10-Q

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, 2006,

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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

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

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 – 173,429,000 shares outstanding as of July 31, 2006.

FULTON FINANCIAL CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2006

INDEX

Description	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
(a) Consolidated Balance Sheets - June 30, 2006 and December 31, 2005		3
(b) Consolidated Statements of Income - Three and six months ended June 30, 2006 and 2005		4
(c) Consolidated Statements of Shareholders’ Equity and Comprehensive Income - Six months ended June 30, 2006 and 2005		5
(d) Consolidated Statements of Cash Flows - Six months ended June 30, 2006 and 2005		6
(e)Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures about Market Risk		38
Item 4. Controls and Procedures		41
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3. Defaults Upon Senior Securities		42
Item 4. Submission of Matters to a Vote of Security Holders		42
Item 5. Other Information		43
Item 6. Exhibits		43
Signatures		44
Exhibit Index		45
Certifications		46

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Item 1. Financial Statements
FULTON FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per-share data)

	June 30, 2006			December 31
	(unaudited)			2005
ASSETS
Cash and due from banks	$	410,563		$	368,043
Interest-bearing deposits with other banks		26,415			31 ,404
Federal funds sold		12,949			528
Loans held for sale		268,966			243,378
Investment securities:
Held to maturity (estimated fair value of $13,100 in 2006 and $18,317 in 2005)		13,142			18,258
Available for sale		2,730,635			2,543,887
Loans, net of unearned income		10,051,957			8,424,728
Less: Allowance for loan losses		(106,544	)		(92,847	)
Net Loans		9,945,413			8,331,881
Premises and equipment		185,677			170,254
Accrued interest receivable		63,589			53,261
Goodwill		622,470			418,735
Intangible assets		41,481			29,687
Other assets		240,245			192,239
Total Assets	$	14,561,545		$	12,401,555
LIABILITIES
Deposits:
Noninterest-bearing	$	1,910,565		$	1,672,637
Interest-bearing		8,236,087			7,132,202
Total Deposits		10,146,652			8,804,839
Short-term borrowings:
Federal funds purchased		1,236,941			939,096
Other short-term borrowings		528,782			359,866
Total Short-Term Borrowings		1,765,723			1,298,962
Accrued interest payable		48,717			38,604
Other liabilities		136,121			115,834
Federal Home Loan Bank advances and long-term debt		1,024,144			860,345
Total Liabilities		13,121,357			11,118,584
SHAREHOLDERS’ EQUITY
Common stock, $2.50 par value, 600 million shares authorized, 190.4 million shares issued in 2006 and 181.0 million shares issued in 2005		476,049			430,827
Additional paid-in capital		1,243,215			996,708
Retained earnings		48,735			138,529
Accumulated other comprehensive loss		(66,889	)		(42,285	)
Treasury stock, 17.1 million shares in 2006 and 16.1 million shares in 2005, at cost		(260,922	)		(240,808	)
Total Shareholders’ Equity		1,440,188			1,282,971
Total Liabilities and Shareholders’ Equity	$	14,561,545		$	12,401,555

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
	2006		2005		2006		2005
INTEREST INCOME
Loans, including fees	$	179,946	$	122,492	$	341,060	$	238,430
Investment securities:
Taxable		23,564		18,257		46,103		36,518
Tax-exempt		3,543		2,843		7,076		5,692
Dividends		1,555		1,155		2,900		2,239
Loans held for sale		4,006		3,516		7,464		6,018
Other interest income		592		348		1,255		524
Total Interest Income		213,206		148,611		405,858		289,421
INTEREST EXPENSE
Deposits		58,996		31,104		109,186		58,912
Short-term borrowings		18,427		7,914		33,733		14,738
Long-term debt		12,932		9,668		25,045		17,598
Total Interest Expense		90,355		48,686		167,964		91,248
Net Interest Income		122,851		99,925		237,894		198,173
PROVISION FOR LOAN LOSSES		875		725		1,875		1,525
Net Interest Income After Provision for Loan Losses		121,976		99,200		236,019		196,648
OTHER INCOME
Investment management and trust services		9,056		8,966		19,088		17,985
Service charges on deposit accounts		10,892		9,960		21,139		19,292
Other service charges and fees		6,576		7,142		13,230		12,698
Gains on sales of mortgage loans		5,187		6,290		9,959		11,947
Investment securities gains		1,409		1,418		4,074		4,733
Gain on sale of deposits		—		2,201		—		2,201
Other		2,882		2,338		5,119		5,312
Total Other Income		36,002		38,315		72,609		74,168
OTHER EXPENSES
Salaries and employee benefits		53,390		45,235		103,319		89,532
Net occupancy expense		9,007		6,549		17,596		14,047
Equipment expense		3,495		2,888		7,088		5,958
Data processing		3,165		3,321		6,074		6,490
Advertising		3,027		2,276		5,280		4,249
Intangible amortization		2,006		1,168		3,858		2,347
Other		16,703		16,752		35,594		29,393
Total Other Expenses		90,793		78,189		178,809		152,016
Income Before Income Taxes		67,185		59,326		129,819		118,800
INCOME TAXES		20,484		17,722		39,239		35,759
Net Income	$	46,701	$	41,604	$	90,580	$	83,041
PER-SHARE DATA:
Net income (basic)	$	0.27	$	0.26	$	0.53	$	0.51
Net income (diluted)		0.27		0.25		0.52		0.50
Cash dividends		0.1475		0.138		0.286		0.264

See Notes to Consolidated Financial Statements

4

FULTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(dollars in thousands)

												Accumulated
	Number of					Additional						Other Com-
	Shares			Common		Paid-in			Retained			prehensive			Treasury
	Outstanding			Stock		Capital			Earnings			(Loss) Income			Stock			Total
Balance at December 31, 2005		164,868,000		$	430,827	$	996,708		$	138,529		$	(42,285	)	$	(240,808	)	$	1,282,971
Comprehensive income:
Net income										90,580									90,580
Unrealized loss on securities (net of $11.1 million tax effect)													(20,592	)					(20,592	)
Unrealized loss on derivative financial instrument (net of $735,000 tax effect)													(1,364	)					(1,364	)
Less — reclassification adjustment for gains included in net income (net of $1.4 tax expense)													(2,648	)					(2,648	)
Total comprehensive income																			65,976
Stock dividend - 5%					22,648		107,952			(130,600	)								-
Stock issued, including related tax benefits		763,000			2,051		4,261												6,312
Stock-based compensation awards		85,000					686												686
Stock issued for acquisition of Columbia Bancorp		8,619,000			20,523		133,608												154,131
Acquisition of treasury stock		(1,056,000	)													(16,691	)		(16,691	)
Accelerated share repurchase settlement																(3,423	)		(3,423	)
Cash dividends — $0.286 per share										(49,774	)								(49,774	)
Balance at June 30, 2006		173,279,000		$	476,049	$	1,243,215		$	48,735		$	(66,889	)	$	(260,922	)	$	1,440,188
Balance at December 31, 2004		165,007,500		$	335,604	$	1,018,403		$	60,924		$	(10,133	)	$	(160,711	)	$	1,244,087
Comprehensive income:
Net income										83,041									83,041
Unrealized loss on securities (net of $3.2 million tax effect)													(5,954	)					(5,954	)
Less — reclassification adjustment for gains included in net income (net of $1.7 million tax expense)													(3,076	)					(3,076	)
Total comprehensive income																			74,011
Stock split paid in the form of a 25% stock dividend					84,046		(84,114	)											(68	)
Stock issued, including tax related benefits		846,300			1,012		1,158									5,071			7,241
Stock-based compensation awards							179												179
Acquisition of treasury stock		(5,250,000	)													(85,168	)		(85,168	)
Cash dividends — $0.264 per share										(43,463	)								(43,463	)
Balance at June 30, 2005		160,603,800		$	420,662	$	935,626		$	100,502		$	(19,163	)	$	(240,808	)	$	1,196,819

See Notes to Consolidated Financial Statements

5

FULTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

	Six months ended
	June 30
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	90,580		$	83,041
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,875			1,525
Depreciation and amortization of premises and equipment		8,250			6,539
Net amortization of investment security premiums		1,939			2,682
Investment securities gains		(4,074	)		(4,733	)
Net increase in loans held for sale		(25,588	)		(56,852	)
Amortization of intangible assets		3,858			2,347
Stock-based compensation		686			179
Increase in accrued interest receivable		(3,672	)		(3,186	)
Increase in other assets		(20,248	)		(780	)
Increase in accrued interest payable		9,066			3,763
Increase (decrease) in other liabilities		1,569			(3,193	)
Total adjustments		(26,339	)		(51,709	)
Net cash provided by operating activities		64,241			31,332
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale		94,178			101,196
Proceeds from maturities of securities held to maturity		5,116			2,102
Proceeds from maturities of securities available for sale		322,336			311,054
Purchase of securities held to maturity		(7	)		(4,398	)
Purchase of securities available for sale		(447,397	)		(406,130	)
Decrease in short-term investments		9,422			26,551
Net increase in loans		(562,723	)		(299,700	)
Net cash paid for acquisitions		(105,413	)		—
Net purchase of premises and equipment		(15,769	)		(13,226	)
Net cash used in investing activities		(700,257	)		(282,551	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits		3,811			122,355
Net increase in time deposits		369,066			120,245
Additions to long-term debt		195,874			284,062
Repayment of long-term debt		(112,211	)		(16,553	)
Increase (decrease) in short-term borrowings		282,678			(59,941	)
Dividends paid		(46,880	)		(40,441	)
Net proceeds from issuance of common stock		6,312			7,176
Acquisition of treasury stock		(20,114	)		(85,168	)
Net cash provided by financing activities		678,536			331,735
Net Increase in Cash and Due From Banks		42,520			80,516
Cash and Due From Banks at Beginning of Period		368,043			278,065
Cash and Due From Banks at End of Period	$	410,563		$	358,581
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	158,898		$	87,485
Income taxes		32,276			30,618

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 U.S. 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 U.S. 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, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

NOTE B – Net Income Per Share and Comprehensive Income

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. Excluded from the calculation were 1.4 million anti-dilutive options for the three and six months ended June 30, 2006.

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
	2006		2005		2006		2005
			(in thousands)
Weighted average shares outstanding (basic)		173,449		162,235		172,166		163,718
Impact of common stock equivalents		2,035		1,806		2,169		1,920
Weighted average shares outstanding (diluted)		175,484		164,041		174,335		165,638

Total comprehensive income was $31.5 million and $66.0 million for the three and six months ended June 30, 2006, respectively. Total comprehensive income was $54.9 million and $74.0 million for the three and six months ended June 30, 2005, respectively.

NOTE C – Stock Dividend

The Corporation declared a 5% stock dividend on April 18, 2006, which was paid on June 8, 2006 to shareholders of record on May 19, 2006. All share and per-share information has been restated to reflect the impact of this stock dividend.

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 fifteen separate banks as of June 30, 2006, 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

Statement of Financial Accounting Standards No.123R, “Share-Based Payment” (Statement 123R), requires that the fair value of equity awards to employees be recognized as compensation expense over the period during which an employee is required to provide service in exchange for such award. During the third quarter of 2005, the Corporation adopted Statement 123R using “modified retrospective application”, electing to restate all prior periods including all per-share amounts. The Corporation’s equity awards consist of stock options and restricted stock granted under its Stock Option and Compensation Plans (Option Plans) and shares purchased by employees under its Employee Stock Purchase Plan.

The following table presents compensation expense and the related tax impacts for equity awards recognized in the consolidated income statements:

	Three months ended					Six months ended
	June 30					June 30
	2006		2005			2006			2005
			(in thousands)
Compensation expense	$	342	$	83		$	686		$	179
Tax expense (benefit)		14		(107	)		(119	)		(109	)
Net income effect	$	356	$	(24	)	$	567		$	70

Under the Option Plans, options are granted to key personnel for terms of up to ten years at option prices equal to the fair market value of the Corporation’s stock on the date of grant. Options are typically granted annually on July 1^st and, prior to the July 1, 2005 grant, had been 100% vested immediately upon grant. For the July 1, 2005 grant, a three-year cliff-vesting feature was added. Certain events, as specified in the Option Plans and agreements, would result in the acceleration of the vesting period. As of June 30, 2006, the Option Plans had 14.9 million shares reserved for the future grants through 2013. On July 1, 2006, the Corporation granted approximately 840,000 options under its Option Plans.

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 $4.1 million to the Pension Plan in 2006.

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 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.

8

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
	2006			2005			2006			2005
	(in thousands)
Service cost	$	606		$	621		$	1,215		$	1,245
Interest cost		865			842			1,729			1,685
Expected return on plan assets		(1,057	)		(819	)		(2,114	)		(1,637	)
Net amortization and deferral		201			221			403			443
Net periodic benefit cost	$	615		$	865		$	1,233		$	1,736

	Post-Retirement Plan
	Three months ended						Six months ended
	June 30						June 30
	2006			2005			2006			2005
	(in thousands)
Service cost	$	147		$	88		$	290		$	177
Interest cost		189			114			374			231
Expected return on plan assets		(1	)		(1	)		(2	)		(1	)
Net amortization and deferral		(82	)		(55	)		(162	)		(112	)
Net periodic benefit cost	$	253		$	146		$	500		$	295

NOTE G – Acquisitions

On February 1, 2006, the Corporation completed its acquisition of Columbia Bancorp (Columbia) of Columbia, Maryland. Columbia was a $1.3 billion bank holding company whose primary subsidiary was The Columbia Bank, which operates 20 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 was acquired by the Corporation based on a “cash election merger” structure. Each Columbia 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 Columbia shareholder elections, approximately 3.5 million of the Columbia shares outstanding on the acquisition date were converted into shares of the Corporation’s common stock, based upon a fixed exchange ratio of 2.441 shares of Corporation stock for each share of Columbia stock. The remaining 3.4 million shares of Columbia stock were purchased for $42.48 per share. In addition, each of the options to acquire Columbia’s stock was converted into options to purchase the Corporation’s stock or was settled in cash, based on the election of each option holder and the terms of the merger agreement. The total purchase price was approximately $305.9 million, including $154.1 million in stock issued and stock options assumed, $149.4 million of Columbia stock purchased and options settled for cash and $2.4 million for other direct acquisition costs. The purchase price for shares issued was determined based on the value of the Corporation’s stock on the date when the number of shares was fixed and determinable.

As a result of the acquisition, Columbia was merged into the Corporation, and The Columbia Bank became a wholly owned subsidiary. The acquisition was 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

9

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 are included in the Corporation’s financial statements prospectively from the February 1, 2006 acquisition date.

The following is a summary of the purchase price allocation based on estimated fair values on the acquisition date (in thousands):

Cash and due from banks	$	46,407
Other earning assets		16,854
Investment securities available for sale		113,761
Loans, net of allowance		1,052,684
Premises and equipment		7,904
Core deposit intangible asset		14,689
Trade name intangible asset		964
Goodwill		202,321
Other assets		92,719
Total assets acquired		1,548,303
Deposits		968,936
Short-term borrowings		184,083
Long-term debt		80,136
Other liabilities		9,223
Total liabilities assumed		1,242,378
Net assets acquired	$	305,925

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, which operates thirteen community-banking offices in Somerset, Hunterton and Middlesex Counties in New Jersey. The total purchase price was $90.4 million, including $66.6 million in stock issued and options assumed, $22.4 million in SVB stock purchased and options settled for cash and $1.4 million in other direct acquisition costs.

The following table summarizes unaudited pro-forma information assuming the acquisitions of Columbia and SVB had occurred on January 1, 2005. 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 June 30				Six months ended June 30
	2006 (1)		2005		2006		2005
Net interest income	$	122,851	$	118,403	$	243,392	$	234,029
Other income		36,002		40,268		71,876		77,956
Net income		46,701		46,142		91,387		92,124
Per Share:
Net income (basic)	$	0.27	$	0.26	$	0.52	$	0.52
Net income (diluted)		0.27		0.26		0.52		0.52

(1) The acquisitions of Columbia and SVB had no pro-forma impact on the reported figures for the three months ended June 30, 2006.

NOTE H – Derivative Financial Instruments

As of June 30, 2006, interest rate swaps with a notional amount of $300.0 million were used to hedge certain long-term fixed rate certificates of deposit. 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

10

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 interest rate swaps are classified as fair value hedges and both the interest rate swaps and the certificates of deposit are recorded at fair value, with changes in the fair values during the period recorded as income or expense. For interest rate swaps accounted for as a fair value hedge, ineffectiveness is the difference between the changes in the fair value of the interest rate swap and the hedged item, in this case the certificates of deposit.

The Corporation’s analysis of hedge effectiveness indicated they were highly effective as of June 30, 2006. For the three and six months ended June 30, 2006, net charges of $94,000 and $155,000, respectively, were recorded to expense representing the net impact of the change in fair values of the interest rate swaps and the certificates of deposit.

The Corporation entered into a forward-starting interest rate swap with a notional amount of $150.0 million in October 2005 in anticipation of the issuance of $150.0 million of trust preferred securities in January 2006. This was accounted for as a cash flow hedge as it hedged the variability of interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. As of December 31, 2005, $2.2 million had been recorded as an other comprehensive loss representing the estimated fair value of the swap on that date, net of a $1.2 million tax effect. The Corporation settled this derivative on its contractual maturity date in January 2006 with a total payment of $5.5 million to the counterparty that resulted in an additional $1.4 million charge to other comprehensive loss (net of $751,000 tax effect) during the first quarter of 2006. The total amount recorded in other comprehensive loss is being amortized to interest expense over the life of the related securities using the effective interest method. The total amount of net losses in accumulated other comprehensive income that will be reclassified into earnings during the next twelve months is expected to be approximately $185,000.

NOTE I – Commitments and Contingencies

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 amounts 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.

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

	June 30
	2006		2005
	(in thousands)
Commitments to extend credit		4,245,908		3,556,674
Standby letters of credit		726,944		548,713
Commercial letters of credit		30,181		21,471

From time to time, the Corporation and its subsidiary banks may be defendants in legal proceedings relating to the conduct of their banking business. Most of such legal proceedings are a normal part of the banking business and, in management’s opinion, the financial position and results of operations and cash flows of the Corporation would not be affected materially by the outcome of such legal proceedings.

NOTE J – Stock Repurchases

In 2005, the Corporation purchased 4.5 million shares of its common stock from an investment bank at a total cost of $73.6 million under an “Accelerated Share Repurchase” program (ASR), which allowed the shares to be purchased immediately rather than over time. The investment bank, in turn, repurchased shares on the

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open market over a period that was determined by the average daily trading volume of the Corporation’s shares, among other factors. The Corporation completed the ASR in February 2006 and settled its position with the investment bank by paying $3.4 million, representing the difference between the initial payment and the actual total price of the shares repurchased.

In March 2006, the Corporation’s Board of Directors approved a stock repurchase plan for 2.1 million shares through December 31, 2006. Repurchases under this plan will occur through open market acquisitions. During the three and six months ended June 30, 2006, 1.0 million and 1.1 million shares were repurchased under this plan, respectively.

NOTE K – Long-Term Debt

In January 2006, the Corporation purchased all of the common stock of a subsidiary trust, Fulton Capital Trust I, which was formed for the purpose of issuing $150.0 million of trust preferred securities at a fixed rate of 6.29% and an effective rate of approximately 6.50% as a result of issuance costs and the settlement cost of the forward-starting interest rate swap. In connection with this transaction, $154.6 million of junior subordinated deferrable interest debentures were issued to the trust. These debentures carry the same rate and mature on February 1, 2036.

NOTE L – New Accounting Standard

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). The interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”. Specifically, the interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Corporation is currently evaluating the impact of FIN 48 on the consolidated financial statements.

NOTE M – Reclassifications

Certain amounts in the 2005 consolidated financial statements and notes have been reclassified to conform to the 2006 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 risk factors could cause actual results to differ materially from such forward-looking statements:

• Changes in interest rates may have an adverse effect on the Corporation’s profitability.

• Changes in economic conditions and the composition of the Corporation’s loan portfolios could lead to higher loan charge-offs or an increase in the allowance for loan losses and may reduce the Corporation’s income.

• Fluctuations in the value of the Corporation’s equity portfolio, or assets under management by the Corporation’s trust and investment management services, could have a material impact on the Corporation’s results of operations.

• If the Corporation is unable to acquire additional banks on favorable terms or if it fails to successfully integrate or improve the operations of acquired banks, the Corporation may be unable to execute its growth strategies.

• If the goodwill that the Corporation has recorded in connection with its acquisitions becomes impaired, it could have a negative impact on the Corporation’s profitability.

• The competition the Corporation faces is increasing and may reduce the Corporation’s customer base and negatively impact the Corporation’s results of operations.

• The supervision and regulation by various regulatory authorities to which the Corporation is subject can be a competitive disadvantage.

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

The Corporation currently derives the majority of its earnings from traditional banking activities, with net interest income, or the difference between interest income earned on loans and investments and interest paid on deposits and borrowings, accounting for approximately 78% of revenues for the three and six months ended June 30, 2006. Growth in net interest income is dependent upon balance sheet growth or increasing the net interest margin, which is net interest income as a percentage of average interest-earning

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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 2006 increased $5.1 million, or 12.3%, from $41.6 million in 2005 to $46.7 million in 2006. Net income for the first half of 2006 increased $7.5 million, or 9.1%, from $83.0 million in 2005 to $90.6 million in 2006. Diluted net income per share for the second quarter increased $0.02, or 8.0%, from $0.25 in 2005 to $0.27 in 2006. For the first half of 2006, diluted net income per share increased $0.02 per share, or 4.0%, from $0.50 in 2005 to $0.52 in 2006. The Corporation realized annualized returns on average assets of 1.32% and average equity of 13.01% during the second quarter of 2006. For the first half of 2006, the Corporation realized annualized returns on average assets of 1.32% and average equity of 12.92%. The annualized return on average tangible equity, which is net income, as adjusted for intangible amortization (net of tax), divided by average shareholders’ equity, excluding goodwill and intangible assets, was 24.87% and 23.93% for the quarter and six months ended June 30, 2006, respectively.

The increase in net income compared to the second quarter of 2005 resulted from a $22.9 million, or 22.9%, increase in net interest income due primarily to external growth through acquisitions, offset by a decline in net interest margin. The increase in net interest income was also offset by a $2.3 million decrease in other income, a $12.6 million increase in other expenses and a $2.8 million increase in income taxes.

For the first half of 2006, the increase in net income compared to the first half of 2005 resulted from a $39.7 million, or 20.0%, increase in net interest income also due primarily to acquisitions, offset by a slight decline in net interest margin and an increase in other expenses of $26.8 million. The increase in earnings was further offset by a $3.5 million increase in income taxes and a $1.6 million decrease in other income.

The following summarizes some of the more significant factors that influenced the Corporation’s results for the three and six months ended June 30, 2006.

Interest Rates – Changes in the interest rate environment generally impact both the Corporation’s net interest income and certain components of its non-interest income. The interest rate environment refers to the level of rates and the slope of the U. S. Treasury yield curve, which plots the yields on treasury issues over various maturity periods. Typically, the shape of the yield curve is upward sloping, with longer-term rates exceeding short-term rates. However, during the three and six months ended June 30, 2006, the yield curve was relatively flat, with minimal differences between long and short-term rates, resulting in a negative impact to the Corporation’s net interest income.

Floating rate loans, short-term borrowings and savings and time deposit rates are generally influenced by short-term rates. The Federal Reserve Board (FRB) raised the Federal funds rate eight times since June 30, 2005, for a total increase of 200 basis points (from 3.25% to 5.25%). The Corporation’s prime lending rate had a corresponding increase, from 6.25% to 8.25%, resulting in an increase in the rates on floating rate loans as well as the rates on new fixed-rate loans. However, the increase in short-term rates also resulted in increased funding costs, with short-term borrowings immediately repricing to higher rates and deposit rates – although more discretionary – increasing due to competitive pressures. In addition, as rates have increased, customers have begun to shift funds from lower rate core demand and savings accounts to fixed rate certificates of deposit in order to lock into higher rates. The increase in rates on deposits and borrowings was more pronounced than loans and other earning assets and, as a result, the Corporation realized a decline in net interest margin in the three and six months ended June 30, 2006 compared to 2005.

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With respect to longer-term rates, the 10-year treasury yield, which is a common benchmark for evaluating residential mortgage rates, increased to 5.15% at June 30, 2006, as compared to 3.94% at June 30, 2005. Higher mortgage rates have resulted in slower refinance activity, origination volumes and lower margins and, therefore, lower total net gains for the Corporation on fixed-rate residential mortgages which are generally sold in the secondary market.

The Corporation manages its risk associated with changes in interest rates through the techniques described in the “Market Risk” section of Management’s Discussion.

Acquisitions – In February 2006, the Corporation acquired Columbia Bancorp (Columbia), of Columbia, Maryland, a $1.3 billion bank holding company whose primary subsidiary was The Columbia Bank. In July 2005, the Corporation acquired SVB Financial Services, Inc. (SVB) of Somerville, New Jersey, a $530 million bank holding company whose primary subsidiary was Somerset Valley Bank. Results for 2006 in comparison to 2005 were impacted by these acquisitions, as documented in the appropriate sections of Management’s Discussion.

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 the Corporation’s “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 has also impacted the Corporation’s capital and liquidity. In order to complete acquisitions, the Corporation implemented strategies to maintain appropriate levels of capital and to provide necessary cash resources. In January 2006, the Corporation issued $154.6 million of junior subordinated deferrable interest debentures in order to fund the Columbia acquisition. See additional information in the “Liquidity” section of Management’s Discussion.

Earning Assets – The Corporation’s interest-earning assets increased from 2005 to 2006 through a combination of acquisitions and internal loan growth.

During the second quarter of 2006, the Corporation experienced a slight shift in its composition of interest-earning assets from investments (21.8% of total average interest-earning assets in 2006, compared to 23.3% in 2005) to loans (76.1% in 2006, compared to 74.0% in 2005). For the six months ended June 30, 2006, a similar shift in the composition of interest-earning assets from investments (22.2% in 2006, compared to 23.6% in 2005) to loans (75.7% in 2006, compared to 74.1% in 2005) occurred. The movement to higher-yielding loans has mitigated some of the factors that have had a negative effect on the Corporation’s net interest income and net interest margin. Slower growth in loans could result in a future shift in the composition of interest-earning assets from loans to investments.

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 influenced by economic conditions and other factors, but can be managed through conservative underwriting and sound collection policies and procedures.

