SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


[X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

For the quarterly period ended June 30, 2000
                               -------------

[ ]    TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
       ACT OF 1934

For the transition period from ___________________ to ___________________


                         Commission file number 0-21285
                                                -------

                             ATLANTIC FINANCIAL CORP
             (Exact Name of Registrant as Specified in its Charter)


           VIRGINIA                                     54-1809409
------------------------------------        ------------------------------------
   (State or Other Jurisdiction             (I.R.S. Employer Identification No.)
 of Incorporation or Organization)


                          737 J. Clyde Morris Boulevard
                          Newport News, Virginia 23601
                    ----------------------------------------
                    (Address of Principal Executive Offices)

                                 (757) 595-7020
          ------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

--------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required  to be filed by  Section  13 or 15(d) of the  Exchange  Act  during the
preceding 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 ___.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of June 30, 2000.


                      Common stock, $5 par value--4,168,185
                      -------------------------------------

<PAGE>

                                      INDEX

ATLANTIC FINANCIAL CORP                                                Page No.

Part I.   Financial Information

          Item 1.  Financial Statements
                   Consolidated Balance Sheets--
                     June 30, 2000 and December 31, 1999                       3

                   Consolidated Statements of Income--
                     Six months ended June 30, 2000 and 1999                   4
                     Three months ended June 30, 2000 and 1999

                   Consolidated Statements of Stockholders' Equity--
                     Six months ended June 30, 2000 and 1999               5 - 6

                   Consolidated Statements of Cash Flows--
                     Six months ended June 30, 2000 and 1999                   7

                   Notes to Consolidated Financial Statements             8 - 11

          Item 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                 12 - 16

          Item 3.  Quantitative and Qualitative Disclosures About
                     Market Risk                                         16 - 17

Part II.  Other Information:                                             18 - 19

          Item 1.  Legal Proceedings
          Item 2.  Changes in Securities and Use of Proceeds
          Item 3.  Defaults Upon Senior Securities
          Item 4.  Submission of Matters to a Vote of Security Holders
          Item 5.  Other Information
          Item 6.  Exhibits and Reports on Form 8-K

Signatures









                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

                             ATLANTIC FINANCIAL CORP
                           CONSOLIDATED BALANCE SHEETS
                            (In Thousands of Dollars)
<TABLE>
<CAPTION>
                                                           (Unaudited)
                                                             June 30,             December 31,
ASSETS:                                                        2000                   1999
                                                           -------------         -------------
<S>                                                          <C>                   <C>
    Cash and due from banks                                  $  14 111             $  17 486
    Interest-bearing deposits in other banks                     1 885                 1 653
    Securities available for sale                               99 232                89 729
    Securities held to maturity (fair value of
        $9,373 and $9,786, respectively)                         9 609                 9 987
    Federal funds sold                                          16 351                22 577
    Loans, net                                                 227 694               223 513
    Premises and equipment                                      10 044                10 481
    Other real estate owned                                        246                   550
    Accrued interest receivable                                  3 153                 3 004
    Intangibles, net                                               980                 1 023
    Other assets                                                 3 996                 3 306
                                                             ---------             ---------
          TOTAL ASSETS                                       $ 387 301             $ 383 309
                                                             =========             =========

LIABILITIES:
    Deposits
      Non-interest bearing                                   $  55 694             $  52 026
      Interest-bearing                                         283 161               283 020
                                                             ---------             ---------
       TOTAL DEPOSITS                                          338 855               335 046
    Short-term borrowings                                        1 918                 2 976
    Accrued interest payable                                     1 243                 1 195
    Other liabilities                                            1 547                 1 054
                                                             ---------             ---------
          TOTAL LIABILITIES                                    343 563               340 271
                                                             ---------             ---------

STOCKHOLDERS' EQUITY:
    Preferred stock; $1 par value per share;
     authorized 1,000,000 shares; no shares
     issued and outstanding                                  $      --             $      --
    Common stock; $5 par value per share;
     authorized 20,000,000 shares; issued and
     outstanding 4,168,185 and 4,191,185
     shares, respectively                                       20 841                20 956
    Stock options                                                    1                     3
    Retained earnings                                           24 531                23 438
    Accumulated other comprehensive
      income, net                                               (1 635)               (1 359)
                                                             ---------             ---------
          TOTAL STOCKHOLDERS' EQUITY                            43 738                43 038
                                                             ---------             ---------
          TOTAL LIABILITIES AND
            STOCKHOLDERS' EQUITY                             $ 387 301             $ 383 309
                                                             =========             =========
</TABLE>

Notes to financial statements are an integral part of these statements.



                                       3
<PAGE>


                            ATLANTIC FINANCIAL CORP.
                        CONSOLIDATED STATEMENTS OF INCOME
                            (In Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                               Three Months Ended             Six Months Ended
                                                     June 30,                      June 30,
                                               2000           1999            2000          1999
                                               ----           ----            ----          ----
<S>                                         <C>            <C>            <C>            <C>
INTEREST INCOME:
Loans and Fees                              $    5 526     $    5 244     $   10 946     $   10 323
Federal Funds Sold                                 242            290            543            590
Interest on Deposits at Other Banks                 27             20             41             26
Investment Securities                            1 764          1 458          3 413          2 828
                                            ----------     ----------     ----------     ----------
   Total Interest Income                         7 559          7 012         14 943         13 767

INTEREST EXPENSE:
Interest on deposits                             3 188          3 020          6 360          5 977
Interest on federal funds purchased
 and other borrowings                               24             26             45             42
                                            ----------     ----------     ----------     ----------
   Total Interest Expense                        3 212          3 046          6 405          6 019
                                            ----------     ----------     ----------     ----------
   Net Interest Income                           4 347          3 966          8 538          7 748

PROVISION FOR LOAN
AND LEASE LOSSES                                   130            137            200            209
                                            ----------     ----------     ----------     ----------
   Net Interest Income After
   Provision for Loan
   and Lease Losses                              4 217          3 829          8 338          7 539

