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


___X___ QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
               For the quarterly period ended March 31, 2002

_______ 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. Empolyer
     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


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

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

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes ___ No ___

Number of shares of Common Stock outstanding as of May 10, 2002:  1,693,817

Transitional Small Business Disclosure Format:  Yes______ No___X___




<PAGE>


                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                              Index - Form 10-QSB

                         PART I - FINANCIAL INFORMATION

Item 1 - Consolidated Financial Statements (Unaudited)

          Consolidated Statements of Financial Condition as of March 31, 2002
          and December 31, 2001

          Consolidated Statements of Income for the Three Months Ended
          March 31, 2002 and 2001

          Consolidated Statements of Cash Flows for the Three Months
          Ended March 31, 2002 and 2001

          Consolidated Statement of Stockholders' Equity for the Three Months
          Ended March 31, 2002

          Notes to Unaudited Consolidated Financial Statements

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

          Results of Operations

          Financial Condition

          Asset Quality

          Liquidity and Capital Resources

          Interest Sensitivity


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

                                   SIGNATURES



<PAGE>

<TABLE>


                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition



                                                                      March 31,         December 31,
                                                                        2002                2001
--------------------------------------------------------------------------------------------------------
                                                                     (Unaudited)
                            ASSETS

 <c>

Cash (including interest - earning deposits of
     approximately $7,029,000 and $4,890,000, respectively)     $       12,886,700     $      6,605,900
Investment securities:
     Held to maturity (fair value of $2,968,500 and
        $2,007,500, respectively)                                        2,987,700            1,999,700
     Available for sale (amortized cost of $27,276,600 and
        $25,175,200, respectively)                                      27,235,400           25,422,300
     Federal Home Loan Bank stock, at cost                                 542,700              510,500
     Federal Reserve Bank stock, at cost                                   124,800              124,800
Loans receivable, net                                                  105,357,500          104,095,800
Premises and equipment, net                                              3,034,200            2,778,500
Real estate owned                                                           41,000                    -
Accrued interest receivable                                                991,100              981,400
Prepaid expenses and other assets                                          441,200              332,300
                                                                ----------------------------------------

                                                                $      153,642,300     $    142,851,200
                                                                ========================================

             LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                        $      135,803,000     $    125,313,700
Advances from Federal Home Loan Bank                                       800,000              816,700
Advance payments by borrowers for taxes
     and insurance                                                         266,200              198,400
Accrued interest payable                                                    39,900               27,000
Accrued expenses and other liabilities                                     351,400              234,600
                                                                ----------------------------------------
           Total liabilities                                           137,260,500          126,590,400
                                                                ----------------------------------------

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; 1,692,667 and 1,697,667 shares
        issued and outstanding, respectively                               558,600              560,200
     Additional capital                                                  2,630,500            2,677,200
     Retained earnings, substantially restricted                        13,217,700           12,859,600
     Accumulated other comprehensive income (loss)                         (25,000)             163,800
                                                                ----------------------------------------
           Total stockholders' equity                                   16,381,800           16,260,800
                                                                ----------------------------------------

                                                                $      153,642,300     $    142,851,200
                                                                ========================================


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

<PAGE>


                      SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                           Consolidated Statements of Income



                                                       Three Months Ended March 31,
                                                   --------------------------------------
                                                         2002                2001
-----------------------------------------------------------------------------------------

 <c>
Interest and dividend income
     Loans                                         $       1,924,000   $       1,981,700
     Investments
        Taxable interest                                     309,400             491,900
        Tax-exempt interest                                   34,300              38,100
        Dividends                                             34,000              34,500
                                                   --------------------------------------
           Total interest and dividend income              2,301,700           2,546,200
                                                   --------------------------------------

Interest expense
     Deposits                                                930,600           1,306,000
     FHLB advances                                            11,900              50,700
                                                   --------------------------------------
        Total interest expense                               942,500           1,356,700
                                                   --------------------------------------

Net interest income                                        1,359,200           1,189,500

