compensation at retirement. Under their salary continuation agreements, these executive officers are entitled to receive an annual benefit (the normal retirement benefit) payable in monthly installments over a 15-year period upon termination of employment after having reached age 65. A reduced benefit (“early termination benefit”) is payable if the executive officer retires prior to the normal retirement age. If, within twenty-four months following a change in control, the executive officer’s employment terminates, the executive officer will be entitled to 100% of his normal retirement benefit. In the case of Mr. Mitchell, the benefit is to be paid in a single lump sum in the month following his termination. In the case of Mr. Bryer, the benefit is to be paid in twelve (12) monthly installments, over a 15-year period, beginning in the month following the executive’s attainment of age 65. The separation and consulting agreement with Mr. Mitchell specifies that the lump sum payment he will be entitled to receive under his salary continuation agreement following his termination will be $558,765, less applicable withholdings.

43

Split-Dollar Insurance Agreement

County First maintains a split dollar life insurance agreement with Mr. Mitchell, that provides that the executive officer’s designated beneficiary will receive a portion of the proceeds of certain life insurance policies covering the executive officer if the executive officer dies while employed by County First. The percentage of the death benefit provided under the split dollar agreement incrementally increases over time with the maximum benefit (39.5%) payable in the event the executive’s separation from service occurs on or after 2025. Under the terms of the agreement, if Mr. Mitchell dies after a separation from service which occurs following a change in control, the executive’s beneficiary will be entitled to 39.5% of the net proceeds (maximum benefit) from the underlying insurance policies. Mr. Mitchell has not reached age 65; accordingly, the merger will increase the death benefit provided to Mr. Mitchell’s beneficiary under the split dollar agreement upon his termination of employment following the change in control.

Indemnification; Directors’ and Officers’ Insurance

Under the merger agreement, Community Financial has agreed to, following the effective time, indemnify and hold harmless all current and former directors, officers and employees of County First and its subsidiaries against all costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the effective time, whether asserted before or after the effective time, pertaining to (i) the fact that such person is or was a director, officer or employee of County First, any of its subsidiaries or any of their respective predecessors or was prior to the effective time serving at the request of any such party as a director, officer, employee, trustee or partner of another corporation, partnership, trust, joint venture, employee benefit plan or other entity, or (ii) any matters arising in connection with the transactions contemplated by the merger agreement, to the fullest extent such persons would have been indemnified or have the right to advancement of expenses pursuant to County First’s articles of incorporation and bylaws (as in effect on the date of the merger agreement) and as permitted by applicable law. Community Financial and County First have also agreed to advance expenses as incurred to the fullest extent permitted under applicable law, provided that the person receiving such advance expenses provides a signed written undertaking to repay such advances if the person is not entitled to mandatory indemnification and it is ultimately determined that such person is not entitled to indemnification.

The merger agreement requires the surviving corporation to maintain, for a period of six years after completion of the merger, County First’s existing directors’ and officers’ liability insurance policy, or policies covering each person that was covered, as of the date of the merger agreement, by County First’s existing directors’ and officers’ liability insurance policy with respect to claims against such persons arising from facts or events that occurred at or prior to the effective time. However, the surviving corporation is not required to spend annually more than 300% of the current annual premium paid as of the date of the merger agreement by County First for such insurance (which we refer to as the “premium cap”), and if such premiums for such insurance would at any time exceed that amount, then the surviving corporation will maintain policies of insurance which provide as much comparable coverage as is available at an annual premium equal to the premium cap. In lieu of the foregoing, Community Financial may (i) request County First to obtain an extended reporting period endorsement under County First’s existing directors’ and officers’ liability insurance policy or (ii) substitute therefor “tail” policies the material terms of which (including coverage and amount), are no less favorable in any material respect to such persons than County First’s existing insurance policies as of the date of the merger agreement and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the premium cap. For additional information see the section entitled “The Merger Agreement — Covenants and Agreement — Director and Officer Indemnification and Insurance” beginning on page 58 of this proxy statement/prospectus.

Appointment to the Board of Directors

The merger agreement provides that, at the effective time, Community Financial will: (i) increase the size of its board of directors to eleven (11) members; (ii) appoint one (1) current member of the County First board of directors, to be designated by Community Financial after consultation with County First, to

44

the Community Financial board of directors to serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies; and (iii) take appropriate steps to cause such member of the board of directors of County First to be nominated to stand for election at Community Financial’s next annual meeting of stockholders to serve in the class of directors whose term expires at the 2021 annual meeting of stockholders. Additionally, Community Financial will cause Community Bank to (i) increase the size of its board of directors to sixteen (16) members; (ii) appoint one (1) current member of the County First board of directors, to be designated by Community Financial after consultation with County First, to the board of directors of Community Bank to serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies; and (iii) take appropriate steps to cause such member of the board of directors of County First to be nominated to stand for election at Community Bank’s next annual meeting of stockholders to continue serving on the its board of directors. Community Financial and Community Bank have each determined, after consultation with County First, to appoint E. Larry Sanders, III, to the boards of directors of Community Financial and Community Bank.

Public Trading Markets

Community Financial common stock is listed for trading on the Nasdaq Global Select Market under the symbol “TCFC” and County First common stock is quoted on the OTCQB Marketplace under the symbol “CUMD.” Upon the completion of the merger, County First common stock will no longer be listed on the OTCQB Marketplace. It is a condition to each party’s obligations to complete the merger that the Community Financial common stock to be issued pursuant to the merger agreement be authorized for listing on the Nasdaq Global Select Market (subject to official notice of issuance). Immediately following the completion of the merger, shares of Community Financial common stock will continue to be traded on the Nasdaq Global Select Market under the symbol “TCFC.”

Dividend Policy

Community Financial currently pays a quarterly cash dividend of  $0.10 per share, which is expected to continue, although the Community Financial board may change this dividend policy at any time. County First currently does not pay a quarterly cash dividend, although, subject to certain restrictions in the merger agreement, the County First board may change this dividend policy at any time. Community Financial will be entitled to receive dividends when and if declared by the Community Bank board out of funds legally available for dividends. The Community Financial board will consider Community Financial’s financial condition and level of net income, future prospects, economic condition, industry practices and other factors, including applicable banking laws and regulations, in determining whether to pay dividends in the future and the amount of such dividends.

Community Financial’s principal source of income is dividends that are declared and paid by Community Bank on its capital stock. Therefore, Community Financial’s ability to pay dividends is dependent upon the receipt of dividends from Community Bank. Insured depository institutions such as Community Bank are prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become “undercapitalized,” as such term is defined in the applicable law and regulations. In the future, any declaration and payment of cash dividends will be subject to the Community Financial board’s evaluation of Community Financial’s operating results, financial condition, future growth plans, general business and economic conditions, and tax and other relevant considerations. The payment of cash dividends by Community Financial in the future will also be subject to certain other legal and regulatory limitations and ongoing review by the Community Financial’s banking regulators.

Dissenters’ Rights

Dissenters’ rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value of their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Maryland law provides that a stockholder is not entitled to demand the fair value of his or her shares of stock in any transaction if the stock is listed

45

on a national securities exchange. Because County First’s common stock is listed on the OTCQB Marketplace, the holders of County First common stock are entitled to dissenters’ or appraisal rights with respect to the County First merger proposal.

The following is a summary of the steps which must be taken by a County First stockholder to exercise his or her right to dissent from the merger. This summary is qualified in its entirety by reference to the sections of Maryland Financial Institutions Code. § 3-719 et seq., as amended, set forth in Annex D.

General

Under the Maryland Financial Institutions Code, you may dissent from the merger and be paid the value of your shares, in cash, provided that you comply with the applicable provisions of Maryland law. If you are contemplating the exercise of your right to dissent, you should review the procedures set forth in Sections § 3-719 through § 3-721 of the Maryland Financial Institutions Code, which are attached to this proxy statement/prospectus as Annex D.

Required Vote and Written Notice of Dissent

To be eligible to exercise your right to dissent, you must:

•

vote your shares against the County First merger proposal at the special meeting; and

​

•

deliver a written notice of dissent to the principal office of Community Bank, stating that you intend to demand payment for your shares of your common stock, and surrender your stock certificates.

​

Your notice of dissent should be delivered to Community Bank of the Chesapeake, 3035 Leonardtown Road, Waldorf, Maryland 20601, Attention: Christy Lombardi, Corporate Secretary.

The notice of dissent and your surrendered stock certificates must be received by Community Bank of your stock not later than 30 days after the merger becomes effective.

Your vote against the County First merger proposal, by proxy or otherwise, is not sufficient to perfect your rights as a dissenting stockholder. Additionally, if you vote in favor of the County First merger proposal, whether in person or by proxy (including those stockholders who return the enclosed proxy card executed but without a designation as to the vote on the merger), then you will be deemed to have waived your right to qualify as a dissenter. If the merger is not consummated for any reason, appraisal rights will no longer be available.

Written Demand for Payment and Offer of Payment

Following approval by the County First stockholders, if obtained, Community Bank and County First will on the effective date of the merger file a Certificate of Merger with the Maryland Office of the Commission of Financial Regulation along with certifications of the Corporate Secretary of County First of a stockholders’ resolution approving the County First merger proposal adopted by the holders of at least two-thirds of the outstanding shares of the common stock of County First. If you are a dissenting County First stockholder who did not vote in favor of the merger, then you may within thirty (30) days of the filing of the Certificate of Merger with the Maryland Office of the Commission of Financial Regulation serve a demand upon Community Bank, as the successor, at its principal office for payment of the value of your shares. Community Financial may then offer to pay you a sum for your shares, which, in the opinion of its Board of Directors, does not exceed what it considers to be the fair value of the shares of stock as of the time of the stockholders’ meeting approving the transaction.

Determination of Value

If you fail to accept the sum offered by Community Financial for your shares, the value of the shares as of the date of the stockholders’ meeting approving the merger shall be made by three appraisers, selected as follows:

(i)

One chosen by the owners of two-thirds of the shares involved;

​

46

(ii)

One chosen by the board of directors of Community Financial; and

​

(iii)

The third chosen by the other two appraisers.

​

The fair value to which any two appraisers agree will be the value of the shares. The appraisers shall give notice of the fair value determination to the successor and to each stockholder who has made demand for appraisal.

In the event that the appraisal method described above is not completed within 90 days after the merger becomes effective, the Maryland Commissioner of Financial Regulation (the “Commissioner”) shall have an appraisal made. This appraisal is final and binding as to the value of the shares of stock of all dissenting stockholders.

