1
                    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 June 30, 2003

        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


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 August 13, 2003:  1,698,067

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
                    June 30, 2003 and December 31, 2002

                    Consolidated Statements of Income for the Three and
                    Six Months Ended June 30, 2003 and 2002

                    Consolidated Statements of Cash Flows for the Six Months
                    Ended June 30, 2003 and 2002

                    Consolidated Statement of Stockholders' Equity for the
                    Six Months ended June 30, 2003

                    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

                    Recent Accounting and Reporting Pronouncements

         Item 3 - Controls and Procedures


                           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


                                                                           June 30,            December 31,
                                                                             2003                  2002
----------------------------------------------------------------------------------------------------------------

 <c>
                                                                          (Unaudited)
                              ASSETS


Cash (including interest - earning deposits of
     approximately $1,642,900 and $2,532,000, respectively)         $         6,812,600      $        7,534,900
Investment securities:
     Held to maturity (fair value of $5,033,000 and
        $5,069,500, respectively)                                             5,001,600               5,003,800
     Available for sale (amortized cost of $36,945,500 and
        $40,546,900, respectively)                                           38,619,500              41,490,900
     Federal Home Loan Bank stock, at cost                                      795,000                 542,700
     Federal Reserve Bank stock, at cost                                        124,800                 124,800
     Community Bankers' Bank stock, at cost                                      21,100                  21,100
Loans receivable, net                                                       126,859,900             116,809,800
Premises and equipment, net                                                   4,251,700               3,472,200
Other assets                                                                  4,981,800               4,993,100
                                                                    --------------------------------------------

                                                                    $       187,468,000      $      179,993,300
                                                                    --------------------------------------------

               LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
        Interest bearing                                            $       139,183,700      $      143,220,500
        Noninterest bearing                                                  18,113,500              15,768,800
Advances from Federal Home Loan Bank                                          9,816,700               2,150,000
Other liabilities                                                               889,700                 636,500
                                                                    --------------------------------------------
            Total liabilities                                               168,003,600             161,775,800
                                                                    --------------------------------------------

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; 1,696,917 and 1,695,817 shares
        issued and outstanding, respectively                                    560,000                 559,600
     Additional capital                                                       2,662,100               2,654,500
     Retained earnings, substantially restricted                             15,180,100              14,394,200
     Accumulated other comprehensive income                                   1,062,200                 609,200
                                                                    --------------------------------------------
            Total stockholders' equity                                       19,464,400              18,217,500
                                                                    --------------------------------------------

                                                                    $       187,468,000      $      179,993,300
                                                                    --------------------------------------------


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


<PAGE>


                                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                                        Consolidated Statements of Income



                                               Three Months Ended June 30,          Six Months Ended June 30,
                                             ---------------------------------   ---------------------------------
                                                  2003             2002               2003             2002
------------------------------------------------------------------------------------------------------------------

 <c>
Interest and dividend income
    Loans                                    $    1,940,800    $    1,954,700     $    3,855,900   $    3,878,700
    Investments
       Taxable interest                             347,700           344,300            716,500          645,600
       Tax-exempt interest                           28,400            34,100             56,800           68,400
       Dividends                                     54,700            41,900             92,500           84,000
                                             ----------------------------------  ---------------------------------
          Total interest and dividend income      2,371,600         2,375,000          4,721,700        4,676,700
                                             ----------------------------------  ---------------------------------

Interest expense
    Deposits                                        813,300           921,500          1,701,900        1,852,100
    FHLB advances                                    25,100            19,600             39,000           31,500
                                             ----------------------------------  ---------------------------------
       Total interest expense                       838,400           941,100          1,740,900        1,883,600
                                             ----------------------------------  ---------------------------------

Net interest income                               1,533,200         1,433,900          2,980,800        2,793,100

Provision for loan losses                            95,100            81,600            190,200          157,700
                                             ----------------------------------  ---------------------------------

Net interest income after
    provision for loan losses                     1,438,100         1,352,300          2,790,600        2,635,400
                                             ----------------------------------  ---------------------------------

Noninterest income
    Deposit account fees                            288,000           258,900            536,300          479,700
    Loan fees                                        28,900            17,300             60,100           63,300
    Commissions on investment brokerage sales        31,300            11,500             71,800           27,600
    Gains on sales of securities                     96,300              -                92,600             -
    Gains on sale of repossessed assets                -                3,200               -               3,200
    Gains on disposals of fixed assets                 -                5,800               -               5,800
    Other                                            61,700            21,900            142,100           68,100
                                             ----------------------------------  ---------------------------------
       Total noninterest income                     506,200           318,600            902,900          647,700
                                             ----------------------------------  ---------------------------------

Noninterest expense
    Compensation and employee
       benefits                                     542,400           418,400          1,082,800          891,200
    Occupancy and equipment                         274,400           259,700            572,600          525,400
    Data processing                                 109,000           126,000            215,700          244,400
    Advertising                                      24,900            15,800             39,600           34,900
    Federal insurance premium                         6,300             5,500             12,400           11,500
    Other                                           198,500           144,200            359,100          272,900
                                             ----------------------------------  ---------------------------------
       Total noninterest expense                  1,155,500           969,600          2,282,200        1,980,300
                                             ----------------------------------  ---------------------------------