The Corporation continued to maintain excellent asset quality throughout the first half of 2006, attributable to its credit culture and underwriting policies as well as general economic conditions.

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Annualized net charge-offs to average loans were consistent at 0.02% in the second quarter and first half of 2006 and 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. Historically, gains on sales of these equities have been a recurring component of the Corporation’s earnings, although realized gains have decreased in recent periods. Declines in bank stock portfolio values could have a detrimental impact on the Corporation’s ability to recognize gains in the future.

Quarter Ended June 30, 2006 versus Quarter Ended June 30, 2005

Results for the second quarter of 2006 compared to the results of the second quarter of 2005 were impacted by the February 2006 acquisition of Columbia and the July 2005 acquisition of SVB, whose results are included in 2006 amounts, but not in 2005.

Net Interest Income

Net interest income increased $22.9 million, or 22.9%, to $122.9 million in 2006 from $99.9 million in 2005. The increase was due to average balance growth, with total interest-earning assets increasing 23.7%, offset by a slightly lower net interest margin. The average fully taxable-equivalent (FTE) yield on interest-earning assets increased 91 basis points (a 15.7% increase) over 2005 while the cost of interest-bearing liabilities increased 107 basis points (a 46.7% increase). Due to the more pronounced increase in costs of interest-bearing liabilities, the net interest margin decreased two basis points. The Corporation continues to manage its asset/liability position and interest rate risk through the methods as described 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 2006 as compared to the same period in 2005. Interest income and yields are presented on an FTE basis, using a 35% Federal tax rate. The discussion following this table is based on these FTE amounts. All dollar amounts are in thousands.

	Three months ended June 30
	2006									2005
	Average						Yield/			Average						Yield/
	Balance			Interest			Rate			Balance			Interest			Rate
ASSETS
Interest-earning assets:
Loans and leases (1)	$	9,846,025		$	181,019			7.37	%	$	7,743,791		$	123,263			6.38	%
Taxable investment securities (2)		2,242,945			23,564			4.20			1,966,738			18,257			3.72
Tax-exempt investment securities (2)		430,246			5,200			4.83			341,044			4,227			4.96
Equity securities (2)		152,210			1,740			4.58			131,002			1,341			4.11
Total investment securities		2,825,401			30,504			4.32			2,438,784			23,825			3.92
Loans held for sale		222,103			4,006			7.21			232,448			3,516			6.05
Other interest-earning assets		50,422			592			4.69			47,819			348			2.92
Total interest-earning assets		12,943,951			216,121			6.70	%		10,462,842			150,952			5.79	%
Noninterest-earning assets:
Cash and due from banks		335,009									342,592
Premises and equipment		183,587									152,123
Other assets		862,739									552,859
Less: Allowance for loan losses		(106,727	)								(91,209	)
Total Assets	$	14,218,559								$	11,419,207
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits	$	1,672,116		$	6,258			1.50	%	$	1,484,772		$	3,309			0.89	%
Savings deposits		2,386,287			12,113			2.03			1,986,909			5,859			1.18
Time deposits		4,082,429			40,625			3.99			3,014,871			21,936			2.92
Total interest-bearing deposits		8,140,832			58,996			2.91			6,486,552			31,104			1.92
Short-term borrowings		1,602,894			18,427			4.56			1,180,975			7,914			2.66
Long-term debt		1,010,744			12,932			5.13			843,727			9,668			4.60
Total interest-bearing liabilities		10,754,470			90,355			3.36	%		8,511,254			48,686			2.29	%
Noninterest-bearing liabilities:
Demand deposits		1,850,991									1,567,611
Other		173,213									139,921
Total Liabilities		12,778,674									10,218,786
Shareholders’ equity		1,439,885									1,200,421
Total Liabilities and Shareholders’ Equity	$	14,218,559								$	11,419,207
Net interest income/net interest margin (FTE)					125,766			3.90	%					102,266			3.92	%
Tax equivalent adjustment					(2,915	)								(2,341	)
Net interest income				$	122,851								$	99,925

(1)	Includes non-performing loans.
(2)	Balances include amortized historical cost for available for sale securities. The related unrealized holding gains (losses) are included in other assets.

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

	2006 vs. 2005
	Increase (decrease) due
	To change in
	Volume			Rate			Net
		(in thousands)
Interest income on:
Loans and leases	$	36,765		$	20,991		$	57,756
Taxable investment securities		2,766			2,541			5,307
Tax-exempt investment securities		1,088			(115	)		973
Equity securities		234			165			399
Loans held for sale		(162	)		652			490
Other interest-earning assets		20			224			244
Total interest income	$	40,711		$	24,458		$	65,169
Interest expense on:
Demand deposits	$	462		$	2,487		$	2,949
Savings deposits		1,376			4,878			6,254
Time deposits		9,168			9,521			18,689
Short-term borrowings		3,499			7,014			10,513
Long-term debt		2,054			1,210			3,264
Total interest expense	$	16,559		$	25,110		$	41,669

Interest income increased $65.2 million, or 43.2%, primarily due to increases in average balances of interest-earning assets and partially due to increases in rates. Interest income increased $40.7 million as a result of a $2.5 billion, or 23.7%, increase in average balances, while an increase of $24.5 million was realized from the 91 basis point increase in rates.

The increase in average interest-earning assets was primarily due to loan growth. Average loans increased $2.1 billion, or 27.1%. The following summarizes the growth in average loans, by type:

	Three months ended
	June 30				Increase
	2006		2005		$		%
			(dollars in thousands)
Commercial – industrial and financial	$	2,466,241	$	1,970,926	$	495,315		25.1	%
Commercial – agricultural		325,409		319,853		5,556		1.7
Real estate – commercial mortgage		3,039,417		2,537,606		501,811		19.8
Real estate – residential mortgage and home equity		2,046,953		1,678,623		368,330		21.9
Real estate – construction		1,373,038		691,509		681,529		98.6
Consumer		518,714		482,178		36,536		7.6
Leasing and other		76,253		63,096		13,157		20.9
Total	$	9,846,025	$	7,743,791	$	2,102,234		27.1	%

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The acquisitions of Columbia and SVB contributed approximately $1.4 billion to the increase in average balances. The following table presents the average balance impact of acquisitions, by type:

	Three months ended
	June 30
	2006		2005
	(in thousands)
Commercial — industrial and financial	$	357,295	$	—
Real estate — commercial mortgage		274,592		—
Real estate — residential mortgage and home equity		273,542		—
Real estate — construction		459,666		—
Consumer		4,676		—
Leasing and other		1,231		—
Total	$	1,371,002	$	—

The following table presents the growth in average loans, by type, excluding the average balances contributed by the acquisitions of Columbia and SVB:

	Three months ended
	June 30				Increase
	2006		2005		$		%
			(dollars in thousands)
Commercial — industrial and financial	$	2,108,946	$	1,970,926	$	138,020		7.0	%
Commercial — agricultural		325,409		319,853		5,556		1.7
Real estate — commercial mortgage		2,764,825		2,537,606		227,219		9.0
Real estate — residential mortgage and home equity		1,773,411		1,678,623		94,788		5.6
Real estate — construction		913,372		691,509		221,863		32.1
Consumer		514,038		482,178		31,860		6.6
Leasing and other		75,022		63,096		11,926		18.9
Total	$	8,475,023	$	7,743,791	$	731,232		9.4	%

Excluding the impact of acquisitions, loan growth was particularly strong in the commercial mortgage and construction categories, which together increased $449.1 million, or 13.9%. Commercial loans increased $143.6 million, or 6.3%. The remaining growth in loans was due to residential mortgage and home equity loans increasing $94.8 million, or 5.6%, primarily due to increases in home equity loans.

The average yield on loans during the second quarter of 2006 was 7.37%, a 99 basis point, or 15.5%, increase over 2005. This mainly reflects the impact of floating and adjustable rate loans, which reprice to higher rates when interest rates rise, as they have over the past twelve months.

Average investment securities increased $386.6 million, or 15.9%. Excluding the impact of acquisitions, this increase was $32.2 million, or 1.3%, funded by both reinvestments of maturities and increased borrowings. The average yield on investment securities increased 40 basis points from 3.92% in 2005 to 4.32% in 2006.

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The following table summarizes the growth in average deposits, by category:

	Three months ended
	June 30				Increase
	2006		2005		$		%
			(dollars in thousands)
Noninterest-bearing demand	$	1,850,991	$	1,567,611	$	283,380		18.1	%
Interest-bearing demand		1,672,116		1,484,772		187,344		12.6
Savings		2,386,287		1,986,909		399,378		20.1
Time deposits		4,082,429		3,014,871		1,067,558		35.4
Total	$	9,991,823	$	8,054,163	$	1,937,660		24.1	%

The acquisitions of Columbia and SVB accounted for approximately $1.4 billion of the increase in average balances. The following table presents the average balance impact of these acquisitions, by type:

	Three months ended
	June 30
	2006		2005
	(in thousands)
Noninterest-bearing demand	$	315,723	$	—
Interest-bearing demand		183,007		—
Savings		296,080		—
Time deposits		651,435		—
Total	$	1,446,245	$	—

The following table presents the growth in average deposits, by type, excluding the contribution of the acquisitions of Columbia and SVB:

	Three months ended
	June 30				Increase (decrease)
	2006		2005		$			%
			(dollars in thousands)
Noninterest-bearing demand	$	1,535,268	$	1,567,611	$	(32,343	)		(2.1	)%
Interest-bearing demand		1,489,109		1,484,772		4,337			0.3
Savings		2,090,207		1,986,909		103,298			5.2
Time deposits		3,430,994		3,014,871		416,123			13.8
Total	$	8,545,578	$	8,054,163	$	491,415			6.1	%

Interest expense increased $41.7 million, or 85.6%, to $90.4 million in the second quarter of 2006 from $48.7 million in the second quarter of 2005. Interest expense increased $16.6 million due to a $2.2 billion, or 26.4%, increase in average balances and $25.1 million due to the 107 basis point, or 46.7%, increase in the cost of total interest-bearing liabilities. The cost of interest-bearing deposits increased 99 basis points, or 51.6%, from 1.92% in 2005 to 2.91% in 2006. This increase was due to customers becoming increasingly price-sensitive and shifting from core demand and savings accounts to higher cost certificates of deposit, a trend that may continue throughout the second half of the year.

Average borrowings increased $588.9 million from the second quarter of 2005. Excluding the impact of acquisitions, average short-term borrowings increased $221.4 million, or 18.7%, to $1.4 billion, while average long-term debt increased $132.7 million, or 15.7%, to $976.4 million. The increase in short-term borrowings was mainly due to an increase in Federal funds purchased to fund investment purchases and loan growth, offset by lower borrowings outstanding under repurchase agreements. The increase in long-term debt was primarily due to the issuance of $154.6 million of junior subordinated deferrable interest

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debentures in connection with the Columbia acquisition, offset by lower Federal Home Loan Bank (FHLB) advances.

Provision and Allowance for Loan Losses

The following table presents ending balances of loans outstanding (net of unearned income):

	June 30		December 31		June 30
	2006		2005		2005
	(in thousands)
Commercial — industrial and financial	$	2,553,375	$	2,044,010	$	1,991,480
Commercial — agricultural		330,063		331,659		322,791
Real-estate — commercial mortgage		3,063,863		2,831,405		2,556,990
Real-estate — residential mortgage and home equity		2,091,301		1,774,260		1,695,821
Real-estate — construction		1,408,144		851,451		699,518
Consumer		520,094		519,094		485,492
Leasing and other		85,117		72,849		60,387
	$	10,051,957	$	8,424,728	$	7,812,479

Approximately $4.5 billion, or 44.5%, of the Corporation’s loan portfolio was in commercial mortgage and construction loans at June 30, 2006, compared to 41.7% at June 30, 2005. While the Corporation does not have a concentration of credit risk with any single borrower, repayments on loans in these portfolios can be negatively influenced by decreases in real estate values. The Corporation mitigates this risk through stringent underwriting policies and procedures. In addition, approximately 60% of commercial mortgages were owner-occupied as of June 30, 2006. These types of loans are generally less risky than non-owner-occupied mortgages. Construction loans at June 30, 2006 consisted of approximately 60% builder and land acquisition loans, 20% residential construction and 20% commercial or multi-family construction.

21

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

	Three months ended
	June 30
	2006			2005
	(dollars in thousands)
Loans outstanding at end of period (net of unearned)	$	10,051,957		$	7,812,479
Daily average balance of loans and leases	$	9,846,025		$	7,743,791
Balance at beginning of period	$	106,195		$	90,127
Loans charged off:
Commercial – financial and agricultural		1,016			729
Real estate – mortgage		77			54
Consumer		537			836
Leasing and other		49			41
Total loans charged off		1,679			1,660
Recoveries of loans previously charged off:
Commercial – financial and agricultural		790			479
Real estate – mortgage		12			467
Consumer		346			242
Leasing and other		5			22
Total recoveries		1,153			1,210
Net loans charged off		526			450
Provision for loan losses		875			725
Balance at end of period	$	106,544		$	90,402
Net charge-offs to average loans (annualized)		0.02	%		0.02	%
Allowance for loan losses to loans outstanding		1.06	%		1.15	%

The following table summarizes the Corporation’s non-performing assets as of the indicated dates:

	June 30			December 31			June 30
	2006			2005			2005
	(dollars in thousands)
Non-accrual loans	$	26,299		$	36,560		$	20,820
Loans 90 days past due and accruing		13,421			9,012			7,453
Other real estate owned		3,125			2,072			3,478
Total non-performing assets	$	42,845		$	47,644		$	31,751
Non-accrual loans/Total loans		0.26	%		0.43	%		0.27	%
Non-performing assets/Total assets		0.29	%		0.38	%		0.27	%
Allowance/Non-performing loans		268	%		204	%		320	%

The provision for loan losses for the second quarter of 2006 totaled $875,000, an increase of $150,000, or 20.7%, from the same period in 2005. Net charge-offs totaled $526,000, or 0.02% of average loans on an annualized basis, during the second quarter of 2006, a $76,000 increase over a $450,000, or 0.02%, in net

22

charge-offs for the second quarter of 2005. Non-performing assets increased to $42.8 million, or 0.29% of total assets, at June 30, 2006, from $31.8 million, or 0.27% of total assets, at June 30, 2005. While total non-performing assets increased $11.1 million in comparison to 2005, this is not an indication of a deterioration in credit quality as non-performings as a percent of total assets increased only two basis points. Total non-performing assets decreased $4.8 million from December 31, 2005.

Management believes that the allowance balance of $106.5 million at June 30, 2006 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)
	2006		2005		$			%
			(dollars in thousands)
Investment management and trust services	$	9,056	$	8,966	$	90			1.0	%
Service charges on deposit accounts		10,892		9,960		932			9.4
Other service charges and fees		6,576		7,142		(566	)		(7.9	)
Gains on sales of mortgage of loans		5,187		6,290		(1,103	)		(17.5	)
Investment securities gains		1,409		1,418		(9	)		(0.6	)
Gain on sale of deposits		—		2,200		(2,200	)		N/A
Other		2,882		2,339		543			23.2
Total	$	36,002	$	38,315	$	(2,313	)		(6.0	)%

Other income decreased $2.3 million, or 6.0%, in 2006 including additions of $1.7 million due to the acquisitions of Columbia and SVB, presented as follows:

	Three months ended
	June 30
	2006			2005
	(in thousands)
Investment management and trust services	$	271		$	—
Service charges on deposit accounts		674			—
Other service charges and fees		244			—
Gains on sales of mortgage loans		297			—
Investment securities gains (losses)		(4	)		—
Other		259			—
Total	$	1,741		$	—

23

The following table presents the components of other income, excluding the amounts contributed by the Columbia and SVB acquisitions:

	Three months ended
	June 30				Increase (decrease)
	2006		2005		$			%
			(dollars in thousands)
Investment management and trust services	$	8,785	$	8,966	$	(181	)		(2.0	)%
Service charges on deposit accounts		10,218		9,960		258			2.6
Other service charges and fees		6,332		7,142		(810	)		(11.3	)
Gains on sales of mortgage loans		4,890		6,290		(1,400	)		(22.3	)
Investment securities gains		1,413		1,418		(5	)		(0.4	)
Gain on sale of deposits		—		2,200		(2,200	)		N/A
Other		2,623		2,339		284			12.1
Total	$	34,261	$	38,315	$	(4,054	)		(10.6	)%

The discussion that follows addresses changes in other income, excluding the acquisitions of Columbia and SVB.

Excluding investment securities gains, total other income decreased $4.1 million, or 11.0%, primarily due to a $2.2 million non-recurring gain on the sale of deposits in the second quarter of 2005, and gains on sales of mortgage loans. The reduction in gains on sales of mortgage loans resulted from the increase in longer-term mortgage rates and lower spreads on sales.

The decrease in investment management and trust services was due to a reduction in brokerage revenue, offset slightly by increased trust commission income. Brokerage revenue decreased $258,000, or 8.0%, mainly due to lower sales of fixed rate annuities as higher rates made alternative investments, such as certificates of deposit, more attractive.

The increase in service charges on deposit accounts was due to increases of $332,000 and $278,000 in cash management fees and overdraft fees, respectively, offset by a $352,000 decrease in other service charges on deposit accounts. The decrease in other service charges and fees was due to decrease in merchant fees ($1.2 million, or 42.1%) due to a one-time increase in the second quarter of 2005, offset by increases in debit card fees ($243,000, or 15.0%) and letter of credit fees ($68,000, or 5.6%).

Other Expenses

The following table presents the components of other expenses:

	Three months ended
	June 30				Increase (decrease)
	2006		2005		$			%
			(dollars in thousands)
Salaries and employee benefits	$	53,390	$	45,235	$	8,155			18.0	%
Net occupancy expense		9,007		6,549		2,458			37.5
Equipment expense		3,495		2,888		607			21.0
Data processing		3,165		3,321		(156	)		(4.7	)
Advertising		3,027		2,276		751			33.0
Intangible amortization		2,006		1,168		838			71.7
Other		16,703		16,752		(49	)		(0.3	)
Total	$	90,793	$	78,189	$	12,604			16.1	%

24

Total other expenses increased $12.6 million, or 16.1%, in 2006, including $14.0 million due to the Columbia and SVB acquisitions, presented as follows:

	Three months ended
	June 30
	2006		2005
	(in thousands)
Salaries and employee benefits	$	7,137	$	—
Net occupancy expense		1,664		—
Equipment expense		541		—
Data processing		390		—
Advertising		418		—
Intangible amortization		900		—
Other		2,947		—
Total	$	13,997	$	—

The following table presents the components of other expenses, excluding the amounts contributed by the Columbia and SVB acquisitions:

	Three months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Salaries and employee benefits	$	46,253	$	45,235	$	1,018			2.3	%
Net occupancy expense		7,343		6,549		794			12.1
Equipment expense		2,954		2,888		66			2.3
Data processing		2,775		3,321		(546	)		(16.4	)
Advertising		2,609		2,276		333			14.6
Intangible amortization		1,106		1,168		(62	)		(5.3	)
Other		13,756		16,752		(2,996	)		(17.9	)
Total	$	76,796	$	78,189	$	(1,393	)		(1.8	)%

The discussion that follows addresses changes in other expenses, excluding the acquisitions of Columbia and SVB.

The increase in salaries and employee benefits resulted from the salary expense component increasing $873,000, or 2.4%, driven by an increase in total average full-time equivalent employees and normal increases for existing employees, offset by decreased incentive compensation costs. Employee benefits also increased $145,000, or 1.6%, in comparison to the second quarter of 2005 due to increases in healthcare costs, offset by a decrease in expenses related to the Corporation’s defined benefit pension plan.

The increase in occupancy expense resulted from increased depreciation of real property and higher maintenance and utility costs in the second quarter of 2006 in comparison to 2005. The decrease in data processing expense, which consists mainly of fees paid for outsourced back office systems, was mainly due to the renegotiation of key processing contracts with certain vendors, most notably an automated teller service provider. The decrease in other expenses was mainly due to the timing of certain expenses recorded in the second quarter of 2005 and approximately $700,000 of certain expense recoveries related to non-accrual loans in 2006.

25

Income Taxes

Income tax expense for the second quarter of 2006 was $20.5 million, a $2.8 million, or 15.6%, increase from $17.7 million in 2005. The Corporation’s effective tax rate was approximately 30.5% in 2006, as compared to 29.9% in 2005. 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, 2006 versus Six Months Ended June 30, 2005

Results for the first half of 2006 compared to the results for the first half of 2005 were impacted by the February 2006 acquisition of Columbia and the July 2005 acquisition of SVB, whose results are included in 2006 amounts, but not in 2005.

Net Interest Income

Net interest income increased $39.7 million, or 20.0%, to $237.9 million in 2006 from $198.2 million in 2005. The increase was due to average balance growth, with total interest-earning assets increasing 21.6%, offset by a lower net interest margin. The average FTE yield on interest-earning assets increased 85 basis points (a 14.9% increase) over 2005 while the cost of interest-bearing liabilities increased 104 basis points (a 47.5% increase). The higher increase in the cost of interest-bearing liabilities resulted in a five basis point decrease in net interest margin. 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.

26

The following table provides a comparative average balance sheet and net interest income analysis for the first six months of 2006 as compared to the same period in 2005. Interest income and yields are presented on an FTE basis, using a 35% Federal tax rate. The discussion following this table is based on these FTE amounts. All dollar amounts are in thousands.

	Six months ended June 30
	2006									2005
	Average						Yield/			Average						Yield/
	Balance			Interest			Rate			Balance			Interest			Rate
ASSETS
Interest-earning assets:
Loans and leases (1)	$	9,538,542		$	342,902			7.24	%	$	7,675,039		$	239,954			6.30	%
Taxable investment securities (2)		2,214,666			46,103			4.16			1,975,750			36,518			3.73
Tax-exempt investment securities (2)		433,087			10,385			4.80			338,215			8,481			5.06
Equity securities (2)		148,630			3,299			4.45			127,929			2,611			4.12
Total investment securities		2,796,383			59,787			4.28			2,441,894			47,610			3.93
Loans held for sale		210,834			7,464			7.08			207,428			6,018			5.85
Other interest-earning assets		56,870			1,255			4.43			38,313			524			2.76
Total interest-earning assets		12,602,629			411,408			6.57	%		10,362,674			294,106			5.72	%
Noninterest-earning assets:
Cash and due from banks		346,681									332,747
Premises and equipment		180,690									150,579
Other assets		825,037									562,046
Less: Allowance for loan losses		(104,376	)								(90,851	)
Total Assets	$	13,850,661								$	11,317,195
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits	$	1,669,327		$	11,996			1.45	%	$	1,489,850		$	6,279			0.85	%
Savings deposits		2,329,850			22,510			1.95			1,949,573			10,324			1.07
Time deposits		3,914,400			74,680			3.85			3,005,646			42,309			2.84
Total interest-bearing deposits		7,913,577			109,186			2.78			6,445,069			58,912			1.84
Short-term borrowings		1,545,414			33,733			4.36			1,210,053			14,738			2.46
Long-term debt		1,003,152			25,045			5.03			764,042			17,598			4.64
Total interest-bearing liabilities		10,462,143			167,964			3.23	%		8,419,164			91,248			2.19	%
Noninterest-bearing liabilities:
Demand deposits		1,808,671									1,538,526
Other		166,346									133,590
Total Liabilities		12,437,160									10,091,280
Shareholders’ equity		1,413,501									1,225,915
Total Liabilities and Shareholders’ Equity	$	13,850,661								$	11,317,195
Net interest income/net interest margin (FTE)					243,444			3.89	%					202,858			3.94	%
Tax equivalent adjustment					(5,550	)								(4,685	)
Net interest income				$	237,894								$	198,173

(1)	Includes non-performing loans.
(2)	Balances include amortized historical cost for available for sale securities. The related unrealized holding gains (losses) are included in other assets.

27

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

	2006 vs. 2005
	Increase (decrease) due
	To change in
	Volume		Rate			Net
	(in thousands)
Interest income on:
Loans and leases	$	63,918	$	39,030		$	102,948
Taxable investment securities		4,901		4,684			9,585
Tax-exempt investment securities		2,348		(444	)		1,904
Equity securities		460		228			688
Loans held for sale		105		1,341			1,446
Other interest-earning assets		325		406			731
Total interest income	$	72,057	$	45,245		$	117,302
Interest expense on:
Demand deposits	$	834	$	4,883		$	5,717
Savings deposits		2,332		9,854			12,186
Time deposits		14,881		17,490			32,371
Short-term borrowings		5,000		13,995			18,995
Long-term debt		5,872		1,575			7,447
Total interest expense	$	28,919	$	47,797		$	76,716

Interest income increased $117.3 million, or 39.9%, primarily as a result of increases in average balances of interest-earning assets and partially as a result of increases in rates. Interest income increased $72.1 million as a result of a $2.2 billion, or 21.6%, increase in average balances, while an increase of $45.2 million was realized from the 85 basis point increase in rates.

The increase in average interest-earning assets was primarily due to loan growth. Average loans increased $1.9 billion, or 24.3%. The following summarizes the growth in average loans, by type:

	Six months ended
	June 30				Increase
	2006		2005		$		%
	(dollars in thousands)
Commercial — industrial and financial	$	2,372,936	$	1,987,810	$	385,126		19.4	%
Commercial — agricultural		326,662		323,257		3,405		1.1
Real estate — commercial mortgage		2,992,308		2,488,974		503,334		20.2
Real estate — residential mortgage and home equity		1,986,582		1,666,518		320,064		19.2
Real estate — construction		1,268,781		665,043		603,738		90.8
Consumer		517,539		480,406		37,133		7.7
Leasing and other		73,734		63,031		10,703		17.0
Total	$	9,538,542	$	7,675,039	$	1,863,503		24.3	%

28

The acquisitions of Columbia and SVB contributed approximately $1.2 million to the increase in average balances. The following table presents the average balance impact of acquisitions, by type:

	Six months ended
	June 30
	2006		2005
	(in thousands)
Commercial — industrial and financial	$	301,717	$	—
Real estate — commercial mortgage		254,681		—
Real estate — residential mortgage and home equity		235,415		—
Real estate — construction		387,311		—
Consumer		4,239		—
Leasing and other		1,001		—
Total	$	1,184,364	$	—

The following table presents the growth in average loans, by type, excluding the average balances contributed by the acquisitions of Columbia and SVB:

	Six months ended
	June 30				Increase
	2006		2005		$		%
	(dollars in thousands)
Commercial — industrial and financial	$	2,071,219	$	1,987,810	$	83,409		4.2	%
Commercial — agricultural		326,662		323,257		3,405		1.1
Real estate — commercial mortgage		2,737,627		2,488,974		248,653		10.0
Real estate — residential mortgage and home equity		1,751,167		1,666,518		84,649		5.1
Real estate — construction		881,470		665,043		216,427		32.5
Consumer		513,300		480,406		32,894		6.8
Leasing and other		72,733		63,031		9,702		15.4
Total	$	8,354,178	$	7,675,039	$	679,139		8.8	%

Excluding the impact of acquisitions, loan growth was particularly strong in the commercial mortgage and construction categories, which together increased $465.1 million, or 14.7%. Commercial loans increased $86.8 million, or 3.8%. Residential mortgage and home equity loans increased $84.6 million, or 5.1%, entirely due to increases in home equity loans.

