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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934 For the year ended December 31, 1999.

                        Commission file number 000-23847

                           SHORE FINANCIAL CORPORATION
                       ----------------------------------

                Virginia                            54-1873994
            ----------------                       ------------
     (State or other jurisdiction of             (I.R.S Employer
      incorporation or organization)            Identification No.)

    25253 Lankford Highway, Onley, VA                  23418
   -----------------------------------              ------------
(Address of principal executive offices)             (Zip Code)

         Issuer's telephone number, including area code: (757) 787-1335

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                         Common Stock ($0.33 par value)
                        --------------------------------
                                (Title of Class)

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State Issuer's Revenues for its most recent fiscal year $8,843,000.

On March 1, 2000, the aggregate market value of the 1,822,812 shares of Common
Stock of the Registrant outstanding on such date, excluding shares held by
affiliates of the Registrant, was approximately $14.4 million. This figure is
based on the closing price of $7.88 per share of the Registrant's Common Stock
on March 1, 2000.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 1, 2000:

                      Class                     Outstanding at March 1, 2000
                   -----------                 ------------------------------
           Common Stock, $0.33 par value                  1,822,812

         DOCUMENTS INCORPORATED BY REFERENCE
(1)      Portions of the Registrant's 1999 Annual Report to the Shareholders are
         incorporated by reference in Part II hereof.
(2)      Portions of Registrant's 2000 Proxy Statement are incorporated by
         reference in Part III hereof.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT       YES [ ]   NO [X]
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                                     PART I

         THIS FORM 10-KSB CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. FOR THIS
PURPOSE ANY STATEMENTS CONTAINED IN THIS FORM 10-KSB THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, WORDS SUCH AS "MAY," "WILL," "EXPECT," "BELIEVE," "ANTICIPATE,"
"ESTIMATE" OR "CONTINUE" OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A
VARIETY OF FACTORS.

ITEM 1.
                             DESCRIPTION OF BUSINESS

GENERAL

         Shore Financial Corporation (the "Company") is a Virginia corporation
organized in September 1997 by Shore Bank (the "Bank") for the purpose of
becoming the holding company of the Bank. The Company's assets consist of its
investment in the Bank and approximately $3.1 million in cash and other
investments. The business and management of the Company consists of the business
and management of the Bank. The Bank is a Virginia chartered, Federal Reserve
member commercial bank whose predecessor began business in 1961. The Company and
the Bank are headquartered in Onley, Virginia. The Bank operates seven banking
offices on the Eastern Shore of Virginia and Maryland, including the counties of
Accomack and Northampton in Virginia and the Salisbury/Wicomico County area in
Maryland. At December 31, 1999, the Company had assets of $127.6 million, Bank
deposits of $107.1 million and stockholders' equity of $13.9 million.

         In August 1997, the Bank completed both a public and a subscription
rights offering, issuing 431,250 new shares of common stock that netted the Bank
approximately $3.1 million in new capital. It was in August 1997 that the Bank
became publicly traded on the Nasdaq National Market under the symbol "SHBK". In
November 1997, the Bank's shareholders approved the reorganization of the Bank
into the holding company form of organization, and in December 1997, the Bank
changed its year end from fiscal June 30 to calendar year December 31 for
financial and income tax reporting purposes. On March 31, 1998, the Bank
converted from a federally chartered savings bank to a Virginia chartered
commercial bank.

         The Bank offers a full menu of banking products and services in the
communities it serves. For business customers, the Bank offers checking, cash
management, credit card merchant services, sweep accounts, and a variety of loan
options including operating lines of credit, equipment loans, and real estate
loans. For consumers, the Bank has the only totally free checking account
available in its Virginia market, along with telephone banking services, safe
deposit boxes, a check card and the largest network of ATMs on the Eastern Shore
of Virginia. The Bank delivers its banking services through seven branch
offices, including the main office, that are staffed by 64 dedicated employees.

         The Company also offers other services that complement the core
financial services offered by the Bank. The Company has an investment in a
Virginia registered trust company that provides a vehicle to offer trust and
asset management services within the Bank's markets. In March 1999, the Bank
activated its subsidiary, Shore Investments, Inc. (the "Subsidiary"), to provide
financial services supporting the Bank's operations. These services include, but
are not limited to, offering insurance and investment products within the Bank's
markets. Also during March 1999, the Subsidiary invested in a Virginia title
insurance company that enabled it to offer title insurance policies within the
Bank's markets. During September 1999, the Subsidiary entered into an agreement
with a third party registered broker-dealer to begin offering investment
products. Currently, the Subsidiary has one fully licensed employee that began
selling investment products in February 2000.

