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


__X___  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
               For the quarterly period ended June 30, 2007

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

                        Commission file number 000-23847

                           SHORE FINANCIAL CORPORATION

             (Exact name of registrant as specified in its charter)

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

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                                        Yes __X__  No_____


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


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

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

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


Number of shares of Common Stock outstanding as of August 10, 2007:  2,500,927






<PAGE>


                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
                                Index - Form 10-Q

                         PART I - FINANCIAL INFORMATION

         Item 1 - Consolidated Financial Statements (Unaudited)

                           Consolidated Statements of Financial Condition as of
                           June 30, 2007 and December 31, 2006

                           Consolidated Statements of Income for the Three and
                           Six Months Ended June 30, 2007 and 2006

                           Consolidated Statements of Stockholders' Equity for
                           the Six Months Ended June 30, 2007 and 2006

                           Consolidated Statements of Cash Flows for the Six
                           Months Ended June 30, 2007 and 2006

                           Notes to Unaudited Consolidated Financial Statements

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

                           Results of Operations

                           Interest Sensitivity

                           Financial Condition

                           Asset Quality

                           Liquidity and Capital Resources

         Item 3 - Quantitative and Qualitative Disclosures about Market Risk

         Item 4 - Controls and Procedures


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

                                   SIGNATURES



<PAGE>

<TABLE>


                                  Consolidated Statements of Financial Condition


                                                                              June 30,              December 31,
                                                                                2007                  2006
------------------------------------------------------------------------------------------------------------------

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

                                ASSETS


Cash (including interest-earning deposits of
     approximately $2,789,600 and $2,267,000, respectively)            $         10,101,200     $        9,469,800
Investment securities:
     Available-for-sale (amortized cost of $27,332,300 and
         $27,791,300, respectively)                                              27,110,300             27,965,300
     Other investments, at cost                                                   2,320,600              2,442,700
Loans receivable, net                                                           210,838,400            207,725,200
Premises and equipment, net                                                       6,877,300              7,044,300
Other assets                                                                      6,204,100              6,028,700
                                                                       --------------------------------------------

                                                                       $        263,451,900     $      260,676,000
                                                                       ============================================

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
         Interest-bearing                                              $        175,007,600     $      172,548,300
         Noninterest-bearing                                                     28,749,200             25,554,500
                                                                       ---------------------   --------------------
            Total deposits                                                      203,756,800            198,102,800

Advances from Federal Home Loan Bank                                             32,200,000             35,233,300
Other liabilities                                                                   748,400              1,213,600
                                                                       --------------------------------------------
            Total liabilities                                                   236,705,200            234,549,700
                                                                       --------------------------------------------

Stockholders' equity
     Preferred stock, par value $1 per share, 500,000
         shares authorized; none issued and
         outstanding                                                                      -                      -
     Common stock, par value $.275; 6,000,000
         shares authorized; 2,499,487 and
         2,497,327 issued and outstanding, respectively                             687,400                686,800
     Additional capital                                                           8,392,200              8,372,600
     Retained earnings                                                           17,815,000             16,953,400
     Accumulated other comprehensive income (loss)                                 (147,900)               113,500
                                                                       --------------------------------------------
            Total stockholders' equity                                           26,746,700             26,126,300
                                                                       --------------------------------------------

                                                                       $        263,451,900     $      260,676,000
                                                                       ============================================


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


</TABLE>


<PAGE>


<TABLE>


                                                Consolidated Statements of Income

                                                Three Months Ended June 30,               Six Months Ended June 30,
                                              ---------------------------------    ----------------------------------------
                                                  2007                 2006               2007                  2006
-------------------------------------------------------------------------------    ----------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Interest and dividend income
     Loans                                    $   3,678,700      $   3,368,900     $         7,250,200      $    6,503,800
     Investments
         Taxable interest                           247,700            304,800                 469,200             582,700
         Tax-exempt interest                         60,400             38,400                 120,700              71,000
         Dividends                                   62,800             62,400                 136,200             112,800
                                              ---------------------------------    ----------------------------------------
              Total interest and dividend income  4,049,600          3,774,500               7,976,300           7,270,300
                                              ---------------------------------    ----------------------------------------

Interest expense
     Deposits                                     1,480,100          1,192,000               2,942,800           2,125,300
     FHLB/other advances                            362,600            436,700                 758,700             856,800
                                              ---------------------------------    ----------------------------------------
              Total interest expense              1,842,700          1,628,700               3,701,500           2,982,100
                                              ---------------------------------    ----------------------------------------

Net interest income                               2,206,900          2,145,800               4,274,800           4,288,200

Provision for loan losses                            11,100             20,800                  11,700              36,700
                                              ---------------------------------    ----------------------------------------

Net interest income after
     provision for loan losses                    2,195,800          2,125,000               4,263,100           4,251,500
                                              ---------------------------------    ----------------------------------------