Provision for loan losses                                     76,100              58,500
                                                   --------------------------------------

Net interest income after
     provision for loan losses                             1,283,100           1,131,000
                                                   --------------------------------------

Noninterest income
     Deposit account fees                                    220,800             191,900
     Loan fees                                                46,000              33,700
     Commissions on investment brokerage sales                16,100               7,100
     Other                                                    46,200              35,400
                                                   --------------------------------------
        Total noninterest income                             329,100             268,100
                                                   --------------------------------------

Noninterest expense
     Compensation and employee
        benefits                                             472,800             454,100
     Occupancy and equipment                                 265,700             247,500
     Data processing                                         118,400             106,100
     Advertising                                              19,100              13,000
     Federal insurance premium                                 6,000               5,800
     Other                                                   128,700             102,300
                                                   --------------------------------------
        Total noninterest expense                          1,010,700             928,800
                                                   --------------------------------------

Income before income taxes                                   601,500             470,300

Income taxes                                                 192,500             150,500
                                                   --------------------------------------

Net income                                         $         409,000   $         319,800
                                                   ======================================

Cash Dividends Declared Per Share                  $            0.03   $            0.09
                                                   ======================================

Earnings Per Common Share:
        Basic                                      $            0.24   $            0.18
                                                   ======================================

        Diluted                                    $            0.24   $            0.18
                                                   ======================================



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


<PAGE>

                              SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                             Consolidated Statement of Stockholders' Equity


Three Months Ended March 31, 2002
----------------------------------------------------------------------------------------------------------

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

 <c>
Balance, December 31, 2001    1,697,667   $560,200    $2,677,200   $12,859,600  $   163,800    $16,260,800

Common stock cash dividend
    declared                      -           -             -          (50,900)        -           (50,900)

Repurchase of common stock      (5,000)     (1,600)      (46,700)         -            -           (48,300)

Comprehensive income              -           -             -          409,000     (188,800)       220,200
                               ----------------------------------------------------------------------------


Balance, March 31, 2002       1,692,667   $558,600    $2,630,500   $13,217,700  $   (25,000)   $16,381,800
                              ============================================================================







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

<PAGE>

                 SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                    Consolidated Statements of Cash Flows



                                                    Three Months Ended March 31,
                                                    ---------------------------
                                                        2002          2001
-------------------------------------------------------------------------------

 <c>
Cash flows from operating activities
    Net income                                      $    409,000    $  319,800
    Adjustments to reconcile to net cash
      provided by operating activities:
         Provision for loan losses                        76,100        58,500
         Depreciation and amortization                    77,400        80,200
         Amortization of premium and accretion
           of discount on securities, net                 17,200       (79,800)
         Loss on disposal of fixed assets                  2,000             -
         Change in net deferred loan fees                (12,800)        1,800
         (Increase) decrease in other assets             (20,400)       66,400
         Increase in other liabilities                   197,500       330,700
                                                    ---------------------------
    Net cash provided by operating activities            746,000       777,600
                                                    ---------------------------

Cash flows from investing activities
    Purchase of available-for-sale securities         (2,239,000)      (29,400)
    Proceeds from maturities, sales and calls of
      available-for-sale securities                      120,100     3,073,000
    Purchase of held-to-maturity securities           (2,986,200)   (1,185,200)
    Proceeds from maturities, prepayments and calls
      of held-to-maturity securities                   2,000,000     2,000,000
    Purchase of Federal Home Loan Bank stock             (32,200)      (18,700)
    Loan originations, net of repayments              (1,366,000)   (1,390,400)
    Purchase of premises and equipment                  (335,100)      (14,600)
                                                    ---------------------------
    Net cash (used) provided by investing activities  (4,838,400)    2,434,700
                                                    ---------------------------

<PAGE>


                 SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                    Consolidated Statements of Cash Flows


                                                    Three Months Ended March 31,
                                                    ---------------------------
                                                        2002       2001
-------------------------------------------------------------------------------

