U.S. 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, 2006

        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
               For the transition period from _________ to _________

                        Commission file number 000-23847

                           SHORE FINANCIAL CORPORATION

             (Exact name of registrant as specified in its charter)

           Virginia                                       54-1873994
----------------------------------                   ---------------------
  (State or other jurisdiction                         (I.R.S. Employer
of incorporation or organization)                    Identification Number)

    25253 Lankford Highway
        Onley, Virginia                                     23418
----------------------------------                        ---------
     (Address of Principal                                (Zip Code)
      Executive Offices)

                    Issuer's telephone number: (757) 787-1335


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer ____ Accelerated filer ____ Non-accelerated filer __X__

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
                                                        Yes ____ No __X__

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
                                                        Yes ____ No ____

Number of shares of Common Stock outstanding as of August 11, 2006:  2,076,367






<PAGE>


                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                                Index - Form 10-Q

                         PART I - FINANCIAL INFORMATION

         Item 1 - Consolidated Financial Statements (Unaudited)

                           Consolidated Statements of Financial Condition as of
                           June 30, 2006 and December 31, 2005

                           Consolidated Statements of Income for the Three and
                           Six Months Ended June 30, 2006 and 2005

                           Consolidated Statements of Stockholders' Equity for
                           the Six Months Ended June 30, 2006 and 2005

                           Consolidated Statements of Cash Flows for the Six
                           Months Ended June 30, 2006 and 2005

                           Notes to Unaudited Consolidated Financial Statements

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

                           Results of Operations

                           Interest Sensitivity

                           Financial Condition

                           Asset Quality

                           Liquidity and Capital Resources

         Item 3 - Quantitative and Qualitative Disclosures about Market Risk

         Item 4 - Controls and Procedures


                           PART II - OTHER INFORMATION
         Item 1 - Legal Proceedings
         Item 1A - Risk Factors
         Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
         Item 3 - Defaults Upon Senior Securities
         Item 4 - Submission of Matters to Vote of Security Holders
         Item 5 - Other Information
         Item 6 - Exhibits

                                   SIGNATURES



<PAGE>

<TABLE>


                                  Consolidated Statements of Financial Condition


                                                                             June 30,             December 31,
                                                                               2006                   2005
------------------------------------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                               ASSETS


Cash (including interest - earning deposits of
     approximately $2,798,400 and $1,775,300, respectively)           $         10,324,000     $         9,176,000
Investment securities:
     Available-for-sale (amortized cost of $28,685,600 and
         $29,781,900, respectively)                                             28,391,600              29,889,900
     Other investments, at cost                                                  2,392,500               2,460,900
Loans receivable, net                                                          210,222,900             192,696,500
Premises and equipment, net                                                      7,241,800               7,464,600
Other assets                                                                     5,999,800               5,731,000
                                                                      ---------------------------------------------

                                                                      $        264,572,600     $       247,418,900
                                                                      =============================================

                LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
         Interest-bearing                                             $        177,050,300     $       160,105,000
         Noninterest-bearing                                                    29,898,700              28,864,700
                                                                      ---------------------   ---------------------
            Total deposits                                                     206,949,000             188,969,700

Advances from Federal Home Loan Bank                                            32,216,700              34,050,000
Other liabilities                                                                  811,400                 770,600
                                                                      ---------------------------------------------
            Total liabilities                                                  239,977,100             223,790,300
                                                                      ---------------------------------------------

Stockholders' equity
     Preferred stock, par value $1 per share, 500,000
         shares authorized; none issued and
         outstanding                                                                     -                       -
     Common stock, par value $.33 per share, 5,000,000
         shares authorized; 2,076,827 and 2,074,207 shares
         issued and outstanding, respectively                                      685,400                 684,500
     Additional capital                                                          8,333,400               8,267,400
     Retained earnings                                                          15,772,100              14,631,400
     Accumulated other comprehensive income                                       (195,400)                 45,300
                                                                      ---------------------------------------------
            Total stockholders' equity                                          24,595,500              23,628,600
                                                                      ---------------------------------------------

                                                                      $        264,572,600     $       247,418,900
                                                                      =============================================


                    The accompanying notes are an integral part of these financial statements.


</TABLE>



<PAGE>


<TABLE>


                                                Consolidated Statements of Income

                                                    Three Months Ended June 30,           Six Months Ended June 30,
                                                -------------------------------------------------------------------------
                                                    2006                 2005             2006                2005
-------------------------------------------------------------------------------------------------------------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Interest and dividend income
     Loans                                      $   3,368,900      $   2,711,000     $    6,503,800      $     5,343,200
     Investments
         Taxable interest                             304,800            330,300            582,700              644,000
         Tax-exempt interest                           38,400             34,700             71,000               69,400
         Dividends                                     62,400             39,200            112,800               81,500
                                                ---------------------------------    ------------------------------------
             Total interest and dividend income     3,774,500          3,115,200          7,270,300            6,138,100
                                                ---------------------------------    ------------------------------------

Interest expense
     Deposits                                       1,192,000            837,600          2,125,300            1,658,500
     FHLB/other advances                              436,700            230,900            856,800              359,800
                                                ---------------------------------    ------------------------------------
               Total interest expense               1,628,700          1,068,500          2,982,100            2,018,300
                                                ---------------------------------    ------------------------------------

Net interest income                                 2,145,800          2,046,700          4,288,200            4,119,800

Provision for loan losses                              51,900             82,000             91,800              160,200
                                                ---------------------------------    ------------------------------------

Net interest income after
     provision for loan losses                      2,093,900          1,964,700          4,196,400            3,959,600
                                                ---------------------------------    ------------------------------------

Noninterest income
     Deposit account fees                             621,900            319,500          1,214,500              607,500
     Loan fees                                         26,600             31,800             53,600               51,100
     Mortgage banking fees                             19,800             46,100             49,400               77,900
     Commissions on investment brokerage sales        112,100             33,200            190,500               64,400
     Gains on sales of securities                           -             69,800                  -              160,200
     Other                                             61,800             63,500            129,600              125,000
                                                ---------------------------------    ------------------------------------
               Total noninterest income               842,200            563,900          1,637,600            1,086,100
                                                ---------------------------------    ------------------------------------