OTHER INCOME:
Service Charges & Fees                             488            408            931            846
Securities Gains (Losses)                            5              1              5              1
Other income                                       131            107            261            215
                                            ----------     ----------     ----------     ----------

   Total Other Income                              624            516          1 197          1 062

OTHER EXPENSES:
Salaries & Employee Benefits                     1 720          1 606          3 441          3 136
Occupancy Expenses                                 243            238            493            469
Furniture & Equipment Expenses                     469            439            924            830
Other Operating Expenses                           649            766          1 348          1 516
                                            ----------     ----------     ----------     ----------
   Total Other Expenses                          3 081          3 049          6 206          5 951
                                            ----------     ----------     ----------     ----------
Income Before Income Taxes                       1 760          1 296          3 329          2 650
Applicable Income Taxes                            493            335            915            691
                                            ----------     ----------     ----------     ----------
   Net Income                               $    1 267     $      961     $    2 414     $    1 959
                                            ==========     ==========     ==========     ==========

    Earnings Per Share, Basic                      .31            .23            .58            .47
                                            ==========     ==========     ==========     ==========
    Earnings Per Share, Assuming
    Dilution                                       .30            .23            .57            .46
                                            ==========     ==========     ==========     ==========
</TABLE>

Notes to financial statements are an integral part of these statements.




                                       4
<PAGE>


                             ATLANTIC FINANCIAL CORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                      For the six months ended June 30, 2000
                            (In Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                                                            Other
                                                  Common      Stock             Retained    Comprehensive   Comprehensive
                                                   Stock    Options   Surplus   Earnings    Income          Income          Total
                                                   -----    -------   -------   --------    ------          ------          -----
<S>                                              <C>           <C>        <C>    <C>        <C>            <C>            <C>
Balance, January 1, 2000                         $20 956         $3       - -    $23 438    ($1 359)                      $43 038
Comprehensive Income:
   Net Income                                        - -        - -       - -      2 414        - -        $2 414           2 414
   Other comprehensive income:
     Unrealized holding gains (losses) on
     securities available for sale arising
     during the period, net of tax of $94                                                                    (276)            - -
                                                                                                           ------
   Other comprehensive income, net of tax            - -        - -       - -        - -       (276)         (276)           (276)
                                                                                                           ------
   Total comprehensive income                        - -        - -       - -        - -                   $2 138             - -
                                                                                                           ======

Exercise of stock options                            119         (2)      - -        - -        - -                           117
Purchase of common stock                            (234)       - -       - -       (359)       - -                          (593)
Cash dividends                                       - -        - -       - -       (962)       - -                          (962)
                                                 -------        ---    ------    -------     ------                       -------
Balance, June 30, 2000                           $20 841         $1    $  - -    $24 531    ($1 635)                      $43 738
                                                 ===================================================                      =======
</TABLE>



Notes to financial statements are an integral part of these statements.





                                       5
<PAGE>

                             ATLANTIC FINANCIAL CORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     For the six months ended June 30, 1999
                            (In Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                                                            Other
                                                  Common      Stock             Retained    Comprehensive   Comprehensive
                                                   Stock    Options   Surplus   Earnings    Income          Income         Total
                                                   -----    -------   -------   --------    ------          ------         -----
<S>                                              <C>            <C>       <C>    <C>        <C>             <C>            <C>
Balance, January 1, 1999                         $20 845         $6       - -    $21 048    $1 230                         $43 129
Comprehensive Income:
   Net Income                                        - -        - -       - -      1 959       - -          $1 959           1 959
   Other comprehensive income:
     Unrealized holding gains (losses) on
     securities available for sale arising
     during the period, net of tax of $153
                                                                                                            (1 452)            - -
                                                                                                            ------
   Other comprehensive income, net of tax            - -        - -       - -        - -      (1 452)       (1 452)         (1 452)
                                                                                                            ------
   Total comprehensive income                        - -        - -       - -        - -                    $  507             - -
                                                                                                            ======
Exercise of stock options                            127        (2)       - -        - -       - -                             125
Purchase of common stock                             (11)       - -       - -       (26)       - -                             (37)
Cash dividends                                       - -        - -       - -      (754)       - -                            (754)
                                                     ---        ---       ---      -----       ---                             ---
Balance, June 30, 1999                           $20 961         $4    $  - -    $22 227     ($222)                        $42 970
                                                 ==================================================                        =======
</TABLE>


Notes to financial statements are an integral part of these statements.



                                       6
<PAGE>

                             ATLANTIC FINANCIAL CORP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                              Six Months Ended
                                                                                   June 30,
                                                                            -----------------------

                                                                               2000          1999
                                                                               ----          ----
<S>                                                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                                               $   2 414     $   1 959
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation                                                                 654           337
     Provision for loan losses                                                    200           209
     Amortization of premiums, net                                                 34            47
     (Gain) loss on sale of securities available for sale                          (5)           (1)
     (Gain) loss on sale of other real estate                                      28           (14)
     (Gain) loss on sale of premises and equipment                                - -            (1)
     Changes in operating assets and liabilities:
       Decrease (increase) in accrued interest receivable                        (149)           36
       Decrease (increase) in other assets                                       (548)          327
       Increase in accrued interest payable                                        48            27
       Increase in other liabilities                                              453           334
                                                                            ---------     ---------
          Net Cash Provided by Operating Activities                         $   3 129     $   3 260
                                                                            ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net (increase) decrease in loans                                            (4 458)      (13 073)
   Purchase of securities available for sale                                  (17 424)      (23 779)
   Proceeds from sales of securities available for sale                           427         1 619
   Proceeds from calls and maturities of securities available for sale          7 049        10 376
   Proceeds from calls and maturities of securities held to maturity              376         3 114
   Purchase of premises and equipment                                            (174)         (323)
   Proceeds from sales of premises and equipment                                  - -             1
   Proceeds from sales of other real estate                                       353            79
                                                                            ---------     ---------
          Net Cash (Used In) Investing Activities                           ($13 851)     ($21 986)
                                                                            ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in deposits                                                     $   3 809     $  13 936
   Issuance of common stock                                                       117           127
   Repurchase of common stock                                                    (593)          (36)
   Proceeds from long-term debt                                                   - -         1 550
   Net increase (decrease) in short-term borrowings                            (1 058)         (439)
   Cash dividends paid                                                           (922)       (1 302)
                                                                            ---------     ---------
          Net Cash Provided by Financing Activities                         $   1 353     $  13 836
                                                                            ---------     ---------

            Net Increase In Cash and Cash Equivalents                       ($  9 369)    ($  4 890)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                41 716        41,306
                                                                            ---------     ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                   $  32 347     $  36 416
                                                                            =========     =========

</TABLE>






Notes to financial statements are an integral part of these statements.


