8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2012

TRI-COUNTY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Maryland	0-18279	52-1652138
(State or other Jurisdiction of	(Commission	(IRS Employer
incorporation or organization)	File Number)	Identification No.)

3035 Leonardtown Road, Waldorf, Maryland 20601

(Address of principal executive offices)

(301) 645-5601

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On May 7, 2012, Tri-County Financial Corporation (the “Company”), the holding company for Community Bank of Tri-County (the “Bank”), disseminated a letter to shareholders that reported financial and operational highlights for the year ended December 31, 2011 and for the quarter ended March 31, 2012. A copy of the letter to shareholders is included as Exhibit 99.1 to this report and incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c) On May 7, 2012, the Board of Directors of the Company appointed William J. Pasenelli President of the Company. Mr. Pasenelli is also Chief Financial Officer of the Company and President and Chief Financial Officer of the Bank. Mr. Pasenelli joined the Bank as Chief Financial Officer in 2000 and was named President in 2010. Before joining the Bank, Mr. Pasenelli had been Chief Financial Officer of Acacia Federal Savings Bank, Annandale, Virginia, since 1987. Mr. Pasenelli is a member of the American Institute of Certified Public Accountants, the Greater Washington Society of Certified Public Accountants and other civic groups. Age 53.

For a description of the agreements between the Company, the Bank and Mr. Pasenelli, reference is made to the “Executive Compensation,” “Retirement Benefits” and “Other Potential Post-Termination Benefits” sections in the Company’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on April 5, 2012.

Item 5.07 Submission of Matters to a Vote of Security Holders

(a) The annual meeting of stockholders of the Company was held on May 7, 2012.

(b) The matters considered and voted on by the stockholders at the annual meeting and the vote of the stockholders were as follows:

1. The following individuals were elected as directors, each for a three-year term, by the following vote:

Name	Shares Voted For	Shares Voted Against	Abstentions
William J. Pasenelli	2,200,054	22,396	23,604
Austin J. Slater, Jr.	2,216,869	18,814	10,371
Joseph V. Stone, Jr.	2,215,861	22,789	7,404

There were 269,443 broker non-votes in the election of directors.

2. The appointment of Stegman & Company as the independent registered public accounting firm for the fiscal year ending December 31, 2012 was ratified by the stockholders by the following vote:

Shares Voted For	Shares Voted Against	Abstentions
2,502,682	0	12,815

3. An amendment to the Company’s Articles of Incorporation relating to the permissible size of the Board was approved by stockholders by the following vote:

Shares Voted For	Shares Voted Against	Abstentions
2,056,253	86,254	103,547

There were 269,443 broker non-votes on the proposal.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired: Not applicable

(b) Pro Forma Financial Information: Not applicable

(c) Shell Company Transactions: Not applicable

(d) Exhibits

Number Description

99.1 Letter to Shareholders

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 10, 2012	By:	/s/ William J. Pasenelli
		William J. Pasenelli President and Chief Financial Officer

EX-99.1

Dear Shareholder:

Tri County Financial Corporation continued to execute its strategy to return the Company and the Bank to pre-crisis levels of performance. For 2011, we were able to grow assets by 11% to just under $1 billion. The majority of growth was in loans, which increased $55,638,839 from new loan production of $269,796,000. It is important to note the role played by your company during the Great Recession and the ensuing anemic recovery. We originated over $1 billion in new loans during the economic crisis to support our market as other lenders curtailed lending.

Another of our strategic objectives for 2011 was to significantly improve the level of classified assets. While our residential portfolio had very low levels of delinquency during the crisis, our commercial customers felt the economic shock waves and their performance was negatively impacted. As a result of the measures taken to reduce nonperforming loans and redeploy the funds into earning assets, we were able to reduce our nonperforming assets from 2.71% to 1.48%, which is well below peer levels.

During 2011, we increased the provision for loan losses and valuation allowance on foreclosed real estate by $1,828,996 over the comparable period in 2010, to reflect economic conditions or pending contracts for sale to assist in disposal of those affected assets. The result of this additional cost, and the increased cost of regulatory mandates as well as other noninterest expense increases, was a decrease in net income available to common shareholders for the year to $3,488,976 or $0.82 per common share (diluted). It is important to note that your company remained profitable in every quarter during and after the Great Recession.

In keeping with our dividend policy, your Board approved an annual cash dividend of $0.40 per share.

The strategic objectives for 2011, that is, the improvement of earnings and asset quality, continue to be the focal point of our efforts in 2012. Our loan portfolio has continued to perform well and our nonperforming loan ratios remain well below peers and are trending toward historic levels. Net income increased by 357% compared to the first quarter of 2011 to $1,105,253 for the first quarter of 2012, while net income available to common shareholders increased by $1,025,488 compared to the first quarter of 2011 to $1,055,253 for the first quarter of 2012. Total assets declined $14,888,219 in the first quarter of 2012 to $968,591,504 at March 31, 2012 as securities, cash and cash equivalents decreased as seasonal fluctuations and interest rate cost containment policies allowed higher cost of deposits to run off. Interest expense reduction efforts continue to reduce our cost of funds as maturing certificates of deposit reprice at current rates. This should help improve the net interest spread going forward.

As the United States slowly works its way through economic recovery, many challenges remain that introduce uncertainty in future expectations of market stability. The congressional budget impasse and “fiscal cliff” of maturing tax cuts must be addressed in order to continue the country’s recovery. Our Board and management is vigilant in assessing the immediate and long term impact of these emerging threats. However, if the country is able to continue its healthy recovery, stability to markets and Main Street will be most welcomed and beneficial to your company.

With your continued support, I look forward to an improved performance of our company, its shareholder franchise value and the banking sector overall.

Yours truly,

 Michael L. Middleton

Chairman of the Board