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 March 31, 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 March 31, 2000.


                      Common stock, $5 par value--4,178,985
                      -------------------------------------

<PAGE>

                                      INDEX
<TABLE>
<CAPTION>
ATLANTIC FINANCIAL CORP                                                            Page No.
<S>                                                                                <C>
Part I.   Financial Information

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

                   Consolidated Statements of Income--
                     Three months ended March 31, 2000 and 1999                          4

                   Consolidated Statements of Stockholders' Equity--
                     Three months ended March 31, 2000 and 1999                      5 - 6

                   Consolidated Statements of Cash Flows--
                     Three months ended March 31, 2000 and 1999                          7

                   Notes to Consolidated Financial Statements                       8 - 12

          Item 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                           13 - 17

          Item 3.  Quantitative and Qualitative Disclosures About
                     Market Risk                                                   18 - 19

Part II.  Other Information:                                                            20

          Item 1.  Legal Proceedings
          Item 2.  Changes in Securities
          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
</TABLE>




                                       2
<PAGE>

                         PART I. FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

                             ATLANTIC FINANCIAL CORP
                           CONSOLIDATED BALANCE SHEETS
                            (In Thousands of Dollars)
<TABLE>
<CAPTION>
                                                           (Unaudited)
                                                             March 31,           December 31,
ASSETS:                                                        2000                  1999
                                                            ----------            ----------
<S>                                                         <C>                   <C>
    Cash and due from banks                                 $   13,808            $   17,486
    Interest-bearing deposits in other banks                     1,573                 1,653
    Securities available for sale                               98,908                89,729
    Securities held to maturity (fair value of
        $9,452 and $9,786, respectively)                         9,676                 9,987
    Federal funds sold                                          21,553                22,577
    Loans, net                                                 222,259               223,513
    Premises and equipment                                      10,270                10,481
    Other real estate owned                                        224                   550
    Accrued interest receivable                                  2,932                 3,004
    Intangibles, net                                             1,002                 1,023
    Other assets                                                 3,268                 3,306
                                                            ----------            ----------
          TOTAL ASSETS                                      $  385,473            $  383,309
                                                            ==========            ==========

LIABILITIES:
Deposits
    Non-interest bearing                                    $   52,893            $   52,026
    Interest-bearing                                           284,153               283,020
                                                            ----------            ----------
       TOTAL DEPOSITS                                          337,046               335,046
    Short-term borrowings                                        1,815                 2,976
    Accrued interest payable                                     1,543                 1,195
    Other liabilities                                            1,647                 1,054
                                                            ----------            ----------
          TOTAL LIABILITIES                                    342,051               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 4,178,985 and 4,191,185
     shares, respectively                                       20,895                20,956
    Stock Options                                                    3                     3
    Retained earnings                                           23,996                23,438
    Accumulated other comprehensive
      income, net                                               (1,472)               (1,359)
                                                            ----------            ----------
          TOTAL STOCKHOLDERS' EQUITY                            43,422                43,038
                                                            ----------            ----------
          TOTAL LIABILITIES AND
            STOCKHOLDERS' EQUITY                            $  385,473            $  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)

                                                       Three Months Ended
                                                         & Year-to-Date
                                                            March 31,
                                                         2000       1999
                                                         ----       ----

INTEREST INCOME:
Loans and Fees                                         $  5420    $  5071
Federal Funds Sold                                         300        299
Interest on Deposits at Other Banks                         15          6
Investment Securities                                     1649       1371
                                                       -------    -------
   Total Interest Income                                  7384       6747

INTEREST EXPENSE:
Interest on deposits                                      3172       2957
Interest on federal funds purchased
 and other borrowings                                       21         16
                                                       -------    -------
   Total Interest Expense                                 3193       2973
                                                       -------    -------
   Net Interest Income                                    4191       3702

PROVISION FOR LOAN
AND LEASE LOSSES                                            70         72
                                                       -------    -------
   Net Interest Income After
   Provision for Loan
   and Lease Losses                                       4121       3702

OTHER INCOME:
Service Charges & Fees                                     443        439
Gain (loss) on sale of other real estate                  (48)         --
Other income                                               130        116
                                                       -------    -------
   Total Other Income                                      525        555

