UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20459

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005, or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No. 0-10587

FULTON FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	23-2195389
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Penn Square, P.O. Box 4887 Lancaster, Pennsylvania	17604
(Address of principal executive offices)	(Zip Code)

(717) 291-2411

(Registrant’s telephone number, including area code)

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $2.50 Par Value – 156,824,223 shares outstanding as of July 29, 2005.

FULTON FINANCIAL CORPORATION

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2005

INDEX

Description	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
(a) Consolidated Balance Sheets — June 30, 2005 and December 31, 2004		3
(b) Consolidated Statements of Income — Three and six months ended June 30, 2005 and 2004		4
(c) Consolidated Statements of Shareholders’ Equity — Six months ended June 30, 2005 and 2004		5
(d) Consolidated Statements of Cash Flows — Six months ended June 30, 2005 and 2004		6
(e) Notes to Consolidated Financial Statements – June 30, 2005		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.Quantitative and Qualitative Disclosures about Market Risk		37
Item 4. Controls and Procedures		41
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 4 Submission of Matters to a Vote of Security Holders		43
Item 6. Exhibits		44
Signatures		45
Exhibit Index		46
Certifications		47

2

Item 1. Financial Statements

FULTON FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands, except per-share data)

	June 30			December 31
	2005			2004
ASSETS
Cash and due from banks	$	358,581		$	278,065
Interest-bearing deposits with other banks		21,842			4,688
Federal funds sold		758			32,000
Loans held for sale		237,713			158,872
Investment securities:
Held to maturity (estimated fair value of $27,285 in 2005 and $25,413 in 2004)		27,003			25,001
Available for sale		2,402,362			2,424,858
Loans, net of unearned income		7,861,508			7,584,547
Less: Allowance for loan losses		(90,402	)		(89,627	)
Net Loans		7,771,106			7,494,920
Premises and equipment		153,598			146,911
Accrued interest receivable		43,819			40,633
Goodwill		364,203			364,019
Intangible assets		22,592			25,303
Other assets		167,506			163,081
Total Assets	$	11,571,083		$	11,158,351
LIABILITIES
Deposits:
Non-interest bearing	$	1,611,909		$	1,507,799
Interest-bearing		6,527,758			6,387,725
Total Deposits		8,139,667			7,895,524
Short-term borrowings:
Federal funds purchased		660,633			676,922
Other short-term borrowings		473,950			517,602
Total Short-Term Borrowings		1,134,583			1,194,524
Accrued interest payable		31,042			27,279
Other liabilities		119,971			114,498
Federal Home Loan Bank advances and long-term debt		951,745			684,236
Total Liabilities		10,377,008			9,916,061
SHAREHOLDERS’ EQUITY
Common stock, $2.50 par value, 600 million shares authorized, 168.3 million shares issued in 2005 and 167.8 million shares issued in 2004		420,662			335,604
Additional paid-in capital		917,323			1,000,111
Retained earnings		117,064			77,419
Accumulated other comprehensive loss		(20,166	)		(10,133	)
Treasury stock, 15.3 million shares in 2005 and 10.7 million shares in 2004, at cost		(240,808	)		(160,711	)
Total Shareholders’ Equity		1,194,075			1,242,290
Total Liabilities and Shareholders’ Equity	$	11,571,083		$	11,158,351

See Notes to Consolidated Financial Statements

3

FULTON FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per-share data)

	Three Months Ended				Six Months Ended
	June 30				June 30
	2005		2004		2005		2004
INTEREST INCOME
Loans, including fees	$	123,309	$	96,859	$	239,937	$	185,325
Investment securities:
Taxable		18,257		19,652		36,518		41,388
Tax-exempt		2,843		2,540		5,692		5,073
Dividends		1,155		992		2,239		1,944
Mortgage loans held for sale		2,699		1,962		4,511		2,201
Other interest income		348		19		524		29
Total Interest Income		148,611		122,024		289,421		235,960
INTEREST EXPENSE
Deposits		31,104		22,345		58,912		42,695
Short-term borrowings		7,914		3,135		14,738		6,462
Long-term debt		9,668		7,838		17,598		15,130
Total Interest Expense		48,686		33,318		91,248		64,287
Net Interest Income		99,925		88,706		198,173		171,673
PROVISION FOR LOAN LOSSES		725		800		1,525		2,540
Net Interest Income After Provision for Loan Losses		99,200		87,906		196,648		169,133
OTHER INCOME
Investment management and trust services		8,966		8,637		17,985		17,282
Service charges on deposit accounts		9,960		9,929		19,292		19,434
Other service charges and fees		7,142		4,970		12,698		9,996
Gain on sale of mortgage loans		6,290		6,050		12,339		7,764
Investment securities gains		1,418		5,349		4,733		11,177
Other		4,539		1,727		7,121		3,047
Total Other Income		38,315		36,662		74,168		68,700
OTHER EXPENSES
Salaries and employee benefits		45,152		41,834		89,353		78,592
Net occupancy expense		6,549		5,859		14,047		11,377
Equipment expense		2,888		2,749		5,958		5,390
Data processing		3,321		2,868		6,490		5,687
Advertising		2,276		1,914		4,249		3,442
Intangible amortization		1,168		1,356		2,347		2,347
Other		16,752		13,957		29,393		25,974
Total Other Expenses		78,106		70,537		151,837		132,809
Income Before Income Taxes		59,409		54,031		118,979		105,024
INCOME TAXES		17,829		16,167		35,868		31,314
Net Income	$	41,580	$	37,864	$	83,111	$	73,710
PER-SHARE DATA:
Net income (basic)	$	0.27	$	0.25	$	0.53	$	0.50
Net income (diluted)		0.27		0.25		0.53		0.50
Cash dividends		0.145		0.132		0.277		0.254

See Notes to Consolidated Financial Statements

4

FULTON FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2005 AND 2004

												Accumulated
												Other
	Number of					Additional						Comprehen-
	Shares			Common		Paid-In			Retained			sive Income			Treasury
	Outstanding			Stock		Capital			Earnings			(Loss)			Stock			Total
	(dollars in thousands)
Balance at December 31, 2004		157,150,000		$	335,604	$	1,000,111		$	77,419		$	(10,133	)	$	(160,711	)	$	1,242,290
Comprehensive income:
Net income										83,111									83,111
Unrealized loss on derivative financial instruments (net of $540,000 tax effect)													(1,003	)					(1,003	)
Unrealized loss on securities (net of $6.5 million tax effect)													(12,106	)					(12,106	)
Less – reclassification adjustment for gains included in net income (net of $1.7 million tax expense)													3,076						3,076
Total comprehensive income																			73,078
Stock split paid in the form of a 25% stock dividend					84,046		(84,114	)											(68	)
Stock issued (340,00 shares from treasury stock)		806,000			1,012		1,326									5,071			7,409
Acquisition of treasury stock		(5,000,000	)													(85,168	)		(85,168	)
Cash dividends — $0.277 per share										(43,466	)								(43,466	)
Balance at June 30, 2005		152,956,000		$	420,662	$	917,323		$	117,064		$	(20,166	)	$	(240,808	)	$	1,194,075
Balance at December 31, 2003		142,085,000		$	284,480	$	633,588		$	117,373		$	12,267		$	(100,772	)	$	946,936
Comprehensive income:
Net income										73,710									73,710
Unrealized loss on securities (net of $16.6 million tax effect)													(30,749	)					(30,749	)
Less – reclassification adjustment for gains included in net income (net of $3.9 million tax expense)													(7,265	)					(7,265	)
Total comprehensive income																			35,696
Stock dividend – 5%					15,299		100,226			(115,615	)								(90	)
Stock issued (all treasury)		824,000					(6,157	)								11,756			5,599
Stock issued for acquisition of Resource Bancshares Corporation		11,287,000			21,498		164,365												185,863
Acquisition of treasury stock		(1,845,000	)													(29,939	)		(29,939	)
Cash dividends — $0.254 per share										(36,583	)								(36,583	)
Balance at June 30, 2004		152,351,000		$	321,277	$	892,022		$	38,885		$	(25,747	)	$	(118,955	)	$	1,107,482

See Notes to Consolidated Financial Statements

5

FULTON FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

	Six months ended
	June 30
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	83,111		$	73,710
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,525			2,540
Depreciation and amortization of premises and equipment		6,539			6,177
Net amortization of investment security premiums		2,682			5,942
Investment securities gains		(4,733	)		(11,177	)
Net increase in loans held for sale		(58,455	)		(18,769	)
Amortization of intangible assets		2,347			2,347
Increase in accrued interest receivable		(3,186	)		(1,294	)
(Increase) decrease in other assets		(836	)		5,861
Increase (decrease) in accrued interest payable		3,763			(2,481	)
(Decrease) increase in other liabilities		(4,736	)		5,643
Total adjustments		(55,090	)		(5,211	)
Net cash provided by operating activities		28,021			68,499
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale		101,196			179,971
Proceeds from maturities of securities held to maturity		2,102			5,279
Proceeds from maturities of securities available for sale		311,054			457,086
Purchase of securities held to maturity		(4,398	)		(3,699	)
Purchase of securities available for sale		(406,130	)		(133,005	)
Decrease in short-term investments		26,551			2,760
Net increase in loans		(298,097	)		(256,901	)
Net cash paid for acquisitions		—			(768	)
Net purchase of premises and equipment		(13,226	)		(5,966	)
Net cash (used in) provided by investing activities		(280,948	)		244,757
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits		122,355			203,212
Net increase (decrease) in time deposits		121,788			(122,396	)
Increase (decrease) in long-term debt		267,509			(34,376	)
Decrease in short-term borrowings		(59,941	)		(266,384	)
Dividends paid		(40,441	)		(34,762	)
Net proceeds from issuance of common stock		7,341			5,599
Acquisition of treasury stock		(85,168	)		(29,939	)
Net cash provided by (used in) financing activities		333,443			(279,046	)
Net Increase in Cash and Due From Banks		80,516			34,210
Cash and Due From Banks at Beginning of Period		278,065			300,966
Cash and Due From Banks at End of Period	$	358,581		$	335,176
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	87,485		$	66,768
Income taxes		30,618			25,841

See Notes to Consolidated Financial Statements

6

FULTON FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – Basis of Presentation

The accompanying unaudited consolidated financial statements of Fulton Financial Corporation (the Corporation) have been prepared in accordance with generally accepted accounting principles for interim financial information 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 notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

NOTE B – Net Income Per Share and Comprehensive Income (Loss)

The Corporation’s basic net income per share is calculated as net income divided by the weighted average number of shares outstanding. For diluted net income per share, net income is divided by the weighted average number of shares outstanding plus the incremental number of shares added as a result of converting common stock equivalents, calculated using the treasury stock method. The Corporation’s common stock equivalents consist solely of outstanding stock options.

A reconciliation of the weighted average shares outstanding used to calculate basic net income per share and diluted net income per share follows:

	Three months ended				Six months ended
	June 30				June 30
	2005		2004		2005		2004
Weighted average shares outstanding (basic)		154,509		152,647		155,922		147,380
Impact of common stock equivalents		1,721		1,709		1,828		1,474
Weighted average shares outstanding (diluted)		156,230		154,356		157,750		148,854

Total comprehensive income was $57.1 million and $73.1 million for the three and six months ended June 30, 2005, respectively. Total comprehensive loss was $4.3 million for the quarter ended June 30, 2004 and total comprehensive income was $35.7 million for the six months ended June 30, 2004.

NOTE C – 5-for-4 Stock Split

The Corporation declared a 5-for-4 stock split on April 13, 2005, which was paid in the form of a 25% stock dividend on June 8, 2005 to shareholders of record on May 17, 2005. All share and per-share information has been restated to reflect the impact of this stock split.

NOTE D – Disclosures about Segments of an Enterprise and Related Information

The Corporation does not have any operating segments, which require disclosure of additional information. While the Corporation owned thirteen separate banks as of June 30, 2005, each engaged in similar activities and provided similar products and services. The Corporation’s non-banking activities are immaterial and, therefore, separate information has not been disclosed.

