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

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

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

                         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)

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

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



                                      NONE
      (Former name, address and fiscal year, if changed since last report.)


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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.



               Class                      Outstanding at June 30, 1998
           Common Stock                         4,456,547 Shares












<PAGE>
Drovers Bancshares Corporation and Subsidiaries
CONTENTS
PART I  FINANCIAL INFORMATION

 ITEM 1.  FINANCIAL STATEMENTS

  Consolidated Statements of Condition .....................................  3
   June 30, 1998 and December 31, 1997

  Consolidated Statements of Income ........................................  4
   Three Months Ended June 30, 1998 and 1997
   Six Months Ended June 30, 1998 and 1997

  Consolidated Statements of Comprehensive Income ..........................  5
   Three Months Ended June 30, 1998 and 1997
   Six Months Ended June 30, 1998 and 1997

  Consolidated Statements of Cash Flows ....................................  6
   Six Months Ended June 30, 1998 and 1997

  Notes to Consolidated Financial Statements ...............................  7

 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS .............................. 11

PART II  OTHER INFORMATION
 SIGNATURES ................................................................ 16
































2 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands)
                                                            
                                                             JUNE 30,  DEC 31,
ASSETS                                                         1998      1997
Cash and due from banks ..................................  $ 16,730   $ 14,549
Money market investments .................................     1,296        379
Investment securities (fair value $167,125 and $180,245)..   166,249    179,299
  
Loans (net of unearned income of $3,404 and $3,320) ......   355,381    313,673
Reserve for loan losses ..................................     3,665      3,304
Net loans ................................................   351,716    310,369
  
Bank premises and equipment ..............................    14,480     13,864
Other assets .............................................     8,712      6,432
TOTAL ASSETS .............................................  $559,183   $524,892
  
LIABILITIES  
Deposits:  
Noninterest-bearing ......................................  $ 41,046   $ 41,973
Interest-bearing .........................................   384,638    360,113
Total deposits ...........................................   425,684    402,086
Federal funds purchased and securities sold under  
 agreements to repurchase ................................    38,699     31,360
Other borrowings .........................................    40,446     43,558
Other liabilities ........................................     8,558      4,418
TOTAL LIABILITIES ........................................   513,387    481,422
  
SHAREHOLDERS' EQUITY  
Common stock($3.33 par value), 10,000,000 shares   
  authorized; issued and outstanding-4,456,547 shares in  
  1998 and 2,961,127 shares in 1997 ......................    14,840     14,806
Additional paid-in capital ...............................    18,790     18,664
Retained earnings ........................................    10,683      8,407
Accumulated other comprehensive income ...................     1,483      1,593
TOTAL SHAREHOLDERS' EQUITY ...............................    45,796     43,470
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...............  $559,183   $524,892


See notes to consolidated financial statements.

















3 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)      THREE MONTHS          SIX MONTHS 
                                          ENDED JUNE 30,       ENDED JUNE 30,
                                           1998     1997       1998      1997
INTEREST INCOME    
Interest and fees on loans .............  $7,531   $6,253   $14,700   $12,354
Interest on deposits with banks ........      27        7        32        11
Interest and dividends on    
 investment securities .................   2,604    2,617     5,410     4,941
Total interest income ..................  10,162    8,877    20,142    17,306
INTEREST EXPENSE    
Interest on deposits ...................   4,308    3,795     8,503     7,333
Federal funds purchased and securities    
 sold under agreements to repurchase ...     425      389       790       707
Interest on borrowed funds .............     694      512     1,425       978
Total interest expense .................   5,427    4,696    10,718     9,018
Net interest income ....................   4,735    4,181     9,424     8,288
Provision for loan losses ..............     229       66       468       186
Net interest income after    
 provision for loan losses .............   4,506    4,115     8,956     8,102
OTHER INCOME    
Trust income ...........................     317      282       588       544
Service charges on deposit accounts ....     417      320       792       625
Securities gains .......................       9      101       231       102
Net gains on residential    
 mortgage loan sales ...................     337       73       584       230
Equity in losses of real estate ventures     -18      -28       -55       -41
Other ..................................     325      263       578       456
Total other income .....................   1,387    1,011     2,718     1,916
OTHER EXPENSES    
Salaries and employee benefits .........   1,996    1,850     4,013     3,669
Occupancy and premises .................     295      212       545       393
Furniture and equipment ................     300      271       595       531
Marketing ..............................     151      120       302       241
Net (gain) cost of operation 
 of other real estate ..................      12       62        18        73
Supplies ...............................     124      113       243       174
Other taxes ............................      97       88       193       178
Other...................................     738      597     1,501     1,118
Total other expenses ...................   3,713    3,313     7,410     6,377
Income before income taxes .............   2,180    1,813     4,264     3,641
Applicable income taxes ................     540      403     1,016       841
NET INCOME ............................. $ 1,640  $ 1,410   $ 3,248   $ 2,800
PER SHARE DATA    
Net income .............................  $ 0.37   $ 0.32   $  0.73   $  0.63
Net income, assuming dilution ..........  $ 0.36   $ 0.32   $  0.72   $  0.63
Dividends ..............................  $ 0.12   $ 0.10   $  0.22   $  0.19
See notes to consolidated financial statements.