 <c>
Cash flows from financing activities
    Net increase in demand deposits                    8,038,600     2,689,700
    Net increase in time deposits                      2,450,700     2,530,700
    Proceeds from FHLB advances                        1,500,000     7,000,000
    Repayments of FHLB advances                       (1,516,700)  (14,118,100)
    Repurchase of common stock                           (48,300)     (260,300)
    Payment of dividend on common stock                  (50,900)     (161,600)
                                                    ---------------------------
    Net cash provided (used) by financing activities  10,373,400    (2,319,600)
                                                    ---------------------------

Increase in cash and cash equivalents                  6,281,000       892,700

Cash and cash equivalents, beginning of period         6,605,900     5,096,300
                                                    ---------------------------

Cash and cash equivalents, end of period            $ 12,886,900    $5,989,000
                                                    ===========================


Supplemental disclosure of cash flow information

    Cash paid during the period for interest        $    929,600    $1,377,800
    Cash paid during the period for income taxes    $     25,000    $     -

Supplemental schedule of non-cash investing and
    financing activities

    Transfers from loans to real estate acquired
      through foreclosure                           $     41,000    $  319,200


  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-QSB and Item  310(b) of  Regulation  S-B.  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 three
month period ended March 31, 2002 are not necessarily  indicative of the results
that may be  expected  for any other  interim  period or the entire  year ending
December 31, 2002. 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-KSB for the year ended December 31, 2001.

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.


NOTE 2 - ORGANIZATION

The Company is a Virginia  corporation  organized in September  1997 by the Bank
for the purpose of becoming a unitary  holding  company of the Bank. The Company
became a unitary holding company of the Bank on March 16, 1998. The business and
management of the Company  consists of the business and  management of the Bank.
The Bank became a Virginia chartered, Federal Reserve member, commercial bank on
March 31, 1998. Prior to that the Bank was a federally  chartered  savings bank.
The  Company  and the Bank are  headquartered  on the  Eastern  Shore in  Onley,
Virginia.  During  March,  1999,  the  Bank  activated  its  subsidiary,   Shore
Investments,  Inc.,  to engage in  financial  activities  supporting  the Bank's
operations.  These  activities  include the selling of investment  and insurance
products.

<PAGE>

NOTE 3 - 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 March
31, 2002 and 2001.

<TABLE>

                                                   Three Months Ended March 31,
                                               -------------------------------------
                                                    2002                 2001
                                               ----------------     ----------------

 <c>

Net income (numerator, basic and diluted)    $         409,000    $         319,800
Weighted average shares outstanding
(denominator)                                        1,696,300            1,795,200
                                               ----------------     ----------------

Earnings per common share - basic            $            0.24    $            0.18
                                               ================     ================

Effect of dilutive securities:

Weighted average shares outstanding                  1,696,300            1,795,200
Effect of stock options                                  6,600                    -
                                               ----------------     ----------------
Diluted average shares outstanding
(denominator)                                        1,702,900            1,795,200
                                               ----------------     ----------------

Earnings per common share -
assuming dilution                            $            0.24    $            0.18
                                               ================     ================

</TABLE>


The effect of potentially  dilutive  securities was not used to compute dilutive
earnings  per share for the three months ended March 31, 2001 because the effect
would have been anti-dilutive.


NOTE 4 - COMPREHENSIVE INCOME

Total comprehensive  income consists of the following for the three months ended
March 31, 2002 and 2001:
<TABLE>

                                                            Three Months Ended March 31,
                                                 ----------------------------------------------
                                                         2002                    2001
                                                 ---------------------  -----------------------

 <c>

Net income                                           $        409,000       $          319,800
Other comprehensive (loss) income                            (188,800)                 259,400
                                                       ---------------        -----------------

Total comprehensive income                           $        220,200       $          579,200
                                                       ===============        =================

</TABLE>

<PAGE>


The following is a reconciliation  of the related tax effects  allocated to each
component of other comprehensive income at March 31, 2002 and 2001.