                                       7
<PAGE>

                             ATLANTIC FINANCIAL CORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.    General

      The  consolidated  statements  include the accounts of Atlantic  Financial
      Corp and its  subsidiaries,  Peninsula  Trust Bank,  Inc. (PTB) and United
      Community  Bank  (UCB).   All   significant   intercompany   balances  and
      transactions  have been  eliminated.  In the  opinion of  management,  the
      accompanying  unaudited  consolidated  financial  statements  contain  all
      adjustments  (consisting of only normal recurring  accruals)  necessary to
      present  fairly the  financial  positions as of June 30, 2000 and December
      31, 1999,  and the results of operations and cash flows for the six months
      ended June 30, 2000 and 1999.

      The results of operations  for the six months ended June 30, 2000 and 1999
      are not necessarily  indicative of the results to be expected for the full
      year.

2.    Investment Securities

      Amortized cost and carrying  amount  (estimated  fair value) of securities
      available for sale are summarized as follows:
<TABLE>
<CAPTION>
                                                                   June 30, 2000
                                                  ---------------------------------------------------
                                                                    Gross          Gross    Estimated
                                                   Amortized   Unrealized     Unrealized       Market
                                                        Cost        Gains       (Losses)        Value
                                                  ---------------------------------------------------
                                                                (In Thousands of Dollars)
<S>                                               <C>           <C>           <C>           <C>
US Treasury Securities                                  100            --            (1)          99
US Government and federal agencies                   28 821            10        (1 235)      27 596
States and local governments                         31 619            65          (745)      30 939
Mortgage-backed securities                           28 073            16          (836)      27 253
Corporate debt obligations                            4 548            --          (227)       4 321
Collateralized mortgage obligations                   2 837             2           (45)       2 794
Restricted stocks                                     1 205            --             --       1 205
Other securities                                      4 507           957          (439)       5 025
                                                  ---------     ---------     ----------    --------
                                                  $ 101 710     $   1 050     $  (3 528)    $ 99 232
                                                  =========     =========     ==========    ========
</TABLE>

      Amortized cost and carrying  amount  (estimated  fair value) of securities
      held to maturity are summarized as follows:
<TABLE>
<CAPTION>
                                                                   June 30, 2000
                                                 ----------------------------------------------------
                                                                    Gross          Gross    Estimated
                                                   Amortized   Unrealized     Unrealized       Market
                                                        Cost        Gains       (Losses)        Value
                                                 ----------------------------------------------------
                                                                (In Thousands of Dollars)
<S>                                                <C>              <C>         <C>          <C>
US Government and federal agencies                    2 343            --          (113)        2 230
States and local governments                          5 503             5           (72)        5 436
Mortgage-backed securities                            1 763            --           (56)        1 707
                                                   --------         -----       --------     --------
                                                   $  9 609         $   5       $  (240)     $  9 373
                                                   ========         =====       ========     ========
</TABLE>




                                       8
<PAGE>

                             ATLANTIC FINANCIAL CORP
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (Unaudited)

      Securities  available  for  sale  at  December  31,  1999  consist  of the
      following:
<TABLE>
<CAPTION>
                                                                    Gross          Gross    Estimated
                                                   Amortized   Unrealized     Unrealized       Market
                                                        Cost        Gains       (Losses)        Value
                                                  ---------------------------------------------------
                                                                (In Thousands of Dollars)
<S>                                               <C>             <C>         <C>           <C>
US Treasury Securities                                  857             1            (3)         855
US Government and federal agencies                   27 392             8        (1 126)      26 274
State and local governments                          30 278           100          (706)      29 672
Mortgage-backed securities                           22 289            --          (889)      21 400
Corporate debt obligations                            4 149            --          (119)       4 030
Collateralized mortgage obligations                   1 780            --           (30)       1 750
Restricted stocks                                     1 205            --             --       1 205
Other securities                                      3 839           791           (87)       4 543
                                                  ---------       -------     ----------    --------
                                                  $  91 789       $   900     $  (2 960)    $ 89 729
                                                  =========       =======     ==========    ========
</TABLE>

      Securities held to maturity at December 31, 1999 consist of the following:
<TABLE>
<CAPTION>
                                                                    Gross          Gross    Estimated
                                                   Amortized   Unrealized     Unrealized       Market
                                                        Cost        Gains       (Losses)        Value
                                                   --------------------------------------------------
                                                                (In Thousands of Dollars)
<S>                                                <C>            <C>           <C>         <C>
US Government and federal agencies                    2 593            --          (102)       2 491
State and local governments                           5 549            14           (55)       5 508
Mortgage-backed securities                            1 845            --           (58)       1 787
                                                   --------       -------       --------    --------
                                                   $  9 987       $    14       $  (215)    $  9 786
                                                   ========       =======       ========    ========
</TABLE>

                                                         Six Months Ended
                                                             June 30,
                                                   -----------------------------
                                                     2000                 1999
                                                   ---------           ---------
                                                     (In Thousands of Dollars)

Gross proceeds from sales of securities                  422               1 619
                                                   =========           =========
Gross Gains on Sale of Securities                          5                   3
Gross Losses on Sale of Securities                        --                   3
                                                   ---------           ---------
  Net Securities Gains (Losses)                            5                  --
                                                   =========           =========






                                       9
<PAGE>

                             ATLANTIC FINANCIAL CORP
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (Unaudited)