Noninterest expense
     Compensation and employee
         benefits                                     937,900            784,300          1,856,000            1,520,700
     Occupancy and equipment                          406,300            391,600            838,800              811,700
     Data processing                                  203,500            186,700            415,900              372,900
     Professional fees                                 97,700             68,100            193,000              124,700
     Advertising and promotion                         33,500             49,200             63,200               85,600
     Other                                            190,200            159,200            392,900              324,000
                                                ---------------------------------    ------------------------------------
               Total noninterest expense            1,869,100          1,639,100          3,759,800            3,239,600
                                                ---------------------------------    ------------------------------------

Income before income taxes                          1,067,000            889,500          2,074,200            1,806,100

Income taxes                                          330,800            275,800            643,000              561,300
                                                ---------------------------------    ------------------------------------

Net income                                      $     736,200      $     613,700     $    1,431,200      $     1,244,800
                                                =================================    ====================================

Cash Dividends Declared Per Share               $        0.07      $        0.06     $         0.14      $          0.12
                                                =================================    ====================================

Earnings Per Common Share:
         Basic                                  $          0.36    $           0.29  $         0.69      $          0.60
                                                =================================    ====================================

         Diluted                                $          0.35    $           0.29  $         0.68      $          0.59
                                                =================================    ====================================


            The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>


<TABLE>

                                                Consolidated Statements of Stockholders' Equity


-----------------------------------------------------------------------------------------------------------------------------------


                                                                                                   Accumulated
                                                                                                      Other
                                 Number of       Common         Additional         Retained        Comprehensive
                                  Shares          Stock           Capital          Earnings        Income (Loss)          Total
                               ------------  ---------------------------------------------------------------------------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Balance, December 31, 2004       2,063,284   $    680,900    $    8,199,000    $   12,494,400    $       584,700    $   21,959,000

Common stock cash dividend
     declared                            -              -                 -          (248,100)                 -          (248,100)

Exercise of stock options            7,653          2,500            35,900                 -                  -            38,400

Comprehensive income (loss)              -              -                 -         1,244,800           (307,200)          937,600
                               ------------  ---------------------------------------------------------------------------------------

Balance, June 30, 2005           2,070,937   $    683,400    $    8,234,900    $   13,491,100    $       277,500    $   22,686,900
                               ============  =============   ===============   ===============   ================   ================

Balance, December 31, 2005       2,074,207   $    684,500    $    8,267,400    $   14,631,400    $        45,300    $   23,628,600

Common stock cash dividend
     declared                            -              -                 -          (290,500)                 -          (290,500)

Exercise of stock options            2,620            900            57,900                 -                  -            58,800

Tax benefit associated with the
     exercise of stock options           -              -             8,100                 -                  -             8,100

Comprehensive income (loss)              -              -                 -         1,431,200           (240,700)        1,190,500
                               ------------  ---------------------------------------------------------------------------------------

Balance, June 30, 2006           2,076,827   $    685,400    $    8,333,400    $   15,772,100    $      (195,400)   $   24,595,500
                               ============  =============   ===============   ===============   ================   ================








                                  The accompanying notes are an integral part of these financial statements.

</TABLE>



<PAGE>



<TABLE>

                 Consolidated Statements of Cash Flows


                                                         Six Months Ended June 30,
                                                        --------------------------
                                                             2006          2005
---------------------------------------------------------------------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Cash flows from operating activities
    Net income                                          $ 1,431,200    $1,244,800
    Adjustments to reconcile to net cash
      provided by operating activities:
        Provision for loan losses                            91,800       160,200
        Depreciation and amortization                       380,600       362,600
        Amortization of premium and accretion
          of discount on securities, net                      4,600        34,500
        Gain on sale of investment securities                     -      (160,200)
        Increase in cash surrender value of
          life insurance                                    (72,200)      (66,500)
        Tax benefit of stock options exercised                8,100             -
        Changes in:
          Deferred loan fees                                 63,200        69,700
          Other assets                                      (65,300)       72,200
          Other liabilities                                  40,800      (524,800)
                                                        --------------------------
          Net cash flows from operating activities        1,882,800     1,192,500
                                                        --------------------------

Cash flows from investing activities
    Purchase of available-for-sale securities            (2,055,100)    (982,400)
    Proceeds from maturities, sales and calls of
      available-for-sale securities                       3,146,800       663,500
    Purchase of other investments                        (1,323,300)   (2,967,000)
    Proceeds from maturities, sales and calls of
      other investments                                   1,391,700     2,311,500
    Loan originations, net of repayments                (17,681,400)  (10,482,800)
    Purchase of premises and equipment                     (127,800)     (136,000)
                                                        --------------------------
          Net cash flows from investing activities      (16,649,100)  (11,593,200)
                                                        --------------------------


</TABLE>


<PAGE>


<TABLE>

                 Consolidated Statements of Cash Flows

                                                         Six Months Ended June 30,
                                                        --------------------------
                                                             2006          2005
----------------------------------------------------------------------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Cash flows from financing activities
    Net increase (decrease) in demand deposits          $(4,095,300)  $ 5,068,100
    Net increase (decrease) in time deposits             22,074,600    (1,590,000)
    Proceeds from FHLB advances                         148,500,000    69,800,000
    Repayments of FHLB advances                        (150,333,300)  (60,383,400)
    Proceeds from exercise of stock options                  58,800        38,400
    Payment of dividends on common stock                   (290,500)     (248,100)
                                                        --------------------------
          Net cash flows from financing activities       15,914,300    12,685,000
                                                        --------------------------

Change in cash and cash equivalents                       1,148,000     2,284,300

Cash and cash equivalents, beginning of year              9,176,000     9,415,000
                                                        --------------------------

Cash and cash equivalents, end of year                  $10,324,000   $11,699,300
                                                        ==========================


Supplemental disclosure of cash flow information

    Cash paid during the period for interest            $ 2,709,200    $1,931,300
    Cash paid during the period for income taxes        $   630,000    $  443,500
    Conversion of Trust Preferred Stock investment
        to common stock                                 $         -    $   72,000




The accompanying notes are an integral part of these financial statements.


