SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                                    FORM 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
                   For the Fiscal year ended December 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


                         Commission file number 0-10958


                         DROVERS BANCSHARES CORPORATION
             (Exact name of registrant as specified in its charter)


                      PENNSYLVANIA                                23-2209390
(State or other jurisdiction of incorporation or organization)(IRS Employer ID)

            30 SOUTH GEORGE STREET, YORK, PA                        17401
         (Address of principal executive office)                  (Zip Code)

Registrant's telephone number, including area code  (717) 843-1586

Securities registered pursuant to Section 12(g) of the act:

               COMMON STOCK $3.33 PAR               NASDAQ
               (Title of each class)    (Name of exchange on which registered)


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 shorter periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]  No [ ]


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K. [X]


The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 28, 1999 was $88,960,000.  The number of shares of
Drovers Bancshares Corporation Common Stock, $3.33 par value, outstanding at
February 28, 1999 was 4,468,461.

1<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report for the year ended December 31, 1998 are
incorporated by reference into Parts I, II and IV.  Portions of the Proxy
Statement for the annual shareholders meeting to be held May 27, 1999
incorporated by reference in Part III.
Drovers Bancshares Corporation and Subsidiaries
CONTENTS

PART I

Item 1.  Business ......................................................... 5

Item 2.  Properties ....................................................... 12

Item 3.  Legal Proceedings 
  The information required by this item is contained on page 21 of the
  Corporation's 1998 Annual Report.

Item 4.  Submission of Matters to a Vote of Security Holders
  This item is omitted since it is not applicable.

PART II

Item 5.  Market for the Registrant's Common Equity and Related
  Stockholder Matters
  The information required by this item is contained on page 1 and 21 of the
  Corporation's 1998 Annual Report.

Item 6.  Selected Financial Data 
  The information required by this item is contained on pages 12-13 of the
  Corporation's 1998 Annual Report.

Item 7.  Management's Discussion and Analysis of Financial Condition and
  Results of Operation
  The information required by this item is contained on pages 34-42 of the
  Corporation's 1998 Annual Report.

Item 7a.  Quantitative and qualitative disclosures about market risk
  The information required by this item is contained on pages 34-42 of the 
  Corporation's 1998 Annual Report.

Item 8.  Financial Statements and Supplementary Data ...................... 14
  Additional information required by this item is contained on pages 15-32
  and page 43 of the Corporation's 1998 Annual Report.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
  Financial Disclosure
  This item is omitted since it is not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant ............... 25
  Additional information required by this item is contained on pages 4-9
  of the Definitive Proxy Statement dated April 23, 1999.

Item 11. Executive Compensation
  The information required by this item is contained on pages 7-12
  of the Definitive Proxy Statement dated April 23, 1999.

Item 12. Security Ownership of Certain Beneficial Owners and Management
  The information required by this item is contained on pages 3-6
  of the Definitive Proxy Statement dated April 23, 1999.



2<PAGE>
Drovers Bancshares Corporation and Subsidiaries
CONTENTS

Item 13. Certain Relationships and Related Transactions
  The information required by this item is contained on pages 17
  of the Definitive Proxy Statement dated April 23, 1999.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

  A.  Financial statements are incorporated by reference to pages 1-43 of the
      Corporation's 1998 Annual Report.

  B.  There were no filings on Form 8-K for the year ended December 31, 1998.

  C.  Listing of Exhibits.

    Exhibit 3.1 - Articles of Incorporation and Bylaws. (incorporated by
      reference from Exhibit 3.1 of the Drovers Bancshares Corporation 
      Form 10-K for the year ended December 31, 1997)

    Exhibit 4 - Instruments Defining the Rights of Security Holders
      (incorporated by reference to Exhibit B to the Holding Company's
      Registration Statement on Form S-14, No. 2-77871 filed June 29, 1982,
      with the Securities and Exchange Commission)

    Exhibit 10(a) - Amended and Restated Supplemental Pension Plan, dated
      September 28, 1994, between the Bank and A. Richard Pugh and First
      Amendment thereto, dated November 14, 1995 ...........................27

    Exhibit 10(b) - Amended and restated Change of Control Agreement, dated
      November 14, 1995, among the Corporation, the Bank and
      A. Richard Pugh ......................................................39

    Exhibit 10(c) - Form of Change of Control Agreement among the Corporation
      the Bank and each of the following Executive Vice Presidents of the
      Company:  Debra A. Goodling, Michael J. Groft and Shawn A. Stine .....44

    Exhibit 10(d) - The Corporation's 1995 Stock Option Plan. (incorporated
      herein by reference to Exhibit 99.1 to the Corporation's Registration
      Statement on Form S-8, as filed with the Securities and Exchange
      Commision on December 31, 1998)

    Exhibit 10(e) - The Corporation's Incentive Stock Option Plan.
      (incorporated herein by reference to Exhibit 99.1 to the Corporation's
      Registration Statement on Form S-8 as filed with the Securities and
      Exchange Commission on May 24, 1995)

    Exhibit 11 - Statements Regarding Computation of Per Share Earnings.
      (incorporated by reference to Note 15 on page 28 of the Corporation's
      1998 Annual Report)

    Exhibit 13 - Annual Report to Security Holders.






3 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
CONTENTS


C.  Listing of Exhibits, Continued

    Exhibit 21 - Subsidiaries of the Registrant. (incorporated by reference
      to page 34 of the Corporation's 1998 Annual Report)

    Exhibit 23 - Consents of experts and Counsel.

    Exhibit 27 - Financial Data Schedule.

SIGNATURES ................................................................ 25



Page numbers of Annual Report to shareholders and Definitive Proxy Statement
referenced in this document refer to hard copy only.  See electronic copy of
documents for corresponding page numbers.








































4<PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

GENERAL

Drovers Bancshares Corporation was organized on October 27, 1982, under
Pennsylvania Business Corporation Law and held all the stock of Drovers
Interim Bank, a Pennsylvania state-chartered bank established to effect the
reorganization.  The Interim Bank was then merged into The Drovers & Mechanics
Bank and the Common Stock of the Interim Bank was converted into and exchanged
on a share-for-share basis for Common Stock of Drovers Bancshares Corporation.
The Management of The Drovers & Mechanics Bank formed Drovers Bancshares
Corporation for greater flexibility in providing a wider variety of banking
services and in engaging in nonbanking activities permitted under the Bank
Holding Company Act of 1956, as amended.

The Drovers & Mechanics Bank is a wholly-owned subsidiary of Drovers
Bancshares Corporation.  The Bank is chartered pursuant to the laws of the
Commonwealth of Pennsylvania and is subject to the supervision of the Banking
Department of the Commonwealth and the Federal Deposit Insurance Corporation.
The Drovers & Mechanics Bank was organized in 1883 as a national bank and
became a state-chartered non-member of the Federal Reserve System on
February 14, 1979.

The Bank offers a wide variety of banking and trust services to individuals
and commercial customers in its service area.  Personal banking services
include checking accounts, savings and time accounts, certificates of deposit,
personal and mortgage loans, home improvement loans, safe deposit services,
estate planning and administration, personal trust management and discount
brokerage services.  Commercial banking services are provided to businesses,
nonprofit organizations and local municipalities.  These services include
checking accounts, savings and time accounts, financing activities and
corporate trust services in the areas of pension, profit sharing and employee
benefit plans.

On December 31, 1998, the Bank employed 215 full-time equivalents throughout
its offices. The Main Office of the Bank is located at 30 South George
Street, York, Pennsylvania.  A Research and Administrative Services Center
and nine branches are located in the surrounding suburbs of York City.  In
addition, there are six out-of-town offices located in Shrewsbury, Emigsville,
Hellam, York Haven, Dover and Red Lion, Pennsylvania.  On January 4, 1999, a
full-service bank office opened in Hellam Township, Pennsylvania.  The Bank 
purchased land near Dillsburg, Pennsylvania in late 1998 with construction of
a new branch office at the location to begin in early 1999.  The Bank expects
to open its first loan production office (LPO) in the first quarter of 1999.
The office will be located in Cumberland County, near Harrisburg.  This will
be the Bank's first facility outside York County.  The staff at the LPO will
initially focus on commercial lending.  Negotiations continue to purchase land
in Newberrytown, Pennsylvania to establish a new branch office.  The Bank also
has ten remote service facilities located at the York Fairgrounds, York
College of Pennsylvania and eight inside Shipley Stores, Inc. convenience 
stores.

In December 1993, the Bank purchased the office building attached to the
Bank's main office.  The five-story complex, known as 96 South George, 
provides for future growth and enables the Corporation to maintain its
headquarters in downtown York.  The accounting, corporate banking, 
and executive offices of the Bank are located on the fifth floor of
96 South George.

The Bank is the sole limited partner in four ventures to renovate and operate
apartment buildings.  The first building opened in 1994 with the second
building opening in 1996.  The third building opened in December 1998.  The
fourth building is scheduled to open in 1999.   All four partnerships provide
low income housing to qualified families.  The investments are accounted
for under the equity method of accounting.  The combined carrying values of
the investments at December 31, 1998 and 1997 were $5,385,000 and $2,292,000,
respectively.
5 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

SUPERVISION AND REGULATION

     Bank Holding Company Regulation

Drovers Bancshares Corporation ("the Company") is registered as a bank holding
company and is subject to the regulations of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the Bank Holding Company
Act of 1956, as amended ("BHCA").  Bank holding companies are required to file
periodic reports with and are subject to examination by the Federal Reserve. 
The Federal Reserve has issued regulations under the BHCA that require a bank
holding company to serve as a source of financial and managerial strength to
its subsidiary banks.  As a result, the Federal Reserve, pursuant to such
regulations, may require the Company to stand ready to use its resources to
provide adequate capital funds to the Bank during periods of financial stress
or adversity.

Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), a bank holding company is required to guarantee the compliance
of any insured depository institution subsidiary that may become
"undercapitalized" as defined by regulations) with the terms of any capital
restoration plan filed by such subsidiary with its appropriate federal banking
agency, up to specified limits.

Under the BHCA, the Federal Reserve has the authority to require a bank
holding company to terminate any activity or relinquish control of a nonbank
subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's determination that such activity or control constitutes a serious
risk to the financial soundness and stability of any bank subsidiary of the
bank holding company.

The BHCA prohibits the Company from acquiring direct or indirect control of
more than 5% of the outstanding shares of any class of voting stock or
substantially all of the assets of any bank or merging or consolidating with
another bank holding company without prior approval of the Federal Reserve.
Such a transaction would also require approval of the Pennsylvania Department
of Banking.  Pennsylvania law permits Pennsylvania bank holding companies to
control an unlimited number of banks.

Additionally, the BHCA prohibits the Company from engaging in or from
acquiring ownership or control of more than 5% of the outstanding shares of
any class of voting stock of any company engaged in a nonbanking business
unless such business is determined by the Federal Reserve to be so closely
related to banking as to be a proper incident thereto.  The Federal Reserve
can differentiate between nonbanking activities that are initiated by a bank
holding company or subsidiary and activities that are acquired as a going
concern.  The BHCA does not place territorial restrictions on the activities
of such nonbanking-related activities.  The Company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property, or furnishing of services.

Federal Reserve approval may be required before the Company or its nonbank
subsidiaries may begin to engage in any new activity and before acquiring a
business.

     Dividend Restrictions

The Company is a legal entity separate and distinct from the Bank and the
Company's nonbank subsidiaries.  The Company's revenues (on a parent company
only basis) result almost entirely from dividends paid to the Company by its
subsidiaries.  The right of the Company and consequently the right of
creditors and shareholders of the Company, to participate in any distribution
of the assets or earnings of any subsidiary through the payment of such
dividends or otherwise is necessarily subject to the prior claims of creditors



6 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

     Dividend Restrictions, Continued

of the subsidiary (including depositors, in the case of the Bank), except to
the extent that claims of the Company in its capacity as a creditor may be
recognized.

Federal and state laws regulate the payment of dividends by the Company's
subsidiaries.  See "Supervision and Regulation - Regulation of the
Bank" herein.

Further, it is the policy of the Federal Reserve that bank holding companies
should pay dividends only out of current earnings.  Federal banking regulators
also have the authority to prohibit banks and bank holding companies from
paying a dividend if they should deem such payment to be an unsafe or unsound
practice.

     Capital Adequacy

Bank holding companies are required to comply with the Federal Reserve's risk-
based capital guidelines.  The required minimum ratio of total capital to
risk-weighted assets (including certain off-balance sheet activities, such as
standby letters of credit) is 8%.  At least half (4%) of the total capital is
required to be "Tier 1 Capital," consisting principally of common
shareholders' equity, noncumulative perpetual preferred stock, a limited
amount of cumulative perpetual preferred stock, and minority interests in the
equity accounts of consolidated subsidiaries, less certain intangible assets.
The remainder ("Tier 2 capital") may consist of a limited amount of
subordinated debt and intermediate-term preferred stock, certain hybrid
capital instruments and other debt securities, perpetual preferred stock, and
a limited amount of the general loan loss allowance.  In addition to the risk-
based capital guidelines, the Federal Reserve requires a bank holding company
to maintain a minimum "leverage ratio."  This requires a minimum level of
Tier 1 capital (as determined under the risk-based capital rules) to average
total consolidated assets of 3% for those bank holding companies that have the
highest regulatory examination ratings and are not contemplating or
experiencing significant growth or expansion.  All other bank holding
companies are expected to maintain a ratio of at least 1% to 2% above the
stated minimum.  Further, the Federal Reserve has indicated that it will
consider a "tangible Tier 1 capital leverage ratio" deducting all intangibles
and other indications of capital strength in evaluating proposals for
expansion or new activities.  The Federal Reserve has not advised the Company
of any specific minimum leverage ratio applicable to the Company.