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NOTE E – Stock-Based Compensation

The Corporation accounts for its stock-based compensation, consisting primarily of stock options, in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). As such, no compensation expense has been recognized in the Consolidated Statements of Income as stock options are granted with an exercise price equal to the fair market value of the Corporation’s stock. Pro-forma disclosures of the impact of stock-based compensation on the Corporation’s net income and net income per share, had compensation expense been recognized under the provisions of Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (Statement 123), are as follows:

	Three months ended				Six months ended
	June 30				June 30
	2005		2004		2005		2004
Net income as reported	$	41,580	$	37,864	$	83,111	$	73,710
Stock-based employee compensation expense under the fair value method, net of tax		83		62		179		132
Pro-forma net income	$	41,497	$	37,802	$	82,932	$	73,578
Net income per share (basic)	$	0.27	$	0.25	$	0.53	$	0.50
Pro-forma net income per share (basic)		0.27		0.25		0.53		0.50
Net income per share (diluted)	$	0.27	$	0.25	$	0.53	$	0.50
Pro-forma net income per share (diluted)		0.27		0.24		0.53		0.49

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (Statement 123R). Statement 123R is a revision to the original Statement 123 which disallows the APB 25 method of accounting for stock options and requires public companies to recognize compensation expense related to stock-based compensation in their income statements. Companies can adopt Statement 123R using either “modified prospective application” or “modified retrospective application”. Modified retrospective application also results in restatement of prior period results, based on the amounts previously disclosed in prior period financial statements.

The effective date of Statement 123R was originally the beginning of the first fiscal quarter after June 15, 2005. In April 2005, the Securities and Exchange Commission (SEC) delayed the effective date to the beginning of the first fiscal year after June 15, 2005, or January 1, 2006 for the Corporation. Early adoption is permissible. The Corporation expects to adopt the provisions of Statement 123R in the third quarter of 2005, using modified retrospective application. On July 1, 2005 the Corporation granted 1.1 million stock options under its Stock Option and Compensation Plan.

NOTE F – Employee Benefit Plans

The Corporation maintains a defined benefit pension plan (Pension Plan) for certain employees. Contributions to the Pension Plan are actuarially determined and funded annually. Pension Plan assets are invested in money markets, fixed income securities, including corporate bonds, U.S. Treasury securities and common trust funds, and equity securities, including common stocks and common stock mutual funds. The Pension Plan has been closed to new participants, but existing participants continue to accrue benefits according to the terms of the plan. The Corporation expects to contribute approximately $2.3 million to the Pension Plan in 2005.

The Corporation currently provides medical and life insurance benefits under a post-retirement benefits plan (Post-Retirement Plan) to certain retired full-time employees who were employees of the Corporation prior to January 1, 1998. Other certain full-time employees may become eligible for these discretionary benefits if they

8

reach retirement age while working for the Corporation. Benefits are based on a graduated scale for years of service after attaining the age of 40.

The net periodic benefit cost for the Corporation’s Pension Plan and Post-Retirement Plan, as determined by consulting actuaries, consisted of the following components for the three and six-month periods ended June 30:

	Pension Plan
	Three months ended						Six months ended
	June 30						June 30
	2005			2004			2005			2004
				(in thousands)
Service cost	$	621		$	577		$	1,245		$	1,154
Interest cost		842			776			1,685			1,551
Expected return on plan assets		(819	)		(750	)		(1,637	)		(1,500	)
Net amortization and deferral		221			166			443			332
Net periodic benefit cost	$	865		$	769		$	1,736		$	1,537

	Post-Retirement Plan
	Three months ended						Six months ended
	June 30						June 30
	2005			2004			2005			2004
				(in thousands)
Service cost	$	88		$	91		$	177		$	182
Interest cost		114			118			231			237
Expected return on plan assets		(1	)		—			(1	)		(1	)
Net amortization and deferral		(55	)		(57	)		(112	)		(115	)
Net periodic benefit cost	$	146		$	152		$	295		$	303

NOTE G – New Accounting Standards

Accounting for Certain Loans or Debt Securities Acquired in a Transfer: In December 2003, the Accounting Standards Executive Committee issued Statement of Position 03-3 (SOP 03-3), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer”. SOP 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer, including business combinations, if those differences are attributable, at least in part, to credit quality.

SOP 03-3 became effective for the Corporation on January 1, 2005. No loans or debt securities meeting the scope of SOP 03-3 were acquired during the three or six-month periods ended June 30, 2005. The Corporation does not expect SOP 03-3 to have a material effect on the Corporation’s consolidated financial statements in the future.

Other Than Temporary Impairment: In 2004, the Emerging Issues Task Force released Issue 03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments” (EITF 03-1), which provides guidance for evaluating whether an investment is other-than-temporarily impaired and requires certain disclosures with respect to these investments.

In June 2005, the FASB voted to nullify certain provisions of EITF 03-1 which addressed the evaluation of an impairment to determine whether it was other-than-temporary. In general, these provisions required companies to declare their ability and intent to hold other-than-temporarily impaired investments until they recovered their losses. If a company was unable to make this declaration, write-downs of investment securities through losses charged to the income statement would be required. The effective date of these provisions was

9

originally delayed in September 2004, due to industry concerns about the potential impact of this proposed accounting.

Adoption of the surviving provisions of EITF 03-1 did not have a material impact on the Corporation’s financial condition or results of operations. The Corporation continues to apply the provisions of existing authoritative literature in evaluating its investments for other-than-temporary impairment.

NOTE H – Acquisitions

On December 31, 2004, the Corporation acquired all of the outstanding common stock of First Washington FinancialCorp (First Washington), of Windsor, New Jersey. First Washington was a $490 million bank holding company whose primary subsidiary was First Washington State Bank (FWSB), which operates sixteen community-banking offices in Mercer, Monmouth and Ocean Counties in New Jersey. This acquisition enabled the Corporation to expand and enhance its existing New Jersey franchise.

The total purchase price was $125.8 million, including $125.2 million in stock issued and stock options assumed and $610,000 in First Washington stock purchased for cash and other direct acquisition costs. The Corporation issued 1.69 shares of its stock for each of the 4.3 million shares of First Washington outstanding on the acquisition date. The purchase price was determined based on the value of the Corporation’s stock on the date when the final terms of the acquisition were agreed to and announced.

On April 1, 2004, the Corporation acquired all of the outstanding common stock of Resource Bankshares Corporation (Resource), an $890 million financial holding company, and its primary subsidiary, Resource Bank. Resource Bank is located in Virginia Beach, Virginia, and operates six community-banking offices in Newport News, Chesapeake, Herndon, Virginia Beach and Richmond, Virginia and fourteen loan production and residential mortgage offices in Virginia, North Carolina, Maryland and Florida. This acquisition allowed the Corporation to enter a new geographic market.

The total purchase price was $195.7 million, including $185.9 million in stock issued and stock options assumed and $9.8 million in Resource stock purchased for cash and other direct acquisition costs. The Corporation issued 1.925 shares of its stock for each of the 5.9 million shares of Resource outstanding on the acquisition date. The purchase price was determined based on the value of the Corporation’s stock on the date when the final terms of the acquisition were agreed to and announced.

The following table summarizes unaudited pro-forma information assuming the acquisitions of Resource and First Washington had occurred on January 1, 2004. This pro-forma information includes certain adjustments, including amortization related to fair value adjustments recorded in purchase accounting (in thousands, except per-share information):

	Three months ended		Six months ended
	June 30, 2004		June 30, 2004
Net interest income	$	92,733	$	186,828
Other income		37,523		75,177
Net income		39,084		77,112
Per Share:
Net income (basic)	$	0.24	$	0.48
Net income (diluted)		0.24		0.47

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NOTE I – Subsequent Events

Acquisition of SVB Financial Services, Inc.: On July 1, 2005, the Corporation completed its acquisition of SVB Financial Services, Inc. (SVB). SVB was a $530 million bank holding company whose primary subsidiary was Somerset Valley Bank (Somerset Valley), which operates 11 community-banking offices in Somerset, Hunterdon and Middlesex Counties in New Jersey.

Under the terms of the merger agreement, each of the approximately 4.1 million shares of SVB’s common stock was acquired by the Corporation based on a “cash election merger” structure. Each SVB shareholder elected to receive 100% of the merger consideration in stock, 100% in cash, or a combination of stock and cash.

As a result of the SVB shareholder elections, approximately 3.1 million of the SVB shares outstanding on the acquisition date were converted into shares of Corporation common stock, based on a fixed exchange ratio of 1.1899 shares of Corporation stock for each share of SVB stock. The remaining 984,000 shares of SVB stock were purchased for $21.00 per share, or a total of $20.7 million cash. In addition, each of the options to acquire SVB’s stock were converted into options to purchase the Corporation’s stock or were settled in cash, based on the election of each option holder and the terms of the merger agreement.

As a result of the acquisition, SVB was merged into the Corporation and Somerset Valley became a wholly owned subsidiary. The acquisition is being accounted for using purchase accounting, which requires the Corporation to allocate the total purchase price of the acquisition to the assets acquired and liabilities assumed, based on their respective fair values at the acquisition date, with any remaining purchase price being recorded as goodwill. Resulting goodwill balances are then subject to an impairment test on at least an annual basis. The results of Somerset Valley’s operations will be included in the Corporation’s financial statements prospectively from the July 1, 2005 acquisition date.

The total purchase price of approximately $90 million includes the value of the Corporation’s stock issued ($65.7 million), cash paid ($20.7 million), SVB options converted or settled in cash ($2.5 million), and certain acquisition related costs ($1.0 million). The carrying value of the net assets of Somerset Valley as of July 1, 2005 was approximately $31.5 million and, therefore, the purchase price exceeded the carrying value of the net assets by approximately $58.5 million. The total purchase price will be allocated to the net assets acquired, based on acquisition date fair values. The Corporation expects to record a core deposit intangible asset and goodwill as a result of the acquisition accounting. The Corporation is in the process of completing its fair value analysis and will determine the allocation of the purchase price to the fair value of net assets acquired and goodwill during the third quarter of 2005.

Pending Acquisition – Columbia Bancorp: On July 26, 2005, the Corporation entered into a merger agreement to acquire Columbia Bancorp (Columbia), of Columbia, Maryland. Columbia is a $1.3 billion bank holding company whose primary subsidiary is Columbia Bank, which operates 19 full-service community banking offices and five retirement community offices in Howard, Montgomery, Prince George’s and Baltimore Counties and Baltimore City.

Under the terms of the merger agreement, each of the approximately 6.9 million shares of Columbia’s common stock will be acquired based on a “cash election merger” structure. Each Columbia shareholder will have the ability to elect to receive 100% of the merger consideration in stock, 100% in cash, or a combination of stock and cash. Their elections will be subject to prorating to achieve a result where a minimum of 20% and a maximum of 50% of Columbia’s outstanding shares will receive cash consideration. Those shares that will be converted into Corporation common stock would be exchanged based on a fixed exchange ratio of 2.325 shares of Corporation stock for each share of Columbia stock. Those shares of Columbia stock that will be converted into cash will be converted into a per-share amount of cash based on a fixed price of $42.48 per

11

share of Columbia stock. In addition, each of the options to acquire Columbia’s stock will be converted to options to purchase the Corporation’s stock.

The acquisition is subject to approval by both the Columbia shareholders and applicable bank regulatory authorities. The acquisition is expected to be completed during the first quarter of 2006. As a result of the acquisition, Columbia will be merged into the Corporation and Columbia Bank will become a wholly-owned subsidiary.

The acquisition will be accounted for as a purchase. Purchase accounting requires the Corporation to allocate the total purchase price of the acquisition to the assets acquired and liabilities assumed, based on their respective fair values at the acquisition date, with any remaining acquisition cost being recorded as goodwill. Resulting goodwill balances are then subject to an impairment review on at least an annual basis. The results of Columbia’s operations will be included in the Corporation’s financial statements prospectively from the date of the acquisition.

