FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549


ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 1997
Commission file number:  33-85626


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

 Commonwealth of Pennsylvania                25-1598464
(State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)          Identification No.)

100 Lincoln Way East
McConnellsburg, Pennsylvania                    17233
(Address of principal executive offices)      (Zip Code)

Registrant's telephone number,
 including area code:                     (717) 485-3144


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 period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
             Yes   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 March 9, 1998
(Common stock, .625 par value)         495,000


DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual shareholders report for the year
ended December 31, 1997 are incorporated by reference into
Parts I and II.  Portions of the Proxy Statement for 1998
Annual Meeting of Security Holders are incorporated by
reference in Part III of this Form 10-K.











































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Item 1.   Business.

Description of the Company

         Fulton Bancshares Corporation (the "Company"), a
Pennsylvania business corporation, is a bank holding company
registered with and supervised by the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board").
The Company was incorporated on March 29, 1989 under the
business corporation law of the Commonwealth of Pennsylvania
for the purpose of becoming a bank holding company.  Since
commencing operations, the Company's business has consisted
primarily of managing and supervising the Fulton County
National Bank and Trust Company (the "Bank"), and its
principal source of income has been dividends paid by the
Bank.  The Company has two wholly-owned subsidiaries - the
Bank, and Fulton County Community Development Corporation
("FCCDC"), which was formed on June 7, 1996 to support
efforts of the local downtown business revitalization
project by making low interest loans to eligible small
businesses for the purpose of facade improvement.  FCCDC had
minimal activity in 1997, and has no employees.
         The principal executive office of the Company is
located at 100 Lincoln Way East, McConnellsburg, Fulton
County, Pennsylvania  17233.  The telephone number of the
Company is (717) 485-3144.
         The Company has no employees.
-2-


Supervision and Regulation - The Company
         The Company is subject to the provisions of the
Bank Holding Company Act of 1956, as amended (the "Bank
Holding Company Act"), and to supervision by the Federal
Reserve Board.  The Bank Holding Company Act requires the
Company to secure the prior approval of the Federal Reserve
Board before it owns or controls, directly or indirectly,
more than five percent (5%) of the voting shares or
substantially all of the assets of any institution,
including another bank.  The Bank Holding Company Act
prohibits acquisition by the Company of more than five
percent (5%) of the voting shares of, or interest in, all or
substantially all of the assets of any bank located outside
of Pennsylvania unless such acquisition is specifically
authorized by the laws of the state in which such bank is
located.
         A bank holding company is prohibited from engaging
in or acquiring direct or indirect control of more than five
percent (5%) of the voting shares of any company engaged in
nonbanking activities unless the Federal Reserve Board, by
order or regulation, has found such activities to be so
closely related to banking or managing or controlling banks
as to be a proper incident thereto.




-3-


         The Company is required to file an annual report
with the Federal Reserve Board and any additional
information that the Federal Reserve Board may require
pursuant to the Bank Holding Company Act.  The Federal
Reserve Board may also make examinations of the Company and
any or all of its subsidiaries.
         Federal law prohibits acquisitions of control of a
bank holding company without prior notice to certain federal
bank regulators.  Control is defined for this purpose as the
power, directly or indirectly, to direct the Management or
policies of the bank or bank holding company or to vote 25%
or more of any class of voting securities of the bank
holding company.  A person or group holding revocable
proxies to vote 25% or more of the stock of a bank or its
holding company would presumably be deemed to control the
institution for purposes of this federal law.
         Subsidiary banks of a bank holding company are
subject to certain restrictions imposed by the Federal
Reserve Act on any extensions of credit to the bank holding
company or any of its subsidiaries, on investments in the
stock or other securities of the bank holding company and on
taking of such stock or securities as collateral for loans
to any borrower.




-4-


Permitted Activities
         The Federal Reserve Board permits bank holding
companies to engage in activities so closely related to
banking or managing or controlling banks as to be a proper
incident thereto.  The Company does not at this time engage
in any of the permissible activities described below, nor
does the Company have any current plans to engage in these
activities in the foreseeable future.
         While the types of permissible activities are
subject to a variety of limitations and to change by the
Federal Reserve Board, the principal activities that
presently may be conducted by a bank holding company and may
in the future be engaged by the Company are:  (1) making,
acquiring or servicing loans and other extensions of credit
for its own account or for the account of others, such as
would be made by consumer finance, credit card, mortgage,
commercial finance and factoring companies; (2) operating as
an industrial bank or similar entity in the manner
authorized by state law so long as the institution does not
both accept demand deposits and make commercial loans; (3)
operating as a trust company in the manner authorized by
federal or state law so long as the institution does not
make certain types of loans or investments or accept
deposits, except as may be permitted by the Federal Reserve
Board; (4) acting as an investment or financial advisor to
-5-


investment companies and other persons; (5) leasing personal
and real property or acting as agent, broker or advisor in
leasing property; (6) making equity and debt investments in
corporations or projects designed primarily to promote
community welfare; (7) providing to others financially
oriented data processing or bookkeeping services; (8) acting
as an insurance agent or broker in relation to insurance for
itself and its subsidiaries or for insurance directly
related to extensions of credit; (9) acting as underwriter
for credit life insurance and credit accident and health
insurance: (10) providing courier services of a limited
character; (11) providing management consulting advice to
nonaffiliated banks and nonbank depository institutions;
(12) selling money orders, travelers' checks and United
States savings bonds; (13) performing appraisals of real
estate; (14) acting as intermediary for the financing of
commercial or industrial income-producing real estate by
arranging for the transfer of the title, control and risk of
such a real estate project to one or more investors; (15)
providing securities brokerage services, related securities
credit activities and incidental activities such as offering
custodial services, individual retirement accounts and cash
management services, if the securities brokerage services
are restricted to buying and selling securities solely as


-6-


agent for the account of customers and do not include
securities underwriting or dealing or investment advice or
research services; (16) underwriting and dealing in
obligations of the United States, general obligations of
states and their political subdivisions such as bankers'
acceptances and certificates of deposit; (17) providing
general information, advisory services and statistical
forecasting with respect to foreign exchange markets; (18)
acting as a futures commission merchant in the execution and
clearance on major commodity exchanges of futures contracts
and options on futures contracts for bullion, foreign
exchange, government securities, certificates of deposit and
other money market instruments; (19) performing personal
property appraisals that require expertise regarding all
types of personal and business property, including
intangible property such as corporate securities; (20)
providing commodity trading and futures commission merchant
advice; (21) providing consumer financial counseling to
individuals on consumer-oriented financial management
matters, including debt consolidation, mortgage
applications, bankruptcy, budget management, real estate tax
shelters, tax planning, retirement and estate planning,
insurance and general investment management, so long as this
activity does not include the sale of specific products or


-7-


investments; (22) providing tax planning and preparation
advice to corporations and individuals; (23) providing check
guaranty services to subscribing merchants; (24) operating a
collection agency and credit bureau; and (25) acquiring and
operating thrift institutions, including savings and loan
associations, building and loan associations and FDIC-
insured savings banks.
Certain Provisions of Pennsylvania Banking Law
         Under the Pennsylvania Banking Code of 1965, as
amended, (the "Code"), the Company has been permitted since
March 4, 1990 to control an unlimited number of banks.
However, the Company would be subject to the requirements of
the Bank Holding Company Act as discussed in the
"Supervision and Regulation - The Company" section above.
         Also since March 4, 1990, the Code authorizes
reciprocal interstate banking without any geographic
limitation.  Reciprocity between states exists when a
foreign state's law authorizes Pennsylvania bank holding
companies to acquire banks or bank holding companies located
in that state on terms and conditions substantially no more
restrictive than those applicable to such an acquisition by
a bank holding company located in that state.  For a further
discussion of interstate banking and branching, see the
section entitled "Legislation and Regulatory Changes" below.


