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


  X     QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--------
        ACT OF 1934
               For the quarterly period ended September 30, 2006

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

                        Commission file number 000-23847

                           SHORE FINANCIAL CORPORATION

             (Exact name of registrant as specified in its charter)

               Virginia                                    54-1873994
   ----------------------------------               ------------------------
      (State or other jurisdiction                      (I.R.S. Employer
    of incorporation or organization)                 Identification Number)
      25253 Lankford Highway
           Onley, Virginia                                    23418
     -----------------------------                   ----------------------
       (Address of Principal                                (Zip Code)
         Executive Offices)


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                                          Yes   X    No
                                                               ----     ------

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):
Large accelerated filer ____ Accelerated  filer ____ Non-accelerated  filer _X_


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

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

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


Number of shares of Common Stock outstanding as of November 13, 2006:  2,492,143






<PAGE>


                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                                Index - Form 10-Q

                         PART I - FINANCIAL INFORMATION

         Item 1 - Consolidated Financial Statements (Unaudited)

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

                           Consolidated Statements of Income for the Three and
                           Nine Months Ended September 30, 2006 and 2005

                           Consolidated Statements of Stockholders' Equity for
                           the Nine Months Ended September 30, 2006 and 2005

                           Consolidated Statements of Cash Flows for the Nine
                           Months Ended September 30, 2006 and 2005

                           Notes to Unaudited Consolidated Financial Statements

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

                           Results of Operations

                           Interest Sensitivity

                           Financial Condition

                           Asset Quality

                           Liquidity and Capital Resources

         Item 3 - Quantitative and Qualitative Disclosures about Market Risk

         Item 4 - Controls and Procedures


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

                                   SIGNATURES



<PAGE>


<TABLE>

                                  Consolidated Statements of Financial Condition


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

                                ASSETS


Cash (including interest - earning deposits of
     approximately $5,564,400 and $1,775,300, respectively)            $         11,984,400     $        9,176,000
Investment securities:
     Available-for-sale (amortized cost of $28,686,900 and
         $29,781,900, respectively)                                              28,870,900             29,889,900
     Other investments, at cost                                                   2,282,900              2,460,900
Loans receivable, net                                                           206,807,400            192,696,500
Premises and equipment, net                                                       7,111,300              7,464,600
Other assets                                                                      5,869,500              5,731,000
                                                                       --------------------------------------------

                                                                       $        262,926,400     $      247,418,900
                                                                       ============================================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
         Interest-bearing                                              $        174,792,000     $      160,105,000
         Noninterest-bearing                                                     30,038,600             28,864,700
                                                                       ---------------------   --------------------
            Total deposits                                                      204,830,600            188,969,700

Advances from Federal Home Loan Bank                                             31,900,000             34,050,000
Other liabilities                                                                   760,200                770,600
                                                                       --------------------------------------------
            Total liabilities                                                   237,490,800            223,790,300
                                                                       --------------------------------------------

Stockholders' equity
     Preferred stock, par value $1 per share, 500,000
         shares authorized; none issued and
         outstanding                                                                      -                      -
     Common stock, par value $.275 and $.33 per share, respectively;
         6,000,000 and 5,000,000 shares authorized, respectively;
         2,492,143 and 2,074,207 issued and outstanding, respectively               685,300                684,500
     Additional capital                                                           8,333,400              8,267,400
     Retained earnings                                                           16,296,800             14,631,400
     Accumulated other comprehensive income                                         120,100                 45,300
                                                                       --------------------------------------------
            Total stockholders' equity                                           25,435,600             23,628,600
                                                                       --------------------------------------------

                                                                       $        262,926,400     $      247,418,900
                                                                       ============================================


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


</TABLE>



<PAGE>



<TABLE>

                                                Consolidated Statements of Income

                                                Three Months Ended September 30,        Nine Months Ended September 30,
                                               -----------------------------------    -------------------------------------
                                                    2006                 2005              2006                 2005
----------------------------------------------------------------------------------    -------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Interest and dividend income
     Loans                                     $    3,480,400      $    2,898,400     $     9,984,200      $     8,241,600
     Investments
         Taxable interest                             264,400             332,800             847,100              976,800
         Tax-exempt interest                           39,300              34,300             110,300              103,700
         Dividends                                     68,000              45,900             180,800              127,400
                                               -----------------------------------    -------------------------------------
              Total interest and dividend income    3,852,100           3,311,400          11,122,400            9,449,500
                                               -----------------------------------    -------------------------------------

Interest expense
     Deposits                                       1,374,900             854,300           3,500,200            2,512,800
     FHLB/other advances                              398,000             312,000           1,254,800              671,800
                                               -----------------------------------    -------------------------------------
              Total interest expense                1,772,900           1,166,300           4,755,000            3,184,600
                                               -----------------------------------    -------------------------------------

Net interest income                                 2,079,200           2,145,100           6,367,400            6,264,900

Provision for loan losses                              33,800              86,200             125,600              246,400
                                               -----------------------------------    -------------------------------------