Income before income taxes                          788,800           701,300          1,411,300        1,302,800

Income taxes                                        254,500           224,500            455,700          417,000
                                             ----------------------------------  ---------------------------------

Net income                                   $      534,300    $      476,800     $      955,600   $      885,800
                                             ----------------------------------  ---------------------------------

Cash Dividends Declared Per Share            $         0.05    $         0.03     $         0.10   $         0.06
                                             ----------------------------------  ---------------------------------

Earnings Per Common Share:
       Basic                                 $         0.31    $         0.28     $         0.56   $         0.52
                                             ----------------------------------  ---------------------------------

       Diluted                               $         0.31    $         0.28     $         0.56   $         0.52
                                             ----------------------------------  ---------------------------------



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

<PAGE>


                                        SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                                       Consolidated Statement of Stockholders' Equity
                                               Six Months Ended June 30, 2003


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

 <c>
                                                                                               Accumulated
                                                                                                  Other
                                    Number of     Common       Additional       Retained      Comprehensive
                                     Shares        Stock         Capital        Earnings         Income           Total
                                    ----------  ------------  --------------  -------------- ---------------- ---------------

Balance, December 31, 2002          1,695,817    $  559,600    $  2,654,500    $ 14,394,200   $      609,200   $  18,217,500

Common stock cash dividend
    declared                             -             -               -           (169,700)            -           (169,700)

Exercise of stock options               1,100           400           7,600            -                -              8,000

Comprehensive income                     -             -               -            955,600          453,000       1,408,600
                                    ----------------------------------------------------------------------------------------


Balance, June 30, 2003              1,696,917    $  560,000    $  2,662,100    $ 15,180,100   $    1,062,200   $  19,464,400
                                    ----------   -----------   -------------   -------------  ---------------  --------------





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

<PAGE>



              SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                  Consolidated Statements of Cash Flows



                                                Six Months Ended June 30,
                                                --------------------------
                                                    2003         2002
--------------------------------------------------------------------------

 <c>
Cash flows from operating activities
    Net income                                  $    955,600   $  885,800
    Adjustments to reconcile to net cash
      provided by operating activities:
        Provision for loan losses                    190,200      157,700
        Depreciation and amortization                205,200      164,700
        Amortization of premium and accretion
           of discount on securities, net             49,700       31,200
        Gain on sale of investment securities        (92,600)        -
        Gain on disposal of fixed assets                -          (5,800)
        Gain on sale of repossessed assets              -          (3,200)
        Increase in cash surrender value of
          life insurance                             (74,200)        -
        Changes in:
           Deferred loan fees                         (8,000)     (40,000)
           Other assets                             (218,700)     (95,100)
           Other liabilities                         253,200      (20,000)
                                                --------------------------
           Net cash provided by operating
               activities                          1,260,400    1,075,300
                                                --------------------------

Cash flows from investing activities
    Purchase of available-for-sale securities       (197,700)  (4,777,400)
    Proceeds from maturities, sales and calls of
      available-for-sale securities                3,844,200    1,120,000
    Purchase of held-to-maturity securities             -      (5,990,300)
    Proceeds from maturities, prepayments and
      calls of held-to-maturity securities              -       2,000,000
    Purchase of Federal Home Loan Bank stock        (252,300)     (32,200)
    Loan originations, net of repayments         (10,232,300)  (8,877,100)
    Purchase of premises and equipment              (957,500)    (908,800)
    Proceeds from sale of real estate owned,
      net of costs                                      -          89,200
                                                --------------------------
           Net cash used by investing
               activities                         (7,795,600) (17,376,600)
                                                --------------------------

<PAGE>


              SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                  Consolidated Statements of Cash Flows


                                                Six Months Ended June 30,
                                                --------------------------
                                                    2003         2002
--------------------------------------------------------------------------

 <c>
Cash flows from financing activities
    Net increase in demand deposits             $  7,305,100  $  12,981,100
    Net increase (decrease) in time deposits      (8,997,200)     2,450,700
    Proceeds from FHLB advances                   21,500,000      8,600,000
    Repayments of FHLB advances                  (13,833,300)    (7,233,400)
    Repurchase of common stock                          -           (48,300)
    Proceeds from exercise of stock options            8,000          8,600
    Payment of dividends on common stock            (169,700)      (101,700)
                                                ----------------------------
           Net cash provided by financing
               activities                          5,812,900     16,657,000
                                                ----------------------------

Increase (decrease) in cash and cash
     equivalents                                    (722,300)       355,700

Cash and cash equivalents, beginning of period     7,534,900      6,605,900
                                                ----------------------------

Cash and cash equivalents, end of period        $  6,812,600    $ 6,961,600
                                                ----------------------------


Supplemental disclosure of cash flow information

    Cash paid during the period for interest    $  1,748,700   $ 1,878,100
    Cash paid during the period for income
          taxes                                 $    450,000   $   450,000

Supplemental schedule of non-cash investing and
    financing activities

    Transfers from loans to real estate acquired
      through foreclosure                       $       -      $    86,000


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-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 six
month period ended June 30, 2003 are not  necessarily  indicative of the results
that may be  expected  for any other  interim  period or the entire  year ending
December 31, 2003. 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, 2002.

