.
.
.
EXHIBIT 99.6

ITEM 1. FINANCIAL STATEMENTS (JUNE 30, 2005)

FULTON FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

JUNE 30 December 31
2005 2004
----------- -----------

ASSETS
Cash and due from banks ............................... $ 358,581 $ 278,065
Interest-bearing deposits with other banks ............ 21,842 4,688
Federal funds sold .................................... 758 32,000
Loans held for sale ................................... 237,713 158,872
Investment securities:
Held to maturity (estimated fair value of $27,285
in 2005 and $25,413 in 2004) .................... 27,003 25,001
Available for sale ................................. 2,402,362 2,424,858
Loans, net of unearned income ......................... 7,861,508 7,584,547
Less: Allowance for loan losses .................... (90,402) (89,627)
----------- -----------
Net Loans ....................................... 7,771,106 7,494,920
----------- -----------

Premises and equipment ................................ 153,598 146,911
Accrued interest receivable ........................... 43,819 40,633
Goodwill .............................................. 364,203 364,019
Intangible assets ..................................... 22,592 25,303
Other assets .......................................... 169,247 164,878
----------- -----------
Total Assets .................................... $11,572,824 $11,160,148
=========== ===========

LIABILITIES
Deposits:
Non-interest bearing ............................... $ 1,611,909 $ 1,507,799
Interest-bearing ................................... 6,527,758 6,387,725
----------- -----------
Total Deposits .................................. 8,139,667 7,895,524
----------- -----------
Short-term borrowings:
Federal funds purchased ............................ 660,633 676,922
Other short-term borrowings ........................ 473,950 517,602
----------- -----------
Total Short-Term Borrowings ..................... 1,134,583 1,194,524
----------- -----------

Accrued interest payable .............................. 31,042 27,279
Other liabilities ..................................... 119,971 114,498
Federal Home Loan Bank advances and long-term debt .... 951,745 684,236
----------- -----------
Total Liabilities ............................... 10,377,008 9,916,061
----------- -----------

SHAREHOLDERS' EQUITY
Common stock, $2.50 par value, 600 million shares
authorized, 168.3 million shares issued in 2005
and 167.8 million shares issued in 2004 ............ 420,662 335,604
Additional paid-in capital ............................ 935,626 1,018,403
Retained earnings ..................................... 100,502 60,924
Accumulated other comprehensive loss .................. (20,166) (10,133)
Treasury stock, 15.3 million shares in 2005 and
10.7 million shares in 2004, at cost ............... (240,808) (160,711)
----------- -----------
Total Shareholders' Equity ...................... 1,195,816 1,244,087
----------- -----------
Total Liabilities and Shareholders' Equity ...... $11,572,824 $11,160,148
=========== ===========

See Notes to Consolidated Financial Statements

FULTON FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------

INTEREST INCOME
Loans, including fees ..................... $123,309 $ 96,859 $239,937 $185,325
Investment securities:
Taxable ................................ 18,257 19,652 36,518 41,388
Tax-exempt ............................. 2,843 2,540 5,692 5,073
Dividends .............................. 1,155 992 2,239 1,944
Mortgage loans held for sale .............. 2,699 1,962 4,511 2,201
Other interest income ..................... 348 19 524 29
-------- -------- -------- --------
Total Interest Income ............... 148,611 122,024 289,421 235,960

INTEREST EXPENSE
Deposits .................................. 31,104 22,345 58,912 42,695
Short-term borrowings ..................... 7,914 3,135 14,738 6,462
Long-term debt ............................ 9,668 7,838 17,598 15,130
-------- -------- -------- --------
Total Interest Expense .............. 48,686 33,318 91,248 64,287
-------- -------- -------- --------
Net Interest Income ................. 99,925 88,706 198,173 171,673
PROVISION FOR LOAN LOSSES ................. 725 800 1,525 2,540
-------- -------- -------- --------
Net Interest Income After
Provision for Loan Losses ........ 99,200 87,906 196,648 169,133
-------- -------- -------- --------