4 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)                               THREE MONTHS         SIX MONTHS 
                                            ENDED JUNE 30,      ENDED JUNE 30,
                                             1998     1997     1998     1997
Net income ..............................  $ 1,640  $ 1,410  $ 3,248  $ 2,800
Other comprehensive income:     
Unrealized gains (losses) on securities
  arising during period .................     -223    1,063       65      336
Reclassification adjustment for gains
  Included in net income ................       -9     -101     -231     -102
Other comprehensive income (loss) before
  tax ...................................     -232      962     -166      234
Income taxes (benefits) related to other
  Comprehensive income  .................      -79      327      -56       80
Other comprehensive income (loss) .......     -153      635     -110      154
COMPREHENSIVE INCOME  ...................  $ 1,487  $ 2,045  $ 3,138  $ 2,954









































5 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)                                                   SIX MONTHS 
                                                               ENDED JUNE 30, 
                                                              1998        1997
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income ..........................................      $  3,248   $  2,800
Adjustments to reconcile net income to net cash
 from operating activities:
Depreciation ........................................           741        650
Net amortization of investment security premiums ....           169        -89
Provision for loan losses ...........................           468        186
Provision for losses on other real estate owned .....             0         54
Gain on sale of securities held-to-maturity .........             0         -1
Gain on sale of securities available-for-sale .......          -231       -102
Loans originated for sale ...........................       -33,628    -13,140
Proceeds from sales of loans ........................        35,041     13,518
Gain on sale of loans ...............................          -583       -230
Other (gains) losses ................................             1        -42
Net deferred loan fees ..............................          -657       -287
Equity in loss of real estate venture................            55         41
Increase in interest/dividends receivable ...........           -28       -447
Increase in interest payable ........................           717        705
Other ...............................................         1,721        186
Net cash provided by operating activities ...........         7,034      3,802
CASH FLOWS FROM INVESTING ACTIVITIES:  
Proceeds from sales and maturities of securities  
 held-to-maturity ...................................         3,540      3,146
Proceeds from sales and maturities of securities
 available-for-sale .................................        22,264     14,317
Purchases of securities held-to-maturity ............             0     -9,827
Purchases of securities available-for-sale ..........       -12,859    -40,529
Increase in net loans ...............................       -41,909     -9,499
Capital expenditures ................................        -1,265       -522
Proceeds from sale of fixed assets ..................             2         75
Purchase of investment in real estate venture .......          -847          9
Proceeds from sale of other real estate .............           134         99
Net cash used in investing activities ...............       -30,940    -42,731
CASH FLOWS FROM FINANCING ACTIVITIES:  
Net increase in demand deposits
 and savings accounts ...............................        16,634     18,534
Net increase in certificates of deposit .............         6,953     12,803
Net increase in federal funds purchased
 and repurchase agreements ..........................         7,339      4,354
Net increase (decrease) in other borrowings .........        -3,092      4,916
Payments made for capital leases ....................           -19        -17
Dividends paid ......................................          -978       -843
Proceeds from issuance of common stock ..............           167          0
Net cash provided by financing activities ...........        27,004     39,747
NET INCREASE IN CASH & CASH EQUIVALENTS .............         3,098        818
CASH & CASH EQUIVALENTS AT JANUARY 1, ...............        14,928     17,783
CASH & CASH EQUIVALENTS AT JUNE 30, .................      $ 18,026   $ 18,601
See notes to consolidated financial statements.
6 <PAGE>





Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

In the opinion of management, the accompanying consolidated financial statements
contain all adjustments (including normal recurring accruals) considered
necessary to present fairly Drovers Bancshares' financial position as of
June 30, 1998 and December 31, 1997.  Operating results and changes in cash
flows for the six months ended June 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998.  For
further information, refer to the consolidated financial statements
and footnotes included in the Annual Report for the year ended December 31,
1997.

NOTE B - CALCULATION OF EARNINGS PER SHARE

On May 29, 1998, the Corporation issued a 3-for-2 stock split.  Par value was 
adjusted from $5.00 per share to $3.33 per share.  Net income per share is 
computed based on the weighted average number of shares outstanding each period,
giving retroactive effect to the 3-for-2 stock split issued in 1998, a 5% stock 
dividend issued in 1997 and a 25% stock dividend issued in 1996.  Earnings per 
common share, assuming dilution gives effect to all dilutive potential common 
shares during each period.

NOTE C - INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities classified
as held-to-maturity as of June 30, 1998 are as follows:

                                                     Gross      Gross   
                                        Amortized Unrealized Unrealized    Fair
(In thousands)                             Cost      Gains      Losses    Value
US Treasury securities and obligations
 of US government corp and agencies ...    $10,472  $    148  $      0  $10,620
Obligations of states and political
 subdivisions .........................     17,520       633         0   18,153
Mortgage-backed securities and
 collateralized mortgage obligations ..     11,207       148        53   11,302
Total investment securities ...........    $39,199  $    929  $     53  $40,075


















7 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE C - INVESTMENT SECURITIES, continued

The amortized cost and estimated fair value of investment securities classified
as available-for-sale as of June 30, 1998 are as follows:
                                                    Gross      Gross   
                                       Amortized Unrealized Unrealized    Fair
(In thousands)                            Cost      Gains      Losses     Value
US Treasury securities and obligations    
 of US government corp and agencies ..  $  9,999  $     76    $    1   $ 10,074
Obligations of states and political    
 Subdivisions ........................     5,395       185         0      5,580
Corporate obligations ................       500         0        17        483
Mortgage-backed securities and    
 Collateralized mortgage obligations .    91,884     1,074        40     92,918
Total debt securities ................   107,778     1,335        58    109,055
Equity securities ....................    17,024       976         5     17,995
Total investment securities .......... $ 124,802  $  2,311   $    63  $ 127,050

The amortized cost and estimated fair value of investment securities classified
as held-to-maturity as of December 31, 1997 are as follows:
                                                    Gross      Gross 
                                       Amortized Unrealized Unrealized    Fair
(In thousands)                            Cost      Gains     Losses      Value
US Treasury securities and obligations    
 of US government corp and agencies ..  $ 10,469  $    153   $     0   $ 10,622
Obligations of states and political    
 subdivisions ........................    18,318       707         0     19,025
Mortgage-backed securities and    
 collateralized mortgage obligations .    13,965       165        79     14,051
Total investment securities ..........  $ 42,752  $  1,025   $    79   $ 43,698

The amortized cost and estimated fair value of investment securities classified
as available-for-sale as of December 31, 1997 are as follows:
                                                    Gross      Gross 
                                       Amortized Unrealized Unrealized    Fair
(In thousands)                            Cost      Gains     Losses      Value
US Treasury securities and obligations    
 of US government corp and agencies ..  $ 18,003  $    109   $     5   $ 18,107
Obligations of states and political    
 subdivisions ........................     5,898       198         0      6,096
Corporate obligations.................       500         0        14        486
Mortgage-backed securities and    
 collateralized mortgage obligations .    93,729     1,047        29     94,747
Total debt securities ................   118,130     1,354        48    119,436
Equity securities ....................    16,004     1,107         0     17,111
Total investment securities ..........  $134,134  $  2,461   $    48   $136,547

For additional information, see pages 22-23 of the Corporation's 1997 Annual
Report.