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 products,  title
insurance and trust services.

<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 June 30,
2003 and 2002.

<TABLE>

                                                   Three Months Ended June 30,            Six Months Ended June 30,
                                               -----------------------------------   -----------------------------------
                                                     2003               2002               2003               2002
                                               ----------------   ----------------   ----------------   ----------------

 <c>

Net income (numerator, basic and diluted)       $      534,300     $      476,800     $      955,600     $      885,800
Weighted average shares outstanding
(denominator)                                        1,696,800          1,693,500          1,696,400          1,694,900
                                               ----------------   ----------------   ----------------   ----------------

Earnings per common share - basic               $         0.31     $         0.28     $         0.56     $         0.52
                                               ================   ================   ================   ================

Effect of dilutive securities:

Weighted average shares outstanding                  1,696,800          1,693,500          1,696,400          1,694,900
Effect of stock options                                 24,400             16,300             22,400             11,800
                                               ----------------   ----------------   ----------------   ----------------
Diluted average shares outstanding
(denominator)                                        1,721,200          1,709,800          1,718,800          1,706,700
                                               ----------------   ----------------   ----------------   ----------------

Earnings per common share -
assuming dilution                               $         0.31     $         0.28     $         0.56     $         0.52
                                               ================   ================   ================   ================

</TABLE>

NOTE 4 - COMPREHENSIVE INCOME

Total  comprehensive  income  consists of the following for the six months ended
June 30, 2003 and 2002:

<TABLE>

                                                       Six Months Ended June 30,
                                                 -----------------------------------
                                                       2003              2002
                                                 -----------------  ----------------

 <c>

Net income                                        $       955,600    $      885,800
Other comprehensive income                                453,000            14,500
                                                 -----------------  ----------------

Total comprehensive income                        $     1,408,600    $      900,300
                                                 =================  ================

</TABLE>

<PAGE>


NOTE 4 - COMPREHENSIVE INCOME (concluded)

The following is a reconciliation  of the related tax effects  allocated to each
component of other comprehensive income at June 30, 2003 and 2002.

<TABLE>

                                                       Six Months Ended June 30,
                                                 -----------------------------------
                                                       2003              2002
                                                 -----------------  ----------------

 <c>

Unrealized gains on available-for-sale securities:
Unrealized holding gains
      arising during the period                   $       822,600    $       28,000
Less: reclassification adjustment
      for gain included in income                         (92,600)             -
                                                 -----------------  ----------------

Total other comprehensive income
     before tax effect                                    730,000            28,000

Tax effect                                               (277,000)          (13,500)
                                                 -----------------  ----------------

Net unrealized gain                               $       453,000    $       14,500
                                                 =================  ================

</TABLE>


NOTE 5 - SEGMENT INFORMATION

Segment information  consists of the following for the six months ended June 30,
2003 and 2002:

<TABLE>

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

 <c>

Net Interest Income:
     Six months ended June 30, 2003               $   2,228        $     398        $      827       $        (472)     $    2,981
     Six months ended June 30, 2002               $   2,016        $     355        $      767       $        (345)     $    2,793

Assets:
     June 30, 2003                                $ 145,535        $  37,998        $   53,827       $     (49,892)     $  187,468
     December 31, 2002                            $ 140,389        $  39,060        $   56,774       $     (56,230)     $  179,993

</TABLE>

<PAGE>


NOTE 7 - 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,  2003. 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,
but is still assessing the recognition provisions of the Standard.

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 2003 and 2002. 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, 2003 and 2002.

<TABLE>

                                                   Three Months Ended June 30,             Six Months Ended June 30,
                                               -----------------------------------     -----------------------------------
                                                     2003               2002                  2003               2002
                                               ----------------   ----------------     ----------------   ----------------

 <c>

(Dollars in thousands, except per share data)

Net income, as reported                         $      534,300     $      476,800       $      955,600     $      885,800
Deduct:
             Total stock-based  employee
             compensation  expense determined
             under fair value based method
             for all awards, net of related
             tax effects                                  -                  -                 (57,800)           (40,400)
                                               ----------------   ----------------     ----------------   ----------------

Pro forma net income                            $      534,300     $      476,800       $      897,800     $      845,400
                                               ================   ================     ================   ================

Earnings per share:

Basic - as reported                             $         0.31     $         0.28       $         0.56     $         0.52
                                               ================   ================     ================   ================
Basic - pro forma                               $         0.31     $         0.28       $         0.53     $         0.50
                                               ================   ================     ================   ================

Diluted - as reported                           $         0.31     $         0.28       $         0.56     $         0.52
                                               ================   ================     ================   ================
Diluted - pro forma                             $         0.31     $         0.28       $         0.52     $         0.50
                                               ================   ================     ================   ================
</TABLE>


NOTE 7 - SUBSEQUENT EVENT

During July 2003, the Company declared a $0.05 per share quarterly cash dividend
on its common stock payable on August 1, 2003 to  shareholders of record on July
21, 2003.