Net interest income after
     provision for loan losses                      2,045,400           2,058,900           6,241,800            6,018,500
                                               -----------------------------------    -------------------------------------

Noninterest income
     Deposit account fees                             598,900             327,100           1,813,400              934,600
     Loan fees                                         28,800              28,900              82,400               80,000
     Mortgage banking fees                             29,300              45,200              78,700              123,100
     Commissions on investment brokerage sales         67,100              43,500             257,600              107,900
     Gains on sales of securities                      52,600              10,100              52,600              170,300
     Gains on sale of real estate                           -             150,800                   -              150,800
     Other                                             61,800              67,000             191,400              192,000
                                               -----------------------------------    -------------------------------------
              Total noninterest income                838,500             672,600           2,476,100            1,758,700
                                               -----------------------------------    -------------------------------------

Noninterest expense
     Compensation and employee
         benefits                                     954,200             809,400           2,810,200            2,330,100
     Occupancy and equipment                          453,700             392,300           1,292,500            1,204,000
     Data processing                                  188,100             196,500             604,000              569,400
     Professional fees                                 90,800              98,000             283,800              222,700
     Advertising and promotion                         34,100              34,000              97,300              119,600
     Other                                            190,700             186,700             583,600              510,700
                                               -----------------------------------    -------------------------------------
              Total noninterest expense             1,911,600           1,716,900           5,671,400            4,956,500
                                               -----------------------------------    -------------------------------------

Income before income taxes                            972,300           1,014,600           3,046,500            2,820,700

Income taxes                                          301,400             314,500             944,400              875,800
                                               -----------------------------------    -------------------------------------

Net income                                     $      670,900      $      700,100     $     2,102,100      $     1,944,900
                                               ===================================    =====================================

Cash Dividends Declared Per Share              $         0.06      $         0.06     $          0.18      $          0.16
                                               ===================================    =====================================
Earnings Per Common Share:
         Basic                                 $         0.27      $         0.28     $          0.84      $          0.78
                                               ===================================    =====================================

         Diluted                               $         0.27      $         0.28     $          0.83      $          0.77
                                               ===================================    =====================================


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

</TABLE>


<PAGE>


<TABLE>

                                                Consolidated Statements of Stockholders' Equity


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

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


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

Common stock cash dividend
     declared                            -             -                 -           (393,100)                 -         (393,100)

Exercise of stock options            8,283         2,700            42,400                  -                  -            45,100

Comprehensive income (loss)              -             -                 -          1,944,900           (578,500)        1,366,400
                               ------------  --------------------------------------------------------------------------------------

Balance, September 30, 2005      2,071,567    $  683,600     $   8,241,400      $  14,046,200      $       6,200    $   22,977,400
                               ============  ======================================================================================

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

Common stock cash dividend
     declared                            -             -                 -           (435,900)                 -          (435,900)

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

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

6-for-5 Stock Split                415,316          (100)                -               (800)                 -              (900)

Comprehensive income (loss)              -             -                 -          2,102,100             74,800         2,176,900
                               ------------  --------------------------------------------------------------------------------------

Balance, September 30, 2006      2,492,143    $  685,300     $   8,333,400      $  16,296,800      $     120,100    $   25,435,600
                               ============  ======================================================================================





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



</TABLE>



<PAGE>


<TABLE>

                 Consolidated Statements of Cash Flows


                                                        Nine Months Ended September 30,
                                                        -------------------------------
                                                                2006          2005
---------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Cash flows from operating activities
    Net income                                             $ 2,102,100    $1,944,900
    Adjustments to reconcile to net cash
      provided by operating activities:
        Provision for loan losses                              125,600       246,400
        Depreciation and amortization                          566,800       543,800
        Amortization of premium and accretion
          of discount on securities, net                         8,400        51,400
        Gain on sale of investment securities                  (52,600)     (170,300)
        Gain on sale of real estate                                  -      (150,800)
        Loss on disposal of fixed assets                             -         6,800
        Increase in cash surrender value of life              (109,500)     (100,600)
        Tax benefit of stock options exercised                   8,100             -
        Changes in:
          Deferred loan fees                                    60,400       102,600
          Other assets                                         (76,500)       36,900
          Other liabilities                                    (10,400)     (469,100)
                                                           --------------------------
          Net cash flows from operating activities           2,622,400     2,042,000
                                                           --------------------------

Cash flows from investing activities
    Purchase of available-for-sale securities               (3,094,200)   (1,476,800)
    Proceeds from maturities, sales and calls of
      available-for-sale securities                          4,233,400     2,882,100
    Purchase of other investments                           (1,798,700)   (2,961,700)
    Proceeds from maturities, sales and calls of
      other investments                                      1,976,700     2,311,500
    Proceeds from sale of real estate                                -       323,100
    Loan originations, net of repayments                   (14,296,900)  (13,472,700)
    Purchase of premises and equipment                        (167,200)     (191,800)
                                                           --------------------------
          Net cash flows from investing activities         (13,146,900)  (12,586,300)
                                                           --------------------------



