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, 2001

        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 10, 2001:  1,706,367

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 Balance Sheets as of June 30, 2001 and
               December 31, 2000

               Consolidated Statements of Income for the Three Months and
               Six Months Ended June 30, 2001 and 2000

               Consolidated Statements of Cash Flows for the Six Months
               Ended June 30, 2001 and 2000

               Consolidated Statement of Stockholders' Equity for the Six Months
               Ended June 30, 2001

               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 Pronouncements


                           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,
                                                                        2001                2000
--------------------------------------------------------------------------------------------------------
                                                                      (Unaudited)
                            ASSETS


 <c>
Cash (including interest - earning deposits of
     approximately $1,778,000 and $1,154,000, respectively)     $        6,651,700    $       5,096,300
Investment securities:
     Held to maturity (fair value of $11,712,000 and
        $12,356,000, respectively)                                      11,570,000           12,303,100
     Available for sale (amortized cost of $23,738,000 and
        $26,394,000, respectively)                                      23,615,100           25,831,300
     Federal Home Loan Bank stock, at cost                                 510,500              491,800
     Federal Reserve Bank stock, at cost                                   124,800              124,800
Loans receivable, net                                                   96,176,700           91,344,700
Premises and equipment, net                                              2,720,400            2,843,400
Real estate owned                                                          324,200                5,000
Accrued interest receivable                                              1,072,800            1,131,500
Prepaid expenses and other assets                                          471,300              641,800
                                                                ----------------------------------------

                                                                $      143,237,500    $     139,813,700
                                                                ----------------------------------------

             LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                        $      125,167,200    $     115,890,200
Advances from Federal Home Loan Bank                                     2,220,000            8,054,700
Advance payments by borrowers for taxes
     and insurance                                                         251,300              190,500
Accrued interest payable                                                    42,700               78,200
Accrued expenses and other liabilities                                     210,800              164,600
                                                                ----------------------------------------
           Total liabilities                                           127,892,000          124,378,200
                                                                ----------------------------------------

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; 1,706,367 and 1,815,212 shares
        issued and outstanding, respectively                               563,100              599,000
     Additional capital                                                  2,757,700            3,556,500
     Retained earnings, substantially restricted                        12,147,000           11,640,700
     Accumulated other comprehensive income (loss)                        (122,300)            (360,700)
                                                                ----------------------------------------
           Total stockholders' equity                                   15,345,500           15,435,500
                                                                ----------------------------------------

                                                                $      143,237,500    $     139,813,700
                                                                ----------------------------------------


              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,
                                             ---------------------------------    ---------------------------------
                                             2001              2000               2001             2000
--------------------------------------------------------------------------------  ---------------------------------
Interest and dividend income
    Loans                                    $     1,981,100   $    1,897,500     $     3,962,800  $     3,718,000
    Investments
          Taxable                                    486,700          470,800           1,013,100          866,900
          Tax-exempt                                  37,500           54,800              75,600          110,700
                                             -----------------------------------  ---------------------------------
       Total interest income                       2,505,300        2,423,100           5,051,500        4,695,600
                                             -----------------------------------  ---------------------------------

Interest expense
    Deposits                                       1,269,800        1,215,000           2,575,800        2,292,600
    FHLB advances                                     13,000           13,700              63,700           64,300
                                             -----------------------------------  ---------------------------------
       Total interest expense                      1,282,800        1,228,700           2,639,500        2,356,900
                                             -----------------------------------  ---------------------------------

Net interest income                                1,222,500        1,194,400           2,412,000        2,338,700

Provision for loan losses                             46,500           53,100             105,000          106,200
                                             -----------------------------------  ---------------------------------

Net interest income after
    provision for loan losses                      1,176,000        1,141,300           2,307,000        2,232,500
                                             -----------------------------------  ---------------------------------

Noninterest income
    Deposit account fees                             222,300          191,300             414,200          352,200
    Loan fees                                         36,900           32,000              70,600           67,700
    Gains on sales of securities                      12,300                0              12,300                0
    Other                                             39,000           34,600              81,500           75,200
                                             -----------------------------------  ---------------------------------
       Total noninterest income                      310,500          257,900             578,600          495,100
                                             -----------------------------------  ---------------------------------

Noninterest expense
    Compensation and employee
       benefits                                      452,900          436,400             907,000          845,700
    Occupancy and equipment                          231,000          226,700             478,500          490,700
    Data processing                                  118,600          105,700             224,700          207,600
    Advertising                                       14,600           15,500              27,600           28,200
    Federal insurance premium                          5,500            5,500              11,300           11,300
    Other                                            152,900          141,100             255,200          237,900
                                             -----------------------------------  ---------------------------------
       Total noninterest expense                     975,500          930,900           1,904,300        1,821,400
                                             -----------------------------------  ---------------------------------