<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, 2003 was  $534,300,  compared to
$476,800 in the second  quarter of 2002.  For the six months ended June 30, 2003
net income was $955,600,  compared to $885,800 for the same period of 2002. Core
earnings continued to benefit from strong loan growth during the quarter,  while
asset quality  remained  solid.  Additionally,  robust  earnings growth from the
bank's  investment   subsidiary,   Shore   Investments   Inc.,   continued  with
year-to-date  commission revenues at more than double the levels realized during
the prior year.  The Company's net interest  margin,  negatively  impacted by an
$18.0 million deposit  acquisition  during  December 2002,  improved by 15 basis
points to 3.65%  during the quarter.  The net interest  margin for the first six
months ended June 30, 2003 was 3.58%.

Net Interest Income

Net interest  income  increased 6.9% to $1.53 million for the three months ended
June 30, 2003,  compared to $1.43 million for the same period in 2002, while net
interest  income  increased  6.7% to $2.98 million for the six months ended June
30, 2003,  compared to $2.79 million  during the June 2002 six month  period.  A
decrease  in net  interest  margin  from 3.92% in 2002 to 3.58%  during the 2003
period,  primarily relating to the Susquehanna deposit  acquisition,  negatively
impacted net interest  income.  Although  earning asset yields and funding costs
continued to decline,  growth in earning  assets  mitigated  the impact of these
declines and the deposit  acquisition,  resulting in an increase in net interest
income.  Since  January 2003,  the  Company's  net interest  margin has improved
approximately  15 basis points,  illustrating  the impact of the loan growth and
the declining funding costs during the period.

Average  earning assets  increased  $24.2 million during the June 2003 six month
period  as  compared  to the June 2002  period,  a result of growth in loans and
investment  securities.  Average  loans  increased  by $13.3  million  to $122.1
million  during the June 2003 period as compared to the June 2002  period.  Real
estate and home  equity  line  lending  predominantly  drove loan growth for the
period. Increases in average investment securities,  primarly due to the deposit
acquisition,  also contributed to net interest income growth. Average investment
securities increased by $11.5 million during the period as compared to the prior
year.

The  Susquehanna  deposit  acquisition  also impacted  average  interest-bearing
deposits which increased $22.3 million during the period. Additionally, the Bank
experienced  24.8% growth in average  noninterest-bearing  demand deposits which
increased  to $16.5  million  during the June 2003  period as  compared to $13.2
million during the June 2002 period.  Since the December 2002 deposit acquistion
supplied  the Bank with ample time  deposit  funding,  management  adopted  less
aggressive time deposit pricing  strategies during the six months ended June 30,
2003. These strategies  contributed to the reductions in funding costs, but also
created  a  need  for  additional  liquidity.  Accordingly,  the  Bank  borrowed
short-term  funds at lower  costs  from the  Federal  Home Loan Bank of  Atlanta
("FHLB"),  resulting in an increase in average borrowings of $1.9 million during
the June 2003 period as compared to 2002 period.

<PAGE>

Interest and dividend income was $2.37 million and $4.72 million,  respectively,
for the three and six month  periods ended June 30, 2003;  relatively  flat when
compared  to the  prior  year.  Although  market-driven  declines  in  loan  and
investment  yields  continued  to impact  interest  income as  reported in prior
quarters,  it appears that some leveling has occurred in this area during recent
months.  During the six months ended June 30, 2003,  investment yields decreased
97 basis  points as  compared to the period  ended June 2002,  while loan yields
declined 82 basis points during the same period.

Interest expense decreased 10.9% to $838,400 for the three months ended June 30,
2003,  compared to $941,100 for the same period in 2002,  while interest expense
for the six months ended June 30, 2003 decreased 7.6% to $1.74 million, compared
to $1.88 million for the same 2002 period.  During the period,  the average rate
on  interest-bearing  liabilities  decreased from 3.11% in 2002 to 2.39% for the
June 2003 period.  Time deposit costs  declined 67 basis points,  while checking
and savings deposit costs dropped 47 basis points.


<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

                                                                      Six Months Ended June 30,
                                          ---------------------------------------------------------------------------------
                                                            2003                                      2002
                                          -------------------------------------     -------------------------------------
                                             Average       Income/      Yield/         Average       Income/      Yield/
(In Thousands)                               Balance       Expense       Rate          Balance       Expense       Rate
                                          ------------   -----------  ---------     ------------   -----------  ----------

