SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C.  20549


                                   FORM 10-Q

                  Quarterly Report Under Section 13 or 15(d)
                    of the Securities Exchange Act of 1934


For Quarter Ended September 30, 1998        Commission File No. 0-5929


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


Commonwealth of Virginia                        54-0857462
(State or other jurisdiction of                 (IRS Employer
incorporation or organization)                  Identification Number)

9 Court Square, Winchester, Virginia                  22601  
(Address of principal executive offices)              (Zip Code)


      Registrant's telephone number, including area code:  540-665-4200 


                                 NO CHANGES                        
(Former name, former address and former fiscal year, if 
changes since last report)


Indicate by check mark whether the registrant (l) has filed all
reports to be filed by Section 13 or 15(d) of the Securities and
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


As of November 12, 1998, there were 21,893,663 shares of the
Registrant's common stock outstanding.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements

F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (000 OMITTED)
<CAPTION>
                                                     (Unaudited)
                                                     Sept. 30,       December 31,
                                                     1998            1997    
<S>                                                  <C>             <C>
Assets:
   Cash and due from banks                             115,445         132,138
   Interest-bearing deposits in other banks             45,019          11,843
   Securities-held to maturity(market value
     September 30, 1998-$440,822;
     December 31, 1997, $413,286)                      426,515         406,707
   Securities-available for sale
     (market value)                                    279,755         254,466

   Federal funds sold and securities
     purchased under agreements to resell              100,018         113,077

   Loans                                             1,680,876       1,652,415
     Unearned income                                    (3,069)         (3,661)
       Loans (net of unearned income)                1,677,807       1,648,754
     Allowance for loan losses                         (22,099)        (21,690)
       Net loans                                     1,655,708       1,627,064

   Bank premises and equipment, net                     63,550          60,958
   Other assets                                         73,046          71,683

     Total assets                                    2,759,056       2,677,935


Liabilities and Shareholders' Equity:

Liabilities:
   Deposits
     Non-interest bearing                              475,596         437,208
     Interest bearing                                1,843,534       1,838,173
       Total deposits                                2,319,130       2,275,381

   Federal funds purchased and securities
     sold under agreements to repurchase                94,521          81,336

   Other short-term borrowings                          15,940          14,508
   Long-term debt                                       21,570          17,202
   Other liabilities                                    26,530          24,657

       Total liabilities                             2,477,691       2,413,084

</TABLE>
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (000 OMITTED)
<CAPTION>

                                                     (Unaudited)
                                                     Sept. 30,       December 31,
                                                     1998            1997    

<S>                                                  <C>             <C>
Stockholders' Equity
   Preferred stock, no par value:
     (Authorized 5,000,000 shares,
      no shares outstanding)                                 0               0

   Common stock par value $2.00 per
     share, authorized 30,000,000 shares:
     issued September 30, 1998-21,893,800
     shares; issued December 31, 
     1997-21,889,413 shares                             43,788          43,779

   Capital surplus                                      77,146          77,827
   Retained earnings                                   155,748         141,015
   Accumulated other comprehensive income                4,683           2,230

       Total shareholders' equity                      281,365         264,851

Total liabilities and
   shareholders' equity                              2,759,056       2,677,935

</TABLE>




See Accompanying Notes to Consolidated Financial Statements

<PAGE>
<TABLE>
F & M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED)
<CAPTION>

                                          (Unaudited) For        (Unaudited) For
                                          the Nine Months        the Three Months
                                          Ended Sept. 30,        Ended Sept. 30,
                                          1998        1997       1998        1997

<S>                                       <C>         <C>        <C>         <C>
Interest Income:
 Interest and fees on loans               111,231    109,336     37,411      37,246
 
 Securities held to maturity:
   Taxable interest income                 18,386     15,020      6,319       5,277
   Interest income exempt from
     Federal income taxes                     988      1,162        310         374
 Securities available for sale:
   Taxable interest income                 12,043     12,330      4,180       3,921
   Dividend income                            648        573        207         193
    Total security interest
     income                                32,065     29,085     11,016       9,765

 Interest on federal funds sold
   and securities purchased
   under agreements to resell               4,680      2,802      1,318         944
 Interest on deposits in banks                889        364        420          86
    Total interest income                 148,865    141,587     50,165      48,041

Interest Expense:
 Interest on deposits                      58,165     56,097     19,212      19,117
 Interest on short-term
   borrowings                               2,932      2,313        987         918
 Interest on long-term debt                   766        634        276         218
    Total interest expense                 61,863     59,044     20,475      20,253

    Net interest income                    87,002     82,543     29,690      27,788

Provision for loan losses                   2,790      2,768      1,410         799
   Net interest income after
    provision for loan losses              84,212     79,775     28,280      26,989