The average yield on loans during the first half of 2006 was 7.24%, a 94 basis point, or 14.9%, increase over 2005. This increase in the average yield on loans reflects the impact of a significant portfolio of floating rate loans, which immediately reprice to higher rates when interest rates rise, as they have over the past twelve months.

Average investment securities increased $354.5 million, or 14.5%. Excluding the impact of acquisitions, this increase was $41.8 million, or 1.7%, funded by both reinvestments of maturities and increased borrowings. The average yield on investment securities increased 35 basis points from 3.93% in 2005 to 4.28% in 2006.

29

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

	Six months ended
	June 30				Increase
	2006		2005		$		%
			(dollars in thousands)
Noninterest-bearing demand	$	1,808,671	$	1,538,526	$	270,145		17.6	%
Interest-bearing demand		1,669,327		1,489,850		179,477		12.0
Savings		2,329,850		1,949,573		380,277		19.5
Time deposits		3,914,400		3,005,646		908,754		30.2
Total	$	9,722,248	$	7,983,595	$	1,738,653		21.8	%

The acquisitions of Columbia and SVB accounted for approximately $1.3 billion of the increase in average balances. The following table presents the average balance impact of acquisitions, by type:

	Six months ended
	June 30
	2006		2005
	(in thousands)
Noninterest-bearing demand	$	270,623	$	—
Interest-bearing demand		169,893		—
Savings		271,068		—
Time deposits		557,142		—
Total	$	1,268,726	$	—

The following table presents the growth in average deposits, by type, excluding the contribution of the acquisitions of Columbia and SVB:

	Six months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Noninterest-bearing demand	$	1,538,048	$	1,538,526	$	(478	)		N/M
Interest-bearing demand		1,499,434		1,489,850		9,584			0.6	%
Savings		2,058,782		1,949,573		109,209			5.6
Time deposits		3,357,258		3,005,646		351,612			11.7
Total	$	8,453,522	$	7,983,595	$	469,927			5.9	%

N/M — not meaningful.

Interest expense increased $76.7 million, or 84.1%, to $168.0 million in the first half of 2006 from $91.2 million in the first half of 2005. Interest expense increased $28.9 million due to a $2.0 billion, or 24.3%, increase in average balances and $47.8 million due to a 104 basis point, or 47.5%, increase in the cost of total interest-bearing liabilities. The cost of interest-bearing deposits increased 94 basis points, or 51.1%, from 1.84% in 2005 to 2.78% in 2006. This increase was due to rising rates in general as a result of the FRB’s rate increases over the past twelve months. Additional increases have resulted from customers becoming increasingly price-sensitive and shifting from core demand and savings accounts to higher cost certificates of deposits.

Average borrowings increased $574.5 million from the first half of 2005. Excluding the impact of acquisitions, average short-term borrowings increased $166.6 million, or 13.8%, to $1.4 billion, while average long-term debt increased $206.9 million, or 27.1%, to $971.0 million. The increase in short-term

30

borrowings was mainly due to an increase in Federal funds purchased to fund investment purchases and loan growth, offset by lower borrowings outstanding under repurchase agreements. The increase in long-term debt was primarily due to the issuance of $154.6 million of junior subordinated deferrable interest debentures in connection with the Columbia acquisition and the impact of $100.0 million of subordinated debt issued and outstanding since March 2005.

Provision and Allowance for Loan Loss

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

	Six months ended
	June 30
	2006			2005
	(dollars in thousands)
Loans outstanding at end of period (net of unearned)	$	10,051,957		$	7,812,479
Daily average balance of loans and leases	$	9,538,542		$	7,675,039
Balance at beginning of period	$	92,847		$	89,627
Loans charged off:
Commercial – financial and agricultural		1,895			1,552
Real estate – mortgage		158			241
Consumer		998			1,601
Leasing and other		128			85
Total loans charged off		3,179			3,479
Recoveries of loans previously charged off:
Commercial – financial and agricultural		1,171			1,176
Real estate – mortgage		106			917
Consumer		677			608
Leasing and other		56			28
Total recoveries		2,010			2,729
Net loans charged off		1,169			750
Provision for loan losses		1,875			1,525
Allowance purchased		12,991			—
Balance at end of period	$	106,544		$	90,402
Net charge-offs to average loans (annualized)		0.02	%		0.02	%
Allowance for loan losses to loans outstanding		1.06	%		1.15	%

The provision for loan losses for the first half of 2006 totaled $1.9 million, an increase of $350,000, or 23.0%, from the same period in 2005. Net charge-offs totaled $1.2 million, or 0.02% of average loans on an annualized basis, during the first half of 2006, a $419,000 increase over $750,000, or 0.02%, in net charge-offs for the first half of 2005.

31

Other Income

The following table presents the components of other income:

	Six months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Investment management and trust services	$	19,088	$	17,985	$	1,103			6.1	%
Service charges on deposit accounts		21,139		19,292		1,847			9.6
Other service charges and fees		13,230		12,698		532			4.2
Gains on sales of mortgage loans		9,959		11,947		(1,988	)		(16.6	)
Investment securities gains		4,074		4,733		(659	)		(13.9	)
Gain on sale of deposits		—		2,200		(2,200	)		N/A
Other		5,119		5,313		(194	)		(3.7	)
Total	$	72,609	$	74,168	$	(1,559	)		(2.1	)%

Other income decreased $1.6 million, or 2.1%, in 2006, including $3.0 million due to the acquisitions of Columbia and SVB, presented as follows:

	Six months ended
	June 30
	2006			2005
	(in thousands)
Investment management and trust services	$	430		$	—
Service charges on deposit accounts		1,140			—
Other service charges and fees		432			—
Gains on sales of mortgage loans		495			—
Investment securities gains (losses)		(4	)		—
Other		480			—
Total	$	2,973		$	—

The following table presents the components of other income, excluding the amounts contributed by the Columbia and SVB acquisitions:

	Six months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Investment management and trust services	$	18,658	$	17,985	$	673			3.7	%
Service charges on deposit accounts		19,999		19,292		707			3.7
Other service charges and fees		12,798		12,698		100			0.8
Gains on sales of mortgage loans		9,464		11,947		(2,483	)		(20.8	)
Investment securities gains		4,078		4,733		(655	)		(13.8	)
Gain on sale of deposits		—		2,200		(2,200	)		N/A
Other		4,639		5,313		(674	)		(12.7	)
Total	$	69,636	$	74,168	$	(4,532	)		(6.1	)%

The discussion that follows addresses changes in other income, excluding the acquisitions of Columbia and SVB.

32

Excluding investment securities gains, which decreased $655,000 in the first half of 2006 to $4.1 million, total other income decreased $3.9 million, or 5.6%, as slight growth in fee income was more than offset by decreases resulting from a $2.2 million non-recurring gain on the sale of deposits in the second quarter of 2005, and decreased gains on sales of mortgage loans. The decrease in gains on sales of mortgage loans resulted from the increase in longer-term mortgage rates and lower margins.

The increase in investment management and trust services was due to increases in both brokerage revenue and trust commission income. Trust commission income increased $489,000, or 4.3%, while brokerage revenue increased $183,000, or 2.7%.

The increase in service charges on deposit accounts was due to increases of $668,000 and $594,000 in overdraft fees and cash management fees, respectively, offset by a $555,000 decrease in other service charges on deposit accounts, primarily related to lower fees earned on non-interest and interest-bearing demand accounts.

Investment securities gains decreased $655,000, or 13.8%. Investment securities gains during the first half of 2006 consisted of net realized gains of $4.1 million on the sale of equity securities. Investment securities gains during the first half 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.

Other Expenses

The following table presents the components of other expenses:

	Six months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Salaries and employee benefits	$	103,319	$	89,532	$	13,787			15.4	%
Net occupancy expense		17,596		14,047		3,549			25.3
Equipment expense		7,088		5,958		1,130			19.0
Data processing		6,074		6,490		(416	)		(6.4	)
Advertising		5,280		4,249		1,031			24.3
Intangible amortization		3,858		2,347		1,511			64.4
Other		35,594		29,393		6,201			21.1
Total	$	178,809	$	152,016	$	26,793			17.6	%

33

Total other expenses increased $26.8 million, or 17.6%, in 2006, including $23.9 million due to the Columbia and SVB acquisitions, presented as follows:

	Six months ended
	June 30
	2006		2005
	(in thousands)
Salaries and employee benefits	$	12,278	$	—
Net occupancy expense		2,803		—
Equipment expense		1,000		—
Data processing		682		—
Advertising		715		—
Intangible amortization		1,646		—
Other		4,730		—
Total	$	23,854	$	—

The following table presents the components of other expenses, excluding the amounts contributed by the Columbia and SVB acquisitions:

	Six months ended
	June 30				Increase (decrease)
	2006		2005		$			%
	(dollars in thousands)
Salaries and employee benefits	$	91,041	$	89,532	$	1,509			1.7	%
Net occupancy expense		14,793		14,047		746			5.3
Equipment expense		6,088		5,958		130			2.2
Data processing		5,392		6,490		(1,098	)		(16.9	)
Advertising		4,565		4,249		316			7.4
Intangible amortization		2,212		2,347		(135	)		(5.8	)
Other		30,864		29,393		1,471			5.0
Total	$	154,955	$	152,016	$	2,939			1.9	%

The discussion that follows addresses changes in other expenses, excluding the acquisitions of Columbia and SVB.

The increase in salaries and employee benefits resulted from an increase in the salary expense component of $1.5 million, or 2.1%, driven by an increase in total average full-time equivalent employees and normal increases for existing employees, offset by a decrease in incentive compensation costs. This increase was offset by a slight decrease in employee benefits of $42,000, or 0.2%, in comparison to the first half of 2005 due to a reduction in healthcare costs as a result of a favorable claims experience and decreases in expenses related to the Corporation’s defined benefit pension plan, offset by an increase in other employee benefits.

The decrease in data processing expense, which consists mainly of fees paid for outsourced back office systems, was mainly due to the renegotiation of key processing contracts with certain vendors, most notably an automated teller service provider.

The increase in other expenses during the first half of 2006 was mainly the result of a $1.6 million expense related to the reserve for losses associated with the settlement of a previously reported lawsuit, partially offset by certain expense recoveries related to non-accrual loans in the second quarter of 2006.

34

Income Taxes

Income tax expense for the first half of 2006 was $39.2 million, a $3.5 million, or 9.7%, increase from $35.8 million in 2005. The Corporation’s effective tax rate was approximately 30.2% in the first half of 2006, as compared to 30.1% in 2005. 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 $2.2 billion, or 17.4%, to $14.6 billion at June 30, 2006, compared to $12.4 billion at December 31, 2005. The acquisition of Columbia added $1.5 billion to total assets. Excluding the acquisition of Columbia, the increase in total assets was mainly attributable to an increase in loans ($561.6 million, or 6.7%) and investment securities ($104.1 million, or 4.0%).

Unless otherwise noted, the discussion that follows addresses the changes in the consolidated balance sheet excluding the impact of the Columbia acquisition. See Note G, “Acquisitions” in the Notes to Consolidated Financial Statements for a summary of the balances recorded for Columbia.

The Corporation experienced strong loan growth across all loan types, excluding consumer loans, due to continued favorable economic conditions. Commercial loans and mortgages increased $326.0 million, or 6.3%, construction loans grew $121.7 million, or 14.3%, and residential mortgages and home equity loans increased $104.7 million, or 5.9%. Consumer loans decreased $2.4 million, or 0.5%.

Despite strong loan growth, funds provided by increases in deposits and borrowings exceeded net funds used for new loans during the first half of 2006. These excess funds were generally used to purchase investment securities.

Deposits increased $372.9 million, or 4.2%, from December 31, 2005. Savings deposits increased $87.3 million, or 4.1%, while interest-bearing demand deposits decreased $72.0 million, or 4.4%, and noninterest-bearing deposits decreased $11.5 million, or 0.7%. Time deposits increased $369.1 million, or 11.0%, reflecting a significant shift by customers as rates on time deposits increased due to competitive pressures resulting from the FRB’s four short-term interest rate increases during the first half of 2006.

Short-term borrowings, which consist mainly of Federal funds purchased and customer cash management accounts, increased $282.7 million, or 21.8%, during the first half of 2006. This increase was mainly due to an increase in Federal funds purchased and increased borrowings outstanding under the Corporation’s revolving line of credit, offset by reduced borrowings outstanding under repurchase agreements. Long-term debt increased $83.7 million, or 9.7%, primarily due to the Corporation’s issuance of $154.6 million of junior subordinated deferrable interest debentures in January 2006, offset by decreased FHLB advances. See the “Liquidity” section of Management’s Discussion for a summary of the terms of the junior subordinated deferrable interest debentures.

Capital Resources

Total shareholders’ equity increased $157.2 million, or 12.3%, during the first half of 2006. Stock issued in connection with the acquisition of Columbia accounted for $154.1 million, or 98.0%, of the increase. In addition, equity increased due to net income of $90.6 million, offset by $49.8 million in cash dividends to shareholders, $24.6 million in other comprehensive losses and $16.7 million in treasury stock purchases.

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.

35

Under an “Accelerated Share Repurchase” program (ASR), the Corporation repurchases shares immediately from an investment bank rather than over time. The investment bank, in turn, repurchases shares on the open market over a period that is determined by the average daily trading volume of the Corporation’s shares, among other factors. For the ASR that was implemented in the second quarter of 2005, the Corporation settled its position with the investment bank during the first quarter of 2006 at the termination of the ASR by paying the investment bank a total of $3.4 million, representing the difference between the initial price paid and the actual price of the shares repurchased.

In March 2006, the Corporation’s Board of Directors approved a stock repurchase plan for 2.1 million shares through December 31, 2006. The Corporation expects to purchase these shares through open market acquisitions. During the first half of 2006, 1.1 million shares were repurchased under this plan.

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, 2006, 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
	2006			2005			Adequacy			Capitalized
Total Capital (to Risk Weighted Assets)		11.6	%		12.1	%		8.0	%		10.0	%
Tier I Capital to (Risk Weighted Assets)		9.6	%		10.0	%		4.0	%		6.0	%
Tier I Capital (to Average Assets)		7.7	%		7.7	%		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 FHLB to meet short-term liquidity needs.

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 $64.2 million in cash from operating activities during the first half of 2006, mainly due to net income, offset by an increase in loans held for sale and other assets. Investing activities resulted in a net cash outflow of $700.3 million, due to purchases of investment securities and loan originations exceeding sales and maturities of investment securities, in addition to cash used for the acquisition of Columbia. Finally, financing activities resulted in a net inflow of $678.5 million due to increases in time deposits and additional borrowings primarily related to the acquisition of Columbia.

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. As a result of increased acquisition activity and stock repurchase plans; the Parent Company’s cash needs have increased in recent years, requiring additional sources of funds.

36

In January 2006, the Corporation purchased all of the common stock of a new subsidiary, Fulton Capital Trust I, which was formed for the purpose of issuing $150.0 million of trust preferred securities at an effective rate of approximately 6.50%. In connection with this transaction, $154.6 million of junior subordinated deferrable interest debentures were issued to the trust. These debentures carry the same rate and mature on February 1, 2036.

In 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%. The Corporation also has a revolving line of credit agreement with an unaffiliated bank. Under the terms of the agreement, the Corporation can borrow up to $100.0 million with interest calculated at the one-month London Interbank Offering Rate (LIBOR) plus 0.35%. The credit agreement requires the Corporation to maintain certain financial ratios related to capital strength and earnings. The Corporation was in compliance with all required covenants under the credit agreement as of June 30, 2006. As of June 30, 2006, there was $25.6 million borrowed against this line.

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.

37

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 $75.2 million and fair value of $73.2 million at June 30, 2006). The Corporation’s financial institutions stock portfolio had gross unrealized gains of approximately $1.8 million at June 30, 2006.

Although the carrying value of financial institutions stock accounted for 0.5% 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 39 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 $77,000 for specific equity securities which were deemed to exhibit other-than-temporary impairment in value for the second quarter and six-months ended June 30, 2006. For the second quarter and six-months ended June 30, 2005, the Corporation recorded write-downs of $65,000 for specific equity securities which were deemed to exhibit other-than-temporary impairment. Through June 30, 2006, the Corporation had recorded cumulative write-downs of approximately $3.9 million. Through June 30, 2006, gains of approximately $2.7 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.

38

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 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. All dollar amounts are in thousands.

	Expected Maturity Period																					Estimated
	2007			2008			2009			2010			2011			Beyond			Total			Fair Value
Fixed rate loans (1)	$	809,741		$	575,919		$	492,311		$	331,559		$	250,208		$	625,707		$	3,085,445		$	2,995,908
Average rate		6.46	%		6.19	%		6.29	%		6.45	%		6.64	%		6.22	%		6.35	%
Floating rate loans (7) (8)		3,047,837			751,941			562,676			476,242			400,072			1,703,169			6,941,937			6,878,977
Average rate		8.19	%		7.73	%		7.66	%		7.70	%		7.29	%		6.85	%		7.68	%
Fixed rate investments (2)		497,796			386,568			423,798			531,904			393,475			388,763			2,622,304			2,527,223
Average rate		3.99	%		3.89	%		4.06	%		4.03	%		4.18	%		4.98	%		4.17	%
Floating rate investments (2)		—			129			1,968			—			500			72,909			75,506			74,935
Average rate		—			4.92	%		4.99	%		—			5.50	%		5.07	%		5.09	%
Other interest-earning assets		308,330			—			—			—			—			—			308,330			308,330
Average rate		6.94	%		—			—			—			—			—			6.94	%
Total	$	4,663,704		$	1,714,557		$	1,480,753		$	1,339,705		$	1,044,255		$	2,790,548		$	13,033,522		$	12,785,373
Average rate		7.36	%		6.35	%		6.17	%		5.93	%		5.96	%		6.41	%		6.63	%
Fixed rate deposits (3)	$	2,894,913		$	620,938		$	219,796		$	116,935		$	92,143		$	222,939		$	4,167,664		$	4,125,652
Average rate		4.01	%		4.12	%		4.18	%		4.33	%		4.40	%		4.50	%		4.08	%
Floating rate deposits (4)		2,120,997			236,676			236,676			236,676			236,676			2,910,735			5,978,436			5,978,435
Average rate		2.71	%		0.57	%		0.57	%		0.57	%		0.57	%		0.53	%		1.31	%
Fixed rate borrowings (5)		697,668			195,875			101,553			55,553			69,553			261,635			1,381,837			1,388,116
Average rate		4.16	%		4.50	%		5.12	%		5.33	%		5.80	%		6.04	%		4.77	%
Floating rate borrowings (6)		1,403,848			—			—			—			—			1,720			1,405,568			1,405,568
Average rate		5.30	%		—			—			—			—			8.08	%		5.31	%
Total	$	7,117,426		$	1,053,489		$	558,025		$	409,164		$	398,372		$	3,397,029		$	12,933,505		$	12,897,771
Average rate		3.89	%		3.40	%		2.82	%		2.29	%		2.37	%		1.22	%		3.01	%

Assumptions:
(1)	Amounts are based on contractual payments and maturities, adjusted for expected prepayments.
(2)	Amounts are based on contractual maturities; adjusted for expected prepayments on mortgage-backed securities and expected calls on agency and municipal securities.
(3)	Amounts are based on contractual maturities of time deposits.
(4)	These deposit accounts are placed based on history of deposit flows.
(5)	Amounts are based on contractual maturities of debt instruments, adjusted for possible calls.
(6)	Amounts include Federal Funds purchased and securities sold under agreements to repurchase, which mature in less than 90 days, and junior subordinated deferrable interest debentures.
(7)	Floating rate loans include adjustable rate mortgages.
(8)	Line of credit amounts are based on historical cash flow assumptions, with an average life of approximately 5 years.

39

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. Fair value adjustments related to acquisitions are not included in the preceding table.

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 sum of assets and liabilities in each of these periods are summed and compared for mismatches within that maturity segment. Core deposits having no contractual maturities are placed into repricing periods based upon historical balance performance. Repricing for mortgage loans 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 six-month gap to plus or minus 15% of total rate sensitive earning assets. The cumulative six-month gap as of June 30, 2006 was a negative 3.6% and the cumulative six-month ratio of rate sensitive assets to rate sensitive liabilities (RSA/RSL) was 0.92.

Simulation of net interest income and 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 given a static balance sheet. 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 shocks do not take into account changes in customer behavior that could result in changes to mix and/or volumes in the balance sheet nor do they account for competitive pricing over the forward 12-month period. 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	+$	10.7 million	+	2.2	%
+200 bp	+$	7.1 million	+	1.5	%
+100 bp	+$	3.6 million	+	0.7	%
-100 bp	-$	10.0 million	-	2.1	%
-200 bp	-$	22.4 million	-	4.6	%
-300 bp	-$	38.7 million	-	8.0	%

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.

40

	Change in
	economic value
Rate Shock	of equity		% Change
+300 bp	+$	1.4 million	+	0.08	%
+200 bp	+$	1.5 million	+	0.08	%
+100 bp	+$	0.2 million	+	0.01	%
-100 bp	-$	12.0 million	-	0.65	%
-200 bp	-$	50.9 million	-	2.8	%
-300 bp	-$	117.5 million	-	6.4	%

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 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

Information responsive to this item as of December 31, 2005 appears as Exhibit 99.1 to the Corporation’s Form 10-K for the year ended December 31, 2005. There was no material change in such information as of June 30, 2006.

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

					Total number of
					shares purchased		Maximum
	Total				as part of a		number of shares
	number of		Average price		publicly		that may yet be
	shares		paid per		announced plan		purchased under
Period	purchased		share		or program		the plan or program
(04/01/06 - 04/30/06)		519,750		15.82		519,750		1,429,010
(05/01/06 - 05/31/06)		485,520		15.62		485,520		943,490
(06/01/06 - 06/30/06)		—		—		—		943,490

On March 21, 2006 a stock repurchase plan was approved by the Board of Directors to repurchase up to 2.1 million shares through December 31, 2006. As of June 30, 2006, 1.1 shares were repurchased under this plan. No stock repurchases were made outside the plans and all were made under the guidelines of Rule 10b-18 and in compliance with Regulation M.

Item 3. Defaults Upon Senior Securities and Use of Proceeds

Not applicable.

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

The annual meeting of the Corporation was held May 2, 2006. There were 165,687,525 shares of common stock entitled to vote at the meeting and a total of 133,953,896 shares or 80.84% were represented at the meeting. At the annual meeting, the following individuals were elected to the Board of Directors:

Nominee	Term	For		Withheld
John M. Bond, Jr.	2 Years		131,168,630		2,785,266
J.G. Albertson	3 Years		120,403,143		13,550,752
Craig A. Dally	3 Years		120,362,659		13,591,237
R. A. Fulton, Jr.	3 Years		125,003,999		8,949,897
Clyde W. Horst	3 Years		125,988,785		7,965,111
Willem Kooyker	3 Years		131,115,470		2,838,426
R. Scott Smith, Jr.	3 Years		124,995,751		8,958,145

42

Item 5. Other Information

Not applicable.

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.

43

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 9, 2006	/s/ R. Scott Smith, Jr.
	R. Scott Smith, Jr.
	Chairman, Chief Executive Officer and President

Date: August 9, 2006	/s/ Charles J. Nugent
	Charles J. Nugent
	Senior Executive Vice President and Chief Financial Officer

44

EXHIBIT INDEX

Exhibits Required Pursuant
to Item 601 of Regulation S-K

4.1	Revolving Credit Agreement, dated July 12, 2004, by and between Fulton Financial Corporation, as Borrower, and SunTrust Bank, as Lender.
4.2	First Amendment to Revolving Credit Agreement, dated August 31, 2005, by and between Fulton Financial Corporation, as Borrower, and SunTrust Bank, as Lender.
4.3	Second Amendment to Revolving Credit Agreement, dated June 30, 2006, by and between Fulton Financial Corporation, as Borrower, and SunTrust Bank, as Lender.
10.1	Form of Employment Agreement to Senior Management
10.2	Form of Amendment to Stock Option Agreement for John M. Bond.
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.