3.    Loans

      Major classifications of loans are as follows:
<TABLE>
<CAPTION>
                                                                   June 30,          December 31,
                                                                    2000                 1999
                                                                 -----------          -----------
                                                                     (In Thousands of Dollars)
<S>                                                                 <C>                  <C>
Commercial (except those secured by real estate)                      32 076               31 824
Agriculture (except those secured by real estate)                      5 988                5 066
Real estate mortgage:
   Construction and land development                                  18 176               15 995
   Residential (1-4 family)                                           57 620               57 089
   Home equity lines                                                  17 453               16 663
   Commercial                                                         58 220               58 064
   Agricultural                                                        4 711                5 067
Loans to individuals for household,
 family and other consumer expenditures                               36 006               36 497
All other loans                                                          609                  475
                                                                 -----------          -----------
                                                                     230 859              226 740
Less unearned income                                                    (537)                (564)
                                                                 -----------          -----------
Less allowance for loan losses                                        (2 628)              (2 663)
                                                                 -----------          -----------
Loans, net                                                          $227 694             $223 513
                                                                 ===========          ===========
</TABLE>

      The following  schedule  summarizes  the changes in the allowance for loan
      and lease losses:
<TABLE>
<CAPTION>
                                                  Six Months           Six Months
                                                    Ended                Ended
                                                   June 30,             June 30,           December 31,
                                                     2000                 1999                1999
                                                   --------             --------            --------
                                                                (In Thousands of Dollars)
<S>                                                <C>                  <C>                 <C>
Balance at beginning of year                          2 663                2 424               2 424
Provision for loan losses                               200                  209                 505
Recoveries                                               98                  181                 257
Charge-offs                                            (333)                (198)               (523)
                                                   --------             --------            --------
Balance at end of period                           $  2 628             $  2 616            $  2 663
                                                   ========             ========            ========
</TABLE>

      Nonperforming assets consist of the following:

                                                   June 30,         December 31,
                                                     2000               1999
                                                   --------           -------
                                                    (In Thousands of Dollars)

Nonaccrual Loans                                      1 606               632
Restructured Loans                                       --                --
                                                   --------           -------
Nonperforming Loans                                   1 606               632
Foreclosed Properties                                   246               550
                                                   --------           -------
Nonperforming Assets                               $  1 852           $ 1 182
                                                   ========           =======

      Total loans past due 90 days or more and still  accruing were $755 on June
      30, 2000 and $622 on December 31, 1999.





                                       10
<PAGE>

                             ATLANTIC FINANCIAL CORP
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (Unaudited)


4.    Earnings Per Share

      The  following  shows  the  weighted  average  number  of  shares  used in
      computing  earnings per share and the effect on weighted average number of
      shares of  diluted  potential  common  stock  income  available  to common
      shareholders.
<TABLE>
<CAPTION>
                                                        June 30, 2000                      June 30, 1999
                                                        -------------                      -------------
                                                                 Per Share                          Per Share
                                                    Shares          Amount               Shares        Amount
                                                    ------          ------               ------        ------
<S>                                              <C>               <C>                <C>             <C>
Basic Earnings Per Share                         4 184 622         $   .58            4 185 685       $   .47

Effect of dilutive securities:
  Nonemployee directors' stock options              10 606                               20 796
  Employee incentive stock options                  41 119                               59 500
                                                 ---------                            ---------

Diluted Earnings Per Share                       4 236 347         $   .57            4 265 981       $   .46
                                                 =========         =======            =========       =======
</TABLE>


5.    Capital Requirements

      A comparison of the Company's capital as of June 30, 2000 with the minimum
      requirements is presented below:

                                                       Minimum
                                      Actual         Requirements
                                      ------         ------------
Tier I Risk-based Capital             17.02%            4.00 %
Total Risk-based Capital              18.03%            8.00 %
Leverage Ratio                        11.81%            4.00 %







                                       11
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

Forward-Looking Statements
--------------------------

Certain  information  contained  in this  report  may  include  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
These  forward-looking  statements  are generally  identified by phrases such as
"the Company expects," "the Company  believes" or words of similar import.  Such
forward-looking  statements  involve known and unknown risks including,  but not
limited to, changes in general economic and business  conditions,  interest rate
fluctuations,  competition  within and from  outside the banking  industry,  new
products and  services in the banking  industry,  risk  inherent in making loans
such as  repayment  risks  and  fluctuating  collateral  values,  problems  with
technology  utilized by the Company,  changing  trends in customer  profiles and
changes in laws and regulations applicable to the Company.  Although the Company
believes that its expectations  with respect to the  forward-looking  statements
are based upon  reliable  assumptions  within the bounds of its knowledge of its
business  and  operations,  there  can  be no  assurance  that  actual  results,
performance or achievements  of the Company will not differ  materially from any
future  results,  performance  or  achievements  expressed  or  implied  by such
forward-looking statements.

General
-------

The following  discussion presents  management's  discussion and analysis of the
consolidated financial condition and results of operations of Atlantic Financial
Corp  (the  "Company")  as of the  dates  and for the  periods  indicated.  This
discussion  should  be read  in  conjunction  with  the  Company's  Consolidated
Financial  Statements  and the Notes thereto and other  financial data appearing
elsewhere in this report.

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned banking subsidiaries, Peninsula Trust Bank and United Community
Bank, the successor of the merger of The Bank of Franklin and The Bank of Sussex
and Surry.  Contributions from the Company's 51% membership  interest in Johnson
Mortgage Co. LLC are also reflected in the financial results.

In July 2000,  the Company  signed a definitive  agreement to affiliate with F&M
National  Corporation of Winchester,  Virginia.  Additional  information on this
affiliation appears in Part II, Item 5, below.