<PAGE>



                 Consolidated Statements of Cash Flows

                                                        Nine Months Ended September 30,
                                                        -------------------------------
                                                                2006          2005
---------------------------------------------------------------------------------------

Cash flows from financing activities
    Net increase (decrease) in demand deposits            $ (7,183,800)   $4,439,200
    Net increase (decrease) in time deposits                23,043,800    (1,590,000)
    Proceeds from FHLB advances                            169,400,000   106,000,000
    Repayments of FHLB advances                           (171,550,000)  (96,700,000)
    Proceeds from exercise of stock options                     58,800        45,100
    Payment of dividends on common stock                      (435,900)     (393,100)
                                                           --------------------------
          Net cash flows from financing activities          13,332,900    11,801,200
                                                           --------------------------

Change in cash and cash equivalents                          2,808,400     1,256,900

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

Cash and cash equivalents, end of period                  $ 11,984,400   $10,671,900
                                                           ==========================


Supplemental disclosure of cash flow information

    Cash paid during the period for interest               $ 4,623,700    $3,084,200
    Cash paid during the period for income taxes           $   970,000    $  728,500
    Conversion of Trust Preferred Stock investment
         to common stock                                   $         -    $   72,000




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


</TABLE>


<PAGE>




                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

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

Principles of Consolidation

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




<PAGE>



NOTE 2 - EARNINGS PER SHARE

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



<TABLE>

                                                Three Months Ended September 30,               Nine Months Ended September 30,
                                            ---------------------------------------       ----------------------------------------
                                                   2006               2005                       2006                   2005
                                            ------------------   ------------------       -----------------     ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income (numerator, basic and diluted)    $       670,900      $      700,100           $     2,102,100       $   1,944,900
Weighted average shares outstanding
(denominator)                                      2,492,192           2,485,561                 2,491,460           2,480,569
                                            ------------------   ------------------       -----------------     ------------------

Earnings per common share - basic            $          0.27      $         0.28           $          0.84       $        0.78
                                            ==================   ==================       =================     ==================

Effect of dilutive securities:

Weighted average shares outstanding          $     2,492,192      $    2,485,561           $     2,491,460       $   2,480,569
Effect of stock options                               28,695              34,039                    26,341              31,608
                                            ------------------   ------------------       -----------------     ------------------
Diluted average shares outstanding
(denominator)                                      2,520,887           2,519,600                 2,517,801           2,512,177
                                            ------------------   ------------------       -----------------     ------------------

Earnings per common share -
assuming dilution                            $          0.27      $         0.28           $          0.83       $        0.77
                                            ==================   ==================       =================     ==================


</TABLE>



NOTE 3 - COMPREHENSIVE INCOME

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

<TABLE>

                                                   Nine Months Ended September 30,
                                                 ------------------------------------
                                                       2006               2005
                                                 -----------------  -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income                                            $ 2,102,100         $1,944,900
Other comprehensive income (loss)                          74,800           (578,500)
                                                 -----------------  -----------------

Total comprehensive income                            $ 2,176,900         $1,366,400
                                                 =================  =================

</TABLE>



<PAGE>



NOTE 3 - COMPREHENSIVE INCOME (concluded)

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


<TABLE>

                                                   Nine Months Ended September 30,
                                                 ------------------------------------
                                                       2006               2005
                                                 -----------------  -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Unrealized gains (losses) on
      available-for-sale securities:
Unrealized holding gains (losses)
      arising during the period                         $ 168,600         $ (745,700)
Less: reclassification adjustment
      for gain included in income                         (52,600)          (170,300)
                                                 -----------------  -----------------

Total other comprehensive gain (loss)
     before tax effect                                    116,000           (916,000)

Tax benefit (expense)                                     (41,200)           337,500
                                                 -----------------  -----------------

Net unrealized gain (loss)                               $ 74,800         $ (578,500)
                                                 =================  =================


</TABLE>



NOTE 4 - SEGMENT INFORMATION

Segment information consists of the following for the nine months ended
September 30, 2006 and 2005:


<TABLE>

                                                                                            Elimination of
                                                                                             Intersegment
(In thousands)                                Virginia       Maryland         Other          Transactions            Total
                                           -------------  --------------  --------------  -----------------     --------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net Interest Income:
     Nine months ended September 30, 2006     $   4,836       $  1,323       $    (277)        $      485           $   6,367
     Nine months ended September 30, 2005     $   4,469       $  1,249       $     454         $       93           $   6,265

Assets:
     September 30, 2006                       $ 197,664       $ 51,779       $  46,402         $  (32,919)          $ 262,926
     December 31, 2005                        $ 186,922       $ 46,145       $  45,042         $  (30,690)          $ 247,419


</TABLE>


<PAGE>





NOTE 5 - STOCK-BASED COMPENSATION

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

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


<TABLE>

                                                                    Three Months                    Nine Months
                                                                  Ended September 30,           Ended September 30,
                                                                        2005                            2005
                                                              -------------------------       -------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