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MARKET AREA

         The Bank's main office and four additional banking offices are located
in Accomack and Northampton Counties, which together comprise the Eastern Shore
of Virginia. Poultry and seafood processing are major industries in the area,
with Perdue Farms and Tyson Foods being the area's two largest employers.
Agriculture and tourism are also integral parts of the area's economy. Recently,
the Virginia legislature created a Space Port Authority to serve northern
Accomack County by promoting commercial space launches from existing space
flight facilities and infrastructure at Wallops Island, Virginia. In Northampton
County, there is a recently completed Eco-Industrial Park which is committed to
environmentally friendly job creation. The park is a model for others nationally
and has signed its first tenant.

         During October 1999, the Bank opened its fifth Virginia branch and
seventh overall in Parksley, Virginia. The full service facility provides a
banking alternative for a community that management considers under-served. This
branch also provides transaction volume support for the Bank's Onley, Virginia
office, which currently serves customers from that area.

         During April 1999, the Company opened an operations center in Accomac,
Virginia. The facility houses the Bank's administrative function and, as of
August 1999, provides item processing and check imaging. The operations center
has enabled the Company to better serve the Bank's branch network and provide
improved customer service.

         In 1995, the Bank expanded into the Salisbury/Wicomico County area of
Maryland, which is approximately 60 miles north of the Bank's main office. The
Salisbury/Wicomico County area is the economic hub of the Delmarva Peninsula and
is centrally located as a crossroads on the peninsula. The area has a
diversified economy. Leading industries in the area include poultry processing,
electronics and medical services. Salisbury is also home to Salisbury State
University, a member of the Maryland university system. During late 1997, the
Bank opened its second Maryland branch in the financial district of downtown
Salisbury.

COMPETITION

         In its market area, the Bank competes with regional commercial banks
and independent community banks with multiple offices on the Eastern Shore.
These and certain other non-bank competitors may have much greater financial
resources, diversified markets, and branch networks than the Bank and may be
able to offer similar services at varying costs with higher lending limits. With
nationwide banking, the Bank also faces the prospect of additional competitors
entering its market area.

         The Bank faces strong competition both in originating loans and in
attracting deposits. Competition in originating loans comes primarily from
commercial banks and mortgage lenders and to a lesser extent consumer finance
companies, credit unions, and savings institutions. The Bank competes for loans
principally on the basis of the interest rates and loan fees it charges, the
types of loans it originates and the quality of service it provides to
borrowers.

         The Bank faces substantial competition in attracting deposits from
other banks, money market and mutual funds, credit unions and other investment
vehicles. The ability of the Bank to attract and retain deposits depends on its
ability to provide an investment opportunity that satisfies the requirements of
investors as to rate of return, liquidity, risk, convenience and other factors.
The Bank competes for these deposits by offering a variety of deposit accounts
at competitive rates, having convenient business hours, and by marketing its
position as the only locally-owned independent bank on the Eastern Shore of
Virginia.

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CREDIT POLICIES

         The principal risk associated with each of the categories of loans in
the Bank's portfolio is the creditworthiness of its borrowers. Within each
category, such risk is increased or decreased, depending on prevailing economic
conditions. The Bank employs extensive written policies and procedures to
enhance management of credit risk. The loan portfolio is managed under a
specifically defined credit process. This process includes formulation of
portfolio management strategy, guidelines for underwriting standards and risk
assessment, procedures for ongoing identification and management of credit
deterioration, and regular portfolio reviews to estimate loss exposure and to
ascertain compliance with the Bank's policies. The largest unsecured and secured
individual lending authority currently granted by the Bank is $50,000 and
$100,000, respectively. The President and the Chief Lending Officer may
individually approve unsecured loans up to $50,000 and secured loans up to
$100,000. The President and the Chief Lending Officer may together approve
unsecured loans between $50,000 and $100,000 and secured loans between $100,000
and $200,000. Loan applications in excess of $200,000 secured and $100,000
unsecured are approved by the Loan Committee on a weekly basis. The Loan
Committee consists of the President and one additional director, with the
directors rotating their service on this committee on a monthly basis. All loan
applications in excess of $300,000 must be approved by the Board of Directors.