<TABLE>

                                                         Three Months Ended March 31,
                                                 ----------------------------------------------
                                                         2002                    2001
                                                 ---------------------  -----------------------

 <c>

Unrealized gains on securities:
Unrealized holding (losses) gains
      arising during the period                      $       (287,000)      $          398,000
Less: reclassification adjustment
      for gains included in income                                  -                        -
                                                       -----------------      -----------------

Total other comprehensive (loss) income
     before income tax benefit (expense)                     (287,000)                 398,000

Income tax benefit (expense)                                   98,200                 (138,600)
                                                       -----------------      -----------------

Net unrealized (loss) gain                           $       (188,800)      $          259,400
                                                       =================      =================

</TABLE>


NOTE 5 - SEGMENT INFORMATION

Segment  information  consists of the following for the three months ended March
31, 2002 and 2001:
<TABLE>

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

 <c>

Net Interest Income:
    Three months ended March 31, 2002   $       994   $       169    $       367    $        (171)  $     1,359
    Three months ended March 31, 2001   $       809   $       146    $       512    $        (278)  $     1,190

Assets:
    March 31, 2002                      $   135,406   $    20,727    $    41,691    $     (44,182)  $   153,642
    December 31, 2001                   $   130,426   $    19,060    $    33,641    $     (40,276)  $   142,851

</TABLE>


NOTE 6 - SUBSEQUENT EVENT

During  April  2002,  the  Company  declared  a $0.03 per share  quarterly  cash
dividend on its common stock payable on May 1, 2002 to shareholders of record on
April 15, 2002.


<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 March 31, 2002 was  $409,000,  compared to
net income of $319,800  for the same  period of the prior  year.  Loan growth of
14.2% and a 22.8%  increase  in  noninterest  income  over the March 2001 period
positively impacted current period earnings. The lower interest rate environment
and  increased  loan officer  production  continued to drive loan growth,  while
increases  in deposit  account and check card fees and in income  generated  the
Bank's  nondeposit  subsidiary,  Shore  Investments,  Inc.,  continued to propel
noninterest  income  growth.  This coupled with the Bank's ability to maintain a
strong  credit  quality in its loan  portfolio  and to sustain its net  interest
margin resulted in improved earnings for the March 2002 period.

Net Interest Income

Net interest income  increased 14.3% to $1.36 million for the three months ended
March 31, 2002,  compared to $1.19 million for the same period in 2001.  The net
interest margin increased to 3.94% for the three months ended March 31, 2002, as
compared  to 3.72%  during  the 2001  period,  while the  interest  rate  spread
increased to 3.43% from 2.99% for the same period of 2001. Average earning asset
growth of $9.5  million  during the March 2002  period as  compared to the March
2001 period and  reductions  in  nonperforming  assets  positively  impacted net
interest income. Average  noninterest-bearing demand deposits increased 33.7% to
$12.7 million  during the three months ended March 31, 2002, as compared to $9.5
million  during the March 2001 period,  while  average  interest-bearing  demand
deposits and savings accounts  increased 26.7%, or $8.8 million.  Average higher
costing time  deposits were flat during the March 2002 period as compared to the
prior year.

Interest income decreased 9.8% to $2.30 million for the three months ended March
31, 2002,  compared to $2.55 million for the same period in 2001,  primarily due
to lower yields on loans and securities as compared to the prior year. Yields on
loans and investment  securities decreased 134 basis points and 94 basis points,
respectively, while average loans increased $13.9 million and average securities
decreased $7.9 million as compared to the March 2001 period.