</TABLE>


<PAGE>



                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of Shore Financial
Corporation and Subsidiaries (the "Company") have been prepared in accordance
with generally accepted accounting principles ("GAAP") and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial
statements in the United States of America. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the consolidated financial statements have been included.

In preparing the consolidated financial statements in conformity with GAAP in
the United States of America, management is required to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. The consolidated results of operations and other data for the six
month period ended June 30, 2006 are not necessarily indicative of the results
that may be expected for any other interim period or the entire year ending
December 31, 2006. The unaudited consolidated financial statements presented
herein should be read in conjunction with the audited consolidated financial
statements and related notes thereto in the Company's Annual Report on Form 10-K
for the year ended December 31, 2005.

Principles of Consolidation

The consolidated financial statements of the Company include and primarily
consist of the accounts of its wholly-owned subsidiary Shore Bank (the "Bank")
and the Bank's wholly-owned subsidiary Shore Investments, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.



<PAGE>




NOTE 2 - EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the periods ended June 30,
2006 and 2005.


<TABLE>

                                                           Three Months Ended June 30,               Six Months Ended June 30,
                                                         ---------------------------------       -----------------------------------
                                                              2006              2005                   2006              2005
                                                         ----------------  ---------------       ----------------- -----------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income (numerator, basic and diluted)                   $    736,200    $     613,700          $    1,431,200    $    1,244,800
Weighted average shares outstanding
(denominator)                                                  2,076,600        2,070,800               2,075,900         2,069,275
                                                         ----------------  ---------------       ----------------- -----------------

Earnings per common share - basic                           $       0.36    $        0.29          $         0.69    $         0.60
                                                         ================  ===============       ================= =================

Effect of dilutive securities:

Weighted average shares outstanding                            2,076,600        2,070,800               2,075,900         2,069,275
Effect of stock options                                           25,900           30,400                  25,300            30,500
                                                         ----------------  ---------------       ----------------- -----------------
Diluted average shares outstanding
(denominator)                                                  2,102,500        2,101,200               2,101,200         2,099,775
                                                         ----------------  ---------------       ----------------- -----------------

Earnings per common share -
assuming dilution                                           $       0.35    $        0.29          $         0.68    $         0.59
                                                         ================  ===============       ================= =================


</TABLE>


NOTE 3 - COMPREHENSIVE INCOME

Total comprehensive income consists of the following for the six months ended
June 30, 2006 and 2005:

<TABLE>

                                                      Six Months Ended June 30,
                                                 ------------------------------------
                                                       2006               2005
                                                 -----------------  -----------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income                                            $ 1,431,200         $1,244,800
Other comprehensive income (loss)                        (240,700)          (307,200)
                                                    --------------     --------------

Total comprehensive income                            $ 1,190,500          $ 937,600
                                                    ==============     ==============


</TABLE>


<PAGE>



NOTE 3 - COMPREHENSIVE INCOME (concluded)

The following is a reconciliation of the related tax effects allocated to each
component of other comprehensive income at June 30, 2006 and 2005.


<TABLE>

                                                      Six Months Ended June 30,
                                                 ------------------------------------
                                                       2006               2005
                                                 -----------------  -----------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Unrealized gains (losses) on
      available-for-sale securities:
Unrealized holding gains (losses)
      arising during the period                         $(402,000)        $ (331,800)
Less: reclassification adjustment
      for gain included in income                               -           (160,200)
                                                    --------------     --------------

Total other comprehensive gain (loss)
     before tax effect                                   (402,000)          (492,000)

Tax benefit (expense)                                     161,300            184,800
                                                    --------------     --------------

Net unrealized gain (loss)                              $(240,700)        $ (307,200)
                                                    ==============     ==============

</TABLE>


NOTE 4 - SEGMENT INFORMATION

Segment information consists of the following for the six months ended June 30,
2006 and 2005:


<TABLE>

                                                                                         Elimination of
                                                                                         Intersegment
(In thousands)                               Virginia       Maryland        Other        Transactions             Total
                                          -------------  --------------  -------------  ----------------      --------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net Interest Income:
     Six months ended June 30, 2006         $    3,238      $      890     $     (134)       $      294         $     4,288
     Six months ended June 30, 2005         $    2,957      $      811     $      435        $      (83)        $     4,120

Assets:
     June 30, 2006                          $  198,824      $   52,332     $   45,271        $  (31,854)        $   264,573
     December 31, 2005                      $  186,922      $   46,145     $   45,042        $  (30,690)        $   247,419


</TABLE>

<PAGE>



NOTE 5 - STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS 123,
Accounting for Stock-Based Compensation, was issued by the Financial Accounting
Standards Board (FASB) in December, 2002. SFAS 148 provides alternative methods
of transition for a voluntary change to the fair value-based method of
accounting for stock-based employee compensation. SFAS 148 also amends the
disclosure requirements of SFAS 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. Management adopted the disclosure provisions of this Standard in 2002.

In accordance with SFAS 148, the Company provides disclosures as if the fair
value-based method of measuring all outstanding stock options was already
adopted and recognized in 2005. The following table presents the effect on net
income and on basic and diluted net income per share as if the fair value-based
method had been applied to all outstanding and unvested awards at June 30, 2005.

<TABLE>


                                                                 Three Months                Six Months
                                                                Ended June 30,             Ended June 30,
                                                                     2005                       2005
                                                              --------------------       -------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

(Dollars in thousands, except per share data)

Net income, as reported
Deduct:                                                                 $ 613,700               $ 1,244,800
                Total stock-based employee
                compensation expense
                determined under fair value
                based method for all awards,
                net of related tax effects                                (43,800)                 (116,600)
                                                              --------------------       -------------------

Pro forma net income                                                    $ 569,900               $ 1,128,200
                                                              ====================       ===================

Earnings per share:

Basic - as reported                                                        $ 0.29                    $ 0.60
                                                              ====================       ===================
Basic - pro forma                                                          $ 0.28                    $ 0.55
                                                              ====================       ===================

Diluted - as reported                                                      $ 0.29                    $ 0.59
                                                              ====================       ===================
Diluted - pro forma                                                        $ 0.27                    $ 0.54
                                                              ====================       ===================

</TABLE>



On January 1, 2006, the Company adopted SFAS 123(r), Share-Based Payment. The
standard eliminated the ability to account for share-based compensation
transactions under the intrinsic value method and required that such
transactions be accounted for using a fair value-based method which results in
the recognition of compensation expense in the Company's statement of income.
For the three and six months ended June 30, 2006, the Company recognized $0 and
$40,300 of such expense, respectively.