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Legislation and Regulatory Changes
         From time to time, legislation is enacted which
has the effect of increasing the cost of doing business,
limiting or expanding permissible activities or affecting
the competitive balance between banks and other financial
institutions.  Proposals to change the laws and regulations
governing the operations and taxation of banks, bank holding
companies and other financial institutions are frequently
made in Congress, and before various bank regulatory
agencies.  No prediction can be made as to the likelihood of
any major changes or the impact such changes might have on
the Company and its subsidiary, the Bank.  Certain changes
of potential significance to the Company which have been
enacted recently are discussed below.
         The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking and Branch
Act") permits interstate banking to occur.  Bank holding
companies, pursuant to an amendment to the Bank Holding
Company Act, can acquire a bank located in any state, as
long as the acquisition does not result in the bank holding
company controlling more than 10% of the deposits in the
United States, or 30% of the deposits in the target bank's
state.  The legislation permits states to waive the
concentration limits and require that the target institution


-9-


be in existence for up to five years before it can be
acquired by an out-of-state bank or bank holding company.
Interstate branching and merging of existing banks is
permitted after September 29, 1997 if the bank is adequately
capitalized and demonstrates good management.
         The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") was enacted in August of
1989.  This law was enacted primarily to improve the
supervision of savings associations by strengthening
capital, accounting and other supervisory standards.  In
addition, FIRREA reorganized the FDIC by creating two
deposit insurance funds to be administered by the FDIC:  The
Savings Association Insurance Fund and the Bank Insurance
Fund.  Customers' deposits held by the Bank are insured
under the Bank Insurance Fund.  FIRREA also regulates real
estate appraisal standards and the supervisory/enforcement
powers and penalty provisions in connection with the
regulation of the Bank.





















-10-


Effects of Inflation
         Inflation has some impact on the Company's, the
Bank's, and FCCDC's operating costs.  Unlike many industrial
companies, however, substantially all of the Bank's and
FCCDC's assets and liabilities are monetary in nature.  As a
result, interest rates have a more significant impact on the
Company's, the Bank's, and FCCDC's performance than the
general level of inflation.  Over short periods of time,
interest rates may not necessarily move in the same
direction or in the same magnitude as prices of goods and
services.
Monetary Policy
         The earnings of the Company, the Bank, and FCCDC
are affected by domestic economic conditions and the
monetary and fiscal policies of the United States Government
and its agencies.  An important function of the Federal
Reserve System is to regulate the money supply and interest
rates.  Among the instruments used to implement those
objectives are open market operations in United States
government securities and changes in reserve requirements
against member bank deposits.  These instruments are used in
varying combinations to influence overall growth and
distribution of bank loans, investments and deposits, and
their use may also affect rates charged on loans or paid for
deposits.







-11-


         The Bank is a member of the Federal Reserve System
and, therefore, the policies and regulations of the Federal
Reserve Board have a significant effect on its deposits,
loans and investment growth, as well as the rate of interest
earned and paid, and are expected to affect the Bank's
operations in the future.  The effect of such policies and
regulations upon the future business and earnings of the
Company, the Bank, and FCCDC cannot be predicted.
Environmental Regulation
         There are several federal and state statutes which
regulate the obligations and liabilities of financial
institutions pertaining to environmental issues.  In
addition to the potential for attachment of liability
resulting from its own actions, a bank may be held liable
under certain circumstances for the actions of its
borrowers, or third parties, when such actions result in
environmental problems on properties that collateralize
loans held by the Bank.  Further, the liability has the
potential to far exceed the original amount of the loan
issued by the Bank.  Currently, the Company, the Bank, and
FCCDC are not party to any pending legal proceeding pursuant
to any environmental statute, nor is the Company, the Bank,
or FCCDC aware of any circumstances which may give rise to
liability under any such statute.

-12-


Description of the Bank
         The Bank was organized on February 24, 1887 as a
Pennsylvania state-chartered banking institution.  It
converted to a national banking association on September 5,
1933, and is presently under the supervision of the Office
of the Comptroller of the Currency (the "Comptroller").  The
Bank is a member of the Federal Reserve System.  Customers'
deposits held by the Bank are insured by the FDIC to the
maximum extent permitted by law.  The Bank's legal
headquarters are located at 100 Lincoln Way East,
McConnellsburg, Fulton County, Pennsylvania  17233.
         The Bank engages in a full service commercial and
consumer banking business, including the acceptance of time
and demand deposits and the making of secured and unsecured
commercial and consumer loans, and offering trust services.
 The Bank's primary service area is located in Fulton
County, Pennsylvania.  Specifically, the main office of the
Bank is located in McConnellsburg, the county seat.  Within
the defined service area of the Bank's main office, the
banking business is highly competitive.  In addition to
local community banks, the Bank competes with regionally-
based commercial banks, all of which have greater assets,
capital and lending limits.  The Bank also competes with
savings banks, savings and loan associations,
money market funds, insurance companies, stock brokerage



-13-


firms, regulated small loan companies, credit unions and
with the issuers of commercial paper and other securities.
         In order to compete effectively in this market and
to obtain business from individuals, small and medium-sized
businesses and professionals, the Bank offers specialized
services such as extended hours of operation and personal
and business checking accounts at competitive rates in
addition to traditional commercial and consumer banking and
trust services.  The Bank accepts time, demand and savings
deposits, including passbook accounts, statement savings
accounts, NOW accounts, money market accounts, regular
savings accounts, certificates of deposit and club accounts.
 The Bank makes secured and unsecured commercial, consumer,
mortgage and construction loans.  Consumer loans include
revolving credit lines.  The following support services are
offered by the Bank to make financial management more
efficient and convenient for its customers:  bank by mail,
direct deposit, drive-in banking, Federal Tax Depository,
automatic teller machine, MasterCard/Visa applications and
cash advances, night deposit services, notary public
services, payroll deduction plan, personal collections, safe
deposit boxes, signature guarantees, travelers checks,
treasury securities, U.S. Savings Bonds, individual
retirement accounts, and utility and municipal payments.
The Bank also provides discount
-14-