Income before income taxes                           511,000          468,300             981,300          906,200

Income taxes                                         163,500          159,400             314,000          308,500
                                             -----------------------------------  ---------------------------------

Net income                                   $       347,500   $      308,900     $       667,300  $       597,700
                                             -----------------------------------  ---------------------------------

Cash Dividends Declared Per Share            $          0.00   $         0.00     $          0.09  $          0.08
                                             -----------------------------------  ---------------------------------

Earnings Per Common Share:
       Basic                                 $          0.20   $         0.17     $          0.38  $          0.33
                                             -----------------------------------  ---------------------------------

       Diluted                               $          0.20   $         0.17     $          0.38  $          0.33
                                             -----------------------------------  ---------------------------------



                    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, 2001
----------------------------------------------------------------------------------------------------------------------------

                                                                                           Accumulated
                                                                                             Other
                                   Number of    Common      Additional     Retained       Comprehensive
                                    Shares      Stock        Capital       Earnings       Income (Loss)            Total
                                   ---------  ---------     ----------     ---------      --------------      ---------------
Balance, December 31, 2000         1,815,212 $ 599,000     $ 3,556,500   $11,640,700      $    (360,700)       $ 15,435,500

Common stock cash dividend
   declared                             -         -               -         (161,000)              -               (161,000)

Repurchase of common stock          (108,845)  (35,900)       (798,800)         -                  -               (834,700)

Comprehensive income                    -         -               -          667,300            238,400             905,700
                                   -----------------------------------------------------------------------------------------


Balance, June 30, 2001             1,706,367 $ 563,100     $ 2,757,700   $12,147,000      $    (122,300)       $ 15,345,500
                                   -----------------------------------------------------------------------------------------

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,
                                                                    ------------------------------------
                                                                    2001                     2000
-------------------------------------------------------------------------------------   ----------------
Cash flows from operating activities
     Net income                                                     $        667,300    $       597,700
     Adjustments to reconcile to net cash
        provided by operating activities:
           Provision for loan losses                                         105,000            106,200
           Depreciation and amortization                                     162,000            175,600
           Amortization of premium and accretion
               of discount on securities, net                               (157,400)           (48,100)
           Gain on sale of investments                                       (12,300)                 0
           Loss on disposal of fixed assets                                    7,700                  0
           Change in net deferred loan fees                                    5,800              3,200
           Loss on sale of repossessed assets                                      0             28,500
           (Increaase) decrease in other assets                               22,400           (180,500)
           Increase in other liabilities                                     146,500             28,200
                                                                    ------------------------------------
               Net cash provided by operating activities                     947,000            710,800
                                                                    ------------------------------------

Cash flows from investing activities
     Purchase of available-for-sale securities                           (11,116,200)           (52,300)
     Proceeds from maturities, sales and calls of
        available-for-sale securities                                      7,787,400            225,000
     Purchase of held-to-maturity securities                               1,814,800         (7,946,500)
     Proceeds from maturities, prepayments and calls
        of held-to-maturity securities                                     5,000,000          1,049,100
     Purchase of Federal Home Loan Bank stock                                (18,700)                 0
     Loan originations, net of repayments                                 (5,262,100)        (1,036,700)
     Purchase of premises and equipment                                      (43,400)           (52,400)
     Proceeds from sale of real estate owned                                       0            159,800
                                                                    ------------------------------------
               Net cash used by investing activities                      (1,838,200)        (7,654,000)
                                                                    ------------------------------------

Cash flows from financing activities
     Net increase in demand deposits                                       6,746,300          7,034,400
     Net increase in time deposits                                         2,530,700          5,057,300
     Proceeds from FHLB advances                                           8,300,000          2,900,000
     Repayments of FHLB advances                                         (14,134,700)        (7,514,600)
     Repurchase of common stock                                             (834,700)           -
     Payment of dividend on common stock                                    (161,000)          (145,800)
                                                                    ------------------------------------
               Net cash provided by financing activities                   2,446,600          7,331,300
                                                                    ------------------------------------

Increase in cash and cash equivalents                                      1,555,400            388,100

Cash and cash equivalents, beginning of period                             5,096,300          6,821,400
                                                                    ------------------------------------

Cash and cash equivalents, end of period                            $      6,651,700    $     7,209,500
                                                                    ------------------------------------


Supplemental disclosure of cash flow information

     Cash paid during the period for interest                       $      2,675,000    $     2,330,500


Supplemental schedule of non-cash investing and
     financing activities

     Transfers from loans to real estate acquired
        through foreclosure                                         $        319,200    $             0


              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 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,
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, 2001 are not
necessarily indicative of the results that may be expected for any other interim
period or the entire year ending  December 31, 2001. 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, 2000.