(Dollars in thousands, except per share data)

Net income, as reported
Deduct:                                                               $     700,100                   $    1,944,900
                Total stock-based employee
                compensation expense
                determined under fair value
                based method for all awards,
                net of related tax effects                                        -                         (116,600)
                                                                  -------------------             -------------------

Pro forma net income                                                  $     700,100                   $    1,828,300
                                                                  ===================             ===================

Earnings per share:

Basic - as reported                                                   $        0.28                   $         0.78
                                                                  ===================             ===================
Basic - pro forma                                                     $        0.28                   $         0.73
                                                                  ===================             ===================

Diluted - as reported                                                 $        0.28                   $         0.77
                                                                  ===================             ===================
Diluted - pro forma                                                   $        0.28                   $         0.73
                                                                  ===================             ===================


</TABLE>


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

NOTE 6 - SUBSEQUENT EVENT

During October 2006, the Company declared a $0.07 per share quarterly cash
dividend on its common stock payable on November 1, 2006 to shareholders of
record on October 24, 2006, representing a 20% increase in the common stock
dividend as compared to the September 2006 quarter.


<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 September 30, 2006 was $670,900, or $0.27
per diluted share, compared to net income of $700,100, or $0.28 per diluted
share, for the same period of the prior year. Earnings for the nine months ended
September 30, 2006 increased to $2.10 million, or $0.83 per diluted share,
compared to $1.94 million, or $0.77 per diluted share, for the 2005 nine month
period. All per share amounts have been adjusted to reflect the six-for-five
stock split the Company effected on August 30, 2006. Earnings in the third
quarter of 2005 included a $100,000 after tax gain on the sale of real estate.
Excluding gains on the sales of securities and real estate in all periods, core
earnings for the three and nine months ended September 30, 2006 increased 7.7%
and 19.8%, respectively, over comparable periods of the prior year.

Core growth in noninterest income continued to drive earnings during the
September quarter with an increase of 53.6%, while core noninterest income
increased 68.6% for the nine months ending September 30, 2006. Excluding gains
on the sales of securities and real estate, noninterest income for the September
2006 quarter was $785,900, compared to $511,700 for the September 2005 quarter
end, while noninterest income was $2.42 million for the nine months ended
September 30, 2006, compared to $1.44 million for the same period of 2005.
Income from deposit accounts accounted for the majority of this growth,
increasing to $598,900 and $1.81 million or 83.1% and 94.0% for the three and
nine months ended September 30, 2006, respectively. The Company's investment
subsidiary operations continued to post solid results by earning commissions of
$67,100 and $257,600 during the 2006 three and nine month periods, respectively,
compared to $43,500 and $107,900 for the same periods in 2005.

Net Interest Income

Net interest income was $2.08 million and $6.37 million for the three and nine
month periods ended September 30, 2006, respectively, compared to $2.15 million
and $6.26 million for the same periods of 2005, respectively. These results
reflect the growing pressure on the Company's net interest margin due to the
inverted interest rate yield curve, primarily as to its impact on funding costs.
The Company has experienced solid loan growth during the first nine months of
2006 with loans averaging $205.7 million during the period, compared to $184.6
million for the 2005 nine month period.

Average earning assets for the nine months ended September 2006 increased $13.5
million over the September 2005 period. The majority of this growth occurred in
average loans which increased $21.0 million over 2005, while average investments
declined $7.1 million during the period. During the first nine months of 2006
residential real estate loans increased 18.1% over comparable periods of 2005,
representing a significant portion of the Company's overall loan growth. Average
commercial loans increased $3.1 million, while other loan categories were flat
during the period. The decline in investment securities reflects the liquidity
demands generated by the loan growth and the limited investment opportunities
that existed during the period primarily due to the inverted yield curve.



<PAGE>




Average total deposits increased to $196.5 million during the period, compared
to $193.4 million during the 2005 period. During the nine months ended September
30, 2006, average interest-bearing checking and savings demand deposits declined
$11.6 million when compared to the September 2005 nine month period. Decreases
in the Bank's money market and savings products accounted for the majority of
this decline due to increased rate competition from other banks, brokerage firms
and insurance companies for all deposit products. During the September 2006 nine
month period, average time deposit balances increased $15.1 million to $100.6
million when compared to the 2005 period. The Company purchased brokered
certificates of deposit and ran several rate specials during the 2006 nine month
period which accounted for the increase in time deposits. Federal Home Loan Bank
("FHLB") advances were used to fund any additional liquidity shortfalls during
the period, resulting in average FHLB advances increasing $7.1 million during
the period ended September 30, 2006 as compared to the September 2005 period.

Interest and dividend income was $3.85 million and $11.12 million for the three
and nine month periods ended September 30, 2006, representing increases of 16.3%
and 17.7%, respectively, over the comparable 2005 amounts. Continued loan growth
constituted the majority of these increases despite net interest margin
pressures during the periods. Loan yields improved by 52 basis points from the
nine months ended September 30, 2005 to the September 2006 comparable period,
while investment yields increased by 57 basis points over the same period.