NOTE 6 - SUBSEQUENT EVENT

During July 2006, the Company declared a $0.07 per share quarterly cash dividend
on its common stock payable on August 1, 2006 to shareholders of record on July
24, 2006.


<PAGE>



Item 2 - Management's Discussion and Analysis of
           Consolidated Financial Condition and Results of Operations

Results of Operations

General

Net income for the three months ended June 30, 2006 was $736,200, or $0.35 per
diluted share, compared to net income of $613,700, or $0.29 per diluted share,
for the same period of the prior year. Earnings for the six months ended June
30, 2006 increased to $1.43 million, compared to $1.24 million for the 2005 six
month period. Noninterest income continued to drive earnings growth during the
June quarter and six month periods with an increase of 49.4% and 50.8%,
respectively. Noninterest income for the June 2006 quarter was $842,200,
compared to $563,900 for the June 2005 quarter end, while noninterest income was
$1.64 million for the six months ended June 30, 2006, compared to $1.09 million
for the same period of 2005. Income from deposit accounts accounted for the
majority of this growth, increasing to $621,900 and $1.21 million or 94.6% and
99.9% for the three and six months ended June 30, 2006, respectively. The
company's investment subsidiary operations continued its strong performance
earning commissions of $112,100 and $190,500 during the 2006 quarter and six
month periods, respectively, compared to $33,200 and $64,400 for the same
periods in 2005.

Net Interest Income

Net interest income also contributed to earnings growth with an increase of 4.8%
to $2.15 million for the three months ended June 30, 2006 and an increase of
4.1% for the six months ended June 30, 2006, as compared to the same periods of
2005. This increase occurred in the face of pressure on the company's net
interest margin and was primarily driven by an increase in loans which averaged
$202.9 million during the six months ended June 30, 2006, compared to $182.2
million for the 2005 six month period. The company's total assets reached $264.6
million, compared to $247.4 million at December 2005. Deposit balances were
$206.9 million at June 30, 2006, compared to $189.0 million at December 31,
2005.

Average earning assets for the six months ended June 2006 increased $13.7
million over the June 2005 period. Growth in the bank's residential real estate
loan portfolio constituted the majority of total loan growth with average
balances increasing $16.8 million, or 17.7%, during the six months ended June
30, 2006 as compared to the same period of 2005. Average commercial loans
increased $3.2 million, while other loan categories were flat during the period.
Average investment securities declined $6.6 million during the period,
reflecting the liquidity demands generated by the loan growth. Average total
deposits were flat at $193.1 million. During the six months ended June 30, 2006,
average interest-bearing checking and savings demand deposits declined $9.5
million when compared to the June 2005 six month period. Decreases in the Bank's
money market product accounted for the majority of this decline due to increased
rate competition from other banks, brokerage firms and insurance companies for
all deposit products. During the June 2006 six month period, average time
deposit balances increased $9.0 million to $95.7 million when compared to the
2005 period. The Company purchased brokered certificates of deposit and ran
several rate specials during the 2006 six month period which accounted for the
increase in time deposits. Federal Home Loan Bank ("FHLB") advances were used to
fund any additional liquidity shortfalls during the period, resulting in average
FHLB advances increasing $11.5 million during the period ended June 30, 2006 as
compared to the June 2005 period.


<PAGE>

Interest and dividend income was $3.77 million and $7.27 million for the three
and six month periods ended June 30, 2006, representing increases of 21.2% and
18.4%, respectively, over the comparable 2005 amounts. Continued loan growth
constituted the majority of these increases despite net interest margin
pressures during the periods. Loan yields improved by 55 basis points from June
2005 to June 2006, while investment yields increased by 57 basis points over the
same period.

Interest expense for the three and six months ended June 30, 2006 was $1.63
million and $2.98 million, respectively, representing an increase of 52.4% and
47.8%, respectively, over comparable 2005 amounts. A 10.4% and 43.4% increase in
average time deposits and FHLB advances, respectively, and an 83 basis point
increase in total interest-bearing liabilities contributed to these increases.
Market pressures continue to force the Bank to raise its deposit rates in order
to fund loan demand. The average rate on interest-bearing liabilities for the
six months ended June 30, 2006 was 2.94%, compared to 2.11% incurred in 2005.
Interest rates on time deposit accounts and FHLB advances represented the
greatest impact on the Bank's cost of funding by increasing 79 basis points and
182 basis points, respectively, while checking and savings deposit costs
declined 4 basis points during the 2006 six month period as compared to the 2005
period.


<PAGE>



The following table illustrates average balances of total interest-earning
assets and total interest-bearing liabilities for the periods indicated, showing
the average distribution of assets, liabilities, and stockholders' equity and
the related income, expense and corresponding weighted average yields and costs.
The average balances used in these tables and other statistical data were
calculated using daily averages.


<TABLE>

                                   Average Balances, Income and Expenses, Yields and Rates

                                                                       Six Months Ended June 30,
                                           ------------------------------------------------------------------------------------
                                                2006                                       2005
                                           -----------------------------------------  -----------------------------------------
                                              Average        Income/       Yield/        Average        Income/       Yield/
(In Thousands)                                Balance        Expense        Rate         Balance        Expense        Rate
                                           -------------   -----------  -----------    -----------    -----------  -----------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Assets:
       Securities (1)                      $     32,232   $        753        4.67%   $     38,844   $        797        4.10%
       Loans (net of unearned income):
             Real estate mortgage               111,817          3,275        5.86%         95,041          2,640        5.56%
             Commercial                          72,325          2,486        6.87%         69,106          2,146        6.21%
             Home equity lines                   15,851            611        7.71%         15,854            459        5.79%
             Consumer                             2,922            131        8.97%          2,230             98        8.79%
                                             -----------    -----------                 -----------    -----------
                  Total loans                   202,915          6,503        6.41%        182,231          5,343        5.86%
       Interest-bearing deposits
             in other banks                       2,518             51        4.05%          2,880             34        2.36%
                                             -----------                                -----------
                                                            -----------                                -----------
                  Total earning assets          237,665          7,307        6.15%        223,955          6,174        5.51%
                                                            -----------                                -----------
       Less: allowance for loan losses           (2,872)                                    (2,473)
       Total nonearning assets                   19,374                                     19,434
                                             -----------                                -----------
       Total assets                        $    254,167                               $    240,916
                                             ===========                                ===========