OTHER EXPENSES:
Salaries & Employee Benefits                              1721       1531
Occupancy Expenses                                         250        230
Furniture & Equipment Expenses                             455        442
Other Operating Expenses                                   651        700
                                                       -------    -------
   Total Other Expenses                                   3077       2903
                                                       -------    -------
Income Before Income Taxes                                1569       1354
Applicable Income Taxes                                    422        356
                                                       -------    -------
   Net Income                                          $  1147    $   998
                                                       =======    =======

    Earnings Per Share, Basic                              .27        .24
                                                       =======    =======
    Earnings Per Share, Assuming
    Dilution                                               .27        .23
                                                       =======    =======

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


                                       4
<PAGE>


                             ATLANTIC FINANCIAL CORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    For the three months ended March 31, 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                                       - -       - -       - -      1,147       - -         $1,147            1,147
     Other comprehensive income:
       Unrealized holding gains (losses) on
       securities available for sale arising
       during the period net of tax of $58                                                                   (113)             - -
                                                                                                             ----
     Other comprehensive income, net of tax           - -       - -       - -        - -      (113)          (113)            (113)
                                                                                                             ----
     Total comprehensive income                       - -       - -       - -        - -                   $1,034              - -
                                                                                                           ======
Exercise of stock options                              18       - -       - -        - -       - -                              18
Purchase of common stock                              (79)      - -       - -       (128)      - -                            (207)
Cash dividends                                        - -       - -       - -       (461)      - -                            (461)
                                                      ---       ---       ---      -----       ---                            ----
Balance, March 31, 2000                           $20,895        $3      $- -    $23,996   ($1,472)                        $43,422
                                                  ===================================================                      =======
</TABLE>



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


                                       5
<PAGE>

                             ATLANTIC FINANCIAL CORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    For the three months ended March 31, 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                                         - -       - -      - -         998       - -         $  998              998
   Other comprehensive income:
     Unrealized holding gains (losses) on
     securities available for sale arising
     during the period, net of tax of $153                                                                   (298)             - -
                                                                                                            -----
   Other comprehensive income, net of tax             - -        - -       - -        - -     (298)          (298)            (298)
                                                                                                            -----
   Total comprehensive income                         - -        - -       - -        - -                  $  700              - -
                                                                                                          =======
Exercise of stock options                             102         (2)      - -        - -      - -                             100
Cash dividends                                        - -        - -       - -       (377)     - -                            (377)
                                                      ---        ---       ---      -----      ---                            ----
Balance, March 31, 1999                           $20,947         $4    $  - -    $21,669    ($932)                        $43,552
                                                  ====================================================                     =======
</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>
                                                                             Three Months Ended
                                                                                  March 31,
                                                                          -------------------------
                                                                              2000          1999
                                                                              ----          ----
<S>                                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                                             $     1,147    $      998
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation                                                                 329           316
     Provision for loan losses                                                     70            72
     Amortization of premiums, net                                                 15            24
     Loss on sale of other real estate                                             48           - -
     Changes in operating assets and liabilities:
       Decrease in accrued interest receivable                                     25           110
       Decrease in other assets                                                   143             1
       Increase in accrued interest payable                                       348            69
       Increase in other liabilities                                              593           249
                                                                          -----------    ----------
          Net Cash Provided by Operating Activities                       $     2,718    $    1,839
                                                                          -----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net (increase) decrease in loans                                             1,184        (5,195)
   Purchase of securities available for sale                                  (11,792)      (11,506)
   Proceeds from sales of securities available for sale                           - -           502
   Proceeds from calls and maturities of securities available for sale          2,428         5,469
   Proceeds from calls and maturities of securities held to maturity              310         2,737
   Purchase of premises and equipment                                             (97)         (268)
   Proceeds from sales of other real esate                                        278           - -
                                                                          -----------    ----------
          Net Cash (Used In) Investing Activities                        ($     7,689)   ($   8,261)
                                                                          -----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in deposits                                                   $     2,000    $    9,864
   Issuance of common stock                                                        18           100
   Repurchase of common stock                                                    (207)          - -
   Net increase (decrease) in short-term borrowings                            (1,161)          371
   Cash dividends paid                                                           (461)         (884)
                                                                          -----------    ----------
            Net Cash Provided by Financing Activities                     $       189    $    9,451
                                                                          -----------    ----------

            Net Increase In Cash and Cash Equivalents                    ($     4,782)        3,029
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                41,716        41,306
                                                                          -----------    ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                 $    36,934    $   44,335
                                                                          ===========    ==========
</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 March 31, 2000 and December
      31,  1999,  and the  results  of  operations  and cash flows for the three
      months ended March 31, 2000 and 1999.

