<Page>1
TRI-COUNTY FINANCIAL CORPORATION LETTERHEAD
2007 FIRST QUARTER REPORT
Dear Shareholder:
I am pleased to report to you the results of operations of Tri-County Financial
Corporation and its banking subsidiary, Community Bank of Tri-County, for the
three months ended March 31, 2007. Net income increased by $36,482 or 3.75%
compared to the three months ended March 31, 2006 and diluted earnings per share
were $0.36 compared to $0.35 for the three months ended March 31, 2006. Total
assets increased to $583,448,213 up $7,952,199 or 1.4%, from December 31, 2006.
The modest increase in net income for the three months of 2007 resulted from an
increase in net interest income over the comparable quarter. This was achieved
despite the continued flat yield curve and overall slowdown of banking activity.
The provision for loan loss was increased by $168,041 due to the gradual shift
in the overall loan portfolio's commercial focus which carries a higher risk
profile than one to four residential loans. Non-interest income increased over
the comparable quarter by $72,975 or 15% as the Bank continues to develop
additional sources of non-interest income to supplement its revenue stream.
Non-interest expense increased by $130,595 or 4.2% over the comparable quarter.
The increase reflects the overall impact of higher employee expense and general
increases in the cost of operating the company in a tight resource market.
Investment in premises and equipment increased by $1,137,883 or 17% due to the
purchase of several parcels for expansion of facilities as well as maintaining
the technological infrastructure necessary for our product complexity and growth
strategies.
The retail growth of the Bank continues to be strong at a rate of 5.6% over the
December 31, 2006 level. The Bank is focusing on attracting more transactional
accounts that typically carry lower interest rates and produce more fee income
than time deposits. Loan growth remained strong during the quarter with net
loans at $436,331,951 up 3.3% for the quarter. With the overall national economy
slowing, especially in residential sectors, it is anticipated that sustained
growth will be more challenging going forward because of the level of
competitive bidding for quality loan customers by large national lenders
operating in our market. We believe the Bank's focus on relationship banking and
its local decision making capability and flexibility of product offerings can
fill a niche in the banking sector.
In conjunction with the increased investment in premises and equipment, the
replacement of the Leonardtown retail facility has begun. The small building has
been demolished and site work has commenced on the regional building and retail
center that will be located on the existing site. The bids for the Lusby retail
center have been released for pricing and that project is expected to be
completed in the fourth quarter of 2007.
On behalf of your board and management, I look forward to continued success
creating shareholder's franchise value. Your continued support is very important
to our success.
Yours truly,
/s/ Michael L. Middleton
Michael L. Middleton
President
Chairman of the Board
<Page>2
<Table>
<Caption>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
- ------------------------------------------------------------------------------------------------
MARCH 31, 2007 DECEMBER 31, 2006
- ------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 2,545,692 $ 3,157,595
Interest-bearing deposits with banks 11,453,211 14,260,560
Federal Funds sold 608,539 772,351
Investment securities available for sale 9,129,840 9,301,676
Investment securities held to maturity 95,180,384 97,804,849
FHLB and Federal Reserve Stock 5,400,900 6,100,400
Loans receivable, net 436,331,951 422,479,799
Premises and equipment, net 7,960,344 6,822,461
Foreclosed real estate 460,884 460,884
Accrued interest receivable 2,866,145 2,837,413
Investment in bank owned life insurance 8,845,278 8,762,761
Other assets 2,665,045 2,735,265
------------ ------------
TOTAL ASSETS $583,448,213 $575,496,014
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $441,528,558 $418,013,402
Short-term borrowings 609,816 6,567,702
Long-term debt 86,035,980 96,045,936
Guaranteed preferred beneficial interest in
Junior Subordinated Debentures 12,000,000 12,000,000
Accrued expenses and other liabilities 4,499,240 5,139,637
------------ ------------
TOTAL LIABLITIES $544,673,594 $537,766,677
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock $ 26,470 $ 26,423
Surplus 9,538,076 9,499,946
Retained Earnings 29,349,523 28,353,792
Accumulated Other Comprehensive Income (42,448) (53,822)
Unearned ESOP Shares (97,002) (97,002)
------------ ------------
TOTAL STOCKHOLDERS'EQUITY $ 38,774,619 $ 37,729,337
------------ ------------
TOTAL LIABLITIES AND STOCKHOLDERS' EQUITY $583,448,213 $575,496,014
============ ============
</Table>
<Table>
<Caption>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
- --------------------------------------------------------------------------------------------
2007 2006
- --------------------------------------------------------------------------------------------
Interest Income $ 9,524,192 $ 8,299,959
Interest Expense 4,981,032 4,045,816
----------- -----------
Net Interest Income $ 4,543,160 $ 4,254,143
Loan Loss Provision 256,526 86,485
----------- -----------
Net Interest Income After Loan Loss Provision $ 4,286,634 $ 4,167,658
Non-Interest Income 550,693 477,718
Non-Interest Expense 3,261,150 3,130,555
----------- -----------
Income Before Income Tax Expense $ 1,576,177 $ 1,514,821
Income Tax Expense 566,558 541,684
----------- -----------
Net Income $ 1,009,619 $ 973,137
=========== ===========
</Table>
<Table>
<Caption>
STOCK ACVITITY
- -----------------------------------------------------------------
Three Months Ended
-----------------------
March 31,
2007 2006
-----------------------
EARNINGS PER SHARE:
Basic $ 0.38 $ 0.37
Diluted $ 0.36 $ 0.35
WEIGHTED-AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING:
Basic 2,643,950 2,639,962
Diluted 2,829,778 2,811,823
Total Shares Outstanding
March 31, 2007 2,647,003
Book Value per Share at
March 31, 2007 $ 14.65
STOCK TRADE TRANSACTION INFORMATION
January 1, 2007 through March 31, 2007
Total Shares Traded 14,363
Share Price Average High Low
$25.18 $27.00 $25.14
</Table>
*Share and per share data have adjusted to reflect the three
for two common stock split effected on November 30, 2006
as if it had occurred on January 1, 2006.
Transfer Agent:
Bank of New York
101 Barclay Street
New York, New York 10286
(800) 524-4458
Stock Transactions and Inquiries:
Ms. Diane Deskins
Shareholder Relations
Community Bank of Tri-County
P. O. Box 38
Waldorf, Maryland 20604
(240) 427-1053
(301) 885-1453 Fax
(888) 745-2265 Toll Free
deskinsd@cbtc.com