Noninterest income
     Deposit account fees                           589,100            590,800               1,115,500           1,159,400
     Loan fees                                       20,400             26,600                  55,900              53,600
     Mortgage banking fees                           57,900             19,800                 125,400              49,400
     Commissions on investment brokerage sales       89,700            112,100                 181,700             190,500
     Gains (losses) on sales of securities          (23,100)                 -                  23,500                   -
     Other                                           77,700             61,800                 139,000             129,600
                                              ---------------------------------    ----------------------------------------
              Total noninterest income              811,700            811,100               1,641,000           1,582,500
                                              ---------------------------------    ----------------------------------------

Noninterest expense
     Compensation and employee
         benefits                                 1,105,500            937,900               2,129,300           1,856,000
     Occupancy and equipment                        427,800            406,300                 854,900             838,800
     Data processing                                222,400            203,500                 424,800             415,900
     Professional fees                              100,200             97,700                 199,800             193,000
     Advertising and promotion                       39,200             33,500                  75,600              63,200
     Loss on disposals of fixed assets              147,900                  -                 147,900                   -
     Other                                          201,900            190,200                 385,900             392,900
                                              ---------------------------------    ----------------------------------------
              Total noninterest expense           2,244,900          1,869,100               4,218,200           3,759,800
                                              ---------------------------------    ----------------------------------------

Income before income taxes                          762,600          1,067,000               1,685,900           2,074,200

Income taxes                                        188,300            330,800                 474,500             643,000
                                              ---------------------------------    ----------------------------------------

Net income                                    $     574,300      $     736,200     $         1,211,400      $    1,431,200
                                              =================================    ========================================

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

Earnings Per Common Share:
         Basic (1)                            $        0.23      $        0.30     $              0.48      $         0.57
                                              =================================    ========================================

         Diluted (1)                          $        0.23      $        0.29     $              0.48      $         0.57
                                              =================================    ========================================

(1) The June 2006 amounts have been retroactively adjusted to reflect the August 2006 six-for-five stock split.

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

</TABLE>


<PAGE>



<TABLE>

                                            Consolidated Statements of Stockholders' Equity


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

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


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

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

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

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

Repurchase of common stock               -            -                -                 -               -                   -

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

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

Balance, December 31, 2006          2,497,327   $  686,800    $   8,372,600     $  16,953,400    $    113,500      $   26,126,300

Common stock cash dividend
    declared                             -            -                -             (349,800)           -               (349,800)

Exercise of stock options               2,160          600           13,900              -               -                 14,500

Tax benefit associated with the
    exercise of stock options            -            -               5,700              -               -                  5,700

Comprehensive income                     -            -                -            1,211,400        (261,400)            950,000
                                   -----------  -----------------------------------------------------------------------------------

Balance, June 30, 2007              2,499,487   $  687,400    $   8,392,200     $  17,815,000    $   (147,900)     $   26,746,700
                                   ===========  ===================================================================================






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



</TABLE>


<PAGE>



<TABLE>


                 Consolidated Statements of Cash Flows


                                                              Six Months Ended June 30,
                                                          --------------------------------
                                                               2007               2006
------------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Cash flows from operating activities
    Net income                                             $ 1,211,400        $ 1,431,200
    Adjustments to reconcile to net cash
      provided by operating activities:
        Provision for loan losses                               11,700             36,700
        Depreciation and amortization                          353,200            380,600
        Amortization of premium and accretion
          of discount on securities, net                        (4,900)             4,600
        Gain on sale of investment securities                  (23,500)                 -
        Loss on disposal of fixed assets                       147,900                  -
        Increase in cash surrender value of life insurance     (77,800)           (72,200)
        Tax benefit of stock options exercised                   5,700              8,100
        Changes in:
          Deferred loan fees                                    (3,900)            63,200
          Other assets                                         (71,600)           (65,300)
          Other liabilities                                   (389,200)            40,800
                                                          ---------------------------------
          Net cash flows from operating activities           1,159,000          1,827,700
                                                          ---------------------------------

Cash flows from investing activities
    Purchase of available-for-sale securities                 (349,800)        (2,055,100)
    Proceeds from maturities, sales and calls of
      available-for-sale securities                            837,200          3,146,800
    Purchase of other investments                           (1,410,500)        (1,323,300)
    Proceeds from maturities, sales and calls of
      other investments                                      1,532,600          1,391,700
    Loan originations, net of repayments                    (3,121,000)       (17,626,300)
    Purchase of premises and equipment                        (301,600)          (127,800)
                                                          ---------------------------------
          Net cash flows from investing activities          (2,813,100)       (16,594,000)
                                                          ---------------------------------