      The results of  operations  for the three  months ended March 31, 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>
                                                                            March 31, 2000
                                                  ---------------------------------------------------
                                                                    Gross          Gross    Estimated
                                                   Amortized   Unrealized     Unrealized       Market
                                                        Cost        Gains       (Losses)        Value
                                                  ---------------------------------------------------
                                                                (In Thousands of Dollars)
<S>                                               <C>           <C>           <C>           <C>
US Treasury Securities                                  852            --            (1)         851
US Government and federal agencies                   28,988             3        (1,069)      27,922
States and local governments                         31,002            66          (761)      30,307
Mortgage-backed securities                           27,331             4          (906)      26,429
Corporate debt obligations                            4,799            --          (178)       4,621
Collateralized mortgage obligations                   2,839            --           (49)       2,790
Restricted stocks                                     1,209            --            --        1,209
Other securities                                      4,119         1,004          (344)       4,779
                                                  ---------     ---------     ----------    --------
                                                  $ 101,139     $   1,077     $  (3,308)    $ 98,908
                                                  =========     =========     ==========    ========
</TABLE>

    Amortized cost and carrying amount (estimated fair value) of securities held
    to maturity are summarized as follows:
<TABLE>
<CAPTION>
                                                                     March 31, 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            --           (98)       2,245
States and local governments                          5,503             5           (70)       5,438
Mortgage-backed securities                            1,830            --           (61)       1,769
                                                   --------         -----       --------    --------
                                                   $  9,676         $   5       $  (229)    $  9,452
                                                   ========         =====       ========    ========
</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>

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           March 31,
                                                                     --------------------
                                                                     2000            1999
                                                                     ----            ----
                                                                   (In Thousands of Dollars)
<S>                                                               <C>            <C>
Gross proceeds from sales of securities                                   --            502
                                                                  ==========     ==========
Gross Gains on Sale of Securities                                         --             --
Gross Losses on Sale of Securities                                        --             --
                                                                  ----------     ----------
  Net Securities Gains (Losses)                                           --             --
                                                                  ==========     ==========
</TABLE>




                                       9
<PAGE>

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

3.  Loans

    Major classifications of loans are as follows:
<TABLE>
<CAPTION>
                                                                   March 31,          December 31,
                                                                     2000                 1999
                                                                 -----------          -----------
                                                                       (In Thousands of Dollars)
<S>                                                                 <C>                  <C>
Commercial (except those secured by real estate)                      31,026               31,824
Agriculture (except those secured by real estate)                      3,896                5,066
Real estate mortgage:
   Construction and land development                                  17,517               15,995
   Residential (1-4 family)                                           57,266               57,089
   Home equity lines                                                  17,266               16,663
   Commercial                                                         57,037               58,064
   Agricultural                                                        4,756                5,067
Loans to individuals for household,
 family and other consumer expenditures                               36,220               36,497
All other loans                                                          431                  475
                                                                 -----------          -----------
                                                                     225,415              226,740
Less unearned income                                                    (541)                (564)
                                                                 -----------          -----------
Less allowance for loan losses                                        (2,615)              (2,663)
                                                                 -----------          -----------
Loans, net                                                          $222,259             $223,513
                                                                 ===========          ===========
</TABLE>

The  following  schedule  summarizes  the changes in the  allowance for loan and
lease losses:
<TABLE>
<CAPTION>
                                                Three Months         Three Months
                                                   Ending               Ending
                                                  March 31,            March 31,         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                                70                   72                 505
Recoveries                                               36                  150                 257
Charge-offs                                            (154)                 (91)               (523)
                                                 ----------           ----------          ----------
Balance at end of period                         $    2,615           $    2,555          $    2,663
                                                 ==========           ==========          ==========
</TABLE>

Nonperforming assets consist of the following:

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

Nonaccrual Loans                                $  1,277              $   632
Restructured Loans                                    --                   --
                                                --------              -------
Nonperforming Loans                                1,277                  632
Foreclosed Properties                                224                  550
                                                --------              -------
Nonperforming Assets                            $  1,501              $ 1,182
                                                ========              =======



                                       10
<PAGE>

Total loans past due 90 days or more and still  accruing  were $836 on March 31,
2000 and $622 on December 31, 1999.