Notice of dissatisfaction with value determination

Within five (5) days after the appraisers give the notice of the fair value determination, a stockholder who is dissatisfied with that value may notify the Commissioner. The Commissioner shall have the shares reappraised. This reappraisal is final and binding as to the value of the shares of stock of that stockholder.

Expenses of appraisal

Community Financial shall pay the expenses of each appraisal made under this section.

COMMUNITY BANK SHALL PROVIDE A NOTIFICATION BY PERSONAL DELIVERY OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, PROMPTLY AFTER THE FILING OF THE CERTIFICATE OF MERGER WITH THE MARYLAND COMMISSIONER OF FINANCIAL REGULATION, TO THE LAST KNOWN ADDRESS OF EACH COUNTY FIRST STOCKHOLDER. EACH COUNTY FIRST STOCKHOLDER’S 30 DAY PERIOD TO PROVIDE DEMAND APPRAISAL OF HIS OR HER SHARES WILL COMMENCE ON THE DATE OF THE FILING OF THE CERTIFICATE OF MERGER. NO FURTHER NOTIFICATION OF THE BEGINNING OR END OF ANY STATUTORY PERIOD WILL BE GIVEN BY COMMUNITY FINANCIAL, COMMUNITY BANK OR COUNTY FIRST TO ANY DISSENTING STOCKHOLDER EXCEPT AS REQUIRED BY LAW. IF YOU ARE CONSIDERING DISSENTING FROM THE MERGER, YOU ARE URGED TO CONSULT YOUR OWN LEGAL COUNSEL.

Regulatory Approvals Required for the Merger

Completion of the merger is subject to receipt of certain approvals, waivers and consents from applicable governmental and regulatory authorities, without certain conditions being imposed by any governmental authority as part of a regulatory approval that would reasonably be expected to have a material adverse effect on Community Financial and the surviving bank, taken as a whole, after giving effect to the merger. Subject to the terms and conditions of the merger agreement, Community Financial and County First have agreed to use their reasonable best efforts and cooperate to promptly prepare and file all necessary documentation and to obtain as promptly as practicable all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement. These include, among others, approval from the FDIC and the Maryland Office of the Commissioner of Financial Regulation. Community Financial submitted applications to the FDIC on September 14, 2017 and to the Maryland Office of the Commissioner of Financial Regulation on September 14, 2017. As of the date of this proxy statement/prospectus, each of the applications remains outstanding. Although neither Community Financial nor County First knows of any reason why any of these applications should not be approved in a timely manner, Community Financial and County First cannot be certain when, or if, the applications will be approved.

FDIC

Community Bank is a Maryland-chartered commercial bank that is regulated by the Maryland Office of the Commissioner of Financial Regulation and the FDIC. The merger of County First with and into Community Bank requires prior approval of the FDIC under the Bank Merger Act. In evaluating an application for such approval, the FDIC takes into consideration a number of factors, including (i) the

47

competitive impact of the transaction; (ii) financial and managerial resources of the bank parties to the bank merger or merger both on a current and pro forma basis; (iii) the convenience and needs of the community to be served and the record of the banks under the Community Reinvestment Act of 1977 (which we refer to as the “CRA”), including their CRA ratings; (iv) the banks’ effectiveness in combating money laundering activities; and (v) the extent to which the bank merger or merger would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. In connection with its review, the FDIC provides an opportunity for public comment on the application and is authorized to hold a public meeting or other proceeding if it determines that would be appropriate.

Maryland Office of the Commissioner of Financial Regulation

Because Community Bank is chartered under the laws of the State of Maryland, the merger of County First with and into Community Bank also requires prior approval of the Maryland Office of the Commission of Financial Regulation under Maryland law. In evaluating an application for such approval, the Maryland Office of the Commissioner of Financial Regulation takes into account, among other things, the capital structure of the surviving institution and whether the proposed transaction is against the public interest.

48

THE MERGER AGREEMENT

The following description of the merger agreement is subject to, and qualified in its entirety by reference to, the express terms of the merger agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated by reference into this proxy statement/prospectus. We urge you to read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

Structure of the Merger

Each of the Community Financial board, the Community Bank board and the County First board has unanimously approved the merger agreement. The merger agreement provides for the merger of County First with and into Community Bank, with Community Bank continuing as the surviving corporation.

Prior to the completion of the merger, Community Financial may change the method or structure of effecting the purposes of the merger agreement as reasonably determined by Community Financial except that no such change may (i) alter or change the amount and kind of the merger consideration, (ii) materially impede or delay consummation of the transactions contemplated by the merger agreement or (iii) adversely affect the tax treatment of the merger with respect to their qualification as a reorganization under the provisions of Section 368(a) of the Code. In the event that Community Financial elects to make such a change, Community Financial, Community Bank and County First agree to execute appropriate documents to reflect the revised structure.

Merger Consideration

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each share of County First common stock, except for the excluded shares, will be converted into (x) 0.9543 shares of Community Financial common stock, (y) $1.00 in cash, and (z) a contingent amount of cash equal to up to $2.24. The per share contingent cash consideration will be determined by dividing the aggregate value of certain contingent assets by the number of shares of County First common stock outstanding at the effective time of the merger. The maximum aggregate contingent cash consideration to be paid in the merger is $2,154,303.

The value of the contingent assets shall be determined as of December 1, 2017. The aggregate contingent asset value shall equal the aggregate amount of cash received by the County First, or the extent to which County First’s position in the contingent assets has improved, in excess of the “marked value” of the assets (as agreed to by the parties), if and to the extent that the contingent assets are sold, resolved or otherwise disposed of, in whole or in part, by the County First without recourse, contingencies, or claw-backs, net of any expenses and federal and state tax impacts attributable to any such sale, resolution or disposition. However (i) in no event shall the value ascribed to any contingent asset exceed its maximum potential contingent asset after-tax value as agreed by the parties, and (ii) in no event shall the aggregate value of the contingent assets exceed $2,154,303. If a contingent asset is not sold, resolved or disposed of above its “marked value” net of expenses and tax impacts on or prior to December 1, 2017, there shall be no value ascribed to such contingent asset for purposes of determining the contingent asset value.

If, between the date of the merger agreement and the effective time, the outstanding shares of Community Financial common stock is increased, decreased, changed into or exchanged for a different number or class of shares as a result of a stock dividend, subdivision, recapitalization, reclassification, split, combination or exchange of shares, an appropriate and proportionate adjustment will be made to the merger consideration. As of the effective time of the merger, each share of County First common stock held by County First or Community Financial, or a subsidiary of either, will be canceled for no consideration or payment.

Fractional Shares

Community Financial will not issue any fractional shares of Community Financial common stock in the merger. Instead, any County First stockholder who otherwise would have been entitled to receive a fraction of a share of Community Financial common stock will instead be entitled to receive an amount in

49

cash, rounded to the nearest cent, determined by multiplying the fraction of a share of Community Financial common stock to which the holder would otherwise be entitled by the closing price of Community Financial common stock on the NASDAQ Global Select Market for the trading day immediately preceding the merger.

Governing Documents; Directors and Officers; Governance Matters

Upon the consummation of the merger, the articles of incorporation and bylaws of Community Bank in effect immediately prior to the effective time will be the articles of incorporation and bylaws (as amended to increase the number of directors from fifteen (15) to sixteen (16)) of the surviving corporation after completion of the merger, until thereafter amended in accordance with applicable law and the terms of such documents.

At the effective time of the merger, Community Bank’s directors immediately prior to the merger shall continue to be directors thereof with the addition of a current member of the board of County First, to be designated by Community Financial after consultation with County First. Community Financial has determined, after consultation with County First, to appoint E. Larry Sanders, III, to the Community Bank board of directors.

Prior to the closing and effective as of the merger, Community Financial shall increase the size of its board to eleven (11) members and appoint one (1) additional current member of the board of County First, to be designated by Community Financial after consultation with County First. Community Financial has determined, after consultation with County First, to appoint E. Larry Sanders, III, to its board of directors.

Treatment of County First Restricted Stock Awards

At the effective time, each restricted stock award in respect of shares of County First common stock subject to vesting, repurchase or other lapse restriction will become fully vested and the restrictions thereon will lapse, and each holder of such restricted stock will be entitled to receive, without interest, the merger consideration.

Closing and Effective Time

The merger will be completed only if all conditions to the merger set forth in the merger agreement (as discussed in this proxy statement/prospectus) are either satisfied or waived. See the section of this proxy statement/prospectus entitled “— Conditions to Completing the Merger.”

The merger will become effective as of the date and time specified in the certificate of merger to be filed with the Commissioner of Financial Regulation in the Department of Labor, Licensing and Regulation of the State of Maryland. Community Financial, Community Bank and County First currently expect to complete the merger in the first quarter of 2018, subject to the requisite approval of the County First stockholders, the receipt of regulatory approvals or waivers and the fulfillment of other customary closing conditions set forth in the merger agreement, but none of Community Financial, Community Bank or County First can guarantee when, or if, the merger will be completed.

Conversion of Shares; Exchange of Certificates

The conversion of shares of County First common stock into the right to receive the merger consideration will occur automatically at the effective time. Promptly following the completion of the merger, the exchange agent will exchange certificates or uncertificated shares of County First common stock for the merger consideration to be received pursuant to the terms of the merger agreement.

Letter of Transmittal

As promptly as reasonably practicable after the effective time, and in no event later than five business days thereafter, the exchange agent will mail to each holder of record of County First common stock immediately prior to the effective time a letter of transmittal and instructions on how to surrender their shares in exchange for the merger consideration the holder is entitled to receive under the merger agreement and any cash in lieu of fractional shares of Community Financial common stock.

50

If a certificate for County First common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration upon receipt of  (i) an affidavit of that fact by the claimant and (ii) if required by Community Financial or the exchange agent, the posting of a bond in an amount as exchange agent may direct as indemnity against any claim that may be made against it with respect to such certificate.

Immediately upon completion of the merger, there will be no further transfers on the stock transfer books of County First of shares of County First common stock, other than to settle transfers of County First common stock that occurred prior to the effective time. Community Financial and the exchange agent may rely upon County First’s stock transfer books to conclusively establish the identity of County First stockholders entitled to receive the merger consideration.

Withholding

Community Financial and the exchange agent will be entitled to deduct and withhold from any cash amount payable under the merger agreement to any holder of County First restricted stock, the amounts they are required to deduct and withhold under the Code or any provision of state, local or foreign tax law. If any such amounts are so withheld and paid over to the appropriate governmental authority, these amounts will be treated for all purposes of the merger agreement as having been paid to the stockholders from whom they were withheld.