 <c>
Assets:
       Securities (1)                       $  43,664     $     883      4.04%       $   32,188     $     806       5.01%
       Loans (net of unearned income):
             Real estate mortgage              69,037         2,209      6.40%           58,597         2,101       7.17%
             Commercial                        37,020         1,209      6.53%           37,530         1,348       7.18%
             Home equity lines                 13,428           314      4.68%            9,227           247       5.35%
             Consumer                           2,568           124      9.66%            3,361           183      10.89%
                                            ----------    ----------                 -----------    ----------
                 Total loans                  122,053          3,856     6.32%          108,715         3,879       7.14%
       Interest-bearing deposits
             in other banks                     2,715             13     0.96%            3,295            27       1.64%
                                            ----------    -----------                -----------    ----------
                 Total earning assets         168,432          4,752     5.64%          144,198         4,712       6.54%
                                            ----------    -----------                -----------    ----------
       Less: allowance for loan losses         (1,684)                                   (1,381)
       Total nonearning assets                 14,775                                     8,881
                                            ----------                               -----------
       Total assets                         $ 181,523                                $  151,698
                                            ==========                               ===========

Liabilities
       Interest-bearing deposits:
             Checking and savings           $  57,384     $      198     0.69%       $   44,065     $      256      1.16%
             Time deposits                     84,453          1,504     3.56%           75,434          1,596      4.23%
                                            ----------    -----------                -----------    -----------

                 Total interest-bearing
                 deposits                     141,837          1,702     2.40%          119,499          1,852      3.10%

       FHLB advances                            3,680             39     2.12%            1,770             32      3.62%
                                            ----------    -----------                -----------    -----------
                 Total interest-bearing
                 liabilities                  145,517          1,741     2.39%          121,269          1,884      3.11%
                                                          -----------                               -----------

Non-interest bearing liabilities:
             Demand deposits                   16,471                                    13,193
             Other liabilities                    799                                       626
                                            ----------                                ----------

       Total liabilities                      162,787                                   135,088
       Stockholders' equity                    18,736                                    16,610
                                            ----------                                ----------

       Total liabilities and stockholders'
             equity                         $ 181,523                                 $ 151,698
                                            ==========                                ==========

       Net interest income (1)                            $    3,011                                $    2,828
                                                          ===========                               ===========

       Interest rate spread (1)(2)                                       3.25%                                      3.43%
       Net interest margin (1)(4)                                        3.58%                                      3.92%


(1)      Tax equivalent  basis.  The tax  equivalent  adjustment to net interest
         income was $30,000  and $35,000 for the six months  ended June 30, 2003
         and 2002, 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>

Noninterest Income

Noninterest  income was $506,200 during the three months ended June 30, 2003, as
compared to $318,600 for the same period in 2002, representing a 58.9% increase.
For the six months ended June 30, 2003 and 2002, noninterest income was $902,900
and  $647,700,   respectively,   representing  a  39.4%  increase.  Included  in
noninterest  income for 2003 is a net gain on sales of  securities  of  $92,600.
Excluding  this gain,  noninterest  income for the six month  period  would have
increased  25.1%.  Increase in the cash  surrender  value of life  insurance and
growth in both deposit account fees and commissions  earned by Shore Investments
Inc. helped drive the increase in total  noninterest  income.  Shore Investments
Inc's.  year-to-date  commission  revenues more than doubled the levels realized
during the prior year.

Provision for Loan Losses

Provision  for loan losses was $95,100 for the three months ended June 30, 2003,
as compared to $81,600 for the same period of 2002, while the provision for loan
losses  for the six  months  ended  June 30,  2003 and  2002  was  $190,200  and
$157,700,  respectively. See Asset Quality for additional discussion relating to
the allowance for loan losses.

Noninterest Expense

Noninterest  expenses  were $1.16  million for the three  months  ended June 30,
2003, as compared to $969,600  during the same period of 2002,  representing  an
increase of 19.2%.  For the six months ended June 30, 2003 and 2002  noninterest
expense was $2.28 million and $1.98 million, respectively,  representing a 15.2%
increase.  Increased employee  compensation and benefits expense constituted the
majority of this increase, including a 24.0% rise in health insurance costs over
the 2002 six month period. Additionally, increased professional fees contributed
to the overall increase in noninterest expense as the company outsourced efforts
to maintain compliance with regulatory and corporate governance requirements.

Financial Condition

During the six months ended June 30, 2003,  the  Company's  assets  increased by
$7.5 million from $180.0  million at December 31, 2002 to $187.5 million at June
30, 2003. Net loans grew $10.1 million and cash and  investments  decreased $3.3
million during the period. Strong loan production,  especially during the second
quarter,  continued to drive asset  growth.  The Company used some proceeds from
investment maturities and sales to fund the loan growth, creating the decline in
cash and investment securities.  The purchase of a branch building in Salisbury,
Maryland  previously  leased and general liquidity needs also contributed to the
declines in cash and investment securities.

Deposits  balances  declined  slightly to $157.3  million  during the six months
ended June 30, 2003,  predominantly in the higher-costing time deposit category.
Interest-bearing  demand and savings  deposit  account  balances  increased $5.0
million and  noninterest-bearing  demand deposits increased $2.3 million,  while
time deposits decreased $9.0 million during the period.  FHLB advances increased
during the period from $2.2 million at December 31, 2002 to $9.8 million at June
30, 2003, with the increase due to liquidity needs created by strong loan growth
and the decrease in deposits.  Of the total FHLB advances,  $9.1 represent lower
cost overnight borrowings.