                                       11
<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>
                                                       March 31, 2000                     March 31, 1999
                                                       --------------                     --------------
                                                                 Per Share                          Per Share
                                                    Shares          Amount               Shares        Amount
                                                 ---------          ------               ------        ------
<S>                                              <C>               <C>                <C>             <C>
Basic Earnings Per Share                         4,186,310         $   .27            4,181,930       $   .24

Effect of dilutive securities:
  Nonemployee directors' stock options              14,775                               24,269
  Employee incentive stock options                  47,584                               59,500
                                                 ---------                            ---------

Diluted Earnings Per Share                       4,248,669         $   .27            4,265,699       $   .23
                                                 =========         =======            =========       =======
</TABLE>


5.  Capital Requirements

    A comparison of the Company's  capital as of March 31, 2000 with the minimum
    requirements is presented below:

                                                                    Minimum
                                              Actual              Requirements
                                              ------              ------------
Tier I Risk-based Capital                     17.26%                 4.00  %
Total Risk-based Capital                      18.29%                 8.00  %
Leverage Ratio                                11.60%                 4.00  %






                                       12
<PAGE>

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

Certain  information  contained in this discussion 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.

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS

The following 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.

Results of Operations

Earnings
--------

Net income for the quarter ended March 31, 2000 totaled $1,147,000,  compared to
$998,000 for the same period in 1999. This  performance not only  represented an
impressive  14.9% increase in absolute  dollars,  but also  represented $.27 per
share compared to $.23 per share for the same period in 1999, a 17.4%  increase.
Both of these performance measures were historical highs for the Company. Return
on average total assets for the current  quarter  equaled 1.21% on an annualized
basis, which compared favorably to the 1.11% level for the same period in 1999.

Net interest income for the first quarter 2000 (tax  equivalent  interest income
less  interest  expense)  totaled $4.4 million (a 10.0%  increase over the first
quarter  1999).  The net interest  margin (tax  equivalent  net interest  income
expressed as a percentage of average earning assets) increased from 4.76% in the
first  quarter 1999 to 4.96% in the first  quarter  2000.  The average  yield on
interest earning assets increased 25 basis points during a time when the average
rate on interest bearing liabilities increased only 3 basis points. As a result,
the 8.88%  increase  in  interest  income for the first  quarter  2000 more than
compensated for the 7.40% increase in interest expense for the same period.  The
Company's   balance  sheet  is  asset  sensitive  as  related  to  its  interest
sensitivity position.  That is to say that its assets re-price more quickly than
its  liabilities.  During the past fifteen  months,  the Federal  Reserve  Board
increased  short-term  interest  rates 125 basis  points in five  separate  rate
adjustments. The Company enjoyed more rapid increase in interest income than the
corresponding increase in interest expense during this period.

Non-interest  expense for the first quarter 2000 totaled $3.1 million,  compared
to $2.9 million in the first quarter 1999, a 6.0%  increase.  This is a positive
trend relative to the 10.0%  increase in net interest  income  discussed  above.
Additionally,  as  discussed  in the Form  10-QSB  of March 31,  1999,  the $2.9
million figure equaled a 20.8% 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.



                                       13
<PAGE>

Non-interest income for the current quarter increased 3.2% over the same quarter
in 1998. As discussed in previous Form 10QSB and 10KSB reports,  the Company has
taken  certain  initiatives  to expand  non-interest  opportunities.  These have
included offering mortgage and investment services.  Earnings contributions from
these  initiatives  have not reached  significant  levels,  but are  expected to
improve gradually.  The investment services area produced net income of $28,000.
The  mortgage  banking  affiliate  recorded  a net loss of $25,000  due  reduced
production in the  refinance  area as interest  rates have risen.