brokerage services, mutual funds, and other alternative
investment products to offer its customers a full range of
investment services.  The Bank expects to experience a
modest increase in growth.
Lending Activities
         It is the Bank's general policy to grant all of
its loans in its primary trade area.  This trade area
includes all of Fulton County, Southern Huntington County
and the Hancock, Maryland area.  The Bank's lending
objectives are as follows:  (1) to establish a diversified
loan portfolio composed of a predetermined mix of mortgage
loans, commercial loans, consumer loans and all other loan
types; (2) to provide a satisfactory rate of return to its
shareholders by properly pricing loans to include the cost
of funds, administrative costs, bad debts, local economic
conditions, competition, customer relationships, the term of
the loan, credit risk, and collateral quality; and, (3) to
provide protection for its depositors by maintaining a
predetermined level of loans to deposits to ensure
liquidity.  The Bank recognizes that the lending of money is
a community responsibility which involves a degree of credit
risk and is willing to undertake such risks by utilizing
standard banking procedures and making prudent judgments
when extending credit.
         The Bank makes loans to both individual consumers
and commercial entities.  The types of loans offered
include:  (1) loans for businesses and individuals on a
-15-


short term or seasonal basis; (2) mortgage and construction
loans, (3) loans to individuals for consumer purchases such
as appliances, furniture, vacations, etc.: (4) loans secured
by marketable stock and bonds providing adequate margins for
market fluctuations; (5) short term working capital loans
secured by the assignment of accounts receivable and
inventory; (6) automobile loans, and (7) second liens on
commercial and residential real estate.  Loans of these
types will be considered desirable by the Bank provided such
loans meet the test of sound credit.
         The Bank has adopted the following loan-to-value
ratios, in accordance with standards adopted by its bank
supervisory agencies:
<TABLE>
<S>     <C>                             <C>
               Loan Category
                                         Loan-to-Value Limit
         Raw land  65%
         Land development    75%
         Construction:
           Commercial, multifamily, and other
             nonresidential  80%
           1 to 4-family residential   85%
         Improved property   85%
         Owner-occupied 1 to 4 family and
          home equity   90%
</TABLE>
The Bank does not assume undue risk on any loan within the
loan portfolio, and takes appropriate steps to secure all
loans as necessary.


-16-


Concentration
         The Bank is neither dependent upon deposits nor
exposed to loan concentrations to a single customer or to a
single industry, the loss of any one or more of which would
have a material adverse effect on the financial condition of
the Bank.
Employees
         As of December 31, 1997, the Bank has forty-four
(44) full-time equivalent employees.
Supervision and Regulation - The Bank
         The operations of the Bank are subject to federal
and state statutes applicable to banks chartered under the
banking laws of the United States, to members of the Federal
Reserve System and to banks whose deposits are insured by
the FDIC.  The operations of the Bank are also subject to
regulations of the Comptroller, the Federal Reserve Board
and the FDIC.  The primary supervisory authority of the Bank
is the Comptroller, which regulates and examines the Bank.
The Comptroller has authority to prevent national banks from
engaging in unsafe or unsound practices in conducting their
businesses.
         Federal and state banking laws and regulations
govern, among other things, the scope of a bank's business,
the investments a bank may make, the reserves against
deposits a bank must maintain, loans a bank makes and
-17-


collateral it takes, the maximum interest rates a bank may
pay on deposits, the activities of a bank with respect to
mergers and consolidations and the establishment of
branches.  Under Pennsylvania law, the Bank may establish or
acquire branch offices, subject to certain limitations, in
any county of the state.  National bank branches, however
may be established within the permitted area only after
approval by the Comptroller.
         As a subsidiary bank of a bank holding company,
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, or investments in the
stock or other securities as collateral for loans.  The
Federal Reserve Act and Federal Reserve Board regulations
also place certain limitations and reporting requirements on
extensions of credit by the Bank to 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.
FDIC
         Under the Federal Deposit Insurance Act, the
Comptroller possesses the power to prohibit institutions
-18-


regulated by it (such as the Bank) from engaging in any
activity that would be an unsafe and unsound banking
practice or would otherwise be in violation of the law.
Moreover, the Financial Institutions Regulatory and Interest
Rate Control Act of 1978 ("FIRA") generally expanded the
circumstances under which officers or directors of a bank
may be removed by the institution's federal supervisory
agency, restricts lending by a bank to its executive
officers, directors, principal shareholders or related
interests thereof and restricts management personnel of a
bank from serving as directors or in other management
positions with certain depository institutions whose assets
exceed a specified amount or which have an office within a
specified geographic area, and restricts management
personnel from borrowing from another institution that has a
correspondent relationship with their bank.  Additionally,
FIRA requires that no person may acquire control of a bank
unless the appropriate federal supervisory agency has been
given sixty (60) days prior written notice and within that
time has not disapproved the acquisition or otherwise
extended the period for disapproval.  Control for purposes
of FIRA, means the power, directly or indirectly, to direct
the management or policies or to vote twenty-five percent
(25%) or more of any class of outstanding stock of a
financial institution or its respective holding company.  A
-19-


person or group holding revocable proxies to vote twenty-
five percent (25%) or more of the outstanding common stock
of a financial institution or holding company such as the
Company, would presumably be deemed to control the
institution for purposes of FIRA.
Garn-St Germain
         The Garn-St Germain Depository Institutions Act of
1982 ("1982 Act") removed certain restrictions on a bank's
lending powers and liberalized its depository capabilities.
The 1982 Act also amended FIRA (see above) by eliminating
the statutory limits on lending by a bank to its executive
officers, directors, principal shareholders or related
interests thereof and by relaxing certain reporting
requirements.  The 1982 Act, however, also tightened FIRA
provisions respecting management interlocks and
correspondent bank relationships involving a bank's
management personnel.
CRA
         Under the Community Reinvestment Act of 1977, as
amended ("CRA"), the Comptroller is required to assess the
record of all financial institutions regulated by it to
determine if these institutions are meeting the credit needs
of the community (including low and moderate income
neighborhoods) which they serve and to take this record into
account in its evaluation of any application made by any of
such institutions for, among other things, approval of a
-20-


branch or other deposit facility, office relocation, a
merger or an acquisition of bank shares.  The Financial
Institutions Reform, Recovery and Enforcement Act of 1989
amended the CRA to require, among other things, that the
Comptroller make publicly available the evaluation of a
bank's record of meeting the credit needs of its entire
community, including low and moderate income neighborhoods.
This evaluation will include a descriptive rating and a
statement describing the basis for the rating, which is
publicly disclosed.
BSA
         Under the Bank Secrecy Act ("BSA"), banks and
other financial institutions are required to report to the
Internal Revenue Service currency transactions of more than
$ 10,000 or multiple transactions of which the Bank is aware
in any one day that aggregate in excess of $ 10,000.  Civil
and criminal penalties are provided under the BSA for
failure to file a required report, for failure to supply
information required by the BSA or for filing a false or
fraudulent report.
CEBA
         An omnibus federal banking bill, known as the
Competitive Equality Banking Act ("CEBA"), was signed into
law in August of 1987.  Included in the legislation were
measures:  (1) imposing certain restrictions on transactions
-21-