<PAGE>

Stockholders'  equity was $19.5  million  at June 30,  2003,  compared  to $18.2
million at December 31, 2002. Comprehensive income of $1.4 million offset common
stock dividend payments of $169,700 ($0.10 per share).

During July 2003, the Company declared a $0.05 per share quarterly cash dividend
on its common stock payable on August 1, 2003 to  shareholders of record on July
21, 2003.

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.

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 $733,000 at June 30, 2003, compared to $879,000
at  December  31,  2002.  As to  nonaccrual  loans  existing  at June 30,  2003,
approximately  $12,900 of interest income would have been recognized  during the
six months then ended if interest  thereon  had  accrued.  During the six months
ended June 30,  2003,  a loan  totaling  $368,000,  identified  as  impaired  at
December  31,  2002 under the  established  accounting  guidelines,  was brought
current with the principal due being  significantly  reduced through the sale of
assets by the  borrower.  Subsequently,  the  borrower  was unable to meet their
obligation  on the remaining  balance and,  consequently,  filed for  bankruptcy
protection.  Approximately  $125,000 in  principal  remains due at June 30, 2003
with  sufficient  collateral  existing to satisfy  this  amount,  subject to the
bankruptcy proceedings.  Accordingly, the Bank continues to maintain the loan in
nonaccrual  status and classify it 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 June 30, 2003, all loans 60 days or more delinquent,  including nonperforming
loans, totaled $868,000. In addition, $123,000 of other performing loans existed
that were current,  but had 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.


<PAGE>



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)                                                                     2003                    2002
                                                                            -------------------    ----------------------

 <c>

Nonaccrual loans:
       Commercial                                                              $           125       $              -
       Real estate mortgage                                                                342                       677
       Home equity lines of credit                                                          74                      -
       Consumer                                                                            192                       202
                                                                            --------------------   ----------------------

       Total nonaccrual loans                                                              733                       879
Other real estate owned                                                                   -                         -
                                                                            --------------------   ----------------------

       Total nonperforming assets                                              $           733       $               879
                                                                            ====================   ======================

Loans past due 90 or more days
       accruing interest                                                                  -                         -
Allowance for loan losses to
       nonaccrual loans                                                                 242.97%                   182.37%
Nonperforming assets to period end
       loans and other real estate owned                                                  0.57%                     0.74%

</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)                                                                          2003                       2002
                                                                                 -------------------       ---------------------

 <c>

Balance, beginning of period                                                      $           1,603         $             1,326
Loans charged off:
       Commercial                                                                              -                           -
       Real estate mortgage                                                                      (4)                       -
       Consumer                                                                                 (12)                        (32)
                                                                                 -------------------       ---------------------

       Total loans charged-off                                                                  (16)                        (32)
                                                                                 -------------------       ---------------------

Recoveries:
       Commercial                                                                              -                           -
       Real estate mortgage                                                                    -                           -
       Consumer                                                                                   4                          23
                                                                                 -------------------       ---------------------

       Total recoveries                                                                           4                          23
                                                                                 -------------------       ---------------------

Net recoveries (charge-offs)                                                                    (12)                         (9)
Provision for loan losses                                                                       190                         158
                                                                                 -------------------       ---------------------

Balance, end of period                                                            $           1,781         $             1,475
                                                                                 ===================       =====================

Allowance for loan losses to loans
       outstanding at end of period                                                           1.38%                       1.29%

Allowance for loan losses to nonaccrual
       loans outstanding at end of period                                                   242.97%                     471.25%

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

</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 June  30,  2003,  the  Company  had  outstanding  loan  and  line  of  credit
commitments  of $34.7 million.  Scheduled  maturities of certificate of deposits
during the twelve  months  following  June 30, 2003  amounted to $45.2  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 decreased $722,300 for the six months ended June
30, 2003,  compared to an increase of $355,700 for the six months ended June 30,
2002.  Net cash  provided by operating  activities  was $1.3 million for the six
months ended June 30, 2003,  compared to $1.1 million  during the same period of
2002. This increase reflects  additional cash earnings  generated during 2003 as
compared to 2002, partially offset by noncash income generated from increases in
cash  surrender  values  of life  insurance  and  other  fluctuations  in normal
operating activities.

Net cash used by investing  activities  was $7.8  million  during the six months
ended June 30, 2003, compared to net cash used by investing  activities of $17.4
million  for the six  months  ended  June 30,  2002.  Although  loan  growth was
stronger during the 2003 period, deposit growth remained flat as compared to the
growth  experienced  during the 2002 period,  resulting in less excess liquidity
for investment purposes.

Net cash  provided by financing  activities  was $5.8 million for the six months
ended June 30, 2003,  compared to net cash  provided by financing  activities of
$16.7 million for the six months ended June 30, 2002.  The December 2002 deposit
acquisition  allowed the Company to minimize  time deposit  growth  through less
aggressive pricing strategies.  Liquidity generated by the acquisition  provided
funding for loan growth and other investing  activities  during the quarter with
shortfalls being covered through investment  maturities and low-cost  borrowings
from the FHLB.