The total purchase price is estimated to be approximately $313 million, which includes cash expected to be paid, the value of the Corporation’s stock expected to be issued, the value of Columbia’s options to be converted and certain acquisition related costs. The net assets of Columbia as of June 30, 2005 were $91.3 million and, therefore, the estimated purchase price exceeded the carrying value of the net assets by $221.7 million. The total purchase price will be allocated to the net assets acquired as of the merger effective date, based on fair market values at that date. The Corporation expects to record a core deposit intangible asset and goodwill as a result of the acquisition accounting.

Note J – Derivative Financial Instruments – Interest Rate Swaps

As of June 30, 2005, interest rate swaps with a notional amount of $240 million were used to hedge certain long-term fixed rate certificate of deposit liabilities held at one of the Corporation’s affiliate banks. The terms of the certificates of deposit and the interest rate swaps mirror each other and were committed to simultaneously. Under the terms of the swap agreements, the Corporation is the fixed rate receiver and the floating rate payer (generally tied to the three month London Interbank Offering Rate, or LIBOR, a common index used for setting rates between financial institutions). The combination of the interest rate swaps and the issuance of the certificates of deposit generates long-term floating rate funding for the Corporation. The interest rate swaps are classified as a cash flow hedge and the fair values of the derivatives are recorded as other assets or other liabilities. Changes in the fair values during the period are recorded in other comprehensive income (loss) to the extent the hedge is effective. Ineffectiveness resulting from differences between the changes in fair value or cash flows of the certificate of deposits and the interest rate swaps must be recorded in current period earnings.

The Corporation’s analysis of the effectiveness of the hedges indicated they were 97.7% effective as of June 30, 2005. As a result, a $109,000 and $46,000 credit to income for the three and six-month periods ended June 30, 2005, respectively, was recognized. During the six months ended June 30, 2005, the Corporation also recorded a $1.0 million other comprehensive loss (net of $540,000 tax effect) to recognize the fair value changes of derivatives resulting from the rising interest rate environment.

NOTE K – Financial Instruments With Off-Balance Sheet Risk

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. Those financial instruments include commitments to extend credit and letters of credit, which involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Corporation’s Consolidated Balance Sheets. Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the outstanding amount of those instruments.

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The outstanding amounts of commitments to extend credit and letters of credit were as follows:

	June 30
	2005		2004
	(in thousands)
Commitments to extend credit		3,556,674		3,109,289
Standby letters of credit		548,713		518,961
Commercial letters of credit		21,471		20,869

NOTE L – Accelerated Share Repurchase

On May 4, 2005, the Corporation purchased 4.3 million shares of its common stock from an investment bank at a total cost of $73.6 million, or $17.06 per share, under an “Accelerated Share Repurchase” program (ASR), which allowed the shares to be purchased immediately rather than over time. The investment bank, in turn, is repurchasing shares on the open market over a period that is determined by the average daily trading volume of our shares, among other factors. The Corporation will settle its position with the investment bank at the completion of the ASR by paying or receiving cash in an amount representing the difference between the initial price and the actual price of the shares repurchased. Through June 30, 2005, the investment bank had repurchased 193,000 shares at an average weighted cost of $17.73 per share. The Corporation expects the ASR to be completed in 2006.

NOTE M – Subordinated Debt

On March 28, 2005 the Corporation issued $100.0 million of ten-year subordinated notes, which mature April 1, 2015 and carry a fixed rate of 5.35%. Interest is paid semi-annually, commencing in October 2005. These notes were registered with the SEC on Form S-4, filed August 4, 2005.

NOTE N – Reclassifications

Certain amounts in the 2004 consolidated financial statements and notes have been reclassified to conform to the 2005 presentation.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion) concerns Fulton Financial Corporation (the Corporation), a financial holding company incorporated under the laws of the Commonwealth of Pennsylvania in 1982, and its wholly owned subsidiaries. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes presented in this report.

FORWARD-LOOKING STATEMENTS

The Corporation has made, and may continue to make, certain forward-looking statements with respect to its acquisition and growth strategies, management of net interest income and margin, the ability to realize gains on equity investments, allowance and provision for loan losses, expected levels of certain non-interest expenses and the liquidity position of the Corporation and Parent Company. The Corporation cautions that these forward-looking statements are subject to various assumptions, risks and uncertainties. Because of the possibility of changes in these assumptions, risks and uncertainties, actual results could differ materially from forward-looking statements.

In addition to the factors identified herein, the following could cause actual results to differ materially from such forward-looking statements: pricing pressures on loan and deposit products, actions of bank and non-bank competitors, changes in local and national economic conditions, changes in regulatory requirements, actions of the Federal Reserve Board (FRB), creditworthiness of current borrowers, customers’ acceptance of the Corporation’s products and services and acquisition pricing and the ability of the Corporation to continue making acquisitions.

The Corporation’s forward-looking statements are relevant only as of the date on which such statements are made. By making any forward-looking statements, the Corporation assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.

RESULTS OF OPERATIONS

Overview

As a financial institution with a focus on traditional banking activities, the Corporation generates the majority of its revenue through net interest income, or the difference between interest income earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the net interest margin, which is net interest income as a percentage of average interest-earning assets. The Corporation also generates revenue through fees earned on the various services and products offered to its customers and through sales of assets, such as loans, investments, or properties. Offsetting these revenue sources are provisions for credit losses on loans, other operating expenses and income taxes.

The Corporation’s net income for the second quarter of 2005 increased $3.7 million, or 9.8%, from $37.9 million in 2004 to $41.6 million in 2005. Diluted net income per share increased $0.02, or 8.0%, from $0.25 in 2004 to $0.27 in 2005. The percentage increase in net income per share was slightly lower than the net income increase as the average number of shares outstanding increased as a result of shares issued for acquisitions. The Corporation realized annualized returns on average assets of 1.46% and average equity of 13.95% during the second quarter of 2005. The annualized return on average tangible equity, which is net income divided by average shareholders’ equity, excluding goodwill and intangible assets, was 20.64% for the quarter.

The increase in net income compared to the second quarter of 2004 resulted from an $11.2 million increase in net interest income and a $5.6 million increase in other income (excluding security gains), offset by a $3.9 million

14

decrease in security gains, a $7.6 million increase in other expenses and a $1.7 million increase in income taxes. Net interest income growth resulted from increases in average earning assets, due to the acquisition of First Washington FinancialCorp (First Washington) in December 2004 (see “Acquisitions” below) and internal growth. The net interest margin increased 5.1% compared to the second quarter of 2004, compounding the impact of the earning asset growth.

The following summarizes some of the more significant factors that influenced the Corporation’s second quarter 2005 results.

Interest Rates – Changes in the interest rate environment can have an effect on both the Corporation’s net interest income and its non-interest income. The interest rate environment is commonly evaluated based on the shape of the U. S. Treasury yield curve (Yield Curve), which plots the yields on treasury issues over various maturity periods. During the past year, the Yield Curve has flattened, with short-term rates increasing and longer-term rates decreasing.

Floating rate loans, short-term borrowings and savings and time deposit rates are generally influenced by short-term rates. The FRB raised the Federal funds rate nine times since June 2004, for a total increase of 225 basis points (from 1.00% to 3.25%). The Corporation’s prime lending rate had a corresponding increase, from 4.00% to 6.25%. The increase in short-term rates initially benefited the Corporation as floating rate loans quickly adjusted to higher rates, while increases in deposit rates – which are more discretionary – were less pronounced. As a result, the Corporation realized an increase in net interest margin in the third and fourth quarters of 2004 and the first quarter of 2005.

During the second quarter of 2005, competitive pressures resulted in increases in deposit rates. In addition, the Corporation issued $100 million of subordinated debt at 5.35% at the end of March 2005. As a result, the net interest margin decreased three basis points compared to the first quarter of 2005.

With respect to longer-term rates, the 10-year treasury yield, which is a common benchmark for evaluating residential mortgage rates, decreased to 3.94% at June 30, 2005 as compared to 4.58% at June 30, 2004. Mortgage rates have been generally low over the past several years, generating strong refinance activity and significant gains for the Corporation as fixed rate residential mortgages are generally sold in the secondary market. With the decrease in long-term rates from the prior year, origination volume and the resulting gains on sales of these loans have remained strong, contributing to the Corporation’s non-interest income.

The Corporation manages its risk associated with changes in interest rates through the techniques documented in the “Market Risk” section of Management’s Discussion. As of June 30, 2005, the Corporation projects improvements in net interest income in a rising rate environment. Increases in long-term rates, however, may have a detrimental impact on mortgage loan origination volumes and related gains on sales of mortgage loans.

Earning Assets - The Corporation’s interest-earning assets increased from 2004 to 2005 as a result of the First Washington acquisition and strong internal loan growth. This growth also contributed to the increase in net interest income. With improving regional economic conditions the Corporation is optimistic that internal loan growth in the short-term will continue to be strong.

From 2004 to 2005, the Corporation experienced a shift in its composition of interest-earning assets from investments (23.3% of total average interest-earning assets in 2005, compared to 27.7% in 2004) to loans (74.8% in 2005 compared to 71.1% in 2004). This change resulted from strong loan demand being funded with the proceeds from maturing investment securities, primarily mortgage-backed securities. The movement to higher-yielding loans has had a positive effect on the Corporation’s net interest income and net interest margin.

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Asset Quality - Asset quality refers to the underlying credit characteristics of borrowers and the likelihood that defaults on contractual payments will result in charge-offs of account balances. Asset quality is generally a function of economic conditions, but can be managed through conservative underwriting and sound collection policies and procedures.

The Corporation continued to maintain excellent asset quality, attributable to its credit culture and underwriting policies. Asset quality measures such as non-performing assets to total assets and net charge-offs to average loans improved in comparison to 2004, resulting in a lower provision for loan losses in the second quarter of 2005. While overall asset quality has remained strong, deterioration in quality of one or several significant accounts could have a detrimental impact and result in losses that may not be foreseeable based on current information. In addition, rising interest rates could increase the total payments of borrowers and could have a negative impact on the ability of some to pay according to the terms of their loans.

Equity Markets — As noted in the “Market Risk” section of Management’s Discussion, equity valuations can have an impact on the Corporation’s financial performance. In particular, bank stocks account for a significant portion of the Corporation’s equity investment portfolio. Gains on sales of these equities have been a recurring component of the Corporation’s earnings for many years, including the second quarters of 2005 and 2004, with total gains of $1.4 million and $5.3 million, respectively. Declines in bank stock portfolio values could have a detrimental impact on the Corporation’s ability to recognize gains from these sales.

Acquisitions — In April 2004, the Corporation acquired Resource Bankshares Corporation (Resource), an $890 million financial holding company located in Virginia Beach, Virginia whose primary subsidiary was Resource Bank. This was the Corporation’s first acquisition in Virginia, allowing it to enter a new geographic market. In December 2004, the Corporation acquired First Washington, a $490 million bank holding company located in Windsor, New Jersey whose primary subsidiary was First Washington State Bank (FWSB). Results for 2005 in comparison to 2004 were impacted by these acquisitions, as documented in the appropriate sections of Management’s Discussion.

In July 2005, the Corporation acquired SVB Financial Services, Inc. (SVB) of Somerville, New Jersey. SVB was a $530 million bank holding company whose primary subsidiary was Somerset Valley Bank, which operates 11 community-banking offices in Somerset, Hunterdon and Middlesex counties in New Jersey. The acquisition was completed on July 1, 2005. For additional information on the terms of this acquisition, see Note I, “Subsequent Events”, in the Notes to Consolidated Financial Statements.

Acquisitions have long been a supplement to the Corporation’s internal growth. These recent acquisitions provide the opportunity for additional growth, as they will allow the Corporation’s existing products and services to be sold in new markets. The Corporation’s acquisition strategy focuses on high growth areas with strong market demographics and targets organizations that have a comparable corporate culture, strong performance and good asset quality, among other factors. Under its “super-community” banking philosophy, acquired organizations generally retain their status as separate legal entities, unless consolidation with an existing affiliate bank is practical. Back office functions are generally consolidated to maximize efficiencies.