Dividends and Distributions

No dividends or other distributions declared with respect to Community Financial common stock will be paid to the holder of any unsurrendered certificates of County First common stock or unsurrendered uncertificated share of County First common stock until the holder surrenders such certificate or uncertificated share in accordance with the terms of the merger agreement. Subject to the effect of applicable abandoned property, escheat or similar laws, after the surrender of a certificate or uncertificated share in accordance with the terms of the merger agreement, the record holder of such certificate or uncertificated share will be entitled to receive any such dividends or other distributions, without any interest thereon, which subsequent to the effective time had previously become payable but not paid with respect to shares of Community Financial common stock represented by such person’s certificates representing shares of County First common stock or uncertificated share of County First common stock.

Representations and Warranties

The representations, warranties and covenants described below, and elsewhere in this proxy statement/​prospectus, and included in the merger agreement were made by Community Financial and Community Bank, on the one hand, and County First, on the other hand, for the benefit of the other party, only for purposes of the merger agreement and as of specific dates. In addition, the representations, warranties and covenants may be subject to limitations, qualifications or exceptions agreed upon by the parties to the merger agreement, including those included in confidential disclosures made for the purposes of, among other things, allocating contractual risk between Community Financial, Community Bank and County First rather than establishing matters as facts, and may be subject to standards of materiality that differ from those standards relevant to investors. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in public disclosures by Community Financial, Community Bank or County First. Therefore, you should not rely on the representations, warranties, covenants or any description thereof as characterizations of the actual state of facts or condition of Community Financial, Community Bank, County First or any of their respective subsidiaries or affiliates without considering the foregoing. The representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus and in the documents incorporated by reference into this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

The merger agreement contains customary representations and warranties of each of Community Financial, Community Bank and County First relating to their respective businesses. The representations and warranties in the merger agreement do not survive the effective time.

51

The merger agreement contains representations and warranties made by County First relating to a number of matters, including the following:

•

corporate matters, including due organization and qualification and subsidiaries;

​

•

capitalization;

​

•

authority relative to the execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;

​

•

required governmental, regulatory and third party consents, approvals and filings in connection with the merger;

​

•

reports to, and other filings with, regulatory authorities;

​

•

financial statements, internal controls, books and records and the absence of undisclosed liabilities;

​

•

the absence of certain changes or events;

​

•

legal proceedings;

​

•

the absence of agreements with, or orders, enforcement actions or other directives by, regulatory authorities;

​

•

compliance with applicable laws in all material respects;

​

•

tax matters;

​

•

certain material contracts;

​

•

intellectual property;

​

•

labor, employee and employee benefit matters;

​

•

real property;

​

•

the opinion of its financial advisor;

​

•

broker’s fees payable in connection with the merger;

​

•

environmental matters;

​

•

loan matters;

​

•

the inapplicability of anti-takeover statutes;

​

•

related party transactions;

​

•

insurance matters;

​

•

investment securities and derivatives;

​

•

corporate documents and records;

​

•

the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents;

​

•

internal controls;

​

•

data privacy and security; and

​

•

the absence of action or knowledge of any fact or circumstance that would prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

​

The merger agreement contains representations and warranties made by Community Financial and Community Bank relating to a number of matters, including the following:

•

corporate matters, including due organization and qualification and subsidiaries;

​

52

•

capitalization;

​

•

authority relative to the execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;

​

•

required governmental, regulatory and third party consents, approvals and filings in connection with the merger;

​

•

funding for the merger consideration;

​

•

SEC reports and reports to, and other filings with, regulatory authorities;

​

•

financial statements, internal controls, books and records and the absence of undisclosed liabilities;

​

•

the absence of certain changes or events;

​

•

legal proceedings;

​

•

the absence of agreements with, or orders, enforcement actions or other directives by, regulatory authorities;

​

•

compliance with applicable laws in all respects;

​

•

tax matters;

​

•

employee benefits matters;

​

•

the opinion of its financial advisor;

​

•

broker’s fees payable in connection with the merger;

​

•

loan matters;

​

•

the inapplicability of anti-takeover statutes;

​

•

the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents;

​

•

internal controls;

​

•

data privacy and security; and

​

•

the absence of action or knowledge of any fact or circumstance that would prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

​

Certain representations and warranties of Community Financial, Community Bank and County First are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, a “material adverse effect,” when used in reference to Community Financial, Community Bank, County First or the combined company, means a material adverse effect on the business, financial condition or results of operations of such party and its subsidiaries taken as a whole (provided that, any effect, change or circumstance resulting from the following shall not be considered in determining whether a material adverse effect has occurred: (i) changes, after the date of the merger agreement, in (A) laws, rules, or regulations or interpretations thereof or U.S. generally accepted accounting principles (which we refer to as “GAAP”) or (B) applicable regulatory accounting requirements or interpretations thereof by courts or governmental entities, that apply to financial and/or depository institutions and/or their holding companies generally, (ii) changes, after the date of the merger agreement, in economic conditions affecting financial institutions generally, including but not limited to, changes in the general level of market interest rates, (iii) actions and omissions of Community Financial or County First taken with the prior written consent, or at the request, of the other, (iv) direct effects of compliance with the merger agreement on the operating performance of the parties, including expenses related to the merger, (v) public announcement of the merger, merger agreement, including any stockholder litigation relating to the merger and the other transactions contemplated by the merger agreement, (vi) any failure by Community Financial or County First to meet internal or published projections, forecasts, performance measures, operating statistics or revenue or

53

earnings predictions for any period, and (vii) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States; except, with respect to subclauses (i), (ii) and (vii), to the extent such effect, circumstance, occurrence or change is disproportionately adverse to such party and its subsidiaries as compared to comparable U.S. banking organizations.

Covenants and Agreements

Conduct of Business Prior to the Effective Time

County First has agreed that, prior to the effective time (or earlier termination of the merger agreement), subject to specified exceptions, it will, and will cause each of its subsidiaries to, conduct its business in the ordinary and usual course consistent with past practice and in accordance with written policies and procedures, use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships, and take no action that would reasonably likely to adversely affect or delay its ability to obtain any necessary approvals of any governmental entity or regulatory agency required for the transactions contemplated by the merger agreement or to perform its covenants and agreements under the merger agreement or to consummate the transactions contemplated thereby on a timely basis.

Additionally, prior to the effective time (or earlier termination of the merger agreement), subject to specified exceptions, County First may not, and may not permit any of its subsidiaries to, without the prior written consent of Community Financial, which consent cannot be unreasonably withheld, undertake the following actions:

•

other than in the ordinary course of business consistent with past practice, incur, modify, extend or renegotiate any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity;

​

•

prepay any indebtedness or other similar arrangements so as to cause County First or any of its subsidiaries to incur any prepayment penalty thereunder;

​

•

purchase any brokered certificates of deposit other than in the ordinary course of business consistent with past practice with a term not in excess of one year;

​

•

adjust, split, combine or reclassify any of its capital stock;

​

•

make, declare or pay any dividend, or make any other distribution on any shares of its capital stock, except quarterly cash dividends by County First at a rate not in excess of  $0.075 per share of County First common stock;

​

•

grant any stock options, stock appreciation rights, performance shares, restricted stock units, restricted shares or other equity or equity-based awards or interests, or grant any individual, corporation or other entity any right to acquire any shares of its capital stock;

​

•

issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of capital stock, except pursuant to the settlement of County First restricted stock awards in accordance with their terms;

​

•

directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock, except the acceptance of shares of County First common stock as payment for withholding taxes incurred in connection with the vesting or settlement of County First restricted stock awards, in each case, in accordance with past practice and the terms of the applicable award agreements;

​

•

sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets to any individual, corporation or other entity other than a subsidiary, or cancel, release or assign

​

54

any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business consistent with past practice or pursuant to the contracts or agreements in force as of the date of the merger agreement;

•

except pursuant to agreements in force at the date of or permitted by the merger agreement, (i) acquire (whether by merger or consolidation, acquisition of stock or assets or by formation of a joint venture or otherwise) any other person or business or any material assets, deposits or properties of any other person; or (ii) make any equity investment, either by purchase of stock or securities, contributions to capital, property transfers or purchase of any property or assets of any other individual, corporation or other entity, or form any new subsidiary;

​

•

enter into, renew, amend or terminate any contract or agreement, or make any change in any of its leases or contracts, other than with respect to those involving aggregate payments of less than, or the provision of goods or services with a market value of less than, $25,000 per annum, subject to certain exceptions;

​

•

make, renegotiate, renew, increase the amount of, extend the term of, modify or purchase any loan, or make any commitment in respect of any of the foregoing, except (i) in conformity with existing lending practices and $750,000 if such loan is not fully secured or $1.0 million if such loan is fully secured, or (ii) loans as to which the Company has a binding obligation to make such loans (including without limitation lines of credit and letters of credit) as of the date hereof; provided, however, that neither County First nor any of its subsidiaries shall make, renegotiate, renew, increase the amount of, extend the term of, modify or purchase any loan, or make any commitment in respect of any of the foregoing, to any person if when aggregated with all outstanding Loans and commitments for loans made to such person and such person’s family members and affiliates, the loans would exceed the lesser of the Company’s internal policy limits or 75% of the Company’s legal lending limit;

​

•

enter into any material new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or any segment thereof), except as required by applicable law or policies imposed by any governmental entity;

​

•

except for loans made in accordance with Regulation O of the Federal Reserve Board, make or increase any loan, or commit to make or increase any such loan or extension of credit, to any director or executive officer of County First or any entity controlled, directly or indirectly, by any of the foregoing;

​

•

subject to certain exceptions, including as required under applicable law, (i) increase the compensation or benefits payable to any current or former employee, executive officer, director or consultant, except for merit or promotion based increases in annual base salary or wage rate for employees (other than directors or executive officers) in the ordinary course of business, consistent with past practice, or otherwise consistent with the bank’s budget, that do not exceed, in the aggregate, 3% of the aggregate cost of all employee annual base salaries and wages in effect as of the date of the merger agreement, (ii) pay or award, or commit to pay or award, any bonuses or incentive compensation not required by any existing plan or agreement, except in a manner consistent with past practice, (iii) enter into, adopt, amend or terminate any employee benefit or compensation plan, program, policy or arrangement for the benefit of any current or former employee, officer, director or consultant (who is a natural person), (iv) grant or accelerate the vesting of any equity-based awards or other compensation, (v) enter into any new, or amend (whether in writing or through the interpretation of) any existing, employment, severance, chance in control, retention, bonus guarantee, or collective bargaining agreement or arrangement, (vi) elect to any senior executive office any person who is not a member of its senior executive officer team as of the date of the merger agreement or elect to its board of directors any person who is not a member of its board of directors as of the date of the merger agreement or (vii) hire any employee with annual compensation greater than $40,000, or terminate the employment or services of any employee in a position of Vice President or above or whose annual compensation is greater than $40,000, other than for cause;