Financial Condition

The Company experienced a flat balance sheet during the first quarter 2000, with
total  assets  increasing  $2.2  million,   or  0.6%  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.  This condition
was compounded  this quarter by 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
interest bearing deposits, which reflected a $1.1 million, or 0.4% increase, for
the three  months  ending  March 31,  2000.  The Company is  actively  exploring
alternative  funding  sources.  Special  attention  will be given  to price  and
duration volatility as it relates to overall asset liability management, overall
liquidity and preserving the stability of the net interest margin.

Loan demand softened during the first quarter, evidenced by net loans decreasing
$1.3 million, or 0.6%, 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 its practice during the first quarter of selling Federal
funds,  having sold  continuously  on a daily basis in amounts  averaging  $21.3
million,  5.62% of average total assets.  These figures compare to $26.0 million
and 7.22%, respectively,  for the first quarter 1999. The quarter-end balance of
$21.6 million  represented a $1.0 million (or 4.54%)  decrease from December 31,
1999.

The level of the investment account increased approximately $8.9 million (8.89%)
during the first quarter 2000,  ending the period at $108.6 million or 28.17% of
total assets.  The portfolio was used to absorb some of the excess Y2K liquidity
that built up during the fourth  quarter 1999.  The portfolio is comprised of 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 of three



                                       14
<PAGE>

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 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  98.5%  of  total  liabilities  of  the  Company,  including
non-interest  bearing checking  accounts which represent 15.7% of total deposits
on March 31,  2000.  Short-term  borrowings  of $1.8  million  reflected  a $1.2
million  (39.0%)  decline from December 31, 1999.  The decrease was  represented
primarily  ($.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
$4.6  million  (2.06% of total  outstandings).  Included in the 30 day total are
$836,000,  which  are 90 days or more  past  due and  still  accruing  interest.
Non-accrual  loans  totaled $1.3 million at March 31,  2000,  which  represented
0.57% of total outstanding loans and 48.83% of the loan loss reserve. Foreclosed
properties totaled $225,000 at March 31, 2000, with potential losses expected to
be  minimal.  Trends in this area are  relatively  stable  during the past three
months.

During the first quarter of 2000, the Company  expensed $70,000 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 $154,000 and total
recoveries were $36,000.

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 $2.62 million March 31, 2000,  comfortably  above the Company's
general target of 1.10% 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 and indicate  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
whom 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 March 31,  2000) has been carried in a  non-accruing
status since the fourth quarter 1999.



                                       15
<PAGE>

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

Equity  capital at March 31, 2000 totaled $43.4 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 $44.9 million or 11.6% 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 15,800
shares  during the  current  quarter for a total of  $206,100.  Since the Plan's
adoption in 1999,  21,900 shares totaling  $305,844 have been  repurchased.  The
Plan provides for up to 100,000 shares to be  repurchased.  The Plan is intended
to improve the market efficiency for trading smaller denominations of shares and
also improve  long-term  earnings per share  performance.  The Company finds the
current market value of its stock perplexing, with the banking sector as a group
experiencing  downward pressure on stock prices.  However, it is also proving to
be an opportune time for repurchasing shares.

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 17.6% of total demand
deposits at March 31, 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 plans in the near future to
employ 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
------------

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  continues  its research and  development  efforts  associated  with
developing an internet presence.  E-banking,  as with other forms of E-commerce,
continues to proliferate as to customer acceptance and, indeed, customer demand.
The Company plans to offer a complete  product line  including,  but not limited
to,  internal  transactions  and third party bill paying.  The Company is moving
cautiously,  exploring not only product functionality,  but with equally intense
attention to security for the customer and the Company.

The Company plans to dissolve the previous  joint venture  relationship  between
PTB and a local  real  estate  title  agency  due to  less-than-desirable  title
insurance  activity  from the  arrangement.  PTB will then  enter into a similar
agreement  as its sister bank (UCB)  through the Virginia  Bankers  Association.
This move is designed to enhance non-interest fee income for PTB.

Interactive  voice  response  (IVR),  a form  of  telephone  banking,  has  been
available to PTB customers for several years.  Management  anticipates  this new
customer service to be implemented at UCB by the end of the second quarter 2000.