Principles of Consolidation

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


NOTE 2 - ORGANIZATION

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


NOTE 3 - EARNINGS PER SHARE

The following is an unaudited  reconciliation of the numerators and denominators
of the basic and diluted  earnings per share  computations for the periods ended
June 30, 2001 and 2000.
<TABLE>

                                                   Three Months Ended June 30,             Six Months Ended June 30,
                                               -------------------------------------   -----------------------------------
                                                    2001                 2000               2001               2000
                                               ----------------     ----------------   ----------------   ----------------


 <c>
Net income (numerator, basic and diluted)    $         347,500    $         308,900           $667,300           $597,700
Weighted average shares outstanding
(denominator)                                        1,742,900            1,822,800          1,768,900          1,822,800
                                               ----------------     ----------------   ----------------   ----------------

Earnings per common share - basic            $            0.20    $            0.17              $0.38              $0.33
                                               ================     ================   ================   ================

Effect of dilutive securities:

Weighted average shares outstanding                  1,742,900            1,822,800          1,768,900          1,822,800
Effect of stock options                                      0                    0                  0                  0
                                               ----------------     ----------------   ----------------   ----------------
Diluted average shares outstanding
(denominator)                                        1,742,900            1,822,800          1,768,900          1,822,800
                                               ----------------     ----------------   ----------------   ----------------

Earnings per common share -
assuming dilution                            $            0.20    $            0.17              $0.38              $0.33
                                               ================     ================   ================   ================

</TABLE>

The effect of dilutive  securities was not used to compute dilutive earnings per
share  at  June  30,  2001  and  2000   because  the  effect   would  have  been
anti-dilutive.


NOTE 4 - COMPREHENSIVE INCOME

Total  comprehensive  income  consists of the following for the six months ended
June 30, 2001 and 2000:
<TABLE>

                                                           Six Months Ended June 30,
                                                 ----------------------------------------------
                                                         2001                    2000
                                                 ---------------------  -----------------------


 <c>
Net income                                           $        667,300       $          597,700
Other comprehensive income (loss)                             238,400                  (70,000)
                                                       ---------------        -----------------

Total comprehensive income                           $        905,700       $          527,700
                                                       ===============        =================
</TABLE>




<PAGE>


The  following  is an  unaudited  reconciliation  of  the  related  tax  effects
allocated to each component of other  comprehensive  income at June 30, 2001 and
2000.
<TABLE>

                                                           Six Months Ended June 30,
                                                 ----------------------------------------------
                                                         2001                    2000
                                                 ---------------------  -----------------------


 <c>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
      arising during the period                      $        379,300       $         (105,000)
Less: reclassification adjustment
      for gains included in income                             12,300                        0
                                                       -----------------      -----------------

Total other comprehensive income (loss)
     before income tax expense                                367,000                 (105,000)

Income tax (expense) benefit                                 (128,600)                  35,000
                                                       -----------------      -----------------

Net unrealized gains (losses)                        $        238,400       $          (70,000)
                                                       =================      =================

</TABLE>

NOTE 5 - SEGMENT INFORMATION

Segment information  consists of the following for the six months ended June 30,
2001 and 2000:

<TABLE>
                                                                                                    Elimination of
                                                                                                     Intersegment
(In thousands)                                   Virginia         Maryland           Other          Transactions          Total
                                               -----------       -----------      ------------     ---------------     ------------
                                                                                  (Unaudited)

 <c>
Net Interest Income:
     Six months ended June 30, 2001           $      1,648     $         320    $       1,025    $           (581)   $       2,412
     Six months ended June 30, 2000           $      1,593     $         344    $         936    $           (534)   $       2,339

Assets:
     June 30, 2001                            $    130,182     $      17,114    $      44,437    $        (48,495)   $     143,238
     December 31, 2000                        $    116,851     $      17,150    $      48,731    $        (42,918)   $     139,814

</TABLE>

NOTE 6 - STOCKHOLDERS' EQUITY

During the six months ended June 30, 2001, the Company  completed its repurchase
of  approximately  90,000 shares of common stock under the stock repurchase plan
approved during November 2000. The average price of the 90,000 shares  purchased
under the November plan was $7.29.  During June 2001,  the Company  approved the
repurchase of 85,000 additional shares of common stock on the open market. Under
this plan, the Company has  repurchased  38,500 shares of common stock at $7.87,
or 88% of the  Company's  book value of $8.99 at June 30,  2001.  During the six
months ended June 30, 2001, the Company repurchased a total of 108,845 shares of
common stock under both plans at an average price of $7.67 per share.