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 six months ended June 30, 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.  The Bank did not pay
dividends to the Company  during the six months ended June 30, 2003. At June 30,
2003, the Bank's  retained  earnings  available for the payment of dividends was
$1.9  million.  The  capital  amounts  and  classification  are also  subject to
qualitative judgments by the regulators about components,  risk weightings,  and
other factors.

<PAGE>

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, 2003,  the Company meets all capital  adequacy
requirements to which it is subject.

The  following  table  details the  components  of Tier 1 and Tier 2 capital and
related ratios at June 30, 2003 and December 31, 2002.

<TABLE>


                                          Analysis of Capital

                                                                     June 30,           December 31,
(In Thousands)                                                         2003                 2002
                                                                 ------------------  -------------------

 <c>

Tier 1 Capital:
       Common stock                                               $            560    $             560
       Additional paid-in capital                                            2,662                2,654
       Retained earnings                                                    15,180               14,394
       Accumulated other comprehensive income                                1,062                  609
                                                                 ------------------  -------------------
             Total capital (GAAP)                                           19,464               18,217
       Less: Intangibles                                                      (624)                (650)
       Net unrealized gain on debt and equity securities                    (1,062)                (609)
       Net unrealized losses on equity securities                             -                     (41)
                                                                 ------------------  -------------------
             Total Tier 1 capital                                           17,778               16,917


Tier 2 Capital:
       Allowable allowances for loan losses                                  1,475                1,366
       Net unrealized gains on equity securities                               158                    8
                                                                 ==================  ===================
             Total Tier 2 capital                                 $         19,411    $          18,291
                                                                 ==================  ===================

Risk-weighted assets                                              $        122,044    $         112,642

Capital Ratios (1):
       Tier 1 risk-based capital ratio                                      14.57%               15.02%
       Total risk-based capital ratio                                       15.91%               16.24%
       Tier 1 capital to average adjusted
             total assets                                                    9.83%               10.72%

</TABLE>

<PAGE>


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.

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  interest
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.

<PAGE>

The following table presents the Company's interest sensitivity position at June
30, 2003 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

                                                                          June 30, 2003
                                      -----------------------------------------------------------------------------------------
                                          Within            91-365            1 to 5             Over
(In Thousands)                            90 Days            Days              Years            5 Years            Total
                                      ----------------  ----------------  -----------------  ----------------  ----------------

 <c>

Interest-Earning Assets:
       Loans (1)                       $       33,278    $       15,071    $        56,819    $       23,473    $      128,641
       Securities                               3,005             6,062             32,568             2,927            44,562
       Money market and other
           short term securities                1,643              -                  -                 -                1,643
       Bank-Owned Life Insurance                 -                3,074               -                 -                3,074
                                      ----------------  ----------------  -----------------  ----------------  ----------------

       Total earning assets            $       37,926    $       24,207    $        89,387    $       26,400    $      177,920
                                      ================  ================  =================  ================  ================
       Cumulative earning assets       $       37,926    $       62,133    $       151,520    $      177,920    $      177,920
                                      ================  ================  =================  ================  ================


Interest-Bearing Liabilities:
       Money market savings            $       15,711    $         -       $          -       $         -       $       15,711
       Interest checking (2)                     -                 -                21,650              -               21,650
       Savings (2)                                456             1,465             19,307              -               21,228
       Certificates of deposit                 15,313            29,863             33,688             1,731            80,595
       FHLB advances                            9,100              -                  -                  717             9,817
                                      ----------------  ----------------  -----------------  ----------------  ----------------

       Total interest-bearing
          liabilities                  $       40,580    $       31,328    $        74,645    $        2,448    $      149,001
                                      ================  ================  =================  ================  ================
       Cumulative interest-bearing
          liabilities                          40,580            71,908            146,553           149,001           149,001
                                      ================  ================  =================  ================  ================

       Period gap                      $       (2,654)   $       (7,121)   $        14,742    $       23,952    $       28,919
       Cumulative gap                  $       (2,654)   $       (9,775)   $         4,967    $       28,919    $       28,919
       Ratio of cumulative interest-
          earning assets to interest-
          bearing liabilities                   93.46%            86.41%            103.39%           119.41%           119.41%
       Ratio of cumulative gap to total
           earning assets                       -1.49%            -5.49%              2.79%            16.25%            16.25%



(1)  Includes nonaccrual loans of $733,000, 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>

Recent Accounting and Reporting Pronouncements

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments  and Hedging  Activities  (SFAS 149),  which  amends and
clarifies the accounting and reporting  requirements for derivative  instruments
and hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging  Activities.  The  requirements  of this Statement are effective for
contracts  entered  into or  modified  after  June 30,  2003.  Furthermore,  the
requirements of this Statement are to be applied prospectively.  The adoption of
this  Standard  is  currently  not  expected  to have a  material  impact on the
Company's consolidated results of operations or financial position.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). SFAS
150 initiates  standards  for how an issuer  categorizes  and evaluates  certain
financial  instruments that display  characteristics  similar to liabilities and
equity in its  statement of financial  position.  The Statement is effective for
financial  instruments  entered  into or  modified  after May 31,  2003,  and is
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. As a result,  SFAS 150 will be effective for the Company's  third
quarter  starting July 1, 2003. The adoption of this Standard is not expected to
have a material impact on the consolidated financial statements.