between banks and their affiliates; (2) expanding the powers
available to Federal bank regulators in assisting failed and
failing banks; (3) limiting the amount of time banks may
hold certain deposits prior to making such funds available
for withdrawal and any interest thereon; and (4) requiring
that any adjustable rate mortgage loan secured by a lien on
a one-to-four family dwelling include a limitation on the
maximum rate at which interest may accrue on the principal
balance during the term of such loan.
FDICIA
    Capital Categories
         In December of 1991 the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") became law.
Under FDICIA, institutions must be classified, based on
their risk-based capital ratios into one of five defined
categories, as illustrated below:
<TABLE>
<S>           <C>         <C>         <C>      <C>
                 Total       Tier 1    Tier 1     Under a
               Risk-Based  Risk-Based Leverage Capital Order
                 Ratio        Ratio     Ratio  or Directive
CAPITAL CATEGORY
Well capitalized   > 10.0    > 6.0     > 5.0     No
Adequately
 capitalized  > 8.0     > 4.0     > 4.0*
Undercapitalized   < 8.0     < 4.0     < 4.0*
Significantly
 undercapitalized< 6.0  < 3.0     < 3.0
Critically
 undercapitalized       < 2.0
</TABLE>
    *  3.0 for those banks having the highest available

regulatory rating.

    Based on the above criteria, the Bank is classified

as "well capitalized".


-22-


Prompt Corrective Action
         In the event an institution's capital deteriorates
to the undercapitalized category or below, FDICIA prescribes
an increasing amount of regulatory intervention, including:
(1) the institution of a capital restoration plan and a
guarantee of the plan by a parent institution; and (2) the
placement of a hold on increases in assets, number of
branches or lines of business.  If capital has reached the
significantly or critically undercapitalized levels, further
material restrictions can be imposed, including restrictions
on interest payable on accounts, dismissal of management and
(in critically undercapitalized situations) appointment of a
receiver.  For well capitalized institutions, FDICIA
provides authority for regulatory intervention where the
institution is deemed to be engaging in unsafe or unsound
practices or receives a less than satisfactory examination
report rating for asset quality, management, earnings or
liquidity.  All but well capitalized institutions are
prohibited from accepting brokered deposits without prior
regulatory approval.
Operational Controls
         Under FDICIA, financial institutions are subject
to increased regulatory scrutiny and must comply with
certain operational, managerial and compensation standards
to be developed by Federal Reserve Board regulations.
-23-


FDICIA also requires the regulators to issue new rules
establishing certain minimum standards to which an
institution must adhere including standards requiring a
minimum ratio of classified assets to capital, minimum
earnings necessary to absorb losses and minimum ratio of
market value to book value for publicly held institutions.
Additional regulations are required to be developed relating
to internal controls, loan documentation, credit
underwriting, interest rate exposure, asset growth and
excessive compensation, fees and benefits.
Examinations and Audits
         Annual full-scope, on site examinations are
required for all FDIC-insured institutions except
institutions with assets under $ 100 million which are well
capitalized, well managed and not subject to a recent change
in control, in which case, the examination period is every
eighteen (18) months.  Banks with total assets of $ 150
million or more are required to submit to their supervising
federal and state banking agencies a publicly available
annual audit report and are subject to additional accounting
and reporting regulations.
Truth-In-Savings
         A separate subtitle within FDICIA, called the
"Bank Enterprise Act of 1991", requires "truth-in-savings"
on consumer deposit accounts so that consumers can make
meaningful comparisons between the competing claims of banks
-24-


with regard to deposit accounts and products.  Under this
provision, the Bank is required to provide information to
depositors concerning the terms of their deposit accounts,
and in particular, to disclose the annual percentage yield.
There are some operational costs of complying with the
Truth-In-Savings law.
         Management believes that full implementation of
the FDICIA has had no material impact on liquidity, capital
resources or reported results of operation.
Item 2.  Properties
         The main administrative office of the Bank which
also includes a branch, is located in McConnellsburg,
Pennsylvania.  The Bank currently has four branch offices
one of which is located at Penn's Village on Route 16 at the
east end of McConnellsburg, Pennsylvania.  This branch
office opened on May 11, 1981.  In addition, the Bank
installed an ATM at the Penn's Village Shopping Center in
March, 1989.  The Bank also serves the communities
surrounding the Pennsylvania/Maryland border through its
branch office located in Warfordsburg, Pennsylvania.  This
branch opened for business on April 4, 1983.  On the same
day, a third branch office was opened in Hustontown,
Pennsylvania, which services Northern Fulton County.
Finally, to service the Southern end of Huntington County,
the Bank acquired a branch in Shade Gap, Pennsylvania, on
-25-


September 26, 1988.  On January 7, 1997 ATM's were opened at
the Warfordsburg and Hustontown branches.  The main office,
Warfordsburg, Hustontown and Shade Gap branches are owned by
the Bank.  The Penn's Village branch is rented.
Item 3.  Legal Proceedings.
         Fulton Bancshares Corporation is an occasional
party to legal actions arising in the ordinary course of its
business.  In the opinion of the Company's management,
Fulton Bancshares Corporation has adequate legal defenses
and/or insurance coverage respecting any and each of these
actions and does not believe that they will materially
affect the Company's operations or financial position.
Item 4.  Submission of Matters to Vote of Security Holders.
         None
Item 5.  Market for Registrant's Common Stock and Related
           Security Holder Matters.

         The corporation's common stock is traded on a
limited basis in the local over-the-counter market.  As of
December 31, 1997, the approximate number of shareholders of
record was 492.
<TABLE>
<S>           <C>        <C>          <C>        <C>
                 Market     Cash        Market      Cash
                 Price    Dividend      Price     Dividend
                       1997                   1996
First Quarter $ 35.00   $ .16     $ 27.00   $ .15
Second Quarter     35.00     .16  32.00     .15
Third Quarter 40.00     .185 35.00     .179
Fourth Quarter     45.00     .195 35.00     .185
</TABLE>



-26-



Item 6.  Selected Financial Data.
<TABLE>
<S>              <C>      <C>      <C>     <C>     <C>
                    1997   1996     1995    1994     1993
Income (000 omitted)

Interest income    $ 7,898   $ 7,513   $ 7,298   $ 6,417   $ 6,349
Interest expense   4,036     3,725     3,732     3,269     3,575
Provision for
 loan losses            20        65        62        48        70
Net interest
 income after
 provision for
 loan losses       3,842     3,723     3,504     3,100     2,704
Securities gains
 (losses)     3    (      2) 5     2       89
Other operating
 income            470  391  276  242  229
Other operating
 expenses            2,626     2,425     2,304     2,236     2,097
Income before
 income taxes      1,689     1,687     1,481     1,108       925
Applicable income
 tax                   384       455       422       319       225
    Net income          $ 1,305   $ 1,232   $ 1,059   $   789   $   700
</TABLE>
Per share amounts are based on following weighted averages:

