UPDATE 2-Fulton Financial Q3 profit beats market

* Q3 EPS $0.10 vs est. $0.07

* Q3 net interest income $132.8 mln vs $134 mln last year

* Loan loss provision down 10 pct sequentially to $45 mln (Adds details, analyst comments)

By Abhinav Sharma

BANGALORE, Oct 20 (Reuters) - U.S. regional bank Fulton Financial Corp (FULT.O) reported a better-than-expected third-quarter profit and said the rate of credit deterioration within its loan portfolio slowed during the quarter.

For the quarter, the company earned $18.3 million, or 10 cents a share, compared with $29.1 million, or 17 cents a share, a year earlier.

Analysts on average were expecting the company to earn 7 cents a share, excluding items, according to Thomson Reuters I/B/E/S.

The results were slightly better than expectations due to lower loan loss provisioning, analyst David Darst of FTN Equity Capital Market said.

Provision for loan losses fell 10 percent sequentially to $45 million.

"While the past year has been extremely challenging for us, the quarter just completed showed slowing in the rate of credit deterioration within our loan portfolio and, as a result, we were able to decrease the provision from the second quarter," Chief Executive Scott Smith said in a statement.

Annualized net charge-offs for the quarter were 0.81 percent of average total loans, compared with 0.97 percent in the second quarter, Fulton said.

"Net charge-offs will decline and provisions will also decline and will likely match each other going forward," analyst Darst added.

The analyst also expects further stability in Fulton's earnings stream and sees the company improving its earnings outlook.

Net interest income fell about a percent to $132.8 million.

Shares of the the Lancaster, Pennsylvania-based company closed at $7.25 Tuesday on Nasdaq. They were flat after the bell. (Reporting by Abhinav Sharma in Bangalore; Editing by Unnikrishnan Nair)