Interest  expense  decreased  30.5% to $942,500 for the three months ended March
31, 2002,  compared to $1.36  million for the same period of 2001.  During 2001,
the declining interest rate environment began to positively impact the Company's
cost of funding.  For the  majority  of 2001  through  March  2002,  deposit and
borrowing  costs  decreased  significantly,  resulting  in a  postive  offset to
declining earning asset yields and improved earnings.  Average  interest-bearing
deposits increased by $8.9 million during the three months ended March 31, 2002,
as  compared  to  the  same  period  of  2001.  However,  the  average  rate  on
interest-bearing  deposits  decreased  from 4.86%  during  2001 to 3.20% for the
March 2002 period.  Additionally,  average borrowings from the Federal Home Loan
Bank  decreased  $2.5 million during the March 2002 period when compared to 2001
as a result of  liquidity  management  steps taken during 2001 to limit the need
for these borrowings.

<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,  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

                                                              Three Months March 31,
                                        -------------------------------------------------------------------
                                                       2002                               2001
                                        ---------------------------------  --------------------------------
                                         Average    Income/     Yield/     Average     Income/     Yield/
(In Thousands)                           Balance    Expense    Rate (2)    Balance     Expense    Rate (2)
                                        ----------  ---------  ----------  ---------  ----------  ---------

 <c>
Assets:
       Securities (1)                      28,648        378       5.27%     36,574         568      6.21%
       Loans (net of unearned income):
            Real estate mortgage           47,928        880       7.35%     45,442         923      8.12%
            Real estate construction        1,437         22       6.12%      1,153          25      8.67%
            Commercial                     36,622        672       7.33%     28,149         625      8.88%
            Home equity lines               9,227        117       5.07%      6,725         159      9.46%
            Consumer                       11,212        233       8.31%     11,021         250      9.07%
                                        ----------  ---------              ---------  ----------
                Total loans               106,426      1,924       7.23%     92,490       1,982      8.57%
       Interest-bearing deposits
            in other banks                  4,627         18       1.56%      1,091          16      5.87%
                                        ----------  ---------              ---------  ----------
                Total earning assets      139,701      2,320       6.64%    130,155       2,566      7.89%
                                        ----------  ---------              ---------  ----------
       Less: allowance for loan losses     (1,346)                           (1,292)
       Total nonearning assets              8,907                             7,512
                                        ----------                         ---------
       Total assets                       147,262                           136,375
                                        ==========                         =========

Liabilities
       Interest-bearing deposits:
            Checking and savings           42,032        125       1.19%     33,187         208      2.51%
            Time deposits                  74,323        806       4.34%     74,246       1,098      5.92%
                                        ----------  ---------              ---------  ----------

                Total interest-bearing
                deposits                  116,355        931       3.20%    107,433       1,306      4.86%

       FHLB advances                          976         12       4.92%      3,453          51      5.91%
                                        ----------  ---------              ---------  ----------
                Total interest-bearing
                liabilities               117,331        943       3.21%    110,886       1,357      4.90%
                                                    ---------                         ----------
       Non-interest bearing liabilities:
            Demand deposits                12,707                             9,484
            Other liabilities                 728                               509
                                        ----------                         ---------

       Total liabilities                  130,766                           120,879
       Stockholders' equity                16,496                            15,496
                                        ----------                         ---------

       Total liabilities and stockholders'
            equity                        147,262                           136,375
                                        ==========                         =========

       Net interest income (1)                         1,377                              1,209
                                                    =========                         ==========

       Interest rate spread (1)                                    3.43%                             2.99%
       Net interest margin (1)                                     3.94%                             3.72%

       (1)   Tax equivalent basis. The tax equivalent adjustment to net interest
             income was $18,000 and $20,000 for the three months ended March 31,
             2002 and 2001, 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.

</TABLE>

<PAGE>

Noninterest Income

Noninterest income was $329,100 during the three months ended March 31, 2002, as
compared to $268,100 for the same period in 2001,  representing a 22.3% increase
over the prior period.  The  improvement  in  noninterest  income  resulted from
increases in deposit account and check card fees, and an improvement in revenues
generated by the Bank's non deposit subsidiary, Shore Investments, Inc.

Provision for Loan Losses

Provision for loan losses was $76,100 for the three months ended March 31, 2002,
as  compared  to $58,500  for the same  period of 2001.  See Asset  Quality  for
additional discussion of the allowance for loan losses.

Noninterest Expense

Noninterest  expense was $1.01  million  during the three months ended March 31,
2002, as compared to $928,800 for the same period of 2001,  representing an 8.8%
increase over the March 2001  quarter.  This increase  resulted  primarily  from
annual compensation  adjustments and increases  associated with normal growth of
operating activities.

Financial Condition

During the three months ended March 31, 2002, the Company's  assets increased by
$10.7  million  from $142.9  million at December  31, 2001 to $153.6  million at
March 31, 2002. Net loans grew $1.3 million and cash and  investments  increased
$9.1 million during the period.  Continued  improvements  in the commercial loan
area,  increased loan officer  production and the low interest rate  environment
contributed to loan growth,  while excess liquidity  generated by deposit growth
drove investment security growth.

Deposits  increased  $10.5 million during the three months ended March 31, 2002.
Interest-bearing and  noninterest-bearing  demand deposits grew $6.8 million and
$1.3 million,  respectively,  during the period,  while time deposits  increased
$2.5 million during the period. Federal Home Loan Bank advances outstanding were
flat during the period.

Stockholders'  equity was $16.4  million at March 31,  2002,  compared  to $16.3
million at December 31, 2001. Net income of $409,000 offset declines in the fair
market values of  available-for-sale  securities,  the payment of $50,900 ($0.03
per share) in common stock  dividends and the  repurchase of 5,000 shares of the
Company's common stock at an average price of $9.66.

During  April  2002,  the  Company  declared  a $0.03 per share  quarterly  cash
dividend on its common stock payable on May 1, 2002 to shareholders of record on
April 15, 2002.

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.

<PAGE>

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  $295,000  at March 31,  2002,  compared to
$533,000 at December  31, 2001.  As to  nonaccrual  loans  existing at March 31,
2002,  approximately $7,000 of interest income would have been recognized during
the three months then ended if interest  thereon had accrued.  During the period
ended March 31, 2002,  the Company  foreclosed on  collateral  relating to loans
totaling  approximately  $300,000  to  one  borrower  that  were  previously  in
nonaccrual status,  resulting in the full recovery of nonaccrual interest,  late
charges  and  selling  costs.  At March  31,  2002 and  December  31,  2001,  no
significant  loans exist that  management  has  identified as 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..

At March 31, 2002, all loans 60 days or more delinquent, including nonperforming
loans, totaled $300,000.  In addition,  other performing loans totaling $987,000
existed that have documentation  deficiencies or other potential weaknesses that
management considers to warrant additional  monitoring.  Loans in this category,
along with the delinquent loans, are subject to constant  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


                                                                  March 31,           December 31,
(In Thousands)                                                       2002                 2001
                                                                ---------------     -----------------

 <c>
Nonaccrual loans:
      Commercial                                              $              -    $                -
      Real estate mortgage                                                 191                   453
      Home equity lines of credit                                            -                    22
      Consumer                                                              63                    58
                                                                ---------------     -----------------

      Total nonaccrual loans                                               254                   533
Other real estate owned                                                     41                     -
                                                                ---------------     -----------------

      Total nonperforming assets                              $            295    $              533
                                                                ===============     =================

Loans past due 90 or more days
      accruing interest                                                      -                     -
Allowance for loan losses to
      nonaccrual loans                                                 548.03%               248.78%
Nonperforming assets to period end
      loans and other real estate owned                                  0.28%                 0.51%


</TABLE>

<PAGE>

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

<TABLE>
                                     Allowance for Loan Losses


                                                                  Three Months Ended March 31,
                                                                -------------------------------------
(In Thousands)                                                       2002                 2001
                                                                ---------------     -----------------


 <c>
Balance, beginning of period                                  $          1,326    $            1,336
Loans charged off:
      Commercial                                                             -                     -
      Real estate mortgage                                                   -                  (230)
      Consumer                                                             (11)                  (45)
                                                                ---------------     -----------------

      Total loans charged-off                                              (11)                 (275)
                                                                ---------------     -----------------

Recoveries:
      Commercial                                                             -                     -
      Real estate mortgage                                                   -                     -
      Consumer                                                               1                     1
                                                                ---------------     -----------------

      Total recoveries                                                       1                     1
                                                                ---------------     -----------------

Net recoveries (charge-offs)                                               (10)                 (274)
Provision for loan losses                                                   76                    59
                                                                ---------------     -----------------

Balance, end of period                                        $          1,392    $            1,121
                                                                ===============     =================

Allowance for loan losses to loans
      outstanding at end of period                                       1.31%                 1.20%

Allowance for loan losses to nonaccrual
      loans outstanding at end of period                               548.03%               121.06%

Net charge-offs to average loans
      outstanding during period                                         -0.01%                -0.30%


</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. The Company's
ability to obtain deposits and purchase funds at favorable rates  determines its
liability liquidity.

<PAGE>

At March  31,  2002,  the  Company  had  outstanding  loan  and  line of  credit
commitments  of $25.0 million.  Scheduled  maturities of certificate of deposits
during the twelve months  following  March 31, 2002  amounted to $50.9  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  $6.3  million for the three  months
ended March 31,  2002,  compared to an increase of $892,700 for the three months
ended March 31, 2001. Net cash provided by operating activities was $746,000 for
the three  months  ended March 31,  2002,  compared to $777,600  during the same
period of 2001.

Net cash used by investing  activities  was $4.8 million during the three months
ended March 31, 2002,  compared to net cash provided by investing  activities of
$2.4 million for the three months ended March 31, 2001. The fluctuation in these
amounts  resulted  primarily  from an increase in  liquidity  created by deposit
growth during 2002.

Net cash provided by financing activities was $10.4 million for the three months
ended March 31, 2002, compared to net cash used by financing  activities of $2.3
million for the three months ended March 31, 2001. The  fluctuations  in amounts
during these  periods were  primarily the result of an increase in repayments of
borrowings  with the  Federal  Home Loan  Bank and  increased  stock  repurchase
activity  during the March 2001 period and a quarterly  dividend  payment during
the March 2002 period versus an annual  dividend  payment  during the March 2001
period.

The Company is subject to various regulatory capital  requirements  administered
by the federal 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.
During the quarter ended March 31, 2002,  the Bank paid $500,000 in dividends to
the Company to fund operations,  pay shareholder  dividends and to purchase real
estate for the  Company's  planned  operations  center.  At March 31, 2002,  the
Bank's  retained  earnings  available for the payment of dividends was $900,000.
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 March 31, 2002, 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 March 31, 2002 and December 31, 2001.

<TABLE>

                              Analysis of Capital

                                                                     March 31,          December 31,
(In Thousands)                                                         2002                 2001
                                                                 ------------------  -------------------

 <c>
Tier 1 Capital:
       Common stock                                               $            559     $            560
       Additional paid-in capital                                            2,630                2,677
       Retained earnings                                                    13,218               12,860
       Comprehensive (loss) income                                             (25)                 164
                                                                 ------------------  -------------------
             Total capital (GAAP)                                           16,382               16,261
       Less: Intangibles                                                       (30)                 (30)
       Net unrealized (gain) loss on securities                                 25                 (164)
       Net unrealized losses on equity securities                             (146)                (137)
                                                                 ------------------  -------------------
             Total Tier 1 capital                                           16,231               15,930


Tier 2 Capital:
       Allowable allowances for loan losses                                  1,286                1,232
                                                                 ==================  ===================
             Total Tier 2 capital                                 $         17,517     $         17,162
                                                                 ==================  ===================

Risk-weighted assets                                              $        106,107     $        101,638

Capital Ratios (1):
       Tier 1 risk-based capital ratio                                      15.30%               15.67%
       Total risk-based capital ratio                                       16.51%               16.89%
       Tier 1 capital to average adjusted
             total assets                                                   11.02%               11.30%

</TABLE>

Interest Sensitivity

An  important  element  of both  earnings  performance  and the  maintenance  of
sufficient  liquidity is proper management of the 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
the 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
assets or liabilities at maturity,  or by adjusting the interest rate during the
life of an asset or  liability.  Matching  amounts  of  assets  and  liabilities
maturing in the same time interval  helps hedge the risk and minimize the impact
on net interest income in periods of rising or falling interest rates.