Interest expense for the three and nine months ended September 30, 2006 was
$1.77 million and $4.76 million, respectively, representing increases of 52.0%
and 49.3%, respectively, over comparable 2005 amounts. A 17.7% and 26.0%
increase in average time deposits and FHLB advances, respectively, and a 91
basis point increase in cost of total interest-bearing liabilities contributed
to these increases. Market competition continue to force the Bank to raise its
deposit rates and rely more on wholesale funding in order to meet funding needs.
This competition along with the inverted yield curve have put added pressure on
the Company's net interest margin which, in turn, has reduced the normally
positive impact of being asset sensitive during a rising interest rate
environment.

The average rate on interest-bearing liabilities for the nine months ended
September 30, 2006 was 3.11%, compared to 2.20% incurred in 2005. Interest rates
on time deposit accounts and FHLB advances represented the greatest impact on
the Bank's cost of funding by increasing 89 basis points and 158 basis points,
respectively, while checking and savings deposit costs increased 6 basis points
during the 2006 nine month period as compared to the 2005 period.


<PAGE>



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


<TABLE>

                                   Average Balances, Income and Expenses, Yields and Rates

                                                                     Nine Months Ended September 30,
                                           ------------------------------------------------------------------------------------
                                                2006                                       2005
                                           -----------------------------------------  -----------------------------------------
                                              Average        Income/       Yield/        Average        Income/       Yield/
(In Thousands)                                Balance        Expense        Rate         Balance        Expense        Rate
                                           ------------    -----------  -----------    -----------    -----------  -----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Assets:
       Securities (1)                      $     31,830   $      1,119        4.69%   $     38,888   $      1,202        4.12%
       Loans (net of unearned income):
             Real estate mortgage               114,076          5,024        5.87%         96,609          4,055        5.60%
             Commercial                          73,078          3,827        6.98%         69,944          3,321        6.33%
             Home equity lines                   15,584            932        7.97%         15,799            715        6.03%
             Consumer                             2,950            201        9.08%          2,288            151        8.80%
                                             -----------    -----------                 -----------    -----------
                  Total loans                   205,688          9,984        6.47%        184,640          8,242        5.95%
       Interest-bearing deposits
             in other banks                       2,433             76        4.16%          2,951             60        2.71%
                                             -----------    -----------                 -----------    -----------
                  Total earning assets          239,951         11,179        6.21%        226,479          9,504        5.59%
                                                            -----------                                -----------
       Less: allowance for loan losses           (2,874)                                    (2,535)
       Total nonearning assets                   18,830                                     19,926
                                             -----------                                -----------
       Total assets                        $    255,907                               $    243,870
                                             ===========                                ===========

Liabilities
       Interest-bearing deposits:
             Checking and savings          $     68,988   $        449        0.87%   $     80,597   $        488        0.81%
             Time deposits                      100,557          3,051        4.05%         85,409          2,025        3.16%
                                             -----------    -----------                 -----------    -----------

                  Total interest-bearing
                  deposits                      169,545          3,500        2.75%        166,006          2,513        2.02%

       FHLB advances                             34,423          1,255        4.86%         27,310            672        3.28%
                                             -----------    -----------                 -----------    -----------
                  Total interest-bearing
                  liabilities                   203,968          4,755        3.11%        193,316          3,185        2.20%
                                                            -----------                                -----------
       Non-interest bearing liabilities:
             Demand deposits                     26,957                                     27,380
             Other liabilities                      392                                        581
                                             -----------                                -----------

       Total liabilities                        231,317                                    221,277
       Stockholders' equity                      24,590                                     22,593
                                             -----------                                -----------

       Total liabilities and stockholders'
             equity                        $    255,907                               $    243,870
                                             ===========                                ===========

       Net interest income (1)                            $      6,424                               $      6,319
                                                            ===========                                ===========

       Interest rate spread (1)(2)(3)                                         3.10%                                      3.39%
       Net interest margin (1)(2)(4)                                          3.57%                                      3.72%


(1)      Tax equivalent  basis. The tax equivalent  adjustment to net interest income was $57,000 and $54,000 for the nine months
         ended September 30, 2006 and 2005, respectively.
(2)      Yield and rate percentages are all computed through the annualization
         of interest income and expense divided by average daily balances based
         on amortized costs.
(3)      Interest  rate spread is the  average  yield  earned on earning  assets less the  average  rate  incurred on
         interest-bearing liabilities.
(4)      Net interest margin is derived by dividing net interest income by
         average total earning assets.