         In the normal course of business, the Bank makes various commitments
and incurs certain contingent liabilities which are disclosed but not reflected
in its annual financial statements, including commitments to extend credit. At
December 31, 1999, commitments to extend credit totaled $9.8 million.

         ONE- TO FOUR-FAMILY RESIDENTIAL REAL ESTATE LENDING. The Bank's primary
lending program has been the origination of loans secured by one- to four-family
residences, virtually all of which have been located in its market area. The
Bank evaluates both the borrower's ability to make principal and interest
payments and the value of the property that will secure the loan. Federal law
permits the Bank to make loans in amounts of up to 100% of the appraised value
of the underlying real estate. Loans are made with a loan to value up to 90% for
conventional mortgage loans on primary residences. The Bank generally originates
mortgage loans that have an adjustable rate feature in which the rate changes
every one, three or five years. Most of these loans are tied to comparable
maturity U.S. Treasury Bills. Where loans are not indexed, they generally have a
balloon feature. There are unquantifiable risks resulting from potential
increased costs to the borrower as a result of repricing. It is possible,
therefore, that during periods of rising interest rates, the risk of defaults on
adjustable rate mortgages ("ARMs") may increase due to the upward adjustment of
interest costs to borrowers.

         CONSTRUCTION LENDING. The Bank makes local construction loans,
primarily residential and small commercial loans. The construction loans are
secured by the property for which the loan was obtained. At December 31, 1999,
construction and land loans outstanding were $2.3 million, or 2.6%, of gross
loans. The average life of a construction loan is less than 12 months and they
reprice daily based on the prime rate or are fixed for a 12-month period.
Construction lending entails significant additional risks, compared with
residential mortgage lending. Construction loans involve risks attributable to
the fact that loan funds are advanced upon the security of the home under
construction, which is of uncertain value prior to the completion of
construction. Thus, it is more difficult to evaluate accurately the total loan
funds required to complete a project and related loan-to-value ratios. To
minimize the risks associated with construction lending, the Bank limits loan
amounts to 80% of appraised value, in addition to its usual credit analysis of
its borrowers. Additionally, the Bank's officers make regular inspections of
construction projects prior to disbursement of loan funds. The Bank also obtains
a first lien on the property as security for its construction loans.

                                       3
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         COMMERCIAL REAL ESTATE LENDING. The Bank also originates commercial
real estate loans. These loans are secured by various types of commercial real
estate, including multifamily residential buildings, commercial buildings and
offices. At December 31, 1999, commercial real estate loans aggregated $22.5
million or 25.6% of the Bank's gross loans. The interest rates on commercial
real estate loans is usually fixed for 1 to 3 years, with either a balloon
feature or an additional rate increase feature. Commercial real estate loans
made by the Bank generally amortize over 5 to 15 years and may have a call
provision of 3 or 5 years. The Bank's commercial real estate loans are secured
by properties in its market area.

         In its underwriting of commercial real estate, the Bank may lend, under
federal regulation, up to 100% of the security property's appraised value,
although the Bank's loan to original appraised value ratio on such properties is
80% or less in most cases. Commercial real estate lending entails significant
additional risk, compared with residential mortgage lending. Commercial real
estate loans typically involve larger loan balances concentrated with single
borrowers or groups of related borrowers. Additionally, the payment experience
on loans secured by income producing properties is typically dependent on the
successful operation of a business or a real estate project and thus may be
subject to adverse conditions in the real estate market or in the economy
generally. The Bank's commercial real estate loan underwriting criteria require
an examination of debt service coverage ratios, the borrower's creditworthiness
and prior credit history and reputation, and the Bank generally requires
personal guarantees or endorsements of borrowers.