45

EX-4.1

                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                           REVOLVING CREDIT AGREEMENT

                            dated as of July 12, 2004

                                     between

                          FULTON FINANCIAL CORPORATION
                                   as Borrower

                                       AND

                                  SUNTRUST BANK
                                    as Lender



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I. DEFINITIONS; CONSTRUCTION.....................................     1

   Section 1.1.  Definitions.............................................     1
   Section 1.2.  Accounting Terms and Determination......................     9
   Section 1.3.  Terms Generally.........................................     9

ARTICLE II. AMOUNT AND TERMS OF THE REVOLVING COMMITMENT.................    10

   Section 2.1.  Revolving Loans and Revolving Credit Note...............    10
   Section 2.2.  Procedure for Revolving Loans...........................    10
   Section 2.3.  Optional Increase in Revolving Commitment; Optional
                 Reduction and Termination of Revolving Commitment.......    10
   Section 2.4.  Repayment and Optional Prepayments of Revolving Loans...    11
   Section 2.5.  Interest on Loans.......................................    11
   Section 2.6.  Fees....................................................    11
   Section 2.7.  Computation of Interest and Fees........................    12
   Section 2.8.  Inability to Determine Interest Rates...................    12
   Section 2.9.  Illegality..............................................    12
   Section 2.10. Increased Costs.........................................    12
   Section 2.11. Payments Generally......................................    13

ARTICLE III. CONDITIONS PRECEDENT TO REVOLVING LOANS.....................    13

   Section 3.1.  Conditions to Initial Revolving Loan....................    13
   Section 3.2.  Each Revolving Loan.....................................    14

ARTICLE IV. REPRESENTATIONS AND WARRANTIES...............................    14

   Section 4.1.  Existence; Power........................................    14
   Section 4.2.  Organizational Power; Authorization.....................    14
   Section 4.3.  Governmental Approvals; No Conflicts....................    14
   Section 4.4.  Financial Statements....................................    15
   Section 4.5.  Litigation Matters......................................    15
   Section 4.6.  Compliance with Laws and Agreements.....................    15
   Section 4.7.  Investment Company Act, Etc.............................    15
   Section 4.8.  Taxes...................................................    15
   Section 4.9.  Margin Regulations......................................    15
   Section 4.10. ERISA...................................................    16
   Section 4.11. Disclosure..............................................    16
   Section 4.12. Subsidiaries............................................    16
   Section 4.13. Dividend Restrictions; Other Restrictions...............    16
   Section 4.14. Ownership of Property...................................    16



                                       -i-



                                                                         
   Section 4.15. Well-Capitalized........................................    16

ARTICLE V. AFFIRMATIVE COVENANTS.........................................    17

   Section 5.1.  Financial Statements and Other Information..............    17
   Section 5.2.  Notices of Material Events..............................    18
   Section 5.3.  Existence; Conduct of Business..........................    18
   Section 5.4.  Compliance with Laws, Etc...............................    18
   Section 5.5.  Payment of Obligations..................................    18
   Section 5.6.  Books and Records.......................................    19
   Section 5.7.  Visitation, Inspection, Etc.............................    19
   Section 5.8.  Maintenance of Properties; Insurance....................    19
   Section 5.9.  Use of Proceeds.........................................    19

ARTICLE VI. FINANCIAL COVENANTS..........................................    19

   Section 6.1.  Leverage Ratio..........................................    19
   Section 6.2.  Return on Average Assets................................    19
   Section 6.3.  Nonperforming Assets....................................    20
   Section 6.4.  Double Leverage Ratio...................................    20
   Section 6.5.  Capital Ratios..........................................    20

ARTICLE VII. NEGATIVE COVENANTS..........................................    20

   Section 7.1.  Indebtedness............................................    20
   Section 7.2.  Negative Pledge.........................................    21
   Section 7.3.  Fundamental Changes.....................................    21
   Section 7.4.  Restricted Payments.....................................    21
   Section 7.5.  Restrictive Agreements..................................    22
   Section 7.6   Hedging Agreements......................................    22
   Section 7.7.  Accounting Changes......................................    22
   Section 7.8.  Transactions with Affiliates............................    22

ARTICLE VIII. EVENTS OF DEFAULT..........................................    22

   Section 8.1.  Events of Default.......................................    22

ARTICLE IX. MISCELLANEOUS................................................    24

   Section 9.1.  Notices.................................................    24
   Section 9.2.  Waiver; Amendments......................................    25
   Section 9.3.  Expenses; Indemnification...............................    26
   Section 9.4.  Successors and Assigns..................................    27
   Section 9.5.  Governing Law; Jurisdiction; Consent to Service
                 of Process..............................................    27
   Section 9.6.  Waiver of Jury Trial....................................    28




                                      -ii-



                                                                         
   Section 9.7.  Right of Setoff.........................................    28
   Section 9.8.  Counterparts; Integration...............................    28
   Section 9.9.  Survival................................................    29
   Section 9.10. Severability............................................    29
   Section 9.11. Interest Rate Limitation................................    29



Schedules

   Schedule 4.12 - Subsidiaries
   Schedule 7.1  - Outstanding Indebtedness

Exhibits

   Exhibit A     - Revolving Credit Note
   Exhibit A-2   - Loans and Payments
   Exhibit 2.2   - Notice of Revolving Borrowing


                                      -iii-


                           REVOLVING CREDIT AGREEMENT

          THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made and entered
into as of July ____, 2004 by and between Fulton Financial Corporation, a
Pennsylvania corporation (the "Borrower") and SUNTRUST BANK, a Georgia banking
corporation (the "Lender").

                                   WITNESSETH:

          WHEREAS, the Borrower has requested the Lender, and the Lender has
agreed, subject to the terms and conditions of this Agreement, to establish a
$50,000,000, two-year revolving credit facility to the Borrower;

          NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Borrower and the Lender agree as follows:

                                    ARTICLE I

                            DEFINITIONS; CONSTRUCTION

          SECTION 1.1. DEFINITIONS. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined):

          "AFFILIATE" shall mean, as to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Person.

          "APPLICABLE MARGIN" shall mean, as of any date, with respect to all
Eurodollar Loans outstanding on any date during the Availability Period, the
applicable percentage per annum set forth below, based upon the debt ratings by
Moody's of the Borrower (as more particularly described below) applicable on
such date:



RATING CATEGORY   EURODOLLAR LOANS
- ---------------   ----------------
               
> or = A1                0.50%
A2                      0.625%
A3                       0.75%
BAA1                    0.875%
BAA2                     1.00%
< or = BAA3              1.25%


A change in the Applicable Margin resulting from a change in the debt ratings
shall be effective as of the date on which it is first announced by Moody's.
Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of Moody's
shall change or if Moody's shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lender shall negotiate in good faith to
amend this definition to reflect such changed rating system or the
non-availability of debt ratings from Moody's, and pending the effectiveness of
any such amendment, the Applicable Margin shall be determined by reference to
the debt rating most recently in effect prior to such change or cessation;
provided, that if the Borrower and the Lender have not agreed upon an amendment
within ninety (90) days after such change, the



Applicable Margin shall become 1.25% per annum from such date until an amendment
in a form satisfactory to the Lender has been executed. The debt ratings to be
utilized for purposes of determining the Applicable Margin are those assigned to
the senior, unsecured long-term debt securities of the Borrower without
third-party enhancement, whether or not any such debt securities are actually
outstanding, and any debt rating assigned to any other debt security of the
Borrower shall be disregarded. The Applicable Margin on the Closing Date shall
be 0.625% per annum.

          "APPLICABLE PERCENTAGE" shall mean, as of any date, with respect to
the commitment fee, the percentage per annum determined by reference to the
applicable rating category as set forth below, based upon the debt ratings by
Moody's of the Borrower (as more particularly described below) applicable on
such date:



RATING CATEGORY   APPLICABLE PERCENTAGE
- ---------------   ---------------------
               
> or = A1                  0.10%
A2                        0.125%
A3                         0.15%
Baa1                      0.175%
Baa2                      0.200%
< or = Baa3                0.25%


A change in the Applicable Percentage resulting from a change in the debt
ratings shall be effective as of the date on which it is first announced by
Moody's. Each change in the Applicable Percentage shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of Moody's shall change or if Moody's shall cease to be in the business
of rating corporate debt obligations, the Borrower and the Lender shall
negotiate in good faith to amend this definition to reflect such changed rating
system or the non-availability of debt ratings from Moody's, and pending the
effectiveness of any such amendment, the Applicable Percentage shall be
determined by reference to the debt rating most recently in effect prior to such
change or cessation; provided that if the Borrower and Lender have not agreed
upon an amendment within ninety (90) days after such change, the Applicable
Percentage shall become 0.25% per annum from such date until an amendment in a
form satisfactory to the Lender has been executed. The debt ratings to be
utilized for purposes of determining the Applicable Percentage are those
assigned to the senior, unsecured long-term debt securities of the Borrower
without third-party enhancement, whether or not any such debt securities are
actually outstanding, and any debt rating assigned to any other debt security of
the Borrower shall be disregarded. The Applicable Percentage on the Closing Date
shall be 0.125% per annum.

          "AVAILABILITY PERIOD" shall mean the period from the Closing Date to
the Commitment Termination Date.

          "BASE RATE" shall mean the higher of (i) the per annum rate which the
Lender publicly announces from time to time to be its prime lending rate, as in
effect from time to time minus 1.25% per annum, and (ii) the Federal Funds Rate,
as in effect from time to time, plus 0.65% per annum. The Lender's prime lending
rate is a reference rate and does not necessarily represent the lowest or best
rate charged to customers. The Lender may make commercial loans or other loans
at rates of interest at, above or below the Lender's prime lending rate. Each
change in the Lender's prime lending rate shall be effective from and including
the date such change is publicly announced as being effective.

          "BUSINESS DAY" shall mean (i) any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized or
required by law to close and (ii) if such day relates to a borrowing or
continuation of, a payment or prepayment of principal or interest on, or an
Interest Period for,


                                        2



a Eurodollar Loan or a notice with respect thereto, any day on which dealings in
Dollars are carried on in the London interbank market.

          "CALL REPORT" shall mean the Consolidated Reports of Condition and
Income" (FFIEC Form 031 or 041 or any successor form of the Federal Financial
Institutions Examination Council).

          "CHANGE IN CONTROL" shall mean (a) with respect to the Borrower, the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in a single transaction or a series of related transactions)
of all or substantially all of the assets of the Borrower to any Person or
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder in effect on the date
hereof), (ii) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or "group" (within the meaning of the Securities
Exchange Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof) of 30% or more of the outstanding
shares of the voting stock of the Borrower or (iii) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Borrower by
Persons who were neither (A) nominated by the current board of directors or (B)
appointed by directors so nominated, or (b) the Borrower shall own, directly or
indirectly, less than 100% of the voting stock of any Financial Institution
Subsidiary.

          "CHANGE IN LAW" shall mean (i) the adoption of any applicable law,
rule or regulation after the date of this Agreement, (ii) any change in any
applicable law, rule or regulation, or any change in the interpretation or
application thereof, by any Governmental Authority after the date of this
Agreement, or (iii) compliance by the Lender (or for purposes of Section
2.10(b), by the Lender's holding company, if applicable) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

          "CLOSING DATE" shall mean the date on which the conditions precedent
set forth in Section 3.1 and Section 3.2 have been satisfied or waived in
accordance with Section 9.2.

          "CODE" shall mean the Internal Revenue Code of 1986, as amended and in
effect from time to time.

          "COMMITMENT TERMINATION DATE" shall mean the earliest of (i) July
____, 2006, (ii) the date on which the Revolving Commitment is terminated
pursuant to Section 2.3 and (iii) the date on which all amounts outstanding
under this Agreement have been declared or have automatically become due and
payable (whether by acceleration or otherwise).

          "CONTROL" shall mean the power, directly or indirectly, either to (i)
vote 5% or more of securities having ordinary voting power for the election of
directors (or persons performing similar functions) of a Person or (ii) direct
or cause the direction of the management and policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "CONTROLLING", "CONTROLLED BY", and "UNDER COMMON CONTROL WITH" have
meanings correlative thereto.

          "DEFAULT" shall mean any condition or event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.

          "DEFAULT INTEREST" shall have the meaning set forth in Section 2.5(b).

          "DOLLAR(S)" and the sign "$" shall mean lawful money of the United
States of America.

          "DOUBLE LEVERAGE RATIO" shall mean the ratio of (a) the sum of (i) the
Borrower's investments in Subsidiaries and associated companies and (ii)
goodwill of the Borrower to (b) the Borrower's


                                        3



total stockholder's equity.

          "ENVIRONMENTAL LAWS" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.

          "ENVIRONMENTAL LIABILITY" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
investigation and remediation, costs of administrative oversight, fines, natural
resource damages, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) any actual or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
any actual or alleged exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.

          "ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

          "ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator appointed by the PBGC of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

          "EURODOLLAR" when used in reference to any Revolving Loan, refers to
whether such Revolving Loan bears interest at a rate determined by reference to
LIBOR.

          "EVENT OF DEFAULT" shall have the meaning provided in Article VIII.

          "FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published by
the Federal Reserve Bank of New York on the next succeeding Business Day or if
such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded


                                        4



upwards, if necessary, to the next 1/100th of 1% of the quotations for such day
on such transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.

          "FINANCIAL INSTITUTION SUBSIDIARY" shall mean each of (a) the
financial institutions listed under the heading "Bank Subsidiaries" on Schedule
4.12 attached hereto, and (b) each other Subsidiary hereafter formed or acquired
that is a regulated financial institution.

          "FISCAL QUARTER" shall mean each fiscal quarter (including the fiscal
quarter at the fiscal year-end) of the Borrower and its Subsidiaries.

          "FR REPORT Y-9C" shall mean the "Consolidated Financial Statements for
Bank Holding Companies-FR Y-9C" submitted by the Borrower as required by Section
5(c) of the Bank Holding Company Act (12 U.S.C. 1844) and Section 225.5(b) of
Regulation Y [12 CFR 225.5(b)], or any successor or similar replacement report.

          "FR REPORT Y9-LP" shall mean the "Parent Company Only Financial
Statements for Large Bank Holding Companies-FR Y-9LP" submitted by the Borrower
as required by Section 5(c) of the Bank Holding Company Act (12 U.S.C. 1844) and
Section 225.5(b) of Regulation Y [12 CFR 225.5(b)], or any successor or similar
replacement report.

          "GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of Section
1.2.

          "GOVERNMENTAL AUTHORITY" shall mean the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

          "HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

          "HEDGING AGREEMENTS" shall mean interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts, foreign exchange contracts (forward and/or
spot), commodity agreements and other similar agreements or arrangements
designed to protect against fluctuations in interest rates, currency values or
commodity values.

          "INDEBTEDNESS" of any Person shall mean, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person in respect of the deferred purchase price of
property or services (other than trade payables incurred in the ordinary course
of business), (iv) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(v) all obligations of such Person under capital leases and all monetary
obligations of such Person under Synthetic Leases, (vi) all obligations,
contingent or otherwise, of such Person in respect of letters of credit on which
such Person is the account party, acceptances or similar extensions of credit,
(vii) all guarantees by such Person of Indebtedness of others, (viii) all
Indebtedness of a third party secured by any Lien on property owned by such
Person, whether or not such Indebtedness has been assumed by such Person, (ix)
all obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any common stock of such Person, and (x)
all net obligations incurred by such Person under Hedging Agreements.


                                        5



          "INTEREST PERIOD" shall mean, with respect to any Loan, a period of
one month, provided that (i) the initial Interest Period may have an actual
duration of less than one month, depending on the initial funding date, and (ii)
no Interest Period may extend beyond the Commitment Termination Date.

          "INTEREST RATE DETERMINATION DATE" shall mean the date that the
initial Revolving Loan is funded and the first Business Day of each calendar
month thereafter.

          "LIBOR" shall mean that rate per annum effective on any Interest Rate
Determination Date that is equal to the quotient of:

     (i) the rate per annum equal to the offered rate for deposits in U.S.
     dollars for a one-month period, which rate appears on that page of
     Bloomberg reporting service, or such similar service as determined by the
     Bank, that displays British Bankers' Association interest settlement rates
     for deposits in U.S. Dollars, as of 11:00 A.M. (London, England time) two
     (2) Business Days prior to the Interest Rate Determination Date; provided,
     that if no such offered rate appears on such page, the rate used will be
     the per annum rate of interest determined by the Bank to be the rate at
     which U.S. dollar deposits for a one-month period are offered to the Bank
     in the London Inter-Bank Market as of 10:00 A.M. (Richmond, Virginia time),
     on the day which is two (2) Business Days prior to the Interest Rate
     Determination Date, divided by

     (ii) a percentage equal to 1.00 minus the maximum reserve percentages
     (including any emergency, supplemental, special or other marginal reserves)
     expressed as a decimal (rounded upward to the next 1/100th of 1%) in effect
     on any day to which the Bank is subject with respect to any LIBOR loan
     pursuant to regulations issued by the Board of Governors of the Federal
     Reserve System with respect to eurocurrency funding (currently referred to
     as "eurocurrency liabilities" under Regulation D). This percentage will be
     adjusted automatically on and as of the effective date of any change in any
     reserve percentage.

          "LIEN" shall mean any mortgage, pledge, security interest, lien
(statutory or otherwise), charge, encumbrance, hypothecation, assignment,
deposit arrangement, or other arrangement having the practical effect of the
foregoing or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
the same economic effect as any of the foregoing).

          "LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Revolving Credit Note, any Hedging Agreement entered into with Lender in
connection with the Indebtedness under this Agreement or the Revolving Credit
Note and any and all other instruments, agreements, documents and writings
executed in connection with any of the foregoing.

          "MATERIAL ADVERSE EFFECT" shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not related, a
material adverse change in, or a material adverse effect on, (i) the business,
results of operations, financial condition, assets, liabilities or prospects of
the Borrower and of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform any of its obligations under the Loan
Documents, (iii) the rights and remedies of the Lender under any of the Loan
Documents or (iv) the legality, validity or enforceability of any of the Loan
Documents.

          "MOODY'S" shall mean Moody's Investors Service, Inc., and its
successors.

          "MULTIEMPLOYER PLAN" shall have the meaning set forth in Section
4001(a)(3) of ERISA.


                                        6



          "NONPERFORMING ASSETS" shall mean the sum of (a) Nonperforming Loans,
(b) nonaccrual investment securities and (c) Other Real Estate Owned (determined
in accordance with, and as set forth on, Borrower's FR Report Y-9C).

          "NONPERFORMING LOANS" shall mean the sum of (a) nonaccrual loans and
lease financing receivables, (b) loans and lease financing receivables that are
contractually past due 90 days or more as to interest or principal and are still
accruing interest and (c) loans for which the terms have been modified due to a
deterioration in the financial position of the borrower (determined in
accordance with, and as set forth on, Borrower's FR Report Y-9C).

          "NOTICE OF BORROWING" shall have the meaning as set forth in Section
2.2.

          "OBLIGATIONS" shall mean all amounts owing by the Borrower to the
Lender pursuant to or in connection with this Agreement or any other Loan
Document, including without limitation, all principal, interest (including any
interest accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like proceeding relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), all reimbursement obligations, all net
obligations under Hedging Agreements, fees, expenses, indemnification and
reimbursement payments, costs and expenses (including all fees and expenses of
counsel to the Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder,
together with all renewals, extensions, modifications or refinancings thereof.

          "OTHER REAL ESTATE OWNED" shall mean the sum of (a) real estate
acquired in satisfaction of debts previously contracted and (b) other real
estate owned, as set forth on Schedule HC-M of Borrower's FR Report Y-9C.

          "PARTICIPANT" shall have the meaning set forth in Section 9.4(c).

          "PAYMENT OFFICE" shall mean the office of the Lender located at 303
Peachtree Street, Atlanta, Georgia 30308, or such other location as to which the
Lender shall have given written notice to the Borrower.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA, and any successor entity performing similar functions.

          "PERMITTED ENCUMBRANCES" shall mean

          (i) Liens imposed by law for taxes not yet due or which are being
     contested in good faith by appropriate proceedings and with respect to
     which adequate reserves are being maintained in accordance with GAAP;

          (ii) statutory Liens of landlords and Liens of carriers, warehousemen,
     mechanics, materialmen and other Liens imposed by law created in the
     ordinary course of business for amounts not yet due or which are being
     contested in good faith by appropriate proceedings and with respect to
     which adequate reserves are being maintained in accordance with GAAP;

          (iii) pledges and deposits made in the ordinary course of business in
     compliance with workers' compensation, unemployment insurance and other
     social security laws or regulations;


                                        7



          (iv) deposits to secure the performance of bids, trade contracts,
     leases, statutory obligations, surety and appeal bonds, performance bonds
     and other obligations of a like nature, in each case in the ordinary course
     of business;

          (v) judgment and attachment liens not giving rise to an Event of
     Default or Liens created by or existing from any litigation or legal
     proceeding that are currently being contested in good faith by appropriate
     proceedings and with respect to which adequate reserves are being
     maintained in accordance with GAAP; and

          (vi) easements, zoning restrictions, rights-of-way and similar
     encumbrances on real property imposed by law or arising in the ordinary
     course of business that do not secure any monetary obligations and do not
     materially detract from the value of the affected property or materially
     interfere with the ordinary conduct of business of the Borrower and its
     Subsidiaries taken as a whole;

provided, that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

          "PERSON" shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Authority.

          "PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

          "REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to time, and
any successor regulations.

          "RELEASE" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.

          "RESPONSIBLE OFFICER" shall mean any of the president, the chief
executive officer, the chief operating officer, the chief financial officer, the
treasurer or a vice president of the Borrower or such other representative of
the Borrower as may be designated in writing by any one of the foregoing with
the consent of the Lender; and, with respect to the financial covenants only,
the chief financial officer or the treasurer of the Borrower.

          "REVOLVING COMMITMENT" shall mean the obligation of the Lender to make
Revolving Loans to the Borrower in an aggregate principal amount not exceeding
$50,000,000 subject to Section 2.3(a).

          "REVOLVING LOAN" shall mean a loan made by the Lender to the Borrower
under its Revolving Commitment, which will at all times be a Eurodollar Loan
except under circumstances set forth in Section 2.8 or Section 2.9 hereof.

          "REVOLVING CREDIT NOTE" shall mean a promissory note of the Borrower
payable to the order of the Lender in the principal amount of the Revolving
Commitment, in substantially the form of Exhibit A.

          "SUBSIDIARY" shall mean, with respect to any Person (the "PARENT"),
any corporation, partnership, joint venture, limited liability company,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial


                                        8



statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, partnership, joint venture, limited liability company,
association or other entity (i) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (ii) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise indicated, all references to "Subsidiary" hereunder shall mean a
Subsidiary of the Borrower. Notwithstanding the foregoing, all low-income
housing partnerships in which Borrower or any Subsidiary is a limited partner
shall not be deemed a "Subsidiary".

          "SYNTHETIC LEASE" of any Person shall mean (a) a lease designed to
have the characteristics of a loan for federal income tax purposes while
obtaining operating lease treatment for financial accounting purposes, or (b) an
agreement for the use or possession of property creating obligations that are
not required to appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person would be characterized by a court of
competent jurisdiction as indebtedness of such Person.

          "TOTAL LOANS" shall mean for the Borrower on a consolidated basis the
line item "Loans net of unearned income" set forth on the Borrower's
consolidated balance sheet delivered pursuant to Section 5.1(a) and (b).

          "WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.2. ACCOUNTING TERMS AND DETERMINATION. Unless otherwise
defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for such changes approved by the Borrower's independent
public accountants) with the most recent audited consolidated financial
statement of the Borrower delivered pursuant to Section 5.1(a); provided, that
if the Borrower notifies the Lender that the Borrower wishes to amend any
covenant in Article VI to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Lender notifies the Borrower that it
wishes to amend Article VI for such purpose), then the Borrower's compliance
with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Lender.

          SECTION 1.3. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall". In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the word "to" means "to but
excluding". Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (ii) any reference herein to any Person
shall be construed to include such Person's successors and permitted assigns,
(iii) the words "hereof", "herein" and "hereunder" and words of similar import
shall be construed to refer to this Agreement as a whole and not to any
particular provision hereof, (iv) all references to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles, Sections, Exhibits and
Schedules to this Agreement and (v) all references to a specific time shall be
construed to refer to the time in the city and state of the Lender's principal
office, unless otherwise indicated.


                                        9



                                   ARTICLE II

                  AMOUNT AND TERMS OF THE REVOLVING COMMITMENT

          SECTION 2.1. REVOLVING LOANS AND REVOLVING CREDIT NOTE. (a) Subject to
the terms and conditions set forth herein, the Lender agrees to make Revolving
Loans to the Borrower, from time to time during the Availability Period, in an
aggregate principal amount outstanding at any time not to exceed the Revolving
Commitment. During the Availability Period, the Borrower shall be entitled to
borrow, prepay and reborrow Revolving Loans in accordance with the terms and
conditions of this Agreement; provided, that the Borrower may not borrow or
reborrow should there exist a Default or Event of Default.

          (b) The Borrower's obligation to pay the principal of, and interest
on, Revolving Loans shall be evidenced by the records of the Lender and by the
Revolving Credit Note. The entries made in such records and/or on the schedule
annexed to the Revolving Credit Note shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, that the failure or delay of the Lender in maintaining or making
entries into any such record or on such schedule or any error therein shall not
in any manner affect the obligation of the Borrower to repay the Revolving Loans
(both principal and unpaid accrued interest) in accordance with the terms of
this Agreement.

          SECTION 2.2. PROCEDURE FOR REVOLVING LOANS. The Borrower shall give
the Lender written notice (or telephonic notice promptly confirmed in writing)
of each Revolving Loan substantially in the form of Exhibit 2.2 (a "NOTICE OF
BORROWING") prior to 11:00 a.m. on the same Business Day on which a Revolving
Loan is being requested. Each Notice of Borrowing shall be irrevocable and shall
specify: (i) the principal amount of the Revolving Loan, (ii) the proposed date
of the Revolving Loan (which shall be a Business Day), and (iii) if the
Revolving Loan is $5,000,000 or greater, its purpose (in sufficient detail to
the satisfaction of the Lender). The aggregate principal amount of each
Revolving Loan shall be not less than $1,000,000 or a larger multiple of
$500,000, or in such lesser amounts equal to the amount of the unused Revolving
Commitment. Upon the satisfaction of the applicable conditions set forth in
Article III hereof, the Lender will make the proceeds of each Revolving Loan
available to the Borrower at the Payment Office on the date specified in the
applicable Notice of Borrowing by crediting an account maintained by the
Borrower with the Lender or at the Borrower's option, by effecting a wire
transfer of such amount to an account designated by the Borrower to the Lender.

          SECTION 2.3. OPTIONAL INCREASE IN REVOLVING COMMITMENT; OPTIONAL
REDUCTION AND TERMINATION OF REVOLVING COMMITMENT.

          (a) Upon the request of the Borrower at any time prior to the first
anniversary of the Closing Date, and in the sole discretion of the Lender, the
Revolving Commitment may be increased up to $100,000,000. The Borrower may only
make two such requests during such period and each request must be in an amount
of $10,000,000 or more. If the Revolving Commitment is increased in accordance
with this paragraph, the Borrower agrees that it will deliver an amended
Revolving Credit Note in such increased amount to the Lender prior to such
increase becoming effective.


                                       10



          (b) Unless previously terminated, the Revolving Commitment shall
terminate on the Commitment Termination Date.

          (c) Upon at least two (2) Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) to the Lender (which notice
shall be irrevocable), the Borrower may reduce the Revolving Commitment in part
or terminate the Revolving Commitment in whole; provided, that (i) any partial
reduction pursuant to this Section 2.3 shall be in an amount of at least
$500,000 and any larger multiple of $100,000 and (ii) no such reduction shall be
permitted which would reduce the Revolving Commitment (after giving effect
thereto and any concurrent prepayments made under Section 2.4) to an amount less
than the outstanding Revolving Loans.