</TABLE>


<PAGE>


<TABLE>


                 Consolidated Statements of Cash Flows

                                                              Six Months Ended June 30,
                                                          ---------------------------------
                                                               2007               2006
-------------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Cash flows from financing activities
    Net increase (decrease) in demand deposits            $ 11,742,400        $(4,095,300)
    Net increase (decrease) in time deposits                (6,088,400)        22,074,600
    Proceeds from FHLB advances                            148,300,000        148,500,000
    Repayments of FHLB advances                           (151,333,300)      (150,333,300)
    Proceeds from exercise of stock options                     14,500             58,800
    Payment of dividends on common stock                      (349,800)          (290,500)
                                                          ---------------------------------
          Net cash flows from financing activities           2,285,400         15,914,300
                                                          ---------------------------------

Change in cash and cash equivalents                            631,300          1,148,000

Cash and cash equivalents, beginning of period               9,469,800          9,176,000
                                                          ---------------------------------

Cash and cash equivalents, end of period                  $ 10,101,100        $10,324,000
                                                          =================================


Supplemental disclosure of cash flow information

    Cash paid during the period for interest              $ 3,815,300         $ 2,709,200
    Cash paid during the period for income taxes          $   685,000         $   630,000


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


</TABLE>

<PAGE>






                  SHORE FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

In preparing the consolidated financial statements in conformity with GAAP in
the United States of America, management is required to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. The consolidated results of operations and other data for the six
month period ended June 30, 2007 are not necessarily indicative of the results
that may be expected for any other interim period or the entire year ending
December 31, 2007. 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, 2006.

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.

Reclassifications

Certain reclassifications of the prior period's information have been made to
conform to the June 30, 2007 presentation.



<PAGE>




NOTE 2 - EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the periods ended June 30,
2007 and 2006. The June 2006 amounts have been retroactively adjusted to reflect
the August 2006 six-for-five stock split.

<TABLE>

                                                 Three Months Ended June 30,           Six Months Ended June 30,
                                            -------------------------------------  ------------------------------------
                                                    2007              2006                2007              2006
                                            ------------------ ------------------  ----------------- ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income (numerator, basic and diluted)     $    574,300       $   736,200         $   1,211,400      $   1,431,200
Weighted average shares outstanding
(denominator)                                    2,499,500         2,491,900             2,498,800          2,491,100
                                            ------------------ ------------------  ----------------- ------------------

Earnings per common share - basic             $       0.23       $      0.30         $        0.48      $        0.57
                                            ================== ==================  ================= ==================

Effect of dilutive securities:

Weighted average shares outstanding              2,499,500         2,491,900             2,498,800          2,491,100
Effect of stock options                             20,900            31,100                24,900             30,400
                                            ------------------ ------------------  ----------------- ------------------
Diluted average shares outstanding
(denominator)                                    2,520,400         2,523,000             2,523,700          2,521,500
                                            ------------------ ------------------  ----------------- ------------------

Earnings per common share -
assuming dilution                             $       0.23       $      0.29         $        0.48      $        0.57
                                            ================== ==================  ================= ==================


</TABLE>



NOTE 3 - COMPREHENSIVE INCOME

Total comprehensive income consists of the following for the six months ended
June 30, 2007 and 2006:


<TABLE>

                                                Six Months Ended June 30,
                                           -------------------------------------
                                                 2007                2006
                                           ------------------  -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Net income                                       $ 1,211,400         $1,431,200
Other comprehensive income (loss)                   (261,400)          (240,700)
                                           ------------------  -----------------

Total comprehensive income                         $ 950,000         $1,190,500
                                           ==================  =================

</TABLE>



<PAGE>



NOTE 3 - COMPREHENSIVE INCOME (concluded)

The following is a reconciliation of the related tax effects allocated to each
component of other comprehensive income at June 30, 2007 and 2006.


<TABLE>

                                                Six Months Ended June 30,
                                           -------------------------------------
                                                 2007                2006
                                           ------------------  -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>


Unrealized gains (losses) on
      available-for-sale securities:
       Unrealized holding gains (losses)
             arising during the period            $ (372,500)        $ (402,000)
       Less: reclassification adjustment
             for gain included in income             (23,500)                 -
                                           ------------------  -----------------

Total other comprehensive gain (loss)
     before tax effect                              (396,000)          (402,000)

Tax benefit (expense)                                134,600            161,300
                                           ------------------  -----------------

Net unrealized gain (loss)                        $ (261,400)        $ (240,700)
                                           ==================  =================


</TABLE>


NOTE 4 - SEGMENT INFORMATION

Segment information consists of the following for the six months ended June 30,
2007 and 2006:


<TABLE>

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


Net Interest Income:
     Six Months ended June 30, 2007        $   3,182           $    901           $   (253)          $     445         $   4,275
     Six Months ended June 30, 2006        $   3,238           $    890           $   (134)          $     294         $   4,288

Assets:
     June 30, 2007                         $ 204,425           $ 49,388           $ 45,113           $ (35,474)        $ 263,452
     December 31, 2006                     $ 198,692           $ 49,441           $ 43,531           $ (30,988)        $ 260,676

</TABLE>


NOTE 5 - DISPOSAL OF LONG-LIVED ASSET

During the quarter ended June 30, 2007, the Bank initiated plans to raze its
branch on South Salisbury Boulevard in Salisbury, Maryland and build a new
full-service banking facility at that location. As a result, the Bank incurred a
$147,900 charge to earnings during the quarter related to the planned disposal
of the existing facility. The Bank is no longer using the facility and is
leasing a temporary location nearby to accommodate its customers during
construction of the new banking facility.