NOTE 7 - EMPLOYEE BENEFIT PLANS

On April 17, 2001,  the  Company's  shareholders  approved  the Shore  Financial
Corporation  2001 Stock  Incentive  Plan (the  "Plan")  making  available  up to
270,000  shares of common stock for granting  restricted  stock awards and stock
options in the form of incentive stock options and non-statuatory  stock options
to  employees  of  the  Company.  The  Company's   Compensation  Committee  (the
"Committee")  administors the Plan and has the power to select plan participants
and to grant  stock  options  and  restricted  stock on the terms the  Committee
considers  appropriate;  however,  any award made to a Committee  member must be
approved by the Board of Directors.  The Committee will fix the option price and
specify  other  conditions  and terms at the time the stock  option is  granted,
subject to certain restrictions specified in the Plan document. The Plan expires
on April 16,  2011.  During the six  months  ended June 30,  2001,  the  Company
granted 8,200 stock options under the previous plan at an average exercise price
of $7.22 and  granted  15,500  stock  options  under the new plan at an  average
exercise price of $8.00.


<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, 2001 was  $347,500,  compared to
net income of $308,900 for the same period in the prior year. Net income for the
six months ended June 30, 2001 was $667,300,  compared to net income of $597,700
for the 2000  period.  Quarterly  earnings  were  positively  impacted by a 9.0%
increase  in gross  loans  and  20.4%  increase  in  noninterest  income,  while
noninterest expense increased 4.8%.  Increases in deposit account and check card
fees and in returns from investments made during recent years in  nontraditional
banking products continued to drive growth in noninterest  income.  This coupled
with the  Company's  ongoing  focus on  controlling  noninterest  expenses  have
resulted in positive earnings trends in recent quarters.

Net Interest Income

Net interest  income  increased 2.4% to $1.22 million for the three months ended
June 30, 2001,  compared to $1.19 million for the same period in 2000, while net
interest  income  increased  3.1% to $2.41 million for the six months ended June
30, 2001,  compared to $2.34 million during the June 2000 six month period.  The
net interest  margin  decreased to 3.73% for the six months ended June 30, 2001,
as compared to 3.91%  during the 2000  period,  while the  interest  rate spread
decreased to 3.03% from 3.25% for the same period in 2000. Average earning asset
growth of $8.9 million  during the June 2001 period as compared to the June 2000
period and reductions in nonperforming  assets positively  impacted net interest
income,  while  continued  high funding costs  negatively  impacted net interest
income.  Average  noninterest-bearing  demand deposits increased to $9.9 million
during the six months  ended June 30, 2001,  as compared to $9.7 million  during
the June 2000 period.  Market pressure to provide alternative,  interest earning
deposit products,  such as the Bank's commercial sweep product,  and competition
for these monies  continue to negatively  impact growth in ths area.  Since last
year,  the Bank's  sweep  product has  captured in excess of $2.0 million of the
it's  noninterest-bearing  deposits.  The Bank sweeps these funds into  external
mutual funds and,  therefore,  the amounts are not reflected in the Bank's total
deposits. However, the Bank receives fee income on the average balances of these
funds   which  is   reflected   in   noninterest   income.   Factoring   average
noninterest-bearing  deposits  in  calculating  the cost of funds  results in an
additional  38 basis points  increase in interest rate spread for the six months
ended June 30, 2001 and 2000.

Interest income  increased 3.4% to $2.51 million for the three months ended June
30, 2001,  compared to $2.42 million for the same period in 2000, while interest
income  increased  7.6% to $5.05 million for the six months ended June 30, 2001,
compared to $4.70 million during the June 2000 six month period.  An increase in
the average loan balance of $4.8  million  during the period,  primarily in real
estate and consumer lending,  contributed to the positive interest income trend.
Additionally,  yields on loans  increased by 9 basis points during the June 2001
period,  as  compared to the 2000  period.  The  average  balance of  securities
increased $4.1 million,  while the Company experienced a 12 basis point decrease
in yields on  securities.  A significant  repricing of the Company's  investment
portfolio  coupled  with  the  decrease  in  yields  available  on new  security
purchases,  primarily  due to the  lower  interest  rate  environment  of  2001,
negatively impacted interest income.

Interest expense increased 4.4% to $1.28 million for the three months ended June
30, 2001,  compared to $1.23 million for the same period in 2000, while interest
expense increased 12.0% to $2.64 million for the six months ended June 30, 2001,
compared  to $2.36  million  during  the June 2000 six month  period.  Increased
funding costs resulting from efforts by management  during late 2000 to generate
business and personal relationships through various deposit specials contributed
to this increase. Several of these deposit specials contained terms resulting in
repricing dates that lag the falling interest rate environment  occurring during
the first half of 2001.  Average  interest-bearing  deposits  increased  by $7.4
million  during the six months  ended June 30,  2001,  as  compared  to the same
period of 2000. Additionally,  the average rate on interest-bearing  liabilities
increased  from  4.50%  in 2000 to  4.71%  for the  June  2001  period.  Average
borrowings  from the Federal  Home Loan Bank were flat for the June 2001 period,
as compared to the same period in 2000.