Merger and acquisition activity in the financial services industry has been very competitive in recent years, as evidenced by the prices paid for certain acquisitions. While the Corporation has been an active acquirer, management is committed to basing its pricing on rational economic models. Management will continue to focus on generating growth in the most cost-effective manner.

Merger and acquisition activity also impacted the Corporation’s capital and liquidity. In order to complete acquisitions, the Corporation must have strategies in place to maintain appropriate levels of capital and to provide necessary cash resources. In March 2005, the Corporation issued $100 million of subordinated debt, in part to support

16

treasury stock repurchases related to acquisitions. This financing instrument also qualifies as a component of total regulatory capital. See additional information in the “liquidity” section of Management’s Discussion.

Quarter Ended June 30, 2005 versus Quarter Ended June 30, 2004

Results for the second quarter of 2005 compared to the results of the second quarter of 2004 were impacted by the December 2004 acquisition of FWSB, whose results are included in 2005 amounts, but not in 2004.

Net Interest Income

Net interest income increased $11.2 million, or 12.6% ($7.0 million, or 7.9%, excluding FWSB), to $99.9 million in 2005 from $88.7 million in 2004. The increase was due to both average balance growth, with total earning assets increasing 7.0%, and an improving net interest margin. The average taxable equivalent yield on earning assets increased 69 basis points (a 13.5% increase) over 2004 while the cost of interest-bearing liabilities increased 62 basis points (a 37.1% increase). This resulted in a 19 basis point increase in net interest margin compared to the same period in 2004. The Corporation continues to manage its asset/liability position and interest rate risk through the methods discussed in the “Market Risk” section of Management’s Discussion.

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The following table provides a comparative average balance sheet and net interest income analysis for the second quarter of 2005 as compared to the same period in 2004. Interest income and yields are presented on a tax-equivalent basis, using a 35% Federal tax rate. The discussion following this table is based on these tax-equivalent amounts. All dollar amounts are in thousands.

	Quarter Ended June 30, 2005									Quarter Ended June 30, 2004
	Average						Yield/			Average						Yield/
	Balance			Interest			Rate (1)			Balance			Interest			Rate (1)
ASSETS
Interest-earning assets:
Loans and leases	$	7,823,737		$	124,080			6.36	%	$	6,946,626		$	97,705			5.65	%
Taxable investment securities		1,965,683			18,257			3.71			2,299,834			19,652			3.39
Tax-exempt investment securities		341,044			4,227			4.96			272,891			3,822			5.60
Equity securities		129,980			1,341			4.14			137,528			1,196			3.49
Total investment securities		2,436,707			23,825			3.91			2,710,253			24,670			3.62
Mortgage loans held for sale		152,503			2,699			7.08			115,658			1,962			6.79
Other interest-earning assets		47,819			348			2.90			6,717			19			1.09
Total interest-earning assets		10,460,766			150,952			5.79	%		9,779,254			124,356			5.10	%
Noninterest-earning assets:
Cash and due from banks		342,592									332,653
Premises and equipment		152,123									130,737
Other assets		552,807									447,700
Less: Allowance for loan losses		(91,209	)								(86,800	)
Total Assets	$	11,417,079								$	10,603,544
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits	$	1,484,772		$	3,309			0.89	%	$	1,362,761		$	1,634			0.48	%
Savings deposits		1,986,909			5,859			1.18			1,857,175			2,637			0.57
Time deposits		3,019,818			21,936			2.91			2,841,569			18,074			2.56
Total interest-bearing deposits		6,491,499			31,104			1.92			6,061,505			22,345			1.48
Short-term borrowings		1,180,975			7,914			2.68			1,282,657			3,135			0.98
Long-term debt		841,650			9,668			4.59			656,803			7,838			4.70
Total interest-bearing liabilities		8,514,124			48,686			2.29	%		8,000,965			33,318			1.67	%
Noninterest-bearing liabilities:
Demand deposits		1,567,611									1,386,770
Other		139,888									114,219
Total Liabilities		10,221,623									9,501,954
Shareholders’ equity		1,195,455									1,101,590
Total Liabilities and Shareholders’ Equity	$	11,417,078								$	10,603,544
Net interest income/ net interest margin (FTE)					102,266			3.92	%					91,038			3.73	%
Tax equivalent adjustment					(2,341	)								(2,332	)
Net interest income				$	99,925								$	88,706

(1) Presented on a fully taxable equivalent (FTE) basis using a 35% Federal tax rate.

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The following table summarizes the changes in interest income and expense due to changes in average balances (volume) and changes in rates:

	2005 vs. 2004
	Increase (decrease) due
	To change in
	Volume			Rate			Net
	(in thousands)
Interest income on:
Loans and leases	$	13,280		$	13,095		$	26,375
Taxable investment securities		(2,981	)		1,586			(1,395	)
Tax-exempt investment securities		894			(489	)		405
Equity securities		(68	)		213			145
Mortgage loans held for sale		654			83			737
Other interest-earning assets		262			67			329
Total interest-earning assets	$	12,041		$	14,555		$	26,596
Interest expense on:
Demand deposits	$	159		$	1,516		$	1,675
Savings deposits		198			3,024			3,222
Time deposits		1,201			2,661			3,862
Short-term borrowings		(268	)		5,047			4,779
Long-term debt		2,153			(323	)		1,830
Total interest-bearing liabilities	$	3,443		$	11,925		$	15,368

Interest income increased $26.6 million, or 21.4%, mainly as a result of both the increased yield on interest earning assets and growth in average balances. Interest income increased $14.6 million as a result of the 69 basis point increase in rates. An additional $12.0 million increase was realized from the 7.0% increase in average balances.

Average loans increased $877.1 million, or 12.6%. The following presents the growth in average loans by category:

	Three months ended
	June 30				Increase (decrease)
	2005		2004		$			%
			(dollars in thousands)
Commercial — industrial and financial	$	1,970,926	$	1,776,940	$	193,986			10.9	%
Commercial — agricultural		319,853		331,575		(11,721	)		(3.5	)
Real estate — commercial mortgage		2,537,606		2,216,617		320,988			14.5
Real estate — commercial construction		388,113		312,312		75,802			24.3
Real estate — residential mortgage		570,061		519,353		50,707			9.8
Real estate — residential construction		344,823		241,053		103,769			43.0
Real estate — home equity		1,127,228		959,267		167,960			17.5
Consumer		502,031		517,226		(15,195	)		(2.9	)
Leasing and other		63,096		72,283		(9,185	)		(12.7	)
Total	$	7,823,737	$	6,946,626	$	877,111			12.6	%

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FWSB contributed $251.6 million to the increase in average loans, presented by type in the following table:

	Three months ended June 30
	2005		2004		Increase
	(in thousands)
Commercial — industrial and financial	$	51,553	$	—	$	51,553
Commercial — agricultural		—		—		—
Real estate — commercial mortgage		129,435		—		129,435
Real estate — commercial construction		19,894		—		19,894
Real estate — residential mortgage		11,430		—		11,430
Real estate — residential construction		258		—		258
Real estate — home equity		34,913		—		34,913
Consumer		3,737		—		3,737
Leasing and other		397		—		397
Total	$	251,617	$	—	$	251,617

The following table presents the growth in average loans, by type, excluding the average balances contributed by FWSB:

	Three months ended June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Commercial — industrial and financial	$	1,919,373	$	1,776,940	$	142,433			8.0	%
Commercial — agricultural		319,853		331,575		(11,722	)		(3.5	)
Real estate — commercial mortgage		2,408,173		2,216,617		191,556			8.6
Real estate — commercial construction		368,220		312,312		55,908			17.9
Real estate — residential mortgage		558,630		519,353		39,277			7.6
Real estate — residential construction		344,564		241,053		103,511			42.9
Real estate — home equity		1,092,314		959,267		133,047			13.9
Consumer		498,293		517,226		(18,933	)		(3.7	)
Leasing and other		62,700		72,283		(9,583	)		(13.3	)
Total	$	7,572,120	$	6,946,626	$	625,494			9.0	%

Excluding the impact of FWSB, loan growth continued to be particularly strong in the commercial and commercial mortgage categories, which together increased $334.0 million, or 8.4%. Commercial agricultural loans decreased $11.7 million, or 3.5% due to agricultural customers using excess funds to pay down loans, instead of expanding their facilities. Residential mortgage and residential construction increased $142.8 million, or 18.8%, mainly due to an increase in residential construction lending at Resource Bank. Home equity loans increased $133.1 million, or 13.9%, due to promotional efforts and customers using home equity loans as a cost-effective refinance alternative. Consumer loans decreased slightly, reflecting repayment of these loans with tax-advantaged residential mortgage or home equity loans.

The average yield on loans during the second quarter of 2005 was 6.36%, a 71 basis point, or 12.6%, increase over 2004. This reflects the impact of a significant portfolio of floating rate loans, which reprice to higher rates when interest rates rise.

Average investment securities decreased $273.5 million, or 10.1%. Excluding the impact of FWSB, this decrease was $506.7 million, or 18.7%. During the past twelve months, maturities of investment securities exceeded purchases of new investments, with the resulting net inflow of funds used to support loan growth.

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The average yield on investment securities increased 29 basis points, from 3.62% in 2004 to 3.91% in 2005.

Interest expense increased $15.4 million, or 46.1%, to $48.7 million in the second quarter of 2005, from $33.3 million in the second quarter of 2004. Interest expense increased $11.9 million as a result of the 62 basis point increase in the cost of total interest-bearing liabilities, with the remaining $3.4 million increase due to an increase in average balances, The cost of interest-bearing deposits increased 44 basis points, or 29.7%, from 1.48% in 2004 to 1.92% in 2005. This increase was due to rising rates in general as a result of the FRB’s rate increases over the past twelve months.

The following table presents average deposits by category:

	Three months ended
	June 30				Increase
	2005		2004		$		%
	(dollars in thousands)
Noninterest-bearing demand	$	1,567,611	$	1,386,770	$	180,841		13.0	%
Interest-bearing demand		1,484,771		1,362,761		122,011		9.0
Savings/money market		1,986,909		1,857,174		129,735		7.0
Time deposits		3,019,819		2,841,570		178,248		6.3
Total	$	8,059,110	$	7,448,275	$	610,835		8.2	%

The FWSB acquisition accounted for approximately $419.6 million of the increase in average balances. The following table presents the average balance impact of the acquisition, by type:

	Three months ended
	June 30
	2005		2004		Increase
	(in thousands)
Noninterest-bearing demand	$	79,743	$	—	$	79,743
Interest-bearing demand		54,268		—		54,268
Savings/money market		51,082		—		51,082
Time deposits		234,556		—		234,556
Total	$	419,649	$	—	$	419,649

The following table presents the growth in average deposits, by type, excluding the contribution of FWSB:

	Three months ended
	June 30				Increase (decrease)
	2005		2004		$			%
			(dollars in thousands)
Noninterest-bearing demand	$	1,487,868	$	1,386,770	$	101,098			7.3	%
Interest-bearing demand		1,430,503		1,362,761		67,742			5.0
Savings/money market		1,935,827		1,857,175		78,652			4.2
Time deposits		2,785,264		2,841,570		(56,306	)		(2.0	)
Total	$	7,639,461	$	7,448,275	$	191,186			2.6	%

Average borrowings increased $83.2 million, or 4.3%, to $2.0 billion in the second quarter of 2005. FWSB added $51.3 million to short-term borrowings and $9.5 million to long-term debt. Excluding FWSB, average short-term borrowings decreased $152.9 million, or 11.9%, to $1.1 billion in 2005, while average long-term

21

debt increased $175.4 million, or 26.7%, to $832.2 million. The decrease in short-term borrowings was mainly due to a decrease in Federal funds purchased as funds from deposits and investment maturities were sufficient to fund increases in loans. The increase in long-term debt was partially due to the Corporation’s issuance of $100.0 million of ten-year subordinated notes in March 2005. The remaining increase was mainly due to an increase in Federal Home Loan Bank Advances. The Corporation locked in longer-term rates in anticipation of increasing rates. As with the U.S. Treasury yields, longer-term FHLB rates have decreased over the last year.