              1997 - 495,000     1995 - 480,476   1993 - 440,000
              1996 - 495,000     1994 - 440,000
<TABLE>
<S>              <C>     <C>     <C>      <C>     <C>
Income before
 income taxes      $  3.41   $ 3.41    $  3.08   $   2.52  $  2.10
Applicable income
 taxes             .77  .92  .88  .73  .51
   Net income           2.64 2.49 2.20 1.79 1.59
Cash dividend paid      .70  .66  .55  .48  .44
Book value         23.04     20.50     19.08     14.12     15.42
</TABLE>









-27-


Item 6.  Selected Financial Data (Continued).
<TABLE>
<S>          <C>     <C>       <C>      <C>       <C>
               1997      1996     1995      1994     1993
Income (000 omitted)
Year-End Balance Sheet Figures (000 omitted)
Total assets  $ 105,770 $ 102,355 $  96,449 $  90,890 $  88,349
Net loans      70,416   63,791    59,871    60,321    60,998
Total investment
 securities        25,922    28,474    29,365    24,060    18,350
Deposits-non-
 interest
 bearing       8,159    10,000    7,959      7,266     6,930
Deposits-interest
 bearing       82,062   81,632    78,399    76,728    74,220
Total deposits     90,221    91,632    86,358     83,994   81,150
Liabilities for
 borrowed money 3,470        0    0      220         0
Total stock-
 holders'
 equity  11,407    10,149    9,445       6,214    6,785

Ratios
Average equity/
 average assets    10.29     9.80 9.29  7.23      7.15
Return on
 average equity    11.98     12.57     12.13     12.08     10.73
Return on
 average assets    1.23 1.23 1.13  .87  .77
</TABLE>
Item 7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations.

         Management's discussion and analysis of financial
condition and results of operations included on pages 26
through 32 of the annual report to security holders is
incorporated herein by reference.
Item 8.  Financial Statements and Supplementary Data.
         The financial statements and supplementary data,
some of which is required under Guide 3 (statistical
disclosures by bank holding companies) are shown on pages 2
through 25 of the annual shareholders report for the year
ended December 31, 1997 and are incorporated herein by
reference.  Additional schedules required in addition to
those included in the annual shareholders report are
submitted herewith.



-28-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY
    For additional information concerning liquidity, refer to statistical
disclosures applicable to the investment and loan portfolio.
    Closely related to the management of liquidity is the management of rate
sensitivity which focuses on maintaining stability in the net interest
 margin.  As
illustrated in the table below the tax equivalent net interest margin
 ranged from 4.0% to
4.1% of average earning assets during the past 3 years. An asset/liability
 committee
monitors and coordinates the overall asset/liability strategy.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Rates and Interest Differential Tax Equivalent Yields
                        Years Ended December 31
<TABLE>
<S>                  <C>      <C>     <C>    <C>     <C>      <C>  <C>
<C>     <C>
      ASSETS                  1997                     1996
1995
                      Average                 Average                Average
(000 omitted)         Balance Interest Rate   Balance Interest Rate  Balance
Interest Rate
Investment securities:
    Taxable interest
  income      $ 23,627  $ 1,532   6.5% $  26,647 $ 1,651   6.2% $ 26,010  $
1,498    5.7%
Nontaxable interest
  income         5,090      254   5.0      3,040    153    5.0     1,586
81  5.1
         Total investment
          securities    28,717    1,786     6.2  29,687    1,804     6.1  27,596
    1,579     5.7
Loans (net of unearned
 discounts)        68,171    6,098     8.9  62,530    5,686     9.1  61,011
5,64
9   9.3
Other short-term
 investments         255          14   5.5        430      23   5.3       661

   70    5.9
         Total interest
           earning assets    97,143    $ 7,898   8.1% 92,647    $ 7,513   8.1%
8
9,268    $ 7,298   8.2%
Allowance for loan
  losses      (      475)              (      392)              (     364)

Cash and due from banks 2,847               2,638               2,399

Bank premises and
 equipment         2,371               2,083               2,028
Other assets      3,978               3,211              1,440
         Total assets   $ 105,864           $ 100,187           $ 94,771


  LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing demand
 deposits          $  15,528 $   412   2.6% $  15,758 $   413   2.6% $ 14,871
$
  398    2.7%
Savings deposits   13,816    368  2.7  14,578    400  2.7  14,663    417  2.8
Time deposits 53,738    3,136     5.8  49,582    2,847     5.7  47,502    2,872
6.0
Short-term borrowings      2,114      120   5.7     1,196       65   5.4
709      44   6.2
         Total interest
          bearing
       liabilities 85,196    $ 4,036   4.7% 81,114    $ 3,725   4.6% 77,745
$
3,731    4.8%
Demand deposits    8,848               8,562               7,902
Other liabilities        927                 645                394
Total liabilities    94,971            90,321              86,041
Stockholders'
 equity          10,893               9,866              8,730
         Total liabilities &
           stockholders'
           equity       $ 105,864           $ 100,187           $ 94,771

Net interest income/net
  yield on average
  earning assets        $ 3,862   4.0%      $ 3,788   4.1%      $ 3,567   4.0%
 </TABLE>
              For purposes of calculating loan yields, the average loan volume
includes
nonaccrual loans.  For purposes of calculating yields on nontaxable interest
 income, the
taxable equivalent adjustment is made to equate nontaxable interest on the
 same basis as
taxable interest.  The marginal tax rate was 34% for 1997, 1996 and 1995.
-29-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

CHANGES IN NET INTEREST INCOME TAX EQUIVALENT YIELDS
<TABLE>
<S>          <C>         <C>    <C>         <C>         <C>      <C>

                      1997 Versus 1996             1996 Versus 1995
                    Increase (Decrease)          Increase (Decrease)
                     Due to Change in              Due to Change in

                                   Total                           Total
               Average  Average   Increase     Average   Average  Increase
               Volume     Rate   (Decrease)    Volume      Rate  (Decrease)
(000 omitted)
Interest Income
    Loans (net of
     unearned
     discounts)    $ 502     ($ 80)    $ 422     $ 138     ($ 111)   $  27
    Taxable
     investment
     securities    (  196)   67   (  129)   39   92   131
    Nontaxable
     investment
     securities        103   (   2)    101  73   (    1)   72
    Other short-term
     investments   (   10)      1 (    9)   (   12)   (    3)   (   15)
         Total interest
          income     399     (  14)      385       238     (   23)     215

Interest Expense
    Interest bearing
     demand    (    6)  6    0    23   (    9)   14
    Savings
     deposits (   20)   (  12)    (   32)   (   2)    (   15)   (   17)
    Time deposits  241  48   289  119  (  144)   (   25)
    Short-term
     borrowings        52       2    54        26     (    4)      22
         Total interest
          expense    267       44   311       166     (  172)   (    6)

         Net interest
          income             $  74               $ 221

</TABLE>
                   Changes which are attributed in part to volume and in part
to
rate are allocated in proportion to their relationships to the amounts of
changes.