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,
                                            --------------------------------------------------------------------------
                                               2001                                  2000
                                            ------------------------------------  ------------------------------------
                                             Average      Income/      Yield/      Average      Income/      Yield/
(In Thousands)                               Balance      Expense       Rate       Balance      Expense       Rate
                                            -----------  -----------  ----------  -----------  -----------  ----------

 <c>
Assets:
       Securities (1)                          $35,886       $1,070       5.96%      $31,763         $966       6.08%
       Loans (net of unearned income):
             Real estate mortgage               44,918        1,845       8.22%       43,859        1,725       7.87%
             Real estate construction            1,296           60       9.26%          604           25       8.28%
             Commercial                         29,100        1,273       8.75%       28,272        1,249       8.84%
             Home equity lines                   6,798          288       8.47%        5,427          261       9.62%
             Consumer                           11,319          497       8.78%       10,480          458       8.74%
                                            -----------  -----------              -----------  -----------
                 Total loans                    93,431        3,963       8.48%       88,642        3,718       8.39%
       Interest-bearing deposits
             in other banks                      2,227           58       5.21%        2,225           69       6.20%
                                            -----------  -----------              -----------  -----------
                 Total earning assets          131,544        5,091       7.74%      122,630        4,753       7.75%
                                            -----------  -----------              -----------  -----------
       Less: allowance for loan losses          (1,216)                               (1,209)
       Total nonearning assets                   7,765                                 7,239
                                            -----------                           -----------
       Total assets                           $138,093                              $128,660
                                            ===========                           ===========

Liabilities
       Interest-bearing deposits:
             Checking and savings              $34,699         $360       2.07%      $32,847         $411       2.50%
             Time deposits                      75,079        2,216       5.90%       69,528        1,882       5.41%
                                            -----------  -----------              -----------  -----------

                 Total interest-bearing
                 deposits                      109,778        2,576       4.69%      102,375        2,293       4.48%

       FHLB advances                             2,210           64       5.79%        2,290           64       5.59%
                                            -----------  -----------              -----------  -----------
                 Total interest-bearing
                 liabilities                   111,988        2,640       4.71%      104,665        2,357       4.50%
                                                         -----------                           -----------
       Non-interest bearing liabilities:
             Demand deposits                     9,949                                 9,651
             Other liabilities                     602                                   249
                                            -----------                           -----------

       Total liabilities                       122,539                               114,565
       Stockholders' equity                     15,554                                14,095
                                            -----------                           -----------

       Total liabilities and stockholders'
             equity                           $138,093                              $128,660
                                            ===========                           ===========

       Net interest income (1)                               $2,451                                $2,396
                                                         ===========                           ===========

       Interest rate spread (1)                                           3.03%                                 3.25%
       Net interest margin (1)                                            3.73%                                 3.91%

       (1)   Tax equivalent basis. The tax equivalent adjustment to net interest
             income was $39,000  and  $57,000 for the six months  ended June 30,
             2001 and 2000, respectively.
       (2)   Yield  and  rate   percentages   are  all   computed   through  the
             annualization  of interest  income and  expense  divided by average
             daily balances based on amortized costs.

</TABLE>


Noninterest Income

Noninterest  income was $310,500 during the three months ended June 30, 2001, as
compared to $257,900 for the same period in 2000, while  noninterest  income was
$578,600  during the six months ended June 30, 2001, as compared to $495,100 for
the same  period of 2000.  This  represented  an  increase  of 20.4% and  16.9%,
respectively,  for  the two  periods.  The  improvement  in  noninterest  income
resulted  from  increases  in  deposit  account  and  check  card  fees,  and an
improvement in revenues  generated by the Bank's non deposit  subsidiary,  Shore
Investments, Inc.

Provision for Loan Losses

Provision  for loan losses was $46,500 for the three months ended June 30, 2001,
as compared to $53,100 for the same period in 2000, while the provision for loan
loss was  $105,000  during the six months  ended June 30,  2001,  as compared to
$106,200  for the  same  period  of  2000.  See  Asset  Quality  for  additional
discussion of the allowance for loan losses.