</TABLE>


<PAGE>


Interest Sensitivity

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

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

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


<TABLE>

                                                                             September 30, 2006
                                           ---------------------------------------------------------------------------------------
                                               Within          91-365           1 to 5           Over
                                               90 Days          Days             Years          5 Years              Total
                                           ---------------  -------------  ----------------  --------------     ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
(In Thousands)

Interest-Earning Assets:
Loans (1)                                    $     51,653     $   51,586     $      99,203     $     7,239        $      209,681
Securities                                          4,604          4,394            20,431           1,541                30,970
Money market and other
    short term securities                           5,564              -                 -               -                 5,564
Other earning assets                                    -              -                 -           3,525                 3,525
                                           ---------------  -------------  ----------------  --------------     ------------------

Total earning assets                         $     61,821     $   55,980     $     119,634     $    12,305        $      249,740
                                           ===============  =============  ================  ==============     ==================
Cumulative earning assets                    $     61,821     $  117,801     $     237,435     $   249,740        $      249,740
                                           ===============  =============  ================  ==============     ==================


Interest-Bearing Liabilities:
Money market savings                         $     17,138     $        -     $           -     $         -        $       17,138
Interest checking (2)                                   -              -            24,358               -                24,358
Savings (2)                                         2,099          1,053            18,239               -                21,391
Certificates of deposit                            23,138         50,251            37,627             889               111,905
FHLB advances                                      19,400          2,000            10,000             500                31,900
                                           ---------------  -------------  ----------------  --------------     ------------------

Total interest-bearing liabilities           $     61,775     $   53,304     $      90,224     $     1,389        $      206,692
                                           ===============  =============  ================  ==============     ==================
Cumulative interest-bearing liabilities      $     61,775     $  115,079     $     205,303     $   206,692        $      206,692
                                           ===============  =============  ================  ==============     ==================

Period gap                                   $         46     $    2,676     $      29,410     $    10,916        $       43,048
Cumulative gap                               $         46     $    2,722     $      32,132     $    43,048        $       43,048
Ratio of cumulative interest-earning
    assets to interest-bearing liabilities        100.07%        102.37%           115.65%         120.83%               120.83%
Ratio of cumulative gap to total
    earning assets                                  0.02%          1.09%            12.87%          17.24%                17.24%



(1)  Includes nonaccrual loans of $694,000, which are included in the 91-365
     days and 1 to 5 years categories.
(2)  Management has determined that interest checking and savings accounts are
     not as sensitive to changes in related market rates and, therefore, they
     are placed in the 1 to 5 years category.



</TABLE>


<PAGE>


Noninterest Income

As discussed earlier, core growth in noninterest income continued during the
September quarter with an increase of 53.6%, while core noninterest income
increased 68.6% for the nine months ending September 30, 2006. Excluding gains
on the sales of securities and real estate, noninterest income for the September
2006 quarter was $785,900, compared to $511,700 for the September 2005 quarter
end, while noninterest income was $2.42 million for the nine months ended
September 30, 2006, compared to $1.44 million for the same period of 2005.
Income from deposit accounts accounted for the majority of this growth,
increasing to $598,900 and $1.81 million or 83.1% and 94.0% for the three and
nine months ended September 30, 2006, respectively. The Company's investment
subsidiary operations continued to post solid results by earning commissions of
$67,100 and $257,600 during the 2006 three and nine month periods, respectively,
compared to $43,500 and $107,900 for the same periods in 2005.

Provision for Loan Losses

Provision for loan losses was $40,200 and $132,000 for the three and nine months
ended September 30, 2006, respectively, compared to $86,200 and $246,400 for the
same periods of 2005. With asset quality remaining strong during the quarter,
management considers the allowance for loan loss to be commensurate with the
risk existing in the Bank's loan portfolio. See Asset Quality for additional
discussion relating to the allowance for loan losses and related risk in the
loan portfolio.

Noninterest Expense

Noninterest expense for the September 2006 quarter and nine month periods was
$1.91 million and $5.67 million, respectively, as compared to $1.72 million and
$4.96 million, respectively, during the same periods of 2005. Employee
compensation and benefits expense increases resulted primarily from commission
driven expense associated with operating the Company's mortgage and investment
brokerage services and the expensing of employee stock options granted to
non-executive employees during March 2006. During 2006, the Company has invested
in long range planning initiatives that it anticipates will pay dividends in the
future, but has resulted in a negative effect on earnings during 2006. The Bank
also expanded its ATM network and internet banking activities during the year
and took on new deposit product initiatives which resulted in a significant
increase in income, but cost approximately $100,000 in administrative expenses
during the first nine months of 2006. Finally, the Company experienced several
weather related incidences during the summer that resulted in approximately
$30,000 of additional operating expense during the September 2006 quarter.


Financial Condition

During the first nine months of 2006, the Company's assets increased by $15.5
million from $247.4 million at December 31, 2005 to $262.9 million at September
30, 2006. Growth in net loans of $14.1 million accounted for this increase while
other asset categories remained relatively flat during the period. Favorable
market conditions during the first half of 2006 benefited loan volumes, although
some softening in the market occurred during the third quarter.


<PAGE>



Deposits grew to $204.8 million from December 2005 to September 2006.
Interest-bearing demand, savings and time deposit account balances increased by
a total of $14.7 million, while noninterest-bearing deposits increased by $1.2
million. Time deposits and brokered certificates of deposit were primarily used
to fund liquidity needs during the period.