8 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE D - LOANS

Loans are comprised of the following as of June 30, 1998 and December 31, 1997:

                                                           JUNE 30,   DEC 31,
(In thousands)                                               1998      1997
Commercial, financial and industrial loans .............   $104,990  $ 80,636 
Real estate mortgage loans:  
  Real estate construction-related .....................     11,942    12,105 
  Real estate mortgage loans secured by  
     1-4 family residential properties .................    111,222   107,797 
  Other real estate ....................................     94,607    80,462 
Total real estate mortgage loans .......................    217,771   200,364 
Consumer loans:  
  Monthly payment ......................................     31,086    30,952 
  Other revolving credit ...............................      1,451     1,476 
Total consumer loans ...................................     32,537    32,428 
Leasing and other ......................................         83       245 
Total loans ............................................   $355,381  $313,673 
  
Changes in the reserve for loan losses for the periods ended June 30, were  
as follows:  
  
(In thousands)                                               1998       1997
Balance, beginning of year .............................  $  3,304   $  3,130 
Provision for loan losses ..............................       468        186 
LESS: Loans charged-off ................................       165        136 
Recoveries .............................................        58         80 
Balance, June 30 .......................................  $  3,665   $  3,260 

As of June 30, 1998, the total recorded investment in impaired loans was 
$1,232,000. Nonaccrual loans at June 30, 1998 were $695,000 compared to $740,000
at December 31, 1997.

Residential mortgage loans with a book value of $3,312,000 were held for sale at
June 30, 1998.  The cumulative fair value exceeded the book value of these 
loans.  Loans held for sale are included in total loans.  During the first six 
months of 1998, the Corporation capitalized $222,000 in mortgage servicing 
rights and amortized $69,000.

For additional information, see pages 23-24 of the Corporation's 1997 annual
report.

NOTE E - COMPREHENSIVE INCOME

Effective beginning with March 31, 1998 interim reports, Financial Accounting
Standard No. 130, "Reporting Comprehensive Income," (FAS 130) requires the
reporting of comprehensive income.  Accordingly, the Consolidated Statements
of Comprehensive Income was added to our interim financial statements.  The
income tax expense or benefit allocated to each component of other comprehensive
income for the periods ended June 30, were as follows:

9 <PAGE>



Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE E - COMPREHENSIVE INCOME, continued
(In thousands)                                THREE MONTHS        SIX MONTHS 
                                              ENDED JUNE 30,    ENDED JUNE 30, 
                                              1998     1997      1998      1997
Unrealized gains (losses) on securities    
  arising during period ...................   $ -76  $ 361      $  22    $ 114 
Reclassification adjustment for gains
  included in net income ..................      -3    -34        -78      -34 
Income taxes (benefits) related to other
  Comprehensive income ....................   $ -79  $ 327      $ -56    $  80 

Accumulated other comprehensive income as of June 30, was as follows:
(in thousands)                                                1998      1997
  
Balance, January 1, ......................................  $ 1,593    $   370 
Current-period change ....................................     -110        154 
Balance, June 30, ........................................  $ 1,483    $   524 

All components of accumulated other comprehensive income were as a result of 
unrealized gains (losses) on investment securities available-for-sale.



































10 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

The following comparison of actual balances indicates how the Corporation has
generated and employed its funds for the six months ending June 30, 1998:
                                        BALANCE                       BALANCE
                                        JUNE 30,  INCREASE            DEC 31,
(In thousands)                           1998    (DECREASE)     %      1997
FUNDING USES:                                            
Money market investments ...........   $  1,296   $    917    242.0%  $    379
Investment securities ..............    166,249    -13,050     -7.3%   179,299
Loans (net) ........................    351,716     41,347     13.3%   310,369
Total interest-bearing assets ......    519,261     29,214      6.0%   490,047
Noninterest-bearing assets .........     39,922      5,077     14.6%    34,845
TOTAL USES .........................   $559,183   $ 34,291      6.5%  $524,892
FUNDING SOURCES:    
Interest-bearing demand deposits ....   $ 47,026  $  4,267     10.0%  $ 42,759
Savings deposits ....................    120,064    11,476     10.6%   108,588
Time deposits .......................    217,548     8,782      4.2%   208,766
Short-term borrowings ...............     38,699     7,339     23.4%    31,360
Long-term borrowings ................     40,446    -3,112     -7.1%    43,558
Total interest-bearing liabilities ..    463,783    28,752      6.6%   435,031
Noninterest-bearing demand deposits .     41,046      -927     -2.2%    41,973
Other liabilities ...................      8,558     4,140     93.7%     4,418
Shareholders' equity ................     45,796     2,326      5.4%    43,470
TOTAL SOURCES .......................   $559,183  $ 34,291      6.5%  $524,892