         COMMERCIAL LOANS. Beginning in fiscal year 1993, the Bank began to
focus on developing its commercial loan portfolio to qualified small businesses
in its market area. At December 31, 1999, commercial loans aggregated $4.9
million or 5.5% of the Bank's gross loans. Commercial business loans generally
have a higher degree of risk than residential mortgage loans, but have
commensurably higher yields. To manage these risks, the Bank generally secures
appropriate collateral and carefully monitors the financial condition of its
business borrowers. Commercial business loans typically are made on the basis of
the borrower's ability to make repayment from the cash flow from its business
and are often secured by business assets, such as accounts receivable, equipment
and inventory. As a result, the availability of funds for the repayment of
commercial business loans may be substantially dependent on the success of the
business itself. Further, the collateral for commercial business loans may
depreciate over time and cannot be appraised with as much precision as
residential real estate. The Bank has a credit review and monitoring system to
regularly review the cash flow and collateral of commercial borrowers.

         CONSUMER LENDING. The Bank offers various secured and unsecured
consumer loans, including unsecured personal loans and lines of credit, home
equity lines of credit, automobile loans, deposit account loans, installment and
demand loans, and letters of credit. At December 31, 1999, the Bank had consumer
loans of $15.6 million or 17.7% of gross loans. Such loans are generally made to
customers with whom the Bank has a preexisting relationship and are generally in
amounts of under $75,000. The Bank originates all of its consumer loans in its
market area and intends to continue its consumer lending in this geographic
area.

         Consumer loans may entail greater risk than do residential mortgage
loans, particularly in the case of consumer loans which are unsecured, such as
lines of credit, or secured by rapidly depreciable assets such as automobiles.
In such cases, any repossessed collateral for a defaulted consumer loan may not
provide an adequate source of repayment of the outstanding loan balance as a
result of the greater likelihood of damage, loss or depreciation. The remaining
deficiency often does not warrant further substantial collection efforts against
the borrower. In addition, consumer loan collections are dependent on the
borrower's continuing financial stability, and thus are more likely to be
adversely affected by job loss, divorce, illness or personal bankruptcy.
Furthermore, the application of various federal and state laws, including
federal and state bankruptcy and insolvency laws, may limit the amount which can
be recovered on such loans.

                                       4
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EMPLOYEES

         At December 31, 1999, the Bank had 53 full-time and 12 part-time
employees. The Bank considers relations with its employees to be good.

REGULATION AND SUPERVISION

         Set forth below is a brief description of certain laws and regulations
that relate to the regulation of the Company and the Bank. The descriptions of
these laws and regulations, as well as descriptions of laws and regulations
contained elsewhere herein, do not purport to be complete and are qualified in
their entirety by reference to applicable laws and regulations.

THE COMPANY

         GENERAL. The Company, as a bank holding company, is subject to
regulation under the Bank Holding Company Act of 1956 (the "BHCA") and the
regulation, supervision and examination requirements of the Board of Governors
of the Federal Reserve System. Bank holding companies are subject to extensive
regulation by the Federal Reserve as set forth in Regulation Y, 12 C.F.R.
Regulation Y establishes the registration, reporting, examination, applications,
acquisitions, control and divestiture, change in bank control, appraisals, and
change in director and senior executive officers requirements applicable to bank
holding companies. Regulation Y and the interpretations and rulings issued by
the Federal Reserve thereunder identify various prohibited non-banking
activities in which bank holding companies and their subsidiaries may not engage
as well as various exempt activities in which a bank holding company and its
subsidiaries may engage either with or, in some cases, without prior Federal
Reserve approval. Regulation Y further confirms the authority of the Federal
Reserve under the BHCA to impose criminal and civil penalties for violations of
the BHCA and the regulations and orders issued thereunder and to issue cease and
desist orders when necessary in connection therewith.

         ACTIVITIES OBLIGATIONS AND RESTRICTIONS. There are a number of
obligations and restrictions imposed on bank holding companies and their
depository institution subsidiaries that are designed to reduce potential loss
exposure to the depositors of the depository institutions and to the FDIC
insurance funds. For example, under a policy of the Federal Reserve with respect
to bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy. In addition, the "cross-guarantee" provisions of
federal law require insured depository institutions under common control to
reimburse the FDIC for any loss suffered or reasonably anticipated by either the
Savings Association Insurance Fund (the "SAIF") or the Bank Insurance Fund (the
"BIF") as a result of the default of a commonly controlled insured depository
institution or for any assistance provided by the FDIC to a commonly controlled
insured depository institution in danger of default. The FDIC may decline to
enforce the cross-guarantee provisions if it determines that a waiver is in the
best interest of the SAIF or the BIF or both. The FDIC's claim for damages is
superior to claims of stockholders of the insured depository institution or its
holding company but is subordinate to claims of depositors, secured creditors
and holders of subordinated debt (other than affiliates) of the commonly
controlled insured depository institutions.