Stockholders' equity was $25.4 million at September 30, 2006, representing an
increase of $1.8 million since December 31, 2005. This increase is made up of
comprehensive income of $2.2 million consisting primarily of $2.1 million of net
income earned during the nine month period offset by common stock dividends of
$435,900 ($0.18 per share as adjusted for the stock split) during the period.
Additionally, the Company executed a 6-for-5 stock split during the September
2006 quarter that resulted in a 20% increase in the number of common shares
outstanding.

During October 2006, the Company declared a $0.07 per share quarterly cash
dividend on its common stock payable on November 1, 2006 to shareholders of
record on October 24, 2006, representing a 20% increase in the common stock
dividend as compared to the September 2006 quarter.

Asset Quality

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

Total nonperforming assets, which consist of nonaccrual loans and foreclosed
properties, adjusted for estimated losses upon sale and the related selling
expenses and holding costs, were $694,000 at September 30, 2006, compared to
$1.1 million at December 31, 2005. As to nonaccrual loans existing at September
30, 2006, approximately $23,000 of interest income would have been recognized
during the nine months then ended if interest thereon had accrued. The Company
has identified $29,000 of other loans deemed impaired under the guidelines
established by SFAS No. 114, Accounting by Creditors for Impairment of a Loan,
as amended by SFAS No. 118, Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures. Impaired loans have a valuation allowance
allocation of $5,000 at September 30, 2006.

At September 30, 2006, all loans 60 days or more delinquent, including
nonperforming loans, totaled $810,000. In addition, other performing loans,
totaling $5.9 million, 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 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


                                                                            September 30,           December 31,
(In Thousands)                                                                 2006                     2005
                                                                       ----------------------  ------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Nonaccrual loans:
       Commercial                                                        $               282      $                194
       Real estate mortgage                                                              307                       811
       Home equity lines of credit                                                        25                         -
       Consumer                                                                           80                        59
                                                                           ------------------       -------------------

       Total nonaccrual loans                                                            694                     1,064
Other real estate owned                                                                    -                         -
                                                                           ------------------       -------------------

       Total nonperforming assets                                        $               694      $              1,064
                                                                           ==================       ===================

Loans past due 90 or more days
       accruing interest                                                                   -                         -
Allowance for loan losses to
       nonaccrual loans                                                              414.12%                   267.95%
Nonperforming assets to period end
       loans and other real estate owned                                               0.33%                     0.56%



</TABLE>



<PAGE>



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

<TABLE>

                                              Allowance for Loan Losses


                                                                                 Nine Months Ended September 30,
                                                                           --------------------------------------------
(In Thousands)                                                                   2006                      2005
                                                                           ------------------       -------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Balance, beginning of period                                               $           2,851        $            2,404
Loans charged off:
       Commercial                                                                          -                         -
       Real estate mortgage                                                                -                         -
       Consumer                                                                         (196)                      (14)
                                                                           ------------------       -------------------

       Total loans charged-off                                                          (196)                      (14)
                                                                           ------------------       -------------------

Recoveries:
       Commercial                                                                         19                       173
       Real estate mortgage                                                                -                         -
       Consumer                                                                           74                        17
                                                                           ------------------       -------------------

       Total recoveries                                                                   93                       190
                                                                           ------------------       -------------------

Net recoveries (charge-offs)                                                            (103)                      176
Provision for loan losses                                                                126                       246
                                                                           ------------------       -------------------

Balance, end of period                                                     $           2,874        $            2,826
                                                                           ==================       ===================

Allowance for loan losses to loans
       outstanding at end of period                                                    1.37%                     1.47%

Allowance for loan losses to nonaccrual
       loans outstanding at end of period                                            414.12%                   238.28%

Net charge-offs (recoveries) to average loans
       outstanding during period                                                       0.05%                    -0.10%


</TABLE>



Liquidity and Capital Resources

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


<PAGE>




At September 30, 2006, the Company had outstanding loan, line of credit and
letter of credit commitments of $50.7 million. Scheduled maturities of
certificate of deposits during the twelve months following September 30, 2006
amounted to $73.3 million. Historically, the Company has been able to retain a
significant amount of its deposits as they mature. As a result of the Company's
management of liquid assets and the ability to generate liquidity through
liability funding, management believes that the Company maintains overall
liquidity that is sufficient to satisfy its depositors' requirements and meet
its customers' credit needs.

Total cash and cash equivalents increased $2.8 million for the nine months ended
September 30, 2006, compared to an increase of $1.3 million for the nine months
ended September 30, 2005. Net cash from operating activities was $2.6 million
for the nine months ended September 30, 2006, compared to $2.0 million during
the same period of 2005. The changes reflect the earnings growth experienced
during the period and other fluctuations in normal operating activities.

Net cash used in investing activities was $13.2 million during the nine months
ended September 30, 2006, compared to net cash from investing activities of
$12.6 million for the nine months ended September 30, 2005. Slightly stronger
loan growth during the first nine months of 2006 than what occurred during 2005
constituted the majority of the difference.