          SECTION 2.4. REPAYMENT AND OPTIONAL PREPAYMENTS OF REVOLVING LOANS.

          (a) The outstanding principal amount of all Revolving Loans shall be
due and payable (together with accrued and unpaid interest thereon) on the
Commitment Termination Date.

          (b) The Borrower shall have the right at any time and from time to
time to prepay any Revolving Loan, in whole or in part, without premium or
penalty, on the last Business Day of each calendar month. Each partial
prepayment shall be in an amount not less than $100,000 and integral multiples
thereof.

          SECTION 2.5. INTEREST ON LOANS.

          (a) The Borrower shall pay interest on each Eurodollar Loan at LIBOR,
plus the Applicable Margin. If a Base Rate Loan shall be outstanding under the
circumstances set forth in Section 2.8 or 2.9, then the Borrower shall pay
interest on each Base Rate Loan at the Base Rate in effect from time to time.

          (b) While an Event of Default exists or after acceleration, at the
option of the Lender, the Borrower shall pay interest ("DEFAULT INTEREST") with
respect to all Eurodollar Loans at the rate otherwise applicable for the
then-current Interest Period plus an additional 2% per annum until the last day
of such Interest Period, and thereafter, and with respect to all Base Rate Loans
and all other Obligations hereunder (other than Loans), at the Base Rate, plus
2% per annum.

          (c) Interest on the principal amount of all Revolving Loans shall
accrue from and including the date such Revolving Loans are made to but
excluding the date of any repayment thereof. Interest on all outstanding
Revolving Loans shall be payable monthly in arrears on the last Business Day of
each calendar month, and on the Commitment Termination Date. All Default
Interest shall be payable on demand.

          (d) The Lender shall determine each interest rate applicable to the
Revolving Loans hereunder and shall promptly notify the Borrower of such rate in
writing (or by telephone, promptly confirmed in writing). Any such determination
shall be conclusive and binding for all purposes, absent manifest error.

          SECTION 2.6. FEES.

          (a) The Borrower agrees to pay to the Lender a commitment fee, which
shall accrue at the Applicable Percentage (calculated on the basis of a 360-day
year for the actual number of days outstanding) on the daily amount of the
unused Revolving Commitment during each fiscal quarter, payable in arrears on
the last Business Day of each March, June, September, and December of each year
and on the Commitment Termination Date, commencing on the first such date after
the Closing Date; provided, that if the Lender continues to have any Revolving
Loans outstanding after the Commitment Termination Date, then


                                       11



the commitment fee shall continue to accrue on the daily amount of such
outstanding Revolving Loans from and after the Commitment Termination Date to
the date that all of the Lender's outstanding Revolving Loans have been paid in
full; provided further, that any commitment fees accruing after the Commitment
Termination Date shall be payable on demand. A change in the commitment fee
resulting from a change in the debt ratings shall be effective as of the date on
which it is first announced by Moody's. Any additional provision set forth in
the definition of the Applicable Margin related to the use of Moody's shall
apply to use of Moody's in calculation of the commitment fee.

          (b) The Borrower agrees to pay to the Lender a closing fee of 0.05% of
the Revolving Commitment; provided, that at any time that the Revolving
Commitment is increased, the Borrower shall pay an additional 0.05% on the
amount of such increase at the time that such increase becomes effective.

          SECTION 2.7. COMPUTATION OF INTEREST AND FEES. All computations of
interest and fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable (to the
extent computed on the basis of days elapsed). Each determination by the Lender
of an interest amount or fee hereunder shall be made in good faith and, except
for manifest error, shall be final, conclusive and binding for all purposes.

          SECTION 2.8. INABILITY TO DETERMINE INTEREST RATES. If prior to the
commencement of any Interest Period for any Eurodollar Loan, the Lender shall
have determined (which determination shall be conclusive and binding upon the
Borrower) that (a) by reason of circumstances affecting the relevant interbank
market, adequate means do not exist for ascertaining LIBOR for such Interest
Period, or (b) LIBOR does not adequately and fairly reflect the cost to the
Lender of making, funding or maintaining its Eurodollar Loans for such Interest
Period, the Lender shall give written notice (or telephonic notice, promptly
confirmed in writing) to the Borrower as soon as practicable thereafter. Until
the Lender notifies the Borrower that the circumstances giving rise to such
notice no longer exist, (x) the obligation of the Lender to make Eurodollar
Loans or to continue outstanding Revolving Loans as Eurodollar Loans shall be
suspended and (y) all such affected Revolving Loans shall be converted into Base
Rate Loans on the last day of the then current Interest Period unless the
Borrower elects to prepay such Revolving Loans in accordance with this
Agreement.

          SECTION 2.9. ILLEGALITY. If any Change in Law shall make it unlawful
or impossible for the Lender to make, maintain or fund any Eurodollar Loan, the
Lender shall promptly give notice thereof to the Borrower, whereupon until the
Lender notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Lender to make Eurodollar
Loans, or to continue any outstanding Revolving Loans as Eurodollar Loans, shall
be suspended. Any new Revolving Loan shall be made as a Base Rate Loan and all
then outstanding Eurodollar Loans shall be converted to a Base Rate Loan either
(x) on the last day of the then current Interest Period if the Lender may
lawfully continue to maintain such Eurodollar Loans to such date or (y)
immediately if the Lender shall determine that it may not lawfully continue to
maintain such Eurodollar Loans to such date.

          SECTION 2.10. INCREASED COSTS.

          (a) If any Change in Law shall: (i) impose, modify or deem applicable
any reserve, special deposit or similar requirement that is not otherwise
included in the determination of LIBOR hereunder against assets of, deposits
with or for the account of, or credit extended by, the Lender (except any such
reserve requirement reflected in the calculation of LIBOR); or (ii) impose on
the Lender or the eurodollar interbank market any other condition affecting this
Agreement or any Eurodollar Loans made by the Lender; and the result of the
foregoing is to increase the cost to the Lender of making, continuing or
maintaining a Eurodollar Loan or to reduce the amount received or receivable by
the Lender hereunder (whether of principal, interest or any other amount), then
the Borrower shall promptly pay, upon written notice from and


                                       12



demand by the Lender, within ten (10) days after the date of such notice and
demand, additional amount or amounts sufficient to compensate the Lender for
such additional costs incurred or reduction suffered.

          (b) If the Lender shall have determined that on or after the date of
this Agreement any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on the Lender's capital (or on
the capital of the Lender's parent corporation) as a consequence of its
obligations hereunder to a level below that which the Lender or the Lender's
parent corporation could have achieved but for such Change in Law (taking into
consideration the Lender's policies or the policies of the Lender's parent
corporation with respect to capital adequacy) then, from time to time, within
ten (10) days after receipt by the Borrower of written demand by the Lender, the
Borrower shall pay to the Lender such additional amounts as will compensate the
Lender or the Lender's parent corporation for any such reduction suffered.

          (c) A certificate of the Lender setting forth the amount or amounts
necessary to compensate the Lender or its parent corporation, as the case may
be, specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive, absent manifest error. The Borrower shall pay
the Lender such amount or amounts within 10 days after receipt thereof.

          (d) Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender's right to
demand such compensation.

          SECTION 2.11. PAYMENTS GENERALLY. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees, or of
amounts payable under Section 2.10 or otherwise) prior to 12:00 noon, on the
date when due, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Lender, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
Lender at its Payment Office. If any payment hereunder shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be made payable for the period of such extension. All
payments hereunder shall be made in Dollars.

                                   ARTICLE III

                     CONDITIONS PRECEDENT TO REVOLVING LOANS

          SECTION 3.1. CONDITIONS TO INITIAL REVOLVING LOAN. The obligation of
the Lender to make the initial Revolving Loan hereunder is subject to: (a) the
receipt by the Lender of the following documents in form and substance
reasonably satisfactory to the Lender:

          (i) this Agreement duly executed and delivered by the Borrower;

          (ii) a duly executed Revolving Credit Note;

          (iii) a certificate of the Secretary or Assistant Secretary of the
Borrower, attaching and certifying copies of its articles of incorporation,
bylaws and of the resolutions of its boards of directors, authorizing the
execution, delivery and performance of the Loan Documents and certifying the
name, title and true signature of each officer of the Borrower authorized to
execute the Loan Documents;

          (iv) certificates of good standing as may be available from the
Secretary of State of the jurisdiction of incorporation of the Borrower, Fulton
Bank, and FFC Management, Inc.;


                                       13



          (v) a favorable written opinion of the General Counsel of the
Borrower, addressed to the Lender, and covering such matters relating to the
Borrower, the Loan Documents and the transactions contemplated therein as the
Lender shall reasonably request; and

          (vi) a duly executed funds disbursement agreement.

          SECTION 3.2. EACH REVOLVING LOAN. The obligation of the Lender to make
each Revolving Loan is subject to the satisfaction of the following conditions:

          (a) at the time of and immediately after giving effect to such
Revolving Loan, no Default or Event of Default shall exist;

          (b) all representations and warranties of the Borrower herein shall be
true and correct in all material respects on and as of the date of such
Revolving Loan both before and after giving effect thereto;

          (c) since December 31, 2003, there shall have been no change which has
had or could reasonably be expected to have a Material Adverse Effect;

          (d) the Lender shall have received a duly executed Notice of Borrowing
in accordance with Section 2.2 hereof; and

          (e) the Lender shall have received such other documents, certificates,
information or legal opinions as it may reasonably request, all in form and
substance reasonably satisfactory to the Lender.

          The making of each Revolving Loan shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a), (b), and (c) of this Section 3.2.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lender as follows:

          SECTION 4.1. EXISTENCE; POWER. Each of the Borrower and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing as a
corporation under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to carry on its business as now conducted, and
(iii) is duly qualified to do business, and is in good standing, in each
jurisdiction where such qualification is required, except where a failure to be
so qualified could not reasonably be expected to result in a Material Adverse
Effect.

          SECTION 4.2. ORGANIZATIONAL POWER; AUTHORIZATION. The execution,
delivery and performance by the Borrower of each of the Loan Documents are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate, and if required, stockholder, action. This Agreement and
the Revolving Credit Note have been duly executed and delivered by the Borrower
and constitute valid and binding obligations of the Borrower, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity.

          SECTION 4.3. GOVERNMENTAL APPROVALS; NO CONFLICTS. The execution,
delivery and performance by the Borrower of this Agreement and the Revolving
Credit Note (a) do not require any consent


                                       14



or approval of, registration or filing with, or any action by, any Governmental
Authority, except those as have been obtained or made and are in full force and
effect, (b) will not violate any applicable law or regulation or the articles of
incorporation or by-laws of the Borrower or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
material agreement or other material instrument binding on the Borrower or any
of its Subsidiaries or any of its assets or give rise to a right thereunder to
require any payment to be made by the Borrower or any of its Subsidiaries and
(d) will not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.

          SECTION 4.4. FINANCIAL STATEMENTS. The Borrower has furnished to the
Lender (i) the audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 2003 and the related consolidated statements of
income, shareholders' equity and cash flows for the fiscal year then ended
prepared by KPMG LLP and (ii) the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as of March 31, 2004, and the related unaudited
consolidated statements of income and cash flows for the fiscal quarter and
year-to-date period then ending, certified by a Responsible Officer. Such
financial statements fairly present the consolidated financial condition of the
Borrower and its Subsidiaries as of such dates and the consolidated results of
operations for such periods in conformity with GAAP consistently applied,
subject to year end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii). Since December 31, 2003, there
have been no changes with respect to the Borrower and its Subsidiaries which
have had or could reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.

          SECTION 4.5. LITIGATION MATTERS. No litigation, investigation or
proceeding of or before any arbitrators or Governmental Authorities is pending
against, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination that could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect or (ii)
which in any manner draws into question the validity or enforceability of this
Agreement or any other Loan Document.

          SECTION 4.6. COMPLIANCE WITH LAWS AND AGREEMENTS. The Borrower and
each Subsidiary is in compliance with (a) all applicable laws (including without
limitation, to the best of their knowledge, all Environmental Laws) and all
rules, regulations (including without limitation all banking regulations) and
orders of any Governmental Authority, and (b) all indentures, agreements or
other instruments binding upon it or its properties, except where
non-compliance, either singly or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

          SECTION 4.7. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any
of its Subsidiaries is (a) an "investment company", as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.

          SECTION 4.8. TAXES. The Borrower and its Subsidiaries have timely
filed or caused to be filed all Federal income tax returns and all other
material tax returns that are required to be filed by them, and have paid all
taxes shown to be due and payable on such returns or on any assessments made
against it or its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority, except (i) to the
extent the failure to do so would not have a Material Adverse Effect or (ii)
where the same are currently being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as the case may be,
has set aside on its books adequate reserves.

          SECTION 4.9. MARGIN REGULATIONS. None of the proceeds of any of the
Revolving Loans will be used for "purchasing" or "carrying" any "margin stock"
with the respective meanings of each of such terms


                                       15



under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of Regulation U.

          SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. As determined by the Borrower's actuary,
the present value of the accumulated benefit obligation of all underfunded Plans
subject to ERISA, as of December 31, 2003 (based on the assumptions used for
purposes of Statement of Financial Standards No. 87), did not exceed by more
than $2,500,000 the fair value of the assets of all such underfunded Plans as of
December 31, 2003.

          SECTION 4.11. DISCLOSURE. The Borrower has disclosed to the Lender all
agreements, instruments, and corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports (including
without limitation all reports that the Borrower is required to file with the
Securities and Exchange Commission), financial statements, certificates or other
information furnished by or on behalf of the Borrower to the Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole, in light of the circumstances under which they were made, not misleading.

          SECTION 4.12. SUBSIDIARIES. Schedule 4.12 sets forth the name of, the
ownership interest of the Borrower in, and the jurisdiction of incorporation of,
each Subsidiary, in each case as of the Closing Date.

          SECTION 4.13. DIVIDEND RESTRICTIONS; OTHER RESTRICTIONS. (a) No
Financial Institution Subsidiary has violated any applicable regulatory
restrictions on dividends, and no Governmental Authority has taken any action to
restrict the payment of dividends by any Financial Institution Subsidiary.

          (b) Neither the Borrower nor any Subsidiary is under investigation by,
or is operating under any restrictions (excluding any restrictions on the
payment of dividends referenced in subsection (a) above) imposed by or agreed to
with, any Governmental Authority (other than routine examinations by such
Governmental Authorities).

          SECTION 4.14. OWNERSHIP OF PROPERTY. The Borrower and each of its
Subsidiaries (a) have valid fee title to, or valid leasehold interests in, all
of their respective real property, and have good and valid title to all of its
respective material personal properties and assets, of any nature whatsoever
which are reflected on the audited consolidated balance sheet referenced in
Section 4.4 hereof or acquired by the Borrower or such Subsidiary after the date
thereof, except for assets sold, transferred or otherwise disposed of since such
date in the ordinary course of business, except for such defects in title as
would not, individually or in the aggregate, have a Material Adverse Effect.

          SECTION 4.15. WELL-CAPITALIZED. On the Closing Date, each of the
Borrower and each Financial Institution Subsidiary has been, or is deemed to
have been, notified by the appropriate Governmental Authority having supervisory
authority over the Borrower and such Financial Institution Subsidiary that it is
"well-capitalized" as determined in accordance with any regulations established
by such Governmental Authority.


                                       16



                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

          The Borrower covenants and agrees that so long as the Lender has a
Revolving Commitment hereunder or the principal of and interest on any Revolving
Loan or any fee remains unpaid:

          SECTION 5.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
will deliver to the Lender:

          (a) as soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, (i) a copy of the annual audited report for
such fiscal year for the Borrower and its Subsidiaries, containing a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows (together with all footnotes thereto) of the
Borrower and its Subsidiaries for such fiscal year, and (ii) a copy of the
annual audited report for such fiscal year of the Borrower only, containing a
balance sheet as of the end of such fiscal year and the related statements of
income and cash flows of the Borrower only for such fiscal year, setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and reported on by KPMG LLP or other independent public
accountants of nationally recognized standing (without a "going concern" or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit) to the effect that such financial
statements present fairly in all material respects the financial condition and
the results of operations on a consolidated basis of the Borrower and its
Subsidiaries, or the Borrower on a stand alone basis, as the case may be, for
such fiscal year in accordance with GAAP and that the examination by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards;

          (b) as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
an unaudited balance sheet of the Borrower and its Subsidiaries on a
consolidated basis and of the Borrower on a stand alone basis as of the end of
such fiscal quarter and the related unaudited statements of income and cash
flows of the Borrower and its Subsidiaries on a consolidated basis and of the
Borrower on a stand alone basis, each for such fiscal quarter and the then
elapsed portion of such fiscal year, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding portion of
Borrower's previous fiscal year, all certified by the chief financial officer or
treasurer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis and of the Borrower on a stand alone basis
in accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;

          (c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a certificate of a Responsible
Officer, (i) certifying as to whether there exists a Default or Event of Default
on the date of such certificate, and if a Default or an Event of Default then
exists, specifying the details thereof and the action which the Borrower has
taken or proposes to take with respect thereto, and (ii) setting forth in
reasonable detail calculations demonstrating compliance with Article VI;

          (d) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, duly executed copies of the Borrower's
then-current FR Report Y-9C and FR Report Y-9LP and a duly executed copy of the
then-current Call Report for Fulton Bank;

          (e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed with the
Securities and Exchange Commission, or any


                                       17



Governmental Authority succeeding to any or all functions of said Commission, or
with any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and

          (f) promptly following any request therefor, such other information
regarding the results of operations, business affairs and financial condition of
the Borrower or any Subsidiary as the Lender may reasonably request.

          SECTION 5.2. NOTICES OF MATERIAL EVENTS. The Borrower will furnish to
the Lender prompt written notice of the following:

          (a) the occurrence of any Default or Event of Default;

          (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the knowledge of
the Borrower, affecting the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;

          (c) the occurrence of any ERISA Event that alone, or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$2,500,000.00;

          (d) any investigation of the Borrower or any Subsidiary by any
regulatory authority having jurisdiction over the Borrower or any such
Subsidiary (other than routine examinations of the Borrower and/or any such
Subsidiary) and any restrictions on the Borrower or any such Subsidiary imposed
by, or agreed to with, such regulatory authority;

          (e) any announcement by Moody's of any change or any possible change
in the Borrower's debt rating; and

          (f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

          Each notice delivered under this Section shall be accompanied by a
written statement of a Responsible Officer setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

          SECTION 5.3. EXISTENCE; CONDUCT OF BUSINESS. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and maintain in full force and effect its legal
existence and its respective rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business and will continue to engage in the same business as presently conducted
or such other businesses that are reasonably related thereto; provided, that
nothing in this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.3.

          SECTION 5.4. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations
(including without limitation all banking regulations) and requirements of any
Governmental Authority applicable to its properties, except where the failure to
do so, either individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect.


                                       18



          SECTION 5.5. PAYMENT OF OBLIGATIONS. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge at or before maturity, all of its
obligations and liabilities (including without limitation all tax liabilities
and claims that could result in a statutory Lien) before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

          SECTION 5.6. BOOKS AND RECORDS. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books of record and account in which full,
true and correct entries shall be made of all dealings and transactions in
relation to its business and activities to the extent necessary to prepare the
consolidated financial statements of Borrower in conformity with GAAP.

          SECTION 5.7. VISITATION, INSPECTION, ETC. The Borrower will, and will
cause each of its Subsidiaries to, permit any representative of the Lender to
visit and inspect its properties, to examine its books and records and to make
copies and take extracts therefrom, and to discuss its affairs, finances and
accounts with any of its officers and with its independent certified public
accountants, all at such reasonable times and as often as the Lender may
reasonably request after reasonable prior notice to the Borrower.

          SECTION 5.8. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear except where the failure to do so, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect and (b) maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business, and the
properties and business of its Subsidiaries, against loss or damage of the kinds
customarily insured against by companies in the same or similar businesses
operating in the same or similar locations.

          SECTION 5.9. USE OF PROCEEDS. The Borrower will use the proceeds of
all Revolving Loans to finance working capital needs (including without
limitation acquisitions) and for other general corporate purposes of the
Borrower and its Subsidiaries. No part of the proceeds of any Revolving Loan
will be used, whether directly or indirectly, for any purpose that would violate
any rule or regulation of the Board of Governors of the Federal Reserve System,
including Regulation T, U or X.

                                   ARTICLE VI

                               FINANCIAL COVENANTS

          The Borrower covenants and agrees that so long as the Lender has its
Revolving Commitment hereunder or the principal of or interest on or any
Revolving Loan remains unpaid or any fee remains unpaid:

          SECTION 6.1. LEVERAGE RATIO. The Borrower on a consolidated basis will
maintain at all times a Tier I Leverage Ratio (determined in accordance with
then-current regulations established by any Governmental Authority having
supervisory authority over the Borrower or any of its Financial Institution
Subsidiaries) of not less than 6.75%.

          SECTION 6.2. RETURN ON AVERAGE ASSETS. The Borrower on a consolidated
basis will have at the end of each Fiscal Quarter a Return on Average Assets for
such Fiscal Quarter and the previous three Fiscal Quarters of not less than
1.00%, determined by taking the sum of the Return on Average Assets (adjusted
for special restructuring or exceptional charges but excluding any special
charges with respect to additional loan loss reserves or other loan quality
deterioration) for each Fiscal Quarter (as such figure is


                                       19



disclosed in the Borrower's consolidated financial statements that are submitted
to the Securities and Exchange Commission on Forms 10-K and 10-Q), divided by
four (4).

          SECTION 6.3. NONPERFORMING ASSETS. The Borrower on a consolidated
basis will not permit at any time Nonperforming Assets to be greater than 2.0%
of the sum of Total Loans (excluding loans held for sale) and Other Real Estate
Owned.

          SECTION 6.4 DOUBLE LEVERAGE RATIO. The Borrower will not permit at any
time its Double Leverage Ratio to be greater than 1.55%.

          SECTION 6.5. CAPITAL RATIOS. The Borrower on a consolidated basis will
maintain at all times a Total Risk-based Capital Ratio, a Tier 1 Risk-based
Capital Ratio and a Tier 1 Leverage Ratio (determined in accordance with
then-current regulations established by any Governmental Authority having
supervisory authority over the Borrower or any of its Financial Institution
Subsidiaries) at levels that are considered "well-capitalized" as defined by
such Governmental Authority. On the date of this Agreement, "well-capitalized"
means the maintenance of the following capital ratios:

               (i) Total Risk-based Capital Ratio of not less than 10.0%.

               (ii) Tier 1 Risk-based Capital Ratio of not less than 6.0%.

               (iii) Tier 1 Leverage Ratio of not less than 5.0%.

If at any time any such Governmental Authority changes the meaning of
"well-capitalized", either by amending such capital ratios or otherwise, such
amended meaning, and any amended or new capital ratios, shall automatically be
incorporated by reference into this Agreement as the minimum standard on and as
of the date that such amended meaning becomes effective by statute, regulation
or otherwise.

                                   ARTICLE VII

                               NEGATIVE COVENANTS

          The Borrower covenants and agrees that so long as the Lender has its
Revolving Commitment hereunder or the principal of or interest on any Revolving
Loan remains unpaid or any fee remains unpaid:

          SECTION 7.1. INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except:

          (a) Indebtedness created pursuant to the Loan Documents;

          (b) Indebtedness existing on the date hereof and set forth on Schedule
7.1 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof (immediately prior to
giving effect to such extension, renewal or replacement) or shorten the maturity
or the weighted average life thereof;

          (c) Indebtedness of any Financial Institution Subsidiary (i) to the
Federal Reserve Board or to the Federal Home Loan Bank Board or (ii)
constituting federal funds purchased and securities sold under agreements to
repurchase incurred in the ordinary course of business; and


                                       20



          (d) Indebtedness which is subordinated to the Indebtedness under this
Agreement on the following terms: (i) no part of the principal of such
Indebtedness is stated to be payable or is required to be paid (whether by way
of mandatory sinking fund, mandatory redemption, mandatory prepayment or
otherwise) prior to the Commitment Termination Date and the payment of principal
of which and any other obligations of the Borrower with respect thereof (other
than interest subject to clause (d)(ii) are subordinated to the prior payment in
full of principal and interest (including post-petition interest) and all other
obligations and amounts of the Borrower to the Lender hereunder on terms and
conditions first approved in writing by the Lender, (ii) no part of the interest
accruing on such Indebtedness is payable, without the prior written consent of
the Lender, after a Default or Event of Default has occurred and is continuing,
(iii) such Indebtedness otherwise contains terms, covenants and conditions in
form and substance reasonable satisfactory to the Lender as evidenced by its
prior written approval thereof, and (iv) at the time such Indebtedness is
incurred, no Default or Event of Default shall be outstanding.

          SECTION 7.2. NEGATIVE PLEDGE. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien on any of its assets or property now owned or hereafter acquired (including
without limitation in the case of the Borrower, the capital stock of any
Financial Institution Subsidiary), except:

          (a) Liens (if any) created in favor of the Lender pursuant to the Loan
Documents;

          (b) Permitted Encumbrances;

          (c) Liens granted to secure any Indebtedness incurred pursuant to
Section 7.1(c) but in the case of Section 7.1(c)(ii), such Lien shall only
extend to those securities sold;

          (d) Liens created to secure public deposits in accordance with
applicable State law; and

          (e) extensions, renewals, or replacements of any Lien referred to in
paragraphs (a), (b), (c) and (d) of this Section.

          SECTION 7.3. FUNDAMENTAL CHANGES.

          (a) The Borrower will not, and will not permit any Subsidiary to,
merge into or consolidate into any other Person, or permit any other Person to
merge into or consolidate with it, or sell, lease, transfer or otherwise dispose
of (in a single transaction or a series of transactions) all or substantially
all of its assets (in each case, whether now owned or hereafter acquired) or all
or substantially all of the stock of any of its Subsidiaries (in each case,
whether now owned or hereafter acquired) or liquidate or dissolve (other than
any such liquidation or dissolution of any Subsidiary that is not a Financial
Institution Subsidiary if the proceeds are retained within the consolidated
organization); provided, that if at the time thereof and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing, the Borrower may merge with a Person if the Borrower is the
surviving Person or any Subsidiary may merge with a Person as long as the
resulting entity is a wholly-owned Subsidiary of the Borrower.