Liabilities
       Interest-bearing deposits:
             Checking and savings          $     70,678   $        267        0.76%   $     80,158   $        320        0.80%
             Time deposits                       95,697          1,858        3.88%         86,681          1,338        3.09%
                                             -----------    -----------                 -----------    -----------

                  Total interest-bearing
                  deposits                      166,375          2,125        2.55%        166,839          1,658        1.99%

       FHLB advances                             36,251            857        4.73%         24,764            360        2.91%
                                             -----------    -----------                 -----------    -----------
                  Total interest-bearing
                  liabilities                   202,626          2,982        2.94%        191,603          2,018        2.11%
                                                            -----------                                -----------
       Non-interest bearing liabilities:
             Demand deposits                     26,769                                     26,359
             Other liabilities                      391                                        614
                                             -----------                                -----------

       Total liabilities                        229,786                                    218,576
       Stockholders' equity                      24,381                                     22,340
                                             -----------                                -----------

       Total liabilities and stockholders'
             equity                        $    254,167                               $    240,916
                                             ===========                                ===========

       Net interest income (1)                            $      4,325                               $      4,156
                                                            ===========                                ===========

       Interest rate spread (1)(2)(3)                                         3.21%                                      3.40%
       Net interest margin (1)(2)(4)                                          3.64%                                      3.71%



(1)      Tax equivalent  basis.  The tax equivalent adjustment to net interest
         income was $37,000 and $36,000 for the six months ended June 30, 2006
         and 2005, respectively.
(2)      Yield and rate percentages are all computed through the annualization
         of interest income and expense divided by average daily balances based
         on amortized costs.
(3)      Interest  rate spread is the  average  yield  earned on earning
         assets less the  average  rate  incurred on  interest-bearing
         liabilities.
(4)      Net interest margin is derived by dividing net interest income by
         average total earning assets.


</TABLE>


<PAGE>

Interest Sensitivity

Management evaluates interest rate sensitivity periodically through the use of
an asset/liability management reporting model. Using this model, management
determines the overall magnitude of interest sensitivity risk and then
formulates strategies governing asset generation and pricing, funding sources
and pricing, and off-balance-sheet commitments in order to reduce sensitivity
risk. These decisions are based on management's outlook regarding future
interest rate movements, the state of the local and national economy, and other
financial and business risk factors.

An important element of the Company's asset/liability management process is
monitoring its interest sensitivity gap. The interest sensitivity gap is the
difference between interest sensitive assets and interest sensitive liabilities
at a specific time interval. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive
liabilities, and is considered negative when the amount of interest rate
sensitive liabilities exceeds the amount of interest rate sensitive assets
during a given period. Generally, during a period of rising interest rates, a
negative gap within shorter maturities would adversely affect net interest
income, while a positive gap within shorter maturities would result in an
increase in net interest income. Conversely, during a period of falling interest
rates, a negative gap within shorter maturities would result in an increase in
net interest income while a positive gap within shorter maturities would have
the opposite effect. This gap can be managed by repricing assets or liabilities,
by selling investments available for sale, by replacing an asset or liability at
maturity, or by adjusting the interest rate during the life of an asset or
liability. Matching the amounts of assets and liabilities maturing in the same
time interval helps to hedge the risk and minimize the impact on net interest
income in periods of rising or falling interest rates.


<PAGE>



The following table presents the Company's interest sensitivity position at June
30, 2006. This one-day position, which continually is changing, is not
necessarily indicative of the Company's position at any other time.



<TABLE>

                                                                 Interest Sensitivity Analysis

                                                                                June 30, 2006
                                              ------------------------------------------------------------------------------
                                                   Within          91-365          1 to 5           Over
(In Thousands)                                    90 Days           Days            Years          5 Years        Total
                                              ---------------- ---------------- -------------- --------------- -------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Interest-Earning Assets:
       Loans (1)                               $   55,372       $     51,045     $    98,687     $      8,003    $  213,107
       Securities                                   2,923              2,744          19,799            5,613        31,079
       Money market and other
           short term securities                    2,798                  -               -                -         2,798
       Other earning assets                             -                  -               -            3,487         3,487
                                              ---------------- ---------------- -------------- --------------- -------------

       Total earning assets                    $   61,093       $     53,789     $   118,486     $     17,103    $  250,471
                                              ================ ================ ============== =============== =============
       Cumulative earning assets               $   61,093       $    114,882     $   233,368     $    250,471    $  250,471
                                              ================ ================ ============== =============== =============


Interest-Bearing Liabilities:
       Money market savings                    $   18,188       $          -     $         -     $          -    $   18,188
       Interest checking (2)                            -                  -          26,780                -        26,780
       Savings (2)                                  1,461              1,310          18,376                -        21,147
       Certificates of deposit                     27,168             38,203          44,609              955       110,935
       FHLB advances                               17,700              4,000          10,000              517        32,217
                                              ---------------- ---------------- -------------- --------------- -------------

       Total interest-bearing liabilities      $   64,517       $     43,513     $    99,765     $      1,472    $  209,267
                                              ================ ================ ============== =============== =============
       Cumulative interest-bearing liabilities $   64,517       $    108,030     $   207,795     $    209,267    $  209,267
                                              ================ ================ ============== =============== =============

       Period gap                              $   (3,424)      $     10,276     $    18,721     $     15,631    $   41,204
       Cumulative gap                          $   (3,424)      $      6,852     $    25,573     $     41,204    $   41,204
       Ratio of cumulative interest-earning
           assets to interest-bearing
           liabilities                              94.69%            106.34%         112.31%          119.69%       119.69%
       Ratio of cumulative gap to total
           earning assets                           (1.37%)             2.74%          10.21%           16.45%        16.45%


(1)  Includes nonaccrual loans of $634,000, which are included in the 91-365
     days and 1 to 5 years categories.
(2)  Management has determined that interest checking and savings accounts are
     not as sensitive to changes in related market rates and, therefore, they
     are placed in the 1 to 5 years category.