-30-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

    The following table shows the maturities of investment
securities at book value as of December 31, 1997, and weighted average
yields of such securities.  Yields are shown on a tax equivalent basis,
assuming a 34% federal income tax rate.
<TABLE>
<S>            <C>      <C>            <C>           <C>       <C>
                         After 1 year   After 5 years
                 Within   but within      but within    After
                 1 year    5 years         10 years   10 years    Total

(000 omitted)

Bonds:
    U. S. Treasury
              Book value     $ 0  $     0   $     0   $       0 $     0
         Yield     0%   0%   0%   0%   0%

    U. S. Government agencies
         Book value     0    6,154     0    0    6,154
         Yield     0%   4.02%     0%   0%   4.02%

    State and municipal
         Book value     100  1,171       3,879   0    5,150
         Yield     6.06%     7.45%     7.63%     0%   7.56%

    Mortgage-Backed
         Book value     0    0    0    9,729     9,729
         Yield       0%       0%        0%     4.36%      4.36%

Total book value   $ 100     $ 7,325   $ 3,877   $ 9,729   $ 21,033

    Yield      6.06%       4.57%     7.63%      4.36%    5.04%

Other Debt Securities:
    FHLMC/FNMA non-
     cumulative preferred
     stock
    Book value                              $  4,188
    Yield                                  8.54%

Equity Securities:
    Total Equity Securities                      $    577

         Yield                                  6.59%



Total Investment Securities                      $ 25,798

         Yield                                  5.64%
</TABLE>








-31-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

LOAN PORTFOLIO


    The following table presents the loan portfolio at the end of
each of the last five years:
<TABLE>
<S>                     <C>       <C>      <C>      <C>      <C>
                            1997     1996    1995      1994    1993
        (000 omitted)

Commercial, financial and
 agricultural $  7,180  $  7,648  $ 11,135  $ 11,641  $ 10,337
Real estate - Construction     0  0    386    159     386
Real estate - Mortgage  53,624    47,519    37,822    37,196    38,221
Installment and other
 personal loans (net of
 unearned discount)       10,099     9,068    10,872    11,682    12,455
    Total loans    $ 70,903  $ 64,235  $ 60,215  $ 60,678  $ 61,399
</TABLE>

         Presented below are the approximate maturities of the loan
portfolio (excluding real estate mortgages and installments) at
December 31, 1997:
<TABLE>
<S>                        <C>       <C>         <C>       <C>
                            Under One   One to    Over Five
                              Year    Five Years    Years    Total

(000 omitted)

Commercial, financial and
 agricultural $ 4,667   $ 1,292   $ 1,221   $ 7,180
Real estate - Construction         0         0         0         0
    Total          $ 4,667   $ 1,292   $ 1,221   $ 7,180
</TABLE>

         The following table presents the approximate amount of fixed
rate loans and variable rate loans due as of December 31, 1997:
<TABLE>
<S>                                  <C>                <C>
                                       Fixed Rate          Variable
                                          Loans           Rate Loans
   (000 omitted)

Due within one year     $   5,204 $ 13,853
Due after one but within five years     11,771    5,686
Due after five years      15,885    18,504
    Total          $ 32,860  $ 38,043
</TABLE>










-32-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<S>                      <C>       <C>       <C>     <C>       <C>
                                      Years Ended December 31
                            1997      1996     1995     1994    1993

        (000 omitted)

Average total loans
 outstanding (net of
 unearned income)  $ 68,171  $ 62,530  $ 61,011  $ 61,062  $ 64,104

Allowance for loan losses,
 beginning of period    $    444  $    345  $    358  $    400  $    376
Additions to provision
 for loan losses charged
 to operations     20   65   62    48   70
Loans charged off during
 the year
   Commercial 6    0    35   68   39
    Installment         40         9         48        31        14
         Total charge-off's       46         9         83        99        53

Recoveries of loans
 previously charged off:
    Commercial     49   33   1    6    2
    Installment          20       10          7         3         5
         Total recoveries         69        43          8         9         7

Net loans charged off   (     23) (     34)       75        90        46

Allowance for loan losses,   $   487   $   444   $    345  $    358  $    400

Ratio of net loans
 charged off to average
 loans outstanding (    .03)%     (    .05)%         .12%       .15%     .07%
</TABLE>

              The provision is based on an evaluation of the adequacy of
the allowance for possible loan losses.  The evaluation includes, but is
not limited to, review of net loan losses for the year, the present and
prospective financial condition of the borrowers and evaluation of
current and projected economic conditions.
















-33-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

LOANS


    The following table sets forth the outstanding balances
of those loans on a nonaccrual status and those on accrual status
which are contractually past due as to principal or interest
payments for 30 days or more at December 31.
<TABLE>
<S>                  <C>       <C>      <C>     <C>       <C>
                        1997     1996    1995     1994      1993

       (000 omitted)

Nonaccrual loans   $   413   $   310   $   310   $    80   $    249

Accrual loans:
    Restructured   $     0   $     0   $     0   $     0   $     0
    30 through 89 days
     past due 1,466     1,716     2,533     3,876     2,551
    90 days or more
     past due     431     1,041       253        85       147
         Total accrual
          loans    $ 1,897   $ 2,757   $ 2,786   $ 3,961   $ 2,698
</TABLE>

         See Note 5 of the notes to consolidated financial
statements for details of income recognized and foregone revenue on
nonaccrual loans for the past three years.

         Management has not identified any significant problem
loans in the accrual loan categories shown above.
























-34-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY


    The following is an allocation by loan categories of the
allowance for loan losses at December 31 for the last five years.  In
retrospect the specific allocation in any particular category may prove
excessive or inadequate and consequently may be reallocated in the future
to reflect the then current conditions.  Accordingly, the entire allowance
is available to absorb losses in any category:

                         Years Ended December 31
<TABLE>
<S>      <C>        <C>        <C>       <C>         <C>       <C>
                    1997              1996                  1995


                    Percentage            Percentage             Percentage
          Allowance of Loans to Allowance of Loans to Allowance of Loans to
           Amount   Total Loans  Amount   Total Loans  Amount   Total Loans
(000 omitted)

Commercial,
 financial and
 agri-
 cultural     $  49     10.13%    $  53     11.91%    $ 123      35.68%
Real estate -
 Constr-
 uction   0   0.00 0    0.00 2    0.64
Real estate -
 Mortgage     368  75.63     328  73.98     157  45.62
Instal-
 lment      70      14.24       63      14.11       63      18.06
    Total     $ 487     100.00%   $ 444     100.00%   $ 345     100.00%
</TABLE>


<TABLE>
<S>                 <C>             <C>             <C>        <C>
                                  Years Ended December 31
                              1994                          1993

                                     Percentage                  Percentage
                     Allowance       of Loans to     Allowance  of Loans to
                      Amount         Total Loans      Amount    Total Loans

    (000 omitted)

