Filing Details

CUSIP No.  20368X101					Page 7 of 21 Pages
1	NAME OF REPORTING PERSON   Basswood Financial Long Only Fund, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP					(a) ☐ (b) ☒
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)						☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 18,988 (see Item 5)
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 18,988 (see Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 18,988 (see Item 5)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)						☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.41%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN

 

Item 1.

Security and the Issuer

This Schedule 13D relates to the common stock, par value $0.01 per share (the “Common Stock”), of The Community Financial Corporation, a Maryland corporation (the “Issuer”), and is being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The address of the Issuer’s principal executive offices is 3035 Leonardtown Road, Waldorf, Maryland, 20601.

Item 2.

Identity and Background

 

(b)  The address of the principal business and principal office of each of the Reporting Persons is 645 Madison Avenue, 10th Floor, New York, New York 10022.

(c)  The principal business of the Management Company is to serve as investment manager or adviser to certain investment funds, and to control the investing and trading in securities of such investment funds.  The principal business of each of Matthew Lindenbaum and Bennett Lindenbaum is to act as the managing member of the Management Company and certain affiliated entities.

(d)  None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e)  None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members has, during the last five years, been a party to a civil

 

 

proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)  Each of Matthew Lindenbaum and Bennett Lindenbaum is a citizen of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

The Reporting Persons expended an aggregate of $9,226,683 (including commissions, if any) to acquire the 456,209 shares of Common Stock reported herein as beneficially owned by them.  The Reporting Persons effect purchases and hold securities primarily through margin accounts maintained for them with each of BNP Paribas Prime Brokerage, Morgan Stanley & Co., J.P. Morgan Securities LLC and State Street Bank and Trust Company, which may extend margin credit to the Reporting Persons as and when required to open or carry positions in the margin accounts, subject to applicable Federal margin regulations, stock exchange rules and the firms’ credit policies.  In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.

Item 4.

Purpose of Transaction.

On March 15, 2016, Eric Goldberg, a representative of the Management Company, spoke with Michael Middleton, Executive Chairman of the Issuer, and requested in that conversation that he, as a representative of the Management Company, be added to the Issuer’s board of directors (the “Board”).  Mr. Middleton indicated that he would consult with the Board and respond promptly to the Management Company’s request.

On March 21, 2016, Mr. Middleton, William Pasenelli, President and Chief Executive Officer of the Issuer met with Matthew Lindenbaum and Mr. Goldberg at the Management Company’s offices to discuss the Management Company’s request for board representation and to exchange perspectives on the Issuer’s business and operations.  Following a constructive meeting, the parties continued to engage in discussions.  As a result of these discussions, the Management Company and the Issuer entered into an Agreement, dated March 25, 2016 (the “Agreement”), pursuant to which the Issuer agreed to nominate Mr. Goldberg for election to the Board at the Issuer’s 2016 Annual Meeting of Shareholders (the “Annual Meeting”), to be placed in the class of directors with a term ending at the Issuer’s 2017 annual meeting of stockholders.  The Issuer further agreed to solicit proxies for the election of Mr. Goldberg as a director to the same extent as for the election or re-election of any other Issuer nominee for election to the Issuer’s Board at the Annual Meeting.  In addition, at or prior to the time Mr. Goldberg is elected as a director of the Issuer, the Issuer agreed to cause its subsidiary, Community Bank of the Chesapeake (the “Bank”), to add Mr. Goldberg to the Board of Directors of the Bank.  The Management Company agreed not to nominate any person for election to the Board or to propose any business to be presented to the Issuer’s stockholders at the Annual Meeting.  A copy of the Agreement is filed herewith as Exhibit 99.2 and incorporated herein by reference.

The Management Company’s representative will serve on the Board for an initial one year term. In doing so, he will provide the Board with insight into increasing shareholder value.

The Reporting Persons may make further acquisitions of Common Stock from time to time or dispose of any or all of the shares of Common Stock beneficially owned by the Funds and the managed accounts at any time.  Any such acquisition or disposition may be effected through privately negotiated transactions, in the open market, in block transactions or otherwise.  In addition, the Reporting Persons may enter into hedging or derivative transactions with respect to the securities of the Issuer, including the shares of Common Stock beneficially owned by them.  Any determination to acquire or dispose of securities of the Issuer will depend on a number of factors, including the Issuer’s business and financial

 

position and prospects, other developments concerning the Issuer, the price levels of the Common Stock, general market and economic conditions, the availability of financing and other opportunities available to the Reporting Persons.

Except as set forth in this Schedule 13D, the Reporting Persons do not have any plans or proposals at present that relate to or would result in any of the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D.  Each of the Reporting Persons may engage in discussions with others concerning the Issuer and may, at any time, review or reconsider its position with respect to the Issuer and formulate plans or proposals with respect to any of such matters.

Item 5.

Interest in Securities of the Issuer.

By virtue of the relationships among the Reporting Persons, as described in this Schedule 13D, the Reporting Persons may be deemed to be a “group” under the Federal securities laws. If the Reporting Persons were deemed to be such a “group,” such group would collectively beneficially own 456,209 shares of Common Stock.  Each of the Reporting Persons disclaims voting and investment power over shares of the Common Stock, except as set forth on the cover pages of this Schedule 13D.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Persons have entered into a Joint Filing Agreement, a copy of which is filed with this Schedule 13D as Exhibit 99.1, with respect to the joint filing of this Schedule 13D and any amendment or amendments thereto.

Other than as described herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Persons and any other person with respect to the securities of the Issuer.

Item 7.

Material to be filed as Exhibits.

1.	Exhibit 99.1 - Joint Filing Agreement, dated as of March 25, 2016

2.	Exhibit 99.2 – Nomination Agreement, dated as of March 25, 2016

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Dated: March 25, 2016	BASSWOOD CAPITAL MANAGEMENT, L.L.C.
	By: /s/ Matthew Lindenbaum
	Name: Matthew Lindenbaum
	Title: Managing Member
Dated: March 25, 2016	BASSWOOD PARTNERS, L.L.C.
	By: /s/ Matthew Lindenbaum
	Name: Matthew Lindenbaum
	Title: Managing Member
Dated: March 25, 2016	BASSWOOD ENHANCED LONG SHORT GP, LLC
	By: /s/ Matthew Lindenbaum
	Name: Matthew Lindenbaum
	Title: Managing Member
Dated: March 25, 2016	BASSWOOD ENHANCED LONG SHORT FUND, LP
	By: Basswood Capital Management, L.L.C.
	By: /s/ Matthew Lindenbaum
	Name: Matthew Lindenbaum
	Title: Managing Member
Dated: March 25, 2016	BASSWOOD FINANCIAL FUND, LP
	By: Basswood Capital Management, L.L.C.
	By: /s/ Matthew Lindenbaum
	Name: Matthew Lindenbaum
	Title: Managing Member