​

55

•

commence any action or proceeding, other than to enforce any obligation owed to County First or any of its subsidiaries and in accordance with past practice, or settle any claim, action or proceeding (i) involving payment by it of money damages in excess of  $25,000 or (ii) which would impose any material restriction on its operations or the operations of any of its subsidiaries;

​

•

amend its articles of incorporation, bylaws or similar governing documents;

​

•

increase or decrease the rate of interest paid on time deposits or on certificates of deposit, except in a manner consistent with past practice;

​

•

materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, except as may be required by GAAP or applicable laws or policies imposed by any governmental entity or requested by a governmental entity;

​

•

make, or commit to make, any capital expenditures other than (i) pursuant to binding commitments existing on the date of the merger agreement, (ii) expenditures necessary to maintain existing assets in good repair, and (iii) capital expenditures in the ordinary and usual course of business consistent with past practice in amounts not exceeding $25,000 in the aggregate;

​

•

establish or commit to the establishment of any new branch or other office facilities or file any application to relocate or terminate the operation of any banking office;

​

•

enter into any futures contract, option, swap agreement, interest rate cap, interest rate floor, interest rate exchange agreement, or take any other action for purposes of hedging the exposure of its interest-earning assets or interest-bearing liabilities to changes in market rates of interest, other than in the ordinary course of business;

​

•

make, change or rescind any material tax or tax return election, file any amended tax return, enter into any closing agreement with respect to taxes, settle or compromise any material tax claim or assessment, or surrender any right to claim a refund of taxes or obtain any tax ruling;

​

•

take any action that is intended or expected to result in any of its representations and warranties set forth in the merger agreement being or becoming untrue in any material respect at any time prior to the effective time, or in any of the conditions to the merger not being satisfied or in a violation of any provision of the merger agreement;

​

•

implement or adopt any change in its accounting principles, practices or methods, other than as required by GAAP or regulatory guidelines;

​

•

take any action that would prevent or impede the merger from being treated as a “reorganization” within the meaning of Section 368(a) of the Code; or

​

•

agree to take, make any commitment to take, or adopt any resolutions of the County First board or similar governing body in support of, any of the foregoing.

​

Community Financial has agreed that, prior to the effective time, subject to specified exceptions, Community Financial shall use commercially reasonable efforts to preserve intact its and its subsidiaries business organization, goodwill, relationships with depositors, customers and employees, and maintain its rights and franchises in all material respects, and may not, and may not permit any of its subsidiaries to, without the prior written consent of Community Financial, undertake the following actions:

•

knowingly take any action that would adversely affect or delay (i) the ability to obtain any necessary approvals of any governmental entity required for the consummation of the merger or (ii) its ability to perform its obligations under the merger agreement or to consummate the merger;

​

•

take any action that is intended to or expected to result in any of its representations and warranties set forth in the merger agreement being or becoming untrue in any material respect at any time prior to the effective time, or in any of the conditions to the merger not being satisfied or in a violation of any provision of the merger agreement;

​

56

•

take any action that would prevent or impede the merger from being treated as a “reorganization” within the meaning of Section 368 of the Code;

​

•

agree to take, make any commitment to take, or adopt any resolutions of the Community Financial board or similar governing body in support of, any of the foregoing; or

​

•

amend, repeal or modify any provision of its articles of incorporation or bylaws in a manner that would adversely affect any County First stockholder or the merger.

​

Regulatory Matters

Community Financial and County First have agreed to use their respective reasonable best efforts to prepare and file within forty-five (45) days after the date of the merger agreement, all necessary applications, notices and filings, to obtain all permits, consents, approvals and authorizations of all governmental entities that are necessary or advisable, and all third parties that are required, to consummate the transactions contemplated by the merger agreement. Community Financial and County First have also agreed to furnish each other with all information concerning the other party or its subsidiaries as may be reasonably necessary or advisable in connection with any application, notice or filing to any governmental entity in connection with the merger, and Community Financial and County First have the right to review in advance, and to the extent practicable have agreed to consult with the other on, all information relating to Community Financial and County First, as the case may be, and any of their respective subsidiaries, appearing in any written materials submitted to any governmental entity. Each party has also agreed to provide the other with copies of any applications and all related correspondence prior to filing, other than portions of such material filed under a claim of confidentiality and to keep each other apprised of the status of matters related to the transactions contemplated by the merger agreement.

Employee Benefit Matters

Following the effective time, Community Financial has agreed to cause the surviving corporation to maintain, for the benefit of all persons who were employees of County First and its subsidiaries immediately prior to the effective time whose employment is not specifically terminated at or prior to the effective time (whom we refer to as “continuing employees”), employee benefit plans and compensation opportunities that are substantially comparable in the aggregate to the employee benefit and compensation opportunities that are generally made available to similarly situated employees of Community Financial or its subsidiaries, provided that no continuing employee will be eligible to participate in any closed or frozen plan of Community Financial or its subsidiaries. Any employee of County First or any of its subsidiaries immediately prior to the effective time whose employment is specifically terminated at or prior to the effective time of the merger and their qualified beneficiaries will have the right to continued coverage under group health plans of Community Financial in accordance with the Consolidated Omnibus Budget Reconciliation Act.

Under the merger agreement, County First has agreed to, effective immediately prior to the effective time (or such later date as requested by Community Financial or as may be required to comply with any applicable requirements contained in such plans), terminate County First’s health and welfare plans and shall arrange for termination of all corresponding insurance policies, service agreements and related arrangements effective on the same date, provided that no coverage of any of the continuing employees may terminate under the County First plans prior to the time such continuing employees become eligible to participate in the health plans, programs and benefits common to all employees of Community Financial and its subsidiaries.

Under the merger agreement, Community Financial has agreed to, effective as of the effective time, assume and honor in accordance with their terms all employment, severance, change in control and other compensation agreements and arrangements between County First or any of its subsidiaries and any of their employees, which are not terminated in connection with the consummation of the merger, and all accrued and vested benefit obligations through the effective time which are between County First or any of its subsidiaries and any of their current or former directors, officers, employees or consultants.

57

The merger agreement also provides that the surviving corporation, with respect to the continuing employees, agrees to undertake the following:

•

provide each such continuing employee who becomes covered under health plans, programs and benefits of Community Financial or any of its subsidiaries with credit for any co-payments and deductibles paid prior to the effective time under a health plan sponsored by County First for the plan year in which coverage commences under Community Financial’s health plan;

​

•

take any and all actions required to permit such continuing employees to roll over their account balances in County First’s 401(k) Plan into Community Financial’s 401(k) Plan; and

​

•

recognize all service of such continuing employees with County First and its subsidiaries, for purposes of vesting and determination of eligibility to participate under Community Financial’s compensation and benefit plans, programs or policies (other than any plan that is frozen as to participation), except (i) to the extent duplication of benefits occurs with respect to the same period of service, (ii) to the extent that its application would be prohibited by law or (iii) for benefit accrual purposes under any of Community Financial’s compensation and benefit plans, programs or policies (other than Community Financial’s vacation and sick leave programs).

​

Effective as of the day immediately prior to and conditioned upon the occurrence of the closing, County First will take all necessary and appropriate action to terminate its 401(k) Plan. Upon termination of the 401(k) Plan, all participants will be 100% vested in their account balances. Upon written request by Community Financial, County First agrees to take all necessary steps to file or cause to be filed all necessary documents with the Internal Revenue Service for a determination letter for termination of County First’s 401(k) Plan.

With respect to each full time County First employee (immediately prior to the effective time) who is involuntarily terminated by Community Financial (other than for cause as determined by Community Financial) or who voluntarily terminates employment for good reason within twelve (12) months of the effective time (and is not covered by a separate severance, change in control or employment agreement that provides severance benefits) a severance payment equal to two weeks’ base pay (at the rate in effect on the termination date) for each full year of service at County First, with fractional years of service rounded up or down to the nearest full year, with a minimum payment equal to four weeks’ base pay for County First employees who have at least one full year of service as of their date of termination and a maximum equal to twenty-six (26) weeks’ base pay. Severance payments are contingent upon the execution of an appropriate release of claims. Community Financial or Community Bank shall also pay all expenses for six (6) months of outplacement services to be provided to each exempt employee who is terminated or who voluntarily terminates employment for good reason. “Good Reason” for purposes of these severance benefits means a material decrease in the total amount of the employee’s base salary below its level in effect on the effective date without the employee’s prior written consent or a material geographical relocation of the employee without the employee’s prior written consent, which shall be deemed to mean relocation to an office more than thirty (30) miles from the employee’s location on the effective date.

Director and Officer Indemnification and Insurance

Under the merger agreement, Community Financial and Community Bank have agreed to, following the effective time, jointly and severally indemnify and hold harmless all current and former directors, officers and employees of County First and its subsidiaries against all costs or expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the effective time, whether asserted before or after the effective time, pertaining to (i) the fact that such person is or was a director, officer or employee of County First, any of its subsidiaries or any of their respective predecessors or was prior to the effective time serving at the request of any such party as a director, officer, employee, trustee or partner of another corporation, partnership, trust, joint venture, employee benefit plan or other entity, or (ii) any matters arising in connection with the transactions contemplated by the merger agreement, to the fullest extent such persons would have been indemnified or have the right to advancement of expenses pursuant to County First’s or any of its subsidiaries’ articles of

58

incorporation and bylaws or any other written indemnification agreement (as in effect on the date of the merger agreement) to the fullest extent permitted by applicable law to each indemnified party in connection with such claim, action, suit, proceeding or investigation. Community Financial and County First have also agreed to advance expenses to the fullest extent permitted under applicable law as such expenses are incurred and prior to the final and non-appealable disposition thereof, provided that the person receiving such advance expenses provides a signed written undertaking to repay such advances if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to indemnification under applicable law.