In January  2003,  the FASB  issued FASB  Interpretation  46,  Consolidation  of
Variable Interest  Entities,  and  Interpretation of ARB No. 51 (FIN 46). FIN 46
provides a new framework for identifying  variable  interest entities (VIEs) and
determining   when  a  company   should   include   the   assets,   liabilities,
noncontrolling  interests and results of activities of a VIE in its consolidated
financial  statements.  FIN 46 is effective  immediately  for VIEs created after
January 31, 2003,  and is effective  beginning in the third  quarter of 2003 for
VIEs created prior to the issuance of this  interpretation.  Management does not
currently  expect this  pronouncement to have a material impact on the Company's
results of operations or financial position.


Item 3 - 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  within 90 days of the filing  date of this  quarterly
report. 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.

Disclosure  controls and procedures are our controls and other  procedures  that
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 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

(a)      Certifications pursuant to subsections 302 and 906 of the
          Sarbanes-Oxley Act of 2002.
(b)       Form 8-K and Form 8-K/A were filed  during  July 2003  relative to the
          Company's June 30, 2003 earnings release dated July 15, 2003.


<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 13, 2003
--------------------------------------------------------------------------------
Scott C. Harvard
President and
Chief Executive Officer


/s/ Steven M. Belote                                             August 13, 2003
--------------------------------------------------------------------------------
Steven M. Belote
Vice President and
Chief Financial Officer

<PAGE>

     Pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350)


I, Scott C. Harvard, certify that:

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

         2. Based on my knowledge,  this  quarterly  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
quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
information  included in this quarterly  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 quarterly report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         (a) designed  such  disclosure  controls and  procedures 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 quarterly report is being prepared;

         (b) evaluated the effectiveness of the registrant's disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         (c)  presented  in this  quarterly  report  our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

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

         (a) all significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         (b) any fraud,  whether or not material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this quarterly report whether or not there were significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 13, 2003

                                                       /s/ Scott C. Harvard
                                                       --------------------
                                                       President and CEO

<PAGE>


     Pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350)


I, Steven M. Belote, certify that:

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

         2. Based on my knowledge,  this  quarterly  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
quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
information  included in this quarterly  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 quarterly report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         (a) designed  such  disclosure  controls and  procedures 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 quarterly report is being prepared;

         (b) evaluated the effectiveness of the registrant's disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         (c)  presented  in this  quarterly  report  our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

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

         (a) all significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         (b) any fraud,  whether or not material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this quarterly report whether or not there were significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 13, 2003

                                                       /s/ Steven M. Belote
                                                       ----------------------
                                                       CFO and Vice President

<PAGE>

     Pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350)

         The  undersigned,  as the chief  executive  officer of Shore  Financial
Corporation,  certifies  to the  best  of his  knowledge  and  belief  that  the
Quarterly  Report on Form  10-QSB for the  period  ended  June 30,  2003,  which
accompanies this  certification  fully complies with the requirements of Section
13(a) or 15(d),  as applicable,  of the Securities  Exchange Act of 1934 and the
information  contained in the periodic report fairly  presents,  in all material
respects,  the financial  condition and results of operations of Shore Financial
Corporation  at  the  dates  and  for  the  periods  indicated.   The  foregoing
certification is made pursuant to ss. 906 of the  Sarbanes-Oxley Act of 2002 (18
U.S.C.  ss. 1350) and no purchaser or seller of  securities  or any other person
shall be entitled to rely upon the foregoing  certification for any purpose. The
undersigned   expressly   disclaims  any  obligation  to  update  the  foregoing
certification except as required by law.


                                        /s/ Scott C. Harvard
                                        ---------------------
                                        Chief Executive Officer
<PAGE>

     Pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350)

         The  undersigned,  as the chief  financial  officer of Shore  Financial
Corporation,  certifies  to the  best  of his  knowledge  and  belief  that  the
Quarterly  Report on Form  10-QSB for the  period  ended  June 30,  2003,  which
accompanies this  certification  fully complies with the requirements of Section
13(a) or 15(d),  as applicable,  of the Securities  Exchange Act of 1934 and the
information  contained in the periodic report fairly  presents,  in all material
respects,  the financial  condition and results of operations of Shore Financial
Corporation  at  the  dates  and  for  the  periods  indicated.   The  foregoing
certification is made pursuant to ss. 906 of the  Sarbanes-Oxley Act of 2002 (18
U.S.C.  ss. 1350) and no purchaser or seller of  securities  or any other person
shall be entitled to rely upon the foregoing  certification for any purpose. The
undersigned   expressly   disclaims  any  obligation  to  update  the  foregoing
certification except as required by law.

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