Results of Operations

Earnings
--------

         Quarterly performance comparison
         --------------------------------

Net income for the  second  quarter  ended  June 30,  2000  totaled  $1,267,000,
compared to  $961,000  for the same period in 1999.  This  performance  not only
represented an impressive 31.8% increase in absolute dollars,  but, expressed as
earnings per share (EPS),  also  represented  $.30 compared to $.23 for the same
period  in 1999,  a 30.4%  increase.  Both of these  performance  measures  were
historical  highs for the Company.  Return on average total assets (ROA) for the
current quarter equaled 1.34% on an annualized basis,  which compared  favorably
to the 1.05% level for the same period in 1999.  Sequential  quarter  comparison
was also favorable as the current quarter displayed a 10.5% increase in dollars,
11.1%  increase in EPS, and 10.7%  increase in ROA compared to the first quarter
of this year.

Net interest income (tax equivalent  interest income less interest  expense) for
the second  quarter 2000 totaled $4.3 million (a 9.6%  increase  over the second
quarter  1999 and a 3.7%  increase  over the first  quarter  2000).  The largest
contributor  to the  improved net  interest  earnings  was interest  income from
investment  activities,  which  demonstrated  a 15.0%  increase  over the second
quarter  1999.  The Company  continued  its efforts to invest the excess  liquid
funds  accumulated as a part of Year 2000



                                       12
<PAGE>

(Y2K)  liquidity  planning  during 1999. The net interest margin (tax equivalent
net  interest  income  expressed  as a  percentage  of average  earning  assets)
increased  from 4.77% in the second  quarter 1999 to 5.13% in the second quarter
2000,  continuing a positive trend evidenced by the 4.96% reported for the first
quarter of 2000. The average yield on interest earning assets increased 48 basis
points  during a time when the  average  rate on  interest  bearing  liabilities
increased  only 19 basis  points.  As a result,  the 7.80%  increase in interest
income for the second quarter 2000 more than  compensated for the 5.45% increase
in interest expense for the same period.  The Company's  balance sheet continues
to be asset sensitive as related to its interest sensitivity position;  that is,
its assets  re-price more quickly than its  liabilities.  Since June 1, 1999 the
Federal Reserve Board has increased  short-term  interest rates 175 basis points
in six separate rate  adjustments.  The Company  enjoyed more rapid  increase in
interest income than the corresponding  increase in interest expense during this
period.

Non-interest  income  for the  current  quarter  increased  20.9%  over the same
quarter in 1999. As discussed in its Annual Reports on Form 10-KSB and Quarterly
Reports on Form  10-QSB and 10-Q for  previous  periods,  the  Company has taken
certain initiatives to expand non-interest opportunities. These initiatives have
included  offering mortgage and investment  services.  The Company has performed
extensive  review of its services,  particularly  in the areas of ATM activities
and deposit account overdraft  charges.  Various increase  adjustments have been
made in these areas to more closely cover associated  operational costs, as well
as  reflect  pricing  of  competitor  institutions.  Service  charges on deposit
accounts  demonstrated a 19.8% increase for the current quarter  compared to the
second quarter 1999, while other miscellaneous  income (primarily other customer
service fees) increased 22.4% for the same comparative interim period.

Non-interest expense for the second quarter 2000 totaled $3.1 million,  compared
to $3.0 million in the second  quarter 1999, a 1.1%  increase.  This result is a
positive  trend relative to the 9.6% increase in net interest  income  discussed
above.  Additionally,  as discussed in the  Company's  Quarterly  Report on Form
10-QSB for the period ended June 30, 1999,  the $3.0  million  figure  equaled a
17.4%  increase  over the same  period  in 1998.  This  trend  demonstrates  the
Company's  ability  to more  efficiently  control  expenses  in this area  after
several  growth   initiatives   (merger  and  branch  openings)  and  technology
advancements in 1998. Other miscellaneous expenses reflected a decrease of 15.2%
when comparing the second quarters of 2000 and 1999.

         Six month, year to date comparative performance
         -----------------------------------------------

For the six months ended June 30, 2000,  net income of $2.4 million  constituted
an  EPS  of  $.57,  fully  diluted,  representing  impressive  23.2%  and  23.9%
increases,  respectively,  over these same measures for the corresponding period
in 1999.  The  improving  total net income  continues  to be a story of balanced
performance throughout the income statement. A 6.4% increase in interest expense
was adequately offset by an 8.5% interest income increase,  resulting in a 10.2%
improvement of net interest income. A 12.7%  improvement in non-interest  income
was impressive in the face of a 4.3% increase in non-interest expense.  Improved
performance  was also evidenced by the 1.27% ROA for the current period compared
to 1.08% for the same period in 1999.

Improvement  in net  interest  income for the  current six months  mirrored  the
quarterly analysis discussed above.  Investment activities  demonstrated a 16.1%
increase  over the  same  period  in 1999.  Overnight  and  short-term  maturing
investments were employed in longer term higher yielding  securities,  enhancing
the overall yield of the investment  portfolio.  Interest  income on loans moved
more in step  with  cost of  funds  interest  expense  reflecting  6.0% and 6.4%
increases,  respectively. The net interest margin grew from 4.82% for the period
ended June 30, 1999 to 5.04% for the current period end.

Non-interest  income  year to date,  similar  to the second  quarter's  analysis
above,  reflected an improvement that was driven by increased service charges on
deposit accounts,  other customer fees, and fees from investment  services.  The
investment services area produced year-to-date net income of $75,000,  while the
mortgage banking  affiliate  recorded a modest  year-to-date net loss of $34,000
due to reduced production in the refinance area as interest rates have risen.



                                       13
<PAGE>

The modest  increase  in  non-interest  expense  was the result of  management's
restrictive  and even  reduction-minded  practices  over all  areas of  overhead
expenses.

Effects of Inflation
--------------------

Interest  rates are affected by  inflation,  but the timing and magnitude of the
changes may not coincide  with changes in the consumer  price index.  Management
actively monitors interest rate  sensitivity,  utilizing  multiple tools such as
Gap Analysis in order to minimize the effects of inflationary trends on interest
rates.  Other areas of non-interest  expenses such as personnel costs,  costs of
computer  hardware  and  software,  and even  fuel  costs  may be more  directly
affected by inflation.  There have been no material  inflationary effects during
the past three years.