Pursuant to FDICIA, the federal banking agencies have specified, by
regulation, the levels at which an insured institution is considered "well
capitalized," "adequately capitalized," "undercapitalized," "significantly 
undercapitalized," or "critically undercapitalized."  Under these regulations,
an institution is considered "well capitalized" if it has a total risk-based
capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, a leverage ratio of 5% or greater, and is not subject to any order or
written directive to meet and maintain a specific capital level.  The Company
and the Bank, at December 31, 1998, qualify as "well capitalized" under these
regulatory standards.

     FDIC Insurance

The Bank is subject to FDIC deposit insurance assessments.  The FDIC has
adopted a risk-related premium assessment system for both the Bank Insurance
Fund ("BIF") for banks and the Savings Association Insurance fund ("SAIF") for
savings associations.  Under this system, FDIC insurance premiums are assessed
based on capital and supervisory measures.





7 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

      FDIC Insurance, Continued

Under the risk-related premium assessment system, the FDIC, on a semiannual
basis, assigns each institution to one of three capital groups (well
capitalized, adequately capitalized, or undercapitalized) and further assigns
such institution to one of three subgroups within a capital group
corresponding to the FDIC's judgment of its strength based on supervisory
evaluations, including examination reports, statistical analysis, and other
information relevant to gauging the risk posed by the institution.  Only
institutions with a total risk-based capital to risk-adjusted assets ratio of
10% or greater, a Tier 1 capital to risk-adjusted assets ratio of 6% or
greater, and a Tier 1 leverage ratio of 5% or greater, are assigned to the
well-capitalized group.

On September 30, 1996, the President signed into law the Deposit Insurance
Funds Act of 1996 to recapitalize the Savings Association Insurance Fund
("SAIF") administered by the Federal Deposit Insurance Corporation ("FDIC")
and to provide for repayment of the FICO (Financial Institution Collateral
Obligation) bonds issued by the United States Treasury Department.  The FDIC
levied a one-time special assessment of SAIF deposits equal to 65.7 cents per
$100 of the SAIF-accessible deposit base as of March 31, 1995.  During 1997, 
1998 and 1999, the Bank Insurance Fund ("BIF") will pay $322 million of FICO
debt service, and SAIF will pay $458 million.  During 1997, 1998 and 1999, the
average regular annual deposit insurance assessment is estimated to be about
1.29 cents per $100 of deposits for BIF deposits and 6.44 cents per $100 of
deposits for SAIF deposits.  Individual institution's assessments will
continue to vary according to their capital and management ratings.  As
always, the FDIC will be able to raise the assessments as necessary to
maintain the funds at their target capital ratios provided by law.  After
1999, BIF and SAIF will share the FICO cost equally.  Under current estimates,
BIF and SAIF assessment bases would each be assessed at the rate of
approximately 2.43 cents per $100 of deposits.  The FICO bonds will mature in
2018-2019, ending the interest payment obligation.

     Regulation of the Bank

The operations of the Bank are subject to federal and state statues applicable
to banks chartered under the banking laws of the Commonwealth of Pennsylvania
that are not members of the Federal Reserve System and to banks whose deposits
are insured by the FDIC.

The FDIC, which has primary supervisory authority over the Bank, regularly
examines banks in such areas as reserves, loans, investments, management
practices, and other aspects of operations.  These examinations are designed
for the protection of the Bank's depositors rather than the Company's
shareholders.  The Bank must furnish annual and quarterly reports to the FDIC,
which has the authority under the Financial Institutions Supervisory Act to
prevent a state non-member bank from engaging in an unsafe or unsound practice
in conducting its business.

Federal and state banking laws and regulations govern, among other things, the
scope of a bank's business, the investments a bank may take, the reserves
against deposits a bank must maintain, the types and terms of loans a bank may
make and the collateral it may take, the activities of a bank with respect to
mergers and consolidations, and the establishment of branches.  Pennsylvania
law permits statewide branching.

Recently, Pennsylvania enacted a law to permit State chartered financial
institutions to sell insurance.  This follows a United States Supreme Court
decision in favor of nationwide insurance sales by banks and which also bars
states from blocking insurance sales by national banks in towns with
populations of no more than 5,000.  Consequently, banks are allowed to sell
insurance in Pennsylvania.  The Office of the Comptroller of the Currency has



8 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

      Regulation of the Bank, Continued

issued guidelines for national banks to sell insurance.  The Bank has been
licensed as an insurance agency within the State of Pennsylvania.  The Bank
presently sells fixed and variable rate annuity products and is evaluating its
options regarding the sale of additional insurance products.

Under the Federal Deposit Insurance Act, as amended, the Bank is required to
obtain the prior approval of the FDIC for the payment of dividends if the
total of all dividends declared by the Bank in one year would exceed the
Bank's net profits (as defined and interpreted by regulation) for the current
year plus its retained net profits (as defined and interpreted by regulation)
for the two preceding years, less any required transfers to surplus.  In
addition, the Bank may only pay dividends to the extent that its retained net
profits (including the portion transferred to surplus) exceed statutory bad
debts (as defined by regulation).  Under FDICIA, any depository institution,
including the Bank, is prohibited from paying any dividends, making other
distributions or paying any management fees if, after such payment, it would
fail to satisfy its minimum capital requirements.

A subsidiary bank of a bank holding company, such as the Bank, is subject to
certain restrictions imposed by the Federal Reserve Act on any extensions of
credit to the bank holding company or its subsidiaries, on investments in the
stock or other securities of the bank holding company or its subsidiaries, and
on taking such stock or securities as collateral for loans.  The Federal
Reserve Act and Federal Reserve regulations also place certain limitations and
reporting requirements on extensions of credit by a bank to the principal
shareholders of its parent holding company, among others, and to related
interests of such principal shareholders.  In addition, such legislation and
regulations may affect the terms upon which any person becoming a principal
shareholder of a holding company may obtain credit from banks with which the
subsidiary bank maintains a correspondent relationship.

The Bank, and the banking industry in general, are affected by the monetary
and fiscal policies of government agencies, including the Federal Reserve.
Through open market securities transactions and changes in its discount rate
and reserve requirements, the Board of Governors of the Federal Reserve exerts
considerable influence over the cost and unavailability of funds for lending
and investment.

As the Year 2000 approaches, regulation of both the Company and the Bank
with respect to completing Year 2000 modifications is likely to increase.  A
brief discussion of the most recent federal banking agency pronouncements that
affect the Company and/or the Bank follows.

In December 1997, the Federal Financial Institutions Examination Council
("FFIEC") issued an interagency statement.  The statement indicates that
senior management and the board of directors should be actively involved in
managing the Company's and the Bank's Year 2000 compliance efforts.  The
statement also recommended that institutions obtain Year 2000 compliance
certification from vendors followed by comprehensive internal testing.  In
addition, contingency plans should be developed for all vendors that service
"mission critical" applications which are applications vital to the successful
continuance of a core business activity.  In addition, the Securities and
Exchange Commission (the "SEC") adopted, effective August 4, 1998, an 
interpretive release providing guidance to public companies, such as the
Company, with respect to making meaningful disclosure in it Management's
Discussion and Analysis of Financial Condition under the heading "Year 
2000 Disclosure".  







9 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

COMPETITION

The financial services industry in the Company's service area is extremely
competitive.  The Company's competitors within its service area include
multi-bank holding companies, with resources substantially greater than those
of the Company.  Many competitor financial institutions have legal lending
limits substantially higher than the Bank's legal lending limit.  In addition,
the Bank competes with savings banks, savings and loan associations, credit
unions, money market and other mutual funds, mortgage companies, leasing
companies, finance companies, and other financial services companies that
offer products and services similar to those offered by the Bank on
competitive terms.

In September 1994, federal legislation was enacted that is expected to have a
significant effect in restructuring the banking industry in the United States.
See "Interstate Banking Legislation" herein.  As a result, the Company expects
the operating environment for Pennsylvania-based financial institutions to
become increasingly competitive.

Additionally, the manner in which banking institutions conduct their
operations may change materially as the activities increase in which bank 
holding companies and their banking and nonbanking subsidiaries are permitted
to engage, and funding and investment alternatives continue to broaden,
although the long-range effects of these changes cannot be predicted, with
reasonable certainty, at this time.  These changes most probably will further
narrow the differences and intensify competition between and among commercial
banks, thrift institutions, and other financial service companies.  See
"Proposed Legislation and Regulations" herein.


INTERSTATE BANKING LEGISLATION

In September 1994, the Riegle-Neal Interstate Banking and Branching Efficiency
Act (the "Interstate Banking Act") was enacted.  The Interstate Banking Act
facilitates the interstate expansion and consolidation of banking
organizations (i) by permitting bank holding companies that are adequately
capitalized and adequately managed, beginning September 29, 1995, to acquire
banks located in states outside their home states regardless of whether such
acquisitions are authorized under the law of the host state; (ii) by
permitting the interstate merger of banks after June 1, 1997, subject to the
right of individual states to "opt in" or "opt out" of this authority before
that date; (iii) by permitting banks to establish new branches on an
interstate basis provided that such action is specifically authorized by the
law of the host state; (iv) by permitting, beginning September 29, 1995, a
bank to engage in certain agency relationships (i.e., to receive deposits,
renew time deposits, close loans (but not including loan approvals or
disbursements), service loans, and receive payments on loans and other
obligations) as agent for any bank or thrift affiliate, whether the affiliate
is located in the same state or a different state then the agent bank; and (v)
by permitting foreign banks to establish, with approval of the regulators in
the United States, branches outside their "home" states to the same extent
that national or state banks located in the home state would be authorized to
do so.  One effect of this legislation will be to permit the Company to
acquire banks and bank holding companies located in any state and to permit
qualified banking organizations located in any state to acquire banks and bank
holding companies located in Pennsylvania, irrespective of state law.










10 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 1.  BUSINESS

INTERSTATE BANKING LEGISLATION, Continued

Since 1995, the Pennsylvania Banking Code has authorized full interstate
banking and branching under Pennsylvania law.  Specifically, the legislation 
(i) eliminates the "reciprocity" requirement previously applicable to
interstate commercial bank acquisitions by bank holding companies, (ii)
authorized interstate bank mergers and reciprocal interstate branching into
Pennsylvania by interstate banks, and (iii) permits Pennsylvania institutions
to branch into other states with the prior approval of the Pennsylvania
Department of Banking.

Overall, this federal and state legislation has, as was predicted, had the
effect of increasing consolidation and competition and promoting geographic
diversification in the banking industry.


PROPOSED LEGISLATION AND REGULATIONS

From time to time, various federal and state legislation is proposed that
could result in additional regulation of, and restriction on, the business of
the Company and the Bank, or otherwise change the business environment.

Management cannot predict whether any of this legislation, if enacted, will
have a material effect on the business of the Company.










































11 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 2.  PROPERTIES

The Corporation and Subsidiaries own in fee simple unencumbered the following
land and buildings:

Main Office                        Emigsville Office
30 S George Street                 2123 N George Street
York, PA  17401                    Emigsville, PA  17318

Research & Administrative          Westgate Office 
Services Center                    1500 Kenneth Road 
915 Indian Rock Dam Road           York, PA  17404 
York, PA  17403

Richland Avenue Office             Memory Lane Office 
905 Indian Rock Dam Road           200 Memory Lane 
York, PA  17403                    York, PA  17402 

York Haven Office                  Land in Dillsburg
Landvale Street                    Tristan Drive
York Haven, PA  17370              Dillsburg, PA 17019

The Drovers & Mechanics Bank is the sole occupant of all land and buildings
listed above.  

The following property is pledged as collateral for a mortgage loan secured
to purchase the property:

96 South George Office Building
96 South George Street
York, PA 17401

The five-story office building adjacent to the Main Office provides for
future growth and enables the Corporation to maintain headquarters in
downtown York.  The accouting, corporate banking, and executive offices of
The Drovers & Mechanics Bank are located on the fifth floor of the office
building.

The following branch offices are leased:

Queensgate Office
Queensgate Shopping Center
York, PA  17403
$1,750.00 per month rental; lease expires October 1, 2000.

Dover Office
Dover Square, adjacent to Shipley Stores, Inc.
1 South Main Street
Dover, PA  17315
$4,800.00 per month rental; lease expires November 10, 2006, and is renewable
for three five-year options.

South York Plaza Office
275 Pauline Drive
in the Giant Food Store
York, PA 17402
$2,917.00 per month rental; lease expires August 22, 2000, and is renewable
for one five-year option.