Noninterest Expense

Noninterest expense was $975,500 during the three months ended June 30, 2001, as
compared to $930,900 for the same period in 2000, while noninterest  expense was
$1.90  million  during the six months ended June 30, 2001,  as compared to $1.82
million for the same period of 2000.  This  represented  an increase of 4.8% and
4.6%,  respectively,  for the two periods. This increase resulted primarily from
annual compensation  adjustments and increases  associated with normal growth of
operating activities.

Financial Condition

During the six months ended June 30, 2001,  the  Company's  assets  increased by
$3.4 million from $139.8 million at December 31, 2000, to $143.2 million at June
30,  2001.  Loans grew $4.8  million  and cash and  investments  decreased  $1.4
million during the period. The Company's increased loan demand during the period
resulted primarily from improved efforts in marketing it's loan products and the
improved interest rate environment.

Deposits  increased $9.3 million during the six months ended June 30, 2001. Time
deposits and demand deposit accounts increased by approximately $3.6 million and
$5.6 million,  respectively,  during the period. The Company used this growth to
pay the $7.0 million in short-term  Federal Home Loan Bank advances  outstanding
at December 31, 2000.

Stockholders'  equity was $15.3  million  at June 30,  2001,  compared  to $15.4
million at December 31, 2000. Net income of $667,300 and decreases in unrealized
losses on  available-for-sale  securities were offset by the payment of $161,000
($.09 per share) in common stock  dividends and the repurchase of 108,845 shares
of the Company's  common stock at an average  price of $7.67.  During the period
ended June 30, 2001,  the Company  completed the  repurchase of 90,000 shares of
common stock under it's stock repurchase plan approved during November 2000, and
approved a second  stock  repurchase  plan  during  June 2001  allowing  for the
repurchase of an additional  85,000 shares in the open market.  Since  approving
the plan in June 2001, the Company has  repurchased  38,500 shares at $7.87,  or
88% of the Company's book value of $8.99 at June 30, 2001.


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 $1.04  million at June 30, 2001,  compared to
$1.27 million at December 31, 2000. As to nonaccrual  loans existing at June 30,
2001, approximately $25,000 of interest income would have been recognized during
the six months then ended if interest  thereon  had  accrued.  During the period
ended June 30, 2001,  the Company  foreclosed  on  collateral  relating to loans
totaling  approximately $267,000 to one borrower that were previously identified
as impaired  under the  guidelines  established  by SFAS No. 114,  Accounting by
Creditors for  Impairment  of a Loan, as amended by SFAS No. 118,  Accounting by
Creditors for  Impairment of a Loan - Income  Recognition  and  Disclosures.  In
conjunction with the foreclosure,  the Company wrote down the related properties
to their fair market value less estimated selling and other  miscellaneous cost.
At June 30,  2001,  no other  loans  exist that  management  has  identified  as
impaired.

At June 30, 2001, all loans 60 days or more delinquent,  including nonperforming
loans, totaled $774,000.  In addition,  other performing loans totaling $222,000
existed that have documentation  deficiencies or other potential weaknesses that
management considers to warrant additional  monitoring.  Loans in this category,
along with the delinquent loans, are subject to constant  management  attention,
and their status is reviewed on a regular basis.

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

                                       Nonperforming Assets


                                                                  June 30,           December 31,
(In Thousands)                                                      2001                 2000
                                                                --------------      ---------------

 <c>
Nonaccrual loans:
      Commercial                                              $             0   $               13
      Real estate mortgage                                                663                1,180
      Home equity lines of credit                                          20                   25
      Consumer                                                             30                   43
                                                                --------------      ---------------

      Total nonaccrual loans                                              713                1,261
Other real estate owned                                                   324                    5
                                                                --------------      ---------------

      Total nonperforming assets                              $         1,037   $            1,266
                                                                ==============      ===============

Loans past due 90 or more days
      accruing interest                                                    $0                   $0
Allowance for loan losses to
      nonaccrual loans                                                163.39%              105.95%
Nonperforming assets to period end
      loans and other real estate owned                                 1.06%                1.37%

</TABLE>


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)                                                      2001                 2000
                                                                --------------      ---------------

 <c>
Balance, beginning of period                                  $         1,336   $            1,163
Loans charged off:
      Commercial                                                            0                    4
      Real estate mortgage                                                235                    0
      Consumer                                                             45                   23
                                                                --------------      ---------------

      Total loans charged-off                                             280                   27
                                                                --------------      ---------------

Recoveries:
      Commercial                                                            0                   38
      Real estate mortgage                                                  0                    0
      Consumer                                                              4                   13
                                                                --------------      ---------------

      Total recoveries                                                      4                   51
                                                                --------------      ---------------

Net recoveries (charge-offs)                                             (276)                  24
Provision for loan losses                                                 105                  106
                                                                --------------      ---------------

Balance, end of period                                        $         1,165   $            1,293
                                                                ==============      ===============

Allowance for loan losses to loans
      outstanding at end of period                                      1.20%                1.45%

Allowance for loan losses to nonaccrual
      loans outstanding at end of period                              163.39%              122.56%

Net charge-offs to average loans
      outstanding during period                                        -0.30%                0.03%

</TABLE>
<PAGE>


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.

