* Q1 EPS $0.05 vs $0.24 last year

* Reuters Estimates Q1 EPS view $0.08

* Provision for loan losses increases $38.8 mln

April 21 (Reuters) - Financial holding company Fulton Financial Corp (FULT.O: Quote, Profile, Research) reported an 81 percent fall in first-quarter profit as provision for bad loans surged mainly due to an increase in the level of non-performing assets.

"Despite experiencing good deposit growth and very strong mortgage refinancing activity, first quarter earnings were slowed by credit related charges," Chief Executive Scott Smith Jr. said.

The company earned $8.1 million in the first quarter ended March 31, compared with $41.5 million a year earlier.

Net charge-offs were 1.0 percent of average total loans, compared with 0.15 percent a year earlier, due to construction loans and commercial mortgages. Net charge-offs stood at 0.89 percent for the quarter ended Dec. 31, 2008.

Non-performing assets were $269.2 million, or 1.63 percent, of total assets at March 31, compared with $219 million, or 1.35 percent, at Dec. 31, 2008.

Provision for loan losses stood at $50 million in the first quarter, the company said.

Shares of the Lancaster, Pennsylvania-based company closed up 13 percent at $7.49 Tuesday on Nasdaq. (Reporting by Archana Shankar in Bangalore; Editing by Deepak Kannan)