12 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 2.  PROPERTIES
Cape Horn Office
3140 Cape Horn Road
Red Lion, PA 17356
$2,625.00 per month land rental; lease expires March 1, 2012, and is renewable
for six five-year options.  Building owned by the Corporation.

West Manchester Office
1750 Loucks Road
in the Giant Food Store
York, PA 17404
$2,500.00 per month rental; lease expires March 1, 1999, and is renewable for
two five-year options.

York Marketplace Office
2415 East Market Street
in the Giant Food Store
York, PA 17402
$2,500.00 per month rental; lease expires May 1, 1999, and is renewable for
two five-year options.

Penvale Office
3183 Susquehanna Trail North
York, PA 17402
$7,000.00 per month rental; lease expires November 3, 2007, with a rent
increase of $500.00 to $7,500.00 per month in the sixth year.  The lease is
renewable for three five-year options.

Shrewsbury Office
611 Shrewsbury Commons Avenue
Shrewsbury, PA 17361
$4,167.00 per month land rental; lease expires December 1, 2017, with rent
increases each year.  The land lease is renewable for four five-year options.
Building owned by the Corporation.

Hellam Office
599 W. Market Street
Hellam, PA 17406
$3,500.00 per month land rental; lease expires October 10, 2007.  The lease is
renewable for three five-year options and contains a purchase option.
Building owned by the Corporation.

Mt. Rose Avenue Office
1095 Mt. Rose Avenue 
York, PA 17403
$20,000.00 per year land rental; lease expires January 1, 2001.  Additionally,
leased equipment with an annual lease amount of $45,840.00 is required to be
paid by the Bank.  This transaction has been classified as a capitalized lease.

Although the facilities currently owned or leased by the Corporation are
sufficient for its operations, the Corporation may obtain additional space as
required.

Construction of a new office in Dillsburg, Pennsylvania will begin
in early 1999.  The Corporation expects to open its first loan production
office (LPO) near Harrisburg in the first quarter of 1999.  The staff at the
LPO will initially focus on commercial lending.  This will be the
Corporation's first facility outside York County.  All construction costs
related to these projects will be funded from operations.
13 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INVESTMENT PORTFOLIO

The following table sets forth the carrying amount of investment securities at
the dates indicated:

<TABLE>
<CAPTION>

(In thousands)                       1998         1997           1996  
<S>                                  <C>           <C>           <C>   
U.S. Government .............     $  6,559      $ 10,519      $ 10,538 
U.S. Agencies ...............      106,927       126,769        90,348 
Municipal ...................       24,686        24,414        18,465 
Corporate ...................        4,666           486           500 
Total debt securities .......      142,838       162,188       119,851 
Equity securities ...........       18,781        17,111         8,231 
Total investment securities .     $161,619      $179,299      $128,082 

</TABLE>

The following table sets forth the contractual maturities of debt securities
classified as held-to-maturity at December 31, 1998:

<TABLE>
<CAPTION>

                                AFTER       AFTER                        
                      ONE YR    ONE TO     FIVE TO    OVER               
(In thousands)       OR LESS   FIVE YRS    TEN YRS   TEN YRS      TOTAL  
<S>                      <C>       <C>        <C>       <C>          <C> 
U.S. Government ..    $1,000     $1,485    $     0   $     0      $ 2,485
U.S. Agencies ....         0      1,678      6,292     6,878       14,848
Municipal ........       303      3,288      8,743     4,592       16,926
Total ............    $1,303     $6,451    $15,035   $11,470      $34,259

</TABLE>

The following table depicts the average weighted yields of the held-to-
maturity investments by maturity at December 31, 1998:

<TABLE>
<CAPTION>

                                 AFTER       AFTER                      
                      ONE YR    ONE TO     FIVE TO    OVER              
                     OR LESS   FIVE YRS    TEN YRS   TEN YRS      TOTAL 
<S>                     <C>        <C>        <C>       <C>        <C>  
U.S. Government ..     7.00%      6.65%      0.00%     0.00%      6.79% 
U.S. Agencies ....     0.00%      5.93%      7.34%     6.54%      6.81% 
Municipal ........     7.93%      7.55%      5.40%     5.18%      5.80% 
Total ............     7.22%      6.92%      6.21%     5.99%      6.31% 

</TABLE>




14 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INVESTMENT PORTFOLIO (continued)

The following table sets forth the contractual maturities of debt securities
classified as available-for-sale at December 31, 1998:

<TABLE>
<CAPTION>

                                 AFTER      AFTER                        
                      ONE YR    ONE TO     FIVE TO    OVER               
(In thousands)       OR LESS   FIVE YRS    TEN YRS   TEN YRS       TOTAL 
<S>                     <C>        <C>        <C>      <C>          <C>  
U.S. Government ..    $2,513     $1,561    $     0   $     0     $  4,074
U.S. Agencies ....         0      4,310      8,781    78,988       92,079
Municipal ........         0          0      3,352     4,408        7,760
Other ............         0          0        480     4,186        4,666
Total ............    $2,513     $5,871    $12,613   $87,582     $108,579

</TABLE>

The following table depicts the average weighted yields of the available-for-
sale investments by maturity at December 31, 1998:

<TABLE>
<CAPTION>

                                 AFTER       AFTER                      
                      ONE YR    ONE TO     FIVE TO    OVER              
                     OR LESS   FIVE YRS    TEN YRS   TEN YRS      TOTAL 
<S>                     <C>        <C>        <C>       <C>         <C> 
U.S. Government ..     6.47%      5.53%      0.00%     0.00%      6.11% 
U.S. Agencies ....     0.00%      6.58%      7.04%     6.85%      6.86% 
Municipal ........     0.00%      0.00%      5.17%     4.83%      4.98% 
Other ............     0.00%      0.00%      6.22%     6.90%      6.83% 
Total ............     6.47%      6.30%      6.51%     6.75%      6.69% 

</TABLE>

The average yields are computed by dividing annual interest income, including
the accretion of discounts and amortization of premiums, by the amortized cost
of securities at December 31, 1998.  The yield on Municipal investments has
not been restated on a fully tax equivalent basis.

For additional information see Note 6 on pages 22-23 of the Corporation's 1998
Annual Report.












15 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

LOAN DATA

Loans are comprised of the following:

<TABLE>
<CAPTION>

                                             YEAR ENDED DECEMBER 31,           
(In thousands)                    1998      1997      1996      1995     1994  
<S>                                <C>       <C>       <C>       <C>      <C>  
Domestic loans:                                                                
  Commercial, financial and                                                    
   industrial ................ $117,620  $ 80,588  $ 72,776  $ 66,798  $ 59,943
  Real estate:                                                                 
    Construction .............   13,523    12,105     8,908     5,910     7,163
    Mortgage .................  227,914   188,775   167,751   141,565   120,392
  Consumer ...................   34,132    35,280    37,150    45,548    46,168
  Leasing and other (net) ....      173       245        26         9         6
Total domestic loans .........  393,362   316,993   286,611   259,830   233,672
Foreign loans ................        0         0         0         0         0
Total domestic and                                                             
 Foreign loans ...............  393,362   316,993   286,611   259,830   233,672
Unearned income ..............   -3,253    -3,320    -3,494    -4,425    -4,297
Loans net of unearned ........  390,109   313,673   283,117   255,405   229,375
Reserve for loan losses ......   -3,912    -3,304    -3,130    -2,937    -2,638
Net loans .................... $386,197  $310,369  $279,987  $252,468  $226,737

</TABLE>

For additional information see Note 7 on page 23-24 of the Corporation's
1998 Annual Report.


























16 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MATURITIES AND RATE SENSITIVITY OF THE LOAN PORTFOLIO
(EXCLUDING CONSUMER AND RESIDENTIAL REAL ESTATE LOANS)

The following table shows the amounts of loans (excluding consumer,
Residential real estate and other loans) outstanding as of December 31, 1998
which, based on remaining scheduled repayments of principal, are due in the
periods indicated:

<TABLE>
<CAPTION>

                                                    AFTER                     
REMAINING MATURITIES                      ONE YR   ONE TO     OVER            
(In thousands)                           OR LESS   FIVE YRS  FIVE YRS   TOTAL 
<S>                                         <C>      <C>       <C>       <C>  
Domestic loans:                                                               
  Commercial, financial and industrial . $85,617  $ 22,579  $  9,424  $117,620
  Real estate construction .............   8,486     3,971     1,066    13,523
Foreign loans ..........................       0         0         0         0
Total .................................. $94,103  $ 26,550  $ 10,490  $131,143
                                                                              
Rate sensitivity:                                                             
  Predetermined rate ...................  $3,127  $ 20,380  $  9,542  $ 33,049
  Floating or adjustable rate ..........  90,976     6,170       948    98,094
Total .................................. $94,103  $ 26,550  $ 10,490  $131,143

</TABLE>

Drovers Bancshares Corporation has no set rollover policy.  Many of our loans
are made on a short-term basis with full intention of renewal at time of
maturity.  All loans, however,  are reviewed on a continual basis for
creditworthiness.  Should a loan become questionable or approach problem loan
status, it then undergoes a formal review process by all appropriate levels of
authority.























17 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NONACCRUAL, RESTRUCTURED LOANS AND NONPERFORMING ASSETS

The following table shows loans on nonaccrual status or loans which have been
restructured for the past five years:

<TABLE>
<CAPTION>

                                  PRINCIPAL AMOUNT AT YEAR END DECEMBER 31, 
(In thousands)                         1998    1997    1996    1995    1994 
<S>                                     <C>     <C>     <C>     <C>     <C> 
Domestic:                                                                   
  Nonaccrual loans ................. $1,435  $  740  $  615  $  934  $  416 
  90 days past due still accruing ..      7      33       0       9       6 
  Restructured loans ...............  1,203       0   1,139     791     818 
Foreign:                                                                    
  Nonaccrual loans .................      0       0       0       0       0 
  90 days past due still accruing ..      0       0       0       0       0 
  Restructured loans ...............      0       0       0       0       0 
Total .............................. $2,645  $  773  $1,754  $1,734  $1,240 

</TABLE>

Nonaccrual loans as a percentage of net loans at December 31, 1998 and 1997
were 0.37% and 0.24%, respectively.  Restructured loans continued to consist of
commercial loans to one party.  Interest is recognized under the accrual
method of accounting.

The Corporation held $1,748,000 of impaired loans at December 31, 1998.  The
recorded allowance in impaired loans was $150,000.

The following table presents the changes in the balance of other real estate
over the past five years:

<TABLE>
<CAPTION>

(In thousands)                         1998    1997    1996    1995    1994 
<S>                                     <C>    <C>      <C>     <C>     <C> 
Balance at beginning of year ....... $  154  $  803  $  195  $    0  $  141 
Assets acquired by foreclosure                                              
 or repossession ...................    277     211     822     300       0 
Dispositions .......................   -252    -827    -203    -106    -152 
Other (net) ........................    -31     -33     -11       1      11 
Balance at end of year ............. $  148  $  154  $  803  $  195  $    0 

</TABLE>

Other real estate consists of assets which have been repossessed or acquired
through workout situations on defaulted loans.

For additional information on nonperforming assets see Note 1 and Note 7 on
pages 19-20 and 23-24, respectively, of the Corporation's 1998 Annual Report.




18 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
ANALYSIS OF RESERVE FOR LOAN LOSSES
<CAPTION>

                                               YEARS ENDED DECEMBER 31,          
(In thousands)                         1998     1997     1996     1995     1994  
<S>                                     <C>      <C>      <C>     <C>       <C>  
Balance, January 1, ................ $ 3,304  $ 3,130  $ 2,937  $ 2,638  $ 2,332 
Provision for loan losses ..........   1,266      386      645      501      382 
Charge-offs:                                                                     
  Commercial, financial                                                          
   and industrial ..................     522        0       25       31       19 
  Real estate - construction .......       0        0        0        0        0 
  Real estate - mortgage ...........       0        0      215       45        0 
  Consumer .........................     235      327      369      257      157 
Total charge-offs ..................     757      327      609      333      176 
Recoveries:                                                                      
  Commercial, financial                                                          
   and industrial ..................       0       32        6       11        0 
  Real estate - construction .......       0        0        0        0        0 
  Real estate - mortgage ...........       0       15       36        0        6 
  Consumer .........................      99       68      115      120       94 
Total recoveries ...................      99      115      157      131      100 
Net charge-offs ....................     658      212      452      202       76 
Balance, December 31, .............. $ 3,912  $ 3,304  $ 3,130  $ 2,937  $ 2,638 
Ratio of net charge-offs to average     
 loans outstanding .................   0.19%    0.07%    0.17%    0.08%    0.04% 

</TABLE>

Drovers Bancshares Corporation manages the risk characteristics of its  loan
portfolio through various control processes.  Risk is further controlled
through the application of lending procedures such as the holding of adequate
collateral, contractual guarantees, and compensating balances.

Management also considers the amount of recent and expected charge-offs, the
loan portfolio mix and changes in the economy when determining the provision
for loan losses.  Management believes these procedures provide adequate
assurance against losses and the level of the Reserve for Loan Losses is
sufficient to meet any present or potential risks.

For additional information see Note 1 and Note 7 on pages 19-20 and 23-24,
respectively, of the Corporation's 1998 Annual Report.














19 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ALLOCATION OF RESERVE FOR LOAN LOSSES

The following table presents the amount of the reserve allocated to each of
the loan categories and the percentage of total loans for the past five years:

<TABLE>
<CAPTION>

                                        YEARS ENDED DECEMBER 31,          
                               1998              1997               1996  
                                 Percent          Percent          Percent
                                Of Loans         Of Loans         of Loans
                        Reserve To Total Reserve To Total Reserve to Total
(In thousands)           Amount   Loans   Amount   Loans   Amount   Loans 
<S>                        <C>     <C>      <C>     <C>     <C>       <C> 
Commercial, financial                                                     
  and industrial ...... $2,644     30.2%  $ 977     25.6%  $ 657     25.7%
Real Estate:                                                              
  Construction ........     62      3.5%     44      3.9%     46      3.1%
  Mortgage ............    401     58.4%    338     60.1%    321     59.1%
Consumer ..............    128      7.9%    131     10.3%    123     12.1%
Leasing and other .....      0      0.0%      0      0.1%      0      0.0%
Unallocated ...........    677      n/a   1,814      n/a   1,983      n/a 
Total ................. $3,912    100.0% $3,304    100.0% $3,130    100.0%

</TABLE>

<TABLE>
<CAPTION>

                              YEARS ENDED DECEMBER 31,   
                               1995             1994     
                                 Percent          Percent
                                Of Loans         of Loans
                        Reserve To Total Reserve to Total
(In thousands)           Amount   Loans   Amount   Loans 
<S>                        <C>     <C>     <C>      <C>  
Commercial, financial                                    
  and industrial ......  $ 515     26.2%  $ 630     26.2%
Real Estate:                                             
  Construction ........     16      2.3%     29      3.1%
  Mortgage ............    327     55.3%    204     52.3%
Consumer ..............    140     16.2%    120     18.4%
Leasing and other .....      0      0.0%      0      0.0%
Unallocated ...........  1,939      n/a   1,655      n/a 
Total ................. $2,937    100.0% $2,638    100.0%

</TABLE>

For additional information see Note 1 and Note 7 on pages 19-20 and 23-24,
respectively, of the Corporation's 1998 Annual Report.






20 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

DEPOSIT STRUCTURE

Maturities of time deposits of $100,000 or more outstanding at December 31,
are summarized as follows:

<TABLE>
<CAPTION>

(In thousands)                              1998          1997          1996  
<S>                                          <C>           <C>           <C>  
Three months or less ...............      $ 5,983       $ 4,675       $ 3,674 
Over three months to six months ....        4,423         1,598           927 
Over six months to twelve months ...        9,175         5,811         7,047 
Over twelve months .................        7,456         8,340         6,354 
Total ..............................      $27,037       $20,424       $18,002 

</TABLE>



SHORT-TERM BORROWINGS

Short-term borrowings are borrowed funds generally with an original maturity
of one year or less.  Securities sold under repurchase agreements and federal
funds purchased mature in one day.  Other short-term borrowings have a
maturity of greater than one day.

<TABLE>
<CAPTION>

(In thousands)                                     1998     1997      1996   
<S>                                                 <C>      <C>       <C>   
Federal funds purchased and securities sold under repurchase agreements      
     Balance at year-end                         $23,325   $31,360   $15,254 
     Average amount outstanding                   23,820    24,548    12,210 
     Maximum amount outstanding at any month-end  40,586    44,342    18,843 
     Average interest rate for the year             5.17%     5.25%     4.75%
     Average interest rate on year-end balance      4.63%     6.16%     5.24%

Other short-term borrowings                                                  
     Balance at year-end                         $     0   $     0   $     0 
     Average amount outstanding                    4,597     1,112        77 
     Maximum amount outstanding at any month-end  13,000     6,000     4,000 
     Average interest rate for the year             5.65%     5.71%     5.47%
     Average interest rate on year-end balance      0.00%     0.00%     0.00%

</TABLE>










21 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

QUARTERLY FINANCIAL DATA

<TABLE>
Unaudited 1998
<CAPTION>

(In thousands,                FIRST      SECOND     THIRD    FOURTH          
 Except per share data)      QUARTER    QUARTER    QUARTER   QUARTER   TOTAL 
<S>                             <C>        <C>       <C>       <C>      <C>  
Net interest income ......    $4,690     $4,735     $4,888   $4,942   $19,255
Provision for loan losses        239        229        179      619     1,266
Total noninterest income .     1,330      1,387      1,289    1,402     5,408
Total noninterest expense                                                    
  and income taxes .......     4,173      4,253      4,308    3,853    16,587
Net income ...............    $1,608     $1,640     $1,690   $1,872    $6,810
PER SHARE DATA                                                               
Net income ...............     $0.36      $0.37      $0.38    $0.42    $ 1.53
Net income,                                                                  
  assuming dilution ......     $0.36      $0.36      $0.37    $0.41    $ 1.51

</TABLE>

<TABLE>
1997
<CAPTION>

(In thousands,                FIRST      SECOND     THIRD    FOURTH          
 except per share data)      QUARTER    QUARTER    QUARTER   QUARTER   TOTAL 
<S>                             <C>       <C>        <C>       <C>      <C>  
Net interest income ......    $4,107     $4,181     $4,301   $4,424   $17,013
Provision for loan losses        120         66        120       80       386
Total noninterest income .       905      1,011        980    1,057     3,953
Total noninterest expense                                                    
  and income taxes .......     3,502      3,716      3,707    4,024    14,949
Net income ...............    $1,390     $1,410     $1,454   $1,377   $ 5,631
PER SHARE DATA                                                               
Net income ...............     $0.31      $0.32      $0.33    $0.31  $   1.27
Net income,                                                                  
  assuming dilution ......     $0.31      $0.32      $0.33    $0.31  $   1.26

</TABLE>


Data adjusted to reflect a 3 for 2 stock split issued in 1998 and a 5% stock
dividend issued in 1997.












22 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
INTEREST DIFFERENTIAL
<CAPTION>

                                                  December 31,            
                                           1998                1997       
(In thousands)                     VOLUME  RATE  TOTAL VOLUME  RATE TOTAL 
<S>                                 <C>     <C>   <C>   <C>     <C>  <C>  
INTEREST INCOME                                                           
Increase (decrease) in:                                                   
Money market investments and                                              
 interest-bearing deposits                                                
 with banks ......................  $ -38 $   9 $  -29 $  -90 $   5 $  -85
Federal funds sold ...............      0     0      0      0     0      0
Total money market investments ...    -38     9    -29    -90     5    -85
Investment securities                                                     
 Taxable investment securities ...   -130  -426   -556  3,035   185  3,220
 Equity securities ...............    290   -24    266    445   -14    431
 Tax-exempt investment securities      71   -24     47    414   -56    358
Total investment securities ......    231  -474   -243  3,894   115  4,009
Total loans ......................  5,318  -322  4,996  2,394  -106  2,288
Total interest income ............  5,511  -787  4,724  6,198    14  6,212
                                                                          
INTEREST EXPENSE                                                          
Increase (decrease) in:                                                   
Interest-bearing deposits                                                 
 Demand ..........................     41   -21     20     12    -8      4
 Savings .........................    668   111    779    964   520  1,484
 Time ............................  1,031  -100    931  1,662   172  1,834
Total interest-bearing deposits ..  1,740   -10  1,730  2,638   684  3,322
Borrowed funds                                                            
 Short-term borrowings ...........    143    -5    138    705    64    769
 Long-term borrowings ............    731  -117    614    406   -34    372
Total borrowed funds .............    874  -122    752  1,111    30  1,141
Total interest expense ...........  2,614  -132  2,482  3,749   714  4,463
Increase in interest differential  $2,897 $-655 $2,242 $2,449 $-700 $1,749

</TABLE>

The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in cash.

For additional information see Note 1 and Average Balances and Rates on pages
19-20 and 43, respectively, of the Corporation's 1998 Annual Report.












23 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The principal executive officers of Drovers Bancshares Corporation and its
principal subsidiary, The Drovers & Mechanics Bank, as of January 1, 1999, are
as follows:

Name:  A. Richard Pugh                   Age:  58
Position and Office:  Chairman of the Board, President, and Chief Executive
Officer of Drovers Bancshares Corporation and The Drovers & Mechanics Bank.
Mr. Pugh joined the organization in 1988, he was appointed President in 1990
and C.E.O. in 1994.  He has extensive and diversified experience in bank
management.

Name:  George L.F. Guyer, Jr.            Age:  65
Position and Office:  Senior Vice President and Secretary of Drovers
Bancshares Corporation and The Drovers & Mechanics Bank.  Mr. Guyer joined the
organization in 1964.  He served as Marketing Coordinator from 1972 to 1990.
Mr. Guyer retired from his position effective January 1, 1999.

Name:  Michael J. Groft                  Age:  43
Position and Office:  Executive Vice President of Drovers Bancshares
Corporation and Executive Vice President and Senior Lending Officer of The
Drovers & Mechanics Bank.  Mr. Groft joined the organization in March 1978.
He has served in various loan officer positions since 1978.

Name:  Debra A. Goodling                 Age:  40
Position and Office:  Executive Vice President and Treasurer of Drovers
Bancshares Corporation and Executive Vice President, Treasurer and Chief
Financial Officer of The Drovers & Mechanics Bank.  Ms. Goodling joined the
organization in February 1977.  She has served in various financial officer
positions since 1981.

Name:  Shawn A. Stine                    Age:  43
Position and Office:  Executive Vice President and Senior Corporate
Banking Officer of The Drovers & Mechanics Bank.  Mr. Stine joined the
organization in August 1991 in the position of Vice President and Senior
Corporate Banking Officer.

Name:  John D. Blecher                   Age:  37
Position and Office:  Senior Vice President, Secretary and Assistant
Treasurer of Drovers Bancshares Corporation and Senior Vice President,
Secretary and Controller of The Drovers & Mechanics Bank.  Mr. Blecher joined
the organization in February 1987.  He has served as Controller since 1989.



Additional information required for this item is contained on pages 4-8 of the
Definitive Proxy Statement dated April 23, 1999.











24 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART IV.  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 DROVERS BANCSHARES CORPORATION       Date March 24, 1999
        (Registrant)

                 By /S/ A. Richard Pugh                  
                   A. Richard Pugh, Chairman of the Board,
                   President and Chief Executive Officer

Pursuant to the requirement of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.


   _/S/ L. Doyle Ankrum_____________    __/S/ Robert L. Myers____________
   L. Doyle Ankrum, Director            Robert L. Myers, Jr., Director


   _/S/ J. Samuel Gregory___________    __/S/ Harlowe R. Prindle_________
   J. Samuel Gregory, Director          Harlowe R. Prindle, Director


   _/S/ Daniel E. Hess______________    _________________________________
   Daniel E. Hess, Director             Basil A. Shorb, III, Director


   _/S/ Geroge W. Hodges____________    __/S/ D. John Sparler, Jr._______
   George W. Hodges, Director           D. John Sparler, Jr., Director


   _/S/ Herbert D. Lavetan__________    _________________________________
   Herbert D. Lavetan, Director         Gary A. Stewart, Director


   _________________________________    _________________________________
   Richard M. Linder, Director          Robert H. Stewart, Jr., Director


   _/S/ David C. McIntosh __________    __/S/ Delaine A. Toerper ________
   David C. McIntosh, Director          Delaine A. Toerper, Director


   _________________________________    __/S/ James S. Wisotzkey ________
   Frank Motter, Director               James S. Wisotzkey, Director


   _/S/ Debra A. Goodling __________    _/S/ John D. Blecher_____________
   Debra A. Goodling, Executive Vice    John D. Blecher, Senior Vice President,
   President and Treasurer              Secretary and Assistant Treasurer
   Principal Financial Officer          Principal Accounting Officer





25 <PAGE>
EXHIBIT 23
DROVERS BANCSHARES CORPORATION AND SUBSIDIARIES

CONSENT OF INDEPENDENT AUDITORS'

We consent to the incorporation by reference in this Form 10-K of Drovers
Bancshares Corporation and Subsidiaries of our report dated January 15, 1999,
included in the 1998 Annual Report to Shareholders of Drovers Bancshares
Corporation and Subsidiaries.

We also consent to the incorporation by reference in the Registration Statement
on Form S-3 pertaining to the shelf registration of the Dividend Reinvestment
and Stock Purchase Plan of Drovers Bancshares Corporation and Subsidiaries and
the Registration Statement on Form S-8 pertaining to the Drovers Bancshares
Corporation Incentive Stock Option Plan of our report dated January 15, 1999,
with respect to the consolidated financial statements incorporated herein by
reference.


/S/ Stambaugh Ness P.C.

York, Pennsylvania

March 24, 1999










































26<PAGE>

                                    Exhibit 10(a)

                                  AMENDED AND RESTATED
                               CHANGE OF CONTROL AGREEMENT


     AGREEMENT made this 14th day of November, 1995, by and between DROVERS
BANCSHARES CORPORATION and THE DROVERS & MECHANICS BANK, a Pennsylvania
corporation and a Pennsylvania state chartered bank, respectively, each with
offices in York, Pennsylvania, hereinafter collectively called "Company", and
A. RICHARD PUGH, hereinafter called "Executive."


                                      BACKGROUND


     Executive is employed by Company as President and Chief Executive
Officer.  In consideration of Executive's past and future services, Company
entered into a Change of Control Agreement with Executive on September 28,
1994 ("Prior Agreement") to provide Executive compensation and other benefits
upon his termination of employment after a corporate change of control.

     In consideration of the mutual covenants and agreements herein, and
intending to be legally bound hereby, the parties agree to amend and restate
the Prior Agreement as follows:

     1.     TERM - The term of this Agreement shall commence on the date
hereof and end on the earliest to occur of the following:

            (a)     Executive's death;

            (b)     Executive's permanent disability resulting
         in his inability to fully perform or complete his duties
         as President and Chief Executive Officer for a period
         anticipated to exceed one hundred eighty 180) consecutive
         days, provided, however, that in the event Company
         maintains a long-term disability insurance plan on
         the date Executive becomes disabled, Executive's
         permanent disability shall be determined under the criteria
         of the insurance policy;

            (c)     Retirement at or after age sixty-five (65);

            (d)     The date five (5) years after a Change of
         Control as defined in Section 2;

            (e)     The date thirty-six (36) months after a Change of
         Control Termination as defined in Section 2.

            (f)     The date eighteen (18) months after the termination
         of Executive's employment if there is no Change of Control as
         defined in Section 2 in the interim.

     However, if Executive's death, permanent disability or retirement, as
defined above, occurs after a Change of Control Termination, this Agreement
shall terminate on thirty-six (36) months after such Change of Control 
Termination.



27 <PAGE>
     2.     CHANGE OF CONTROL TERMINATION - Change of Control Termination
shall be deemed to have occurred if there is a Change of Control regarding
either or both corporations constituting Company and, during the Employment
Security Period, either of the following occurs: (i) Company terminates the
employment of Executive other than for Good Cause; or (ii) Executive
terminates his employment with Company following a Change in Control and for
Good Reason.

            (a)     "Change of Control" with respect to the Drovers
         Bancshares Corporation or the Drovers & Mechanics Bank ("Target
         Company") shall mean the occurrence of any of the following:

                    (i)     the change in the Board of Directors
               of Target Company, during any twenty-four (24) month
               period endingon or after the date of this Agreement,
               if the individuals whowere directors of Target Company
               at the beginning of the period cease during such period
               to constitute at least a majority of the Board of
               Directors;

                   (ii)     the commencement of a tender offer or
               exchange offer by any entity, person or group (including
               any affiliates of such entity, person or group, by other
               than an affiliate of Company) for twenty-five percent
               (25%) or more of the outstanding voting power of all
               capital stock of Target Company;

                  (iii)     the acquisition by any entity, person
               or group (including any affiliates of such entity,
               person or group) of beneficial ownership, as that term
               is defined in Rule 13d-3 under the Securities Exchange
               Act of 1934, of Target Company capital stock entitled
               to twenty-five percent (25%) or more of the outstanding
               voting power of all capital stock of Target Company;

                   (iv)     the effective time of the merger,
               consolidation, division, share exchange, or any other
               transaction or a series of transactions outside the
               ordinary course of business ("Business Combination"),
               as a result of which the holders of the outstanding
               voting capital stock of Target Company immediately prior
               to such Business Combination, excluding any shareholder
               who is a party to the Business Combination (other than
               Company) or is such party' affiliate as defined in the
               Securities Exchange Act of 1934, hold less than seventy-
               five percent 75%) of the voting capital stock of the
               surviving or resulting corporation;

                   (v)      the transfer of substantially all of
               the Target Company's assets other than to a wholly
               owned subsidiary of Target Company.


            (b)     "Employment Security Period" shall mean the period
         commencing eighteen (18) months prior to the Change of Control and 
         ending five (5) years after the Change of Control.
(c)     "Good Cause" shall mean the occurrence of one or
         more of the following events:


28 <PAGE>

                   (i)     Executive's willful engagement in gross
               misconduct that is materially injurious to Company;

                  (ii)     excessive alcohol or drug abuse by
               Executive which continually and materially
               interferes with Executive's ability to perform
               his duties as President and Chief Executive
               Officer;

                 (iii)     Executive's conviction or plea of nolo
               contendere of a crime involving fraud, misappro-
               priation, embezzlement or other violation of the
               law of like nature or severity;

                  (iv)     The voluntary filing or application by
               Executive for relief in bankruptcy or other moratorium
               law, or for the appointment of a receiver, trustee or
               liquidator, or the making by Executive of a general
               assignment of all his assets for the benefit of
               creditors, which is not dismissed within sixty days,
               unless any such action or event is attributable to a
               judgment rendered against the Executive arising out
               of his charitable or civic activities.

                   (v)     Executive's willful failure to perform
               his duties as President and Chief Executive
               Officer in a manner generally consistent with
               his past service;


            (d)     "Good Reason" shall mean the occurrence of one
         or more of the following without Executive's prior written consent:

                   (i)     an assignment to Executive of any
               duties materially inconsistent with his
               position as President and Chief Executive
               Officer;

                  (ii)     a reduction in Executive's fixed
               salary or elimination of, or material adverse
               modification to any incentive or other
               supplemental currently taxable compensation
               plan, except any such reduction, elimination
               or modification that is applied generally to
               senior executive officers of Company;

                 (iii)     a relocation of Executive's principal
               executive office outside of York County,
               Pennsylvania, or any requirement that
               Executive be based other than at Company's
               principal executive offices in York,
               Pennsylvania, except on a temporary basis in
               the ordinary course of business;
                    (v)     termination or material adverse
               modification to any nonqualified deferred
               compensation plan in which Executive
               participates without substitution of
               comparable benefits, except any such

29 <PAGE>
               termination or modification that is
               applied generally to senior executive officers
               who had such benefits.


     3.     COMPENSATION AND BENEFITS - Upon a Change of Control Termination,
Company shall provide Executive, in addition to any other rights or benefits
to which Executive may be entitled by contract or under any policy or custom
of Company, the following:

            (a)     For a term commencing with such termination and
         extending for three (3) years thereafter, Company shall pay 
         Executive an annual compensation equal to Executive's highest
         compensation received in that calendar year included with the
         period commencing with the calendar year in which this Agreement
         is executed initially and extending to the calendar year in which
         termination occurs (annualized as necessary).  For purposes of the
         foregoing, "compensation" shall be (i) salary without reduction for
         any contribution to (aa) cash or (ii) deferred arrangements under
         Section 401(k) of the Internal Revenue Code of 1986, as amended [or
         successor provision] and (bb) any nonqualified deferred
         compensation plan, plus (ii) non-deferred incentive compensation
         (collectively "Compensation"), and shall be payable in equal
         installments with such frequency as Company customarily pays its
         payroll.  For purposes of this paragraph (a), Executive's
         Compensation will be reduced, beginning with the first month
         following his re-employment with another employer, by fifty percent
         (50%) of the Form W-2 income, with the new employer.  Executive
         shall have no obligation to mitigate his damages by seeking
         employment following his termination of employment with Company.

            (b)     An amount equal to forty percent (40%) of his
         Compensation, payable in one lump sum at the time of termination,
         to compensate Executive for all expenses incurred by him in
         connection with any search for a new job and/or any relocation.
         Executive shall have no duty to demonstrate his need for, or to
         account for the use of, the disbursement of same.

            (c)     Company shall provide, at its expense, for the
         continuation in full force and effect for a period ending upon the
         earlier to occur of Executive's death or three (3) years following
         the Change of Control Termination, all health, dental, life
         insurance and disability plans, programs and arrangements in which
         Executive was entitled to participate immediately prior to such
         termination, provided that his continued participation is possible
         under the terms and provisions of such plans, programs and
         arrangements, and under the laws and regulations applicable
         thereto.  If Executive's participation in any plan, program or
         arrangement is barred, Company shall use its best efforts to obtain
         and pay for, on Executive's behalf, individual insurance policies,
         plans, programs or arrangements which provide benefits equivalent
         to those which Executive is entitled to receive prior to the date
         of termination.  However, Company may, at any time, deny Executive
         coverage under a health, dental, life insurance or disability plan,
         program or arrangement, to the extent such coverage is duplicate of
         coverage provided Executive by any subsequent employer.  At the end
         of the period of coverage, to the extent permitted by the plans and
         programs, Executive shall have the option to have assigned to him,
         any assignable insurance policy owned by Company and relating
         specifically to him, including, without limitation, CNA-Continental
30 <PAGE>
         Assurance Company policy #3348167, #3363137 and #3393056 if then in
         force and owned by Company.  Executive's right to continuation of
         health and medical coverage under the Consolidated Omnibus Budget
         Reconciliation Act of 1985, as amended, shall commence at the end
         of the three (3) year period following the Change of Control
         Termination.

            (d)     Company shall provide, at its expense, for the
         continuation in full force and effect for a period ending upon
         the earlier to occur of Executive's death, retirement, or three (3)
         years following the Change of Control Termination, all pension,
         profit-sharing, savings, and nonqualified deferred compensation
         plan including the supplemental retirement income plan in which
         Executive was entitled to participate immediately prior to such
         termination, provided that his continued participation is possible
         under the terms and provisions of such plans, programs and
         arrangements, and under the laws and regulations applicable
         thereto.  If Executive's participation in any plan, program or
         arrangement is barred, Executive shall be entitled to receive, upon
         a Change of Control Termination, a lump sum payable annually equal
         to the annual contribution, payments, credits or allocations
         Company would have provided him, to his account or on his behalf
         under such plan, program or arrangement had his participation and
         eligibility continued for the three (3) year period following
         termination.

            (e)     Executive may exercise stock options issued to him
         pursuant to (i) the Drovers Bancshares Incentive Stock Option Plan as
         adopted by the Board of Directors on August 28, 1985 and as herein
         modified ("Stock Option Plan"), and (ii) Drovers Bancshares 
         Corporation 1995 Stock Option Plan ("1995 Plan").  Such stock options
         shall be exercisable fully, and closing shall occur, within ninety
         (90) days of the Change of Control Termination whether or not:

                    (i)     A period of one (1) year has elapsed
               from the date of grant to the date of exercise, as
               required by Section 5, paragraph (c) of the Stock
               Option Plan, or any similar provision under the 1995
               Plan.

                   (ii)     Any installment exercise terms as
               stipulated by the Stock Option Plan's administrative
               committee ("Committee") and any agreement issued under
               Section 5, paragraph (c) of the plan has been
               satisfied, or any similar stipulation under the 1995
               Plan.

(iii)     The Committee has extended the option
               period upon Executive's termination pursuant to
               Section 5, paragraph (f) of the Stock Option Plan, or
               any similar Provision in the 1995 Plan.  However, in
               no event shall Executive Exercise any stock option
               after the earlier of (i) ten (10) years from the date
               of grant, or (ii) the expiration of the option period
               as stipulated in an agreement issued under Section 5,
               paragraph (c) of the Stock Option Plan, or any similar
               provision in the 1995 Plan, as applicable to said
               option(s).


31<PAGE>
          The Committee shall authorize this acceleration of Executive's
          stock options under the Stock Option Plan by executing on the date
          of this Agreement the Stock Option Acceleration Authorization
          attached hereto as Exhibit A.  A similar acceleration occurs under
          Section 8 of the 1995 Plan.

      4.    RIGHT TO HEARING.  In the event Company believes that a 
Good Cause for termination of Executive's employment may exist, Company
shall provide Executive with written notice of its intention to terminate
for Good Cause and the facts upon which Company bases such belief, which
notice shall be given at least sixty (60) days prior to the proposed
effective date for the termination.  For such termination to be effective,
Executive shall be provided with an opportunity within the said sixty (60)
day period to be heard by the Board of Directors of Company.  Thereafter,
the Board may at its discretion elect to terminate Executive's employment
by majority vote.

      5.    CONTINUANCE OF BENEFITS.  If Executive has commenced receiving
benefits hereunder, such benefits shall continue (subject however, to the
specific terms and conditions applicable to each benefit as set forth herein),
for the full term as provided in Section 3, above, notwithstanding that
Executive subsequently dies, becomes permanently disabled, or retires at or
after age sixty-five (65).  Executive may, at any time and by written notice
to Company in the form attached hereto as Exhibit B, name one or more
beneficiaries of any such benefits in the event of his death; provided,
however, that upon Executive's death, the distribution of Executive's benefits
under a qualified pension plan shall be made in accordance with the terms,
including any beneficiary designation provision, of such plan.  A designation
of beneficiary under this Agreement shall be effective on the date actually
received by Company.  If Executive fails to designate a beneficiary, or if no
beneficiary survives Executive, the benefits provided herein shall be paid:

                                   (a)     to his surviving spouse;

                                   (b)     if there is no surviving spouse,
                               to his living descendants per stirpes; or

(c)     if there is neither a surviving spouse
                               nor  descendants, to his duly appointed and 
qualified
                               executor or personal representative.

     6.     NO LIMITATION UPON PAYMENTS - The parties believe that the
benefits payable under Section 3, above, represent reasonable compensation for
personal services and as such no portion thereof constitutes an "excess
parachute payment" as defined in Section 280G of the Internal Revenue Code of
1986, as amended (or successor provision).  The parties acknowledge that,
should any portion be so characterized, substantial adverse tax consequences
would result to both the payor (no tax deduction) and to the payee (excise
tax). Nonetheless, the parties intend that the amounts be paid in full as
provided herein, notwithstanding any such characterization and
tax consequence.

     7.     WITHHOLDING - Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

     8.     SOURCE OF PAYMENT - All payments provided under this Agreement
may be paid in cash from the general funds of the Company and no special or
separate fund shall be required to be established.  Executive shall have no
right, title or interest whatever in or to any investment which Company may
32 <PAGE>
make to fund its obligations hereunder.  Nothing contained in this Agreement,
and no action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind or a fiduciary relationship between Company and
Executive or any other person.

     9.     RABBI TRUST - The Company is establishing contemporaneously
herewith that rabbi trust attached hereto as Exhibit "C" ("Trust"), to
which it is contributing an initial corpus of $100.  In the event of a
change of control as defined herein, the Company shall, in accordance with the
terms of the Trust, contribute thereto the amount described in Section 1(e)
thereof.  Thereafter, amounts payable hereunder shall be paid first from the
assets of such Trust and the income thereon.  To the extent that the assets of
the Trust and the income thereon are insufficient, Company shall pay Executive
the amount due hereunder.

     10.    NONASSIGNABILITY - Neither this Agreement nor any right 
or interest hereunder shall, without Company's prior written consent, be
subject to any sale, transfer, assignment, pledge, attachment, garnishment, or
other alienation or encumbrance of any kind.

     11.    ATTACHMENT - Except as required by law, the right to receive
payments under this Agreement shall not be subject to anticipation, sale,
encumbrance, charge, levy, or similar process or assignment by operation of
law.

     12.    SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit
of and be binding upon any corporate or other successor of the Company which
shall acquire, directly or indirectly, by merger, acquisition, consolidation,
purchase, or otherwise, all or substantially all of the assets of the Company,
and shall otherwise inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.  Nothing in the Agreement shall preclude Company from consolidating
or merging into or with or transferring all or substantially all of its assets
to another person, provided such other person shall assume this Agreement and
all obligations of Company hereunder.  Upon such a consolidation, merger, or
transfer of assets and assumption, the term "Company" as used herein, shall
mean such other person and this Agreement shall continue in full force and
effect.

     13.    WAIVERS NOT TO BE CONTINUED - Any waiver by a party or any
breach of this Agreement by another party shall not be construed as
a continuing waiver or as a consent to any subsequent breach by the
other party.

     14.    NOTICES - All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed by certified or
registered mail, return receipt requested, with postage prepaid,
to the following addresses or to such other address as either
party may designate by like notice:

     A.     If to Executive, to:     A. Richard Pugh
                                     70 Walden Court
                                     York, PA  17404-9730

     B.     If to Company, to:       Drovers Bancshares Corporation
                                     30 South George Street
                                     York, PA  17401


33 <PAGE>
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

     15.    ARBITRATION - Any claim or controversy arising out of or relating
to this Agreement or any breach thereof shall be settled by arbitration.  Any
such arbitration shall take place in York, Pennsylvania, in accordance with
the rules of the American Arbitration Association.  Judgment upon the written
award rendered by a majority of the arbitrators may be entered in the Court
having jurisdiction thereof.  The written decision of a majority of the
arbitrators shall be valid, binding, final, and nonappealable.

     16.    MISCELLANEOUS - 

           (a)     In the event that a party hereto wrongfully fails to
         perform its obligations hereunder as determined and evidenced by a
         final and nonappealable determination of a board of arbitration
         or court, as the case may be, such party shall thereupon be
         obligated to promptly pay and reimburse the other party hereto
         for its costs and expenses incurred (including attorney, accounting,
         actuary and other professional consultants) in enforcing its or his
         entitlements hereunder.

           (b)     Executive shall be under no obligation to execute
         a covenant against competition as a condition to receive any
         benefit otherwise payable hereunder.

           (c)     Upon request, Executive shall promptly provide
         Company with information regarding his subsequent employment as
         contemplated herein, including that described in Section 3 hereof.

           (d)     This Agreement constitutes the entire agreement
         between the parties with respect to the subject matter hereof, and
         supersedes and replaces all prior agreements between the parties.  No
         amendment, waiver or termination of any of the provisions hereof
         shall be effective unless in writing and signed by the party against
         whom it is sought to be enforced.  Any written amendment, waiver or
         termination hereof executed by Company and Executive shall be binding
         upon them and upon all other persons, without the necessity of
         securing the consent of any other person, and no person shall be
         deemed to be third-party beneficiary under this Agreement.

           (e)     This Agreement shall not limit or infringe upon the
         right of Company to terminate the employment of Executive
         at any time, nor upon the right of Executive to terminate
         his employment with Company, each subject however to the specific
         provisions hereof.

           (f)     "Person" as used in this Agreement means a natural
         person, joint venture, corporation, sole proprietorship, trust,
         estate, partnership, cooperative, association, non-profit
         organization or any other legal, cognizable entity.

           (g)     This Agreement may be executed in one or more
         counterparts, each of which shall be deemed an original, but
         all of which taken together shall constitute one and the same
         Agreement.

           (h)     Except as otherwise expressly set forth herein,
         no failure on the part of any party hereto to exercise and no
         delay in exercising any right, power or remedy hereunder shall
34 <PAGE>
         operate as a waiver thereof, nor shall any single or partial
         exercise of any right, power or remedy hereunder preclude any 
         other or further exercise thereof or the exercise of any other
         right, power or remedy.

           (i)     The headings of the sections of this Agreement have
         been inserted for convenience of reference only and shall in no
         way restrict or modify any of the terms or provisions hereof.

           (j)     This Agreement shall be governed and construed and
         the legal relationships of the parties determined in accordance
         with the laws of the Commonwealth of Pennsylvania applicable to
         be performed in the Commonwealth of Pennsylvania.

           (k)     The obligation of Company hereunder shall be joint
         and several.

           (l)     In the event that a party hereto wrongfully fails to
         perform its obligations hereunder as determined by a final and
         nonappealable determination of a board of arbitrator or court,
         such party shall thereupon be obligated to promptly pay and
         reimburse the other party hereto for its costs and expenses
         incurred (including attorney, accounting, actuary and other
         profesional consultants) in enforcing its or his entitlements
         hereunder.



































35 <PAGE>



ATTEST:                             COMPANY:
                                    DROVERS BANCSHARES CORPORATION


______________________________      By____________________________________



ATTEST:                             THE DROVERS & MECHANICS BANK


______________________________      By____________________________________


WITNESS:                            EXECUTIVE


______________________________     ________________________________(SEAL)
                                    A. Richard Pugh






































36 <PAGE>
                                      EXHIBIT A


                          STOCK OPTION ACCELERATION AUTHORIZATION



     Pursuant to Section 5(c) of the Drovers Bancshares Incentive Stock
Option Plan ("Plan"), dated August 28, 1985, the Committee under said Plan
hereby authorizes the acceleration of A. Richard Pugh's stock options under
the Plan to the extent described in Section 3(e) of the Amended and Restated
Change of Control Agreement by and between Drovers Bancshares Corporation,
Drovers & Mechanics Bank, and A. Richard Pugh, dated ______________, 1995.



__________________________________     __________________________________




__________________________________     __________________________________




Dated: ___________________________     

































37 <PAGE>
                                     EXHIBIT B


                               BENEFICIARY DESIGNATION FORM



     I hereby designate the person(s) named below as beneficiary (or
beneficiaries) to receive all amounts payable under the Amended and
Restated Change of Control Agreement by and between Drovers Bancshares
Corporation and Drovers & Mechanics Bank ("Company"), and
A. Richard Pugh, dated ______________, 1995, which have not
been paid at the date of my death.

     Name of Beneficiary:               Address:





     I acknowledge that this Beneficiary Designation shall become effective on
the date actually received by Company and shall render all prior Beneficiary
Designations, if any, void.


WITNESS


__________________________________     _____________________________(SEAL)
                                       A. Richard Pugh




Date received by Company: 

__________________________________




COMPANY


__________________________________















38 <PAGE>
                                    Exhibit 10(b)


                               AMENDED AND RESTATED
              THE DROVERS & MECHANICS BANK SUPPLEMENTAL PENSION PLAN
                               FOR A. RICHARD PUGH


     In consideration of your services with The Drovers & Mechanics
Bank ("Employer"), Employer adopted The Drovers & Mechanics Bank Supplemental
Pension Plan for A. Richard Pugh dated September 28,1994 ("Prior Plan") for
the purpose of providing you and/or your beneficiary pension benefits
("Supplemental Pension") and death benefits ("Supplemental Death Benefit") in
addition to the annual salary and the pension and welfare benefits to which
you and/or your beneficiary may be entitled under pension and welfare benefit
plans, programs or arrangements of Employer or its affiliate(s).  Employer
hereby amends and restates said Prior Plan as follows:


1.   DEFINITIONS.  As used herein, the following words and phrases shall have
     the meanings described below:

     1.1     "Actual Retirement Date" means the first day of the month
              following your retirement.

     1.2     "Annual Salary" means your average annual compensation,
             including non-deferred incentive pay, without reduction for
             (i) any contribution to cash or deferred arrangements under
             Section 401(k) of the Internal Revenue Code of 1986, as amended
             (or successor provision) or (ii) any nonqualified deferred
             compensation plan, as reported for  those three (3) full
             calendar years included within the five (5) full calendar years
             immediately preceding the calendar year of your Actual Retirement
             Date, in which your annual compensation was the greatest.

     1.3     "Early Retirement Date" means the first day of the month
             following your sixty-second (62nd) birthday.

     1.4     "Normal Retirement Date" means the first day of the month
             following your sixty-fifth (65th) birthday.

     1.5     "Pension Plan" means The Drovers & Mechanics Pension Plan, as in
             effect from time to time.

     1.6     "Supplemental Pension" means the projected pension hereunder at
             your Normal Retirement Date which when added to your then primary
             social security amount and your then projected pension from the
             Pension Plan will yield an annual benefit equal to the "Target
             Percentage" of your Annual Salary.  The Target Percentage at
             Normal Retirement Date is 65% and at any other time is adjusted
             from 65% by use of the actuarial assumptions, methods and
             computational techniques then utilized by the Pension Plan
             ("Adjusted Target Percentage").

     1.7     "Supplemental Death Benefit" means the death benefit as defined
             in Section 3.




39 <PAGE>
2.   SUPPLEMENTAL PENSION

     2.1     Normal Retirement.  If you retire on your Normal Retirement Date,
             Employer shall pay to you a Supplemental Pension in the form of a
             ten year term certain and life payout, or as otherwise selected
             by you under Section 4 hereof.

     2.2     Early or Late Retirement.  Except as provided to the contrary in
             Section 5.2 below, if you retire or otherwise terminate
             Employment prior to attaining age 62, no benefits shall be
             payable under this Plan.  If you retire after having attained age
             62 and other than on your Normal Retirement Date, Employer shall
             pay you, commencing at your Actual Retirement Date, a
             Supplemental Pension calculated using your Adjusted Target
             Percentage.

     2.3     Notice.  In the event of an early retirement, you shall provide
             Employer at least six months advance written notice of your
             Actual Retirement Date.

3.   SUPPLEMENTAL DEATH BENEFIT.  If, upon your death prior to Actual
     Retirement Date, your surviving spouse is entitled to receive  a
     death benefit under the Pension Plan, your spouse shall receive a
     Supplemental Death Benefit hereunder, which shall be calculated in
     accordance with the provisions of the Pension Plan substituting,
     however, the Adjusted Target Percentage for the percentage specified
     in the Pension Plan, with the result then reduced by the Pension Plan
     death benefit and the social security benefit, and payable in the
     same manner as the Pension Plan benefit.

4.   PAYMENT OPTIONS.  Insofar as the Pension Plan permits the making of
     elections as to the mode of payment of benefits, such election by you
     will likewise apply with respect to the manner of payment and the amount
     of the Supplemental Pension, using the actuarial equivalency rules
     specified in the Pension Plan for optional forms of benefits.

5.   TRUST.  The Employer is establishing contemporaneously herewith that
     trust attached hereto as Exhibit "A" ("Trust"), to which it is
     contributing an initial corpus of $100.  In the event of a change of
     control as defined in that Amended and Restated Change of Control
     Agreement dated         , 1995, by and between the parties hereto, the
     Employer shall, in accordance with the terms of the Trust, contribute
     thereto the amount described in Section 1(e) thereof.  Thereafter,
     amounts payable hereunder shall be paid first from the assets of such
     Trust and the income thereon.  To the extent that the assets of the Trust
     and the income thereon are insufficient, Employer shall pay Executive the
     amount due hereunder. 

6.   AMENDMENT AND TERMINATION.  This Plan may be terminated, amended or
     modified by Employer, provided however:

     6.1     No such amendment shall reduce the Supplemental Pension and/or
             the Supplemental Death Benefit which (a) has commenced prior to
             the effective date of such amendment, modification or termination
             or (b) would be payable if you had attained age 62 and had
             retired on the day immediately prior to such effective  date,
             provided however, the benefit so determined shall not commence
             until you actually attain age 62 and if you die in the interim,
             the benefit shall be the death benefit determined in accordance
             with the provisions hereof.
40 <PAGE>

             6.2     In the event of a Change of Control, this Plan may not be
             amended to reduce the Supplemental Pension and/or the Supplemental
             Death Benefit and may not be terminated during the Employment
             Security Period and the benefits shall continue to accrue
             thereunder in accordance with the provisions of the Change of
             Control Agreement and hereof.  The terms "Change of Control",
             "Employment Security Period" and "Change of Control Termination"
             shall have the meaning provided under the Amended and Restated
             Change of Control Agreement by and between Drovers Bancshares
             Corporation, Drovers & Mechanics Bank, and A. Richard Pugh,
             dated,______________, 1995.  If you suffer a Change of Control
             Termination prior to attaining Early Retirement Date, you shall
             receive a Supplemental Pension commencing at Early Retirement
             Date based on your Adjusted Target Percentage and your Annual
             Salary as defined in Section 1.2 above determined as of the
             date of your Change of Control Termination rather than Actual
             Retirement Date.  Benefits so calculated shall commence on your
             Early Retirement Date rather than your Actual Retirement Date.


7.   MISCELLANEOUS

     7.1     In the event that a party hereto wrongfully fails to perform its
             obligations hereunder as determined by a final and nonappealable
             determination of a board of arbitrator or court, such party shall
             thereupon be obligated to promptly pay and reimburse the other
             party hereto for its costs and expenses incurred (including
             attorney, accounting, actuary and other professional consultants)
             in enforcing its or his entitlements hereunder.

     7.2     Nothing herein (a) shall be deemed to exclude you from any
             compensation, pension, stock option, incentive pay or other
             benefits to which you otherwise are or might become entitled to
             as an employee of Employer, or (b) shall be construed as
             conferring on you the right to continue in the employ of Employer.

     7.3     Any amounts payable hereunder shall not be deemed salary or other
             compensation to you for the purposes of computing benefits to
             which you may be entitled under the Pension Plan or any other
             plan, program or arrangement of Employer for the benefit of its
             employees.

     7.4     The rights and obligations hereunder shall be binding on you
             and your beneficiary and on the successor and assigns of Employer.

     7.5     Employer shall be responsible for the general operation and
             administration of this Plan.

     7.6     This Plan shall be unfunded and no provision shall at any time be
             made with respect to segregating any assets of Employer for
             payment of any benefits hereunder.  No person will have any
             interest in any assets of Employer by reason of the right to
             receive a benefit hereunder. You, your surviving spouse, and any
             other beneficiary, will have only the rights of a general
             unsecured creditor of Employer with respect to any rights
             hereunder.



41<PAGE>
     7.7     The rights and interests hereunder shall not, unless with
             Employer's prior written consent, be subject to any sale,
             transfer, assignment, pledge, attachment, garnishment, or other
             alienation or encumbrance of any kind.

     7.8     Except as required by law, the right to receive payments
             hereunder shall not be subject to anticipation, sale,
             encumbrance, charge, levy, or similar process or assignment by
             operation of law.

     7.9     The headings of the sections of this Plan have been inserted for
             convenience of reference only and shall in no way restrict or
             modify any of the terms or provisions hereof.

    7.10     This Plan shall be administered and construed in accordance
             with the laws of the Commonwealth of Pennsylvania.

   IN WITNESS WHEREOF, Employer has caused this Plan to be executed
this_____________day of __________________, 1995.


ATTEST:                             EMPLOYER:
                                    THE DROVERS & MECHANICS BANK



______________________________ By____________________________________

































42 <PAGE>
                                 FIRST AMENDMENT TO
                           THE DROVERS AND MECHANICS BANK
                            SUPPLEMENTAL PENSION PLAN FOR
                        A. RICHARD PUGH (AMENDED AND RESTATED)


     By this Agreement, the undersigned hereby amend that Amended
and Restated Supplemental Pension Plan dated November 14, 1995
("Plan"), effective as of January 1, 1996.
     1.     Section 4 of the Plan is hereby amended and restated in 
its entirety to read as follows:
           "4.     Payment Options.  Insofar as the Pension Plan permits the
     making of elections as to the mode of payment of benefits, such election
     by you will likewise apply with respect to the manner of payment and the
     amount of the Supplemental Pension, using the actuarial equivalency rules
     specified in the Pension Plan for optional forms of benefits, provided
     however and the foregoing to the contrary notwithstanding, there shall
     be no option hereunder for payment of benefits in a lump sum."
     2.      In all other respects, the Agreement as herein modified shall
remain in full force and effect.
     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have set their hands and seals this 19th day of January, 1996, effective for
all purposes as of January 1, 1996.

                                    EMPLOYER:
ATTEST:                             THE DROVERS & MECHANICS BANK


                                    By____________________________
George L. F. Guyer, Jr.             Richard M. Linder
Senior Vice President and           Chairman of the Board
Secretary


WITNESS:                            EMPLOYEE:


______________________________                                    (SEAL)
                                    A. Richard Pugh




43 <PAGE>

                                  Exhibit 10(c)

                            CHANGE OF CONTROL AGREEMENT


AGREEMENT made this ____ day of December, 1998, by and between
DROVERS BANCSHARES CORPORATION and THE DROVERS & MECHANICS BANK, a
Pennsylvania corporation and a Pennsylvania state chartered bank,
respectively, each with offices in York, Pennsylvania, hereinafter
collectively called "Company", and "Named Executive Vice President",
hereinafter called "Executive."

                                     BACKGROUND

     Executive is employed by Company as an Executive Vice President.  In
consideration of Executive's past and future services, Company wishes to enter
into a Change of Control Agreement with Executive to provide Executive
compensation and other benefits in the event of his or her termination of
employment after a corporate change of control.

     In consideration of the mutual covenants and agreements herein, and
Intending to be legally bound hereby, the parties agree as follows:

     1.     TERM - The term of this Agreement shall commence on the date
hereof and end on the earliest to occur of the following:

            (a)     Executive's death;

            (b)     Executive's permanent disability resulting in his
     inability to fully perform or complete his or her duties as Executive
     Vice President for a period anticipated to exceed one hundred eighty
     (180) consecutive days, provided, however, that in the event Company
     maintains a long-term disability insurance plan on the date Executive
     becomes disabled, Executive's permanent disability shall be determined
     under the criteria of the insurance policy;

            (c)     Retirement at or after age sixty-five (65);

            (d)     The date two (2) years after a Change of Control as
     defined in Section 2;

            (e)     The date eighteen (18) months after a Change of Control
     Termination as defined in Section 2.

            (f)     The date twelve (12) months after the termination of
     Executive's employment if there is no Change of Control as defined in
     Section 2 in the interim.

     However, if Executive's death, permanent disability or retirement, as
defined above, occurs after a Change of Control Termination, this Agreement
shall terminate on eighteen (18) months after such Change of Control
Termination.

     2.     CHANGE OF CONTROL TERMINATION - Change of Control Termination shall
be deemed to have occurred if there is a Change of Control regarding either or
both corporations constituting Company and, during the Employment Security
Period, either of the following occurs: (i) Company terminates the employment
of Executive other than for Good Cause; or (ii) Executive terminates his or
her employment with Company following a Change in Control and for Good Reason.
44 <PAGE>
            (a)     "Change of Control" with respect to the Drovers Bancshares
Corporation or the Drovers & Mechanics Bank ("Target Company") shall mean the
occurrence of any of the following:

                    (i)     the change in the Board of Directors of
            Target Company, during any twenty-four (24) month period
            ending on or after the date of this Agreement, if the
            individuals who were directors of Target Company at the
            beginning of the period cease during such period to
            constitute at least a majority of the Board of Directors;

                   (ii)     the commencement of a tender offer or
            exchange offer by any entity, person or group (including
            any affiliates of such entity, person or group, by other
            than an affiliate of Company) for twenty-five percent (25%)
            or more of the outstanding voting power of all capital stock
            of Target Company;

                  (iii)     the acquisition by any entity, person
            or group (including any affiliates of such entity, person
            or group) of beneficial ownership, as that term is defined
            in Rule 13d-3 under the Securities Exchange Act of 1934, of
            Target Company capital stock entitled to twenty-five percent
            (25%) or more of the outstanding voting power of all capital
            stock of Target Company;

                   (iv)     the effective time of the merger,
            consolidation, division, share exchange, or any other
            transaction or a series of transactions outside the
            ordinary course of business ("Business Combination"), as
            a result of which the holders of the outstanding voting
            capital stock of Target Company immediately prior to such
            Business Combination, excluding any shareholder who is a
            party to the Business Combination (other than Company) or is
            such party' affiliate as defined in the Securities Exchange
            Act of 1934, hold less than seventy-five percent (75%) of
            the voting capital stock of the surviving or resulting
            corporation;

                    (v)     the transfer of substantially all of
            the Target Company's assets other than to a wholly owned
            subsidiary of Target Company.

            (b)     "Employment Security Period" shall mean the period
commencing twelve (12) months prior to the Change of Control and ending
two (2) years after the Change of Control.

            (c)     "Good Cause" shall mean the occurrence of one
or more of the following events:

                    (i)     Executive's willful engagement in gross
            misconduct that is materially injurious to Company;

                   (ii)     excessive alcohol or drug abuse by Executive
            which continually and materially interferes with Executive's
            ability to perform his duties as Executive Vice President;

                  (iii)     Executive's conviction or plea of nolo
            contendere of a crime involving fraud, misappropriation,

45 <PAGE>
            embezzlement or other violation of the law of like nature
            or severity;

                   (iv)     The voluntary filing or application by
            Executive for relief in bankruptcy or other moratorium
            law, or for the appointment of a receiver, trustee or
            liquidator, or the making by Executive of a general
            assignment of all his or her assets for the benefit of
            creditors, which is not dismissed within sixty days, unless
            any such action or event is attributable to a judgment
            rendered against the Executive arising out of his or her
            charitable or civic activities.

                    (v)     Executive's willful failure to perform his
            or her duties as Executive Vice President in a manner
            generally consistent with his or her past service;

            (d)     "Good Reason" shall mean the occurrence of one or more
of the following without Executive's prior written consent:

                    (i)     an assignment to Executive of any duties
            materially inconsistent with his or her position as
            Executive Vice President;

                   (ii)     a reduction in Executive's fixed salary or
            elimination of, or material adverse modification to any
            incentive or other supplemental currently taxable
            compensation plan, except any such reduction, elimination
            or modification that is applied generally to senior
            executive officers of Company;

                  (iii)     a relocation of Executive's principal
            executive office outside of York County, Pennsylvania,
            or any requirement that Executive be based other than
            at Company's principal executive offices in York,
            Pennsylvania, except on a temporary basis in the ordinary
            course of business;

                   (iv)     a termination or material adverse
            modification to any nonqualified deferred compensation
            plan in which Executive participates without substitution
            of comparable benefits, except any such termination or
            modification that is applied generally to senior executive
            officers who had such benefits.

     3.     COMPENSATION AND BENEFITS - Upon a Change of Control Termination,
Company shall provide Executive, in addition to any other rights or benefits
to which Executive may be entitled by contract or under any policy or custom
of Company, the following:

            (a)     For a term commencing with such termination and
     extending for eighteen (18) months thereafter, Company shall pay
     Executive an annual compensation equal to Executive's highest
     compensation received in that calendar year included with the period
     commencing with the calendar year in which this Agreement is executed
     initially and extending to the calendar year in which termination occurs
     (annualized as necessary).  For purposes of the foregoing, "compensation"
     shall be (i) salary without reduction for any contribution to (aa) cash
     or deferred arrangements under Section 401(k) of the Internal Revenue
     Code of 1986, as amended [or successor provision] and (bb) any
46 <PAGE>
     nonqualified deferred compensation plan, plus (ii) non-deferred incentive
     compensation (collectively "Compensation"), and shall be payable in equal
     installments with such frequency as Company customarily pays its payroll.
     For purposes of this paragraph (a), Executive's Compensation will be
     reduced, beginning with the first month following his re-employment with
     another employer, by fifty percent (50%) of the Form W-2 income, with the
     new employer.  Executive shall have no obligation to mitigate his or her
     damages by seeking employment following his or her termination of
     employment with Company.

            (b)     Company shall provide, at its expense, for the
     continuation in full force and effect for a period ending upon the
     earlier to occur of Executive's death or eighteen (18) months following
     the Change of Control Termination, all health, dental, life insurance and
     disability plans, programs and arrangements in which Executive was
     entitled to participate immediately prior to such termination, provided
     that his or her continued participation is possible under the terms and
     provisions of such plans, programs and arrangements, and under the laws
     and regulations applicable thereto.  If Executive's participation in any
     plan, program or arrangement is barred, Company shall use its reasonable
     best efforts to obtain and pay for, on Executive's behalf, individual
     insurance policies, plans, programs or arrangements which provide
     benefits equivalent to those which Executive is entitled to receive prior
     to the date of termination.  However, Company may, at any time, deny
     Executive coverage under a health, dental, life insurance or disability
     plan, program or arrangement, to the extent such coverage is duplicate of
     coverage provided Executive by any subsequent employer.  At the end of
     the period of coverage, to the extent permitted by the plans and
     programs, Executive shall have the option to have assigned to him or her,
     any assignable insurance policy owned by Company and relating
     specifically to him or her.  Executive's right to continuation of health
     and medical coverage under the Consolidated Omnibus Budget Reconciliation
     Act of 1985, as amended, shall commence at the end of the eighteen (18)
     month period following the Change of Control Termination.

            (c)     Company shall provide, at its expense, for the
     continuation  in full force and effect for a period ending upon the
     earlier to occur of Executive's death, retirement, or eighteen (18)
     months following the Change of Control Termination, all pension, profit-
     sharing, savings, and nonqualified deferred compensation plan including
     the supplemental retirement income plan in which Executive was entitled
     to participate immediately prior to such termination, provided that his
     or her continued participation is possible under the terms and provisions
     of such plans, programs and arrangements, and under the laws and
     regulations applicable thereto.  If Executive's participation in any
     plan, program or arrangement is barred, Executive shall be entitled to
     receive, upon a Change of Control Termination, a lump sum payable
     annually equal to the annual contribution, payments, credits or
     allocations Company would have provided him or her, to his or her account
     or on his or her behalf under such plan, program or arrangement had his
     or her participation and eligibility continued for the eighteen (18)
     month period following termination.

            (d)     Executive may exercise stock options issued to him or
     her pursuant to (i) the Drovers Bancshares Incentive Stock Option Plan
     as adopted by the Board of Directors on August 28, 1985 and as herein
     modified ("Stock Option Plan"), and (ii) Drovers Bancshares Corporation
     1995 Stock Option Plan ("1995 Plan").  Such stock options shall be
     exercisable fully, and closing shall occur, within ninety (90) days of
     the Change of Control Termination whether or not:
47 <PAGE>
                   (i)     A period of one (1) year has elapsed from
            the date of grant to the date of exercise, as required by
            Section 5, paragraph (c) of the Stock Option Plan, or any
            similar provision under the 1995 Plan.

                  (ii)     Any installment exercise terms as stipulated
            by the Stock Option Plan's administrative committee
            ("Committee") and any agreement issued under Section 5,
            paragraph (c) of the plan has been satisfied, or any similar
            stipulation under the 1995 Plan.

                 (iii)     The Committee has extended the option
            period upon Executive's termination pursuant to Section 5,
            paragraph (f) of the Stock Option Plan, or any similar
            provision in the 1995 Plan.  However, in no event shall
            Executive exercise any stock option after the earlier of
            (i) ten (10) years from the date of grant, or (ii) the
            expiration of the option period as stipulated in an
            agreement issued under Section 5, paragraph (c) of the
            Stock Option Plan, or any similar provision in the 1995
            Plan, as applicable to said option(s).

     The Committee shall authorize this acceleration of Executive's stock
     options under the Stock Option Plan by executing on the date of this
     Agreement the Stock Option Acceleration Authorization attached hereto
     as Exhibit A.  A similar acceleration occurs under Section 8 of the
     1995 Plan.

     4.     RIGHT TO HEARING - In the event Company believes that a Good Cause
for termination of Executive's employment may exist, Company shall provide
Executive with written notice of its intention to terminate for Good Cause and
the facts upon which Company bases such belief, which notice shall be given at
least sixty (60) days prior to the proposed effective date for the termination.
For such termination to be effective, Executive shall be provided with an
opportunity within the said sixty (60) day period to be heard by the Board of
Directors of Company.  Thereafter, the Board may at its discretion elect to
terminate Executive's employment by majority vote.

     5.     CONTINUANCE OF BENEFITS -  If Executive has commenced receiving
benefits hereunder, such benefits shall continue (subject however, to the
specific terms and conditions applicable to each benefit as set forth
herein), for the full term as provided in Section 3, above, notwithstanding
that Executive subsequently dies, becomes permanently disabled, or retires
at or after age sixty-five (65).  Executive may, at any time and by written
notice to Company in the form attached hereto as Exhibit B, name one or more
beneficiaries of any such benefits in the event of his or her death; provided,
however, that upon Executive's death, the distribution of Executive's benefits
under a qualified pension plan shall be made in accordance with the terms,
including any beneficiary designation provision, of such plan.  A designation
of beneficiary under this Agreement shall be effective on the date actually
received by Company.  If Executive fails to designate a beneficiary, or if
no beneficiary survives Executive, the benefits provided herein shall be paid:

                        (a)     to his or her surviving spouse;

                        (b)     if there is no surviving spouse, to his
                    or her living descendants per stirpes; or
                        (c)     if there is neither a surviving spouse nor
                    descendants, to his or her duly appointed and qualified
                    executor or personal representative.
48 <PAGE>
     6.     NO LIMITATION UPON PAYMENTS - The parties believe that the
benefits payable under Section 3, above, represent reasonable compensation for
personal services and as such no portion thereof constitutes an "excess
parachute payment" as defined in Section 280G of the Internal Revenue Code of
1986, as amended (or successor provision).  The parties acknowledge that,
should any portion be so characterized, substantial adverse tax consequences
would result to both the payor (no tax deduction) and to the payee (excise
tax). Nonetheless, the parties intend that the amounts be paid in full as
provided herein, notwithstanding any such characterization and tax consequence.

     7.     WITHHOLDING - Company may withhold from any benefits payable under
this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.

     8.     SOURCE OF PAYMENT - All payments provided under this Agreement may
be paid in cash from the general funds of the Company and no special or
separate fund shall be required to be established.  Executive shall have no
right, title or interest whatever in or to any investment which Company may
make to fund its obligations hereunder.  Nothing contained in this Agreement,
and no action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind or a fiduciary relationship between Company and
Executive or any other person.

     9.     RABBI TRUST - The Company has established a rabbi trust at Hershey
Trust Company.  In the event of a change of control as defined herein, the
Company shall, in accordance with the terms of the Trust, contribute thereto
the amount described in Section 1(e) thereof.  Thereafter, amounts payable
hereunder shall be paid first from the assets of such Trust and the income
thereon.  To the extent that the assets of the Trust and the income thereon
are insufficient, Company shall pay Executive the amount due hereunder.

    10.     NONASSIGNABILITY - Neither this Agreement nor any right or
interest hereunder shall, without Company's prior written consent, be subject
to any sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind.

    11.     ATTACHMENT - Except as required by law, the right to receive
payments under this Agreement shall not be subject to anticipation, sale,
encumbrance, charge, levy, or similar process or assignment by operation 
of law.

    12.     SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit
of and be binding upon any corporate or other successor of the Company which
shall acquire, directly or indirectly, by merger, acquisition, consolidation,
purchase, or otherwise, all or substantially all of the assets of the Company,
and shall otherwise inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.  Nothing in the Agreement shall preclude Company from consolidating
or merging into or with or transferring all or substantially all of its assets
to another person, provided such other person shall assume this Agreement and
all obligations of Company hereunder.  Upon such a consolidation, merger, or
transfer of assets and assumption, the term "Company" as used herein, shall
mean such other person and this Agreement shall continue in full force and
effect.

    13.     WAIVERS NOT TO BE CONTINUED - Any waiver by a party or any breach
of this Agreement by another party shall not be construed as a continuing
waiver or as a consent to any subsequent breach by the other party.


49 <PAGE>
    14.     NOTICES - All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed by certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice:

     A.     If to Executive, to:       "Named Executive Vice President" 


     B.     If to Company, to:         Drovers Bancshares Corporation
                                       30 South George Street
                                       York, PA  17401

and to such other or additional person or persons as either party shall
have designated to the other party in writing by like notice.

    15.     ARBITRATION - Any claim or controversy arising out of or relating
to this Agreement or any breach thereof shall be settled by arbitration.  Any
such arbitration shall take place in York, Pennsylvania, in accordance with
the rules of the American Arbitration Association.  Judgment upon the written
award rendered by a majority of the arbitrators may be entered in the Court
having jurisdiction thereof.  The written decision of a majority of the
arbitrators shall be valid, binding, final, and nonappealable.

    16.     MISCELLANEOUS - 

            (a)     In the event that a party hereto
       wrongfully fails to perform its obligations hereunder as
       determined and evidenced by a final and nonappealable 
       determination of a board of arbitration or court, as the
       case may be, such party shall thereupon be obligated to
       promptly pay and reimburse the other party hereto for its
       costs and expenses incurred (including attorney, accounting,
       actuary and other professional consultants) in enforcing its
       or his entitlements hereunder.

            (b)     Executive shall be under no obligation to execute
       a covenant against competition as a condition to receive any benefit
       otherwise payable hereunder.

            (c)     Upon request, Executive shall promptly provide Company
       with information regarding his subsequent employment as contemplated
       herein, including that described in Section 3 hereof.

            (d)     This Agreement constitutes the entire agreement between
       the parties with respect to the subject matter hereof, and supersedes
       and replaces all prior agreements between the parties.  No amendment,
       waiver or termination of any of the provisions hereof shall be
       effective unless in writing and signed by the party against whom it
       is sought to be enforced.  Any written amendment, waiver or
       termination hereof executed by Company and Executive shall be
       binding upon them and upon all other persons, without the
       necessity of securing the consent of any other person, and no
       person shall be deemed to be third-party beneficiary under this
       Agreement.

            (e)     This Agreement shall not limit or infringe upon the right
       of Company to terminate the employment of Executive at any time, nor
       upon the right of Executive to terminate his or her employment with
       Company, each subject however to the specific provisions hereof.
50 <PAGE>
            (f)     "Person" as used in this Agreement means a natural person,
       joint venture, corporation, sole proprietorship, trust, estate,
       partnership, cooperative, association, non-profit organization or
       any other legal, cognizable entity.

            (g)     This Agreement may be executed in one or more
       counterparts, each  of which shall be deemed an original, but
       all of which taken together shall constitute one and the same
       Agreement.

            (h)     Except as otherwise expressly set forth herein, no
       failure on the part of any party hereto to exercise and no delay
       in exercising any right, power or remedy hereunder shall operate
       as a waiver thereof, nor shall any single or partial exercise of
       any right, power or remedy hereunder preclude any other or further
       exercise thereof or the exercise of any other right, power or
       remedy.

            (i)     The headings of the sections of this Agreement have
       been inserted for convenience of reference only and shall in no
       way restrict or modify any of the terms or provisions hereof.

            (j)     This Agreement shall be governed and construed and the
       legal relationships of the parties determined in accordance with
       the laws of the Commonwealth of Pennsylvania applicable to
       contracts executed and to be performed in the Commonwealth of
       Pennsylvania.

            (k)     The obligation of Company hereunder shall be joint and
       several. 

            (l)     In the event that a party hereto wrongfully
       fails to perform its obligations hereunder as determined by
       a final and nonappealable determination of a board of arbitrator
       or court, such party shall thereupon be obligated to promptly
       pay and reimburse the other party hereto for its costs and
       expenses incurred (including attorney, accounting, actuary and
       other professional consultants) in enforcing its or his
       entitlements hereunder.

       This Agreement replaces that Change of Control Agreement entered
into by and among them on August 31, 1998; therefore, that Agreement is
hereby revoked.

ATTEST:                             COMPANY:
                                    DROVERS BANCSHARES CORPORATION

______________________________      By____________________________________

ATTEST:                             THE DROVERS & MECHANICS BANK


______________________________      By____________________________________


WITNESS:                            EXECUTIVE


______________________________      ________________________________(SEAL)
                                    "Named Executive Vice President"
51 <PAGE>
                                   EXHIBIT A


                     STOCK OPTION ACCELERATION AUTHORIZATION



     Pursuant to Section 5(c) of the Drovers Bancshares Incentive Stock
Option Plan ("Plan"), dated August 28, 1985, the Committee under said Plan
hereby authorizes the acceleration of "Named Executive Vice President"'s
stock options under the Plan to the extent described in Section 3(e) of the
Change of Control Agreement by and between Drovers Bancshares Corporation,
Drovers & Mechanics Bank, and "Named Executive Vice President", dated
December __, 1998.



__________________________________      __________________________________
Robert L. Myers, Jr.                    Frank Motter



__________________________________      __________________________________
Harlowe R. Prindle                      George W. Hodges



Dated: ___________________________
































52 <PAGE>
                                     EXHIBIT B


                            BENEFICIARY DESIGNATION FORM



     I hereby designate the person(s) named below as beneficiary (or
beneficiaries) to receive all amounts payable under the Change of Control
Agreement by and between Drovers Bancshares Corporation and Drovers & Mechanics
Bank ("Company"), and "Named Executive Vice President", dated
December ___, 1998, which have not been paid at the date of my death.

     Name of Beneficiary:                     Address: 


     I acknowledge that this Beneficiary Designation shall become
effective on the date actually received by Company and shall render
all prior Beneficiary Designations, if any, void.


WITNESS

__________________________________      _____________________________(SEAL)
                                        "Named Executive Vice President" 




Date received by Company: 

__________________________________




COMPANY


__________________________________
















53 <PAGE>