         Banking laws also provide that amounts received from the liquidation or
other resolution of any insured depository institution by any receiver must be
distributed (after payment of secured claims) to pay the deposit liabilities of
the institution prior to payment of any other general or unsecured senior
liability, subordinated liability, general creditor or stockholder. This
provision would give depositors a preference over general and subordinated
creditors and stockholders in the event a receiver is appointed to distribute
the asset of any bank or savings bank subsidiaries.

                                       5
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         The restriction on interstate acquisitions by bank holding companies
was abolished effective September 1995, and bank holding companies from any
state are able to acquire banks and bank holding companies located in any other
state, subject to certain conditions, including nationwide and state imposed
concentration limits. Banks are able to branch across state lines by
acquisition, merger or de novo (unless state law would permit such interstate
branching at an earlier date), provided certain conditions are met, including
that applicable state law must expressly permit such interstate branching.

THE BANK

         GENERAL. As a state chartered commercial bank, the Bank is subject to
regulation, supervision and examination requirements of the Virginia State
Corporation Commission's Bureau of Financial Institutions. The Bank is also
subject to the regulation, supervision and examination requirements of the
Federal Reserve Board and the Federal Deposit Insurance Corporation. State and
federal laws also govern the activities in which the Bank may engage, the
investments it may make and the aggregate amount of loans that may be granted to
one borrower. Various consumer and compliance laws and regulations also affect
the Bank's operations. The Federal Reserve and the SCC conduct periodic
examinations to test the Bank's compliance with various regulatory requirements.
The SCC completed its most recent examination in March, 1999. In November 1998,
the Federal Reserve completed a compliance examination of the Bank. Both
examinations yielded results that exceeded regulatory requirements.

         INSURANCE OF ACCOUNTS. The deposits of the Bank are insured by the FDIC
up to the limits set forth under applicable law. A majority of the deposits of
the Bank are subject to the deposit insurance assessments of the SAIF. However,
a portion of the Bank's deposits are subject to assessments imposed by BIF. The
FDIC equalized the assessment rates for BIF-insured and SAIF-insured deposits
effective January 1, 1998. The assessments imposed on all FDIC deposits for
deposit insurance have an effective rate ranging from 0 to 27 basis points for
$100 of insured deposits, depending on the institutions capital position and
other supervisory factors. Legislation was enacted in 1997 requiring both
SAIF-insured and BIF-insured deposits to pay a pro rata portion of the interest
due on the obligations issued by the Financing Corporation ("FICO"). The FICO
currently assesses BIF-insured and SAIF-insured deposits an additional 2.12
basis points per $100 of deposits to cover those obligations.

         REGULATORY CAPITAL REQUIREMENTS. The Company and the Bank are subject
to various regulatory capital requirements administered by the federal banking
agencies. Generally, the Company and the Bank are required to maintain a minimum
ratio of total capital to risk-weighted assets of 8%. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

        Quantitative measures established by regulation to ensure capital
adequacy require the Company and its the Bank to maintain minimum amounts and
ratios of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1999, that the
Company meets all capital adequacy requirements to which it is subject. In fact,
at December 31, 1999, the Bank exceeded all of its regulatory capital
requirements, with total capital to risk-weighted assets, tier 1 capital to
risk-weighted assets and tier 1 capital to average assets ratios of 12.84%,
13.44% and 9.01%, respectively.

                                       6
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         CAPITAL DISTRIBUTIONS. The Bank is subject to legal limitations on
capital distributions including the payment of dividends, if, after making such
distribution, the institution would become "undercapitalized" (as such term is
used in the statute). For all state member banks of the Federal Reserve seeking
to pay dividends, the prior approval of the applicable Federal Reserve Bank is
required if the total of all dividends declared in any calendar year will exceed
the sum of the bank's net profits for that year and its retained net profits for
the preceding two calendar years. Federal law also generally prohibits a
depository institution from making any capital distribution (including payment
of a dividend or payment of a management fee to its holding company) if the
depository institution would thereafter fail to maintain capital above
regulatory minimums. Federal Reserve Banks are also authorized to limit the
payment of dividends by any state member bank if such payment may be deemed to
constitute an unsafe or unsound practice. In addition, under Virginia law, no
dividend may be declared or paid that would impair a Virginia chartered bank's
paid-in capital. The SCC has general authority to prohibit payment of dividends
by a Virginia chartered bank if it determines that the limitation is in the
public interest and is necessary to ensure the bank's financial soundness.