Commercial,
 financial and
 agricultural $ 136     37.92%    $ 144     36.05%
Real estate -
 Construction  1   .27  3    .63
Real estate -
 Mortgage     152  42.55     172  43.01
Installment                69      19.26       81      20.31
    Total     $ 358     100.00%   $ 400     100.00%
</TABLE>




-35-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

DEPOSITS


    The average amounts of deposits are summarized below:
<TABLE>
<S>                               <C>         <C>         <C>
                                       Years Ended December 31

                                     1997        1996       1995

      (000 omitted)

Demand deposits    $  8,848  $  8,562  $  7,902
Interest bearing demand deposits  15,528    15,758    14,871
Savings deposits   13,816    14,578    14,663
Time deposits   53,738    49,582    47,502
     Total deposits     $ 91,930  $ 88,480  $ 84,938
</TABLE>

    The following is a breakdown of maturities of time
deposits of $ 100,000 or more as of December 31, 1997:

                  Maturity                       (000 omitted)

    Certificates of Deposit
         Three months or less     $  1,982
         Over three months through six months      1,692
         Over six months through twelve months   1,744
         Over twelve months     4,749
                   $ 10,167


   RETURN ON EQUITY AND ASSETS (APPLYING DAILY AVERAGE BALANCES)


    The following table presents a summary of significant
earnings and capital ratios:
<TABLE>
<S>                           <C>           <C>          <C>
                                   1997        1996        1995

    Assets    $ 105,864 $ 100,187 $ 94,771
    Net income     $   1,305 $   1,232 $  1,059
    Equity    $  10,893 $   9,866 $  8,730
    Cash dividends paid $     347 $     327 $    272
    Return on assets    1.23%     1.23%     1.13%
    Return on equity    11.98%    12.49%    12.13%
    Dividend payout ratio    26.6%     26.5%     25.7%
    Equity to asset ratio     10.29%   9.85%     9.21%
</TABLE>





-36-


FULTON BANCSHARES CORPORATION AND SUBSIDIARY

CONSOLIDATED SUMMARY OF OPERATIONS


                                        Years Ended December 31
<TABLE>
<S>                         <C>      <C>      <C>        <C>      <C>
                               1997    1996      1995      1994     1993
(000 omitted)

Interest income    $ 7,898   $ 7,513   $ 7,298   $ 6,417   $ 6,349
Interest expense     4,036     3,725     3,732     3,269     3,575
Net interest income     3,862     3,788     3,566     3,148     2,774
Provision for loan losses         20        65        62        48         70


         Net interest income after
       provision for loan
       losses 3,842     3,723     3,504     3,100     2,704

Other income:
    Trust     63    43  42    41   30
    Service charges - Deposits     146 130  99   102  127
    Other service charges,
     collection and exchange,
     charges, commission fees      93  102  69    80   67
    Other operating income       171       114        71        21        94
         Total other income      473       389       281       244       318

Income before operating
 expense 4,315     4,112     3,785     3,344     3,022

Operating expenses:
    Salaries and employees
     benefits 1,178     1,129     1,072       957      934
    Occupancy and equipment
     expense  465  418  370  325  258
    Other operating expenses     983       878       862       954       905
         Total operating
          expenses   2,626     2,425     2,304     2,236     2,097

Income before income taxes   1,689     1,687     1,481     1,108       925
Income tax        384       455       422       319       225

         Net income applicable
          to common stock    $ 1,305   $ 1,232   $ 1,059   $   789   $   700


Per share data:
    Earnings per common share     $ 2.64         $ 2.49         $ 2.20
$
1.79          $ 1.59
    Cash dividend - Common   .70       .66       $  .55 *  $  .48         $  .44
    Weighted average number
     of common shares   495,000   495,000   480,476   440,000   440,000
</TABLE>

                 * Based on 495,000 shares outstanding




-37-


FULTON BANCSHARES CORPORATION AND SUBSIDIARIES

STATEMENTS OF AVERAGE BALANCES AND AVERAGE RATES
<TABLE>
<S>                     <C>         <C>       <C>      <C>       <C>

  ($ 000 omitted)           1997     1996      1995       1994      1993

LOANS
    Lines of credit     $   3,290 $  3,492  $  3,556  $  3,606  $  3,611
    Tax free  2,201     2,458     3,027     1,930         2,846
    Commercial     13,966    12,702    10,356    10,533       11,873
    Mortgage  35,415    32,833    33,430    34,458       34,793
    Consumer                    13,299   11,045    10,642    10,535     10,981
         Total loans                 68,171   62,530    61,011    61,062
64,104

INVESTMENT SECURITIES
    U.S. Government     0    254  404    564          665
    U.S. Government agencies 6,931     6,984     5,361     4,743         6,206
    State & municipal   5,090     3,040     1,586       906           553
    Mortgage-backed securities    13,861    18,730    19,777    17,744    13,741
    FNMA & FHLMC preferred
     stock    2,443     124  0    0    0
    Other           392      679       468       407       468
         Total investment
          securities       28,717   29,687    27,596    24,364    21,633

OTHER SHORT-TERM INVESTMENTS
    Federal funds sold        255      430       661       536     1,713

TOTAL EARNING ASSETS       97,143   92,647    89,268    85,962    87,450

TOTAL ASSETS  $ 105,864 $ 99,844  $ 93,959  $ 90,315  $ 91,297

Percent increase   6.0% 6.3% 4.0% (1.1)%    5.0%

DEPOSITS
    Interest-bearing demand  $  15,528 $ 15,758  $ 14,871  $ 14,876  $ 15,431
    Savings   13,816    14,578    14,663    16,641       16,052
    Time    53,738   49,582    47,502    43,919    44,283
         Total interest-
          bearing deposits      83,082   79,918    77,036    75,436    75,766

OTHER BORROWINGS
    Federal funds purchased  276  908  524  408          0
    Liabilities for borrowed
     money        1,838      288       185       200     1,030

TOTAL INTEREST-BEARING
  LIABILITIES    85,196   81,114    77,745    76,044    76,796
</TABLE>










-38-


FULTON BANCSHARES CORPORATION AND SUBSIDIARIES

STATEMENTS OF AVERAGE BALANCES AND AVERAGE RATES (CONTINUED)
<TABLE>
<S>                            <C>       <C>    <C>     <C>      <C>
                                 1997      1996   1995      1994    1993
AVERAGE RATES EARNED
                                   %        %      %         %       %

Loans
    Commercial     9.11 9.31      9.95 8.90 7.77
    Mortgage  8.67 8.64 8.99 7.94 7.42
    Consumer       8.89 9.58 10.09     10.14     10.42
    Tax free  5.62 5.91 6.05 6.73 6.21
    Lines of credit                    9.19 9.13  9.84      8.63      7.31
         Total     8.73 9.09  9.22      8.45      7.92


Investment Securities
    U.S. Government     0.00 6.40 6.40 6.11 5.90
    U.S. Government agencies 6.17 6.09 5.86 5.35 5.34
    State & municipal                  5.00 5.02 5.08 5.34 7.18
    Mortgage-backed securities    6.46 6.50 5.94 4.87 5.59
    Other     7.27 6.32   6.54      6.17      7.06
         Total     6.22 6.08   5.89      5.03     5.60

Other Short-Term Investments
    Federal funds sold  5.51 5.30  5.85      4.02      3.63

Total earning assets    8.13 8.11  8.15      7.44      7.24

AVERAGE RATES PAID
    Time & savings deposits  4.71 4.59 4.77 4.29 4.69
    Federal funds purchased       5.61 5.61 6.09 3.93 0.00
    Liabilities for borrowed money     5.68 5.55  6.36      3.74      3.26

Total interest-bearing
 liabilities  4.74 4.59  4.78      4.29      4.67
</TABLE>






















-39-


Item 9.  Disagreements on Accounting and Financial Disclosures.