OTHER INCOME
Investment management and trust services .. 8,966 8,637 17,985 17,282
Service charges on deposit accounts ....... 9,960 9,929 19,292 19,434
Other service charges and fees ............ 7,142 4,970 12,698 9,996
Gain on sale of mortgage loans ............ 6,290 6,050 12,339 7,764
Investment securities gains ............... 1,418 5,349 4,733 11,177
Other ..................................... 4,539 1,727 7,121 3,047
-------- -------- -------- --------
Total Other Income .................. 38,315 36,662 74,168 68,700

OTHER EXPENSES
Salaries and employee benefits ............ 45,235 41,894 89,532 78,724
Net occupancy expense ..................... 6,549 5,859 14,047 11,377
Equipment expense ......................... 2,888 2,749 5,958 5,390
Data processing ........................... 3,321 2,868 6,490 5,687
Advertising ............................... 2,276 1,914 4,249 3,442
Intangible amortization ................... 1,168 1,356 2,347 2,347
Other ..................................... 16,752 13,957 29,393 25,974
-------- -------- -------- --------
Total Other Expenses ................ 78,189 70,597 152,016 132,941
-------- -------- -------- --------
Income Before Income Taxes .......... 59,326 53,971 118,800 104,892
INCOME TAXES .............................. 17,722 16,167 35,759 31,314
-------- -------- -------- --------
Net Income .......................... $ 41,604 $ 37,804 $ 83,041 $ 73,578
======== ======== ======== ========

PER-SHARE DATA:
Net income (basic) ........................ $ 0.27 $ 0.25 $ 0.53 $ 0.50
Net income (diluted) ...................... 0.27 0.24 0.53 0.49
Cash dividends ............................ 0.145 0.132 0.277 0.254

See Notes to Consolidated Financial Statements

FULTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2005 AND 2004

ACCUMULATED
OTHER
NUMBER OF ADDITIONAL COMPREHEN-
SHARES COMMON PAID-IN RETAINED SIVE INCOME TREASURY
OUTSTANDING STOCK CAPITAL EARNINGS (LOSS) STOCK TOTAL
----------- -------- ---------- -------- ----------- --------- ----------
(dollars in thousands)

Balance at December 31, 2004................. 157,150,000 $335,604 $1,018,403 $ 60,924 $(10,133) $(160,711) $1,244,087
Comprehensive income:
Net income............................. 83,041 83,041
Unrealized loss on derivative
financial instruments (net of
$540,000 tax effect)................ (1,003) (1,003)
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....... 73,008
----------
Stock split paid in the form of a 25%
stock dividend............................ 84,046 (84,114) (68)
Stock issued, including related tax
benefits (340,000 shares from
treasury stock)........................... 806,000 1,012 1,158 5,071 7,244
Stock-based compensation awards.............. 179 179
Acquisition of treasury stock................ (5,000,000) (85,168) (85,168)
Cash dividends - $0.277 per share............ (43,463) (43,466)
----------- -------- ---------- -------- -------- --------- ----------
Balance at June 30, 2005..................... 152,956,000 $420,662 $ 935,626 $100,502 $(20,166) $(240,808) $1,195,816
=========== ======== ========== ======== ======== ========= ==========
Balance at December 31, 2003................. 142,085,000 $284,480 $ 648,155 $104,187 $ 12,267 $(100,772) $ 948,317
Comprehensive income:
Net income............................. 73,578 73,578
Unrealized loss on securities
(net of $16.6 million tax effect)... (30,749) (30,749)
Less - reclassification adjustment
for gains included in net income
(net of $3.9 million tax expense)... (7,265) (7,265)
----------
Total comprehensive income....... 35,564
----------
Stock dividend - 5%.......................... 15,299 100,226 (115,615) (90)
Stock issued, including related tax
benefits (all treasury)................... 824,000 (6,302) 11,756 5,454
Stock-based compensation awards.............. 132 132
Stock issued for acquisition of Resource
Bancshares Corporation.................... 11,287,000 21,498 164,365 185,863
Acquisition of treasury stock................ (1,845,000) (29,939) (29,939)
Cash dividends - $0.254 per share............ (36,583) (36,583)
----------- -------- ---------- -------- -------- --------- ----------
Balance at June 30, 2004..................... 152,351,000 $321,277 $ 906,576 $ 25,567 $(25,747) $(118,955) $1,108,718
=========== ======== ========== ======== ======== ========= ==========