         FINANCIAL MODERNIZATION LEGISLATION. The Gramm-Leach-Bliley Act of 1999
("GLBA") was signed into law on November 12, 1999. The main purpose of GLBA is
to permit greater affiliations within the financial services industry, primarily
banking, securities and insurance. While certain portions of GLBA became
effective upon enactment and on March 11, 2000, many other provisions do not
become effective until May 2001 and most of the regulations implementing the law
have not yet been issued. As a result, the overall impact of GLBA on the Company
cannot be predicted at this time. The provisions of GLBA that are believed to be
of most significance to the Company are discussed below.

         GLBA repeals sections 20 and 32 of the Glass-Steagall Act, which
separated commercial banking from investment banking, and substantially amends
the BHCA, which limited the ability of bank holding companies to engage in the
securities and insurance businesses. To achieve this purpose, GLBA creates a new
type of company, the "financial holding company." A financial holding company
may engage in or acquire companies that engage in a broad range of financial
services, including

         o        securities activities such as underwriting, dealing,
                  brokerage, investment and merchant banking; and

         o        insurance underwriting, sales and brokerage activities.

A bank holding company may elect to become a financial holding company only if
all of its depository institution subsidiaries are well-capitalized,
well-managed and have at least a satisfactory Community Reinvestment Act rating.

         GLBA establishes a system of functional regulation under which the
federal banking agencies will regulate the banking activities of financial
holding companies and their financial subsidiaries, the Securities and Exchange
Commission ("SEC") will regulate their securities activities and state insurance
regulators will regulate their insurance activities.

         With regard to Federal securities laws, GLBA removes the blanket
exemption for banks from being considered brokers or dealers under the
Securities Exchange Act of 1934, and sets out a number of limited activities,
including trust and fiduciary activities, in which a bank may engage without
being considered a broker, and a set of activities in which a bank may engage
without being considered a dealer. The Investment Advisers Act of 1940 also will
be amended to eliminate certain provisions exempting banks from the registration
requirements of that statute, and the Investment Company Act of 1940 will be
amended to provide the SEC with regulatory authority over various bank mutual
fund activities.

                                       7
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         GLBA also provides new protections against the transfer and use by
financial institutions of consumer's nonpublic personal information. A financial
institution must provide to its customers, at the beginning of the customer
relationship and annually thereafter, the institution's policies and procedures
regarding the handling of customers' nonpublic personal financial information.
The new privacy provisions will generally prohibit a financial institution from
providing a customer's personal financial information to unaffiliated third
parties unless the institution discloses to the customer that the information
may be so provided and the customer is given the opportunity to opt out of such
disclosure.

         At this time, the Company is unable to predict the impact GLBA may have
upon its or its subsidiaries' financial condition or results of operations. The
Company is currently reviewing the new law and at this time has not elected to
be treated as a financial holding company under GLBA.

FEDERAL TAXATION

         GENERAL. The Company and the Bank are subject to the applicable
corporate tax provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as certain additional provisions of the Code that apply to
banks and other types of financial institutions. The following discussion of tax
matters is intended only as a summary and does not purport to be a comprehensive
description of the tax rules applicable to the Company and the Bank.

         Under the applicable statutes of limitation, the Bank's federal income
tax returns for 1995 through 1998 are open to examination by the Internal
Revenue Service (the "Service"). During February 2000, the Service notified the
Bank that its December 1997 tax return is scheduled for examination which will
begin during April 2000.

         Historically, the Bank has reported its income and expenses on the
accrual method of accounting and filed its federal income tax returns on a June
30 fiscal year basis. Effective December 29, 1997, the Bank changed its year end
to a calendar year basis for financial and income tax reporting purposes. The
Company's fiscal year end is also December 31.

         BAD DEBT RESERVES. Prior to 1996, savings institutions such as the Bank
that met certain definitional tests primarily relating to their assets and the
nature of their business ("Qualifying Thrifts") were permitted to establish a
reserve for bad debts and to make annual additions thereto, which additions
could, within specified formula limits, be deducted by the savings institutions
in arriving at their taxable income. For purposes of the bad debt deduction,
loans were separated into "qualifying real property loans" (which are, in
general, loans secured by interests in improved real property or real property
which is to be improved out of the proceeds of the loan) and "nonqualifying
loans" (which are all other loans).

         During 1996, new tax legislation was enacted that repealed the reserve
method of accounting for bad debts of qualified thrift institutions and, for
years after 1995, the Bank will only be eligible to claim tax deductions for bad
debts under the rules for banks. Because the Bank was a small thrift institution
(one with an adjusted basis of assets of less than $500 million) at that time it
is permitted to compute its bad debt deduction using the experience method in
lieu of deducting bad debts only as they occur. Additionally, the new
legislation requires a thrift institution to recapture over a six-year period
its reserve as of December 31, 1995, to the extent it exceeds its reserve
balance at December 31, 1987. As a result of such legislation, the Bank is
recapturing into taxable income approximately $497,000 ratably over six fiscal
years. The income is includable over the third through eighth years following
the fiscal year ending June 30, 1997, since the Bank meets the residential loan
requirement exception in the legislation. See Note 2 of the notes to the
financial statements.

         The Bank's retained earnings at December 31, 1999 included
approximately $783,000 representing that portion of the Bank's reserve for bad
debts for which no provision for income taxes has

                                       8
<PAGE>

been made. Under legislation passed in 1996, this amount was not subject to
federal income taxes upon the Bank converting from a federal savings bank to a
state chartered commercial bank. However, the Bank is subject to the same
recapture provisions it was subject to as a savings association.

         CORPORATE MINIMUM TAX. The Bank could be subject to an alternative
minimum tax ("AMT") which is imposed to the extent that it exceeds the Bank's
regular tax liability for a year. The alternative minimum tax generally will
apply at a rate of 20% to a base of regular taxable income plus certain tax
preferences and adjustments ("alternative minimum taxable income" or "AMTI"),
less an exemption amount. Currently no more than 90% of the AMTI may be offset
by net operating losses (as determined for AMTI purposes). Payment of the AMT
may be used as a credit against a portion of the regular tax liabilities in
future years. The Code provisions relating to the AMT also: (i) treat as a
preference item interest on certain tax-exempt private activity bonds issued on
or after August 8, 1986; and (ii) include in AMTI (for tax years beginning after
1989) an amount equal to 75% of the amount by which a corporation's adjusted
current earnings exceed its AMTI (determined without regard to this preference
and before reduction for the alternative tax net operating losses). The Bank was
not subject to the AMT in 1997, and does not expect to be subject to AMT in the
foreseeable future.

STATE AND LOCAL TAXATION

         The Bank, as a Virginia chartered bank, is subject to Virginia's Bank
Franchise Tax. Under this system, the Bank's net capital is subject to tax at a
rate of one percent. Net capital is composed generally of the equity accounts
(common stock, additional paid-in capital, and retained earnings) adjusted for
investments in real and personal property, certain reserves, and certain
securities exempt from state taxation.

         The Company is subject to Virginia corporate income taxes. The Virginia
corporate income tax is imposed at a rate of six percent on a combined net
income of a Virginia corporation and its subsidiaries as reported for federal
income tax purposes, with certain modifications.


ITEM 2.
                             DESCRIPTION OF PROPERTY


         The main office of the Bank is located at 25253 Lankford Highway,
Onley, Virginia, a two story colonial brick building built in 1988. The Bank
owns the building free of any encumbrances, but leases the land under an
agreement expiring in 2000, with four five-year renewals. During February 1999,
the Company entered into a five year lease agreement (with two five-year
renewals) to lease commercial office space that will accommodate the Company's
administrative operations and enable it to bring the Bank's item processing
function in house. The Bank operates six other banking offices (4 in Virginia
and 2 in Salisbury, Maryland), with all but the downtown Salisbury branch being
owned free of any encumbrances. The Bank leases the downtown Salisbury branch
location under an agreement expiring in 2002, with three five-year renewals.

                                       9
<PAGE>

ITEM 3.
                                LEGAL PROCEEDINGS

         In the ordinary course of its operations, the Company is a party to
various legal proceedings. Based upon information currently available,
management believes that such legal proceedings, in the aggregate, will not have
a material adverse effect on the business, financial condition, or results of
operations of the Company.