Financial Condition

The Company experienced a flat balance sheet during the first half of 2000, with
total  assets  increasing  $4.0  million,   or  1.0%  over  December  31,  1999.
Historically,  the first quarter has less growth than any other quarters, due in
part to a segment of the deposit base  reflecting  cyclical growth in the fourth
quarter  followed  by balance  shrinkage  during the first  quarter.  The second
quarter saw  continuation  of intense  competitive  pressure on  certificate  of
deposit (CD) interest rates.  Some of this pressure has driven rates higher than
management considers prudent within the Company's balance sheet strategy and has
resulted in moderate run-off of maturing CDs. Minimal growth was funded with new
non-interest bearing deposits, which reflected a $3.7 million, or 7.1%, increase
for the six months ending June 30, 2000.

Loan demand increased  moderately during the first six months,  evidenced by net
loans increasing $4.2 million, or 1.9%, from December 31, 1999.  Competition for
loans  intensified  primarily  relative to pricing as all banks in the Company's
trade area were  experiencing  similar  moderation  in overall loan demand.  The
Company has been reluctant to match all competitor  pricing bids when the credit
quality does not match the pricing  structure.  This  reluctance is particularly
acute in the face of the intense  competition  for deposits  noted above and the
associated  funding  challenges.  The  underwriting  practices  of  the  Company
continue  to  emphasize  the  relationship  between  risk  and  rate in  pricing
considerations,  rather than  responding to pressures from  competitor  pricing.
Also, as noted above, current pressure on funding sources will cause the Company
to be more selective in loan approvals,  attempting to maximize yield and credit
quality.

The Company maintained during the second quarter its practice of selling Federal
funds,  having sold  continuously  on a daily basis in amounts  averaging  $15.4
million,  or 4.07% of  average  total  assets.  These  figures  compare to $24.0
million and 6.52%,  respectively,  for the second quarter 1999. The  quarter-end
balance of $16.4  million  represented  a $6.2 million (or 27.6%)  decrease from
December 31, 1999.

The level of the investment account increased  approximately $9.1 million (9.2%)
during  the first six months of 2000,  ending  the  period at $108.8  million or
28.1% of total  assets.  The portfolio was used to absorb some of the excess Y2K
liquidity  that built up during 1999. The portfolio is comprised of less than 1%
US  Treasuries,  56% US  government  agencies,  mortgage-backed  securities  and
collateralized mortgage obligations, 33% state, county and municipal governments
and 10% other debt and equity securities.

The Financial Accounting Standards Board (FASB) Statement 115 stipulated the way
in which  banks  must  classify  and  account  for their  securities  portfolio,
beginning  with  the  first  quarter  of  1994.  Securities  are  classified  as
Investment Securities when management has both the intent and the ability at the
time of purchase to hold the securities  until maturity.  Investment  Securities
are carried at cost  adjusted  for  amortization  of premiums  and  accretion of
discounts.  Securities  that  are  held  for an  indefinite  period  of time are
classified  as  Securities  Available  for Sale and are marked to market at each
financial  reporting date, or at each month-end.  Securities  Available for Sale
include  securities  that may be sold in response to changes in interest  rates,
changes in the security's  prepayment  risk,  increases in loan demand,  general
liquidity needs and other similar factors. Management utilizes several tools for
the measurement



                                       14
<PAGE>

of three critical  elements in portfolio  performance:  interest rate risk, call
and/or  extension risk and maturity  distribution.  With better tools to monitor
duration,  long-term  earnings  performance  of the  portfolio  is  expected  to
demonstrate   improved  stability  over  varying  interest  rate  cycles.  These
parameters  will also draw a tighter  relationship  between  effective  modified
duration (EMD) and bond convexity.  Convexity  measures the percentage amount of
portfolio  price  appreciation  if  interest  rates  fall  1%  relative  to  the
percentage  of price  depreciation  if  interest  rates rise 1%. The more a bond
declines  relative to its depreciation,  the higher the negative  convexity and,
consequently,  the more potential call and extension risk that bond is likely to
have.  Relative to the current EMD, management is targeting an overall portfolio
negative  convexity of not more than .70.  Currently,  the portfolio's  negative
convexity is slightly below this target level.

Deposits  represent  98.6%  of  total  liabilities  of  the  Company,  including
non-interest bearing checking accounts,  which represent 16.4% of total deposits
on June 30, 2000. Short-term borrowings of $1.9 million reflected a $1.1 million
(35.6%) decline from December 31, 1999. The decrease was  represented  primarily
($.9 million) by a reduction in retail  repurchase  agreements  (securities sold
under  agreements to repurchase).  The decline is considered  cyclical and of no
concern.

Provision / Allowance for Loan Losses & Asset Quality
-----------------------------------------------------

Asset  quality  continues to be sound with problem  credits  considered to be at
satisfactory and manageable levels. Total loans past due 30 days or more equaled
$4.9  million  (2.1% of total  outstandings).  Included  in the 30 day total are
$755,000,  which  are 90 days or more  past  due and  still  accruing  interest.
Non-accrual  loans totaled $1.6 million at June 30, 2000, which represented 0.7%
of total  outstanding  loans  and  61.1% of the loan  loss  reserve.  Foreclosed
properties  totaled $246,000 at June 30, 2000, with potential losses expected to
be minimal.  Trends in this area have been relatively stable during the past six
months.

During the second  quarter of 2000, the Company  expensed  $130,000 as provision
for possible  loan losses.  This amount was added to the  Allowance for Loan and
Lease Losses (ALLL),  while gross  charge-offs for the quarter were $179,000 and
total recoveries were $63,000.

The provision  reflects  management's  assessment of the adequacy of the ALLL to
absorb losses inherent in the loan portfolio due to  deterioration of borrowers'
financial  condition  or changes in overall risk  profile.  Overall risk profile
considers  several  factors,  as  appropriate,  such as  historical  credit loss
experience,  current  economic  conditions,  the  composition  of the total loan
portfolio and assessments of individual credits within specific loan types.

The ALLL  equaled $2.6  million  June 30,  2000,  or 1.14% of total  outstanding
loans. Additionally,  the Company's use of a documented system for internal loan
classifications  more accurately  identifies ongoing credit risk imbedded within
the  loan  portfolio.   Classifications  are  assigned  a  risk  rating  with  a
corresponding percentage of the current balance considered in the ALLL depending
on the severity of the risk. The results of the self  classification  system are
compared to the ALLL each month, reviewed by Senior Management,  and reported to
the Board of Directors.  The June 30, 2000 evaluation indicates that the ALLL is
sufficient to safeguard  the Company in light of known or  identified  potential
loan loss risks.

The Company has two  defaulted  investment  securities  for which no interest is
being accrued.  The bonds were  originally  issued by an Industrial  Development
Authority (IDA) with a "Support  Agreement"  included from the  municipality for
which the IDA was formed.  The municipality has indicated that it will honor its
commitment  upon  completion of the IDA selling all of the assets of the project
for which the bonds were  originally  issued.  It is anticipated  that this will
return all principal  plus interest at the bond's stated coupon rate through the
date of  payment  by the  municipality,  with  no  loss.  No  reserve  has  been
established by the Company; however, the combined outstanding balance of the two
securities  ($151,000 as of June 30,  2000) has been  carried in a  non-accruing
status since the fourth quarter 1999.



                                       15
<PAGE>

Capital and Liquidity
---------------------

Equity  capital at June 30, 2000 totaled $43.7  million,  representing  11.3% of
total assets,  compared to $43.0  million as of December 31, 1999.  Exclusive of
adjustments for unrealized  gains/losses  on securities  classified as available
for sale, total equity equaled $45.4 million or 11.7% of total assets,  compared
to $44.4  million at December 31,  1999.  This level is adequate to support both
current operations, as well as asset growth to a level in excess of $500 million
without external augmentation.

Pursuant to the Company's Share  Repurchase  Plan, the Company  purchased 31,000
shares  during the current  quarter for a total of  $386,900.  Since this Plan's
adoption in 1999,  52,900 shares totaling  $692,744 have been  repurchased.  The
Plan originally provided for up to 100,000 shares to be repurchased in an amount
not to exceed  $2,000,000.  Pursuant  to the  announced  plan of merger with F&M
National  Corporation,  the Share Repurchase Plan has been suspended and will be
terminated during the third quarter, with no further shares being repurchased.

Liquidity is provided by both excess funds in the form of Federal funds sold and
access to the Federal  funds market  through the purchase of Federal  funds from
correspondent  banks. The Company maintains deposit  relationships  with several
correspondent banks that include commitments through various lines of credit for
short-term  borrowing  needs.  Federal  funds sold equaled 13.3% of total demand
deposits at June 30, 2000. The Company,  through two of its subsidiary banks, is
a member of the Federal Home Loan Bank of Atlanta.  This membership  affords the
Company  various  credit  vehicles.  The level of balance  sheet  liquidity  and
available credit facilities is considered  adequate to meet anticipated  deposit
withdrawals and expected loan demand from normal operations.  With the described
external sources of liquidity available,  the Company,  during the first half of
2000,  employed a higher percentage of internal  liquidity in acquiring slightly
longer  term  assets  (primarily   investment   securities)  with  greater  call
protection in an effort to enhance long-term interest earnings.

Future Plans
------------

As stated above, the Company has signed a definitive agreement ("the agreement")
with F&M National  Corporation.  The  transaction  is expected to close no later
than the first quarter of 2001.

The Company continues to explore branch expansion  opportunities for its banking
operations;  however, it has secured only one site for such growth. That site is
located on U. S. Route 17 in Gloucester Point,  Virginia.  A definitive schedule
has not been formalized for this site.

The Company plans to merge its two subsidiary banks into one bank before the end
of the  current  year.  This will  allow for full  implementation  of  telephone
banking and image  processing  throughout  all of its banking  offices,  whereas
these services are currently offered only throughout the offices of PTB.


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Interest Sensitivity Analysis
---------------------------------------------

An important component of both earnings  performance and liquidity is management
of interest rate sensitivity.  The Company's primary component of market risk is
interest rate volatility.  Net interest income,  the Company's primary component
of net income,  is subject to substantial  risk due to changes in interest rates
or  changes  in market  yield  curves,  particularly  if there is a  substantial
variation in the timing between the  re-pricing of the Company's  assets and the
liabilities  that fund them.  Interest rate  sensitivity  reflects the potential
effect on net  interest  income of a  movement  in market  interest  rates.  The
Company seeks to manage this risk by monitoring and controlling the variation in
re-pricing intervals between its assets and liabilities. To a lesser extent, the
Company also monitors its interest rate  sensitivity  by analyzing the estimated
changes in market value of its assets and liabilities  assuming various interest
rate  scenarios.  There are a variety of factors that  influence the  re-pricing
characteristics and market values of any given asset or liability.  The matching
of the re-pricing  characteristics  of assets



                                       16
<PAGE>

and liabilities may be analyzed by examining the extent to which such assets and
liabilities  are "interest rate  sensitive"  and by monitoring an  institution's
interest rate  sensitivity  "gap".  An asset or liability is said to be interest
rate  sensitive  within a specific  time period if it will  mature or  re-price,
either  by its  contractual  terms or based  upon  certain  assumptions  made by
management,  within that time  period.  The  interest  rate  sensitivity  gap is
defined  as  the  difference  between  the  amount  of  interest-earning  assets
anticipated  to mature or re-price  within a specific time period and the amount
of  interest-bearing  liabilities  anticipated to mature or re-price within that
same time period. A gap is considered  positive when the amount of interest rate
sensitive assets maturing or re-pricing within a specific time frame exceeds the
amount of interest rate sensitive liabilities maturing or re-pricing within that
same time  frame.  Conversely,  a gap is  considered  negative  when the reverse
relationship exists between interest rate sensitive assets and liabilities. In a
rising  interest  rate  environment,  an  institution  with a negative gap would
generally  be expected,  absent the effects of other  factors,  to  experience a
greater  increase in the costs of its  liabilities  relative to the yield of its
assets and,  thus,  a decrease in the  institution's  net  interest  income.  An
institution  with a positive gap would  generally be expected to experience  the
opposite  results.  Conversely,  during a period of falling  interest  rates,  a
negative gap would tend to result in an increase in net interest  income while a
positive gap would tend to  adversely  affect net  interest  income.  Management
monitors  interest  rate  sensitivity  so  that  adjustments  in the  asset  and
liability mix, when deemed appropriate, can be made on a timely manner.