Net cash from financing activities was $13.3 million for the nine months ended
September 30, 2006, compared to net cash from financing activities of $11.8
million for the nine months ended September 30, 2005. Greater growth in time
deposits offset by a reduction in demand deposits and FHLB borrowing activity
during the September 2006 nine month period represented the majority of this
increase.

The Company is subject to various capital requirements administered by the
regulatory banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Company's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company and its banking
subsidiary must meet specific capital guidelines that involve quantitative
measures of assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. Additionally, certain
restrictions exist on dividends paid and loans or advances made by the Bank to
the Company. The total amount of dividends that may be paid at any date is
generally limited to the retained earnings for the Bank, and loans and advances
are limited to 10 percent of the Bank's capital and surplus on a secured basis.
The Bank paid $1,000,000 in dividends and made $1,000,000 in loans to the
Company during the nine months ended September 30, 2006. The Bank did not make
any loans, but paid $500,000 of dividends to the Company during the first nine
months of 2005. At September 30, 2006, the Bank's retained earnings available
for the payment of dividends was $4.9 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 September 30, 2006, 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 September 30, 2006 and December 31, 2005.


<TABLE>

                                    Analysis of Capital

                                                         September 30,        December 31,
(In Thousands)                                                2006                2005
                                                       -------------------  ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Tier 1 Capital:
       Common stock                                     $             685    $            685
       Additional paid-in capital                                   8,333               8,267
       Retained earnings                                           16,298              14,632
       Accumulated other comprehensive income                         120                  45
                                                        ------------------   -----------------
             Total capital (GAAP)                                  25,436              23,629
       Less: Intangibles                                             (417)               (464)
       Net unrealized gain on debt and equity securities             (120)                (45)
                                                        ------------------   -----------------
             Total Tier 1 capital                                  24,899              23,120


Tier 2 Capital:
       Allowable allowances for loan losses                         2,274               2,152
       Net unrealized gains on equity securities                      185                 161
                                                        ------------------   -----------------
             Total Tier 2 capital                       $          27,358    $         25,433
                                                        ==================   =================

Risk-weighted assets                                    $         186,229    $        174,986

Capital Ratios:
       Tier 1 risk-based capital ratio                             13.37%              13.21%
       Total risk-based capital ratio                              14.69%              14.53%
       Tier 1 capital to average adjusted
             total assets                                           9.49%               9.44%


</TABLE>


Item 3 - Quantitative and Qualitative Disclosures about Market Risk

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

The modeling methodologies used measure interest rate sensitivity by analyzing
the potential impact on net interest income under various interest rate
scenarios. One such scenario would assume a hypothetical 200 basis point
instantaneous and parallel shift in the interest rate yield curve. Accordingly,
management modeled the impact of a 200 basis point decline in interest rates and
a 200 basis point increase in interest rates at September 30, 2006. In the
model, a 200 basis point instantaneous and parallel decrease in the yield curve
in interest rates would cause net interest income to decrease by $36,000, while
a 200 basis point instantaneous and parallel increase in the yield curve in
interest rates would cause net interest income to decrease by $86,000.


<PAGE>



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

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


Item 4 - Controls and Procedures

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

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


<PAGE>



                           PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

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

Item 1A - Risk Factors

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

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

None.

Item 3 - Defaults Upon Senior Securities

Not applicable.

Item 4 - Submission of Matters to a Vote of Stockholders

None.

Item 5 - Other Information

None.

Item 6 - Exhibits

(a)      Certifications pursuant to subsections 302 and 906 of the
                Sarbanes-Oxley Act of 2002.
(b)      Form 8-K was filed during July 2006 relative to the Company's
                June 30, 2006 earnings release dated July 15, 2006.


<PAGE>



                                   SIGNATURES

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


/s/ Scott C. Harvard                                          November 13, 2006
-------------------------------------------------------------------------------
Scott C. Harvard
President and
Chief Executive Officer

/s/ Steven M. Belote                                          November 13, 2006
-------------------------------------------------------------------------------
Steven M. Belote
Vice President and
Chief Financial Officer


<PAGE>



                                                                   Exhibit 31.1

                                 CERTIFICATIONS


I, Scott C. Harvard, certify that:

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

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


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


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


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

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

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


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


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

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


Date: November 13, 2006
                                         /s/ Scott C. Harvard
                                         -------------------------------------
                                         Scott C. Harvard
                                         President and Chief Executive Officer

<PAGE>



                                                                   Exhibit 31.2

                                 CERTIFICATIONS


I, Steven M. Belote, certify that:

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

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


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


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


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

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

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


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


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

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


Date: November 13, 2006
                                     /s/ Steven M. Belote
                                     ------------------------------------------
                                     Steven M. Belote
                                     Chief Financial Officer and Vice President

<PAGE>




                                                                   Exhibit 32.1



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


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

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

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


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

Date:  November 13, 2006





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


<PAGE>


                                                                   Exhibit 32.1



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


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

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

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


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

Date:  November 13, 2006





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