Provision and Allowance for Loan Losses

The following table summarizes loans outstanding (net of unearned income):

	June 30		December 31		June 30
	2005		2004		2004
	(in thousands)
Commercial — industrial and financial	$	1,991,480	$	1,946,962	$	1,818,568
Commercial — agricultural		322,791		326,176		324,466
Real-estate — commercial mortgage		2,556,990		2,461,016		2,240,228
Real-estate — commercial construction		396,159		348,846		314,903
Real-estate — residential mortgage		558,845		543,072		504,320
Real-estate — residential construction		347,614		277,940		245,963
Real estate — home equity		1,141,749		1,108,249		1,004,532
Consumer		485,489		506,290		522,574
Leasing and other		60,391		65,996		66,757
Total	$	7,861,508	$	7,584,547	$	7,042,311

22

The following table summarizes the activity in the Corporation’s allowance for loan losses:

	Three months ended
	June 30
	2005			2004
	(dollars in thousands)
Loans outstanding at end of period (net of unearned)	$	7,861,508		$	7,042,311
Daily average balance of loans and leases	$	7,823,737		$	6,946,626
Balance at beginning of period	$	90,127		$	78,271
Loans charged-off:
Commercial, financial and agricultural		729			510
Real estate – mortgage		54			203
Consumer		836			808
Leasing and other		41			48
Total loans charged-off		1,660			1,569
Recoveries of loans previously charged-off:
Commercial, financial and agricultural		479			574
Real estate – mortgage		467			114
Consumer		242			412
Leasing and other		22			24
Total recoveries		1,210			1,124
Net loans charged-off		450			444
Provision for loan losses		725			800
Allowance purchased (Resource)		—			7,912
Balance at end of period	$	90,402		$	86,539
Net charge-offs to average loans (annualized)		0.02	%		0.03	%
Allowance for loan losses to loans outstanding		1.15	%		1.23	%

The following table summarizes the Corporation’s non-performing assets:

	June 30			December 31			June 30
	2005			2004			2004
	(dollars in thousands)
Non-accrual loans	$	20,820		$	22,574		$	21,961
Loans 90 days past due and accruing		7,453			8,318			9,314
Other real estate owned (OREO)		3,478			2,209			1,119
Total non-performing assets	$	31,751		$	33,101		$	32,394
Non-accrual loans/Total loans		0.26	%		0.30	%		0.31	%
Non-performing assets/Total assets		0.27	%		0.30	%		0.31	%
Allowance/Non-performing loans		320	%		290	%		277	%

23

The provision for loan losses for the second quarter of 2005 totaled $725,000, a decrease of $75,000, or 9.4%, from the same period in 2004. Net charge-offs totaled $450,000, or 0.02% of average loans on an annualized basis, during the second quarter of 2005, compared to $444,000 or 0.03% in net charge-offs, for the second quarter of 2004. Non-performing assets decreased to $31.8 million, or 0.27% of total assets, at June 30, 2005, from $32.4 million, or 0.31% of total assets, at June 30, 2004.

Management believes that the allowance balance of $90.4 million at June 30, 2005 is sufficient to cover losses inherent in the loan portfolio on that date and is appropriate based on applicable accounting standards.

Other Income

The following table presents the components of other income:

	Three months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(in thousands)
Investment management and trust services	$	8,966	$	8,637	$	329			3.8	%
Service charges on deposit accounts		9,960		9,929		31			0.3
Other service charges and fees		7,142		4,970		2,172			43.7
Gain on sale of mortgage loans		6,290		6,050		240			4.0
Investment securities gains		1,418		5,349		(3,931	)		(73.5	)
Gain on sale of deposits		2,201		—		2,201			N/A
Other		2,338		1,727		611			35.4
Total	$	38,315	$	36,662	$	1,653			4.5	%

Total other income for the quarter ended June 30, 2005 was $38.3 million, an increase of $1.7 million, or 4.5%, over the comparable period in 2004. Excluding investment securities gains, which decreased from $5.3 million in 2004 to $1.4 million in 2005, other income increased $5.6 million, or 17.8%.

Other service charges and fees increased $2.2 million, or 43.7%, due to a one-time increase in credit card merchant fee income and fees on letters of credit. During the second quarter of 2005, the Corporation sold three branches and related deposits in two separate transactions. The sale resulted in $2.2 million of gains primarily from the premiums paid on the $36.7 million of deposits sold. The $611,000 increase in other income resulted from growth in various categories.

Investment securities gains decreased $3.9 million, or 73.5%. Investment securities gains during the second quarter of 2005 consisted of net realized gains of $1.4 million on the sale of equity securities and $56,000 on the sale of available for sale debt securities. Investment securities gains during the second quarter of 2004 consisted of net realized gains of $3.3 million on the sale of equity securities and $2.0 million on the sale of available for sale debt securities.

24

Other Expenses

The following table presents the components of other expenses:

	Three months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Salaries and employee benefits	$	45,152	$	41,834	$	3,318			7.9	%
Net occupancy expense		6,549		5,859		690			11.8
Equipment expense		2,888		2,749		139			5.1
Data processing		3,321		2,868		453			15.8
Advertising		2,276		1,914		362			18.9
Intangible amortization		1,168		1,356		(188	)		-13.9
Other		16,752		13,957		2,795			20.0
Total	$	78,106	$	70,537	$	7,569			10.7	%

Total other expenses increased $7.6 million, or 10.7%, in 2005, including $3.4 million due to FWSB, detailed as follows:

	Three months ended
	June 30
	2005		2004		Increase
	(in thousands)
Salaries and employee benefits	$	1,291	$	—	$	1,291
Net occupancy expense		358		—		358
Equipment expense		157		—		157
Data processing		122		—		122
Advertising		55		—		55
Intangible amortization		154		—		154
Other		1,269		—		1,269
Total	$	3,406	$	—	$	3,406

The following table presents the components of other expenses, excluding the amounts contributed by FWSB, for the quarter ended June 30, 2005:

	Three months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Salaries and employee benefits	$	43,861	$	41,834	$	2,027			4.8	%
Net occupancy expense		6,191		5,859		332			5.7
Equipment expense		2,731		2,749		(18	)		(0.7	)
Data processing		3,199		2,868		331			11.5
Advertising		2,221		1,914		307			16.0
Intangible amortization		1,014		1,356		(342	)		(25.2	)
Other		15,483		13,957		1,526			10.9
Total	$	74,700	$	70,537	$	4,163			5.9	%

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The discussion that follows addresses changes in other expenses, excluding FWSB.

Salaries and employee benefits increased $2.0 million, or 4.8%, in comparison to the second quarter of 2004. The salary expense component increased $1.4 million, or 4.2%, driven by salary increases for existing employees and an increase in average full-time equivalent employees from 3,298 in the second quarter of 2004 to 3,317 in the second quarter of 2005. Employee benefits increased $626,000, or 7.6%, in comparison to the second quarter of 2004 driven mainly by increases in healthcare costs.

Net occupancy expense increased $332,000, or 5.7%, to $6.2 million in 2005. The increase resulted from the expansion of the branch network and the addition of new office space for existing affiliates. Equipment expense decreased $18,000, or 0.7%, due to lower depreciation expense as certain equipment became fully depreciated.

Data processing expense, which consists mainly of fees paid for outsourced back office systems, increased $331,000, or 11.5%, due to the continued growth in transaction volumes. Advertising expense increased $307,000, or 16.0%, due to promotional campaigns particularly in retail lines of business. Intangible amortization decreased $342,000, or 25.2%, in the second quarter of 2005. Intangible amortization consists of the amortization of unidentifiable intangible assets related to branch and loan acquisitions, core deposit intangible assets, and other identified intangible assets. Since many of these intangibles are amortized using accelerated methods, amortization expense of existing intangibles decreases over time. Other expense increased $1.5 million, or 10.9%, due to the timing of certain expenses.

Income Taxes

Income tax expense for the second quarter of 2005 was $17.8 million, a $1.6 million, or 10.3%, increase from $16.2 million in 2004. The Corporation’s effective tax rate for the second quarter of 2005 was approximately 30.0%, as compared to 29.9% in 2004. The effective rate is lower than the Federal statutory rate of 35% due mainly to investments in tax-free municipal securities and federal tax credits from investments in low and moderate income housing partnerships.

Six Months Ended June 30, 2005 versus Six Months Ended June 30, 2004

Results for the first six months of 2005 when compared to the results of 2004 were impacted by the acquisitions of Resource Bank in April 2004 and FWSB in December 2004. In the following discussion these are collectively referred to as the “Acquisitions”.

Net Interest Income

Net interest income increased $26.5 million, or 15.4%, to $198.2 million in 2005 from $171.7 million in 2004. This increase was due to both average balance growth, with total earning assets increasing 10.2%, and an improving net interest margin. The average yield on earning assets increased 57 basis points (an 11.1% increase) over 2004 while the cost of interest-bearing liabilities increased 51 basis points (a 30.5% increase). This resulted in an 18 basis point increase in net interest margin compared to the same period in 2004. The Corporation continues to manage its asset/liability position and interest rate risk through the methods discussed in the “Market Risk” section of Management’s Discussion.

The following table provides a comparative average balance sheet and net interest income analysis for the first six months of 2005 as compared to the same period in 2004. Interest income and yields are presented on a tax-equivalent basis, using a 35% Federal tax rate. The discussion following this table is based on these tax-equivalent amounts. All dollar amounts are in thousands.

26

	Six months ended June 30, 2005									Six months ended June 30, 2004
	Average						Yield/			Average						Yield/
	Balance			Interest (1)			Rate (1)			Balance			Interest (1)			Rate (1)
ASSETS
Interest-earning assets:
Loans and leases	$	7,749,797		$	241,461			6.28	%	$	6,567,307		$	187,000			5.72	%
Taxable investment securities		1,974,723			36,518			3.69			2,351,126			41,388			3.49
Tax-exempt investment securities		338,215			8,481			5.02			274,517			7,631			5.56
Equity securities		126,907			2,611			4.13			134,540			2,389			3.56
Total investment securities		2,439,845			47,610			3.90			2,760,183			51,408			3.70
Mortgage loans held for sale		132,670			4,511			6.80			65,435			2,201			6.73
Other interest-earning assets		38,313			524			2.74			5,231			29			1.12
Total interest-earning assets		10,360,625			294,106			5.71	%		9,398,156			240,638			5.14	%
Noninterest-earning assets:
Cash and due from banks		332,747									316,721
Premises and equipment		150,579									126,083
Other assets		561,120									381,825
Less: Allowance for loan losses		(90,851	)								(82,766	)
Total Assets	$	11,314,220								$	10,140,019
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits	$	1,489,850		$	6,279			0.85	%	$	1,315,716		$	2,989			0.46	%
Savings deposits		1,949,573			10,324			1.07			1,808,638			5,143			0.57
Time deposits		3,008,161			42,309			2.84			2,636,657			34,563			2.64
Total interest-bearing deposits		6,447,584			58,912			1.84			5,761,011			42,695			1.49
Short-term borrowings		1,210,053			14,738			2.44			1,313,972			6,462			0.98
Long-term debt		761,992			17,598			4.64			613,439			15,130			4.85
Total interest-bearing liabilities		8,419,629			91,248			2.18	%		7,688,422			64,287			1.67	%
Noninterest-bearing liabilities:
Demand deposits		1,538,526									1,322,155
Other		133,554									103,784
Total Liabilities		10,091,709									9,114,361
Shareholders’ equity		1,222,511									1,025,658
Total Liabilities and Shareholders’ Equity	$	11,314,220								$	10,140,019
Net interest income/ net interest margin (FTE)					202,858			3.94	%					176,351			3.76	%
Tax equivalent adjustment					(4,685	)								(4,678	)
Net interest income				$	198,173								$	171,673

(1) Presented on a fully taxable equivalent (FTE) basis using a 35% Federal tax rate.

27

The following table summarizes the changes in interest income and expense due to changes in average balances (volume) and changes in rates:

	2005 vs. 2004
	Increase (decrease) due
	To change in
	Volume			Rate			Net
	(in thousands)
Interest income on:
Loans and leases	$	35,361		$	19,100		$	54,461
Taxable investment securities		(6,958	)		2,088			(4,870	)
Tax-exempt investment securities		1,631			(781	)		850
Equity securities		(143	)		365			222
Mortgage loans held for sale		2,280			30			2,310
Other interest-earning assets		401			94			495
Total interest-earning assets	$	32,572		$	20,896		$	53,468
Interest expense on:
Demand deposits	$	438		$	2,852		$	3,290
Savings deposits		427			4,754			5,181
Time deposits		5,033			2,713			7,746
Short-term borrowings		(549	)		8,825			8,276
Long-term debt		3,442			(974	)		2,468
Total interest-bearing liabilities	$	8,791		$	18,170		$	26,961

Interest income increased $53.5 million, or 22.2%, due to a combination of increases in average interest-earning assets, which contributed $32.6 million to the increase, and increases in average yields, which resulted in a $20.9 million increase.

Average interest-earning assets increased $962.5 million, or 10.2%, mainly as a result of a $709.0 million contribution from the Acquisitions. Internal growth in average loans of $474.4 million was more than offset by a $612.3 million decline in average investments. However, this change in the mix of earning assets contributed to the 57 basis point increase in average yields.

The Corporation’s average loan portfolio increased $1.2 billion, or 18.0%, as shown by type in the following table:

	Six months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Commercial — industrial and financial	$	1,987,810	$	1,691,552	$	296,258			17.5	%
Commercial — agricultural		323,257		340,386		(17,129	)		(5.0	)
Real estate — commercial mortgage		2,488,974		2,115,053		373,921			17.7
Real estate — commercial construction		375,603		283,068		92,535			32.7
Real estate — residential mortgage		565,272		480,601		84,671			17.6
Real estate — residential construction		327,459		142,258		185,201			130.2
Real estate — home equity		1,117,139		928,917		188,222			20.3
Consumer		501,252		515,086		(13,834	)		(2.7	)
Leasing and other		63,031		70,386		(7,355	)		(10.4	)
Total	$	7,749,797	$	6,567,307	$	1,182,490			18.0	%

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The Acquisition contributed approximately $709.0 million to the increase in average balances. The following table presents the average balance impact of the Acquisitions, by type:

	Six months ended
	June 30
	2005		2004		Increase
	(in thousands)
Commercial — industrial and financial	$	187,095	$	52,853	$	134,242
Commercial — agricultural		1,601		195		1,407
Real estate — commercial mortgage		298,143		82,991		215,152
Real estate — commercial construction		108,154		35,752		72,402
Real estate — residential mortgage		90,158		34,625		55,533
Real estate — residential construction		270,978		98,694		172,284
Real estate — home equity		51,971		4,510		47,461
Consumer		6,240		1,329		4,911
Leasing and other		7,018		1,363		5,655
Total	$	1,021,358	$	312,312	$	709,046

The following table presents the growth in average loans, by type, excluding the average balances contributed by the Acquisitions:

	Six months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Commercial — industrial and financial	$	1,800,715	$	1,638,699	$	162,016			9.9	%
Commercial — agricultural		321,656		340,191		(18,535	)		(5.4	)
Real estate — commercial mortgage		2,190,831		2,032,062		158,769			7.8
Real estate — commercial construction		267,449		247,316		20,133			8.1
Real estate — residential mortgage		475,114		445,976		29,138			6.5
Real estate — residential construction		56,481		43,564		12,917			29.7
Real estate — home equity		1,065,168		924,407		140,761			15.2
Consumer		495,012		513,757		(18,745	)		(3.6	)
Leasing and other		56,013		69,023		(13,010	)		(18.8	)
Total	$	6,728,439	$	6,254,995	$	473,444			7.6	%

Excluding the impact of the Acquisitions, average loan growth continued to be particularly strong in the commercial and commercial mortgage categories, which together increased $320.8 million, or 8.7%. Commercial agricultural loans decreased $18.5 million, or 5.4% due to agricultural customers using excess funds to pay down loans, instead of expanding their facilities. Residential mortgage and residential construction increased $42.1 million, or 8.6%. Home equity loans increased $140.8 million, or 15.2%, due to promotional efforts and customers using home equity loans as a cost-effective refinance alternative. Consumer loans decreased slightly, reflecting repayment of these loans with tax-advantaged residential mortgage or home equity loans. Leasing and other loans decreased $13.0 million, or 18.8%.

The average yield on loans during the first six months of 2005 was 6.28%, a 56 basis point, or 9.8%, increase over 2004. This reflects the impact of a significant portfolio of floating rate loans, which reprice to higher rates when interest rates rise, as they have over the past twelve months.

Average investment securities decreased $320.3 million, or 11.6%. Excluding the impact of the Acquisitions, this decrease was $612.3 million, or 22.6%. During the past twelve months, maturities of investment

29

securities exceeded purchases as funds were used to support loan growth and reduce short-term borrowings. The average yield on investment securities increased 20 basis points from 3.70% in 2004 to 3.90% in 2005.

Interest expense increased $27.0 million, or 41.9%, to $91.2 million in the first six months of 2005 from $64.3 million in the first six months of 2004. Interest expense increased $18.2 million as a result of the 51 basis point increase in the cost of total interest-bearing liabilities, with the remaining increase of $8.8 million due to an increase in average balances. The cost of interest-bearing deposits increased 35 basis points, or 23.5%, from 1.49% in 2004 to 1.84% in 2005. This increase was due to rising rates in general as a result of the FRB’s rate increases over the past twelve months.

The following table presents the growth in average deposits by category:

	Six months ended
	June 30				Increase
	2005		2004		$		%
	(dollars in thousands)
Noninterest-bearing demand	$	1,538,526	$	1,322,155	$	216,371		16.4	%
Interest-bearing demand		1,489,850		1,315,716		174,134		13.2
Savings/money market		1,949,573		1,808,638		140,935		7.8
Time deposits		3,008,161		2,636,657		371,504		14.1
Total	$	7,986,110	$	7,083,166	$	902,944		12.7	%

The Acquisitions accounted for approximately $809.1 million of the increase in average balances. The following table presents the average balance impact of the Acquisitions, by type:

	Six months ended
	June 30
	2005		2004		Increase
	(in thousands)
Noninterest-bearing demand	$	119,004	$	19,187	$	99,817
Interest-bearing demand		103,032		27,453		75,579
Savings/money market		161,079		22,391		138,688
Time deposits		714,762		219,739		495,023
Total	$	1,097,877	$	288,770	$	809,107

The following table presents the growth in average deposits, by type, excluding the contribution of the Acquisitions:

	Six months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Noninterest-bearing demand	$	1,419,522	$	1,302,968	$	116,554			8.9	%
Interest-bearing demand		1,386,818		1,288,263		98,555			7.7
Savings/money market		1,788,494		1,786,247		2,247			0.1
Time deposits		2,293,399		2,416,918		(123,519	)		(5.1	)
Total	$	6,888,233	$	6,794,396	$	93,837			1.4	%

30

Average borrowings increased $44.6 million, or 2.3%, to $2.0 billion in the first six months of 2005. The Acquisitions added $160.5 million to short-term borrowings and $75.7 million to long-term debt. Excluding the Acquisitions, average short-term borrowings decreased $264.4 million, or 21.3%, to $978.3 million in 2005, while average long-term debt increased $72.8 million, or 12.7%, to $647.1 million. The decrease in short-term borrowings was mainly due to a decrease in Federal funds purchased as funds from deposit growth and investment maturities were sufficient to fund increases in loans. The increase in long-term debt was partially due to the Corporation’s issuance of $100.0 million of ten-year subordinated notes in March 2005.

Provision and Allowance for Loan Losses

The following table summarizes the activity in the Corporation’s allowance for loan losses:

	Six months ended
	June 30
	2005			2004
	(dollars in thousands)
Loans outstanding at end of period (net of unearned)	$	7,861,508		$	7,042,311
Daily average balance of loans and leases	$	7,749,797		$	6,567,307
Balance at beginning of period	$	89,627		$	77,700
Loans charged-off:
Commercial, financial and agricultural		1,551			1,489
Real estate – mortgage		241			967
Consumer		1,601			1,595
Leasing and other		85			181
Total loans charged-off		3,479			4,232
Recoveries of loans previously charged-off:
Commercial, financial and agricultural		1,176			1,091
Real estate – mortgage		917			560
Consumer		608			911
Leasing and other		28			57
Total recoveries		2,729			2,619
Net loans charged-off		750			1,613
Provision for loan losses		1,525			2,540
Allowance purchased (Resource)		—			7,912
Balance at end of period	$	90,402		$	86,539
Net charge-offs to average loans (annualized)		0.02	%		0.05	%
Allowance for loan losses to loans outstanding		1.15	%		1.23	%

The provision for loan losses for the first six months of 2005 totaled $1.5 million, a decrease of $1.0 million, or 40.0%, from the same period in 2004. Net charge-offs totaled $750,000, or 0.02% of average loans on an annualized basis, during the first six months of 2005, an $863,000 improvement over the $1.6 million, or 0.05%, in net charge-offs for the first six months of 2004. Non-performing assets decreased to $31.8 million, or 0.27% of total assets, at June 30, 2005, from $32.4 million, or 0.31% of total assets, at June 30, 2004.

31

Management believes that the allowance balance of $90.4 million at June 30, 2005 is sufficient to cover losses inherent in the loan portfolio on that date and is appropriate based on applicable accounting standards.

Other Income

The following table presents the components of other income:

	Six months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Investment management and trust services	$	17,985	$	17,282	$	703			4.1	%
Service charges on deposit accounts		19,292		19,434		(142	)		(0.7	)
Other service charges and fees		12,698		9,996		2,702			27.0
Gain on sale of mortgage loans		12,339		7,764		4,575			58.9
Investment securities gains		4,733		11,177		(6,444	)		(57.7	)
Gain on sale of deposits		2,201		—		2,201			N/A
Other		4,920		3,047		1,873			61.5
Total	$	74,168	$	68,700	$	5,468			8.0	%

Total other income for the six months ended June 30, 2005 was $74.2 million, an increase of $5.5 million, or 8.0%, over the comparable period in 2004. Excluding investment securities gains, which decreased from $11.2 million in 2004 to $4.7 million in 2005, other income increased $11.9 million, or 20.7%. The Acquisitions contributed $7.1 million to this increase.

Gains on sale of mortgage loans increased $4.6 million with the Acquisitions, mainly Resource Bank, contributing $4.1 million of the increase. Service charges on deposit accounts decreased $142,000, or 0.7%, (excluding the Acquisitions, service charges on deposit accounts decreased $681,000). The decrease was mainly due to increases in existing customers’ balances resulting in lower service charges for those accounts. Other service charges and fees increased $2.7 million, or 27.0%, due mainly to a one-time increase in credit card merchant fee income and letter of credit fees.

During the second quarter of 2005, the Corporation sold three branches and related deposits in two separate transactions. The sales resulted in $2.2 million of gains, primarily from the premiums paid on the deposits, which totaled $36.7 million. Other income increased $1.9 million, or 61.5%, with the Acquisitions accounting for $1.1 million of the increase and approximately $600,000 resulting from the change in the fair values of certain derivatives related to forward commitments for loan sales.

Investment securities gains decreased $6.4 million, or 57.7%. These gains during the first six months of 2005 consisted of net realized gains of $3.9 million on the sale of equity securities and $845,000 on the sale of available-for-sale debt securities. Investment securities gains during the first six months of 2004 consisted of net realized gains of $8.1 million on the sale of equity securities and $3.1 million on the sale of available-for-sale debt securities. See the “Market Risk” section of Management’s Discussion for information on the risks associated with the Corporation’s portfolio of equity securities.

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Other Expenses

The following table presents the components of other expenses:

	Six months ended
	June 30				Increase
	2005		2004		$		%
	(dollars in thousands)
Salaries and employee benefits	$	89,353	$	78,592	$	10,761		13.7	%
Net occupancy expense		14,047		11,377		2,670		23.5
Equipment expense		5,958		5,390		568		10.5
Data processing		6,490		5,687		803		14.1
Advertising		4,249		3,442		807		23.4
Intangible amortization		2,347		2,347		—		—
Other		29,393		25,974		3,419		13.2
Total	$	151,837	$	132,809	$	19,028		14.3	%

Total other expenses increased $19.0 million, or 14.3%, in 2005, including $15.5 million due to the Acquisitions, as follows:

	Six months ended
	June 30
	2005		2004		Increase
	(in thousands)
Salaries and employee benefits	$	12,315	$	4,472	$	7,843
Net occupancy expense		2,226		621		1,605
Equipment expense		1,106		380		726
Data processing		941		239		702
Advertising		546		173		373
Intangible amortization		520		127		393
Other		5,536		1,656		3,880
Total	$	23,190	$	7,668	$	15,522

The following table presents the components of other expenses, excluding the amounts contributed by the Acquisitions:

	Six months ended
	June 30				Increase (decrease)
	2005		2004		$			%
	(dollars in thousands)
Salaries and employee benefits	$	77,038	$	74,120	$	2,918			3.9	%
Net occupancy expense		11,821		10,756		1,065			9.9
Equipment expense		4,852		5,010		(158	)		(3.2	)
Data processing		5,549		5,448		101			(1.9	)
Advertising		3,703		3,269		434			13.3
Intangible amortization		1,827		2,220		(393	)		(17.7	)
Other		23,857		24,318		(461	)		(1.9	)
Total	$	128,647	$	125,141	$	3,506			2.8	%

The discussion that follows addresses changes in other expenses, excluding the Acquisitions.

33

Salaries and employee benefits increased $2.9 million, or 3.9%, in comparison to the first six months of 2004. The salary expense component increased $1.8 million, or 3.1%, driven by salary increases for existing employees. Average full-time equivalent employees decreased from 2,906 in the first six months of 2004 to 2,891 in the first six months of 2005. Employee benefits increased $1.1 million, or 7.5%, in comparison to the first six months of 2004 driven mainly by continued increases in healthcare costs.

Net occupancy expense increased $1.1 million, or 9.9%, to $11.8 million in 2005. The increase resulted from the expansion of the branch network and the addition of new office space for existing affiliates. Equipment expense decreased $158,000, or 3.2%, due to lower depreciation expense as certain equipment became fully depreciated.

Data processing expense, which consists mainly of fees paid for outsourced back office systems, increased $101,000, or 1.9%. Advertising expense increased $434,000, or 13.3%, due to the timing of promotional campaigns. Intangible amortization decreased $393,000, or 17.7%, in the first six months of 2005. Intangible amortization consists of the amortization of unidentifiable intangible assets related to branch and loan acquisitions, core deposit intangible assets, and other identified intangible assets. Since many of these intangibles are amortized using accelerated methods, amortization expense of existing intangibles decreases over time. Other expense decreased $461,000, or 1.9%, mainly as a result of several non-recurring items, including a reduction of the reserve for legal contingencies.

Income Taxes

Income tax expense for the first six months of 2005 was $35.9 million, a $4.6 million, or 14.5%, increase from $31.3 million in 2004. The Corporation’s effective tax rate was approximately 30.1% in 2005 as compared to 29.8 % in 2004. The effective rate is lower than the Federal statutory rate of 35% due mainly to investments in tax-free municipal securities and federal tax credits from investments in low and moderate income housing partnerships.

FINANCIAL CONDITION

Total assets of the Corporation increased $412.7 million, or 3.7%, to $11.6 billion at June 30, 2005, compared to $11.2 billion at December 31, 2004. Increases occurred in loans ($277.0 million, or 3.7%), loans held for sale ($78.8 million, or 49.6%), and cash balances ($80.5 million, or 29.0%), while investment securities decreased modestly ($20.5 million, or 0.8%) and other earnings assets decreased $14.1 million.

Commercial loans and mortgages grew $184.6 million, or 3.6%, during the six-month period, while residential mortgages increased $85.4 million, or 10.4%, mainly in construction loans. The increase in loans held for sale resulted from a continued decrease in residential mortgage rates during the period and an expansion of the Corporation’s mortgage banking business. The $80.5 million increase in cash and due from banks was due to the nature of these accounts as daily balances can fluctuate up or down in the normal course of business.

Deposits increased $244.1 million, or 3.1%, from December 31, 2004 to $8.1 billion. Noninterest-bearing deposits increased $104.1 million, or 6.9%, while interest-bearing demand deposits decreased $30.1. million, or 2.0%, and savings deposits increased $48.3 million, or 2.5%. Time deposits increased $121.8 million, or 4.1%, as rates have become more attractive to consumers.

Short-term borrowings, which consist mainly of Federal funds purchased and customer cash management accounts, decreased $59.9 million, or 5.0%, during the first six months of 2005. The decrease in short-term

34

borrowings was mainly due to a decrease in Federal funds purchased as funds from other sources including deposits and investment maturities, were sufficient to fund increases in loans.

Long-term debt increased $267.5 million, or 39.1%, partially due to $100.0 million of subordinated debt issued in March 2005. See the “Liquidity” section of Management’s Discussion for a summary of the terms of this debt. The remaining increase was mainly due to an increase in Federal Home Loan Bank Advances. The Corporation locked in longer-term rates in anticipation of increasing rates. As with the U.S. Treasury yields, longer-term FHLB rates have decreased over the last year.

Capital Resources

Total shareholders’ equity decreased $48.2 million, or 3.9%, during the first six months of 2005. Increases due to net income of $83.1 million and $7.4 million in stock issuances were offset by $85.2 million in stock repurchases, $43.5 million in cash dividends to shareholders, $9.0 million in unrealized losses on securities, and $1.0 million in unrealized losses on derivative financial instruments.

The Corporation periodically implements stock repurchase plans for various corporate purposes. In addition to evaluating the financial benefits of implementing repurchase plans, management also considers liquidity needs, the current market price per share and regulatory limitations. In December 2004, the Board of Directors approved an extension of an existing repurchase plan from December 31, 2004 to June 30, 2005 and increased the total number of shares that could be repurchased to 5.0 million. During the second quarter of 2005, the Corporation repurchased 4.3 million shares under an “accelerated share repurchase” plan (ASR), bringing the total shares purchased during the first six months of 2005 to 5.0 million and completing the board-approved repurchase plan. See Note L in the Notes to Consolidated Financial Statements for additional information on the ASR.

The Corporation and its subsidiary banks are subject to various regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can initiate certain actions by regulators that could have a material effect on the Corporation’s financial statements. The regulations require that banks maintain minimum amounts and ratios of total and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and Tier I capital to average assets (as defined). As of June 30, 2005, the Corporation and each of its bank subsidiaries met the minimum requirements. In addition, the Corporation and each of its bank subsidiaries’ capital ratios exceeded the amounts required to be considered “well-capitalized” as defined in the regulations. The following table summarizes the Corporation’s capital ratios in comparison to regulatory requirements as of June 30:

							Regulatory Minimum
	June 30			December 31			Capital			Well
	2005			2004			Adequacy			Capitalized
Total Capital (to Risk Weighted Assets)		12.3	%		11.7	%		8.0	%		10.0	%
Tier I Capital to (Risk Weighted Assets)		10.1	%		10.6	%		4.0	%		6.0	%
Tier I Capital (to Average Assets)		7.7	%		8.7	%		3.0	%		5.0	%

Liquidity

The Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers, who, as depositors, may want to withdraw funds or who, as borrowers, need credit availability. Liquidity is provided on a continuous basis through scheduled and unscheduled principal and interest payments on outstanding loans and investments and through the availability of deposits and borrowings. In addition, the Corporation can borrow on a secured basis from the Federal Home Loan Bank to meet short-term liquidity needs.

35

The Corporation’s sources and uses of cash were discussed in general terms in the net interest income section of Management’s Discussion. The Consolidated Statements of Cash Flows provide additional information. The Corporation generated $28.0 million in cash from operating activities during the first quarter of 2005. Operating cash flows were significantly lower than net income of $83.1 million, mainly due to cash outflows to fund loans originated for sale that had not yet been sold as of June 30, 2005. Investing activities resulted in a net cash outflow of $280.9 million, as purchases of investment securities and loan originations exceeded sales and maturities of investment securities. Finally, financing activities resulted in a net inflow of $333.4 million due to increases in both deposits and borrowings, offset by dividends paid to shareholders and repurchases of treasury stock.

Liquidity must also be managed at the Fulton Financial Corporation Parent Company level. For safety and soundness reasons, banking regulations limit the amount of cash that can be transferred from subsidiary banks to the Parent Company in the form of loans and dividends. Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income. Until 2004, the Parent Company had been able to meet its cash needs through normal, allowable dividends and loans. However, as a result of increased acquisition activity and stock repurchase plans, the Parent Company’s cash needs have increased, requiring additional sources of funds.

In July 2004, the Parent Company entered into a revolving line of credit agreement with an unaffiliated bank. Under the terms of the agreement, the Parent Company can borrow up to $50.0 million (which may be increased to $100.0 million upon request) with interest calculated at the one-month London Interbank Offering Rate (LIBOR) plus 0.625%. The credit agreement requires the Corporation to maintain certain financial ratios related to capital strength and earnings. At June 30, 2005, the Corporation had borrowed $20.0 million on the line and was in compliance with all covenants under the credit agreement.

In March 2005, the Parent Company issued $100 million of ten year subordinated notes at a fixed rate of 5.35%. Interest is paid semi-annually, beginning in October 2005 and the notes mature on April 1, 2015. In addition to providing funds to the Parent Company, this subordinated debt is also a component of total regulatory capital.

These borrowing arrangements supplement the liquidity available from subsidiaries through dividends and borrowings and provide some flexibility in Parent Company cash management. Management continues to monitor the liquidity and capital needs of the Parent Company and will implement appropriate strategies, as necessary, to remain well capitalized and to meet its cash needs.

In addition to its normal recurring and operating cash needs, the Parent Company paid approximately $20.7 million in cash on July 1, 2005 for a portion of the SVB acquisition. See Note I, “Subsequent Events” in the Notes to Consolidated Financial Statements for a summary of the terms of this transaction.

36

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. The types of market risk exposures generally faced by financial institutions include interest rate risk, equity market price risk, foreign currency risk and commodity price risk. Due to the nature of its operations, only equity market price risk and interest rate risk are significant to the Corporation.

Equity Market Price Risk

Equity market price risk is the risk that changes in the values of equity investments could have a material impact on the financial position or results of operations of the Corporation. The Corporation’s equity investments consist primarily of common stocks of publicly traded financial institutions (cost basis of approximately $66.7 million and fair value of $67.0 million at June 30, 2005). The Corporation’s financial institutions stock portfolio had gross unrealized gains of approximately $3.0 million at June 30, 2005.

Although the carrying value of equity investments accounted for only 0.6% of the Corporation’s total assets, the unrealized gains on the portfolio represent a potential source of revenue. The Corporation has a history of periodically realizing gains from this portfolio and, if values were to decline significantly, this revenue source could be lost.

Management continuously monitors the fair value of its equity investments and evaluates current market conditions and operating results of the companies. Periodic sale and purchase decisions are made based on this monitoring process. None of the Corporation’s equity securities are classified as trading. Future cash flows from these investments are not provided in the table on page 38 as such investments do not have maturity dates.

The Corporation has evaluated, based on existing accounting guidance, whether any unrealized losses on individual equity investments constituted “other-than-temporary” impairment, which would require a write-down through a charge to earnings. Based on the results of such evaluations, the Corporation recorded write-downs of $65,000 in 2005, $137,000 in 2004 and $3.3 million in 2003 for specific equity securities which were deemed to exhibit other-than-temporary impairment in value. Through June 30, 2005, gains of approximately $2.5 million had been realized on the sale of investments previously written down. Additional impairment charges may be necessary depending upon the performance of the equity markets in general and the performance of the individual investments held by the Corporation.