          (b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries on the date hereof and
businesses reasonably related thereto and any types of businesses that are
expressly permitted by any Governmental Authority having jurisdiction over the
Borrower and/or any Financial Institution Subsidiary.


                                       21



          SECTION 7.4. RESTRICTED PAYMENTS. Upon the occurrence of any Default
or Event of Default, the Borrower will not, and will not permit its Subsidiaries
to, declare or make, or agree to pay or make, directly or indirectly, any
dividend on any class of its stock, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement, defeasance or other acquisition of, any shares of common
stock or Indebtedness subordinated to the obligations of the Borrower or any
options, warrants, or other rights to purchase such common stock or such
Indebtedness, whether now or hereafter outstanding, except for dividends payable
by any Subsidiary to the Borrower.

          SECTION 7.5. RESTRICTIVE AGREEMENTS. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement that prohibits, restricts or imposes any condition
upon (a) the ability of the Borrower or any Subsidiary to create, incur or
permit any Lien upon any of its assets or properties, whether now owned or
hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or
other distributions with respect to its common stock, to make or repay loans or
advances to the Borrower or any other Subsidiary, to guarantee Indebtedness of
the Borrower or any other Subsidiary or to transfer any of its property or
assets to the Borrower or any Subsidiary of the Borrower; provided, that (i) the
foregoing shall not apply to restrictions or conditions imposed by law or by
this Agreement or any other Loan Document, (ii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is sold and such sale is permitted
hereunder, and (iii) clause (a) shall not apply to customary provisions in
leases restricting the assignment thereof.

          SECTION 7.6. HEDGING AGREEMENTS. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Agreement, other than
(a) Hedging Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Borrower or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities and (b) Hedging
Agreements entered into by any Financial Institution Subsidiary in the ordinary
course of its business.

          SECTION 7.7. ACCOUNTING CHANGES. The Borrower will not, and will not
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower or of any Subsidiary, except to change the fiscal year of a
Subsidiary to conform its fiscal year to that of the Borrower.

          SECTION 7.8. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

          SECTION 8.1. EVENTS OF DEFAULT. If any of the following events (each
an "Event of Default") shall occur:

          (a) the Borrower shall fail to pay any principal of any Revolving Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment or otherwise; or

          (b) the Borrower shall fail to pay any interest on any Revolving Loan
or any fee or any other amount (other than an amount payable under clause (a) of
this Article) payable under this Agreement or


                                       22



any other Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five (5) days; or

          (c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement or any
other Loan Document (including the Schedules attached thereto) and any
amendments or modifications hereof or waivers hereunder, or in any certificate,
report, financial statement or other document submitted to the Lender by the
Borrower or any representative of the Borrower pursuant to or in connection with
this Agreement shall prove to be incorrect in any material respect when made or
deemed made or submitted; or

          (d) the Borrower shall fail to observe or perform any covenant or
agreement contained in Section 5.2, Section 5.3 (with respect to the Borrower's
existence), or Articles VI or VII; or

          (e) the Borrower shall fail to observe or perform any covenant or
agreement contained (i) in this Agreement (other than those referred to in
clauses (a), (b) and (d) above), and such failure shall remain unremedied for 30
days after the earlier of (x) any officer of the Borrower becomes aware of such
failure, or (y) notice thereof shall have been given to the Borrower by the
Lender or any Lender or (ii) in any other Loan Document (after taking into
consideration any applicable grace periods); or

          (f) the Borrower or any Subsidiary (whether as primary obligor or as
guarantor or other surety) shall fail to pay any principal of or premium or
interest on any Indebtedness owed to the Bank in any amount or any other
Indebtedness owed to any other Person greater than $10,000,000 that is
outstanding, when and as the same shall become due and payable (whether at
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument evidencing such Indebtedness; or any other event
shall occur or condition shall exist under any agreement or instrument relating
to such Indebtedness and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness (without regard to whether such holders or other Person shall have
exercised or waived their right to do so); or any such Indebtedness shall be
declared to be due and payable; or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased or
defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case prior to the stated maturity thereof;
or

          (g) the Borrower or any Subsidiary shall (i) commence a voluntary case
or other proceeding or file any petition seeking liquidation, reorganization or
other relief under any federal, state or foreign bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
custodian, trustee, receiver, liquidator or other similar official of it or any
substantial part of its property, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or petition
described in clause (i) of this Section, (iii) apply for or consent to the
appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Borrower or any such Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, or (vi) take any action for the purpose of effecting any
of the foregoing; or

          (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or any substantial
part of its assets, under any federal, state or foreign bankruptcy, insolvency
or other similar law now or hereafter in effect or (ii) the appointment of a
custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any Subsidiary or for a substantial part of its assets,


                                       23



and in any such case, such proceeding or petition shall remain undismissed for a
period of 60 days or an order or decree approving or ordering any of the
foregoing shall be entered; or

          (i) the Borrower or any Subsidiary shall become unable to pay, shall
admit in writing its inability to pay, or shall fail to pay, its debts as they
become due; or

          (j) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with other ERISA Events that have occurred, could
reasonably be expected to result in liability to the Borrower and the
Subsidiaries in an aggregate amount exceeding $2,500,000; or

          (k) any judgment or order for the payment of money in excess of
$10,000,000 in the aggregate shall be rendered against the Borrower or any
Subsidiary, and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be a period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

          (l) any non-monetary judgment or order shall be rendered against the
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect, and there shall be a period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or

          (m) a Change in Control shall occur or exist; or

          (n) any Governmental Authority having regulatory authority over the
Borrower or any Subsidiary shall impose any restriction upon the payment of
dividends from any Subsidiary to the Borrower; or

          (o) any Financial Institution Subsidiary shall cease to be an insured
bank under the Federal Deposit Insurance Act, as amended; or

          (p) the FDIC or any other federal or state regulatory authority shall
issue a cease and desist order or take other action of a disciplinary or
remedial nature against the Borrower or any Financial Institution Subsidiary and
such order or other action could reasonably be expected to have a Material
Adverse Effect or there shall occur with respect to any Financial Institution
Subsidiary any event that is grounds for the required submission of a capital
restoration plan under 12 U. S. C. Section 1831o (e) (2) and the regulations
thereunder;

then, and in every such event (other than an event with respect to the Borrower
or any Subsidiary described in clause (g) or (h) of this Section) and at any
time thereafter during the continuance of such event, the Lender may, by notice
to the Borrower, take any or all of the following actions, at the same or
different times: (i) terminate its Revolving Commitment; (ii) declare the
principal of and any accrued interest on the Revolving Loans, and all other
Obligations owing hereunder, to be, whereupon the same shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower and (iii) exercise all
remedies contained in any other Loan Document; and that, if an Event of Default
specified in either clause (g) or (h) shall occur, the Revolving Commitment
shall automatically terminate and the principal of the Revolving Loans then
outstanding, together with accrued interest thereon, and all fees, and all other
Obligations shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.


                                       24



                                   ARTICLE IX

                                  MISCELLANEOUS

          SECTION 9.1. NOTICES.

          (a) Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications to any
party herein to be effective shall be in writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

          To the Borrower:   Fulton Financial Corporation
                             One Penn Square
                             Lancaster, PA 17602
                             Attn: Charles J. Nugent
                             Telephone Number: (717) 291-2537
                             Telecopy Number: (717) 291-2695

          To the Lender:     SunTrust Bank
                             303 Peachtree Street
                             Third Floor
                             Atlanta, GA 30308
                             Attn: James L. Bradshaw
                             Telephone Number: (404) 588-7565
                             Telecopy Number: (404) 581-1775

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the mails or if
delivered, upon delivery; provided, that notices delivered to the Lender
pursuant to Section 5.2 shall not be effective until actually received by the
Lender at its address specified in this Section 9.1.

          (b) Any agreement of the Lender herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Borrower. The Lender shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Lender shall not have any liability to the Borrower or other Person on account
of any action taken or not taken by the Lender in reliance upon such telephonic
or facsimile notice. The obligation of the Borrower to repay the Revolving Loans
and all other Obligations hereunder shall not be affected in any way or to any
extent by any failure of the Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Lender of a confirmation
which is at variance with the terms understood by the Lender to be contained in
any such telephonic or facsimile notice.

          SECTION 9.2. WAIVER; AMENDMENTS.


                                       25



          (a) No failure or delay by the Lender in exercising any right or power
hereunder or any other Loan Document, and no course of dealing between the
Borrower and the Lender, shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or thereunder. The rights and remedies of the Lender hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies provided by law. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Revolving Loan shall not be
construed as a waiver of any Default or Event of Default, regardless of whether
the Lender may have had notice or knowledge of such Default or Event of Default
at the time.

          (b) No amendment or waiver of any provision of this Agreement or the
other Loan Documents, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower and the Lender and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

          SECTION 9.3. EXPENSES; INDEMNIFICATION.

          (a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and
expenses of the Lender (including, without limitation, the reasonable fees,
charges and disbursements of outside counsel and the allocated cost of inside
counsel) in connection with the preparation and administration of the Loan
Documents and any amendments, modifications or waivers thereof (whether or not
the transactions contemplated in this Agreement or any other Loan Document shall
be consummated), and (ii) all out-of-pocket costs and expenses (including,
without limitation, the reasonable fees, charges and disbursements of outside
counsel and the allocated cost of inside counsel) incurred by the Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Revolving Loans made hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Revolving Loans.

          (b) The Borrower shall indemnify the Lender and each Affiliate of the
Lender, and each officer, director, employee, agents and advisors of the Lender
and each Affiliate of the Lender (each, an "INDEMNITEE") against, and hold each
of them harmless from, any and all costs, losses, liabilities, claims, damages
and related expenses, including the fees, charges and disbursements of any
counsel for any Indemnitee, which may be incurred by any Indemnitee, or asserted
against any Indemnitee by the Borrower or any third Person, arising out of, in
connection with or as a result of (i) the execution or delivery of any this
Agreement or any other agreement or instrument contemplated hereby, the
performance by the parties hereto of their respective obligations hereunder or
the consummation of any of the transactions contemplated hereby, (ii) any
Revolving Loan or any actual or proposed use of the proceeds therefrom, (iii)
any actual or alleged presence or release of Hazardous Materials on or from any
property owned by the Borrower or any Subsidiary or any Environmental Liability
related in any way to the Borrower or any Subsidiary or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether brought by the Borrower or any third Person and whether
based on contract, tort, or any other theory and regardless of whether any
Indemnitee is a party thereto; provided, that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction in a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or (y) result from a
claim brought by the Borrower against an Indemnitee for breach in bad faith of
such Indemnitee's obligations hereunder or under any other Loan Document, if the
Borrower has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.


                                       26



          (c) The Borrower shall pay, and hold the Lender harmless from and
against, any and all present and future stamp, documentary, and other similar
taxes with respect to this Agreement and any other Loan Documents, any
collateral described therein, or any payments due thereunder, and save the
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such taxes.

          (d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated therein, any Loan or the Letter of Credit or the use
of proceeds thereof.

          (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

          SECTION 9.4. SUCCESSORS AND ASSIGNS.

          (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
hereunder without the prior written consent of the Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void).

          (b) The Lender may at any time assign to one or more assignees all or
a portion of its rights and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Revolving Commitment and the
Revolving Loans at the time owing to it); provided, that the Borrower must give
its prior written consent (which consent shall not be unreasonably withheld or
delayed) to any assignment, except an assignment to an Affiliate of the Lender
or during the occurrence and continuation of a Default or an Event of Default.
Upon the execution and delivery of an assignment agreement by the Lender and
such assignee and payment by such assignee of an amount equal to the purchase
price agreed between the Lender and such assignee, such assignee shall become a
party to this Agreement and the other Loan Documents and shall have the rights
and obligations of a Lender under this Agreement, and the Lender shall be
released from its obligations hereunder to a corresponding extent. Upon the
consummation of any such assignment hereunder, the Lender, the assignee and the
Borrower shall make appropriate arrangements to have new Revolving Credit Notes
issued to reflect such assignment.

          (c) The Lender may at any time, without the consent of the Borrower,
sell participations to one or more banks or other entities (a "Participant") in
all or a portion of the Lender's rights and obligations under this Agreement;
provided, that (i) the Lender's obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of its obligations hereunder, and (iii) the Borrower
shall continue to deal solely and directly with the Lender in connection with
the Lender's rights and obligations under this Agreement and the other Loan
Documents. Any agreement between the Lender and the Participant with respect to
such participation shall provide that the Lender shall retain the sole right and
responsibility to enforce this Agreement and the other Loan Documents and the
right to approve any amendment, modification or waiver of this Agreement and the
other Loan Documents; provided, that such participation agreement may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver of this Agreement described in the first
proviso of Section 9.2(b) that affects the Participant. The Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.8, 2.9 and 2.10
to the same extent as if it were a Lender hereunder and had acquired its
interest by assignment pursuant to paragraph (b); provided, that no Participant
shall be entitled to receive any greater payment under Section 2.10 than the
Lender would have been entitled to


                                       27



receive with respect to the participation sold to such Participant unless the
sale of such participation is made with the Borrower's prior written consent.

          (d) The Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement and the Revolving Credit
Note to secure its obligations to a Federal Reserve Bank without complying with
this Section; provided, that no such pledge or assignment shall release the
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

          SECTION 9.5. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.

          (a) This Agreement and the other Loan Documents shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of Georgia.

          (b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of any Federal and/or
state court located in the State of Georgia and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions contemplated hereby or
thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Georgia state court or, to the extent permitted by applicable law, such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Borrower or its properties in
the courts of any jurisdiction.

          (c) The Borrower irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section and brought in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

          (d) Each party to this Agreement irrevocably consents to the service
of process in the manner provided for notices in Section 9.1. Nothing in this
Agreement or in any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by law.

          SECTION 9.6. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


                                       28



          SECTION 9.7. RIGHT OF SETOFF. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, the Lender shall have the right, at any time or from time to time upon
the occurrence and during the continuance of an Event of Default, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set off and apply against all
deposits (general or special, time or demand, provisional or final) of the
Borrower at any time held or other obligations at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all
Obligations held by the Lender, irrespective of whether the Lender shall have
made demand hereunder and although such Obligations may be unmatured. The Lender
agrees promptly to notify the Borrower after any such set-off and any
application made by the Lender; provided, that the failure to give such notice
shall not affect the validity of such set-off and application.

          SECTION 9.8. COUNTERPARTS; INTEGRATION. This Agreement may be executed
by one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. This
Agreement, the other Loan Documents, and any separate letter agreement(s)
relating to any fees payable to the Lender constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements and understandings, oral or written,
regarding such subject matters.

          SECTION 9.9. SURVIVAL. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Revolving Loans, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Revolving Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
and so long as the Revolving Commitment has not expired or terminated. The
provisions of Sections 2.10 and 9.3 shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Revolving Loans, the expiration or termination of the
Revolving Commitment or the termination of this Agreement or any provision
hereof. All representations and warranties made herein, in the certificates,
reports, notices, and other documents delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents, and the making of the Revolving Loans.

          SECTION 9.10. SEVERABILITY. Any provision of this Agreement or any
other Loan Document held to be illegal, invalid or unenforceable in any
jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of
such illegality, invalidity or unenforceability without affecting the legality,
validity or enforceability of the remaining provisions hereof or thereof; and
the illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

          SECTION 9.11. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which may be treated as
interest on such Loan under applicable law (collectively, the "CHARGES"), shall
exceed the maximum lawful rate of interest (the "MAXIMUM RATE") which may be
contracted for, charged, taken, received or reserved by the Lender in accordance
with applicable law, the rate of interest payable in respect of such Loan
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the


                                       29



Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Rate to the date of repayment, shall have been
received by the Lender.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       30



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal in the case of the Borrower by their respective authorized
officers as of the day and year first above written.

                                        FULTON FINANCIAL CORPORATION


                                        By
                                           -------------------------------------
                                        Name: Charles J. Nugent
                                        Title: Senior Executive Vice President
                                               and Chief Financial Officer

                                        [SEAL]


                                        SUNTRUST BANK


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       31



                                                                   SCHEDULE 4.12

                               BANK SUBSIDIARIES



       Ownership % by   Jurisdiction of
Name      Borrower       Incorporation
- ----   --------------   ---------------
                  



                               OTHER SUBSIDIARIES



       Ownership % by   Jurisdiction of
Name      Borrower       Incorporation
- ----   --------------   ---------------
                  



                                  Schedule 4.12



                                                                    SCHEDULE 7.1

                            OUTSTANDING INDEBTEDNESS

                                  Schedule 7.1



                                                                       EXHIBIT A

                              REVOLVING CREDIT NOTE

$50,000,000                                                     Atlanta, Georgia
                                                                July _____, 2004

     FOR VALUE RECEIVED, the undersigned, Fulton Financial Corporation, a
Pennsylvania corporation (the "BORROWER"), hereby promises to pay to SunTrust
Bank (the "LENDER") or its registered assigns at its principal office or any
other office that the Lender designates, on the Commitment Termination Date (as
defined in the Revolving Credit Agreement dated as of July _____, 2004 (as the
same may be amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), between the Borrower and the Lender, the lesser of the
principal sum of Fifty Million and no/100 Dollars ($50,000,000) or the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, in lawful money of the United States
of America in immediately available funds, and to pay interest from the date
hereof on the principal amount thereof from time to time outstanding, in like
funds, at said office, at the rate or rates per annum and payable on such dates
as provided in the Credit Agreement. In addition, should legal action or an
attorney-at-law be utilized to collect any amount due hereunder, the Borrower
further promises to pay all costs of collection, including the reasonable
attorneys' fees of the Lender.

     The Borrower promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates provided in the Credit Agreement.

     All borrowings evidenced by this Revolving Credit Note and all payments and
prepayments of the principal hereof and the date thereof shall be endorsed by
the holder hereof on the schedule attached hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, that the
failure of the holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower to make the payments
of principal and interest in accordance with the terms of this Revolving Credit
Note and the Credit Agreement.

     This Revolving Credit Note is issued in connection with, and is entitled to
the benefits of, the Credit Agreement which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS REVOLVING
CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF GEORGIA AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

                                        FULTON FINANCIAL CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        [SEAL]



                               LOANS AND PAYMENTS



                                      Unpaid
                                     Principal   Name of Person
        Amount and    Payments of   Balance of       Making
Date   Type of Loan    Principal       Note         Notation
- ----   ------------   -----------   ----------   --------------
                                     



                                   Exhibit A-2


                                                                     EXHIBIT 2.2

SunTrust Bank
303 Peachtree Street
Atlanta, Georgia 30308

Attention:

Dear Sirs:

     Reference is made to the Revolving Credit Agreement dated as of July _____,
2004 (as amended and in effect on the date hereof, the "Credit Agreement"),
between the undersigned, as Borrower and SunTrust Bank, as Lender. Terms defined
in the Credit Agreement are used herein with the same meanings. This notice
constitutes a Notice of Borrowing, and the Borrower hereby requests a Revolving
Loan under the Credit Agreement, and in that connection the Borrower specifies
the following information with respect to the Revolving Loan requested hereby:

     (A)  Principal amount of Revolving Loan: __________________________________

     (B)  Date of Revolving Loan (which is a Business Day): ____________________

     (C)  Purpose (if larger than $5,000,000): _________________________________

     (D)  Location and number of Borrower's account to which proceeds of
          Revolving Loan are to be disbursed: __________________________________

     The Borrower hereby represents and warrants that the conditions specified
in paragraphs (a), (b), and (c) of Section 3.2 of the Credit Agreement are
satisfied.

                                        Very truly yours,

                                        FULTON FINANCIAL CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                   Exhibit 2.2

EX-4.2

                                                                     EXHIBIT 4.2

                  FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT

          THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment")
dated as of August 31, 2005, by and between FULTON FINANCIAL CORPORATION, a
Pennsylvania corporation, as Borrower, and SUNTRUST BANK, a Georgia banking
corporation, as Lender.

                                   WITNESSETH:

          WHEREAS, Borrower executed and delivered to Lender a Revolving Credit
Agreement (the "Agreement") dated July 12, 2004 establishing a $50,000,000 two
year revolving credit facility (as amended or modified from time to time, the
"Credit Agreement"; capitalized terms used in this Amendment without definition
that are defined in the Credit Agreement shall have the meanings in this
Amendment as specified for such capitalized terms in the Credit Agreement);

          WHEREAS, Borrower and Lender have agreed to amend the Credit Agreement
in certain respects as set forth in this Amendment;

          NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:

          SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction
of the conditions precedent set forth in Section 2 hereof, and effective as of
the Effective Date (as hereinafter defined), the Credit Agreement is hereby
amended as follows:

     (a) Schedule 7.1 of the Credit Agreement is hereby amended as of the
Closing Date by deleting it in its entirety and replacing it with Schedule 7.1
attached hereto.

     (b) Section 1.1 of the Credit Agreement is hereby amended by deleting the
defined term "Applicable Margin" and substituting in lieu thereof the following:

          "APPLICABLE MARGIN" shall mean, as of any date, with respect to all
          Eurodollar Loans outstanding on any date during the Availability
          Period, the applicable percentage per annum set forth below, based
          upon the debt ratings by S&P, Moody's and Fitch of the Borrower (as
          more particularly described below) applicable on such date:



  RATING CATEGORY
 S&P/MOODY'S/FITCH    APPLICABLE MARGIN
 -----------------    -----------------
                   
> or = A+/A1/A+              0.27%
A2/A2/A                      0.35%



                                       -1-



                   
A-/A3/A-                   0.425%
BBB+/Baa1/BBB+              0.50%
< or = BBB/Baa2/BBB         0.60%



          The Applicable Margin will be based on the two highest ratings from
          S&P, Moody's and Fitch. If the two highest ratings are split by one
          (1) level, then the Applicable Margin will be based on the lower of
          the two ratings. If the two highest ratings are split by more than one
          (1) level, the Applicable Percentage will be based on the lowest of
          the three ratings. A change in the Applicable Margin resulting from a
          change in the debt ratings shall be effective as of the date on which
          it is first announced by the applicable rating agency. Each change in
          the Applicable Margin shall apply during the period commencing on the
          effective date of such change and ending on the date immediately
          preceding the effective date of the next such change. If the rating
          system of a rating agency shall change or if any two of the three
          rating agencies shall cease to be in the business of rating corporate
          debt obligations of the Borrower, the Borrower and the Lender shall
          negotiate in good faith to amend this definition to reflect such
          changed rating system or the non-availability of debt ratings from
          such rating agencies, and pending the effectiveness of any such
          amendment, the Applicable Margin shall be determined by reference to
          the lowest debt rating of the remaining rating agency or agencies;
          provided, that if the Borrower and the Lender have not agreed upon an
          amendment within ninety (90) days after such change, the Applicable
          Margin shall become 0.60% per annum from such date until an amendment
          in a form satisfactory to the Lender has been executed. The debt
          ratings to be utilized for purposes of determining the Applicable
          Margin are those assigned to the senior, unsecured long-term debt
          securities of the Borrower without third-party enhancement, whether or
          not any such debt securities are actually outstanding, and any debt
          rating assigned to any other debt security of the Borrower shall be
          disregarded.

     (c) Section 1.1 of the Credit Agreement is hereby amended by deleting the
defined term "Applicable Percentage" and substituting in lieu thereof the
following:

          "APPLICABLE PERCENTAGE" as of any date, with respect to the facility
          fee, the percentage per annum determined by reference to the
          applicable rating category as set forth below, based upon the debt
          ratings by S&P, Moody's and Fitch of the Borrower (as more
          particularly described below) applicable on such date:



  RATING CATEGORY
 S&P/MOODY'S/FITCH    APPLICABLE PERCENTAGE
 -----------------    ---------------------
                   
> or = A+/A1/A+                0.08%
A2/A2/A                        0.10%
A-/A3/A-                      0.125%
BBB+/Baa1/BBB+                 0.15%
< or = BBB/Baa2/BBB            0.15%



                                       -2-



          The Applicable Percentage will be based on the two highest ratings
          from S&P, Moody's and Fitch. If the two highest ratings are split by
          one (1) level, then the Applicable Margin will be based on the lower
          of the two ratings. If the two highest ratings are split by more than
          one (1) level, the Applicable Percentage will be based on the lowest
          of the three ratings. A change in the Applicable Percentage resulting
          from a change in the debt ratings shall be effective as of the date on
          which it is first announced by the applicable rating agency. Each
          change in the Applicable Percentage shall apply during the period
          commencing on the effective date of such change and ending on the date
          immediately preceding the effective date of the next such change. If
          the rating system of a rating agency shall change or if any two of the
          three rating agencies shall cease to be in the business of rating
          corporate debt obligations of the Borrower, the Borrower and the
          Lender shall negotiate in good faith to amend this definition to
          reflect such changed rating system or the non-availability of debt
          ratings from such rating agencies, and pending the effectiveness of
          any such amendment, the Applicable Percentage shall be determined by
          reference to the lowest debt rating of the remaining rating agency or
          agencies; provided, that if the Borrower and the Lender have not
          agreed upon an amendment within ninety (90) days after such change,
          the Applicable Percentage shall become 0.15% per annum from such date
          until an amendment in a form satisfactory to the Lender has been
          executed. The debt ratings to be utilized for purposes of determining
          the Applicable Percentage are those assigned to the senior, unsecured
          long-term debt securities of the Borrower without third-party
          enhancement, whether or not any such debt securities are actually
          outstanding, and any debt rating assigned to any other debt security
          of the Borrower shall be disregarded.

     (d) Section 1.1 of the Credit Agreement is hereby amended by deleting the
defined term "Commitment Termination Date" and substituting in lieu thereof the
following:

          "COMMITMENT TERMINATION DATE" shall mean the earliest of (i) September
          30, 2007, (ii) the date on which the Revolving Commitment is
          terminated pursuant to Section 2.3 and (iii) the date on which all
          amounts outstanding under this Agreement have been declared or have
          automatically become due and payable (whether by acceleration or
          otherwise).

     (e) Section 1.1 of the Credit Agreement is hereby amended by adding the
following definitions thereto in the appropriate alphabetical order:

          "FITCH" shall mean Fitch, Inc., and its successors.

          "S&P" shall mean Standard & Poor's, a division of the McGraw-Hill
          Companies, Inc., and its successors.