See Notes to Consolidated Financial Statements

100

FULTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

SIX MONTHS ENDED
JUNE 30
-------------------------
2005 2004
------------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .................................................. $ 83,041 $ 73,578

Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses ................................ 1,525 2,540
Depreciation and amortization of premises and equipment .. 6,539 6,177
Net amortization of investment security premiums ......... 2,682 5,942
Investment securities gains .............................. (4,733) (11,177)
Net increase in loans held for sale ...................... (58,455) (18,769)
Amortization of intangible assets ........................ 2,347 2,347
Stock-based compensation ................................. 179 132
Increase in accrued interest receivable .................. (3,186) (1,294)
(Increase) decrease in other assets ...................... (780) 6,006
Increase (decrease) in accrued interest payable .......... 3,763 (2,481)
(Decrease) increase in other liabilities ................. (4,736) 5,643
--------- ---------
Total adjustments ..................................... (54,855) (4,934)
--------- ---------
Net cash provided by operating activities ............. 28,186 68,644
--------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale ........ 101,196 179,971
Proceeds from maturities of securities held to maturity ..... 2,102 5,279
Proceeds from maturities of securities available for sale ... 311,054 457,086
Purchase of securities held to maturity ..................... (4,398) (3,699)
Purchase of securities available for sale ................... (406,130) (133,005)
Decrease in short-term investments .......................... 26,551 2,760
Net increase in loans ....................................... (298,097) (256,901)
Net cash paid for acquisitions .............................. -- (768)
Net purchase of premises and equipment ...................... (13,226) (5,966)
--------- ---------
Net cash (used in) provided by investing activities ... (280,948) 244,757
--------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits ................. 122,355 203,212
Net increase (decrease) in time deposits .................... 121,788 (122,396)
Increase (decrease) in long-term debt ....................... 267,509 (34,376)
Decrease in short-term borrowings ........................... (59,941) (266,384)
Dividends paid .............................................. (40,441) (34,762)
Net proceeds from issuance of common stock .................. 7,176 5,454
Acquisition of treasury stock ............................... (85,168) (29,939)
--------- ---------
Net cash provided by (used in) financing activities ... 333,278 (279,191)
--------- ---------

NET INCREASE IN CASH AND DUE FROM BANKS ..................... 80,516 34,210
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD .............. 278,065 300,966
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD .................... $ 358,581 $ 335,176
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ................................................. $ 87,485 $ 66,768
Income taxes ............................................. 30,618 25,841

See Notes to Consolidated Financial Statements

101

FULTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Fulton Financial
Corporation (the Corporation) have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six-month periods ended June 30, 2005 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2005.

NOTE B - NET INCOME PER SHARE AND COMPREHENSIVE INCOME (LOSS)

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

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

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ -----------------
2005 2004 2005 2004
------- ------- ------- -------

Weighted average shares outstanding (basic) .... 154,509 152,647 155,922 147,380
Impact of common stock equivalents ............. 1,721 1,709 1,828 1,474
------- ------- ------- -------
Weighted average shares outstanding (diluted) .. 156,230 154,356 157,750 148,854
======= ======= ======= =======

Total comprehensive income was $57.1 million and $73.0 million for the three and
six months ended June 30, 2005, respectively. Total comprehensive loss was $4.4
million for the quarter ended June 30, 2004 and total comprehensive income was
$35.6 million for the six months ended June 30, 2004.

NOTE C - 5-FOR-4 STOCK SPLIT

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

NOTE D - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

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

102

NOTE E - STOCK-BASED COMPENSATION

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. The Corporation adopted
Statement 123R using "modified retrospective application", electing to restate
all prior periods. The Corporation's equity awards consist of stock options
granted under its Stock Option and Compensation Plans (Option Plans) and shares
purchased by employees under its Employee Stock Purchase Plan (ESPP).