The merger agreement requires the surviving corporation to maintain, for a period of six (6) years after completion of the merger, County First’s existing directors’ and officers’ liability insurance policy, or policies covering each person that was covered, as of the date of the merger agreement, by County First’s existing directors’ and officers’ liability insurance policy with respect to claims against such persons arising from facts or events that occurred at or prior to the effective time. However, the surviving corporation is not required to spend annually more than 300% of the current annual premium paid as of the date of the merger agreement by County First for such insurance (which we refer to as the “premium cap”), and if such premiums for such insurance would at any time exceed that amount, then the surviving corporation will maintain policies of insurance which provide as much comparable coverage as is available at an annual premium equal to the premium cap. In lieu of the foregoing, Community Financial may or County First may (i) obtain an extended reporting period endorsement under County First’s existing directors’ and officers’ liability insurance policy or (ii) substitute therefor “tail” policies the material terms of which (including coverage and amount), are no less favorable in any material respect to such persons than County First’s existing insurance policies as of the date of the merger agreement and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the premium cap.

Certain Additional Covenants

The merger agreement also contains additional covenants, including, among others, covenants relating to the filing of this proxy statement/prospectus and the registration statement that it is a part of, obtaining required consents, the listing of the shares of the Community Financial common stock to be issued in the merger, access to information of the other company and notification of certain matters including certain threatened claims or litigation, defaults under material contracts or events or other occurrences reasonably likely to result in a material adverse effect, exemption from anti-takeover laws, calculation of contingent asset value, suspension of County First’s dividend reinvestment plan and public announcements with respect to the transactions contemplated by the merger agreement.

Stockholder Meeting and Recommendations of the County First Board

County First has agreed to hold a meeting of its stockholders for the purpose of voting upon approval of the merger agreement as soon as reasonably practicable after the registration statement (of which this proxy statement/prospectus is a part) is declared effective. County First has agreed to use its reasonable best efforts to obtain from its stockholders the vote required to approve the merger agreement, including by communicating to its stockholders its recommendation (and including such recommendation in this proxy statement/prospectus) that they approve the merger agreement and the transactions contemplated thereby.

If the County First board, after consultation with its outside legal counsel and, with respect to financial matters, its financial advisors, determines in good faith that it would be reasonably likely to result in a violation of its fiduciary duties under applicable law to continue to recommend the merger agreement, then in submitting the merger agreement to its stockholders, it may (but shall not be required to) submit the merger agreement to its stockholders without recommendation (although the resolutions approving the merger agreement as of the date therefor may not be rescinded or amended), in which event the County First board may also communicate the basis for its lack of recommendation to its stockholders in this proxy statement or an appropriate amendment or supplement thereto to the extent required by law; except that the County First board may not take any such actions unless (i) County First gives Community Financial at least three (3) business days’ prior written notice of its intention to take such action and a reasonable description of the event or circumstances giving rise to its determination to take such action (including, if such action is taken in response to any third-party proposal or offer or indication of interest with respect to

59

any of the following: (1) any merger, consolidation, share exchange, combination, or other similar transaction involving County First or any of its subsidiaries; (2) any direct or indirect acquisition or purchase of, or any tender or exchange offer resulting in such third party beneficially owning, 25% or more of any class of equity securities or the consolidated assets of County First whether through a series of transactions or otherwise (each of which we refer to as an “acquisition proposal”), its basis for determining that such acquisition proposal constitutes a superior proposal (as defined in the section entitled “— Agreement Not to Solicit Other Offers” below) to the contemplated merger (including the latest material terms and conditions of, and the identity of the third-party making, any such acquisition proposal, or any amendment or modification thereof, or describe in reasonable detail such other event or circumstances)) and (ii) after the close of business on the last day of such notice period, the County First board, taking into account any amendment or modification to the merger agreement proposed by Community Financial in writing (it being understood that Community Financial will not have any obligation to propose any modifications or amendments to the terms and conditions of the merger agreement), and after consultation with its outside legal counsel and, with respect to financial matters, its financial advisors, again determines in good faith that it would nevertheless be reasonably likely to result in a violation of its fiduciary duties under applicable law to continue to recommend the merger agreement to its stockholders. Any material amendment to any acquisition proposal will require a new determination and notice period, except such new notice period shall be two (2) business days instead of three (3) business days.

Under the terms of the merger agreement, County First has agreed to adjourn or postpone the County First stockholder meeting, if, as of the time for which such meeting is originally scheduled, there are insufficient shares of County First common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting, or if on the date of such meeting, County First has not received proxies representing a sufficient number of shares necessary to obtain the requisite County First stockholder approval. Unless the merger agreement has been terminated in accordance with its terms, the County First stockholder meeting shall be convened and the merger agreement shall be submitted to the stockholders for the purpose of voting on the adoption of the merger agreement and the other matters contemplated thereby.

Agreement Not to Solicit Other Offers

From the date of the merger agreement until the closing of the merger (or earlier termination of the merger agreement), County First has agreed that it will not, and will not authorize or permit any of its subsidiaries or any of its or its subsidiaries’ officers, directors, or employees or any investment banker, financial advisor, attorney, accountant or other representative (which we refer to as its “representatives”) to, directly or indirectly, (i) initiate, solicit, knowingly encourage or take any other action to facilitate, any inquiries, discussions or proposals that constitutes or could reasonably be expected to lead to an acquisition proposal, (ii) provide any information or data regarding County First or any of its subsidiaries to any person in connection with or in response to an acquisition proposal or an inquiry or indication of interest that would reasonably be expected to lead to an acquisition proposal, or (iii) continue or otherwise participate in any discussions or negotiations or otherwise communicate with any person (other than Community Financial, Community Bank or a representative of either) regarding an acquisition proposal; provided, however, no such restrictions shall prohibit County First or its representatives from informing in writing any person of such restrictions or from contacting in writing any person who has made, after the date of the merger agreement, an acquisition proposal solely to request the clarification of the terms and conditions thereof so as to determine whether the acquisition proposal constitutes, or is reasonably likely to lead to a superior proposal, provided, further, that prior to furnishing any written communication so permitted, County First shall have provided such information to Community Financial. However, if County First receives an unsolicited bona fide written acquisition proposal prior to obtaining approval of the merger agreement at the County First stockholder meeting and such acquisition proposal did not result from a breach of County First’s non-solicitation obligations under the merger agreement, County First may, and may permit its representatives to, furnish or cause to be furnished information or data and participate in negotiations or discussions to the extent that the County First board concludes in good faith (after consultation with its outside legal counsel, and with respect to financial matters, its financial advisors) that (1) such acquisition proposal constitutes or is reasonably likely to lead to a superior proposal and

60

(2) failure to take such actions would be reasonably likely to result in a violation of its fiduciary duties under applicable law, except that, prior to providing any such nonpublic information or data, County First must have provided such information or data to Community Financial and have entered into a confidentiality agreement with such third party on terms no more favorable to such third party concerning confidentiality than the letter agreement, dated July 11, 2017, between Community Financial and County First, which confidentiality agreement does not provide such third party with any exclusive right to negotiate with County First.

County First has also agreed to immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of the merger agreement with any parties other than Community Financial, with respect to any acquisition proposal. In addition, County First has agreed that it will not release any third party from, or waive any provisions of, any confidentiality or standstill agreements to which County First or any of its subsidiaries is party and to use its reasonable best efforts to enforce any confidentiality or standstill agreement to which County First or any of its subsidiaries is party in accordance with the terms thereof.

County First has also agreed to promptly (and in any event within twenty-four (24) hours) advise Community Financial of receipt of any acquisition proposal or any inquiry with respect to or which could reasonably be expected to lead to an acquisition proposal, and the substance thereof  (including, in each case, the identity of the person making such inquiry or acquisition proposal and the material terms and conditions thereof), to provide to Community Financial copies of any written materials received by County First from or on behalf of such person or its representatives in connection therewith and to keep Community Financial apprised of any related developments, discussions and negotiations on a current basis, including any amendments to or revisions of the terms of such inquiry or acquisition proposal. Except as otherwise provided in the merger agreement, unless the merger agreement has been terminated in accordance with its terms, County First is prohibited from entering into, and must cause its subsidiaries and cause its and their officers, directors, agents, advisors and representatives not to enter into on its behalf, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement relating to any acquisition proposal (other than a confidentiality agreement as described above).

For purposes of the merger agreement, a “superior proposal” means any bona fide written offer or proposal made by a third party to consummate an acquisition proposal for (1) any merger, consolidation, business consolidation or similar transaction, or for (2) 50% or more of Count First’s or its subsidiaries assets, or any class of equity securities of County First or its subsidiaries whose assets, individually or in the aggregate constitute 50% or more of the assets of County first or (3) any tender offer or exchange offer that would result in such third party beneficially owning 50% or more of any class of equity or voting securities in County First, that the County First board determines in good faith (after consultation with its outside legal counsel and, with respect to financial matters, its financial advisors, would result in a transaction that (A) is more favorable, from a financial point of view, than the consideration to be paid to the stockholders of County First pursuant to the merger agreement, considering, among other things, the nature of the consideration being offered and any material regulatory approvals or other risks associated with the timing of the proposed transaction beyond, or in addition to, those specifically contemplated by the merger agreement, and which proposal is not conditioned upon obtaining financing (or if conditioned upon financing, such condition is reasonably likely to be satisfied) and (B) is reasonably likely to be completed on the terms proposed, in each case, taking into account all legal, financial, regulatory and other aspects of the acquisition proposal.

Conditions to Completing the Merger

Community Financial’s and County First’s respective obligations to complete the merger are subject to the satisfaction or waiver of the following customary closing conditions:

•

the approval of the merger agreement by the County First stockholders;

​

•

the authorization for listing on the Nasdaq Global Select Market, subject to official notice of issuance, of the Community Financial common stock to be issued pursuant to the merger agreement;

​

61

•

the receipt of requisite regulatory approvals, consents or waivers, including from the FDIC, the Maryland Office of the Commission of Financial Regulation, state securities or “blue sky” authorities, and the expiration or termination of all statutory waiting periods in respect thereof, without the imposition of any material adverse effect on Community Financial and the surviving bank;

​

•

the effectiveness of the registration statement of which this proxy statement/prospectus is a part, with respect to the Community Financial common stock to be issued upon the consummation of the merger, and the absence of any stop order (or proceedings for that purpose initiated or threatened and not withdrawn) suspending the effectiveness of such registration statement;

​

•

the absence of any order, injunction, or decree of any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the consummation of the merger or any of the other transactions contemplated by the merger agreement, and the absence of any statute, rule, regulation, order, injunction or decree enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal consummation of the merger;

​

•

the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and (except to the extent such representations and warranties speak as of an earlier date, in which case such representations and warranties shall be so true and correct as of such earlier date) as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect);

​

•

the performance in all material respects by the other party of all obligations required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect);

​

•

receipt by such party of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion (which must be consistent with the state of facts existing as of the effective time), the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code; and

​

•

with respect only to Community Financial’s obligation to complete the merger, (i) the absence of the occurrence of any material adverse effect with respect to County First since the date of the merger agreement, (ii) the holders of no more than 10% of the outstanding shares of County First common stock vote such shares against the merger and duly and validly exercise and perfect appraisal rights with respect to such shares, and (iii) there not being outstanding more than 962,513 shares of County First common stock.