In addition to its equity portfolio, the Corporation’s investment management and trust services revenue could be impacted by fluctuations in the securities markets. A portion of the Corporation’s trust revenue is based on the value of the underlying investment portfolios. If securities markets contract, the Corporation’s revenue could be negatively impacted. In addition, the ability of the Corporation to sell its equities brokerage services is dependent, in part, upon consumers’ level of confidence in the outlook for rising securities prices.

Interest Rate Risk

Interest rate risk creates exposure in two primary areas. First, changes in rates have an impact on the Corporation’s liquidity position and could affect its ability to meet obligations and continue to grow. Second, movements in interest rates can create fluctuations in the Corporation’s net income and changes in the economic value of its equity.

The Corporation employs various management techniques to minimize its exposure to interest rate risk. An Asset/Liability Management Committee (ALCO), consisting of key financial and senior management

37

personnel, meets on a weekly basis. The ALCO is responsible for reviewing the interest rate sensitivity position of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions and earnings. The primary goal of asset/liability management is to address the liquidity and net income risks noted above.

The following table provides information about the Corporation’s interest rate sensitive financial instruments. The table provides expected cash flows and weighted average rates for each significant interest rate sensitive financial instrument, by expected maturity period. None of the Corporation’s financial instruments are classified as trading.

	Expected Maturity Period																					Estimated
	2005			2006			2007			2008			2009			Beyond			Total			Fair Value
Fixed rate loans (1)	$	736,744		$	493,648		$	386,853		$	253,684		$	157,725		$	361,153			2,389,807		$	2,392,097
Average rate (2)		6.11	%		6.06	%		5.98	%		6.07	%		6.24	%		6.00	%		6.07	%
Floating rate loans (8)		1,446,748			732,617			578,875			478,111			405,849			1,822,760			5,464,960			5,452,620
Average rate		6.48	%		6.42	%		6.41	%		6.48	%		6.10	%		6.10	%		6.31	%
Fixed rate investments (3)		574,800			379,163			364,716			291,890			388,280			271,777			2,270,626			2,242,171
Average rate		3.64	%		3.90	%		3.60	%		3.60	%		3.58	%		4.27	%		3.74	%
Floating rate investments (3)		758			198			213			3,453			—			48,218			52,840			52,846
Average rate		2.88	%		3.64	%		3.83	%		3.92	%		—			3.76	%		3.75	%
Other interest-earning assets		260,313			—			—			—			—			—			260,313			260,313
Average rate		6.94	%		—			—			—			—			—			6.94	%
Total	$	3,019,363		$	1,605,626		$	1,330,657		$	1,027,138		$	951,854		$	2,503,908			10,438,546			10,400,046
Average rate		5.88	%		5.72	%		5.52	%		5.56	%		5.10	%		5.84	%		5.70	%
Fixed rate deposits (4)	$	1,464,898		$	741,900		$	267,334		$	96,958		$	94,044		$	276,897			2,942,031		$	2,937,186
Average rate		2.66	%		3.59	%		3.73	%		3.64	%		4.34	%		4.22	%		3.22	%
Floating rate deposits (5)		2,133,623			206,164			199,135			194,995			194,995			2,267,376			5,196,288			5,196,095
Average rate		1.58	%		.38	%		.33	%		.28	%		.28	%		.21	%		.79	%
Fixed rate borrowings (6)		777,643			46,911			176,466			132,425			55,447			211,088			1,399,980			1,430,852
Average rate		2.74	%		3.55	%		4.59	%		4.86	%		5.34	%		5.50	%		3.72	%
Floating rate borrowings (7)		680,633			—			—			—			—			—			680,633			680,633
Average rate		3.14	%		—			—			—			—			—			3.14	%
Total	$	5,056,797		$	994,975		$	642,935		$	424,378		$	344,486		$	2,755,361		$	10,218,932		$	10,244,766
Average rate		2.27	%		2.92	%		2.91	%		2.48	%		2.20	%		1.02	%		2.11	%

Assumptions:

(1)	Amounts are based on contractual payments and maturities, adjusted for expected prepayments.
(2)	Average rates are shown on a fully taxable equivalent basis using an effective tax rate of 35%.
(3)	Amounts are based on contractual maturities; adjusted for expected prepayments on mortgage-backed securities and expected calls on agency and municipal securities.
(4)	Amounts are based on contractual maturities of time deposits.
(5)	Money market, Super NOW, NOW and savings accounts are placed based on history of deposit flows.
(6)	Amounts are based on contractual maturities of Federal Home Loan Bank advances, adjusted for possible calls.
(7)	Amounts are Federal Funds purchased and securities sold under agreements to repurchase, which mature in less than 90 days.
(8)	Floating rate loans include adjustable rate commercial mortgages.

38

The preceding table and discussion addressed the liquidity implications of interest rate risk and focused on expected contractual cash flows from financial instruments. Expected maturities, however, do not necessarily estimate the net interest income impact of interest rate changes. Certain financial instruments, such as adjustable rate loans, have repricing periods that differ from expected cash flows.

The Corporation uses three complementary methods to measure and manage interest rate risk. They are static gap analysis, simulation of earnings, and estimates of economic value of equity. Using these measurements in tandem provides a reasonably comprehensive summary of the magnitude of interest rate risk in the Corporation, level of risk as time evolves, and exposure to changes in interest rate relationships.

Static gap provides a measurement of repricing risk in the Corporation’s balance sheet as of a point in time. This measurement is accomplished through stratification of the Corporation’s assets and liabilities into predetermined repricing periods. The assets and liabilities in each of these periods are summed and compared for mismatches within that maturity segment. Core deposits having noncontractual maturities are placed into repricing periods based upon historical balance performance. Repricing for mortgage loans held and for mortgage-backed securities includes the effect of expected cash flows. Estimated prepayment effects are applied to these balances based upon industry projections for prepayment speeds. The Corporation’s policy limits the cumulative 6-month gap to plus or minus 15% of total earning assets. The cumulative 6-month gap as of June 30, 2005 was minus 0.3%. The ratio of rate sensitive assets to rate sensitive liabilities for the six-month period ended June 30, 2005 was .99.

Simulation of net interest income and of net income is performed for the next twelve-month period. A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of earnings is used primarily to measure the Corporation’s short-term earnings exposure to rate movements. The Corporation’s policy limits the potential exposure of net interest income to 10% of the base case net interest income for every 100 basis point “shock” in interest rates. A “shock’ is an immediate upward or downward movement of interest rates across the yield curve based upon changes in the prime rate. The following table summarizes the expected impact of interest rate shocks on net interest income:

	Annual change
	in net interest
Rate Shock	income	% Change
+300 bp	+$ 28.4 million	+ 7.3%
+200 bp	+20.3 million	+ 5.2%
+100 bp	+9.8 million	+ 2.5%
-100 bp	-13.6 million	- 3.5%
-200 bp	-35.5 million	- 9.1%

39

Economic value of equity estimates the discounted present value of asset cash flows and liability cash flows. Discount rates are based upon market prices for like assets and liabilities. Upward and downward shocks of interest rates are used to determine the comparative effect of such interest rate movements relative to the unchanged environment. This measurement tool is used primarily to evaluate the longer-term re-pricing risks and options in the Corporation’s balance sheet. A policy limit of 10% of economic equity may be at risk for every 100 basis point “shock” movement in interest rates. The following table summarizes the expected impact of interest rate shocks on economic value of equity.

	Change in
	economic
Rate Shock	value of equity	% Change
+300 bp	- $7.6 million	- 0.5%
+200 bp	+ 7.8 million	+ 0.5%
+100 bp	+ 6.0 million	+ 0.4%
- 100 bp	- 41.5 million	- 2.6%
- 200 bp	- 123.5 million	- 7.7%

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Item 4. Controls and Procedures

The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Corporation’s disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Corporation reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no changes in our internal control over financial reporting during the fiscal quarter covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

41

PART II — OTHER INFORMATION

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

					Total number of		Maximum
					shares purchased		number of shares
	Total				as part of a		that may yet be
	number of		Average price		publicly		purchased under
	shares		paid per		announced plan		the plan or
Period	purchased		share		or program		program
(04/01/05 – 04/30/05)		241,250		15.89		241,250		4,359,000
(05/01/05 – 05/31/05)		4,359,000		17.06		4,359,000		—
(06/01/05 – 06/30/05)		—		—		—		—

On December 21, 2004 the Board of Directors approved an extension of its stock repurchase plan from December 31, 2004 to June 30, 2005 and increased the total number of shares that could be repurchased to 5.0 million. During the second quarter of 2005, the Corporation, with the approval of the Board of Directors, repurchased 4.3 million shares under an “Accelerated Share Repurchase” plan (ASR), bringing the total shares purchased during the first six months of 2005 to 5.0 million and completing the board-approved repurchase plan. See Note L in the Notes to Consolidated Financial Statements for additional information on the ASR. No stock repurchases were made outside publicly announced plans and all were made in compliance with Regulation M.

42

Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of the Corporation was held April 13, 2005. There were 125,966,286 shares of common stock entitled to vote at the meeting and a total of 104,180,100 shares or 82.70% were represented at the meeting. At the annual meeting, the following individuals were elected to the Board of Directors:

Nominee	Term	For		Withheld
Thomas W. Hunt	2 Years		102,525,015		1,655,085
Patrick J. Freer	3 Years		98,253,237		5,926,864
Carolyn R. Holleran	3 Years		97,739,735		6,440,365
Donald W. Lesher, Jr.	3 Years		98,487,773		5,692,328
Abraham S. Opatut	3 Years		99,509,998		4,670,102
Mary Ann Russell	3 Years		97,993,098		6,187,002
Gary A. Stewart	3 Years		98,198,706		5,981,394

The following directors’ terms of office continued after the annual meeting:

Jeffrey G. Albertson
Donald M. Bowman, Jr.
Craig A. Dally
Clark S. Frame
Rufus A. Fulton, Jr.
Eugene H. Gardner
George W. Hodges
Clyde W. Horst
Joseph J. Mowad
John O. Shirk
R. Scott Smith, Jr.

In addition to the election of directors the shareholders approved by the following vote a proposal to increase the Corporation’s authorized shares of common stock from 400 million shares to 600 million shares.

For	Against		Abstain
99,951,715		3,739,550		488,835

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Item 6. Exhibits

See Exhibit Index for a list of the exhibits required by Item 601 of Regulation S-K and filed as part of this report.

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FULTON FINANCIAL CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FULTON FINANCIAL CORPORATION
Date: August 8, 2005	/s/	Rufus A. Fulton, Jr.
		Rufus A. Fulton, Jr.
		Chairman and Chief Executive Officer
Date: August 8, 2005	/s/	Charles J. Nugent
		Charles J. Nugent
		Senior Executive Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

Exhibits Required Pursuant
to Item 601 of Regulation S-K

3.	(i) Articles of incorporation, as amended and restated, of the Fulton Financial Corporation as amended — Incorporated by reference to the S-4 Registration Statement filed on April 13, 2005.
	(ii) Bylaws of Fulton Financial Corporation as amended — Incorporated by reference to the S-4 Registration Statement filed on April 13, 2005.
4.	Instruments defining the rights of security holders, including indentures.

(a) Rights Agreement dated June 20, 1989, as amended and restated on April 27, 1999 between Fulton Financial Corporation and Fulton Bank — Incorporated by reference to Exhibit 1 of the Fulton Financial Corporation Current Report on Form 8-K dated April 27, 1999.

10. Material Contracts

(a)

Form of stock option agreement and form of Restricted Stock Agreement between Fulton Financial Corporation and officers of the Corporation as of July 1, 2005 – Incorporated by reference to Exhibits 10.1 and 10.2 of the Fulton Financial Corporation Current Report on Form 8-K dated June 27, 2005.

(b)

Agreement between Fulton Financial Corporation and Fiserv Solutions, Inc. dated as of January 1, 2005. Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. See also Fulton Financial Corporation Current Report on Form 8-K dated June 24, 2005.

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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