The following table summarizes the impact of modified retrospective application
on the previously reported results for the periods shown:

SIX
THREE MONTHS ENDED MONTHS
------------------- ENDED
MAR. 31, JUNE 30, JUNE 30,
2005 2004 2004
-------- -------- --------
(in thousands, except
per-share data)

Income before income taxes, originally reported .......... $59,570 $54,031 $105,024
Stock-based compensation expense under the fair value
method (2) ............................................ (96) (60) (132)
------- ------- --------
Income before income taxes, restated ..................... $59,474 $53,971 $104,892
======= ======= ========
Net income, originally reported .......................... $41,531 $37,864 $ 73,710
Stock-based compensation expense under the fair value
method, net of tax (2) ................................ (94) (60) (132)
------- ------- --------
Net income, restated ..................................... $41,437 $37,804 $ 73,578
======= ======= ========
Net income per share (basic), originally reported (1) .... $ 0.26 $ 0.25 $ 0.50
Net income per share (basic), restated ................... 0.26 0.25 0.50
Net income per share (diluted), originally reported (1) .. $ 0.26 $ 0.25 $ 0.49
Net income per share (diluted), restated ................. 0.26 0.24 0.49

(1) Originally reported amounts have been restated for the impact of the
5-for-4 stock split paid in June 2005.

(2) Stock-based compensation expense, originally reported, was $0.

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

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ----------------
2005 2004 2005 2004
----- ---- ----- ----
(in thousands)

Compensation expense .......................... $ 83 $60 $ 179 $132
Tax benefit ................................... (107) -- (109) --
----- --- ----- ----
Net income (increase) decrease ................ $ (24) $60 $ 70 $132
===== === ===== ====

As a result of the retrospective adoption of Statement 123R, as of December 31,
2003 retained earnings decreased $13.2 million, additional paid in capital
increased $14.6 million and deferred tax assets increased $1.4 million. These
changes reflect a combination of compensation expense for prior stock option
grants to employees and related tax benefits.

The tax benefits shown in the preceding table differs from the benefit that
would be calculated using the Corporation's 35% statutory Federal tax rate as
tax benefits are recognized upon grant only for equity awards that ordinarily
will result in a tax

103

deduction when exercised. Tax benefits for other equity awards are recognized
when realized, generally when exercised in a manner resulting in a tax deduction
for the corporation.

Under the Option Plans, options are granted to key personnel for terms of up to
10 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 1st
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
and, as a result, compensation expense associated with this grant will be
recognized over the three year vesting period. Certain events as defined in the
Option Plans, including a change of control, would result in the acceleration of
the vesting. As of June 30, 2005, the Option Plans had 16.0 million shares
reserved for future grants through 2013.

The following table provides information about options outstanding for the six
months ended June 30, 2005:

WEIGHTED
WEIGHTED AVERAGE AGGREGATE
AVERAGE REMAINING INTRINSIC
STOCK EXERCISE CONTRACTUAL VALUE
OPTIONS PRICE TERM (IN MILLIONS)
--------- -------- ----------- -------------

Outstanding at December 31, 2004 ... 6,591,053 $10.74
Granted ......................... -- --
Exercised ....................... (804,031) 6.93
Forfeited ....................... (10,314) 15.51
--------- ------
Outstanding at June 30, 2005 ....... 5,776,708 $11.27 5.9 years $38.9
========= ====== ========= =====
Exercisable at June 30, 2005 ....... 5,759,048 $11.28 5.9 years $38.7
========= ====== ========= =====

The following table presents information about options exercised:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
(dollars in thousands)

Number of options exercised.......................... 216,521 523,199 804,031 928,288
Total intrinsic value of options exercised........... $ 1,829 $ 5,555 $ 8,599 $ 8,886
Cash received from options exercised................. $ 1,548 $ 2,473 $ 4,560 $ 3,664
Tax deduction realized from options exercised........ $ 1,298 $ 1,614 $ 5,318 $ 3,663

Upon exercise, the Corporation issues shares from its authorized, but unissued,
common stock to satisfy the options.

Under the ESPP, eligible employees can purchase stock of the Corporation at 85%
of the fair market value of the stock on the date of purchase. The ESPP is
considered to be a compensatory plan under Statement 123R and, as such,
compensation expense is recognized for the 15% discount on shares purchased. The
following table summarizes activity under the ESPP for the indicated periods.

104

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ -----------------
2005 2004 2005 2004
------- ------- ------- -------

ESPP shares purchased................................ 31,921 25,266 68,479 52,756
Average purchase price (85% of market value)......... $ 14.80 $ 13.90 $ 14.87 $ 14.13
Compensation expense recognized (in thousands)....... $ 83 $ 62 $ 180 $ 132

NOTE F - EMPLOYEE BENEFIT PLANS

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

The Corporation currently provides medical and life insurance benefits under a
post-retirement benefits plan (Post-Retirement Plan) to certain retired
full-time employees who were employees of the Corporation prior to January 1,
1998. Other certain full-time employees may become eligible for these
discretionary benefits if they reach retirement age while working for the
Corporation. Benefits are based on a graduated scale for years of service after
attaining the age of 40.

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

PENSION PLAN
--------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ -----------------
2005 2004 2005 2004
----- ----- ------- -------
(in thousands)

Service cost.......................... $ 621 $ 577 $ 1,245 $ 1,154
Interest cost......................... 842 776 1,685 1,551
Expected return on plan assets........ (819) (750) (1,637) (1,500)
Net amortization and deferral......... 221 166 443 332
----- ----- ------- -------
Net periodic benefit cost............. $ 865 $ 769 $ 1,736 $ 1,537
===== ===== ======= =======

POST-RETIREMENT PLAN
--------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ -----------------
2005 2004 2005 2004
---- ---- ----- -----
(in thousands)

Service cost ......................... $ 88 $ 91 $ 177 $ 182
Interest cost ........................ 114 118 231 237
Expected return on plan assets ....... (1) -- (1) (1)
Net amortization and deferral ........ (55) (57) (112) (115)
---- ---- ----- -----
Net periodic benefit cost ............ $146 $152 $ 295 $ 303
==== ==== ===== =====

NOTE G - NEW ACCOUNTING STANDARDS

ACCOUNTING FOR CERTAIN LOANS OR DEBT SECURITIES ACQUIRED IN A TRANSFER: In
December 2003, the Accounting Standards Executive Committee issued Statement of
Position 03-3 (SOP 03-3), "Accounting for Certain Loans or Debt Securities
Acquired in a Transfer". SOP 03-3 addresses accounting for differences between
contractual cash flows and

105

cash flows expected to be collected from an investor's initial investment in
loans or debt securities acquired in a transfer, including business
combinations, if those differences are attributable, at least in part, to credit
quality.

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

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

In June 2005, the FASB voted to nullify certain provisions of EITF 03-1 which
addressed the evaluation of an impairment to determine whether it was
other-than-temporary. In general, these provisions required companies to declare
their ability and intent to hold other-than-temporarily impaired investments
until they recovered their losses. If a company was unable to make this
declaration, write-downs of investment securities through losses charged to the
income statement would be required. The effective date of these provisions was
originally delayed in September 2004, due to industry concerns about the
potential impact of this proposed accounting.

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

NOTE H - ACQUISITIONS

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

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

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

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

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

106

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2004
------------------ ----------------

Net interest income ............ $92,733 $186,828
Other income ................... 37,523 75,177
Net income ..................... 39,024 76,980

Per Share:
Net income (basic) .......... $ 0.24 $ 0.48
Net income (diluted) ........ 0.24 0.47

NOTE I - Subsequent Events

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

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

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

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

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

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

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

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

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

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

NOTE J - DERIVATIVE FINANCIAL INSTRUMENTS - INTEREST RATE SWAPS

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

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

NOTE K - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

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

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

JUNE 30
---------------------
2005 2004
--------- ---------
(in thousands)

Commitments to extend credit..... 3,556,674 3,109,289
Standby letters of credit........ 548,713 518,961
Commercial letters of credit..... 21,471 20,869

NOTE L - ACCELERATED SHARE REPURCHASE

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

NOTE M - SUBORDINATED DEBT

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

NOTE N - RECLASSIFICATIONS

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

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