Other Income:
 Commissions and fees from
   fiduciary activities                     1,969      1,757        659         570
 Service charges on deposit
   accounts                                 9,463      7,772      3,442       2,750
 Credit card fees                           2,996      2,691      1,089         982
 Fees for other customer services           2,237      2,066        700         684
 Insurance commission                       6,568      2,352      2,291         816
 Other operating income                     2,246      1,921        201         669
 Profits on securities available
   for sale                                   732      1,822        540       1,393
 Investment securities gains, net               1          1        --            3
   Total other income                      26,212     20,382      8,922       7,867
</TABLE>
<PAGE>
<TABLE>
F & M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED)
<CAPTION>

                                          (Unaudited) For        (Unaudited) For
                                          the Nine Months        the Three Months
                                          Ended Sept. 30,        Ended Sept. 30,
                                          1998        1997       1998        1997

<S>                                       <C>         <C>        <C>         <C>
Other Expenses:
 Salaries and employees'
   benefits                                38,090     33,576     12,493      11,717
 Net occupancy expense of
   premises                                 6,110      5,599      2,080       2,082
 Furniture and equipment expense            5,244      4,661      1,751       1,596
 Deposit insurance                            215        184         66          64 
 Credit card expense                        2,269      1,860        892         676
 Other operating expense                   17,354     16,994      5,952       6,241
   Total other expense                     69,282     62,875     23,234      22,377
   Income before income taxes              41,142     37,255     13,968      12,452
   Income tax expense                      14,313     12,716      4,820       4,260

   Net income                              26,829     24,539      9,148       8,192

Average shares:
 Basic                                     21,887     21,710     21,889      21,624
 Assuming dilution                         22,096     21,922     22,074      21,844
 
Earnings per common share:
 Basic                                     $1.23      $1.13       $0.42       $0.38
 Assuming dilution                         $1.22      $1.11       $0.41       $0.37

 Dividends per share                       $0.565     $0.54       $0.195      $0.18

</TABLE>



See Accompanying Notes to Consolidated Financial Statements

<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES-CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(000 OMITTED)
<CAPTION>
                                                          Accumulated
                                                          Other
                                                          Compre-       Compre-
                          Common   Capital    Retained    hensive       hensive
                          Stock    Surplus    Earnings    Income        Income     Total

<S>                       <C>      <C>        <C>         <C>           <C>        <C>
Balances - 
  January 1, 1997         43,770   78,807     123,059         416                  246,052

Comprehensive
  Income: 
   Net income                                  24,539                   24,539      24,539
   Other comprehensive             
    income net of tax:
  Unrealized gain on
   available-for-sale
   securities                                                            3,451       3,451
  Less: Reclassifi-
   cation adjustment
   for gains realized
   in net income                                                        (1,822)     (1,822)

  Other comprehesive
   income, net of tax                                       1,629        1,629     
  Total compre-
   hensive income                                                       26,168     

Cash dividends                                (11,015)                             (11,015)

Cash for fractional
 shares                                            (7)                                  (7)

Acquisition of
 common stock               (854)  (9,382)                                         (10,236)

Issuance of
 authorized stock:
  Stock options              123      405                                              528  
  Stock options 
   under nonvariable
   compensatory plan                  732                                              732
  Employee stock
   ownership plan            100      950                                            1,050

Balances - 
  September 30, 1997      43,139   71,512     136,576       2,045                  253,272
</TABLE>

See Accompanying Notes to Consolidated Financial Statements<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES-CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(000 OMITTED)
<CAPTION>
                                                          Accumulated
                                                          Other
                                                          Compre-      Compre-
                          Common   Capital    Retained    hensive      hensive
                          Stock    Surplus    Earnings    Income       Income      Total

<S>                       <C>      <C>        <C>         <C>          <C>        <C>
Balances - 
  January 1, 1998         43,779   77,827     141,015       2,230                 264,851

Comprehensive
  Income:
   Net income                                  26,829                  26,829      26,829

Other comprehensive
  income net of tax:                                                              
   Unrealized gains
    on available-
    for-sale
    securities                                                          3,185       3,185

  Less: Reclassi-
   fication
   adjustment for
   gains realized
   in net income                                                         (732)       (732)

  Other compre-
   hensive income,
   net of tax                                               2,453       2,453     
  Total compre-
   hensive income                                                      29,282     

Cash dividends                                (12,096)                            (12,096)

Acquisition of
  common stock              (204) (3,118)                                          (3,322)  

Issuance of
  authorized stock:
  Stock options              143      668                                             811
  Stock options 
   under nonvariable
   compensatory plan                1,206                                           1,206
  Employee stock
   ownership plan             70      563                                             633

Balances - 
  September 30, 1998       43,788  77,146     155,748       4,683                 281,365
</TABLE>
See Accompanying Notes to Consolidated Financial Statements<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (000 Omitted)
<CAPTION>
                                                              (Unaudited)
                                                              For the Nine Months Ended
                                                              Sept. 30,      Sept. 30,
                                                              1998           1997   
<S>                                                           <C>            <C>
Cash Flows From Operating Activities
Net income                                                      26,829         24,539
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                                4,815          4,171
    Provision for loan losses                                    2,790          2,768
    Profit on securities available for sale                        732          1,822
    Gain on securities held to maturity                              1              1
    Increase in other assets                                    (1,599)        (7,618)
    Increase in other liabilities                                1,872          2,531
    Net cash provided by operating activities                   35,440         28,214

Cash Flows From Investing Activities
  (Increase) decrease in interest-bearing
   deposits in other banks                                     (33,176)           411
  Proceeds from maturities, calls and sales
   of available for sale securities                            114,255         59,270
  Purchase of securities available for sale                   (136,503)       (32,412)
  Proceeds from maturities of investment
   securities                                                  130,717         63,056
  Purchase of investment securities                           (150,525)      (102,372)
  (Increase) decrease in federal funds sold
   and securities purchased under agreements
   to resell                                                    13,059        (12,857)
  Net (increase) in loans                                      (34,535)      (110,660)
  Purchases of bank premises and equipment                      (6,535)       (13,768)
  Proceeds from sale of OREO                                     2,350          3,940
    Net cash (used in) investing activities                   (100,893)      (145,392)

Cash Flows From Financing Activities
  Net increase in noninterest-bearing
   and interest-bearing demand deposits
   and savings accounts                                         77,184         70,680
  Net increase (decrease) in certificates
   of deposit                                                  (33,435)        42,330
  Dividends paid                                               (12,096)       (11,015)  
  Increase in other short-term borrowings                       14,617         13,643
  Increase in long-term debt                                     4,368          4,854
  Acquisition of common stock                                   (3,322)       (11,573)
  Net proceeds from issuance of common stock                     1,444          2,908
</TABLE>
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES                     
CONSOLIDATED STATEMENTS OF CASH FLOWS (000 Omitted)
<CAPTION>
                                                              (Unaudited)
                                                              For the Nine Months Ended
                                                              Sept. 30,      Sept. 30,
                                                              1998           1997   

<S>                                                           <C>            <C>
Net cash provided by financing activities                       48,760        111,827  

   Increase in cash and
    cash equivalents                                           (16,693)        (5,351)

Cash and Cash Equivalents
  Beginning                                                    132,138        131,943

  Ending                                                       115,445        126,592


Supplemental Disclosures of Cash Flows
Information
  Cash payments for:
   Interest paid to depositors                                  54,742         56,097
   Interest paid on other short-term
    borrowings                                                   3,698          2,313

                                                                58,440         58,410

   Income taxes                                                 13,762         12,252

Supplemental Schedule of Noncash Investing
and Financing Activities
  Issuance of stock options under
  nonvariable compensatory plan:
   1998 - 84,680 shares;
   1997 - 68,500 shares                                          1,206            732

  Loan balances transferred to foreclosed
   properties                                                    3,101          2,358

  Market value adjustment available for
   sale securities                                               3,774          2,506

</TABLE>


See Accompanying Notes to Consolidated Financial Statements

<PAGE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997

1.  In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the
financial position as of September 30, 1998, and December 31, 1997,
and the results of operations and changes in cash flows for the nine
months ended September 30, 1998 and 1997.  The statements should be
read in conjunction with the Consolidated Notes to Financial
Statements included in F&M's Annual Report for the year ended
December 31, 1997.

The amounts previously reported for the periods presented have been
retroactively restated to reflect the acquisitions of Peoples Bank of
Virginia on April 1, 1998, The Bank of Alexandria on June 1, 1998,
and J. V. Arthur, Inc., on April 22, 1998.

2.  The results of operations for the nine-month periods ended
September 30, 1998 and 1997, are not necessarily indicative of the
results to be expected for the full year.

3.  F&M National Corporation's ("F&M" or the "Corporation") amortized
cost and market value of securities being held to maturity as of
September 30, 1998, are as follows:

<TABLE>
<CAPTION>
                                 September 30, 1998 (000 omitted)
                                              Gross        Gross        
                                 Amortized    Unrealized   Unrealized   Market
                                 Cost         Gains        (Losses)     Value  
<S>                              <C>          <C>          <C>          <C>
U.S. Treasury securities
 and obligations of U.S.
 government corporations
 and agencies                     399,219     13,559          (163)      412,615
Corporate securities                1,284         73              -        1,357
Obligations of states and 
 political subdivisions            26,012        838              -       26,850
                                  426,515     14,470          (163)      440,822
</TABLE>

F&M's amortized cost and market value of the available for sale
securities as of September 30, 1998, are as follows:
<PAGE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                 September 30, 1998 (000 omitted)
                                              Gross        Gross        
                                 Amortized    Unrealized   Unrealized   Market
                                 Cost         Gains        (Losses)     Value
<S>                              <C>          <C>          <C>          <C>
U.S. Treasury securities
 and obligations of U.S.
 government corporations 
 and agencies                     256,707     12,909           (89)      269,527
Corporate securities                  620          4            --           624
Other                               9,604         --            --         9,604
                                  266,931     12,913           (89)      279,755
</TABLE>

4.  F&M's loan portfolio is composed of the following:

<TABLE>
<CAPTION>
                                                   Sept. 30,      December 31,
                                                   1998           1997    
                                                   (000 Omitted)  

<S>                                                <C>            <C> 
Commercial, financial and agricultural                283,578        275,600
Real estate-construction                              102,138         95,310
Real estate-mortgage                                1,100,526      1,100,923
Installment loans to individuals                      194,634        180,582
 Total loans                                        1,680,876      1,652,415
Less: Unearned income                                  (3,069)        (3,661)
       Allowance for loan losses                      (22,099)       (21,690)
Loans, net                                          1,655,708      1,627,064
</TABLE>

F&M had $14,451,000 in non-accrual loans at September 30, 1998.

5.  Reserve for Loan Losses:
<TABLE>
<CAPTION>
                                                   Sept. 30,      December 31,
                                                   1998           1997
                                                   (000 Omitted)  
<C>                                                <S>            <S>
Balance at January 1                                  21,690         19,077
Provision charged to operating expense                 2,790          5,802
Recoveries added to the reserve                          468          1,126
Loan losses charged to the reserve                    (2,849)        (4,315)
Balance at end of period                              22,099         21,690
</TABLE>
<PAGE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997


6.  Earnings and dividends paid per share:

<TABLE>
<CAPTION>
                             September 30, 1998           September 30, 1997
                                             Per                        Per
                                             Share                      Share
                             Shares          Amount       Shares        Amount
<C>                          <S>             <S>          <S>           <S>
Basic EPS                    21,886,947      1.23         21,710,145    1.13

Effective of
 dilutive securities:
    Stock options               209,505                      211,865

Diluted EPS                  22,096,452      1.22         21,922,010    1.11
</TABLE>

     The weighted average number of shares outstanding for the nine
months ended September 30, 1998, and September 30, 1997, were
21,886,947 and 21,710,145 shares, respectively.

7.   On September 11, 1997, the Corporation and Shomo & Lineweaver
Insurance Agency, Inc., announced that their respective Board of
Directors have approved an agreement for the affiliation of Shomo &
Lineweaver Insurance Agency, Inc., with F&M Bank-Winchester.  The
transaction was completed in the fourth quarter 1997.

8.   Peoples Bank of Virginia ("PBVA") and the Corporation entered
into a Definitive Agreement and Plan of Reorganization, dated as of
December 21, 1997, and a related Plan of Merger (collectively, the
"Merger Agreement"). This transaction was consummated and the merger
became effective on April 1, 1998. Under the terms of the Merger
Agreement, PBVA was merged with F&M Bank-Richmond and each share of
common stock of PBVA outstanding immediately prior to consummation of
the Merger will be exchanged, in a tax-free exchange, for 2.58 shares
of common stock of F&M, with cash being paid in lieu of issuing
fractional shares. As of December 31, 1997, PBVA had total assets of
$80.4 million, total loans of $47.0 million, total deposits of $70.4
million and total shareholders' equity of $8.2 million.

9.   The Bank of Alexandria ("BOA") and the Corporation entered into a
Definitive Agreement and Plan of Reorganization, dated as of December
12, 1997, and related Plan of Merger (collectively, the "Merger
Agreement"). This transaction was consummated and became effective on
June 1, 1998. Under the terms of the Merger Agreement, BOA was merged
with F&M Bank-Northern Virginia and each share of common stock of BOA
outstanding immediately prior to consummation of the Merger was
exchanged, in a tax-free exchange, for 0.942 shares of common stock
of F&M, with cash being paid in lieu of issuing fractional shares. As
of December 31, 1997, BOA had total assets of $75.9 million, total
loans of $58.2 million, total deposits of $67.6 million, and total
shareholders' equity of $7.9 million.<PAGE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997


10.  On April 22, 1998, the Corporation and J.V. Arthur, Inc., ("JVA")
announced an agreement of affiliation of J.V. Arthur, Inc. with F&M
Bank-Winchester, F&M's lead bank. JVA is an insurance agency located
in Winchester, Virginia, which offers a full line of insurance
products. The affiliation was effective on April 30, 1998.

11.  F&M, in the normal course of business, continually replaces and
upgrades computer software and equipment in order to provide services
demanded by our customers. Normal replacement and upgrade of computer
software and equipment is not considered an expenditure for Year
2000, but the normal conduct of business. Any expenditure that must
be made to eliminate Year 2000 problems are addressed as unusual. 
Year 2000 will not be a material event or uncertainty that would
cause previously reported financial information to no longer be
accurate. Also, F&M is of the opinion that the cost or consequences
of Year 2000 will not represent a known material event or uncertainty
that will reasonably be expected to adversely affect future financial
results.

12.  Security Bank ("Security") and the Corporation have entered into
an agreement, dated as of November 10, 1998, for the affiliation of
Security Bank Corporation, Manassas, Virginia, with the Corporation.
This transaction is subject to the approval of regulatory authorities
and shareholders of Security. Under the terms of the agreement,
Security would exchange the number of its shares of common stock
whose aggregate market value determined as of the date of the closing
equals $17.25, giving the transaction an indicated value of
approximately $16.5 million. The transaction is intended to qualify
as a tax-free exchange and be accounted for as a pooling of
interests. Security also granted F&M an option, exercisable under
certain circumstances, to acquire 191,300 shares of Security's common
stock (subject to adjustment). It is anticipated that the merger will
be effective in the first quarter 1999. At September 30, 1998,
Security had total assets of approximately $61 million.

<PAGE>



INDEPENDENT ACCOUNTANT'S REPORT



To the Board of Directors
F & M National Corporation
Winchester, Virginia


We have reviewed the accompanying consolidated balance sheet of F&M
National Corporation and Subsidiaries as of September 30, 1998, and
the related consolidated statements of income, changes in
shareholders' equity and cash flows for the nine-month periods ended
September 30, 1998 and 1997.  These financial statements are the
responsibility of the Corporation's management.

We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants.  A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters.  It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken
as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated
financial statements referred to above for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of F&M National Corporation and
Subsidiaries as of December 31, 1997, and the related statements of
income, changes in shareholders' equity and cash flows for the year
then ended (not presented herein); and in our report dated January 
28, 1998, we expressed an unqualified opinion on those financial
statements.  In our opinion, the information set forth in the
accompanying condensed balance sheet as of December 31, 1997 is
fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.



/s/
YOUNT, HYDE & BARBOUR, P.C.
Winchester, Virginia
November 10, 1998

<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS 


Management's discussion and analysis of financial information is
presented to aid the reader in understanding and evaluating the
financial condition and results of operations of F&M National
Corporation ("F&M" or the "Corporation"). 

FINANCIAL CONDITION

Total assets on September 30, 1998, amounted to $2.759 billion, up
$159.4 million or 6.1% from $2.600 billion at September 30, 1997.
Total assets at December 31, 1997, were $2.678 billion. For the first
nine months of 1998, total assets averaged $2.726 billion, 8.1% above
the first nine months of 1997 average of $2.521 billion.

Total loans, net of unearned income, amounted to $1.678 billion at
September 30, 1998, an increase of $44.1 million or 2.7% from $1.634
billion at September 30, 1997. At December 31, 1997, total loans,
net, were $1.649 billion. Total loans (net) as a percent of total
assets were 60.8% at September 30, 1998, as compared to 62.8% at
September 30, 1997, and 61.6% at December 31, 1997. Net loan volume
for the first nine months 1998 increased $29.1 million as compared to
an increase of $105.9 million for the first nine months 1997. Loan
volume decreased as a result of increased competition for loans.

On September 30, 1998, the securities portfolio totalled $706.3
million, which was $63.6 million or 9.9% higher than the year before
and $45.1 million or 6.8% higher than at December 31, 1997. In the
first nine months 1998, as funds became available, they were
primarily utilized for investing in the securities portfolio. Funds
were invested in the securities portfolio by acquiring U.S.
government and U.S. agency securities in an effort to balance the
asset risk portfolio. Federal funds sold and securities purchased
under agreements to resell were $100.0 million on September 30, 1998,
$13.1 million or 11.6% lower than $113.1 million outstanding at
December 31, 1997. Federal funds sold are one day sales of funds to
large regional correspondent banks. It is anticipated that as
interest rates improve, these funds will be invested in higher
yielding financial instruments.

FASB Pronouncement #115 requires the Corporation to show the effect
of market changes in the value of securities available for sale
(AFS). The market value of AFS securities at September 30, 1998, was
$279.8 million as compared to $254.5 million at year end 1997. The
Corporation increased the investment in AFS securities as a result of
attractive rates and the high quality of U.S. government securities.
The effect of the market value of AFS securities less the book value
of AFS securities, net of income taxes, is reflected in Stockholders'
Equity which was $4.7 million at September 30, 1998, an increase from
year end 1997 of $2.5 million.

Total deposits increased $103.2 million or 4.7% to $2.319 billion at
September 30, 1998, compared to one year earlier. At December 31,
1997, total deposits were $2.275 billion. F&M offers attractive, yet
competitive, rates that have contributed to the increase in deposits.<PAGE>
Long-term debt was $21.6 million at September 30, 1998, as compared
to $16.4 million at September 30, 1997, and $17.2 million at year end
1997. Long-term debt consists of borrowed funds from Federal Home
Loan Banks that are lent to eligible bank customers for a period of
10 to 15 years for low income housing.

RESULTS OF OPERATIONS 

Net income for the first nine months of 1998 amounted to $26.8 
million, increasing $2.3 million or 9.4% from $24.5 million for the
first nine months of 1997. The yield on interest-earning assets was
8.07% for the first nine months 1998 as compared to 7.97% for the
first nine months 1997, and the yield on interest-bearing deposits
was 4.21% for the first nine months 1998 as compared to 4.07% for the
first nine months 1997.

Return on average assets was 1.32% for the first nine months 1998,
compared with 1.31% for the same period in 1997 and 1.29% for the
year 1997. F&M's return on average equity was 13.03% for the first
nine months 1998, as well as 1997, and 12.95% for the year ended
1997.

Net interest income totaled $87.0 million for the first nine months
1998, a $4.5 million or 5.4% increase over F&M's performance for the
first nine months 1997. The net interest margin for the first nine
months 1998 was 4.69%, up 4 basis points from 4.65% for the first
nine months 1997. The increase in net interest margin is the effect
of lower interest costs related to deposits.

Total nonperforming assets, which consist of nonaccrual loans,
restructured loans, and foreclosed properties were $31.8 million at
September 30, 1998, a decrease of $3.4 million or 9.66% from $35.2
million at December 31, 1997. Nonperforming assets are composed
largely of 1-4 family residential loans and commercial loans secured
by real property.

Nonperforming loans (nonaccrual loans and restructured loans) at
September 30, 1998, were $15.0 million, or 0.9% of total loans,
compared to $20.0 million, or 1.21% of total loans at December 31,
1997. Also included in nonperforming loans are loans considered
impaired where management is concerned about the ability of the
customer to repay the loan and related interest at the original
contractual terms. At September 30, 1998, impaired loans totaled
$10.5 million upon which an allowance of $4.1 million has been
provided, which is included in the total loan portfolio allowance for
loan losses. Interest income recognized on impaired loans as of
September 30, 1998, was $419 thousand. The average balance of
impaired loans for the first nine months 1998 was $11.1 million.
Loans past due 90 days or more and still accruing interest because
they were well secured and in the process of collection were $2.9
million at December 31, 1997, and $2.1 million at September 30, 1998.

Foreclosed properties consists of 38 parcels of real estate acquired
through debt previously contracted. These properties consist
primarily of commercial and residential real estate whose value is
determined through sale at public auction or fair market value,
whichever is less. At September 30, 1998, foreclosed properties were
$16.8 million as compared to $15.2 million at December 31, 1997.

The allowance for loan losses has increased to $22.1 million at
September 30, 1998, as compared to $21.7 million at year end 1997.
The allowance for loan losses increased $409 thousand in the first
nine months 1998 as compared to $370 thousand for the first nine
months 1997. The amount provided for loan losses in 1997 and 1998 is,
in management's judgment, an amount sufficient for the risk
associated with the loan portfolio. The ratio of allowance for loan
losses to total loans was 1.32% at September 30, 1998, as compared to
1.19% at September 30, 1997, and 1.32% at year end 1997.

Total noninterest income increased $5.8 million or 28.6% from $20.4
million for the first nine months 1997 to $26.2 million for the first
nine months 1998. For the first nine months 1998, gains realized on
securities available for sale were $733 thousand or 2.8% of total
noninterest income, whereas, for the first nine months of 1997
securities gains were $1.8 million or 8.9% of total noninterest
income. Security gains are realized when market conditions exist that
are favorable to the Corporation and/or conditions dictate additional
liquidity is desirable. It is the intent of the Corporation not to
sell any security that is held in its "held to maturity" portfolio
and any gain or loss in this category is the result of securities
being called prior to maturity by the issuer. Credit card fees were
$3.0 million for the first nine months 1998, up $305 thousand or
11.3% over the first nine months 1997 as a result of marketing
efforts to attract new credit card customers. Insurance commission
income for the first nine months 1998 was $6.6 million, up $4.2
million from the first nine months 1997 primarily as a result of the
purchase of Shomo & Lineweaver Insurance Agency ("Shomo") and J.V.
Arthur, Inc. ("JVA"), whose source of income is derived from selling
insurance policies to customers. Other operating income increased
$325 thousand, up from $1.9 million for the first nine months 1997 to
$2.2 million for the first nine months of 1998. Other operating
income consists of other fees and charges that have increased as a
result of providing additional banking services to customers.

Total noninterest expenses increased $6.4 million or 10.2% from $62.9 
million for the first nine months 1997 to $69.3 million for the first
nine months 1998. Salary expense increased $4.5 million or 13.6% from
$33.6 million for the first nine months 1997 to $38.1 million for the
first nine months 1998 as a result of increases in salaries and
benefits and the purchase of Shomo and JVA. The cost of net occupancy
expense has increased $511 thousand or 9.1% from $5.6 million for the
first nine months 1997 to $6.1 million for the first nine months
1998, as a result of acquisition of new branches, remodeling of older
branches, and completion of F&M headquarters renovated office
complex. Furniture and equipment expense has increased $583 thousand
or 12.5% from $4.7 million for the first nine months 1997 to $5.2
million for the first nine months 1998, which reflects an increase in
the acquisition of new furniture, equipment, and computer software.
Inherent in furniture and equipment expenses, F&M is testing,
replacing, and upgrading computer equipment and software in order to
be ready for Year 2000. Deposit insurance was $215 thousand for the
first nine months 1998, an increase of $31 thousand from $184
thousand for the same period 1997 which is attributable to growth in
deposits. Credit card expense was up $409 thousand or 22.0% from $1.9
million for the first nine months 1997 to $2.3 million for the first
nine months 1998 as a result of direct marketing and offering new
products. Other operating expense increased $360 thousand from $17.0
million for the first nine months of 1997 to $17.4 million for the 
first nine months 1998.

Income taxes increased $1.6 million or 12.5% from $12.7 million for
the first nine months 1997 to $14.3 million for the first nine months
1998. The increase in income taxes is the result of greater amounts
of income subject to income taxes.

YEAR 2000 ISSUE

As discussed above, F&M is implementing changes to its information
systems so that they will be fully operable for date recognition and
data processing before the year 2000 begins. The Corporation's Year
2000 plans are subject to guidelines promulgated by the Federal
Financial Institutions Examination Council ("FFIEC"). The Federal
Reserve Bank of Richmond periodically measures the status of F&M's
plans and progress, as outlined in the FFIEC guidelines.

The Board of Directors and Senior Management of F&M have made a
commitment that the organization will be Year 2000 ready by December
31, 1998. The Year 2000 Task Force team has been meeting no less than
quarterly since February 1996. The task force and the organization
have made great progress in achieving the Year 2000 goals.

In April of 1998, the Kirchman Corporation certified F&M's D3000
software Year 2000 ready. On May 21, 1998, the Kirchman Corporation
received certification from the Information Technology Association of
America ("ITAA") on the Year 2000. ITAA 2000 certification means that
the process and methods used by the Kirchman Corporation meets the
information technology industry's best software development practices
for addressing the Year 2000 issue.

The ITAA, in conjunction with the Software Productivity Consortium,
performs a thorough and complete review of design methods and
controls used to provide Year 2000 compliant software. This
independent examination is viewed as a vital piece of the Year 2000
due diligence practices for software providers.

F&M has also dedicated technical and managerial support from all
levels of the organization to ensure that it has the necessary
resources to complete the Year 2000 compliance plans in accordance
with the recommended time frames and, therefore, expects no
interruptions in service. It has been estimated that the cost of
addressing Year 2000 will be 1.6% of 1998 earnings (or 0.006% of
assets), which is immaterial when considering the size of the
Corporation. 

The projections of total costs of F&M's year 2000 project and the
expected completion dates are based on F&M's best estimates, which
are necessarily based in part on assumptions of future events
including the continued availability of adequate resources and
completion of third party modification plans. There can be no
guarantee that these estimates will be achieved; actual results could
differ from the Corporation's current estimates. Specific risk
factors that might cause material differences include, but are not
limited to, the availability and cost of personnel with adequate
programming skills and the ability to locate and correct all relevant
computer codes. The inability to control the actions and plans of
vendors and suppliers, customers, government entities, and other
third parties with respect to Year 2000 issues are associated risks.

ASSET QUALITY

Loan quality continues to be good based on reviews by management.
Loan quality is the result of management employing conservative
principles of lending while meeting the needs of customers. Good loan
quality results in reduced need for additional provision for loan
losses and efforts to collect past due loans which has a positive
impact on net income.

Total loan charge-offs less recoveries, amounted to $2.4 million for
the first nine months of 1998, representing a ratio of net
charge-offs to total average loans, net of unearned income, of 0.19%,
annualized. This compares to 1997 twelve-month net charge-offs of
$3.2 million, or 0.20% of average loans. 

As of September 30, 1998, loans on a non-accrual basis amounted to
$14.5 million, or 0.9% of total loans, net of unearned discount, up
from $11.2 million for the same period 1997. Loans 90 days or more
past due and still accruing totaled $2.1 million, or 0.12% of total
loans, net of unearned discount. The increase in non-accrual loans is
primarily due to the inclusion of loans made to one commercial
customer for $3.7 million. F&M has provided $2.0 million in the
allowance for loan losses to adequately provide for any possible
losses attributable to this customer. In management's judgment, the
balance in the reserve for loan losses is adequate to cover future
losses in the existing loan portfolio.

F&M closely monitors those loans that are deemed to be potential
problem loans. Loans are viewed as potential problem loans when
possible credit problems of the borrowers cause management to have
doubts as to the ability of such borrowers to comply with current
repayment terms. Those loans are subject to constant management 
attention, and their classification is reviewed on a regular basis.
At September 30, 1998, the potential problem loans were $17.4 million
and included two lending relationships with principal balances in
excess of $500,000. Those two lending relationships had an aggregate
principal balance outstanding of $3.2 million.

LIQUIDITY 

Liquidity requirements are measured by the need to meet deposit
withdrawals, fund loans, maintain reserve requirements and operate
the organization. To meet its liquidity needs, F&M maintains cash
reserves and has an adequate flow of funds from maturing loans,
investment securities, and short-term investments. In addition, F&M's
affiliate banks have the ability to borrow from correspondent banks,
the Federal Reserve Bank, and the Federal Home Loan Bank. F&M
considers its sources of liquidity to be ample to meet its estimated
needs.

CAPITAL RESOURCES

F&M's strong capital position provides the resources and flexibility
for anticipated growth.

F&M's risk-based capital position at September 30, 1998 was $266.3 
million, or 15.6% of risk-weighted assets, for Tier I capital and 
$287.7 million, or 16.8% for total risk based capital.

Tier I capital consists primarily of common shareholders' equity,
while total risk-based capital adds the allowance for loan losses to
Tier I. Risk-weighted assets are determined by assigning various
levels of risk to different categories of assets and off-balance
sheet activities. Under current risk-based capital standards, all
banks are required to have Tier I capital of at least 4% and total
capital of 8%.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Post Retirement Benefits." This
statement revises employers' disclosures about pension and other post
retirement benefits plans. It does not change the measurement or
recognition of those plans. This Statement standardizes the
disclosure requirements for pensions and other post retirement
benefits to the extent practicable, requires additional information
on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain
disclosures. Restatement of disclosures for earlier periods is
required. This Statement is effective for the Corporation's financial
statements for the year ended December 31, 1998.

In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement
requires companies to record derivatives on the balance sheet as
assets and liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. This Statement is not expected to
have a material impact on the Corporation's financial statements.
This Statement is effective for fiscal years beginning after June 15,
1999, with earlier adoption encouraged. The Corporation will adopt
this accounting standard as required by January 1, 2000.

In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position ("SOP") 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal
Use." This SOP provides guidance on accounting for the costs of
computer software developed or obtained for internal use. This SOP
requires that entities capitalize certain internal-use software costs
once certain criteria are met. This Statement is not expected to have
a material impact on the Corporation's financial statements.

In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities", which requires the costs of start-up activities
and organization costs to be expensed as incurred. This Statement is
effective for the fiscal year 1998 financial statements. This
Statement is not expected to have a material impact on the
Corporation's financial statements.

Effective January 1, 1998, the Corporation adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and
display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general purpose
financial statements. Financial statements for prior periods have
been restated as required.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in information reported as of
December 31, 1997, in Form 10-K.


<PAGE>
FORM 10-Q   PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

There are no material legal proceedings to which the Registrant or
any of its subsidiaries, directors or officers is a party or by which
they, or any of them, are threatened. All legal proceedings presently
pending or threatened against F & M and its subsidiaries involve
routine litigation incidental to the business of F&M  or the
subsidiary involved and are either not material in respect to the
amount in controversy or fully covered by insurance.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits:

      (2)  Plan of Acquisition, Reorganization, Arrangement,
           Liquidation, or Succession - not applicable.

      (3)  (i)  Articles of Incorporation - not applicable.
           (ii) By-laws - not applicable.

      (4)  Instruments Defining the Rights of Security Holders
           Including Indentures - not applicable.

     (10)  Material Contracts.

           Incorporated herein by reference to Registrant's Form 10-K
           Annual Report for the year ended December 31, 1997, filed
           with the Commission on March 19, 1998, under Exhibit 10.

     (11)  Statement re Computation of Per Share Earnings.

           Incorporated herein by reference to Registrant's Form 10-K
           Annual Report for the year ended December 31, 1997, filed
           with the Commission on March 19, 1998 under Exhibit 11.

     (15)  Letter re Unaudited Interim Financial Information - not
           applicable.

     (18)  Letter re change in accounting principles - not applicable.

     (19)  Reports furnished to security holders.

           Incorporated herein by reference to Registrant's 1998 Notice
           of Annual Meeting and Proxy Statement dated March 30, 1998,
           filed with the Commission on March 26, 1998.

     (22)  Published Report Regarding Matters Submitted to Vote of
           Security Holders - not applicable.

     (23)  Consent of Experts and Counsel - not applicable.

     (24)  Power of Attorney - not applicable.

     (27)  Financial Data Schedules - Included herein as Exhibit 27.


     (99)  Additional Exhibits - None.


(b)  Reports on Form 8-K.

     (1)   November 9, 1998, for event of November 5, 1998, under ITEM
           5. to report authorization by the Registrant's Board of
           Directors for management to purchase 200,000 additional
           shares of the Registrant's common stock on the open market.




                                     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 NATIONAL CORPORATION




/s/  Alfred B. Whitt
Alfred B. Whitt
President, Vice Chairman, and Chief Financial Officer



/s/  Charles E. Curtis
Vice Chairman and Chief Administrative Officer


Date:  November 13, 1998