     (f) Section 2.3(a) of the Credit Agreement is hereby amended by deleting
the first sentence thereof and substituting in lieu thereof the following:


                                       -3-



          Upon the request of the Borrower at any time prior to September 30,
          2007, and in the sole discretion of the Lender, the Revolving
          Commitment may be increased up to $100,000,000.

     (g) Section 2.6(a) of the Credit Agreement is hereby amended by deleting
such section in its entirety and substituting in lieu thereof the following:

          (a)  The Borrower agrees to pay to the Lender a facility fee, which
               shall accrue at the Applicable Percentage (calculated on the
               basis of a 360-day year for the actual number of days
               outstanding) on the Revolving Commitment, payable in arrears on
               the last Business Day of each March, June, September, and
               December of each year and on the Commitment Termination Date;
               provided, that if the Lender continues to have any Revolving
               Loans outstanding after the Commitment Termination Date, then the
               facility fee shall continue to accrue on the daily amount of such
               outstanding Revolving Loans from and after the Commitment
               Termination Date to the date that all of the Lender's outstanding
               Revolving Loans have been paid in full; provided further, that
               any facility fees accruing after the Commitment Termination Date
               shall be payable on demand. A change in the facility fee
               resulting from a change in the debt ratings shall be effective as
               of the date on which it is first announced by the applicable
               rating agency.

     (h) Section 7.1 of the Credit Agreement is hereby amended by deleting the
word "and" at the end of clause (c), by deleting the period at the end of clause
(d) and replacing such period with a semicolon, and by adding the following new
clauses (e), (f) and (g):

          (e)  (i) Indebtedness owed by the Borrower or any Affiliate of the
               Borrower (as defined in Regulation W of the FRB and sections 23A
               and 23B of the Federal Reserve Act) to any Financial Institution
               Subsidiary not in violation of Regulation W of the FRB (as
               amended, supplemented or otherwise modified), or (ii)
               Indebtedness owed by any Subsidiary to the Borrower or (iii)
               Indebtedness owed by the Borrower or any Subsidiary to a
               Subsidiary other than a Financial Institution Subsidiary;
               provided, that such Indebtedness is subordinated to the
               Indebtedness under this Agreement on the following terms: (i) no
               part of the principal of such Indebtedness is stated to be
               payable or is required to be paid (whether by way of mandatory
               sinking fund, mandatory redemption, mandatory prepayment or
               otherwise) prior to the Commitment Termination Date and the
               payment of principal of which, and any other obligations of the
               Borrower with respect thereof, are subordinated to the prior
               payment in full of principal and interest (including
               post-petition interest) and all other obligations and amounts of
               the Borrower to the Lender hereunder, and (ii) no part of the
               interest accruing on such Indebtedness is payable, without the
               prior written consent of the Lender, after a Default or Event of
               Default has occurred and is continuing;


                                       -4-



          (f)  Indebtedness consisting of Commercial Paper. "COMMERCIAL PAPER"
               as used herein shall mean any certificated or uncertificated
               security issued by the Borrower to a customer of a Financial
               Institution Subsidiary maintaining a demand deposit or other type
               of account with such Financial Institution Subsidiary that is
               purchased by such customer from the Borrower, provided, that any
               such Commercial Paper shall be offset on a 1:1 basis with cash
               deposits or advances by Borrower in or to such Financial
               Institution Subsidiary; and

          (g)  Indebtedness created, incurred, assumed or existing as a result
               of any merger with, or acquisition of, any other Person;
               provided, that immediately after giving effect to such merger or
               acquisition and the creating, incurring, assumption or existence
               of such Indebtedness, no Default or Event of Default shall have
               occurred and be continuing; and provided further, that such
               Indebtedness is subordinated to the Indebtedness under this
               Agreement on the terms set forth in clauses (d)(i) and (ii) of
               this Section, except that the prior approval of the Lender shall
               not be required.

          SECTION 2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. This Amendment
shall become effective on (the "Effective Date") the later to occur of (x)
August 31, 2005, and (y) the first day when the Lender shall have received
counterparts of this Amendment as executed on behalf of Borrower and the Lender.

          SECTION 3. STATUS OF OBLIGATIONS. Borrower hereby confirms and agrees
that all Revolving Loans and all other Obligations outstanding under the Credit
Agreement and the other Loan Documents as of the date hereof were duly and
validly created and incurred by Borrower thereunder, that all such outstanding
amounts are owed in accordance with the terms of the Credit Agreement and other
Loan Documents, and that there are no rights of offset, defense, counterclaim,
claim or objection in favor of Borrower arising out of or with respect to any of
the Loans or other Obligations of Borrower to the Lender, and any such rights of
offset, defense, counterclaim, claims or objections have been and are hereby
waived and released by Borrower.

          SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower,
without limiting the representations and warranties provided in the Credit
Agreement, represents and warrants to the Lender as follows:

          4.1 The execution, delivery and performance by Borrower of this
Amendment are within Borrower's corporate powers, have been duly authorized by
all necessary corporate action (including any necessary shareholder action) and
do not and will not (a) violate any provision of any law, rule or regulation,
any judgment, order or ruling of any court or governmental agency, the
certificate of incorporation or by-laws of Borrower, or any indenture, agreement
or other instrument to which Borrower is a party or by which Borrower or any of
its properties is bound or (b) be in conflict with, result in a breach of, or
constitute with notice or lapse of time or both a default under any such
indenture, agreement or other instrument.


                                       -5-



          4.2 This Amendment constitutes the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms.

          4.3 After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.

          4.4 The representations and warranties of Borrower contained in the
Credit Agreement are true and accurate on and as of the date of this Amendment,
except for changes expressly permitted under the terms of the Credit Agreement
and except to the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and warranties were true
and accurate as of such earlier date).

          4.5 Since March 31, 2005, there have been no events, acts, conditions
or occurrences of whatever nature, singly or in the aggregate, which have had,
or could reasonably be expected to have, a Material Adverse Effect.

          SECTION 5. SURVIVAL. Each of the foregoing representations and
warranties shall be made at and as of the date of this Amendment and shall be
deemed to have been made as of the date hereof. Each of the foregoing
representations and warranties shall constitute a representation and warranty of
Borrower under the Credit Agreement, and it shall be an Event of Default if any
such representation and warranty shall prove to have been incorrect or false in
any material respect at the time when made or deemed to have been made. Each of
the foregoing representations and warranties shall survive and not be waived by
the execution and delivery of this Amendment or any investigation by the Lender.

          SECTION 6. RATIFICATION OF CREDIT AGREEMENT AND LOAN DOCUMENTS. Except
as expressly amended herein, all terms, covenants and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect,
and the parties hereto do expressly ratify and confirm the Credit Agreement (as
amended herein) and the other Loan Documents. All future references to the
Credit Agreement shall be deemed to refer to the Credit Agreement as amended
hereby.

          SECTION 7. INDEMNITY. In consideration of the amendments agreed to by
the Lender pursuant to this Amendment, Borrower hereby indemnifies the Lender,
and its respective officers, partners, directors, employees, representatives and
agents from, and hold each of them harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred by any of them (whether or not
any of them is designated a party thereto) (an "Indemnitee") arising out of or
by reason of any investigation, litigation or other proceeding related to this
Amendment, the Credit Agreement or any other Loan Documents or any actual or
proposed use of the proceeds of any of the Revolving Loans, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding;
provided, however, Borrower shall not be obligated to indemnify any Indemnitee
for any of the foregoing arising out of such Indemnitee's gross negligence or
willful misconduct.

          SECTION 8. NO WAIVER, ETC. Borrower hereby agrees that nothing herein
shall constitute a waiver by the Lender of any Default or Event of Default,
whether known or unknown, which may exist under the Credit Agreement. Borrower
hereby further agrees that no


                                       -6-



action, inaction or agreement by the Lender, including without limitation, any
indulgence, waiver, consent or agreement altering the provisions of the Credit
Agreement which may have occurred with respect to the non-performance of any
obligation under the terms of the Credit Agreement or any portion thereof, or
any other matter relating to the Credit Agreement, shall require or imply any
future indulgence, waiver, or agreement by the Lender.

          SECTION 9. BINDING NATURE. This Amendment shall be binding upon and
inure to the benefit of the parties hereto, their respective successors,
successors-in-titles, and assigns.

          SECTION 10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.

          SECTION 11. ENTIRE UNDERSTANDING. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or oral,
with respect thereto.

          SECTION 12. COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by the different parties hereto in separate counterparts and
may be delivered by telecopier. Each counterpart so executed and delivered shall
be deemed an original and all of which taken together shall constitute but one
and the same instrument.

                  [remainder of page intentionally left blank]


                                       -7-



          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered in Atlanta, Georgia, by their duly authorized
officers as of the day and year first above written.

                                        FULTON FINANCIAL CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        SUNTRUST BANK,


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       -8-



                                  SCHEDULE 7.1



                              DESCRIPTION                                  BALANCE
                              -----------                                ----------
                                                                      
Treasury Tax and Loan Note                                                5,039,432

Capital Leases                                                              225,000

Trust Preferred Securities (net of unamortized issuance costs)           38,980,727

Fulton Financial Corporation's inter-company line of Credit commitment   72,000,000


This schedule excludes FHLB advances, federal funds purchased and customer
repos.


                                       -9-

EX-4.3

                                                                     EXHIBIT 4.3

                                                                  EXECUTION COPY

                 SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Second
Amendment") dated as of June 30, 2006 between FULTON FINANCIAL CORPORATION, a
Pennsylvania corporation (the "Borrower"), and SUNTRUST BANK, a Georgia banking
corporation (the "Lender").

                                   WITNESSETH:

     WHEREAS, the Borrower and the Lender have entered into that certain
Revolving Credit Agreement dated as of July 12, 2004 pursuant to which the
Lender has established a two year $50,000,000 committed line of credit for loans
(as so amended, the "Credit Agreement");

     WHEREAS, the Borrower and the Lender amended the Agreement pursuant to the
First Amendment to Revolving Credit Agreement dated as of August 31, 2005 (the
"First Amendment"), pursuant to which, inter alia, the Commitment Termination
Date was extended to September 30, 2007; and

     WHEREAS, the Borrower and the Lender have agreed, on the terms and
conditions as hereinafter set forth, to amend the Credit Agreement to increase
the amount of the Revolving Commitment from $50,000,000 to $100,000,000 and to
make other changes as hereinafter set forth;

     NOW, THEREFORE, for and in consideration of the mutual premises, covenants
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

Section 1. Defined Terms. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Agreement.

Section 2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended by:

          A. Section 1.1 is hereby amended by deleting the existing definition
     of "Revolving Commitment" and substituting the following therefor:

          "REVOLVING COMMITMENT" shall mean the obligation of the Lender to make
          Revolving Loans to the Borrower in an aggregate principal amount not
          exceeding One Hundred Million Dollars ($100,000,000).

          B. Section 2.3 is hereby amended by deleting clause (a) in its
     entirety.

Section 3. Conditions Precedent. This Second Amendment shall become effective
upon the receipt by the Lender of the following documents in form and substance
reasonably satisfactory to the Lender:

     (a)  this Second Amendment duly executed by the Borrower;

     (b)  a duly executed Amended and Restated Revolving Credit Note in the
          principal amount of $100,000,000;


                                      -1-



     (c)  a certificate of the Secretary or an Assistant Secretary of the
          Borrower, attaching and certifying the resolution of its board of
          directors authorizing the execution, delivery and performance of this
          Second Amendment and the Amended and Restated Revolving Credit Note
          and certifying the name, title and true signature of each officer of
          the Borrower authorized to execute such Loan Documents;

     (d)  certificates of good standing as may be available from the Secretary
          of State of the jurisdiction of incorporation of the Borrower, Fulton
          Bank and FFC Management, Inc.;

     (e)  a favorable written opinion of the General Counsel of the Borrower,
          addressed to the Lender and covering such matters relating to the
          Borrower, this Second Amendment and the Amended and Restated Revolving
          Credit Note as the Lender shall reasonably request; and

     (f)  the payment of a closing fee equal to $25,000 in accordance with
          Section 2.6(b).

Section 4. Status of Obligations. The Borrower hereby confirms and agrees that
all Revolving Loans and all other Obligations outstanding under the Credit
Agreement and the other Loan Documents as of the date hereof were duly and
validly created and incurred by the Borrower thereunder, that all such
outstanding amounts are owed in accordance with the terms of the Credit
Agreement and other Loan Documents, and that there are no rights of offset,
defense, counterclaim, claim or objection in favor of the Borrower arising out
of or with respect to any of the Revolving Loans or other Obligations of the
Borrower to the Lender, and any such rights of offset, defense, counterclaim,
claims or objections have been and are hereby waived and released by the
Borrower.

Section 5. Representations and Warranties. The Borrower represents and warrants,
on and as of the date of this Second Amendment, that:

     (a) The execution and delivery by Borrower of this Second Amendment and the
Amended and Restated Revolving Credit Note are within the corporate authority of
Borrower, have been duly authorized by all requisite shareholder and corporate
action on the part of Borrower and do not and will not (i) violate any provision
of any law, rule or regulation, any judgment, order or ruling of any court or
governmental agency, the organizational papers or by-laws of Borrower, or any
indenture, material agreement or other material instrument to which Borrower is
a party or by which Borrower or any of its properties is bound, or (ii) be in
conflict with, result in a breach of, or constitute with notice or lapse of time
or both a default under any such indenture, material agreement or other material
instrument. Each of this Second Amendment and the Amended and Restated Revolving
Credit Note has been duly executed by the Borrower.

     (b) The Agreement, as amended by this Second Amendment, remains in full
force and effect, and both the Agreement, as amended by this Second Amendment,
and the Amended and Restated Revolving Credit Note constitute the legal, valid
and binding obligations of the Borrower, enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting generally the enforcement of creditor's
rights.

     (c) No Default or Event of Default is outstanding both before and after
giving effect to this Second Amendment.

     (d) The representations and warranties of Borrower contained in the Credit
Agreement are true and accurate on and as of the date of this Second Amendment,
except for changes expressly permitted under the terms of the Credit Agreement
and except to the extent that such representations and warranties relate


                                      -2-



solely to an earlier date (in which case such representations and warranties
were true and accurate as of such earlier date).

     (e) Since December 31, 2005, there have been no events, acts, conditions or
occurrences of whatever nature, singly or in the aggregate, which have had, or
could reasonably be expected to have, a Material Adverse Effect.

Section 6. Survival. Each of the foregoing representations and warranties shall
be made at and as of the date of this Second Amendment and shall be deemed to
have been made as of the date hereof. Each of the foregoing representations and
warranties shall constitute a representation and warranty of the Borrower under
the Credit Agreement, and it shall be an Event of Default if any such
representation and warranty shall prove to have been incorrect or false in any
material respect at the time when made or deemed to have been made. Each of the
foregoing representations and warranties shall survive and not be waived by the
execution and delivery of this Second Amendment or any investigation by the
Lender.

Section 7. Ratification of Credit Agreement and Loan Documents. Except as
expressly amended herein, all terms, covenants and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect,
and the parties hereto do expressly ratify and confirm the Credit Agreement (as
amended herein) and the other Loan Documents. All future references to the
Credit Agreement shall be deemed to refer to the Credit Agreement as amended
hereby

Section 8. Miscellaneous Provisions.

     (a) Ratification. The Borrower hereby restates, ratifies and reaffirms each
and every term, covenant and condition set forth in the Agreement, as hereby
amended, effective as of the date hereof.

     (b) Counterparts. This Second Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, and all
counterparts, taken together, shall constitute but one and the same document.

     (c) Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA.

     [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURES APPEAR ON
                                 FOLLOWING PAGE]


                                      -3-



     IN WITNESS WHEREOF, the parties have duly executed and delivered this
Second Amendment as of the date first above written.

                                        FULTON FINANCIAL CORPORATION


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        SUNTRUST BANK


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      -4-

EX-10.1

                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

     This Agreement is effective as of _____________________, 200__, between
Fulton Financial Corporation, a Pennsylvania corporation ("FULTON"), and
______________________, an adult individual (the "EXECUTIVE").

                                   BACKGROUND

     Executive is currently employed as the _______________________________ of
Fulton. Fulton and Executive have previously entered into a Severance Agreement,
dated __________________ ("ORIGINAL AGREEMENT"), which provides for certain
payments to Executive upon the occurrence of an employment termination in
connection with a change in control of Fulton. Fulton now desires to enter into
a comprehensive Employment Agreement with the Executive ("AGREEMENT"), replacing
the Original Agreement and addressing more broadly the terms and conditions of
Executive's employment, including but not limited to the consequences of an
employment termination in connection with a change in control. The Executive
desires to continue in the employment of Fulton, on the terms and conditions
contained in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:

SECTION 1. CAPACITY AND DUTIES.

     1.1 Employment: Continuation of Employment. Fulton hereby continues the
employment of the Executive, and Executive hereby agrees to continue Executive's
employment by Fulton, for the period and upon the terms and conditions
hereinafter set forth.

     1.2 Capacity and Duties.

          (a) Executive shall serve hereunder initially as
     ___________________________ of Fulton, and thereafter during the term of
     this Agreement in such other or additional positions as may be assigned by
     the Board of Directors of Fulton (the "BOARD") or by the Chief Executive
     Officer of Fulton acting on behalf of the Board. Executive shall perform
     such duties and shall have such authority consistent with Executive's
     position as may from time to time reasonably be specified by the Board or
     by the Chief Executive Officer of Fulton acting on behalf of the Board.
     Executive shall report directly to ___________________ and shall perform
     Executive's duties for Fulton principally at Fulton's headquarters in
     Lancaster, Pennsylvania, or at such other locations determined by the Board
     or by the Chief Executive Officer of Fulton acting on behalf of the Board,
     except for periodic travel that may be necessary or appropriate in
     connection with the performance of Executive's duties hereunder. The terms
     and conditions of this



     Agreement have been reviewed and approved by the Board's Executive
     Compensation Committee, and such Committee shall review the Agreement on a
     three year cycle, or more frequently, to assess its continuing
     appropriateness in light of Fulton's then-current needs.

          (b) Executive shall devote Executive's full working time, energy,
     skill and best efforts to the performance of Executive's duties hereunder,
     in a manner that will faithfully and diligently further the business and
     interests of Fulton, and shall not be employed by or participate or engage
     in or be a part of in any manner the management or operation of any
     business enterprise other than Fulton without the prior written consent of
     the Board or the Chief Executive Officer of Fulton acting on behalf of the
     Board, which consent may be granted or withheld in Fulton's sole
     discretion.

SECTION 2. TERM OF EMPLOYMENT.

     2.1 Term. The term of the Executive's employment under this Agreement (the
EMPLOYMENT PERIOD") shall commence on the effective date of the Agreement first
entered above (the "EFFECTIVE DATE") and shall continue until the earliest of
(a) the voluntary termination of Executive's employment by the Executive other
than for Good Reason (as defined in Section 4.2), (b) the termination of the
Executive's employment by the Executive for Good Reason, (c) the termination of
the Executive's employment by Fulton for any reason other than Cause (as defined
in Section 4.3), (d) the termination of the Executive's employment by Fulton for
Cause, (e) termination of the Executive's employment with Fulton due to the
Disability (as defined in Section 4.4), (f) the termination of Executive's
employment with Fulton due to his retirement upon attaining age 65, or (g) the
death of the Executive.

SECTION 3. COMPENSATION.

     3.1 Basic Compensation. As compensation for Executive's services hereunder,
Fulton shall pay to Executive a salary at an initial annual rate equal to
$__________, payable in periodic installments in accordance with Fulton's
regular payroll practices in effect from time to time. Executive's annual
salary, as determined in accordance with this Section 3.1, is hereinafter
referred to as Executive's "BASE SALARY." For years subsequent to the initial
year of this Agreement, Executive's Base Salary shall be set by Fulton at an
amount no less than the initial annual rate set herein. For each year in the
Employment Period, Executive shall be a participant in any bonus or incentive
compensation program for executives, including in particular any annual cash
bonus plan and equity-based long term incentive plan, that Fulton may implement
and administer from time to time during the Employment Period, and the amount
and form of such bonus and incentive compensation shall be determined annually
by Fulton consistent with its Board's executive compensation practices.
References herein to the amount of the Executive's Base Salary or annual cash
bonus or cash incentive compensation shall be to the gross amount of such
compensation element, exclusive of any elective compensation deferral agreements
entered into by the Executive from time to time.

     3.2 Employee Benefits. In addition to the compensation provided for in
Section 3.1, Executive shall participate during the Employment Period in those
of Fulton's broad-based employee retirement plans, welfare benefit plans, and
other benefit programs for which


                                        2



Executive is eligible under the terms of the plan or program, on the same terms
and conditions that are applicable to employees generally. Further, Executive
shall be eligible during the Employment Period to participate in any Fulton
executive-only retirement plan, deferred compensation plan, welfare benefit
plan, or other benefit programs, as and to the extent any such benefit programs,
plans or arrangements are or may from time to time be in effect during the
Employment Period.

     3.3 Vacation and Leave. Executive shall be entitled to annual paid
vacation, leave of absence and leave for illness or temporary disability in
conformity with Fulton's regular policies and practices, and any leave on
account of illness or temporary disability shall not constitute a breach by the
Executive of Executive's agreements hereunder.

     3.4 Other Executive Benefits. Executive shall also receive such other
general executives perquisites as approved from time to time by
_________________________ such as company paid club memberships and
employer-provided automobiles.

     3.5 Expense Reimbursement. During the term of Executive's employment,
Fulton shall reimburse Executive for all reasonable expenses incurred by
Executive in connection with the performance of Executive's duties hereunder in
accordance with its regular reimbursement policies as in effect from time to
time and upon receipt of itemized vouchers therefor and such other supporting
information as Fulton may reasonably require.

SECTION 4. TERMINATION OF EMPLOYMENT.

     4.1 Voluntary Termination or Age 65 Retirement. In the event Executive's
employment is voluntarily terminated by the Executive other than for Good Reason
(as defined in Section 4.2) or terminates due to Executive's retirement upon
attaining age 65, Fulton shall be obligated to pay Executive's Base Salary
through the effective date of Executive's termination, together with applicable
expense reimbursements and all accrued and unpaid benefits and vested benefits
in accordance with the applicable employee benefit plans. Upon making the
payments described in this Section 4.1, Fulton shall have no further
compensation obligation to Executive hereunder.

     4.2 Termination for Good Reason; Termination Without Cause.

          (a) In the event:

               (i) Executive's employment is terminated during the term hereof
          by Executive for "Good Reason" (as defined herein); or

               (ii) Executive's employment is terminated during the term hereof
          by Fulton for any reason other than "Cause" (as defined herein);

then Fulton shall continue to pay Executive all of the consideration provided
for in the following sentence for ____ (___) months following such termination.
For purposes of the foregoing, the consideration payable under this Section 4.2
shall include the Base Salary (as in effect immediately prior to the
termination) and may include an additional cash bonus amount determined in the
sole and absolute discretion of Fulton, which discretion shall be exercised by
the Executive Compensation Committee of the Board (or its successor) and
approved by the Board (all exclusive


                                        3



of any election to defer receipt of compensation the Executive may have made).
During such _____ (__) period, the Executive shall also continue to be eligible
to participate in the employee benefit plans referred to in Section 3.2 to the
extent Executive remains eligible under the applicable employee benefit plans
and to the extent Executive's eligibility is not contrary to, or does not
negate, the tax favored status of the plans or of the benefits payable under the
plan. If Executive is unable to continue to participate in any employee benefit
plan or program provided for under this Agreement, Executive shall be
compensated in respect of such inability to participate through payment by
Fulton to Executive, on an annual basis in advance, of an amount equal to the
annual cost that would have been incurred by Fulton if the Executive were able
to participate in such plan or program plus an amount which, when added to the
Fulton annual cost, would be sufficient after Federal, state and local income
and payroll taxes (based on the tax returns filed by the Executive most recently
prior to the date of termination) to enable the Executive to net an amount equal
to the Fulton annual cost.

          (b) As used herein, the Executive shall have "GOOD REASON" if:

               (i) There has occurred a material breach of Fulton's material
          obligations under this Agreement, and Fulton has not remedied such
          breach after notice and a reasonable opportunity to cure;

               (ii) Fulton, without Executive's prior written consent, changes
          or attempts to change in any significant respect the authority,
          duties, compensation, benefits or other terms or conditions of
          Executive's employment in a manner that is adverse to the Executive;
          or

               (iii) Fulton requires Executive to be based at a location outside
          a ___ mile radius of the location where Executive previously was
          based, except for reasonably required travel on Fulton's business.

     4.3 Termination for Cause. Executive's employment hereunder shall terminate
immediately upon notice of termination for "Cause" (as defined herein), in which
event Fulton shall not thereafter be obligated to make any further payments
hereunder other than amounts (including salary, expense reimbursement, etc.)
accrued under this Agreement as of the date of such termination in accordance
with generally accepted accounting principles. As used herein, "CAUSE" shall
mean the following:

          (a) Executive shall have committed an act of dishonesty constituting a
     felony and resulting or intending to result directly or indirectly in gain
     or personal enrichment at the expense of Fulton;

          (b) Executive's use of alcohol or other drugs which interferes with
     the performance by the Executive of Executive's duties;

          (c) Executive shall have deliberately and intentionally refused or
     otherwise failed (for reasons other than incapacity due to accident or
     physical or mental illness) to perform Executive's duties to Fulton, with
     such refusal or failure continuing for a period of at least 30 consecutive
     days following the receipt by Executive of written notice from


                                        4



     Fulton setting forth in detail the facts upon which Fulton relies in
     concluding that Executive has deliberately and intentionally refused or
     failed to perform such duties; or

          (d) Executive's conduct that brings public discredit on or injures the
     reputation of Fulton, in Fulton's reasonable opinion.

     4.4 Benefits Following Death or Disability.

          (a) Following Executive's total disability ("DISABILITY", as defined
     below) or death during the term of this Agreement, the employment of the
     Executive will terminate automatically, in which event the Bank shall not
     thereafter be obligated to make any further payments hereunder other than
     amounts (including salary, expense reimbursement, etc.) accrued under this
     Agreement as of the date of such termination in accordance with generally
     accepted accounting principles or as otherwise specifically provided
     herein. For purposes hereof, Disability shall mean shall mean that the
     Executive, by reason of a medically determinable physical or medical
     impairment that can be expected to result in death or expected to last for
     a continuous period of at least twelve months, (i) is unable to engage in
     any substantial gainful activity or (ii) has received income replacement
     benefits for a period of at least three months under an accident or health
     plan of Fulton.

