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Employee Benefit Plans
12 Months Ended
Dec. 31, 2017
Employee Benefit Plans [Abstract]  
Employee Benefit Plans

NOTE 15 - EMPLOYEE BENEFIT PLANS

The Company has an Employee Stock Ownership Plan (“ESOP”) that covers substantially all its employees. Employees qualify to participate after one year of service and vest in allocated shares after three years of service. The ESOP acquires stock of The Community Financial Corporation by purchasing shares. Dividends on ESOP shares are recorded as a reduction of retained earnings. Contributions are made at the discretion of the Board of Directors. ESOP contributions recognized for the years ended 2017, 2016 and 2015 totaled $242,000,  $99,000 and $129,000, respectively.  As of December 31, 2017 and 2016, the ESOP held 223,344 and 221,106 allocated shares and 22,908 and 9,562 unallocated shares. The approximate market values of the shares were $9.4 million and $6.7 million, respectively as of December 31, 2017 and 2016. The estimated value was determined using the Company’s closing stock price of $38.30 and $29.00 per share as of December 31, 2017 and 2016, respectively. In addition, salary and employee benefit expense for the year ended December 31, 2017 included $110,000 for the excess of fair market value of leveraged ESOP shares released (allocated).

The ESOP has promissory notes with the Company for the purchase of TCFC common stock for the benefit of the participants in the Plan. The ESOP has promissory notes with the Company of $755,000 and $169,000 at December 31, 2017 and 2016, respectively. The promissory notes were originated for the purchase of TCFC common stock for the benefit of the participants in the Plan. Loan terms are at prime rate plus one-percentage point and amortize over seven (7) years. As principal is repaid, common shares are allocated to participants based on the participant account allocation rules described in the Plan. The Bank is a guarantor of the ESOP debt with the Company. During the year ended December 31, 2017, $237,000 or 10,157 ESOP shares were allocated with the payment of promissory notes. This was offset by the purchase of 23,503 shares of the Company’s common shares for $823,000 with promissory notes by the ESOP during the third quarter of 2017.

The Company also has a 401(k) plan. The Company matches a portion of the employee contributions. This ratio is determined annually by the Board of Directors. In 2017, 2016 and 2015, the Company matched one-half of the first 8% of the employee’s contribution. Employees who have completed six months of service are covered under this defined contribution plan. Employee’s vest in the Company’s matching contributions after three years of service. Contributions are determined at the discretion of the Board of Directors. For the years ended December 31, 2017, 2016 and 2015, the expense recorded for this plan totaled $298,000,  $346,000 and $332,000, respectively.



The Company has a separate nonqualified retirement plan for non-employee directors. Directors are eligible for a maximum benefit of $3,500 a year for ten years following retirement from the Board of Community Bank of the Chesapeake. The maximum benefit is earned at 15 years of service as a non-employee director. Full vesting occurs after two years of service. Expense recorded for this plan was $29,000,  $20,000 and $22,000 for the years ended December 31, 2017, 2016 and 2015, respectively.



In addition, the Company has established individual supplemental retirement plans and life insurance benefits for certain key executives and officers of the Bank. The retirement plans provide retirement income payments for 15 years from the date of the employee’s expected retirement at age 65. The retirement benefit amount for each agreement is set at the discretion of the Board of Directors and vests from the date of the agreement until the expected retirement date. Expense recorded for the plans totaled $637,000,  $525,000 and $519,000 for 2017, 2016 and 2015, respectively.