NOTE 6 - SUBSEQUENT EVENT

During July 2007, the Company declared a $0.07 per share quarterly cash dividend
on its common stock payable on August 1, 2007 to shareholders of record on July
23, 2007.


<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, 2007 was $574,300, or $0.23 per
diluted share, compared to net income of $736,200, or $0.29 per diluted share,
for the same period of the prior year. All per share amounts have been adjusted
to reflect the six-for-five stock split the Company effected on August 30, 2006.
Earnings for the six months ended June 30, 2007 were $1.21 million, or $0.48 per
diluted share, compared to $1.43 million, or $0.57 per diluted share, for the
2006 six month period.

The Company continues to operate in an environment where bank consolidation and
restructuring is rampant, resulting in growth opportunities unlike any in recent
years. Accordingly, the Company has embarked on several strategic initiatives to
position itself for future growth and to capitalize on these opportunities
existing in its banking markets. In Salisbury, Maryland, the Bank plans to raze
one of its existing branch buildings and build a new full service facility on
that site. As a result, the Bank incurred a $148,000 charge during the second
quarter to write off the existing structure and is leasing a temporary location
to accommodate its customers during the construction phase. The Bank also has
signed a lease to open its eighth branch location in Pocomoke City, Maryland.
This market offers a great opportunity for the Bank to expand its footprint
while complimenting the Bank's existing markets. Finally, the Bank intends to
relocate its Cheriton, Virginia branch location to a new site that is located
near the entrance to the Bay Creek Community in Cape Charles, Virginia. The Bank
intends to build a full service banking facility on the new site.

As the Company undertakes these strategic endeavors, it continues to be impacted
by a flat interest rate yield curve and a softening real estate market. The
Company's outstanding loan balances on June 30, 2007 were $213.7 million,
representing a nominal increase from a year ago. However, asset quality remained
strong during the quarter. The Bank's non current loan to total loan ratio was
0.45% at June 30, 2007, while the Bank's allowance for loan losses to period end
loans ratio was 1.34%. Since the Bank does not engage in any sub prime lending
activities, it is not exposed to some of the risks currently affecting some
financial companies. Accordingly, management considers the Bank's exposure
levels manageable and commensurate with the risk existing in the Bank's loan
portfolio.

Net Interest Income

The Company's net interest margin was 3.56% during the first six months of 2007,
compared to 3.64% during the 2006 six month period. However, the Company
realized a 21 basis point increase in its net interest margin during the second
quarter of 2007 as compared to the 2007 first quarter. This increase resulted
from the successful introduction of several new products and promotions
initiated by the Bank to attract new lower costing checking accounts. The
Company also benefited from effective liquidity management initiatives and by
limiting its reliance on higher costing time deposits. As a result, net interest
income was $2.21 million and $4.27 million, respectively, during the three and
six month periods ended June 30, 2007, compared to $2.15 million and $4.29
million, respectively, during the same periods of 2006.



<PAGE>



Average earning assets for the six months ended June 2007 increased $6.2 million
over the June 2006 period. The majority of this growth occurred in average loans
which increased $8.8 million over 2006, while average investments declined $2.0
million during the period. The loan growth occurred in residential real estate
and commercial loans which increased 7.0% and 3.7%, respectively, over
comparable period of 2006. 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.

Average total deposits increased to $202.8 million during the period, compared
to $193.1 million during the 2006 period. During the six months ended June 30,
2007, average interest-bearing checking and savings demand deposits declined
$6.2 million when compared to the June 2006 six month period. Decreases in the
Bank's money market and savings products since June 2006 accounted for the
majority of this decline due to increased rate competition from other banks,
brokerage firms and insurance companies for all deposit products. However, the
Bank realized growth in these products during the first six months of 2007 when
compared to December 2006 year end amounts. During the June 2007 six month
period, time deposit balances averaged $110.6 million, representing a $14.9
million increase over average time deposit balances during the 2006 period. The
Company purchased brokered certificates of deposit and offered several rate
specials during the second quarter of 2006 and continues to offer several
short-term rate specials, accounting for the increase in time deposits. As
brokered deposits and time deposits became a better alternative to Federal Home
Loan Bank ("FHLB") advances, the Company relied less on these advances as a
source of liquidity funding. This resulted in a $5.8 million decrease in the
average balance of FHLB advances during the June 2007 six month period as
compared to the June 2006 period.