​

Neither County First nor Community Financial can be certain when, or if, the conditions to the merger will be satisfied or waived or that the merger will be completed.

Termination of the Merger Agreement

The merger agreement can be terminated, and the merger abandoned, at any time prior to effective time of the merger, by action taken or authorized by the board of directors of the terminating party, either before or after obtaining the requisite stockholder approval in the following circumstances:

•

by mutual written consent of Community Financial and County First;

​

•

by either Community Financial or County First, if County First failed to obtain the affirmative vote of the holders of two-thirds of the votes entitled to be cast by County First stockholders entitled to vote at its duly convened stockholder meeting or at any adjournment thereof at which a vote on the adoption of the merger agreement was taken;

​

•

by either Community Financial or County First, if  (i) any governmental entity denies any regulatory approval, consent or waiver required to consummate the merger and such denial has

​

62

become final and non-appealable or (ii) any governmental entity of competent jurisdiction has issued a final and non-appealable order enjoining or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement;

•

by either Community Financial or County First, in the event that the merger has not been consummated on or before the termination date, which is the nine (9) month anniversary of the date of the merger agreement, unless the failure to so consummate by such date is due to the failure of the terminating party to perform or observe its obligations under the merger agreement;

​

•

by either Community Financial or County First (except that the terminating party cannot then be in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement) if the other party breaches any of its covenants or agreements set forth in the merger agreement or any of its representations and warranties set forth in the merger agreement ceases to be true, such that in either case, such breach or untrue representation or warranty would constitute, if occurring or continuing on the closing date, the failure of a closing condition of the terminating party and such breach is not cured within thirty (30) days following written notice to the breaching party, or such breach cannot be cured during such period; or

​

•

by Community Financial, prior to the time that the County First stockholders approve the merger agreement, if the County First board (i) (A) fails to recommend in this proxy statement/​prospectus that the County First stockholders approve the merger agreement, (B) takes or resolves to take certain adverse actions with respect to such recommendation, (C) failed to reaffirm, if an acquisition proposal has been publicly announced or communicated to Count First stockholders, such recommendation within two (2) business days after Community Financial requests in writing that such action be taken, or (D) fails to recommend against acceptance of a tender offer or exchange offer for outstanding County First common stock that has been publicly disclosed (other than by Community Financial or an affiliate of Community Financial) within 10 business days after the commencement of such tender or exchange offer, (ii) recommends or endorses an acquisition proposal or (iii) breaches certain obligations, including with respect to the solicitation of acquisition proposals or calling a meeting of its stockholders and recommending that they approve the merger agreement, in any material respect.

​

Additionally, County First may terminate the merger agreement if its board determines, within two (2) business days after the determination date that (1) the final parent price is less than $29.9591, and (2) (i) the quotient obtained by dividing the final parent price by $37.4489, is less than (ii) the number obtained by subtracting 0.20 from the quotient obtained by dividing the average (rounded to four decimals) of the daily closing prices of the Nasdaq Bank Index for the twenty (20) consecutive trading days immediately preceding the determination date by $3,740.69. If County First elects to exercise its termination rights under such circumstances, it shall give prompt written notice to Community Financial in writing of such election. During the three (3) business day period commencing with Community Financial’s receipt of any such notice of County First electing to exercise its right to terminate the merger agreement as described above, Community Financial will have the option, at its sole discretion, of electing to pay additional merger consideration by increasing the cash consideration payable by an amount equal to the lesser of  (x) an amount equal to the difference between (1) $29.59 and (2) the final parent price multiplied by 0.9543, plus $1.00; or (y) an amount equal to the difference between (1) the sum of  (i) the final parent price multiplied by a fraction, the numerator of which is equal to the product of  (a) $37.4489, (b) 0.9543 and (c) the quotient obtained by dividing the average (rounded to four decimals) of the daily closing prices of the Nasdaq Bank Index for the twenty (20) consecutive trading days immediately preceding the determination date by $3,740.69 minus 0.20, and the denominator of which is equal to the final parent price, and (ii) $1.00 and (2) the sum of  (a) the final parent price multiplied by the 0.9543, and (b) $1.00.

If within such three business day period, Community Financial makes this election, Community Financial shall give written notice to County First within such time period of such election and cash consideration, whereupon no termination shall have occurred, and the merger agreement will remain in full force and effect in accordance with its terms (except as the cash consideration shall have been so modified), and any references in the merger agreement to the merger consideration shall be deemed to refer to the cash consideration after giving effect to any adjustment made pursuant to the above.

63

For purposes of the merger agreement, “determination date” means the fifth (5th) business day immediately prior to the anticipated effective time of the merger (or if such fifth (5th) business day is not a trading day, then the trading day immediately preceding such day), and “final parent price” means the average volume-weighted average price of Community Financial common stock over the twenty (20) trading days preceding the determination date.

Effect of Termination

If the merger agreement is terminated, it will become void and have no effect, and there will be no liability on the part of any party thereto or their respective officers and directors, except that (i) each of Community Financial and County First will remain liable for any liabilities or damages arising out of its fraud or willful breach of any provision of the merger agreement and (ii) designated provisions of the merger agreement will survive the termination, including those relating to payment of termination fees and expenses and the confidential treatment of information.

Termination Fee

In the event that the merger agreement is terminated by Community Financial prior to the approval by County First stockholders of the merger agreement based on the County First board having (i) (A) failed to recommend in this proxy statement/prospectus that the County First stockholders approve the merger agreement, (B) changed, withdrawn, modified or qualified such recommendation in a manner adverse to Community Financial, or publicly resolved to do so, (C) failed to reaffirm, if an acquisition proposal has been publicly announced or communicated to the Company’s stockholders, such recommendation within two business days after Community Financial has requested in writing that such action be taken, or (D) failed to recommend against acceptance of a tender offer or exchange offer for outstanding County First common stock that has been publicly disclosed (other than by Community Financial or an affiliate of Community Financial) within 10 business days after the commencement of such tender or exchange offer, or (ii) recommended or endorsed an acquisition proposal or (iii) breached certain obligations, including with respect to the non-solicitation of acquisition proposals or calling a meeting of its stockholders and recommending that the County First stockholders approve the merger agreement, in any material respect, then in either case (i), (ii) or (iii), County First will pay Community Financial by wire transfer of same day funds a $1.5 million termination fee.

In the event that, after the date of the merger agreement and prior to the termination of the merger agreement, (i) a bona fide acquisition proposal (which would, to the extent applicable, result in a third party beneficially owning 50% or more of any class of equity securities or the consolidated assets of County First whether through a series of transactions or otherwise) has been made known to senior management or the County First board or has been made directly to its stockholders generally or any person has publicly announced (and not withdrawn) an acquisition proposal (which would, to the extent applicable, result in a third party beneficially owning 50% or more of any class of equity securities or the consolidated assets of County First whether through a series of transactions or otherwise) with respect to County First, and (ii) thereafter, either (A) the merger agreement is terminated by either Community Financial or County First because the merger has not been completed prior to the termination date or because the requisite County First stockholder vote approving the merger agreement has not been obtained or (B) the merger agreement is terminated by Community Financial based on a breach of the merger agreement by County First that would constitute the failure of a closing condition and that has not been cured during the permitted time period or by its nature cannot be cured during such period and (iii) within twelve (12) months after the date of such termination, County First enters into a definitive agreement or consummates a transaction with respect to an acquisition proposal (which would, to the extent applicable, result in a third party beneficially owning 50% or more of any class of equity securities or the consolidated assets of County First whether through a series of transactions or otherwise) whether or not the same acquisition proposal as that referred to above, then County First will, on the earlier of the date it enters into such definitive agreement and the date of consummation of such transaction, pay Community Financial, by wire transfer of same day funds, a $1.5 million termination fee. For the avoidance of doubt, in no event shall County First have to pay the termination fee more than once.

64

Expenses and Fees

All costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such expense, except that the costs and expenses of printing and mailing this proxy statement/prospectus shall be borne by County First.

Amendment, Waiver and Extension of the Merger Agreement

Prior to the effective time and subject to compliance with applicable law, any provision of the merger agreement may be: (i) waived in writing by the party benefited by the provision or (ii) amended or modified at any time (including the structure of the transaction) by an agreement in writing between the parties to the merger agreement expressly stating such intent to amend or modify the merger agreement except that, after approval of the merger agreement by the County First stockholders or the approval of the issuance of shares of Community Financial common stock in connection with the merger by the Community Financial stockholders, there may not be, without further approval of such stockholders, any amendment or modification of the merger agreement that would reduce the amount or alter or change the kind of consideration to be received by holders of County First common stock or that would contravene any provision of applicable law.

At any time prior to the completion of the merger, the parties may, to the extent legally permitted, extend the time for the performance of any of the obligations or other acts of the other party, waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document delivered pursuant to the merger agreement, and waive compliance with any of the agreements or satisfaction of any conditions contained in the merger agreement, except that after approval of the merger agreement by the County First stockholders, there may not be, without further approval of such stockholders, any extension or waiver of the merger agreement or any portion thereof that requires further approval under applicable law.

County First Voting Agreement

Simultaneously with the execution of the merger agreement, Community Financial entered into a voting agreement with each of the directors of County First, solely in his or her capacity as a stockholder of County First, pursuant to which each such stockholder agreed, among other things, to vote all shares of County First common stock over which he or she exercises sole disposition and voting rights in favor of the County First merger proposal and certain related matters, and against alternative transactions. Each director also agreed to certain other restrictions with respect to the voting and transfer of such shares of County First common stock. As of the County First record date, the County First directors that are party to the voting agreement exercised sole disposition and voting rights with respect to 179,823 shares of County First common stock, representing approximately 18.7% of the outstanding shares of County First common stock. The foregoing description of the County First voting agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the County First voting agreement, a form of which is attached hereto as Annex B and is incorporated herein by reference.