</TABLE>



Noninterest Income

Noninterest income continued to drive earnings growth during the June quarter
and six month periods with an increase of 49.3% and 50.8%, respectively.
Noninterest income for the June 2006 quarter was $842,200, compared to $563,900
for the June 2005 quarter end, while noninterest income was $1.64 million for
the six months ended June 30, 2006, compared to $1.09 million for the same
period of 2005. Income from deposit accounts accounted for the majority of this
growth, increasing to $621,900 and $1.21 million or 94.6% and 99.9% for the
three and six months ended June 30, 2006, respectively. Prior year's three and
six month periods included gains on sales of securities of $69,800 and $160,200,
respectively, compared to no gains in sales of securities during the current
year. The company's investment subsidiary operations continued its strong
performance earning commissions of $112,100 and $190,500 during the 2006 quarter
and six month periods, respectively, compared to $33,200 and $64,400 for the
same periods in 2005. These amounts represent increases of 237.7% and 195.8%
during the three and six month periods, respectively.

Provision for Loan Losses

Provision for loan losses was $51,900 and $91,800 for the three and six months
ended June 30, 2006, respectively, compared to $82,000 and $160,200 for the same
periods of 2005. With asset quality remaining strong during the quarter,
management considers the allowance for loan loss to be commensurate with the
risk existing in the bank's loan portfolio. See Asset Quality for additional
discussion relating to the allowance for loan losses.



<PAGE>



Noninterest Expense

Noninterest expense was $1.87 million and $3.76 million for the June 2006
quarter and six month periods, respectively, as compared to $1.64 million and
$3.24 million, respectively, during the same periods of 2005. Employee
compensation and benefits expense accounted for a significant portion of the
increase in non interest expense, including increased commission driven
compensation, the expensing of employee stock options granted during March 2006
to the Company's non-executive employees, increases in personnel and normal
salary adjustments that have occurred over the past year. Other increases in
expenses relate to the bank's expanded ATM network and internet banking
activities along with professional fees associated with long range planning and
new deposit product initiatives.

During the first six months of the year the bank made good progress towards
improving the efficiency of the operation. From 2002 through 2004 the company
operated at an efficiency ratio below 60%. Expenses associated with increased
regulatory compliance and the 2004 opening of a new headquarters facility put
added pressure on the efficiency ratio. For the first six months of 2006 the
efficiency ratio was 63.11%, compared to 63.50% for the first six months of
2005. The efficiency ratio showed marked improvement quarter to quarter in 2006,
declining from 63.95% in the first quarter to 62.25% in the second quarter.

Financial Condition

During the first six months of 2006, the Company's assets increased by $17.2
million from $247.4 million at December 31, 2005 to $264.6 million at June 30,
2006. Growth in net loans of $17.5 million accounted for this increase while
other asset categories remained relatively flat during the period. Favorable
market conditions continued to benefit loan volumes.

Deposits grew to $206.9 million from December 2005 to June 2006.
Interest-bearing demand, savings and time deposit account balances increased by
a total of $16.9 million, while noninterest-bearing deposits declined by $1.0
million. Time deposits and brokered certificates of deposit were primarily used
to fund liquidity needs during the period.

Stockholders' equity was $24.6 million at June 30, 2006, representing an
increase of $966,900 since December 31, 2005. Comprehensive income benefited
from $1.43 million of net income during the six month period, but the increase
in interest rates caused the value of the Company's investment portfolio to
decline by $240,700 (net of the tax effect). The Company also paid common stock
dividends of $290,500 ($0.14 per share) during the period.

During July 2006, the Company declared a $0.07 per share quarterly cash dividend
on its common stock payable on August 1, 2006 to shareholders of record on July
24, 2006.


<PAGE>



Asset Quality

Loans are placed on nonaccrual status when, in the judgment of management, the
probability of interest collection is deemed to be insufficient to warrant
further accrual or the loan reaches 90 days delinquent whereby the loan no
longer accrues interest until it has remained current for six months.

Total nonperforming assets, which consist of nonaccrual loans and foreclosed
properties, adjusted for estimated losses upon sale and the related selling
expenses and holding costs, were $634,000 at June 30, 2006, compared to $1.1
million at December 31, 2005. Approximately $16,000 of interest income would
have been recognized during the six months ended June 30, 2006 if the nonaccrual
loans had been performing. The Company has identified $78,000 of other loans
deemed impaired under the guidelines established by SFAS No. 114, Accounting by
Creditors for Impairment of a Loan, as amended by SFAS No. 118, Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures.
Impaired loans have a valuation allowance allocation of $11,700 at June 30,
2006.

At June 30, 2006, all loans 60 days or more delinquent, including nonperforming
loans, totaled $1.2 million. In addition, other performing loans, totaling $4.3
million, existed that were current, but had other potential deficiencies that
management considers to warrant additional monitoring. Loans in this category,
along with the delinquent loans, are subject to management attention, and their
status is reviewed on a regular basis.

The following table details information concerning nonaccrual and past due
loans, as well as foreclosed assets.


<TABLE>

                                                 Nonperforming Assets


                                                                              June 30,              December 31,
(In Thousands)                                                                 2006                     2005
                                                                       ----------------------  ------------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>


Nonaccrual loans:
       Commercial                                                        $               147      $                194
       Real estate mortgage                                                              429                       811
       Home equity lines of credit                                                        24                         -
       Consumer                                                                           34                        59
                                                                           ------------------       -------------------

       Total nonaccrual loans                                                            634                     1,064
Other real estate owned                                                                    -                         -
                                                                           ------------------       -------------------

       Total nonperforming assets                                        $               634      $              1,064
                                                                           ==================       ===================

Loans past due 90 or more days
       accruing interest                                                                   -                         -
Allowance for loan losses to
       nonaccrual loans                                                              454.89%                   267.95%
Nonperforming assets to period end
       loans and other real estate owned                                               0.30%                     0.56%



</TABLE>



<PAGE>



Set forth below is a table detailing the allowance for loan losses for the
periods indicated.