Total assets increased $34,291,000, or 6.5% since December 31, 1997. Loans grew 
$41,347,000 while investments securities declined $13,050,000.  Commercial loan 
demand remained strong in the second quarter.  Commercial loans and other real 
estate loans have grown $24,354,000 and $14,145,000, respectively, since the end
of 1997. Low interest rates and a strong economy continued to fuel demand for 
residential mortgages.  Loans secured by 1-4 family residential properties 
increased $3,425,000 in the last six months.

Last year, management increased holdings in investment securities to leverage 
the Corporation's strong capital base.  Maturities and accelerating prepayments 
from mortgage-backed securities caused investment securities holdings to fall 
$13,050,000 since the end of 1997.  These holdings were reinvested into higher 
yielding loans.  During the first quarter, the Corporation invested $2,200,000 
in a low-income housing partnership.  The investment will provide historic and 
low-income tax credits beginning as early as the fourth quarter of 1998.  The 
investment is shown as a noninterest-bearing asset.

Deposits continued to fund most of the asset growth.  Deposits have grown 
$23,598,000, or 5.9%, in the last six months.  The Corporation's Indexed Money 
Fund, a savings product that pays a money market interest rate, grew 
$10,287,000.  Certificates of deposits grew $6,952,000.  




11 <PAGE>



Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)


LOAN QUALITY

Impaired loans at June 30, 1998 were $1,232,000 compared to $1,314,000 at 
December 31, 1997. Nonaccrual loans at June 30, 1998 were $695,000 compared to 
$740,000 at December 31, 1997.  Overall loan quality remains very good.

Loan charge-offs and recoveries for the first half of 1998 were $165,000 and 
$58,000, respectively. Second quarter net charge-offs were $75,000.

RESULTS OF OPERATION

Drovers Bancshares recorded net income of $3,248,000 and $2,800,000 for the six
months ended June 30, 1998 and 1997, respectively. 

The return on assets (ROA) and return on equity (ROE) for the six months ended
June 30, 1998 were 1.20% and 14.51%, respectively.  This compares to an ROA
and ROE for the same period last year of 1.20% and 14.47%, respectively.  Net 
income for the quarter was $1,640,000 compared to $1,410,000 for the second 
quarter last year and $1,608,000 for the first quarter of 1998.  The ROA and ROE
for the second quarter of 1998 were 1.19% and 14.35%, respectively.  

NET INTEREST INCOME

Net interest income is the difference between the interest earned on loans and
investments and the interest paid on deposits and other sources of funds.  The
following table presents the trends in net interest income:

                                  THREE MONTHS              SIX MONTHS  
                                 ENDED JUNE 30,           ENDED JUNE 30,  
(In thousands)                 1998      1997   98/97    1998      1997   98/97
Interest income ............ $10,162   $ 8,877   14.5%  $20,142  $17,306   16.4%
Interest expense ...........   5,427     4,696   15.6%   10,718    9,018   18.9%
Net interest income ........   4,735     4,181   13.3%    9,424    8,288   13.7%
Provision for loan losses ..     229        66  247.0%      468      186  151.6%
Net interest income after      
 provision for loan losses . $ 4,506   $ 4,115    9.5%  $ 8,956  $ 8,102   10.5%

The corporation's largest category of earning assets consists of loans to
businesses and individuals.  The majority of earning assets are supported by
commercial and consumer deposits and shareholders' equity. Changes in net 
interest income are determined by variations in the volume and mix of assets and
liabilities as well as their sensitivity to interest rate movements. 

Net interest income increased $554,000 in the second quarter and $1,136,000 
during the first six months of 1998.  An increase in earning assets more than 
offset a decline in the net interest margin.  Average earning assets increased 
17.7% to $513,556,000 for the first half of 1998 compared to $436,440,000 for 
the same period last year.  The margin for the first six months was 3.70% 
compared to 3.83% for the first half of 1997 and 3.71% for all of last year.  
The strong 



12 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NET INTEREST INCOME, continued 

loan demand has increased loans as a percentage of earning assets.  This change 
in mix of higher yielding loans compared to investment securities has caused the
margin to increase.  The margin in the fourth quarter of 1997 was 3.56% compared
to 3.75% in the first quarter of 1998 and 3.65% in the second.  In addition, the
Corporation collected about $100,000 in non-recurring loan service charges 
during the first quarter of 1998.     

The provision for loan losses was $229,000 for the quarter and $468,000 for the 
first half of 1998.  This compares to a second quarter provision last year of 
$66,000 and a provision of $186,000 for the first six months.  The increase in 
the provision for loan losses is directly related to the increase in loan 
balances.  Net loans have increased $62,373,000, or 17.7%, during the last 
twelve months.  The loan loss provision as a percentage of loans was 1.03% at 
June 30, 1998 compared to 1.05% at the end of 1997.

NONINTEREST INCOME      
                                    THREE MONTHS                SIX MONTHS  
                                   ENDED JUNE 30,            ENDED JUNE 30,  
(In thousands)                       1998   1997   98/97    1998    1997   98/97
Trust income ...................... $ 317   $282   12.4%  $  588  $  544    8.1%
Service charges on deposit accounts   417    320   30.3%     792     625   26.7%
Securities gains ..................     9    101  -91.1%     231     102  126.5%
Net gains on residential
 mortgage loan sales ..............   337     73  361.6%     584     230  153.9%
Equity in losses of real
 estate venture ...................   -18    -28  -35.7%     -55     -41   34.1%
Other .............................   325    263   23.6%     578     456   26.8%
Total .............................$1,387 $1,011   37.2%  $2,718  $1,916   41.9%

Noninterest income increased $376,000 for the second quarter and $802,000 for 
the six months ended June 30, 1998.  Low interest rates, a strong economy and a 
mild winter have driven mortgage loan sale gains to record levels.  Mortgage 
loan sale gains increased $264,000 for the second quarter and $354,000 year-to-
date.  Mortgage loan sales totaled $14,700,000 and $20,400,000 in the first and 
second quarter, respectively.  Gains from the sale of investment securities 
increased $129,000 over the first half of 1997.  In the first quarter of 1998, 
the Corporation liquidated a portion of its community bank stock portfolio 
accounting for most of the gains this year.  In 1997, the Corporation 
restructured a portion of its investment portfolio accounting for the $102,000 
gain in the second quarter.    

Service charges on deposit accounts increased $97,000 the second quarter and 
$167,000 for the first half of 1998.  The Corporation engaged a consulting group
in the fourth quarter of 1997.  They have now completed their analyses of 
various products and processes, that sought ways to enhance productivity by 
reducing expenses and improving non-interest income.  Most of the increase in 
deposit service charges was a direct result of implementing their 
recommendations.




13 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NONINTEREST INCOME, continued

Other income increased $122,000 for the first half of 1998.  The Corporation 
implemented a surcharge for non-customers using our ATM machines beginning in 
the second quarter of 1997.  Foreign ATM transaction fees increased $49,000 over
the first six months of last year.

NONINTEREST EXPENSE      
                                       THREE MONTHS                SIX MONTHS  
                                    ENDED JUNE 30,              ENDED JUNE 30,  
(In thousands)                      1998    1997   98/97    1998    1997   98/97
Salaries and employee benefits .  $1,996  $1,850    7.9%  $4,013  $3,669    9.4%
Occupancy and premises .........     295     212   39.2%     545     393   38.7%
Furniture and equipment ........     300     271   10.7%     595     531   12.1%
Marketing expense ..............     151     120   25.8%     302     241   25.3%
Net cost of operation      
 of other real estate ..........      12      62  -80.6%      18      73  -75.3%
Supplies .......................     124     113    9.7%     243     174   39.7%
Other taxes ....................      97      88   10.2%     193     178    8.4%
Other...........................     738     597   23.6%   1,501   1,118   34.3%
Total ..........................  $3,713  $3,313   12.1%  $7,410  $6,377   16.2%