Interest and dividend income was $4.05 million and $7.98 million for the three
and six month periods ended June 30, 2007, representing increases of 7.3% and
9.7%, respectively, over the comparable 2006 amounts. An increase in average
loans outstanding during the June 2007 six month period in relation to the
comparable 2006 period accounted for this increase, despite net interest margin
pressures during the period. The yield on earning assets increased 44 basis
points to 6.59% during the June 2007 period as compared to the 2006 comparable
period. Loan and investment yields improved by 44 and 25 basis points,
respectively, during the six months ended June 30, 2007 over the June 2006
comparable period.

Interest expense for the three and six months ended June 30, 2007 was $1.84
million and $3.70 million, respectively, representing an increase of 13.1% and
24.1%, respectively, over comparable 2006 amounts. The 15.6% increase in average
time deposits and a 66 basis point increase in the cost of total
interest-bearing liabilities were the primary contributing factors to this
increase. However, the Company realized an 11 basis point decrease in its cost
of funding during the second quarter of 2007 as compared to the 2007 first
quarter. This improvement resulted from the successful introduction of several
new products and promotions initiated by the Bank to attract new lower costing
checking accounts. The Company also benefited from actively managing its
liquidity and limiting its reliance on higher costing time deposits.

The average rate on interest-bearing liabilities for the six months ended June
30, 2007 was 3.60%, compared to 2.94% incurred in 2006. Interest rates on
checking and savings accounts and time deposits represented the greatest impact
on the Bank's cost of funding by increasing 66 basis points and 62 basis points,
respectively, while FHLB advance cost increased 26 basis points during the 2007
six month period as compared to the 2006 period.


<PAGE>



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


<TABLE>

                               Average Balances, Income and Expenses, Yields and Rates

                                                                         Six Months Ended June 30,
                                               --------------------------------------------------------------------------
                                                   2007                                 2006
                                               ------------------------------------   -----------------------------------
                                                 Average      Income/     Yield/       Average      Income/     Yield/
(Dollars In Thousands)                           Balance      Expense      Rate        Balance      Expense      Rate
                                               -----------   ---------  -----------   ----------    ---------  ----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Assets:
            Securities (1)                     $   30,202   $      743       4.92%   $   32,232   $      753       4.67%
            Loans (net of unearned income):
                  Real estate mortgage            119,653        3,738       6.25%      111,817        3,275       5.86%
                  Commercial                       74,986        2,782       7.42%       72,325        2,486       6.87%
                  Home equity lines                14,028          594       8.47%       15,851          611       7.71%
                  Consumer                          3,012          136       9.03%        2,922          131       8.97%
                                                 ---------    ---------               ----------    ---------
                      Total loans                 211,679        7,250       6.85%      202,915        6,503       6.41%
            Interest-bearing deposits
                  in other banks                    1,976           45       4.55%        2,518           51       4.05%
                                                 ---------                            ----------
                                                              ---------                             ---------
                      Total earning assets        243,857        8,038       6.59%      237,665        7,307       6.15%
                                                              ---------                             ---------
            Less: allowance for loan losses        (2,866)                               (2,872)
            Total nonearning assets                19,709                                19,374
                                                 ---------                            ----------
            Total assets                       $  260,700                            $  254,167
                                                 =========                            ==========

Liabilities
            Interest-bearing deposits:
                  Checking and savings         $   64,446   $      456       1.42%   $   70,678   $      267       0.76%
                  Time deposits                   110,620        2,487       4.50%       95,697        1,858       3.88%
                                                 ---------    ---------               ----------    ---------

                      Total interest-bearing
                      deposits                    175,066        2,943       3.36%      166,375        2,125       2.55%

            FHLB advances                          30,443          759       4.99%       36,251          857       4.73%
                                                 ---------    ---------               ----------    ---------
                      Total interest-bearing
                      liabilities                 205,509        3,702       3.60%      202,626        2,982       2.94%
                                                              ---------                             ---------
            Non-interest bearing liabilities:
                  Demand deposits                  27,703                                26,769
                  Other liabilities                   722                                   391
                                                 ---------                            ----------

            Total liabilities                     233,934                               229,786
            Stockholders' equity                   26,766                                24,381
                                                 ---------                            ----------

            Total liabilities and stockholders'
                  equity                       $  260,700                            $  254,167
                                                 =========                            ==========

            Net interest income (1)                         $    4,336                            $    4,325
                                                              =========                             =========

            Interest rate spread (1)(2)(3)                                   2.99%                                 3.21%
            Net interest margin (1)(4)                                       3.56%                                 3.64%


(1)      Tax equivalent  basis.  The tax equivalent  adjustment to net interest income was $62,000 and $37,000 for the six months
         ended June 30, 2007 and 2006, 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>

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 interest rate trends, the state of the local
and national economy, and other financial and business risk factors.