ITEM 4.
              SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders during the fourth
quarter of 1999.


                                     PART II


ITEM 5.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The information included under "Market for Registrant's Common Stock
and Related Stockholder Matters" appearing on page 48 of the Annual Report to
Shareholders ("Annual Report") is incorporated herein by reference.


ITEM 6.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The information included under "Selected Financial Highlights"
appearing on page 3 of the Annual Report and under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 6 through 22
of the Annual Report are incorporated herein by reference.


ITEM 7.
                              FINANCIAL STATEMENTS

         The Consolidated Financial Statements and the notes thereto on pages 23
through 47 of the Annual Report are incorporated herein by reference.


ITEM 8.

         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                              FINANCIAL DISCLOSURE

         None.



                                       10
<PAGE>

                                    PART III

ITEM 9.

          DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The following provides information on Executive Officers who are not
directors of the Company and are not included in the Proxy Statement:

           Name               Age                Position
           ----               ---                --------
      Steven M. Belote         34       Vice President and Secretary


ITEM 10.

                             EXECUTIVE COMPENSATION


ITEM 11.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


ITEM 12.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Other than as specified above, and pursuant to General Instructions E
(3), the information called for by Part III, Items 9. through 12., is
incorporated herein by reference from the Company's definitive proxy statement
("proxy statement") for the Company's Annual Meeting of Shareholders to be held
on April 18, 2000, which definitive proxy statement was filed with the
Commission pursuant to Rule 14a-6 on March 22, 2000.

                                       11
<PAGE>

                                     PART IV


ITEM  13.
                              EXHIBITS AND FORM 8-K


(a) The following exhibits are filed as part of this Form 10-KSB and this list
includes the Exhibit Index.

       NO.                           DESCRIPTION
       ---                           -----------

      3.1     Articles of Incorporation of Registrant.*

      3.2     Bylaws of Registrant.*

     10.1     Company's Incentive Stock Option Plan.*

     10.2     Amended and Restated Employment Agreement between the Company
              and Scott C. Harvard.

     10.3     Management Continuity Agreement between the Company and Scott C.
              Harvard.

     11.0     Earnings Per Share Computation. **

     13.0     1999 Annual Report to Shareholders.

     21.0     Subsidiaries of the Registrant -- Reference is made to "Item 1.
              Description of Business" for the required information.

     27.0     Financial Data Schedule.
---------------------

*        Incorporated herein by reference from the Company's Registration
         Statement on Form S-4 (Registration No. 333-35389) filed by the Company
         with the Commission on September 15, 1997.

**       Information required herein is incorporated by reference from Note 15
         on page 44 of the financial statements attached hereto to this Form
         10-KSB.

(b)      Reports on Form 8-K. No reports were filed by the registrant during the
         quarter ended December 31, 1999.

                                       12
<PAGE>

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    SHORE FINANCIAL CORPORATION

                                          By: /s/ Scott C. Harvard
                                             ---------------------------------
                                              Scott C. Harvard
                                              President and Chief Executive
                                              Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signature                        Capacity                             Date
        ---------                        --------                             ----
<S>                               <C>                                     <C>
/s/ Henry P. Custis, Jr.          Chairman of the Board and               March 29, 2000
------------------------------    Director
Henry P Custis, Jr.

/s/ Scott C. Harvard              President (Principal Executive          March 29, 2000
------------------------------    Officer) and Director
Scott C. Harvard

/s/ Steven M. Belote              Treasurer (Principal Financial          March 29, 2000
------------------------------    Officer and Accounting Officer)
Steven M. Belote

/s/ Terrell E. Boothe             Director                                March 29, 2000
------------------------------
Terrell E. Boothe

/s/ D. Page Elmore                Director                                March 29, 2000
------------------------------
D. Page Elmore

/s/ Richard F. Hall, III          Director                                March 29, 2000
------------------------------
Richard F. Hall, III

/s/ Lloyd J. Kellam, III          Director                                March 29, 2000
------------------------------
Lloyd J. Kellam, III

/s/ L. Dixon Leatherbury          Director                               March 29, 2000
------------------------------
L. Dixon Leatherbury

/s/ A. Jackson Mason              Director                                March 29, 2000
------------------------------
A. Jackson Mason
</TABLE>

                                       13