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Business Services Industry

Fitch Affirms Fulton Financial Corporation; Will Assign Ratings to The Columbia Bank

Business Wire, July 27, 2005

NEW YORK -- Fitch Ratings has affirmed the ratings of Fulton Financial Corporation (FULT) and its rated subsidiaries following the announcement of its definitive agreement to acquire Columbia Bancorp. At the close of the deal (1Q06), Fitch expects to assign ratings to Columbia Bancorp's bank subsidiary, The Columbia Bank, and align its ratings with FULT's rated bank subsidiaries. In addition, Fitch expects to assign an 'A-' rating to $150 million in trust preferreds that the company plans to issue in support of the acquisition. Furthermore and unrelated to the above-mentioned transaction, Fitch also expects to assign an 'A-' rating to FULT's series B subordinated debt issuance, which will be exchanged for the recently issued $100 million subordinated debt (series A). The company's Rating Outlook remains stable.

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The acquisition, which is valued at $313 million, provides FULT with a 24-branch foothold in the demographically appealing Baltimore/Washington D.C. metropolitan region. Although FULT does have a few branches in Maryland, the acquisition will deepen its penetration in this region and tie together FULT's Virginia operations with the rest of the franchise. The transaction will be funded with stock and cash and will be supported with the proceeds from the issuance of trust preferreds. As with most of its acquisitions, The Columbia Bank will run independently, and current senior management will be retained. That said, some back-office functions will be shifted to FULT.

Although the acquisition will compress FULT's regulatory capital position somewhat and expand double leverage, Fitch expects that these metrics will improve, especially given the company's solid earnings generation and retention capability. Integration risk should remain moderate, as the company has exhibited a positive track record with its past 25 acquisitions. The expected issuance of trust preferreds, when layered atop the recently issued $100 million in subordinated debt, will create a sizable level of parent company debt, requiring an increasingly robust level of financial management at the parent.

The following ratings are affirmed by Fitch with a Stable Outlook:

Fulton Financial Corporation

--Long-term issuer at 'A';

--Subordinated debt at 'A-';

--Short-term issuer at 'F1';

--Individual at 'A/B';

--Support at '5'.

Fulton Bank

--Long-term deposits at 'A+'

--Long-term issuer at 'A'

--Short-term issuer at 'F1'

--Short-term deposits at 'F1'

--Individual at 'A/B'

--Support at '5'

Lebanon Valley Farmers Bank

--Long-term deposits at 'A+';

--Long-term issuer at 'A';

--Short-term issuer at 'F1';

--Short-term deposits at 'F1';

--Individual at 'A/B';

--Support at '5'.

Lafayette Ambassador

--Long-term deposits at 'A+';

--Long-term issuer at 'A';

--Short-term issuer at 'F1';

--Short-term deposits 'F1';

--Individual at 'A/B';

--Support at '5'.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.

Business Services Industry

Fitch Affirms Fulton Financial Corporation; Will Assign Ratings to The Columbia Bank

Business Wire, July 27, 2005

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