<PAGE>

The Company  determines the overall  magnitude of interest  sensitivity risk and
then formulates policies 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.

The following  table  presents the Company's  interest  sensitivity  position at
March 31, 2002 based on the repricing or maturity of interest  sensitive  assets
and liabilities,  whichever is shorter. 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
                                                       March 31, 2002
                                    ---------------------------------------------------------------------------
                                        Within         91-365           1 to 5          Over
(In Thousands)                          90 Days         Days             Years         5 Years        Total
                                    --------------  --------------  -------------   ------------  ------------

 <c>
Interest-Earning Assets:
      Loans (1)                      $     22,188    $     12,885    $    48,909     $   22,427    $  106,409
      Securities                              504           5,070         17,736          2,017        25,327
      Money market and other
        short term securities               7,029             -              -              -           7,029
                                    --------------  --------------  -------------   ------------  ------------

      Total earning assets           $     29,721    $     17,955    $    66,645     $   24,444    $  138,765
                                    ==============  ==============  =============   ============  ============
      Cumulative earning assets      $     29,721    $     47,676    $   114,321     $  138,765    $  138,765
                                    ==============  ==============  =============   ============  ============


Interest-Bearing Liabilities:
      Money market savings           $     13,394    $        -      $       -       $      -      $   13,394
      Interest checking (2)                   -               -           16,923            -          16,923
      Savings (2)                             -               -           15,166            -          15,166
      Certificates of deposit              10,051          41,867         21,316          2,979        76,213
      FHLB advances                           -               -              -              800           800
                                    --------------  --------------  -------------   ------------  ------------

      Total interest-bearing
        liabilities                  $     23,445    $     41,867    $    53,405     $    3,779    $  122,496
                                    ==============  ==============  =============   ============  ============
      Cumulative interest-bearing
        liabilities                  $     23,445    $     65,312    $   118,717     $  122,496    $  122,496
                                    ==============  ==============  =============   ============  ============

      Period gap                     $      6,276    $    (23,912)   $    13,240     $   20,665    $   16,269
      Cumulative gap                 $      6,276    $    (17,636)   $    (4,396)    $   16,269    $   16,269
      Ratio of cumulative
        interest-earning assets to
        interest-bearing liabilities       126.77%          73.00%         96.30%        113.28%       113.28%
      Ratio of cumulative gap to
        total earning assets                 4.52%         (12.71%)        (3.17%)        11.72%        11.72%


(1)  Includes nonaccrual loans of $254,000,  which are included in the 1 to 5
     years category.

(2)  Management has determined that interest  checking and savings  accounts are
     not sensitive to changes in related market rates and,  therefore,  they are
     placed in the 1 to 5 years category.

</TABLE>

<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 2 - Changes in Securities

None.

Item 3 - Defaults Upon Senior Securities

Not applicable.

Item 4 - Submission of Matters to a Vote of Stockholders

None.

Item 5 - Other Information

None.

Item 6 - Exhibits and Reports on Form 8-K

On February  15,  2002,  the Company  filed a Form S-8 with the  Securities  and
Exchange  Commission to register the 270,000 shares of common stock provided for
under the Shore Financial Corporation 2001 Stock Incentive Plan.



<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                                               May 10, 2002
-------------------------------------------------------------------
Scott C. Harvard
President and
Chief Executive Officer

/s/ Steven M. Belote                                               May 10, 2002
-------------------------------------------------------------------
Steven M. Belote
Vice President and
Chief Financial Officer