<TABLE>

                                              Allowance for Loan Losses


                                                                                    Six Months Ended June 30,
                                                                           --------------------------------------------
(In Thousands)                                                                   2006                      2005
                                                                           ------------------       -------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Balance, beginning of period                                             $             2,851      $              2,404
Loans charged off:
       Commercial                                                                          -                         -
       Real estate mortgage                                                                -                         -
       Consumer                                                                         (123)                       (6)
                                                                           ------------------       -------------------

       Total loans charged-off                                                          (123)                       (6)
                                                                           ------------------       -------------------

Recoveries:
       Commercial                                                                         19                         -
       Real estate mortgage                                                                -                         -
       Consumer                                                                           45                         8
                                                                           ------------------       -------------------

       Total recoveries                                                                   64                         8
                                                                           ------------------       -------------------

Net recoveries (charge-offs)                                                             (59)                        2
Provision for loan losses                                                                 92                       160
                                                                           ------------------       -------------------

Balance, end of period                                                   $             2,884      $              2,566
                                                                           ==================       ===================

Allowance for loan losses to loans
       outstanding at end of period                                                    1.35%                     1.36%

Allowance for loan losses to nonaccrual
       loans outstanding at end of period                                            454.89%                   288.64%

Net charge-offs (recoveries) to average loans
       outstanding during period                                                       0.03%                   -0.001%


</TABLE>


Liquidity and Capital Resources

Liquidity represents the Company's ability to meet present and future
obligations through the sale and maturity of existing assets or the acquisition
of additional funds through liability management. Liquid assets include cash,
interest-bearing deposits with banks, federal funds sold, available-for-sale
investments and investments and loans maturing within one year. In addition to
liquid assets, the Company maintains several lines of credit with other
institutions to support liquidity, the largest of which is with the Federal Home
Loan Bank of Atlanta. The Company's ability to obtain deposits and purchase
funds at favorable rates determines its liability liquidity.



<PAGE>




At June 30, 2006, the Company had outstanding loan, line of credit and letter of
credit commitments of $41.3 million. Scheduled maturities of certificate of
deposits during the twelve months following June 30, 2006 amounted to $65.3
million. Historically, the Company has been able to retain a significant amount
of its deposits as they mature. As a result of the Company's management of
liquid assets and the ability to generate liquidity through liability funding,
management believes that the Company maintains overall liquidity that is
sufficient to satisfy its depositors' requirements and meet its customers'
credit needs.

Total cash and cash equivalents increased $1.1 million for the six months ended
June 30, 2006, compared to an increase of $2.2 million for the six months ended
June 30, 2005. Net cash from operating activities was $1.9 million for the six
months ended June 30, 2006, compared to $1.2 million during the same period of
2005. The changes reflect the earnings growth experienced during the period and
other fluctuations in normal operating activities.

Net cash used in investing activities was $16.6 million during the six months
ended June 30, 2006, compared to net cash used in investing activities of $11.6
million for the six months ended June 30, 2005. Stronger loan growth during the
first six months of 2006 than what occurred during 2005 constituted the majority
of the difference.

Net cash from financing activities was $15.9 million for the six months ended
June 30, 2006, compared to net cash from financing activities of $12.7 million
for the six months ended June 30, 2005. Greater growth in time deposits during
the June 2006 six month period represented the majority of this increase.

The Company is subject to various capital requirements administered by the
regulatory banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Company's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company and its banking
subsidiary must meet specific capital guidelines that involve quantitative
measures of assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. Additionally, certain
restrictions exist on dividends paid and loans or advances made by the Bank to
the Company. The total amount of dividends that may be paid at any date is
generally limited to the retained earnings for the Bank, and loans and advances
are limited to 10 percent of the Bank's capital and surplus on a secured basis.
The Bank paid $1,000,000 in dividends and made $1,000,000 in loans to the
Company during the six months ended June 30, 2006. The Bank did not make any
loans, but paid $500,000 of dividends to the Company during the first six months
of 2005. At June 30, 2006, the Bank's retained earnings available for the
payment of dividends was $4.3 million. The capital amounts and classification
are also subject to qualitative judgments by the regulators about components,
risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and its banking subsidiary to maintain minimum amounts and
ratios of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). At June 30, 2006, the Company meets all capital adequacy
requirements to which it is subject.


<PAGE>



The following table details the components of Tier 1 and Tier 2 capital and
related ratios at June 30, 2006 and December 31, 2005.


<TABLE>

                                    Analysis of Capital

                                                          June 30,          December 31,
(In Thousands)                                              2006                2005
                                                     -------------------  ------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

Tier 1 Capital:
       Common stock                                   $             685    $            685
       Additional paid-in capital                                 8,333               8,267
       Retained earnings                                         15,772              14,632
       Accumulated other comprehensive income                      (195)                 45
                                                        ----------------     ---------------
             Total capital (GAAP)                                24,595              23,629
       Less: Intangibles                                           (433)               (464)
       Net unrealized gain on debt and equity securities            195                 (45)
                                                        ----------------     ---------------
             Total Tier 1 capital                                24,357              23,120


Tier 2 Capital:
       Allowable allowances for loan losses                       2,317               2,152
       Net unrealized gains on equity securities                    129                 161
                                                        ----------------     ---------------
             Total Tier 2 capital                     $          26,803    $         25,433
                                                        ================     ===============

Risk-weighted assets                                  $         189,768    $        174,986

Capital Ratios:
       Tier 1 risk-based capital ratio                           12.84%              13.21%
       Total risk-based capital ratio                            14.12%              14.53%
       Tier 1 capital to average adjusted
             total assets                                         9.78%               9.44%

</TABLE>



Item 3 - Quantitative and Qualitative Disclosures about Market Risk

The Company uses a third party provider to perform computer modeling
methodologies that assist in determining the overall magnitude of interest
sensitivity risk. Based on these methodologies, management formulates policies
governing asset generation and pricing, funding sources and pricing, and
off-balance-sheet commitments in order to reduce sensitivity risk. Management
considers the current interest rate environment, the state of the local and
national economy and other financial and business risk factors when making these
decisions.