         Not applicable.























































-40-


PART III
    The information required by Items 10, 12 and 13 is
incorporated by reference from Fulton Bancshares
Corporation's definitive proxy statement for the 1998 Annual
Meeting of shareholders filed pursuant to Regulation 14A.
















































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Item 11. Executive Compensation
         Shown below is information concerning the annual
compensation for services in all capacities to the Company,
the Bank, and FCCDC for the fiscal years ended December 31,
1997, 1996 and 1995 of the Chief Executive Officer.  There
were no other officers of the Company, the Bank, or FCCDC
whose total annual salary and bonus during that time frame
exceeded $ 100,000.
Summary Compensation Table
<TABLE>
<S>        <C>    <C>   <C>   <C>        <C>       <C>     <C>     <C>
                     Annual Compensation  Long-Term Compensation
                                                Awards     Payouts
  (a)        (b)   (c)   (d)      (e)       (f)       (g)     (h)      (i)

                                 Other    Restricted
Name and                         Annual      Stock   Options/ LTIP   All Other
 Principal        Salary Bonus Compensation Award(s)   SARs Payouts Compensation
 Position    Year  ($)    ($)       ($)       ($)    (#)    ($)         ($)
Clyde H.
 Bookheimer
 President &
 CEO          1997 $ 101,825 $ 0  $ 0  $ 0  $ 0  $ 0  $ 59,889
         1996  83,200    0    0    0   0     0    60,987
         1995 77,850    0    0    0    0    0    19,873
</TABLE>

     Footnotes:
     (1)  All other compensation includes the following:
<TABLE>
<S> <C>      <C>                   <C>         <C>                     <C>
               Fringe Benefits                                         Deferred
             (Personal Use of Bank  Retirement Supplemental Executive  Directors
    Directors  Owned Vehicle)          Plan      Retirement Plan        Fees

1997     $     0   $ 1,140   $ 6,081   $ 52,668  $     0
1998      6,000        1,351  9,027     42,609   2,000
1999     2,000     875  6,939     10,059    0
</TABLE>
    The supplemental executive retirement plan was funded by single premium
life insurance policies on the    CEO, with the Bank named as beneficiary.
Actual payments to the CEO amounting to $ 73,000 annually will not begin
until 2005.   At December 31, 1997, the cash surrender value of the policies
was $ 718,961.




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PART IV
Item 14. Exhibits, Financial Statement Schedules and
           Reports on Form 8-K.
         (a)  Certain documents filed as part of Form 10-K
         Financial Statement Schedules and Exhibits
              (1)  Financial statements.  See Item 8 of this
                   report for the index to financial
                   statements.
              (2)  Financial statement schedules.  Not
                   applicable.
              (3)  Exhibits.
    Exhibit Numbers
              (2)       Plan of acquisition, reorganization,
                        arrangement, liquidation or succession.
                        Not applicable.
              (3)  (a)  Articles of incorporation.  Incorporated
                             by reference to Exhibit 3A to the
                             Registrant's Registration Statement on
                             Form SB-2, Registration No. 33-85626.
                   (b)  By-laws.  Incorporated by reference to
                             Exhibit 3B to the Registrant's
                             Registration Statement on Form SB-2,
                             Registration No. 33-85626.
              (4)       Instruments defining the rights of
                        security holders including indentures.
                        The rights of the holders of Registrant's
                        common stock are contained in:

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                   (i)  Articles of Incorporation of Fulton
                             Bancshares Corporation, filed as Exhibit
                             3A to Registrant's Registration
                             Statement on Form SB-2 (Registration No.
                             33-85626).
                   (ii)By-laws of Fulton Bancshares
                             Corporation, filed as Exhibit 3B to the
                             Registrant's Registration Statement on
                             Form SB-2 (Registration No. 33-85626).
         (9)  Voting trust agreement.  Not applicable.
         (10) Material contracts.  None.
         (11) Statement re:  computation of per share
              earnings.  Not applicable.
         (12) Statements re:  computation of ratios.  Not
              applicable.
         (13) Annual report to security holders, Form 10-Q
              or quarterly report to security holders.  Not
              applicable.
         (16) Letter re:  change in certifying accountant.
              not applicable.
         (18) Letter re:  change in accounting principles.
              Not applicable.
         (21) Subsidiaries of the registrant.  Filed
              herewith as Exhibit 21.
         (22) Published report regarding matters submitted
              to vote of security holders.  Not
              applicable.

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         (23) Consents of experts and counsel.  Not
              applicable.
         (24) Power of attorney.  Not applicable.
         (27) Financial data schedule.  Filed herewith.
         (28) Information from reports furnished to state
              insurance regulatory authorities.  Not
              applicable.
         (99) Additional exhibits.  Not applicable.
    (b)  Reports on Form 8-K.  None.





































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SIGNATURES


    In accordance with the requirements of Section 13 or
15(d) of the Securities Act of 1934, this report was signed by the
following persons on behalf of the Registrant in the capacities and
on the dates indicated.

      Signature                    Title                Date

/s/ Clyde H. Bookheimer      Director, President &    March     , 1998
Clyde H. Bookheimer     CEO (Principal Executive
    Officer)

/s/ Raleigh V. Barnett       Director  March     , 1998
Raleigh V. Barnett

/s/ David L. Seiders         Director  March     , 1998
David L. Seiders

/s/ John J. Kelso            Director & Chairman March     , 1998
John J. Kelso of the Board

/s/ Cecil B. Mellott         Director                 March     , 1998
Cecil B. Mellott

/s/ Robert C. Snyder         Director & Vice-         March     , 1998
Robert C. Snyder   Chairman

/s/ Ellis L. Yingling        Director                 March     , 1998
Ellis L. Yingling

/s/ Clair R. Miller          Director  March ____, 1998
Clair R. Miller
























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                                                 EXHIBIT 21


SUBSIDIARIES OF THE REGISTRANT



1.  Fulton County National Bank and Trust, Pennsylvania; a
    national bank organized February 24, 1887 under the
    Pennsylvania Banking Code.

    It converted to a national banking association on
    September 5,   1933.

2.  Fulton County Community Development Corporation, which
    was  formed on June 7, 1996 under the Pennsylvania
    Business Corporation Law of 1988, as amended.