          (b)

               (i) In the event of a termination of this Agreement as a result
          of the Executive's death, the Executive's dependents, beneficiaries
          and estate, as the case may be, will receive such survivor's income
          and other benefits as they may be entitled under the terms of the
          benefit programs, plans, and arrangements described in Section 3.2
          which provide benefits upon the death of the Executive.

               (ii) In the event of a termination of this Agreement as a result
          of the Executive's Disability, (A) Fulton shall pay the Executive an
          amount equal to at least six months' Base Salary at the rate and as
          required by Section 3.1 and in effect immediately prior to the date of
          Disability, (B) thereafter for as long as Executive continues to be
          disabled Fulton shall continue to pay an amount equal to at least 60%
          of Base Salary in effect immediately prior to the date of Disability
          until the earlier of Executive's death or December 31 of the calendar
          year in which Executive attains age 65; and (C), to the extent not
          duplicative of the foregoing, Executive shall receive those benefits
          customarily provided by Fulton to disabled former employees, which
          benefits shall include, but shall not be limited to, life, medical,
          health, accident insurance and a survivor's income benefit.

               (iii) For the purposes of (i) and (ii) above, the Executive or
          Executive's dependents shall pay the same percentage of the total cost
          of coverage under the applicable employee benefit plans as Executive
          was paying when Executive's employment terminated. The total cost of
          the Executive's continued coverage


                                        5



          shall be determined using the same rates for health, life and/or
          disability coverage that apply from time to time to similarly situated
          active employees.

     4.5 Death or Disability Following Termination of Employment. Executive's
disability or death following Executive's termination pursuant to Section 4.2
shall not affect Executive's right, or if applicable, the right of Executive's
beneficiaries, to receive the payments for the balance of the period described
in Section 4.2, nor will it affect the right of Executive or Executive's
beneficiaries to receive the balance of payments due under Sections 6 and 7
herein.

     4.6 Beneficiary Designation. Executive may, at any time, by written notice
to Fulton, name one or more beneficiaries of any benefits which may become
payable by Fulton pursuant to this Agreement. If Executive fails to designate a
beneficiary any benefits to be paid pursuant to this Agreement shall be paid to
Executive's estate.

SECTION 5. RESTRICTIVE COVENANTS.

     5.1 Confidentiality. Executive acknowledges a duty of confidentiality owed
to Fulton and shall not, at any time during or after Executive's employment by
Fulton, retain in writing, use, divulge, furnish, or make accessible to anyone,
without the express authorization of the Board or senior management of Fulton,
any trade secret, private or confidential information or knowledge of Fulton or
any of their affiliates obtained or acquired by Executive while so employed. All
computer software, business cards, customer lists, price lists, contract forms,
catalogs, books, records, files and know-how acquired while an employee of
Fulton are acknowledged to be the property of Fulton (or the applicable
affiliate) and shall not be duplicated, removed from Fulton's possession or made
use of other than in pursuit of Fulton's business and, upon termination of
employment for any reason, Executive shall deliver to Fulton, without further
demand, all copies thereof which are then in Executive's possession or under
Executive's control.

     5.2 Non-Competition and Nonsolicitation. Executive shall not, during the
Employment Period and for a period of _______ (__) years thereafter, directly or
indirectly:

          (a) be or become an officer, director or employee or agent of, or a
     consultant to or give financial or other assistance to, any person or
     entity considering engaging in commercial banking, or so engaged, anywhere
     within the geographic market of Fulton;

          (b) seek, in competition with the business of Fulton, to procure
     orders from or do business with any customer of Fulton;

          (c) solicit or contact any person who is an employee of the Fulton
     with a view to the engagement or employment of such person by a third
     party;

          (d) seek to contract with or engage (in such a way as to adversely
     affect or interfere with the business of Fulton) any person or entity who
     has been contracted with or engaged to provide goods or services to Fulton;
     or


                                        6



          (e) engage in or participate in any effort or act to induce any of the
     customers, associates, consultants, or employees of Fulton to take any
     action which might be disadvantageous to Fulton;

provided, however, (i) that nothing herein shall prohibit the Executive and
Executive's affiliates from owning, as passive investors, in the aggregate not
more than 5% of the outstanding publicly traded stock of any corporation so
engaged and (ii) in the event the Executive's employment is terminated by the
Executive for Good Reason or by Fulton other than for Cause, the covenants in
this Section 5.2 shall not apply.

     For the purpose of Sections 5.1 and 5.2, Fulton shall be deemed to refer to
Fulton and all of its present or future affiliates.

     5.3 Injunctive and Other Relief.

          (a) Executive acknowledges and agrees that the covenants contained
     herein are fair and reasonable in light of the consideration paid
     hereunder, and that damages alone shall not be an adequate remedy for any
     breach by Executive of Executive's covenants which then apply and
     accordingly expressly agrees that, in addition to any other remedies which
     Fulton may have, Fulton shall be entitled to injunctive relief in any court
     of competent jurisdiction for any breach or threatened breach of any such
     covenants by Executive. Nothing contained herein shall prevent or delay
     Fulton from seeking, in any court of competent jurisdiction, specific
     performance or other equitable remedies in the event of any breach or
     intended breach by Executive of any of its obligations hereunder.

          (b) In the event Executive breaches Executive's obligations under
     Section 5.2, the period specified therein shall be tolled during the period
     of any such breach and any litigation seeking remedies for such breach and
     shall resume upon the conclusion or termination of any such breach and any
     such litigation. The remedies set forth in this Section are cumulative and
     in addition to any and all other remedies available to Fulton at law or in
     equity.

SECTION 6. PAYMENTS FOR TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL.

     6.1 Definitions.

          (a) For purposes of this Agreement, a Change in Control of Fulton
     shall mean a change in control of the kind that would be required to be
     reported in response to Item 1 of Securities and Exchange Commission Form
     8-K promulgated under the Securities Exchange Act of 1934 and as in effect
     on the date hereof. Without limitation of the foregoing, a "Change in
     Control," as used in this Agreement, shall be deemed to have occurred when:

               (i) Any person or group of persons acting in concert, shall have
          acquired, directly or indirectly, beneficial ownership of 20 percent
          or more of the outstanding shares of the voting stock of Fulton; or


                                        7



               (ii) The composition of the Board of Fulton shall have changed
          such that during any period of two consecutive years during the term
          of this Agreement, the persons who at the beginning of such period
          were members of the Board cease for any reason to constitute a
          majority of the Board, unless the nomination or election of each
          director who was not a director at the beginning of such period was
          approved in advance by directors representing not less than two-thirds
          of the directors then in office who were directors at the beginning of
          the period; or

               (iii) Fulton shall be merged or consolidated with or its assets
          purchased by another corporation and as a result of such merger,
          consolidation or sale of assets, less than a majority of the
          outstanding voting stock of the surviving, resulting or purchasing
          corporation is owned, immediately after the transaction, by the
          holders of the voting stock of the Company outstanding immediately
          before the transaction.

          (b) For purposes of Section 6.1(a)(i) above, a person shall be deemed
     to be the beneficial owner of any shares which the person or any of the
     person's affiliates or associates (i) owns, directly or indirectly, (ii)
     has the right to acquire, or (iii) has the right to vote or direct the
     voting thereof pursuant to any agreement, arrangement or understanding.

          (c) A "Change in Control Period" shall mean the period commencing 90
     days before a Change in Control and ending two (2) years after such Change
     in Control.

     6.2 Amount of Payments. Except as provided in Section 6.2(d) and in lieu of
amounts payable under Section 4, Fulton will pay the Executive the amounts
specified in the circumstances below.

          (a) If, during the Change in Control Period, the Executive is
     terminated by Fulton in the circumstances described Section 4.2(a)(ii), or
     the Executive resigns for Good Reason as described in Section 4.2(a)(i),
     Fulton will pay, or cause to be paid, to the Executive:

               (i) an amount equal to _____ (__) times the sum of (A) the Base
          Salary immediately before the Change in Control and (B) the highest
          annual cash bonus or other incentive compensation awarded to the
          Executive over the past three years in which cash bonus or other
          incentive compensation was awarded (all exclusive of any election to
          defer receipt of compensation the Executive may have made); and

               (ii) an amount equal to that portion, if any, of Fulton's
          contribution to the Executive's 401(k), profit sharing, deferred
          compensation or other similar individual account plan which is not
          vested as of the date of termination of Executive's employment (the
          "DATE OF TERMINATION") (the "UNVESTED COMPANY CONTRIBUTION"), plus an
          amount which, when added to the Unvested Company Contribution, would
          be sufficient after Federal, state and local income taxes (based on
          the tax returns filed by the Executive most recently prior to the Date
          of


                                        8



          Termination) to enable the Executive to net an amount equal to the
          Unvested Company Contribution; and

               (iii) Fulton shall pay the Executive up to $10,000 for executive
          outplacement services utilized by the Executive upon the receipt by
          Fulton of written receipts or other appropriate documentation; and

               (iv) Except for the payment provided in (iii) above, such
          payments shall be made in one lump sum within 15 business days after
          the Executive's termination or resignation.

          (b) Except as provided in Section 6(d), if the Executive is terminated
     as described in Section 6.2(a), the Executive shall continue to receive all
     employee benefits available to Executive pursuant to Section 3.2 of this
     Agreement that Executive was receiving immediately before such termination,
     as provided in Section 4.2(a), and also the benefits available to Executive
     immediately before such termination pursuant to Section 3.4. The Executive
     shall continue to receive all such benefits for a period of ____ (__) years
     after the date of a termination described in Section 6.2(a). The Executive
     shall pay the same percentage of the total cost of coverage under the
     applicable employee benefit plans as Executive was paying when Executive's
     employment terminated. The total cost of the Executive's continued coverage
     shall be determined using the same rates for health, life and/or disability
     coverage that apply from time to time to similarly situated active
     employees. In addition, Fulton shall pay to the Executive in a single lump
     sum as soon as practicable after Executive's termination described in
     Section 6.2(a) an aggregate amount equal to ____ (__) additional years of
     Fulton retirement plan contributions under each tax qualified or
     nonqualified defined contribution type of retirement plan in which the
     Executive was a participant immediately prior to Executive's termination or
     resignation and equal to the actuarial present value of ____ (__)
     additional years of benefit accruals under each tax qualified or
     nonqualified defined benefit type of retirement plan in which the Executive
     was a participant immediately prior to Executive's termination or
     resignation, calculated in each case as if the Executive had continued as a
     plan participant for the number of additional years indicated below,
     Executive's annual compensation for plan purposes in the most recently
     completed plan year of each plan continued unchanged through these
     additional years, and the retirement plans continued to operate unchanged
     through the additional years. The actuarial equivalence factors and
     assumptions generally in use under any defined benefit plan shall be
     applied in determining lump sum present values of any defined benefit plan
     additional accruals payable hereunder.

          (c) Upon the occurrence of a Change of Control, the vesting and
     exercise rights of all stock options, shares of restricted stock, and other
     equity-based compensation units held by the Executive pursuant to any stock
     option plan, stock option agreement, restricted stock agreement, or other
     long term incentive plan shall be governed by the terms of such plan or
     agreement, but in the event the plan or agreement is silent on the subject
     of change in control, all such options, shares, and units shall immediately
     become vested and exercisable as to all or any part of the shares and
     rights covered thereby.


                                        9



          (d) The Executive is to receive no payments under Section 6.2(a) and
     no benefits under 6.2(b) if the Executive is terminated by Fulton during a
     Change in Control Period upon the death or Disability of the Executive or
     for Cause. In an instance of death or Disability of the Executive, however,
     the Executive and Executive's dependents, beneficiaries and estate shall
     receive any benefits payable to them under Section 4.4.

          (e) References in this Section 6.2 and in Section 7 to "Fulton" shall
     include the successors of Fulton and the Bank, as applicable.

SECTION 7. MISCELLANEOUS.

     7.1 Invalidity. If any provision hereof is determined to be invalid or
unenforceable by a court of competent jurisdiction, Executive shall negotiate in
good faith to provide Fulton with protection as nearly equivalent to that found
to be invalid or unenforceable and if any such provision shall be so determined
to be invalid or unenforceable by reason of the duration or geographical scope
of the covenants contained therein, such duration or geographical scope, or
both, shall be considered to be reduced to a duration or geographical scope to
the extent necessary to cure such invalidity.

     7.2 Assignment: Benefit. This Agreement shall not be assignable by
Executive, and shall be assignable by Fulton only to any affiliate or to any
person or entity which may become a successor in interest (by purchase of assets
or stock, or by merger, or otherwise) to Fulton in the business or a portion of
the business presently operated by it. Subject to the foregoing, this Agreement
and the rights and obligations set forth herein shall inure to the benefit of,
and be binding upon, the parties hereto and each of their respective permitted
successors, assigns, heirs, executors and administrators, including the
restrictive covenants of this Agreement.

     7.3 Notices. All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested or by telegram, fax or telecopy (confirmed by U. S. mail), receipt
acknowledged, addressed as set forth below or to such other person and/or at
such other address as may be furnished in writing by any party hereto to the
other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given as provided in this Agreement; provided that nothing
herein shall be deemed to affect the right of any party to serve process in any
other manner permitted by law.

          (a) If to Fulton:

               Fulton Financial Corporation
               One Penn Square
               Lancaster, PA 17604
               Attention: General Counsel

          (b)  If to Executive:


                                       10



               _______________________________

               _______________________________

     7.4 Entire Agreement and Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements and understandings with
respect thereto. The Original Agreement, if any, shall be terminated, with no
further rights or obligations thereunder due to or from either party, as of the
effective date hereof. Any amendment, modification, or waiver of this Agreement
shall not be effective unless in writing and agreed and executed by Fulton and
the Executive. Neither the failure nor any delay on the part of any party to
exercise any right, remedy, power or privilege shall preclude any other or
further exercise of the same or of any other right, remedy, power, or privilege
with respect to any occurrence and such failure or delay to exercise any right
shall be construed as a waiver of any right, remedy, power, or privilege with
respect to any other occurrence.

     7.5 Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania (and United States federal law, to the extent applicable), without
giving effect to otherwise applicable principles of conflicts of law.

     7.6 Headings; Counterparts. The headings of sections and subsections in
this Agreement are for convenience only and shall not affect its interpretation.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which, when taken together, shall be
deemed to constitute but one and the same Agreement.

     7.7 Further Assurances. Each of the parties hereto shall execute such
further instruments and take such other actions as any other party shall
reasonably request in order to effectuate the purposes of this Agreement.

     7.8 Certain Additional Payments.

          (a) Gross-Up Payment Amount. Notwithstanding anything in this
     Agreement to the contrary, in the event it shall be determined that any
     payment or distribution by Fulton (or its successor) to or for the benefit
     of the Executive, whether paid, payable, distributed or distributable
     pursuant to this Agreement or otherwise (a "PAYMENT") would be subject to
     the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986
     (the "CODE") (or any successor provision) or any interest or penalties with
     respect to such excise tax (such excise tax, together with any such
     interest and penalties, are collectively referred to in this Agreement as
     the "EXCISE TAX"), then the Executive shall be entitled to receive an
     additional payment (a "GROSS-UP PAYMENT") in an amount such that after the
     payment by the Executive of all taxes (including any interest or penalties
     imposed with respect to such taxes), including any Excise Tax imposed upon
     the Gross-Up Payment, the Executive retains an amount of the Gross-Up
     Payment equal to the Excise Tax imposed upon the Payment.


                                       11



          (b) Determinations. Subject to the provisions of Section 7.8(c), all
     determinations required to be made under this Section 7.8, including
     whether and when a Gross-Up Payment is required and the amount of such
     Gross-Up Payment and the assumptions to be utilized in arriving at such
     determination, shall be made by an accounting firm of national standing
     reasonably selected by Fulton (the "ACCOUNTING FIRM"), which shall provide
     detailed supporting calculations to both Fulton and the Executive within 15
     business days of the receipt of written notice from the Executive that
     there has been a Payment, or such earlier time as is requested by Fulton.
     Any Gross-Up Payment, as determined pursuant to this Section 7.8, shall be
     paid by Fulton to the Executive within five days of the receipt of the
     Accounting Firm's determination. All fees and expenses of the Accounting
     Firm shall be borne solely by Fulton. Any determination by the Accounting
     Firm shall be binding upon Fulton and the Executive. As a result of the
     possible uncertainty in application of Section 4999 of the Code at the time
     of the initial determination by the Accounting Firm hereunder, it is
     possible that Gross-Up Payments will not have been made by Fulton that
     should have been made ("UNDERPAYMENT"), consistent with the calculations
     required to be made hereunder. In the event that Fulton exhausts its
     remedies pursuant to Section 7.8(c) and the Executive thereafter is
     required to make a payment of any Excise Tax, the Accounting Firm shall
     determine the amount of the Underpayment that has occurred and any such
     Underpayment shall be promptly paid by Fulton to or for the benefit of the
     Executive.

          (c) IRS Claims. The Executive shall notify Fulton in writing of any
     claim by the Internal Revenue Service that, if successful, would require
     the payment by Fulton of the Gross-Up Payment. Such notification shall be
     given as soon as practicable but no later than ten business days after the
     Executive is informed in writing of such claim and shall apprise Fulton of
     the nature of such claim and the date on which such claim is to be paid.
     The Executive shall not pay such claim prior to the expiration of the
     30-day period following the date on which the Executive gives such notice
     to Fulton (or such shorter period ending on the date that any payment of
     taxes with respect to such claim is due). If Fulton notifies the Executive
     in writing prior to the expiration of such period that it desires to
     contest such claim, the Executive shall:

               (i) give Fulton any information reasonably requested by Fulton
          relating to such claim,

               (ii) take such action in connection with contesting such claim as
          Fulton shall reasonably request in writing from time to time,
          including, without limitation, accepting legal representation with
          respect to such claim by an attorney selected by Fulton and reasonable
          acceptable to the Executive,

               (iii) cooperate with Fulton in good faith in order effectively to
          contest such claim, and

               (iv) permit Fulton to participate in any proceedings relating to
          such claim; provided, however, that Fulton shall bear and pay directly
          all costs and expenses (including additional interest and penalties)
          incurred in connection with such contest and shall indemnify and hold
          the Executive harmless, on an after-tax


                                       12



          basis, for any Excise Tax or income tax (including interest and
          penalties with respect thereto) imposed as a result of such
          representation and payment of costs and expenses. Without limitation
          on the foregoing provisions of this Section, Fulton shall control all
          proceedings taken in connection with such contest and, at its sole
          option, either direct the Executive to pay the tax claimed and sue for
          a refund or contest the claim in any permissible manner, and the
          Executive agrees to prosecute such contest to a determination before
          any administrative tribunal, in a court of initial jurisdiction and in
          one or more appellate courts, as Fulton shall determine; provided,
          however, that if Fulton directs the Executive to pay such claim and
          sue for a refund, Fulton shall, to the extent permitted by applicable
          law, advance the amount of such payment to the Executive, on an
          interest-free basis and shall indemnify and hold the Executive
          harmless, on an after-tax basis, from any Excise Tax or income tax
          (including interest or penalties with respect thereto) imposed with
          respect to such advance or with respect to any imputed income with
          respect to such advance; and further provided that any extension of
          the statute of limitations relating to payment of taxes for the
          taxable year of the Executive with respect to which such contested
          amount is claimed to be due is limited solely to such contested
          amount. Furthermore, Fulton's control of the contest shall be limited
          to issues with respect to which a Gross-Up Payment would be payable
          hereunder and the Executive shall be entitled in Executive's sole
          discretion to settle or contest, as the case may be, any other issue
          raised by the Internal Revenue Service or any other taxing authority.

     7.9 Refunds. If, after receipt by the Executive of an amount advanced by
Fulton pursuant to Section 7.8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to Fulton's
complying with the requirements of such Section) promptly pay to Fulton the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after receipt by the Executive of an amount
advanced by Fulton pursuant to Section 7.8(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
Fulton does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

     7.10 Attorneys' Fees and Related Expenses. All attorneys' fees and related
expenses incurred by Executive in connection with or relating to enforcement by
Executive of Executive's rights under this Agreement shall be paid in full by
the Bank, provided Executive prevails in connection with enforcing Executive's
rights under this Agreement.

     7.11 Mitigation. Executive shall not be required to mitigate the amount of
any payment or benefit provided for in Sections 4 or 6 hereto by seeking
employment or otherwise and the Bank shall not be entitled to setoff against the
amount of any payments made pursuant to Sections 4 or 6 hereto with respect to
any compensation earned by Executive arising from other employment.


                                       13



     7.12 Indemnification. Except to the extent inconsistent with Fulton's
certificate of incorporation or bylaws, Fulton will indemnify the Executive and
hold Executive harmless to the fullest extent permitted by law with respect to
Executive's service as an officer and employee of Fulton and its subsidiaries,
which indemnification shall be provided following termination of employment for
so long as the Executive may have liability with respect to Executive's service
as an officer or employee of Fulton and its subsidiaries. The Executive will be
covered by a directors' and officers' insurance policy with respect to
Executive's acts as an officer to the same extent as all other Bank officers
under such policies.

     7.13 409A Safe Harbor. Notwithstanding anything in this Agreement to the
contrary, in no event shall Fulton be obligated to commence payment or
distribution to the Executive of any amount that constitutes nonqualified
deferred compensation within the meaning of Internal Revenue Code section 409A
("CODE SECTION 409A") earlier than the earliest permissible date under Code
section 409A that such amount could be paid without additional taxes or interest
being imposed under Code section 409A. The Companies and the Executive agree
that they will execute any and all amendments to this Agreement as they mutually
agree in good faith may be necessary to ensure compliance with the distribution
provisions of Code section 409A and to cause any and all amounts due under this
Agreement, the payment or distribution of which is delayed pursuant to Code
section 409A, to be paid or distributed in a single sum payment at the earliest
permissible date under Code section 409A.

     7.14 Funding of Grantor Trust Upon Change in Control. Fulton shall
establish and maintain with an unaffiliated trustee an irrevocable grantor trust
(the "TRUST"), the assets of which shall at all times be subject to the claims
of Fulton's creditors in the event of Fulton's insolvency. Upon the occurrence
of a Change in Control, Fulton shall deposit with the trustee of the Trust, to
be credited to an account established under the Trust in the name of and for the
benefit of the Executive, assets sufficient in value to satisfy fully the
obligations of Fulton to the Executive under this Agreement that would arise in
the event that subsequent to the Change in Control, and during the period the
Executive continues to be covered by the severance benefit protections of this
Agreement, the Executive is terminated by Fulton without Cause or the Executive
terminates his own employment for Good Reason. The contingent obligations to be
funded under the Trust shall include in particular those specified in Section 6
and Section 7.8 hereof. In the event the Executive's entitlement to benefits
under the Agreement expires or the amounts funded are in excess of the amount
needed to fully satisfy the claims under the Agreement of the Executive, any
excess amounts in the Executive's account under the Trust shall revert to
Fulton.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                        FULTON FINANCIAL CORPORATION


                                        By:
                                            ------------------------------------
                                        Title:
                                               ---------------------------------


                                       14




                                        ----------------------------------------
                                        EXECUTIVE

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


                                       15

EX-10.2

                                                                    Exhibit 10.2

                                    AMENDMENT

     This Amendment, dated as of May 17, 2006, by and between John M. Bond,an
adult individual, and Fulton Financial Corporation, a Pennsylvania financial
holding company.

                                   BACKGROUND

     Pursuant to Stock Option Agreements date May 12, 2003, January 26, 2004
and January 31, 2005 (the "Agreements"), Mr. John M. Bond was granted certain
stock options (the "Options"). The terms and conditions of those Agreements
indicate that Mr. Bond would be required to exercise his Options within 3 months
of his retirement as an officer of The Columbia Bank. However, the parties
desire that Mr. Bond be permitted to exercise his Options until three months
after he retires as a director of The Columbia Bank, as permitted by the stock
option agreements pursuant to which options were issued to him in years prior to
2003.

NOW, THEREFORE, intending to be legally bound, the parties agree as follows:

1. Paragraph 5(C) is hereby amended, in its entirety, to read as follows:

     "(C) Directors and Consultants. The foregoing provisions of this Paragraph
(5) shall not apply if the Option is granted to a director or consultant of the
Company or a Subsidiary who is not also an employee of the Company or a
Subsidiary on the date of grant; provided, however, that an employee director
who is deemed a 'Key Employee' shall also be exempted from the foregoing
provisions of this Paragraph (5)."

2. Except as amended hereby, the Agreements remain in full force and effect on
the terms and conditions stated therein.

Fulton Financial Corporation

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


- -------------------------------------
John M. Bond, Jr.

EX-31.1

      EXHIBIT 31.1 - Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, R. Scott Smith, Jr. certify that:

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

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

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

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

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

      b.    Designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

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

      d.    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

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

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

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

Date:    August 9, 2006

         /s/ R. Scott Smith, Jr.
         -----------------------------------------------------
         R. Scott Smith, Jr.
         Chairman, Chief Executive Officer and President

EX-31.2

      EXHIBIT 31.2 - Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles J. Nugent, certify that:

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

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

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

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

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

      b.    Designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

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

      d.    Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

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

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

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

         Date:    August 9, 2006

                  /s/ Charles J. Nugent
                  -------------------------------------------------------------
                  Charles J. Nugent
                  Senior Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1 - Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

I, R. Scott Smith, Jr., Chief Executive Officer of Fulton Financial Corporation,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, certify that:

The Form 10-Q of Fulton Financial Corporation, containing the consolidated
financial statements for the quarter ended June 30, 2006, fully complies with
the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of
1934. The information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations of Fulton
Financial Corporation.

Dated:   August 9, 2006

         /s/ R. Scott Smith, Jr.
         -----------------------------------------------------
         R. Scott Smith, Jr.
         Chairman, Chief Executive Officer and President

EX-32.2

EXHIBIT 32.2 - Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

I, Charles J. Nugent, Chief Financial Officer of Fulton Financial Corporation,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, certify that:

The Form 10-Q of Fulton Financial Corporation, containing the consolidated
financial statements for the quarter ended June 30, 2006, fully complies with
the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of
1934. The information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations of Fulton
Financial Corporation.

Dated:   August 9, 2006

         /s/  Charles J. Nugent
         -----------------------------------------------------
         Charles J. Nugent
         Senior Executive Vice President and
         Chief Financial Officer