65

ACCOUNTING TREATMENT

The merger will be accounted for using the acquisition method of accounting, in accordance with the provisions of FASB ASC Topic 805-10, Business Combinations. Under the acquisition method of accounting, the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of County First as of the effective date of the merger will be recorded at their respective fair values and added to those of Community Financial. If the purchase price exceeds the difference between the fair value of assets acquired and the fair value of the liabilities assumed, then such excess will be recorded as goodwill. Financial statements of Community Financial issued after the completion of the merger will reflect these fair values and will not be restated retroactively to reflect the historical financial position or results of operations of County First before the merger.

66

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a discussion of the material U.S. federal income tax consequences of the merger to “U.S. holders” (as defined below) of County First common stock and is based upon the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions in effect as of the date of this proxy statement/prospectus, all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010 nor does it address any tax consequences arising under the laws of any state, local or foreign jurisdiction or under any U.S. federal laws other than those pertaining to the income tax. For purposes of this summary, a “U.S. holder” is a beneficial owner of County First common stock that for U.S. federal income tax purposes is: (i) an individual citizen or resident of the United States; (ii) a corporation, or an entity treated as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) a trust (a) if the administration thereof is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of such trust or (b) that was in existence on August 20, 1996 and has a valid election in effect under applicable Treasury Regulations to be treated as a United States person; or (iv) an estate that is subject to U.S. federal income tax on its income regardless of the source.

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds County First common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Any entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds County First common stock, and any partners in such partnership, should consult their tax advisors regarding the tax consequences of the merger to their specific circumstances.

The following summary applies only to U.S. holders of County First common stock who hold such shares as capital assets within the meaning of Section 1221 of the Code (generally property held for investment). Further, this discussion is for general information only and does not purport to address all aspects of U.S. federal income taxation that might be relevant to U.S. holders in light of their particular circumstances and does not apply to U.S. holders subject to special treatment under the U.S. federal income tax laws, including, without limitation: banks and certain other financial institutions; tax-exempt organizations and entities, including pension plans, individual retirement accounts and employee stock ownership plans; S corporations, partnerships or other pass-through entities (or an investor in an S corporation, partnership or other pass-through entity); regulated investment companies; real estate investment trusts; controlled foreign corporations; passive foreign investment companies; insurance companies; mutual funds; dealers or brokers in stocks, securities, commodities or currencies; non-U.S. holders; a trader in securities who elects the mark-to-market method of accounting for securities; persons that hold shares as a hedge against currency risk, a straddle or a constructive sale or conversion transaction or other integrated investment; holders subject to the alternative minimum tax provisions of the Code; holders who exercise dissenters’ rights, holders that hold (or that held, directly or constructively, at any time during the five year period ending on the date of the disposition of such holder’s County First common stock pursuant to the merger) 5% or more of the County First common stock; holders who acquired their shares pursuant to the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan; former citizens or residents of the United States; holders whose functional currency is not the U.S. dollar; and holders of County First stock options, stock warrants or debt instruments.

ALL HOLDERS OF COUNTY FIRST COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY OTHER U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS AND THE EFFECT OF POSSIBLE CHANGES IN THOSE LAWS AFTER THE DATE OF THIS PROXY STATEMENT/PROSPECTUS.

67

The Merger

In the opinion of Kilpatrick Townsend & Stockton LLP and Hunton & Williams LLP, the merger will be treated as a merger transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, with the tax consequences described below. The opinions will be given in reliance on facts and representations contained in representation letters from each of Community Financial and County First, in each case in form and substance reasonably satisfactory to such counsel, and on customary assumptions. Neither of these opinions of counsel is binding on the Internal Revenue Service or the courts. No ruling has been, or will be, sought from the Internal Revenue Service as to the U.S. federal income tax consequences of the merger. There can be no assurance that the Internal Revenue Service would not assert, or that a court would not sustain, a position contrary to any of the tax consequences set forth below. In addition, if any of the representations or assumptions upon which those opinions are based are inconsistent with the actual facts, the U.S. federal income tax consequences of the merger could be adversely affected.

It is a condition to the obligation of Community Financial and County First to complete the merger that they receive a written opinion from their counsel, dated the closing date of the merger, to the effect that the merger will together be treated as a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

Consequences to Community Financial, Community Bank and County First

Each of Community Financial, Community Bank and County First will be “a party to the reorganization” within the meaning of Section 368(b) of the Code, and none of Community Financial, Community Bank or County First will recognize any gain or loss as a result of the merger.

Consequences to Stockholders

U.S. holders of County First common stock generally will recognize gain (but not loss) in an amount equal to the lesser of  (i) the holder’s gain realized (i.e., the excess, if any, of the sum of the amount of the cash consideration, contingent cash consideration and the fair market value (as of the effective time of the merger) of the Community Financial common stock received over the U.S. holder’s adjusted tax basis in his, her or its share of County First common stock surrendered) and (ii) the amount of cash consideration and contingent cash consideration received pursuant to the merger. Any gain or loss realized generally must be calculated separately for each identifiable block of shares surrendered in the exchange, and a loss realized on one block of shares may not be used to offset a gain realized on another block of shares. A U.S. holder should consult his, her or its tax advisor regarding the manner in which cash consideration, contingent cash consideration and shares of Community Financial common stock should be allocated among different blocks of their County First common stock surrendered in the merger and the manner in which gain or loss should be determined. Any recognized gain generally will be treated as capital gain and will be long-term capital gain if the U.S. holder’s holding period for its County First common stock exceeds one year at the effective time of the merger (except for gain treated as a dividend, as discussed below).

A U.S. holder’s aggregate tax basis in its Community Financial common stock received pursuant to the merger, including the basis allocable to any fractional share of Community Financial common stock for which cash is received, will be equal to the U.S. holder’s aggregate tax basis in the County First common stock surrendered pursuant to the merger, decreased by the amount of cash received (excluding any cash received in lieu of a fractional share of County First common stock) and increased by the amount of gain, if any, recognized or any amount treated as a dividend, as described below (but excluding any gain resulting from the deemed receipt and redemption of fractional shares).

A U.S. holder’s holding period in its Community Financial common stock received pursuant to the merger will include the holding period for his, her or its shares of County First common stock surrendered in exchange therefor. For a U.S. holder that acquired different blocks of County First common stock at different times or at different prices, the basis and holding period of each block of Community Financial common stock such holder receives will be determined on a block-for-block basis depending on the basis and holding period of the blocks of County First common stock exchanged for such block of Community Financial common stock. U.S. holders who hold shares of County First common stock with differing bases or holding periods should consult their tax advisors with regard to identifying the bases or holding periods of the particular shares of Community Financial common stock received in the merger.

68

Potential Treatment of Cash as a Dividend.   The receipt of cash by a U.S. holder may have the effect of a distribution of a dividend, in which case any gain recognized will be treated as a dividend for U.S. federal income tax purposes to the extent of the U.S. holder’s ratable share of County First’s accumulated “earnings and profits,” as calculated for U.S. federal income tax purposes. In general, the determination of whether such gain recognized will be treated as capital gain or has the effect of a distribution of a dividend depends upon whether and to what extent the exchange reduces the U.S. holder’s deemed percentage of stock ownership of Community Financial. For purposes of this determination, the U.S. holder generally will be treated as if he, she or it first exchanged all of its shares of County First common stock solely for Community Financial common stock (instead of the combination of stock consideration, cash consideration and contingent cash consideration actually received) and then Community Financial immediately redeemed a portion of the Community Financial common stock in exchange for the cash the U.S. holder actually received, which redemption we refer to in this proxy statement/prospectus as the “deemed redemption.” Such gain recognized by a U.S. holder pursuant to the deemed redemption will be treated as capital gain and will not have the effect of a dividend if the deemed redemption is (i) “substantially disproportionate” with respect to the U.S. holder (and after the deemed redemption the U.S. holder actually or constructively owns less than 50% of the voting power of the outstanding Community Bank common stock) or (ii) not “essentially equivalent to a dividend.”

The deemed redemption will generally be “substantially disproportionate” with respect to a U.S. holder if the percentage of the outstanding voting Community Financial common stock that the U.S. holder actually and constructively owns immediately after the deemed redemption is less than 80% of the percentage of the outstanding voting Community Financial common stock that the U.S. holder is deemed actually and constructively to have owned immediately before the deemed redemption. The deemed redemption will not be considered to be “essentially equivalent to a dividend” if it results in a “meaningful reduction’ in the U.S. holder’s deemed percentage of stock ownership of Community Financial following the merger. The Internal Revenue Service has ruled that a minority stockholder in a publicly held corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is considered to have experienced a “material reduction” would result in capital gain (as opposed to dividend) treatment if the stockholder as at least a relatively minor reduction in such stockholder’s percentage of stock ownership under the above analysis. In applying the above tests, the U.S. holder may, under the constructive ownership rules be deemed to own stock that is owned by other persons or otherwise in addition to the stock the U.S. holder actually owns or owned.

If, after applying these tests, the deemed redemption results in a capital gain, the capital gain will be long-term if the U.S. holder’s holding period for his, her or its County First common stock is more than one year as of the date of the exchange. If, after applying these tests, the deemed redemption results in the gain recognized being classified as a dividend, such dividend will be treated as either ordinary income or qualified dividend income. Any gain treated as qualified dividend income will be taxable to a U.S. holder at the long-term capital gains rate, provided that such U.S. holder held the County First common stock giving rise to such income for more than 60 days during the 121 day period beginning 60 days before the effective time of the merger.

The determination as to whether a U.S. holder will recognize a capital gain or dividend income as a result of his, her or its exchange of County First common stock for the stock consideration, cash consideration and contingent cash consideration in the merger is complex and is determined on a stockholder-by-stockholder basis. Accordingly, each U.S. holder is urged to consult his, her or its own tax advisor with respect to any such determination that is applicable to such U.S. holder’s individual situation.

Cash in Lieu of Fractional Shares.   A U.S. holder that receives cash in lieu of a fractional share of Community Financial common stock generally will be treated as having received such fractional share and then having received such cash in redemption of the fractional share. Gain or loss will generally be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s aggregate adjusted tax basis in the shares of County First common stock surrendered which is allocable to the fractional share. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder’s holding period for such fractional share (including the holding period of its County First common stock surrendered therefor) exceeds one year at the effective time of the merger.

69

Backup Withholding and Information Reporting

Payments of cash to a U.S. holder of County First common stock may, under certain circumstances, be subject to backup withholding (currently at a rate of 28%) on any cash payments received pursuant to the merger, unless the U.S. holder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Certain holders (such as corporations and non-U.S. holders) are exempt from backup withholding. The amount of any backup withholding is not an additional tax and will generally be allowed as a refund or credit against a holder’s U.S. federal income tax liability, if any, provided that certain required information is timely furnished to the Internal Revenue Service.

In addition, U.S. holders of County First common stock are required to retain permanent records and make such records available to any authorized Internal Revenue Service officers and employees upon request. The records should include the number of shares of County First stock exchanged, the number of shares of Community Financial stock received, the fair market value and tax basis of County First shares exchanged and the U.S. holder’s tax basis in the Community Financial common stock received.

If a U.S. holder that receives Community Financial common stock in the merger is considered a “significant holder,” such U.S. holder will be required (1) to file a statement with its U.S. federal income tax return in accordance with Treasury Regulation Section 1.368-3 providing certain facts pertinent to the merger, including such U.S. holder’s tax basis in, and the fair market value of, the County First common stock surrendered by such U.S. holder in the merger, and (2) to retain permanent records of these facts relating to the merger. A “significant holder” is any holder of County First common stock that, immediately before the merger, (a) owned at least 5% (by vote or value) of outstanding County First common stock, or (b) owned County First securities with a tax basis of  $1.0 million or more.

This discussion of U.S. federal income tax consequences is for general information purposes only and is not intended to be, and should not be construed as, tax advice. Determining the actual tax consequences of the merger to you may be complex and will depend on your specific situation and on factors that are not within our control. You should consult your tax advisors with respect to the application of U.S. federal income tax laws to your particular situations, including the applicability and effect of the alternative minimum tax and any U.S. federal estate or gift tax rules or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty and the effect of possible changes in those laws after the date of this proxy statement/prospectus.

70

DESCRIPTION OF CAPITAL STOCK OF COMMUNITY FINANCIAL

The following is a brief description of the terms of the capital stock of Community Financial. This summary does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to the Maryland General Corporation Law, federal law, Community Financial’s articles of incorporation and Community Financial’s bylaws. Copies of Community Financial’s articles of incorporation and bylaws have been filed with the SEC and are also available upon request from Community Financial. To find out where copies of these documents can be obtained, see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

Authorized Capital Stock

Community Financial’s articles of incorporation currently authorize the issuance of up to 15,000,000 shares of capital stock, par value $0.01 per share. As of September 29, 2017, there were 4,649,302 shares of Community Financial common stock issued and outstanding, including 34,473 shares of Community Financial common stock issued in respect of outstanding awards of restricted stock and (ii) there are no shares of Community Financial common stock reserved for issuance upon the exercise of outstanding stock options to purchase shares of Community Financial common stock.

Community Financial common stock is currently listed for quotation on the Nasdaq Global Select Market under the symbol “TCFC.”

Preemptive Rights; Redemption Rights; Sinking Funds and Terms of Conversion

Preemptive Rights

The Community Financial common stock currently has no preemptive rights. The Community Financial board may fix preemptive rights for the Community Financial common stock at such prices as it determines in its sole discretion.

Redemption Rights

The Community Financial common stock does not currently have any redemption rights.

As of September 29, 2017, there were no shares of Community Financial preferred stock outstanding. Preferred stock may be issued with preferences and designations as the Community Financial board may from time to time determine. The Community Financial board may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of Community Financial common stock.

Sinking Funds

The Community Financial common stock is not subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Community Financial common stock have no right to require redemption or repurchase of any of their shares.

Conversion

The Community Financial common stock has no conversion rights.

Voting Rights

Because there are no issued and outstanding shares of Community Financial preferred stock, the holders of Community Financial common stock have exclusive voting rights in Community Financial. They elect the Community Financial board and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the Community Financial board. Generally, each holder of Community Financial common stock is entitled to one vote per share and will not have any right to cumulate votes in the election of directors. If Community Financial issues shares of Community

71

Financial preferred stock, holders of the Community Financial preferred stock may also possess voting rights, including the right, voting separately as a class, to elect one or more directors (in addition to the directors elected by the holders of Community Financial common stock).

Liquidation Rights

In the event of Community Financial’s liquidation, dissolution or winding up, holders of Community Financial common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of Community Financial available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation, dissolution or winding up.

Dividend Rights

Holders of Community Financial common stock are entitled to receive ratably such dividends as may be declared by the Community Financial board out of legally available funds. The ability of the Community Financial board to declare and pay dividends on Community Financial common stock is subject to the terms of applicable Maryland law and banking regulations. If Community Financial issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Preferred Stock

Community Financial’s articles of incorporation authorize the Community Financial board, without further stockholder action, to classify and reclassify any unissued shares of capital stock into a class or classes of preferred stock and to provide for the issuance of the shares of preferred stock in series, and by filing articles supplementary to the articles of incorporation pursuant to the applicable law of the State of Maryland, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. As of September 29, 2017, there were no shares of Community Financial preferred stock outstanding. Preferred stock may be issued with preferences and designations as the Community Financial board may from time to time determine. The Community Financial board may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of Community Financial common stock.

72

COMPARISON OF STOCKHOLDERS’ RIGHTS

If the merger is completed, County First stockholders will be entitled to receive shares of Community Financial common stock in exchange for their shares of County First common stock. Community Financial and County First are organized under the laws of the State of Maryland. As a result of the merger, County First stockholders will become stockholders of Community Financial. Thus, following the merger, the rights of County First stockholders who become Community Financial stockholders as a result of the integrated mergers will continue to be governed by the corporate law of the State of Maryland and will also then be governed by Community Financial’s articles of incorporation and Community Financial’s bylaws. Community Financial’s articles of incorporation and bylaws will be unaltered by the merger.

The following is a summary of the material differences between (1) the current rights of County First stockholders under the Maryland General Corporation Law (which we refer to as the “MGCL” in this section) and the Maryland Financial Institutions Code (which we refer to as the “MFIC” in this section), County First’s articles of incorporation and County First’s bylaws and (2) the current rights of Community Financial stockholders under the MGCL, Community Financial’s articles of incorporation and Community Financial’s bylaws. Community Financial and County First believe that this summary describes the material differences between the rights of Community Financial stockholders as of the date of this proxy statement/prospectus and the rights of County First stockholders as of the date of this proxy statement/prospectus; however, it does not purport to be a complete description of those differences. Copies of Community Financial’s and County First’s governing documents have been filed with the SEC. To find out where copies of these documents can be obtained, see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 93.

73

74

75

76

77

78

79

80

81

82

83

84

85

86

COMPARATIVE MARKET PRICES AND DIVIDENDS

Community Financial common stock is listed on the Nasdaq Global Select Market under the symbol “TCFC” and County First common stock is listed on the OTCQB Marketplace under the symbol “CUMD.” The following table sets forth the high and low reported sale prices per share of Community Financial common stock and County First common stock, and the cash dividends declared per share, for the periods indicated:

On July 31, 2017, the last full trading day before the public announcement of the merger, the high and low sales prices of shares of Community Financial common stock as reported on the Nasdaq Global Select Market were $37.48 and $35.40, respectively. On September 29, 2017, the last practicable trading day prior to the printing of this proxy statement/prospectus, the high and low sales prices of shares of Community Financial common stock as reported on the Nasdaq Global Select Market were $35.50 and $35.15, respectively.

On July 31, 2017, the last full trading day before the public announcement of the merger, the high and low sales prices of shares of County First common stock as reported on the OTCQB Marketplace were $21.50 and $21.50, respectively. On September 29, 2017, the last practicable trading day prior to the printing of this proxy statement/prospectus, the high and low sales prices of shares of County First common stock as reported on the OTCQB Marketplace were $34.00 and $34.00, respectively.

As of September 29, 2017, there were approximately 466 registered holders of Community Financial common stock and, as of the County First record date, there were approximately 397 registered holders of County First common stock.

Each of the Community Financial stockholders and the County First stockholders are advised to obtain current market quotations for Community Financial common stock and County First common stock. The market price of Community Financial common stock and County First common stock will fluctuate between the date of this proxy statement/prospectus and the date of completion of the merger. No assurance can be given concerning the market price of Community Financial common stock or County First common stock before or after the effective date of the merger. Changes in the market price of Community Financial common stock prior to the completion of the merger will affect the market value of the stock portion of the merger consideration that County First stockholders will be entitled to receive upon completion of the merger.

87

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF COMMUNITY FINANCIAL

The following table provides information as of September 29, 2017 with respect to the persons known by Community Financial to be the beneficial owners of more than 5% of its outstanding common stock. A person is considered to beneficially own any shares of Community Financial common stock over which he or she has, directly or indirectly, sole or shared voting or investment power.

(1)

Percentages with respect to each person have been calculated on the basis of 4,649,302 shares of Community Financial common stock, the number of shares of Community Financial common stock outstanding as of September 29, 2017.

​

(2)

Based on information contained in a Schedule 13D filed with the U.S. Securities and Exchange Commission on March 25, 2016.

​

(3)

Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 14, 2017.

​

(4)

Based on information contained in a Schedule 13G/A filed with the U.S. Securities and Exchange Commission on February 14, 2017.

​

88

(5)

Based on information contained in a Schedule 13G filed with the U.S. Securities and Exchange Commission on February 14, 2017.

​

(6)

Includes 33,065 shares held in a suspense account for future allocation and/or distribution among participants as the loan used to purchase the shares is repaid. The ESOP trustees, which are Company directors Austin J. Slater, Jr., Joseph V. Stone, Jr. and Kathryn M. Zabriskie vote all allocated shares in accordance with the written instructions of the participating employees. Unallocated shares and shares for which no instructions have been received are voted by the trustees in the same proportion as shares for which the trustees have received timely voting instructions.

​

The following table provides information as of September 29, 2017, about the shares of Community Financial common stock that may be considered to be beneficially owned by (i) each director and each named executive officer of Community Financial as of such date and (ii) all Community Financial directors and executive officers as a group. This information has been provided by each of the directors and executive officers at Community Financial’s request or derived from statements filed with the SEC. Beneficial ownership of securities means the possession directly or indirectly, through any formal or informal arrangement, either individually or in a group, of voting or investment power (which includes the power to dispose of, or to direct the disposition of, such security). Unless otherwise indicated, to Community Financial’s knowledge, the beneficial owner has sole voting and dispositive power over the shares. All directors and executive officers as a group own 12.57% of outstanding common stock.