Noninterest expenses increased $400,000 for the second quarter and $1,033,000 so
far this year.  Two new branch offices, opened late in 1997, added $180,000 to 
second quarter noninterest expenses and $330,000 for the first six months of 
1998.  Other professional services increased $186,000 year-to-date, mainly due 
to the consultants discussed above.  All fees related to the engagement have now
been recognized. In the first quarter of 1997, the Corporation sold a branch 
office that had been previously closed resulting in a gain of $50,000. This gain
was netted against other expense.  A decline in tenant occupancy at the 96 South
George Street Office Building, owned by the Corporation, increased occupancy and
premises expense $61,000 during the first six months of 1998.  On June 2, 1998, 
the Corporation began trading on the Nasdaq National Market.  Expenses related 
to joining the stock exchange totaled $49,000 and were recognized in the second 
quarter.

Enhancing productivity was a focal point of the recent consulting engagement.
Full-time equivalent (FTE's) staffing levels were 205 at June 30, 1998
compared to 209 at the end of 1997 and 208 a year ago.  We have had some
success in increasing productivity, especially in the branch offices.
One full service branch office was recently reduced to drive-up
operations only.
  











14 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART I  FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

TAXATION

The Corporation recognized a provision for income taxes of $1,016,000 for the
six months ending June 30, 1998.  The average tax rate, applicable income
taxes divided by income before taxes, was 23.8%.  This compares to an average
tax rate of 23.3% for all of 1997.  The Corporation manages its tax rate
through the purchase of tax-exempt investment securities and investments in
low-income housing partnerships that provide historic and low-income tax
credits.

MARKET RISK

The Corporation's primary market risk is the risk of changes in net interest 
income caused by changes in interest rates.  Management monitors ongoing 
interest rate risk through monthly "gap" reports and quarterly computer 
simulations of net interest income.  Measurements indicate the 
Corporation is slightly asset sensitive and well within the tolerance limits
established by Management.

VOTING RESULTS

Shareholders' voted on the election of four directors at this year's Annual 
Meeting held May 22, 1998.  The directors serve a four-year term expiring 2001. 
The voting results were as follows:

                                         For     Against/Withheld   
Harlowe R. Prindle (Director) .....    2,664,768            9,056      
Basil A. Shorb III (Director) .....    2,666,764            7,060      
Delaine A. Toerper (Director) .....    2,667,318            6,506      
James S. Wisotzkey (Director)......    2,666,628            7,196      

FUTURE OUTLOOK

In March 1998, the Corporation invested in its third low-income housing
partnership. The partnership will renovate two buildings in Red Lion,
Pennsylvania into fifty one-, two- and three-bedroom apartments for low-income
families.  Construction begins in May and should conclude by yearend.  In
addition to helping provide quality, affordable housing, the Corporation will 
receive substantial tax credits beginning as soon as this year.  When the 
apartments open, the Corporation expects to immediately receive about $525,000 
in historic tax credits.  This will result in a direct reduction in applicable 
income taxes and an increase in net income.  The impact of these tax credits has

not been reflected in the Corporation's financial statements.

Construction of a new branch office in Hellam, Pennsylvania will begin in 
August.  The branch office is expected to open by the end of 1998.  The 
Corporation has signed a contract to purchase land near Dillsburg, Pennsylvania.
Construction of a new branch office will begin later this year and open in 1999.






15 <PAGE>
Drovers Bancshares Corporation and Subsidiaries
PART II  OTHER INFORMATION
SIGNATURES

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

                                   DROVERS BANCSHARES CORPORATION




                                   _/s/_A._Richard_Pugh____________________
                                   A. Richard Pugh, Chairman, President
                                   and Chief Executive Officer




                                   _/s/_Debra_A._Goodling__________________
                                   Debra A. Goodling, Executive Vice President
                                     and Treasurer
                                   Principal Financial Officer




                                   _/s/_John_D._Blecher____________________
                                   John D. Blecher, Vice President and
                                     Assistant Treasurer
                                   Principal Accounting Officer


                                   Date:  August 10, 1998
























16 <PAGE>