The Company uses earnings simulations, duration, and gap analysis to analyze and
project future interest rate risk. The investment  portfolio,  specifically,  is
analyzed  as to interest  rate risk as well as call and  extension  risk.  These
three  elements  combined  will have a direct  bearing  on long  term  portfolio
profitability, both in terms of price change and, importantly, future yield. The
amount  of  interest  rate risk and call and  extension  risk  contained  in the
portfolio  will either  stabilize  or  destabilize  future  Company  earnings if
overall interest rates change.  The best  mathematical  measurements of interest
rate  risk and call and  extension  risk are EMD and  convexity,  especially  in
today's  environment  with so many  bonds  containing  direct or  indirect  call
options.

Because  many types of bonds are  callable or can vary in average  life as rates
change,  the Company  considers what effect this could have on market value, and
thus,  potential  earnings.  Duration  and  Modified  Duration  are used without
negative  convexity  and,  therefore,  are not as accurate  predictors  of price
change  when  dealing  with  bonds  that can  have  variable  principal  payouts
("callables",  "mortgages").  Negative convexity is used in conjunction with EMD
and is useful  when there is a chance of more than one  average  life or workout
date  (maturity/call  date).  It reflects the fact that with this type of bonds,
market prices will almost always decrease in value more than they increase given
the same  rate of shift up and down.  EMD and  convexity,  when  used  together,
provide a close  approximation  of market price changes per 1% moves in interest
rates.  Negative  convexity  usually works against the bondholder in both higher
and lower rate scenarios.

Certain  information  regarding  the  Company's  present  value change in equity
associated with changes in asset values under various interest rate scenarios as
of March 31, 2000 was presented in the Company's  Quarterly  Report on Form 10-Q
for the period ended March 31, 2000. There have been no material changes in that
information.

The Company's balance sheet structure displays a more advantageous position in a
moderately  rising  interest  environment.  This  picture  is  validated  by the
Company's  improvement  in net interest  income during the most recent period of
rising interest rates, as discussed above.



                                       17
<PAGE>

                           PART II. OTHER INFORMATION


Item 1.    Legal Proceedings - None

Item 2.    Changes in Securities and Use of Proceeds - None

Item 3.    Defaults Upon Senior Securities - None

Item 4.    Submission of Matters to a Vote of Security Holders

           On April 25, 2000,  the Annual  Meeting of  Shareholders  was held to
           vote on the following matters:  to elect five directors for a term of
           three  years  each and to  ratify  the  appointment  by the  Board of
           Directors of the firm of Yount, Hyde & Barbour, P.C. as the Company's
           independent, external auditors for the year ending December 31, 2000.
           A total of 3,044,678 shares were voted,  which  represented  72.9% of
           the  4,177,585  outstanding  as of the record date of March 15, 2000.
           The results of the votes on these matters were as follows:

           (1)    Election of Directors


                                                        For         Withheld
                                                        ---         --------

                  Harry M. Healy                     3,005,879       38,799
                  Hersey M. Mason, Jr.               3,004,306       40,372
                  William B. Savedge                 3,003,479       41,199
                  Marion G. Smith                    3,005,266       39,412
                  F. Bruce Stewart                   3,008,379       36,299



           (2)    Ratification of Accountants / External Auditors

                          For        Against      Withheld
                          ---        -------      --------

                       3,000,990      1,030        42,658


Item 5.    Other Information

           On July 6, 2000,  the Company  announced  the signing of a definitive
           agreement  for  the  affiliation  of the  Company  and  F&M  National
           Corporation  of  Winchester,   Virginia.   Under  the  terms  of  the
           agreement,  F&M will  exchange  0.753  shares of its common stock for
           each share of Atlantic stock.

           The  transaction  is expected to be completed no later than the first
           quarter  of  2001.  The  matter  requires  the  approval  of  various
           regulatory   agencies  and  the   shareholders  of  the  Company  and
           satisfaction  of  other  standard  conditions.   The  transaction  is
           intended to qualify as a tax-free  exchange and be accounted for as a
           pooling of interests. The Company's two bank subsidiaries,  Peninsula
           Trust Bank and United  Community  Bank,  will be combined and will be
           operated as a separate  banking  subsidiary  of F&M under the name of
           F&M Bank-Atlantic.

           F&M   National   Corporation   is  a   multi-bank   holding   company
           headquartered in Winchester,  Virginia, with assets in excess of $3.2
           billion at March 31, 2000, and 128 banking offices.



                                       18
<PAGE>

           An  acquisition  of $310  million in deposits  and 15  locations  was
           announced  on May 4,  2000 and is  scheduled  to  close in the  third
           quarter of 2000.  F&M  currently  operates ten banking  affiliates in
           Virginia,  West  Virginia  and  Maryland  and  offers  insurance  and
           financial  services through two  subsidiaries.  F&M also operates F&M
           Trust  Company.  F&M's  common  stock is listed on the New York Stock
           Exchange under the symbol "FMN."

Item 6.    Exhibits and Reports on Form 8-K

           (a)  Exhibits

                   27   Financial Data Schedule (filed electronically only).

           (b)  Reports on Form 8-K - None












                                       19
<PAGE>

                                   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 thereunto duly authorized.


                                     ATLANTIC FINANCIAL CORP


Date:  August 14, 2000                    BY  /s/ W. J. Farinholt
                                            ------------------------------------
                                          W. J. Farinholt, President & CEO


Date:  August 14, 2000                    BY  /s/ Kenneth E. Smith
                                            ------------------------------------
                                          Kenneth E. Smith, Exec. Vice President
                                          & Chief Financial Officer







                                       30