                                       16
<PAGE>

Year 2000 Issue

The Company  performed  considerable  testing and  planning for the century date
change prior to December 31, 1999.  Actual expenses  associated with this effort
approximated  $200,000 in 1999. The diminished production and efficiency through
the diverted attention of staff members who would otherwise have been conducting
normal banking  operations is difficult to quantify.  However,  it clearly had a
negative impact.  The effort proved  successful,  with the coming and passing of
year-end  and the  New  Year,  creating  no  material  interruptions  in  normal
activities.  The Company  continues to maintain an active internal Y2K committee
comprised of Senior Management,  other officers and staff under the direction of
the  Company's  Executive  Vice  President  and  Chief  Financial  Officer.  The
committee meets monthly and subsequently  reports on its activities to the Board
of Directors.  Certain other key dates in the year 2000 are identified as posing
potential  Y2K date  sensitive  risks.  As of the printing of this  report,  the
Company has processed two month-end dates,  including the February 29, 2000 leap
year date, with no material disruptions. Minor glitches have been identified and
communicated with appropriate  personnel as well as vendors,  if applicable.  No
material  negative  customer  impact has been  identified.  Additional  costs or
expenses associated with the Y2K issue are expected to be minimal.









                                       17
<PAGE>


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  which 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 which  influence the re-pricing
characteristics and market values of any given asset or liability.  The matching
of the re-pricing  characteristics  of assets 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 effective  modified duration (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 these type bonds,
market prices will almost always decrease in value more than they increase given
the same rate 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.  The  following  table sets forth the  Company's  present value
change in equity  associated with changes in asset value under various  interest
rate scenarios as of March 31, 2000.



                                       18
<PAGE>

The table  reflects the impact on asset and liability  values related to 100 and
200  basis-point  (i.e.,  1% and 2%)  changes  in  market  interest  rates.  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  discussed  above during the most
recent period of rising interest rates.
<TABLE>
<CAPTION>
                                                                           Current
                                      Minus 200 pts.    Minus 100 pts.    Fair Value      Plus 100 pts.   Plus 200 pts.

-----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>              <C>               <C>             <C>
Securities                             108,536,406       105,751,577      102,761,225       99,164,582      94,992,476
    Market value change                  5,775,181         2,990,352                        (3,596,643)     (7,768,749)
Loans Receivable                       232,541,223       230,791,111      229,041,000      227,290,889     225,540,777
    Market value change                  3,500,223         1,750,111                        (1,750,111)     (3,500,223)
Total rate sensitive assets            341,077,629       336,542,688      331,802,225      326,455,471     320,533,253
Other assets                            58,333,260        56,817,501       55,301,742       53,785,983      52,270,224
----------------------------------------------------------------------------------------------------------------------
Total assets                           399,410,889       393,360,189      387,103,967      380,241,454     372,803,478
----------------------------------------------------------------------------------------------------------------------

Deposits
Rate sensitive                         219,420,070       217,146,325      214,872,580      212,860,007     210,847,434
    Market value change                 (4,547,490)       (2,273,745)                        2,012,573       4,025,146
Non rate sensitive                     137,370,850       133,881,085      130,391,321      126,901,556     123,411,792
    Market value change                 (6,979,529)       (3,489,764)                        3,489,764       6,979,529
-----------------------             --------------    --------------                    --------------  --------------

Total liabilities                      356,790,920       351,027,410      345,263,901      339,761,563     334,259,225
----------------------------------------------------------------------------------------------------------------------

Present Value Equity                    42,619,969        42,332,779       41,840,066       40,479,891      38,544,252
--------------------                --------------    --------------   --------------   --------------  --------------
Total Liabilities & Equity             399,410,889       393,360,189      387,103,967      380,241,454     372,803,478
--------------------------          --------------    --------------   --------------   --------------  --------------
Market Value Change                     (2,251,615)       (1,023,046)                          155,583        (264,296)

Percentage Change                           -5.28%            -2.42%                             0.38%          -0.69%
</TABLE>




                                       19
<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 - None

Item 5.    Other Information - None

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







                                       20
<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:  May 15, 2000                    BY /s/ W. J. Farinholt
                                          --------------------------------
                                          W. J. Farinholt, President & CEO


Date:  May 15, 2000                    BY /s/ Kenneth E. Smith
                                          --------------------------------
                                          Kenneth E. Smith, Exec. Vice President
                                          & Chief Financial Officer








                                       21