The modeling methodologies used measure interest rate sensitivity by analyzing
the potential impact on net interest income under various interest rate
scenarios. One such scenario would assume a hypothetical 200 basis point
instantaneous and parallel shift in the interest rate yield curve. Accordingly,
management modeled the impact of a 200 basis point decline in interest rates and
a 200 basis point increase in interest rates at March 31, 2006. In the model, a
200 basis point instantaneous and parallel decrease in the yield curve in
interest rates would cause net interest income to decrease by $220,000, while a
200 basis point instantaneous and parallel increase in the yield curve in
interest rates would cause net interest income to increase by $105,000.


<PAGE>

The computer model uses a standard algebraic formula for calculating present
value. The calculation discounts the future cash flows of the Company's
portfolio of interest rate sensitive instruments to present value utilizing
techniques designed to approximate current market rates for securities, current
offering rates for loans, and the cost of alternative funding for the given
maturity of deposits and then assumes an instantaneous and parallel shift in
these rates. The difference between these numbers represents the resulting
hypothetical change in the fair value of interest rate sensitive instruments.

As with any modeling techniques, certain limitations and shortcomings are
inherent in the Company's methodology. Significant assumptions must be made in
the calculation including: (1) growth in volume or balance sheet mix; (2)
constant market interest rates reflecting the average rate from the last month
of the given quarter; and (3) pricing spreads to market rates derived from an
historical analysis, or from assumptions by instrument type. Additionally, the
computations do not contemplate certain actions management could undertake in
response to changes in interest rates.


Item 4 - Controls and Procedures

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the quarter. Based on that evaluation,
our principal executive officer and principal financial officer have concluded
that these controls and procedures are effective. There were no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

Controls and other procedures are designed to ensure that information required
to be disclosed by us in the reports that we file or submit under the Exchange
Act is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure.


<PAGE>



                           PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

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

Item 1A - Risk Factors

There has been no material changes in the risk factors as previously disclosed
in response to Item 1A. Part I of the Company's December 31, 2005 Form 10-K.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

Not applicable.

Item 4 - Submission of Matters to a Vote of Stockholders

During the Company's Annual Meeting on April 18, 2006, the Stockholders voted to
reelect Scott C. Harvard and Richard F. Hall III as directors of the Company.

Item 5 - Other Information

None.

Item 6 - Exhibits

(a)      Certifications pursuant to subsections 302 and 906 of the
         Sarbanes-Oxley Act of 2002.
(b)      Form 8-K was filed during July 2006 relative to the Company's
         June 30, 2006 earnings release dated July 18, 2006.


<PAGE>



                                   SIGNATURES

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


/s/ Scott C. Harvard                                            August 11, 2006
--------------------------------------------------------------------------------
Scott C. Harvard
President and
Chief Executive Officer

/s/ Steven M. Belote                                            August 11, 2006
--------------------------------------------------------------------------------
Steven M. Belote
Vice President and
Chief Financial Officer


<PAGE>



                                                                  Exhibit 31.1

                                 CERTIFICATIONS


I, Scott C. Harvard, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Shore Financial
Corporation;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;


      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;


      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


             (a) designed such disclosure controls and procedures, or caused
        such disclosure controls and procedures to be designed under our
        supervision, to ensure that material information relating to the
        registrant, including its consolidated subsidiaries, is made known to us
        by others within those entities, particularly during the period in which
        this report is being prepared;

             (b) evaluated the effectiveness of the registrant's disclosure
        controls and procedures and presented in this report our conclusions
        about the effectiveness of the disclosure controls and procedures, as of
        the end of the period covered by this report based on such evaluation;
        and

             (c) disclosed in this report any change in the registrant's
        internal control over financial reporting that occurred during the
        registrant's most recent fiscal quarter (the registrant's fourth fiscal
        quarter in the case of an annual report) that has materially affected,
        or is reasonably likely to materially affect, the registrant's internal
        control over financial reporting; and


      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):


             (a) all significant deficiencies and material weaknesses in the
        design or operation of internal control over financial reporting which
        are reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

             (b) any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's internal
        control over financial reporting.


Date: August 11, 2006
                                         /s/ Scott C. Harvard
                                         -------------------------------------
                                         Scott C. Harvard
                                         President and Chief Executive Officer

<PAGE>



                                                                  Exhibit 31.2

                                 CERTIFICATIONS


I, Steven M. Belote, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Shore Financial
Corporation;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;


      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;


      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


             (a) designed such disclosure controls and procedures, or caused
        such disclosure controls and procedures to be designed under our
        supervision, to ensure that material information relating to the
        registrant, including its consolidated subsidiaries, is made known to us
        by others within those entities, particularly during the period in which
        this report is being prepared;

             (b) evaluated the effectiveness of the registrant's disclosure
        controls and procedures and presented in this report our conclusions
        about the effectiveness of the disclosure controls and procedures, as of
        the end of the period covered by this report based on such evaluation;
        and

             (c) disclosed in this report any change in the registrant's
        internal control over financial reporting that occurred during the
        registrant's most recent fiscal quarter (the registrant's fourth fiscal
        quarter in the case of an annual report) that has materially affected,
        or is reasonably likely to materially affect, the registrant's internal
        control over financial reporting; and


      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):


             (a) all significant deficiencies and material weaknesses in the
        design or operation of internal control over financial reporting which
        are reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

             (b) any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's internal
        control over financial reporting.


Date: August 11, 2006
                                    /s/ Steven M. Belote
                                    ------------------------------------------
                                    Steven M. Belote
                                    Chief Financial Officer and Vice President

<PAGE>




                                                                  Exhibit 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Quarterly Report of Shore Financial Corporation
(the "Company") on Form 10-Q for the three months ended June 30, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Scott C. Harvard, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.


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

Date:  August 11, 2006





This certificate accompanies this Quarterly Report on Form 10-Q pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 and will not be deemed "filed" by
the Company for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended.


<PAGE>


                                                                  Exhibit 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Quarterly Report of Shore Financial Corporation
(the "Company") on Form 10-Q for the three months ended March 31, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Steven M. Belote, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.


                                                       /s/ Steven M. Belote
                                                       -----------------------
                                                       Steven M. Belote
                                                       Chief Financial Officer

Date:  August 11, 2006





This certificate accompanies this Quarterly Report on Form 10-Q pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 and will not be deemed "filed" by
the Company for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended.