UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC  20549

                                   FORM 10-Q

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

                  For the quarterly period ended March 31, 1997

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

                  For the transition period from -- to -- .

                       Commission file number 0-12638

                                  F&M BANCORP
             (Exact name of registrant as specified in its charter)


            Maryland                                   52-1316473
      (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)              Identification No.)

                          110 Thomas Johnson Drive
                          Frederick, Maryland 21702
              (Address of principal executive offices) (zip code)

                                  301-694-4000
              (Registrant's telephone number, including area code)

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 such 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.

Common Stock $5 par value, 5,694,888 shares outstanding as of May 7, 1997.

Exhibit index located on page 21.
<PAGE>
                                  F&M BANCORP
                               TABLE OF CONTENTS


PART I:     FINANCIAL INFORMATION                                       PAGE

          Consolidated Balance Sheets (Unaudited),
          March 31, 1997 and 1996 and December 31, 1996                   3
        
          Consolidated Statements of Income (Unaudited),
          Three Months Ended March 31, 1997 and 1996                      5
        
          Consolidated Statements of Cash Flows (Unaudited),
          Three Months Ended March 31, 1997 and 1996                      6
        
          Consolidated Statements of Changes in Shareholders'
          Equity (Unaudited), Three Months Ended March 31, 1997
          and Twelve Months Ended December 31, 1996                       8
        
          Notes to Consolidated Financial Statements (Unaudited)          9
        
          Management's Discussion and Analysis of Financial
          Condition and Results of Operations                            13

PART II     OTHER INFORMATION

            Item 6.  Exhibits and Reports on Form 8-K                    20

            Signatures                                                   20
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS (Unaudited)
F&M Bancorp and Subsidiaries

<CAPTION>
 (Dollars in thousands,                March 31       March 31      December 31
  except per share amounts)              1997           1996            1996
-------------------------------------------------------------------------------
 <S>                                   <C>            <C>            <C>
ASSETS
Cash and due from banks              $   33,204       $ 28,974     $   33,762
Federal funds sold                        4,000         21,830             --
Interest-bearing deposits with banks      3,886          4,132          4,943
                                     ----------       --------     ----------
Total cash and cash equivalents          41,090         54,936         38,705
                                     ----------       --------     ----------
Loans held for sale                         144          1,709            309
                                     ----------       --------     ----------
Investment securities
  Held-to-maturity, fair value
    $99,116, $105,858, and $100,201,
    respectively                         99,436        105,880         99,503
  Available-for-sale, at fair value     130,420        131,528        146,308
                                     ----------       --------     ----------
Total investment securities             229,856        237,408        245,811
                                     ----------       --------     ----------
Loans, net of unearned income           678,404        617,909        670,269
Less:  Allowance for credit losses       (9,434)        (9,686)        (9,639)
                                     ----------       --------     ----------
Net loans                               668,970        608,223        660,630
                                     ----------       --------     ----------
Bank premises and equipment, net         25,376         21,086         25,231
Other real estate owned                   6,577          7,774          7,457
Interest receivable                       7,081          6,547          6,701
Intangible assets                         3,895          4,582          3,945
Other assets                             17,963         13,539         17,062
                                     ----------       --------     ----------
Total assets                         $1,000,952       $955,804     $1,005,851
                                     ==========       ========     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Deposits
  Noninterest-bearing                $  111,022       $105,942     $  108,101
  Interest-bearing                      690,290        689,005        686,649
                                     ----------       --------     ----------
Total deposits                          801,312        794,947        794,750
Federal funds purchased and
  securities sold under agreements
  to repurchase                          34,801         32,127         41,876
Other short-term borrowings              52,683         16,377         57,411
Long term borrowings                      6,685         12,272          6,686
Accrued interest and other liabilities   10,726         10,491         11,668
                                     ----------       --------     ----------
Total liabilities                       906,207        866,214        912,391
                                     ----------       --------     ----------
Shareholders' equity
Common stock, par value $5 per share;
  authorized 10,000,000 shares;
  issued and outstanding 5,691,988 
  shares, 5,668,616 shares, and 
  5,678,564 shares, respectively         28,460         28,343         28,393
Surplus                                  29,363         28,968         29,148
Retained earnings                        37,576         32,704         36,113
Net unrealized loss on
  securities available for sale            (654)          (425)          (194)
                                     ----------       --------     ----------
Total shareholders' equity               94,745         89,590         93,460
                                     ----------       --------     ----------
Total liabilities and shareholders'
  equity                             $1,000,952       $955,804     $1,005,851
                                     ==========       ========     ==========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
F&M BANCORP and Subsidiaries

<CAPTION>
Quarter ended
(Dollars in thousands,                                    March 31
 except per share amounts)                         1997               1996
---------------------------------------------------------------------------
<S>                                             <C>                <C>
Interest Income
  Interest and fees on loans                    $14,470            $13,716
  Interest and dividends on investment
    securities
      Taxable                                     2,658              2,357
      Tax-exempt                                    870                928
  Interest on deposits with banks                    36                118
  Interest on federal funds sold                     14                218
                                                -------            -------
  Total interest income                          18,048             17,337
                                                -------            -------

Interest Expense   
  Interest on deposits                            6,833              7,070
  Interest on federal funds purchased and
    securities sold under agreements to
    repurchase                                      495                425
  Interest on Federal Home Loan Bank borrowings     821                463
  Interest on other short-term borrowings            20                 19
                                                -------            -------
  Total interest expense                          8,169              7,977
                                                -------            -------
  Net interest income                             9,879              9,360
  Provision for credit losses                       450                300
                                                -------            -------
  Net interest income after provision
    for credit losses                             9,429              9,060
                                                -------            -------
Noninterest Income
  Trust income                                      611                427
  Service charges on deposit accounts             1,226              1,084
  Losses on sales of securities                      --                (28)
  Gains (losses) on sales of property                (5)                79
  Gains on sales of loans                            43                142
  Other operating income                          1,149                955
                                                -------            -------
  Total noninterest income                        3,024              2,659
                                                -------            -------

Noninterest Expenses
  Salaries and employee benefits                  4,605              4,270
  Occupancy and equipment expense                 1,465              1,288
  Other operating expense                         2,578              2,687
                                                -------            -------
  Total noninterest expenses                      8,648              8,245
                                                -------            -------
  Income before provision for income taxes        3,805              3,474
  Provision for income taxes                      1,081              1,000
                                                -------            -------
Net Income                                      $ 2,724            $ 2,474
                                                =======            =======

Earnings per Common Share
  Based on weighted average shares
    outstanding of 5,685,895 for
    1997, 5,666,468 for 1996                    $   .48            $   .44
                                                =======            =======
Dividends per Share                             $   .22            $   .17
                                                =======            =======
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
F&M BANCORP and Subsidiaries

<CAPTION>
                                                          Three Months Ended
                                                       March 31       March 31
 (Dollars in thousands)                                  1997           1996
-------------------------------------------------------------------------------
<S>                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                          $  2,724       $  2,474
  Adjustments to reconcile net income to net
    cash provided by operating activities
      Provision for credit losses                          450            300
      Depreciation and amortization                        637            486
      Amortization of intangibles                          127            156
      Net premium amortization on investment securities    135            188
      Increase in interest receivable                     (380)           (18)
      Decrease in interest payable                         (10)           (36)
      Deferred income tax benefit                          133             34
      Accretion of net loan origination fees                33             64
      Loss (gain) on sales of property                       5            (79)
      Gain on sales/calls of securities                     --             28
      Decrease in loans held for sale                      165            244
      Decrease in other assets                            (835)           (31)
      Increase (decrease) in other liabilities            (933)           635
                                                      --------       --------
   Net cash provided by operating activities             2,251          4,445
                                                      --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of investment securities to be 
    held to maturity                                    (1,110)       (17,212)
  Purchases of investment securities available 
    for sale                                            (6,707)       (20,156)
  Proceeds from maturities and sales/calls of 
    securities available for sale                       21,764         23,464
  Proceeds from maturities and calls of 
    securities to be held to maturity                    1,139          1,066
  Net decrease (increase) in loans                      (8,823)         6,796
  Purchases of premises and equipment                     (793)        (1,166)
  Proceeds from sales of property                            6             --
  Other investing activities                               879          1,274
                                                      --------       --------
  Net cash provided by (used in) investing activities    6,355         (5,934)
                                                      --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in noninterest-bearing deposits,
    interest-bearing checking, savings and
    money market accounts                                9,843          6,279
  Net increase (decrease) in certificates of deposit    (3,281)         4,043
  Net decrease in securities sold under 
    agreements to repurchase                            (7,075)        (8,031)
  Net decrease in long-term borrowings                      (1)          (500)
  Net decrease in other short-term borrowings           (4,728)        (2,243)
  Cash dividends paid                                   (1,250)          (985)
  Dividend reinvestment plan                                (6)            --
  Proceeds from issuance of common stock                   277            106
                                                      --------       --------
  Net cash used in financing activities                 (6,221)        (1,331)
                                                      --------       --------
  Net increase (decrease) in cash and cash equivalents   2,385         (2,820)
  Cash and cash equivalents at beginning of period      38,705         57,756
                                                      --------       --------
  Cash and cash equivalents at end of period          $ 41,090       $ 54,936
                                                      ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash payments for interest                          $  8,180       $  8,028
  Cash payments for income tax                             483            930

NON-CASH INVESTING AND FINANCING ACTIVITIES
  Fair value adjustment for securities available
    for sale, net of deferred income taxes payable
    (benefits)                                            (460)          (406)
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
F&M BANCORP and Subsidiaries
<CAPTION>
                                                             Net
                                                             Unrealized
                                                             Gain
                                                             (Loss) on
                                                             Securities
(Dollars in thousands          Common              Retained  Available
except per share amounts)      Stock     Surplus   Earnings  for Sale   Total
-------------------------------------------------------------------------------
<S>                            <C>       <C>       <C>       <C>       <C>
Balance at December 31, 1995   $28,304   $28,811   $31,304   $   (18)  $88,401
Net income                          --        --     8,611        --     8,611
Dividend reinvestment plan          --        --       (25)       --       (25)
Stock options exercised
  (25,113 shares)                  126       377        --        --       503
Cash dividends paid
  ($.64 per share)                  --        --    (3,640)       --    (3,640)
Stock repurchased (7,448 shares)   (37)      (40)     (137)       --      (214)
Fair value adjustment for
  securities available
  for sale, net                     --        --        --      (176)     (176)
                               -------   -------   -------   -------   -------
Balance at December 31, 1996   $28,393   $29,148   $36,113   $  (194)  $93,460
Net income                          --        --     2,724        --     2,724
Dividend reinvestment plan          --        --        (6)       --        (6)
Cash dividends paid
  ($.22 per share)                  --        --    (1,250)       --    (1,250)
Stock options exercised
  (13,734 shares)                   69       217        --        --       286
Stock repurchased (310 shares)      (2)       (2)       (5)       --        (9)
Fair value adjustment for
  securities available
  for sale, net                     --        --        --      (460)     (460)
                               -------   -------   -------   -------   -------
Balance at March 31, 1997      $28,460   $29,363   $37,576   $  (654)  $94,745
                               =======   =======   =======   =======   =======
</TABLE>
<PAGE>
                   Notes to Consolidated Financial Statements
                                  (Unaudited)

Note 1. Summary of Significant Accounting Policies

The foregoing financial statements are unaudited; however, in the opinion of 
management, all adjustments (comprising only normal recurring accruals) 
necessary for a fair presentation of the financial statements have been 
included. A summary of F&M Bancorp's ("Bancorp's") significant accounting 
policies is set forth in Note 1 to the consolidated financial statements in 
it's Annual Report on Form 10-K for the year ended December 31, 1996.

Certain reclassifications to prior year balances have been made in the 
accompanying consolidated financial statements to make disclosures consistent 
with those of the current year.

On November 15, 1996, Bancorp acquired all of the outstanding capital stock of 
Home Federal Corporation, Hagerstown, Maryland, in a tax-free transaction. Home 
Federal Corporation merged with and into Bancorp. This transaction was 
accounted for as a "pooling of interests." Accordingly, the consolidated 
financial statements for the quarter ended March 31, 1996 have been restated to 
include the accounts of Home Federal Corporation and its subsidiaries.


Note 2. Investment Securities

Investment securities are summarized as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                              March 31, 1997
-------------------------------------------------------------------------------
                                            Gross        Gross        Estimated
                                Amortized   Unrealized   Unrealized   Fair
(In thousands)                  Cost        Gains        Losses       Value
-------------------------------------------------------------------------------
<S>                             <C>         <C>          <C>          <C>
Available-for-sale:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                  $ 57,833    $   31       $  328       $ 57,536

  Obligations of states and
  political subdivisions           7,377        72            1          7,448

  Mortgage-backed securities      59,643        70          776         58,937
-------------------------------------------------------------------------------
Total-debt securities            124,853       173        1,105        123,921
Equity securities                  6,499        --           --          6,499
-------------------------------------------------------------------------------
Total available-for-sale:        131,352       173        1,105        130,420
-------------------------------------------------------------------------------
Held-to-maturity:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                    11,950        28          181         11,797

  Obligations of states and
  political subdivisions          62,976       713          353         63,336
  Mortgage-backed securities      24,510        33          560         23,983
-------------------------------------------------------------------------------
Total held-to-maturity            99,436       774        1,094         99,116
-------------------------------------------------------------------------------
Total investment securities     $230,788    $  947       $2,199       $229,536
===============================================================================
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                              March 31, 1996
-------------------------------------------------------------------------------
                                            Gross        Gross        Estimated
                                Amortized   Unrealized   Unrealized   Fair
(In thousands)                  Cost        Gains        Losses       Value
-------------------------------------------------------------------------------
<S>                             <C>         <C>          <C>          <C>
Available-for-sale:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                  $ 59,372    $   97       $  271       $ 59,198

  Obligations of states and
  political subdivisions          14,547       322            1         14,868

  Mortgage-backed securities      45,931        92          601         45,422
-------------------------------------------------------------------------------
Total-debt securities            119,850       511          873        119,488
Equity securities                 12,040        --           --         12,040
-------------------------------------------------------------------------------
Total available-for-sale:        131,890       511          873        131,528
-------------------------------------------------------------------------------
Held-to-maturity:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                     5,944        58           24          5,978

  Obligations of states and
  political subdivisions          57,355       887          447         57,795
  Mortgage-backed securities      42,581        51          547         42,085
-------------------------------------------------------------------------------
Total held-to-maturity           105,880       996        1,018        105,858
-------------------------------------------------------------------------------
Total investment securities     $237,770    $1,507       $1,891       $237,386
===============================================================================
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                            December 31, 1996
-------------------------------------------------------------------------------
                                            Gross        Gross        Estimated
                                Amortized   Unrealized   Unrealized   Fair
(In thousands)                  Cost        Gains        Losses       Value
-------------------------------------------------------------------------------
<S>                             <C>         <C>          <C>          <C>
Available-for-sale:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                  $ 69,883    $  112       $  146       $ 69,849

  Obligations of states and
  political subdivisions           8,545       116           --          8,661

  Mortgage-backed securities      62,042       155          435         61,762
-------------------------------------------------------------------------------
Total-debt securities            140,470       383          581        140,272
Equity securities                  6,036        --           --          6,036
-------------------------------------------------------------------------------
Total available-for-sale:        146,506       383          581        146,308
-------------------------------------------------------------------------------
Held-to-maturity:
  U.S. Treasury securities
  and obligations of U.S.
  government corporations
  and agencies                    11,949        58           13         11,994

  Obligations of states and
  political subdivisions          62,336     1,038          214         63,160

  Mortgage-backed securities      25,218        71          242         25,047
-------------------------------------------------------------------------------
Total held-to-maturity            99,503     1,167          469        100,201
-------------------------------------------------------------------------------
Total investment securities     $246,009    $1,550       $1,050       $246,509
===============================================================================
</TABLE>

Bancorp classifies its investments in debt and equity securities into two
categories: held-to-maturity and available-for-sale. Securities classified as
held-to-maturity are those debt securities that Bancorp has both the positive
intent and ability to hold to maturity. These securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts, which are
recognized as adjustments to interest income using the interest method.

Securities classified as available-for-sale are equity securities with readily
determinable fair values and those debt securities that Bancorp intends to hold
for an indefinite period of time but not necessarily to maturity. These
securities may be sold as part of its asset/liability management strategy, or
in response to significant movements in interest rates, liquidity needs,
regulatory capital considerations, and other similar factors. These securities
are carried at fair value, with any unrealized gains and losses reported as a
separate component of shareholders' equity, net of the related deferred tax
effect.

Regardless of the classification, dividend and interest income, including
amortization of premiums and accretion of discounts arising at acquisition, is
included in interest income in the consolidated statements of income. Realized
gains and losses, if any, determined based on the adjusted cost of the specific
securities sold, are reported as a separate line item in noninterest income in
the consolidated statements of income.

The amortized cost and estimated fair values of investments at March 31, 1997 
by contractual maturity are shown below. Expected maturities may differ from 
contractual maturities because borrowers have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                             Amortized            Fair
(in thousands)                                 Cost              Value
-------------------------------------------------------------------------
<S>                                          <C>                <C>
Available-for-sale:
  Within 1 year                              $ 36,666           $ 36,684
  After 1 but within 5 years                   20,541             20,416
  After 5 years but within 10 years             8,003              7,884
  Mortgage-backed securities                   59,643             58,937
  Equity securities                             6,499              6,499
-------------------------------------------------------------------------
  Total available-for-sale                    131,352            130,420
-------------------------------------------------------------------------
Held-to-maturity:
  Within 1 year                                   523                530
  After 1 but within 5 years                   36,604             37,017
  After 5 years but within 10 years            37,693             37,478
  After 10 years                                  107                107
  Mortgage-backed securities                   24,509             23,984
-------------------------------------------------------------------------
  Total held-to-maturity                       99,436             99,116
-------------------------------------------------------------------------
Total investment securities                  $230,788           $229,536
=========================================================================
</TABLE>

The amortized cost of investment securities pledged to secure public deposits,
securities sold under repurchase agreements, Federal Home Loan Bank advances, 
and for other purposes as required and permitted by law, totaled $118,316,000 
at March 31, 1997.


Note 3. Loans

Loans, net of unearned income, consist of the following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                 March 31,         December 31,
-------------------------------------------------------------------------------
(In thousands)                              1997         1996         1996
-------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>
Real Estate Loans
  Construction and land development         $ 30,163     $ 30,297     $ 29,571
  Secured by farmland                          6,645        6,156        6,864
  Residential mortgage                       185,538      176,649      183,566
  Other mortgage                             128,196      120,806      128,777
Agricultural                                     808        1,296          977
Commercial and industrial loans               67,278       51,628       62,288
Consumer                                     255,113      226,388      253,454
Other loans                                    4,663        4,689        4,772
-------------------------------------------------------------------------------
Totals                                      $678,404     $617,909     $670,269
===============================================================================
</TABLE>

Loans to states, political subdivisions, and industrial revenue bonds are
included in all other loans in the schedule above and in total loans in the 
statement of condition.

The allowance for credit losses is maintained at a level which, in management's
opinion, is considered adequate to provide for possible loan losses on loans
currently held in the loan portfolio.


Note 4. Bank Premises and Equipment

Investments in bank premises and equipment are as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                March 31,          December 31,
-------------------------------------------------------------------------------
(In thousands)                              1997         1996         1996
-------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>
Bank premises and land                      $ 22,407     $ 20,190     $ 22,786
Furniture and equipment                       17,850       17,140       17,280
Leasehold improvements                         1,760        1,134        1,696
-------------------------------------------------------------------------------
                                              42,017       38,464       41,762
Less accumulated depreciation
  and amortization                           (16,641)     (17,378)     (16,531)
-------------------------------------------------------------------------------
Net premises and equipment                  $ 25,376     $ 21,086     $ 25,231
===============================================================================
</TABLE>


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

OVERVIEW

F&M Bancorp's net income for the first quarter of 1997 was $2,724,000 or 48 
cents per share compared with $2,474,000 or 44 cents per share for the same 
period last year. Return on average assets and return on average equity was 
1.11 percent and 11.91 percent, respectively, in the first quarter of 1997 
compared with 1.05 percent and 11.14 percent, respectively, in the same period 
last year. Increases in net interest income and noninterest income were the 
principal factors in the 10.1 percent increase in earnings.

Results of Operations

Net Interest Income

Net interest income, which is the sum of interest and certain fees generated 
by earning assets minus interest paid on deposits and other funding sources, 
is the principal source of Bancorp's earnings. Net interest income is impacted 
by changes in the volume and mix of earning assets and funding sources, market 
interest rates, monetary policy of the Federal Reserve Board and other factors. 

Average balances and rates for major categories of interest-earning assets and 
interest-bearing liabilities for the first quarter are presented on a year-to-
year comparative basis in Table 1. Net interest income on a taxable-equivalent 
basis increased $486,000 or 4.9 percent compared with the first quarter of last 
year. The primary reason for the increase was the increase in the volume of 
loans from one period to the other. Loans increased $54,787,000 or 8.8 percent 
compared with the first quarter of 1996. Overall, interest rates declined on 
both earning assets and interest-bearing liabilities. The decline was most 
significant on the liability side, however, which contributed to the increase 
in net interest income.

Average earning assets increased $43,673,000 or 5.0 percent during the first 
quarter of 1997 compared with the first quarter last year. Loans lead the 
increase, as stated above.  Investment securities increased $5,579,000 on 
average overall, with a shift in the portfolio mix from tax-exempt municipals 
to a higher percentage of taxable securities. Asset growth was funded through 
additional borrowings, an increase in deposits, and a reduction in the amount 
of federal funds sold.

Interest-bearing deposits increased $7,531,000 or 1.1 percent. Growth in 
interest checking was offset by a decline in savings deposits. Average time 
deposits grew at a rate of 2.0 percent compared with the first quarter of last 
year. Federal Home Loan Bank (FHLB) advances and federal funds provided the 
additional funding necessitated by the substantial loan demand.

Interest rates earned and paid both declined, but the greatest declines 
occurred with funding sources. The average rate earned on average assets 
declined three basis points to 8.19 percent compared with the first quarter of 
last year. Loan rates declined 21 basis points while the rates on investment 
securities were mixed, with tax-exempt rates declining 27 basis points and 
taxable rates increasing 45 basis points.

The average rate paid on interest-bearing liabilities declined ten basis 
points to 4.20 percent compared with the same quarter last year. Deposit rates 
declined 15 basis points overall, lead by time deposit rates, which declined 25 
basis points. As time deposit rates declined, customers shifted their savings 
balances into these accounts to lock in rates before they declined even 
further. Therefore, the growth in time deposits came primarily at the expense 
of savings deposits. Interest checking posted strong growth, increasing 7.1 
percent compared with the first quarter of last year. The average rate paid on 
borrowed funds declined 29 basis points. This decrease served to offset the 
impact of the increased borrowings.

The net interest margin, the ratio of taxable-equivalent net interest income to 
earning assets increased three basis points for the first quarter of 1997 
compared with the same period last year. The increase resulted from the 
increase in the volume of  loans, which changed the mix of earning assets, and 
the decline in liability interest rates which out paced the decline in earning 
asset rates.


Table 1. Consolidated Average Balances, Interest and Average Rates
         (Taxable Equivalent Basis)

<TABLE>
<CAPTION>
                                                March 31,
-------------------------------------------------------------------------------
                                    1997                        1996
-------------------------------------------------------------------------------
                           YTD                         YTD
                         Average            Average  Average            Average
(Dollars in thousands)   Balance  Interest   Rate    Balance  Interest   Rate
-------------------------------------------------------------------------------
<S>                      <C>       <C>       <C>     <C>       <C>       <C>
ASSETS
Interest-earning assets

Federal funds sold
  - overnight            $    210  $    14   5.31%   $ 15,812  $   218   5.55%
-------------------------------------------------------------------------------
Short-term interest
  bearing deposits          4,841       36   3.02       5,932      118   8.00
-------------------------------------------------------------------------------
Total investment 
  securities - 
  Tax-exempt(1)            70,645    1,318   7.46      72,801    1,406   7.73
-------------------------------------------------------------------------------
Total investment 
  securities - Taxable    166,672    2,658   6.38     158,937    2,357   5.93
-------------------------------------------------------------------------------
Total loans               675,094   14,507   8.71     620,307   13,756   8.92
-------------------------------------------------------------------------------
Total interest-
  earning assets          917,462   18,533   8.19     873,789   17,855   8.22
-------------------------------------------------------------------------------
Total noninterest-
  earning assets           77,885                      71,598
-------------------------------------------------------------------------------
TOTAL ASSETS             $995,347                    $945,387
===============================================================================

LIABILITIES
Interest-bearing liabilities
  Interest-bearing deposits
    Basic savings, time  $114,159  $   717   2.55%   $120,429  $   804   2.69%
      open & clubs
    Interest checking     101,748      508   2.02      94,993      499   2.11
    Money market
      savings             113,642      851   3.04     113,607      843   2.98
    Total time deposits   358,918    4,757   5.38     351,907    4,924   5.63
-------------------------------------------------------------------------------
Total interest-bearing
  deposits                688,467    6,833   4.03     680,936    7,070   4.18
-------------------------------------------------------------------------------
Borrowed funds
  Federal funds 
    purchased and
    repurchase accounts    41,458      495   4.84      34,213      425   5.00
  Other short-term 
    borrowings             52,874      742   5.69      17,849      287   6.47
-------------------------------------------------------------------------------
    Total short-term 
      borrowings           94,332    1,237   5.32      52,062      712   5.55
-------------------------------------------------------------------------------
  Long-term borrowings      6,685       99   6.01      12,546      195   6.25
-------------------------------------------------------------------------------
    Total borrowed funds  101,017    1,336   5.36      64,608      907   5.65
-------------------------------------------------------------------------------
Total interest-bearing
  liabilities             789,484    8,169   4.20     745,544    7,977   4.30
-------------------------------------------------------------------------------
Non-interest bearing 
  liabilities
    Demand deposits       101,802                     100,368
    Other liabilities      11,341                      10,157
    Shareholders' equity   92,720                      89,318
-------------------------------------------------------------------------------
TOTAL LIABILITIES 
  AND EQUITY             $995,347                    $945,387
===============================================================================
NET INTEREST INCOME *              $10,364                     $ 9,878
===============================================================================
NET INTEREST SPREAD                          3.99%                       3.92%
===============================================================================
NET INTEREST MARGIN AS A
  PERCENT OF EARNING ASSETS                  4.58%                       4.55%
===============================================================================
</TABLE>

* Based on an effective federal tax rate of 34% for 1997 and 1996.

(1) Based on amortized cost (i.e. excludes mark-to-market adjustments).


Management continually monitors Bancorp's balance sheet to insulate net
interest income from significant swings caused by interest rate volatility
using the concept of natural hedges, a process of adjusting balance sheet
positions having individual interest rate risks to control the net interest
rate risk as a whole. Derivative financial instruments such as futures,
forwards, swaps, option contracts, or other financial instruments with similar
characteristics are not currently utilized. As market rates change,
corresponding changes in asset mix, funding sources and pricing are considered
to avoid a negative impact on net interest income.

Bancorp attempts to measure the interest rate sensitivity of its assets and 
liabilities on the basis of when they will reprice as opposed to when they can 
reprice. Since it is difficult to predict the movement of interest rates, 
management's objective is to maintain a relatively balanced sensitivity 
position, while not foregoing any opportunity to benefit from current rate 
conditions. As indicated in Table 2, Bancorp had a cumulative net liability 
sensitive position of $93,030,000 within the one year horizon at March 31, 1997.
This position would indicate that Bancorp has the potential for decreased 
earnings if market interest rates rise in the next twelve months.

Due to inherent limitations in this traditional gap analysis technique for 
measuring interest rate sensitivity, management also employs more sophisticated 
interest sensitivity measurement tools to analyze the volatility of net 
interest income as a result of changes in interest rates. Simulation models are 
used to subject the current repricing gap positions to rising and falling 
incremental changes in interest rates of 100, 200, and 300 basis points, and to 
forecast how net interest income varies under alternative interest rate and 
business activity scenarios. The effects of changes in interest rates on the 
market value of assets, liabilities, and off-balance-sheet contracts is also 
measured. At March 31, 1997, the changes in net interest income and/or market 
value calculated under these alternative methods were within limits established 
by the Board of Directors.


TABLE 2.  INTEREST RATE SENSITIVITY ANALYSIS AT MARCH 31, 1997 (1)
<TABLE>
<CAPTION>
                 1-90     91-180   181-365  1-3      3-5      Beyond
(In thousands)   days     days     days     years    years    5 years  Total
-------------------------------------------------------------------------------
<S>              <C>      <C>      <C>      <C>      <C>      <C>      <C>
Interest-
  earning Assets:

Interest-
  bearing
  deposits
  with banks     $  3,886 $     -- $     -- $     -- $     -- $     -- $  3,886
Federal funds
  Sold              4,000       --       --       --       --       --    4,000
Investment
  securities (2)   17,949   22,195   30,306   78,138   37,977   38,345  224,910
Loans, net        133,003   69,552  108,993  200,828  103,597   46,586  662,559
                 -------- -------- -------- -------- -------- -------- --------
    Total        $158,838 $ 91,747 $139,299 $278,966 $141,574 $ 84,931 $895,355
                 ======== ======== ======== ======== ======== ======== ========

Interest-
bearing
Liabilities:

Deposits         $165,319 $ 81,896 $145,759 $135,367 $ 31,591 $130,358 $690,290
Short-term
  borrowings       72,120       --   15,364       --       --       --   87,484
Long-term
  borrowings           --       --    2,456       --       --    4,229    6,685
                 -------- -------- -------- -------- -------- -------- --------
    Total        $237,439 $ 81,896 $163,579 $135,367 $ 31,591 $134,587 $784,459
                 ======== ======== ======== ======== ======== ======== ========

Interest
  Sensitivity 
  Gap:
Period           $(78,601)$  9,851 $(24,280)$143,599 $109,983 $(49,656)$     --
Cumulative        (78,601) (68,750) (93,030)  50,569  160,552  110,896 $110,896
</TABLE>

(1) Excludes nonaccrual loans and other nonrate-sensitive assets.
(2) Reflects fair value adjustments for securities available for sale.


Noninterest Income.

Noninterest income increased $365,000 or 13.7 percent for the first quarter of 
1997 compared with the first quarter of 1996. All significant sources of 
noninterest income increased as management's strategic emphasis on new sources 
of revenue continue to develop revenue enhancing opportunities. Significant 
increases include deposit services, up $142,000 or 13.1 percent, and Trust 
income, up $184,000 or 43.1 percent.

Noninterest Expenses.

Noninterest expenses increased $403,000 or 4.9 percent compared with the first 
quarter of last year. Salaries and benefits increased $335,000 or 7.8 percent 
and include personnel expenses related to a full quarter of operations of a de 
novo branch office which opened in March, 1996. Occupancy and equipment 
expense increased $177,000 or 13.7 percent, reflecting the completion of the 
addition to the corporate headquarters building in the fourth quarter of 1996
and investments in technology which enhance customer service. Other operating 
expenses declined $109,000 or 4.1 percent primarily as a result of a reduction
in deposit insurance premiums.

Income Taxes.

The provision for income taxes increased $81,000 or 8.1 percent compared with 
the first quarter of last year. Tax expense varies from one period to the next 
with changes in the level of income before taxes, changes in the amount of tax-
exempt income, and the relationship of these changes to each other. Bancorp's 
effective tax rate for the first quarter of 1997 and 1996 was 28.4 percent and 
28.8 percent, respectively. Bancorp's income tax expense differs from the 
amount computed at statutory rates primarily due to tax-exempt interest from 
certain loans and investment securities.

NONPERFORMING ASSETS

Table 3 summarizes Bancorp's nonperforming assets and contractually past due 
loans. Total nonperforming assets at March 31, 1997 have declined $354,000 
compared with year earlier levels and have declined $1,129,000 since year-end.  
Loans past due 90 or more days as to interest or principal reflected a $527,000 
increase compared with prior year levels but have decreased $437,000 since 
year-end. Although there is no direct correlation between nonperforming loans 
and ultimate loan losses, an analysis of the nonperforming loans may provide 
some indication of the quality of the loan portfolio. Management believes that 
the amounts of its nonperforming loans and past due loans are modest in 
relation to the loan portfolio.

POTENTIAL PROBLEM LOANS

At March 31, 1997, Bancorp had performing loans amounting to $12,828,000 that 
were identified as potential problem loans because the borrowers were currently 
experiencing financial difficulties such that management had concerns that such 
loans might, in the future, become classified as nonaccrual or delinquent. At 
December 31, 1996, potential problem loans totaled $20,579,000. The decrease in 
the amount of these loans during 1997 is a reflection of an improvement in 
credit quality. As of March 31, 1997, management does not believe that these 
loans present any significant risk of loss. 

Bancorp had loans amounting to approximately $5,752,000 and $5,000,000 at March 
31, 1997 and March 31, 1996, respectively, that were specifically classified as 
impaired and included in non-accrual loans in Table 3. The average balance of 
impaired loans amounted to $6,036,000 and $5,315,000 for the first quarter of 
1997 and 1996, respectively. Cash receipts for these same periods were $162,000 
and $37,000. All cash receipts were applied to reduce the principal balance of 
those impaired loans and no interest income was recognized. The specific 
allowance for credit losses related to these impaired loans was $344,000 and 
$477,000, at March 31, 1997 and March 31, 1996, respectively.

TABLE 3.  NONPERFORMING ASSETS AND CONTRACTUALLY PAST DUE LOANS

<TABLE>
<CAPTION>
                                             March 31,            December 31
(Dollars in thousands)                   1997         1996           1996
-------------------------------------------------------------------------------
<S>                                     <C>          <C>            <C>
Nonperforming Assets:
  Nonaccrual loans(1)                   $ 7,032      $ 6,189       $ 7,281
  Other real estate owned net of
    valuation allowance(2)(4)             6,577        7,774         7,457
-------------------------------------------------------------------------------
Total nonperforming assets              $13,609      $13,963       $14,738
-------------------------------------------------------------------------------
Loans past due 90 or more days
  as to interest or principal(3)        $ 1,783      $ 1,256       $ 2,220
-------------------------------------------------------------------------------
Nonperforming loans to period-end loans    1.04%        1.00%         1.09%
Nonperforming assets to period-end 
  loans and other real estate owned        1.99%        2.23%         2.17%
Period-end allowance for credit
  losses times nonperforming loans         1.34x        1.57x         1.32x
Period-end allowance for credit
  losses times nonperforming assets        0.69x        0.69x         0.65x
</TABLE>

     (1) Loans are placed on nonaccrual status when, in the opinion of
management, reasonable doubt exists as to the full, timely collection of
interest or principal or a specific loan meets the criteria for nonaccrual
status established by regulatory authorities. When a loan is placed on
nonaccrual status, all interest previously accrued but not collected is
reversed against current period interest income. No interest is taken into
income on nonaccrual loans unless received in cash or until such time the
borrower demonstrates sustained performance over a period of time in 
accordance with contractual terms.

     (2) Other real estate owned includes:  banking premises no longer used
for business purposes and real estate acquired by foreclosure (in partial or
complete satisfaction of debt) or otherwise surrendered by the borrower to
Bancorp's possession. Other real estate owned is recorded at the lower of cost
or fair value on the date of acquisition or transfer from loans. Write-downs
to fair value at the date of acquisition are charged to the allowance for
credit losses. Subsequent to transfer, these assets are adjusted through a
valuation allowance to the lower of the net carrying value or the fair value
(net of estimated selling expenses) based on periodic appraisals.

     (3) Nonaccrual loans are not included.

     (4) Consists principally of the real estate held in a limited partnership
and includes minority interests totaling $904,000, $730,000, and $838,000 at
March 31, 1997, March 31, 1996 and December 31, 1996, respectively.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses was $9,434,000 or 1.4 percent of loans 
outstanding as of March 31, 1997 compared with $9,639,000 or 1.4 percent of 
loans outstanding as of December 31, 1996 and $9,686,000 or 1.6 percent of 
loans outstanding as of March 31, 1996. The provision for credit losses was 
$450,000 for the first quarter of 1997 and $300,000 for the first quarter of 
1996. Net charge-offs for the first quarter were $655,000 compared with 
$410,000 for the first quarter of last year. As reflected in Table 4, net 
charge-offs as a percent of total loans were 0.10 percent this quarter 
compared with 0.07 percent for the same period last year.