At June  30,  2001,  the  Company  had  outstanding  loan  and  line  of  credit
commitments  of $17.0 million.  Scheduled  maturities of certificate of deposits
during the twelve  months  following  June 30, 2001  amounted to $49.1  million.
Historically,  the Company has been able to retain a  significant  amount of its
deposits  as they  mature.  As a result of the  Company's  management  of liquid
assets  and  the  ability  to  generate  liquidity  through  liability  funding,
management  believes  that  the  Company  maintains  overall  liquidity  that is
sufficient  to satisfy  its  depositors'  requirements  and meet its  customers'
credit needs.

Total cash and cash equivalents  increased $1.6 million for the six months ended
June 30, 2001, compared to an increase of $388,100 for the six months ended June
30, 2000.  Net cash  provided by operating  activities  was $947,000 for the six
months ended June 30, 2001, compared to $710,800 during the same period in 2000.
The  fluctuations  in amounts  during these periods were primarily the result of
normal operating activities.

Net cash used by investing  activities  was $1.8  million  during the six months
ended June 30, 2001,  compared to $7.7 million for the six months ended June 30,
2000.  The reduction in these  amounts  resulted  primarily  from an increase in
investment maturities and calls during 2001. Although the Company experienced an
increase in loan funding  activities  during 2001, a reduction in deposit growth
resulted  in less  liquidity  being  available  to fund  significant  investment
activities beyond the funding of loans.

Net cash provided provided by financing  activities was $2.4 million for the six
months  ended June 30,  2001,  compared to $7.3 million for the six months ended
June 30, 2000. The  fluctuations  in amounts during these periods were primarily
the result of reduced  deposit  growth,  an increase in repayments of borrowings
with the Federal Home Loan Bank and the  repurchase of 108,845  shares of common
stock during the June 2001 period, as compared to the June 2000 period.

The Company is subject to various regulatory capital  requirements  administered
by the federal banking  agencies.  Failure to meet minimum capital  requirements
can initiate certain mandatory and possibly additional  discretionary actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Company's  financial  statements.  Under  capital  adequacy  guidelines  and the
regulatory  framework for prompt corrective  action, the Company and its banking
subsidiary  must meet  specific  capital  guidelines  that involve  quantitative
measures  of  assets,  liabilities,   and  certain  off-balance-sheet  items  as
calculated  under  regulatory  accounting  practices.  The  capital  amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company and its banking  subsidiary to maintain  minimum amounts and
ratios  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined).  At June 30, 2001,  the Company meets all capital  adequacy
requirements to which it is subject.



<PAGE>



The  following  table  details the  components  of Tier 1 and Tier 2 capital and
related ratios at June 30, 2001 and December 31, 2000.
<TABLE>

                                          Analysis of Capital

                                                                     June 30,           December 31,
(In Thousands)                                                         2001                 2000
                                                                -------------------  -------------------

 <c>
Tier 1 Capital:
       Common stock                                              $             563    $             599
       Additional paid-in capital                                            2,758                3,556
       Retained earnings                                                    12,147               11,641
       Comprehensive income (loss)                                            (122)                (361)
                                                                -------------------  -------------------
             Total capital (GAAP)                                           15,346               15,435
       Less: Intangibles                                                       (32)                 (34)
       Net unrealized (gain) loss on securities                                122                  361
       Net allowable unrealized losses on equity securities                   (306)                (323)
                                                                -------------------  -------------------
             Total Tier 1 capital                                           15,130               15,439


Tier 2 Capital:
       Allowable allowances for loan losses                                  1,165                1,099
                                                                ===================  ===================
             Total Tier 2 capital                                $          16,295    $          16,538
                                                                ===================  ===================

Risk-weighted assets                                             $          97,469    $          90,165

Capital Ratios (1):
       Tier 1 risk-based capital ratio                                      15.52%               17.12%
       Total risk-based capital ratio                                       16.72%               18.34%
       Tier 1 capital to average adjusted
             total assets                                                   10.96%               11.65%

</TABLE>


Interest Sensitivity

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

The Company  determines the overall  magnitude of interest  sensitivity risk and
then formulates policies governing asset generation and pricing, funding sources
and pricing,  and  off-balance-sheet  commitments in order to reduce sensitivity
risk.  These  decisions  are  based on  management's  outlook  regarding  future
interest rate movements,  the state of the local and national economy, and other
financial and business risk factors.