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


<PAGE>



The following table presents the Company's interest sensitivity position at June
30, 2007. 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, 2007
                                                    -------------------------------------------------------------------------------
                                                         Within        91-365           1 to 5          Over
(Dollars In Thousands)                                  90 Days         Days             Years         5 Years          Total
                                                    -------------- -------------- ----------------- ------------- -----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Interest-Earning Assets:
       Loans (1)                                    $      60,406  $      61,411   $        83,916  $      7,968  $        213,701
       Securities (2)                                       5,007          5,145            13,599         5,680            29,431
       Money market and other
           short term securities                            2,790           -                 -             -                2,790
       Other earning assets                                  -              -                 -            3,641             3,641
                                                    -------------- -------------- ----------------- ------------- -----------------

       Total earning assets                         $      68,203  $      66,556  $         97,515  $     17,289  $        249,563
                                                    ============== ============== ================= ============= =================
       Cumulative earning assets                    $      68,203  $     134,759  $        232,274  $    249,563  $        249,563
                                                    ============== ============== ================= ============= =================


Interest-Bearing Liabilities:
       Money market savings                         $      19,045  $        -     $           -     $       -     $         19,045
       Interest checking (3)                                 -              -               29,533          -               29,533
       Savings (3)                                          1,889          1,522            17,203          -               20,614
       Certificates of deposit                             38,258         40,596            26,074           888           105,816
       FHLB advances                                       16,750          8,000             7,000           450            32,200
                                                    -------------- -------------- ----------------- ------------- -----------------

       Total interest-bearing liabilities           $      75,942  $      50,118  $         79,810  $      1,338  $        207,208
                                                    ============== ============== ================= ============= =================
       Cumulative interest-bearing liabilities      $      75,942  $     126,060  $        205,870  $    207,208  $        207,208
                                                    ============== ============== ================= ============= =================

       Period gap                                   $      (7,739) $      16,438  $         17,705  $     15,951  $         42,355
       Cumulative gap                               $      (7,739) $       8,699  $         26,404  $     42,355  $         42,355
       Ratio of cumulative interest-earning
           assets to interest-bearing liabilities           89.81%        106.90%           112.83%       120.44%          120.44%
       Ratio of cumulative gap to total
           earning assets                                   (3.10%)         3.49%            10.58%        16.97%           16.97%



(1)  Includes nonaccrual loans of $958,000, which are spread throughout the
     categories.
(2)  Management has determined that interest checking and savings accounts are
     not as sensitive to changes in related market rates and, therefore, they
     are placed in the 1 to 5 years category.


</TABLE>



Noninterest Income

The Company's noninterest income was $811,700 for the June 2007 quarter,
compared to $811,100 for the June 2006 quarter end, while non interest income
increased to $1.64 million for the six months ended June 30, 2007, compared to
$1.58 million for the 2006 six month period. The Bank's mortgage banking
division has posted significant gains in fee income during 2007 with an increase
from $49,400 during the 2006 six month period to $125,400 during the 2007
comparable quarter. The Company's noninterest income was impacted by a decline
in deposit fee income during the first six months of 2007, as compared to the
2006 six month period. This decline occurred primarily in charges levied on
overdraft deposit balances.


<PAGE>



The mortgage banking division continues to represent a strong segment of the
Company's operations. In its efforts to further capitalize on the success of
this division, the Company hired a mortgage banking representative during the
second quarter to cover its Maryland markets. In addition to providing
profitable alternative loan products in the Bank's markets, these
representatives have proven to be effective ambassadors of the Bank and strong
referral sources for the Bank's traditional loan and deposit products.

Provision for Loan Losses

With asset quality remaining strong during the last several quarters, the
Company has not been required to make significant contributions to the provision
for loan loss. The $11,700 and $36,700 contributed during the June 2007 and 2006
quarters, respectively, primarily related to overdraft deposit accounts.
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

Excluding the branch property write off, the Company's noninterest expense was
$2.10 million during the June 2007 quarter, compared to $1.87 million during the
2006 three month period. For the six months ended June 30, 2007, the Company's
noninterest expense was $4.07 million, compared to $3.76 million during the 2006
six month period. Compensation and benefits expense accounted for the majority
of this increase. The expense for the first six months of 2007 included two
former senior level officers from Mercantile Bank's local affiliate that were
not employed with the Company during the first six months of 2006. Compensation
expense also increased due to commissions paid as a result of the growth and
expansion of the mortgage brokerage business, additional personnel employed to
enhance the Company's internet banking division and normal annual salary and
benefit adjustments. These additional personnel and enhancements should enable
the Company to further capitalize on the growth opportunities existing in its
markets. The Company's other expense categories were generally flat during the
June 2007 six month period when compared to the 2006 period.