TABLE 4.  ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES

<TABLE>
<CAPTION>
                                                    Period ended
-------------------------------------------------------------------------------
                                         March 31,     March 31,   December 31,
(Dollars in thousands)                   1997          1996          1996
-------------------------------------------------------------------------------
<S>                                      <C>           <C>           <C>
Average loans outstanding
  less average unearned income(1)        $674,570      $619,221      $640,148
===============================================================================
Allowance for credit losses
  at beginning of year                   $  9,639      $  9,796      $  9,796
-------------------------------------------------------------------------------
Charge-offs
  Real estate                                 122            11           303
  Commercial and industrial                    --            --            10
  Consumer                                  1,260         1,077         3,609
-------------------------------------------------------------------------------
Total loans charged-off                     1,382         1,088         3,922
-------------------------------------------------------------------------------
Recoveries
  Real estate                                  74            59           247
  Commercial and industrial                    --             3             2
  Consumer                                    653           616         1,994
-------------------------------------------------------------------------------
Total recoveries                              727           678         2,243
-------------------------------------------------------------------------------
Net charge-offs                               655           410         1,679
-------------------------------------------------------------------------------
Additions charged to operating expense        450           300         1,522
-------------------------------------------------------------------------------
Allowance for credit losses
  at end of period                       $  9,434      $  9,686      $  9,639
===============================================================================
Ratio of net charge-offs to
  average loans outstanding                  0.10%         0.07%         0.26%
===============================================================================
</TABLE>

(1)  Exclusive of loans held for sale.

Based upon management's analysis and review of the loan portfolio, past loss
experience, and current economic conditions, the amount in the allowance for
credit losses at March 31, 1997 is considered adequate. Management's estimate 
of credit losses inherent in the credit extension process and the related 
allowance may change in the near term due to uncertainties inherent in the 
estimation process.

TABLE 5.  ALLOCATION OF ALLOWANCES FOR CREDIT LOSSES

<TABLE>
<CAPTION>
                                       March 31,                 December 31,
                                1997               1996              1996
-------------------------------------------------------------------------------
                                   % Gross            % Gross          % Gross
(Dollars in thousands)    Amount   Loans(1)   Amount  Loans(1)  Amount Loans(1)
-------------------------------------------------------------------------------
<S>                       <C>       <C>       <C>      <C>      <C>       <C>
Real estate
  Construction and
    land development      $2,153     4.4%    $1,850     4.9%    $1,821     4.4%
  Residential mortgage       561    27.3        432    28.6        510    27.4
  Other mortgage           1,283    18.9      1,532    19.5      1,765    19.2
Commercial and industrial    593     9.9        889     8.4        830     9.3
Consumer                   3,291    37.7      2,346    36.6      2,757    37.8
Unallocated                1,553     1.8      2,637     2.0      1,956     1.9
-------------------------------------------------------------------------------
Total allowance for
  credit losses           $9,434   100.0%    $9,686   100.0%    $9,639   100.0%
===============================================================================
</TABLE>

(1) Excludes loans held for sale.

Table 5 presents an allocation of the allowance for credit losses to various
loan categories. This allocation does not limit the amount of the allowance
available to absorb losses from any type of loan and should not be viewed as 
an indicator of the specific amount or specific loan categories in which 
future charge-offs may ultimately occur.


CAPITAL RESOURCES

Shareholder's equity totaled $94,745,000 at March 31, 1997, an increase of 1.4 
percent compared with the 1996 year end level of $93,460,000 and an increase of 
5.8 percent from the year earlier level of $89,590,000. The fair value of the 
available-for-sale portfolio has decreased $460,000 (net of deferred taxes) 
since year end. Capital levels are considered sufficient to absorb anticipated 
future price volatility in the available-for-sale portfolio.

Bancorp's risk-based capital and leverage capital ratios continue to exceed 
regulatory guidelines as of March 31, 1997, as follows:


TABLE 6.  CAPITAL RATIOS

<TABLE>
<CAPTION>
                           Risk-based Capital
                           -------------------
                           Tier 1       Total         Leverage
                           Capital     Capital         Ratio
                           -------     -------        --------
<S>                        <C>         <C>             <C>
Actual                     12.94%       14.19%         9.30%
Minimum                     4.00%        8.00%         3.00%
                           ------       ------         -----
Excess                      8.94%        6.19%         6.30%
                           ======       ======         =====
</TABLE>

Fair value adjustments to shareholders' equity for changes in the fair value 
of securities classified as available-for-sale are excluded from the 
calculation of these capital ratios in accordance with regulatory guidelines.



                           PART II - Other Information

Item 6  Exhibits and Reports on Form 8-K                           Page
  (a)  Exhibits

       11  Statement Re:  Computation of per share earnings.        21
       27  Financial Data Schedule                                  22

  (b)  A report on Form 8-K Item 2. Acquisition or Disposition of Assets and 
Item 7. Financial Statements and Exhibits was filed by the Corporation during 
the quarter ended March 31, 1997 as an amendment to a Form 8-K filed on 
November 21, 1996.

<PAGE>
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.


                                                 F&M BANCORP 
                                                 -----------
                                                 (Registrant)


  May 15, 1997                                   /s/David L. Spilman
------------------                               ----------------------------
      Date                                       DAVID L. SPILMAN
                                                 TREASURER
<PAGE>