The following table presents the Company's interest sensitivity position at June
30, 2001 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, 2001
                                            ---------------------------------------------------------------------------------------
                                              With-in              91-365              1 to 5              Over
(In Thousands)                                90 Days               Days                Years             5 Years           Total
                                           ------------      ---------------     ----------------     ------------      -----------

 <c>
Interest-Earning Assets:
    Loans (1)                           $        15,965     $         22,310    $          34,871    $      24,196     $     97,342
    Securities                                    3,974                9,280               19,570            2,996           35,820
    Money market and other
        short term securities                     1,778                    0                    0                0            1,778
                                         --------------      ---------------     ----------------     ------------      -----------

    Total earning assets                $        21,717     $         31,590    $          54,441    $      27,192     $    134,940
                                         ==============      ===============     ================     ============      ===========
    Cummulative earning assets          $        21,717     $         53,307    $         107,748    $     134,940     $    134,940
                                         ==============      ===============     ================     ============      ===========


Interest-Bearing Liabilities:
    Money market savings                          7,477                    0                    0                0            7,477
    Interest checking (2)                             0                    0               15,764                0           15,764
    Savings (2)                                       0                    0               14,573                0           14,573
    Certificates of deposit                      14,583               34,562               24,436            3,059           76,640
    FHLB advances                                 1,300                    0                    0              920            2,220
                                         --------------      ---------------     ----------------     ------------      -----------

    Total interest-bearing liabilities  $        23,360     $         34,562    $          54,773    $       3,979     $    116,674
                                         ==============      ===============     ================     ============      ===========
    Cummulative interest-bearing
        liabilities                              23,360               57,922              112,695          116,674          116,674
                                         ==============      ===============     ================     ============      ===========

      Period gap                        $        (1,643)    $         (2,972)   $            (332)   $      23,213     $     18,266
      Cummulative gap                   $        (1,643)    $         (4,615)   $          (4,947)   $      18,266     $     18,266
      Ratio of cummulative interest-
          earning assets to interest-
          bearing liabilities                     92.97%               92.03%               95.61%          115.66%          115.66%
      Ratio of cummulative gap to total
          earning assets                          -1.22%               -3.42%               -3.67%           13.54%           13.54%


(1)  Includes nonaccrual loans of $713,000,  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 Pronouncements

In July 2001,  the  Securities  and Exchange  Commission  (SEC) issued SEC Staff
Accounting  Bulletin  No.  102  Selected  Loan Loss  Allowance  Methodology  and
Documentation Issues. The bulletin expresses certain of the staff's views on the
development,  documentation,  and  application  of a systematic  methodology  as
required by Financial  Reporting  Release No. 28 for determining  allowances for
loan  and  lease  losses  in  accordance  with  generally  accepted   accounting
principles.  In particular,  the guidance focuses on the documentation the staff
normally  would expect  registrants  to prepare and maintain in support of their
allowances for loan losses.  Management  does not expect this bulletin to have a
material impact on the Company's financial statements.

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
No. 141,  Business  Combinations,  and  Statement  No. 142,  Goodwill  and Other
Intangibles.

Statement No. 141 improves the  transparency of the accounting and reporting for
business  combinations by requiring that all business  combinations be accounted
for under a single method - the purchase method. Use of the pooling-of-interests
method is no longer  permitted.  Statement  No. 141  requires  that the purchase
method be used for business combinations initiated after June 30, 2001.

Statement No. 142 requires that goodwill no longer be amortized to earnings, but
instead be reviewed for impairment.  This change provides investors with greater
transparency  regarding  the  economic  value  of  goodwill  and its  impact  on
earnings.  The  amortization  of goodwill ceases upon adoption of the statement,
which for most  companies  will be January 1, 2002.  Management  will assess the
impact, if any, of this statement on the Company's financial statements.


<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

The annual meeting of the  stockholders of Shore Financial  Corporation was held
on April 17, 2001.  Matters voted on included the election of Terrell E. Boothe,
D. Page Elmore,  and A. Jackson Mason for three-year terms expiring in 2004. The
shareholders  also ratified the Company's  2001 Stock  Incentive  Plan. No other
matters  were voted on during the meeting or by proxy or other means  during the
period.

Item 5 - Other Information

None.

Item 6 - Exhibits and Reports on Form 8-K

The registrant filed an 8-K dated June 12, 2001 disclosing that the registrant's
Board of Directors  approved the repurchase of up to 85,000 shares of its common
stock.




<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 10, 2001
----------------------
Scott C. Harvard
President and
Chief Executive Officer

/s/ Steven M. Belote                                             August 10, 2001
----------------------
Steven M. Belote
Treasurer and
Chief Financial Officer