Financial Condition

The Company's total assets were $263.5 million at June 30, 2007, compared to
$260.7 million at December 31, 2006. Growth in net loans of $3.1 million
accounted for this increase while other asset categories remained relatively
flat during the period. A softening real estate market impacted loan demand
during the first six months of 2007.

Deposits were $203.8 million at June 30, 2007, compared to $198.1 million at
December 31, 2006. Growth in demand and savings account balances accounted for
the majority of the $2.5 million increase in interest-bearing deposits with time
deposits being flat during the period, while noninterest-bearing deposits
increased by $3.2 million.

Stockholders' equity was $26.7 million at June 30, 2007, representing an
increase of $620,400 since December 31, 2006. This increase is made up of
comprehensive income of $950,000, consisting primarily of $1.21 million of net
income earned during the three month period, offset by common stock dividends of
$349,700 ($0.14 per share) during the period.

During July 2007, the Company declared a $0.07 per share quarterly cash dividend
on its common stock payable on August 1, 2007 to shareholders of record on July
23, 2007.


<PAGE>



Asset Quality

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

Total nonperforming assets, which consist of nonaccrual loans and foreclosed
properties, adjusted for estimated losses upon sale and the related selling
expenses and holding costs, were $958,000 at June 30, 2007, compared to $931,000
at December 31, 2006. As to nonaccrual loans existing at June 30, 2007,
approximately $10,000 of interest income would have been recognized during the
six months then ended if interest thereon had accrued. The Company has not
identified any 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.

At June 30, 2007, all loans 60 days or more delinquent, including nonperforming
loans, totaled $1.1 million. In addition, other performing loans, totaling $6.0
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.

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


<TABLE>

                                                 Nonperforming Assets


                                                                             June 30,               December 31,
(Dollars In Thousands)                                                         2007                     2006
                                                                       ----------------------  ------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Nonaccrual loans:
       Commercial                                                        $                 -      $                 73
       Real estate mortgage                                                              852                       832
       Home equity lines of credit                                                       100                        24
       Consumer                                                                            6                         2
                                                                       ----------------------  ------------------------

       Total nonaccrual loans                                                            958                       931
Other real estate owned                                                                    -                         -
                                                                       ----------------------  ------------------------

       Total nonperforming assets                                        $               958      $                931
                                                                       ======================  ========================

Loans past due 90 or more days
       accruing interest                                                                   -                         -
Allowance for loan losses to
       nonaccrual loans                                                              298.85%                   308.59%
Nonperforming assets to period end
       loans and other real estate owned                                               0.45%                     0.44%


</TABLE>



<PAGE>



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


<TABLE>

                                              Allowance for Loan Losses


                                                                                          June 30,
                                                                       ------------------------------------------------
(Dollars In Thousands)                                                         2007                     2006
                                                                       ----------------------  ------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Balance, beginning of period                                             $             2,873      $              2,851
Loans charged off:
       Commercial                                                                          -                         -
       Real estate mortgage                                                                -                         -
       Consumer                                                                          (82)                      (68)
                                                                       ----------------------  ------------------------

       Total loans charged-off                                                           (82)                      (68)
                                                                       ----------------------  ------------------------

Recoveries:
       Commercial                                                                          -                        19
       Real estate mortgage                                                                -                         -
       Consumer                                                                           60                        45
                                                                       ----------------------  ------------------------

       Total recoveries                                                                   60                        64
                                                                       ----------------------  ------------------------

Net recoveries (charge-offs)                                                             (22)                       (4)
Provision for loan losses                                                                 12                        37
                                                                       ----------------------  ------------------------

Balance, end of period                                                   $             2,863      $              2,884
                                                                       ======================  ========================

Allowance for loan losses to loans
       outstanding at end of period                                                    1.34%                     1.35%

Allowance for loan losses to nonaccrual
       loans outstanding at end of period                                            298.85%                   454.89%

Net charge-offs (recoveries) to average loans
       outstanding during period                                                      0.010%                    0.002%


</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 June 30, 2007, the Company had outstanding loan, line of credit and letter of
credit commitments of $53.8 million. Scheduled maturities of certificate of
deposits during the twelve months following June 30, 2007 amounted to $78.7
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 $631,300 for the six months ended June
30, 2007, compared to an increase of $1.15 million for the six months ended June
30, 2006. Net cash from operating activities was $1.16 million for the six
months ended June 30, 2007, compared to $1.83 million during the same period of
2006. The changes reflect fluctuations in normal operating activities.

Net cash used in investing activities was $2.8 million during the six months
ended June 30, 2007, compared to net cash used in investing activities of $16.6
million for the six months ended June 30, 2006. Stronger loan growth during the
first six months of 2006 than what occurred during 2007 constituted the majority
of the difference.

Net cash from financing activities was $2.3 million for the six months ended
June 30, 2007, compared to net cash from financing activities of $15.9 million
for the six months ended June 30, 2006. Less growth in time deposits offset by
an increase in demand deposits during the June 2007 six month period represented
the majority of this decrease. This decline reflects the lower required
liquidity levels needed in 2007 to fund loan growth when compared to 2006.

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 $700,000 of dividends to the Company during the first six months
of 2007, while it paid $1.0 million in dividends to the Company during the six
months ended June 30, 2006. At June 30, 2007, the Bank's retained earnings
available for the payment of dividends was $3.3 million. The capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and its banking subsidiary to maintain minimum amounts and
ratios of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). At June 30, 2007, 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, 2007 and December 31, 2006.


<TABLE>

                                    Analysis of Capital

                                                              June 30,          December 31,
(Dollars In Thousands)                                          2007                2006
                                                         -------------------  ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Tier 1 Capital:
       Common stock                                       $             687    $            687
       Additional paid-in capital                                     8,392               8,373
       Retained earnings                                             17,815              16,953
       Accumulated other comprehensive income                          (148)                113
                                                         -------------------  ------------------
             Total capital (GAAP)                                    26,746              26,126
       Less: Intangibles                                               (387)               (402)
       Net unrealized gain on debt and equity securities                148                (113)
                                                         -------------------  ------------------
             Total Tier 1 capital                                    26,507              25,611


Tier 2 Capital:
       Allowable allowances for loan losses                           2,289               2,269
       Net unrealized gains on equity securities                         65                 180
                                                         -------------------  ------------------
             Total Tier 2 capital                         $          28,861    $         28,060
                                                         ===================  ==================

Risk-weighted assets                                      $         187,217    $        185,991

Capital Ratios (1):
       Tier 1 risk-based capital ratio                               14.16%              13.77%
       Total risk-based capital ratio                                15.42%              15.09%
       Tier 1 capital to average adjusted
             total assets                                            10.18%               9.93%


</TABLE>



Item 3 - Quantitative and Qualitative Disclosures about Market Risk

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

The modeling methodologies used measure interest rate sensitivity by analyzing
the potential impact on net interest income under various interest rate
scenarios. One such scenario would assume a hypothetical 200 basis point
instantaneous and parallel shift in the interest rate yield curve. Accordingly,
management modeled the impact of a 200 basis point decline in interest rates and
a 200 basis point increase in interest rates at March 31, 2007. 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 $208,000, while a
200 basis point instantaneous and parallel increase in the yield curve in
interest rates would cause net interest income to increase by $19,000.

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, 2006 Form 10-K.

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

None.

Item 3 - Defaults Upon Senior Securities

Not applicable.

Item 4 - Submission of Matters to a Vote of Stockholders

During the Company's Annual Meeting on April 17, 2007, the Stockholders voted to
reelect Terrell E. Boothe and D. Page Elmore as directors of the Company.

Item 5 - Other Information

None.

Item 6 - Exhibits

(a)      Certifications pursuant to subsections 302 and 906 of the
Sarbanes-Oxley Act of 2002.

(b) Form 8-K was filed during April 2007 relative to the Company's March 31,
2007 earnings release dated April 19, 2007.

(c) Form 8-K was filed during June 2007 relative to razing and rebuilding plans
of one of the Company's subsidiary bank branch
         locations.



<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 14, 2007
--------------------------------------------------------------------------------
Scott C. Harvard
President and
Chief Executive Officer

/s/ Steven M. Belote                                            August 14, 2007
--------------------------------------------------------------------------------
Steven M. Belote
Senior Vice President and
Chief Financial Officer


<PAGE>



                                                                   Exhibit 31.1

                                 CERTIFICATIONS


I, Scott C. Harvard, certify that:

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

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


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


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


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

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

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


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


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

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


Date: August 14, 2007
                                /s/ Scott C. Harvard
                                -----------------------------------------------
                                Scott C. Harvard
                                President and Chief Executive Officer

<PAGE>



                                                                   Exhibit 31.2

                                 CERTIFICATIONS


I, Steven M. Belote, certify that:

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

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


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


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


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

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

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


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


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

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


Date: August 14, 2007
                              /s/ Steven M. Belote
                              -------------------------------------------------
                              Steven M. Belote
                              Chief Financial Officer and Senior Vice President

<PAGE>




                                                                   Exhibit 32.1



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


         In connection with the Quarterly Report of Shore Financial Corporation
(the "Company") on Form 10-Q for the three months ended June 30, 2007 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Scott C. Harvard, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

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

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


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

Date:  August 14, 2007





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 June 30, 2007 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 and Senior Vice President

Date:  August 14, 2007





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.