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 March 31, 2001                     Commission File No. 1-11405


                            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 May 11, 2001,  there were  28,454,691  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)
                                                                        March 31, 2001        December 31, 2000
                                                                        --------------        -----------------
<S>                                                                      <C>                    <C>
Assets:
  Cash and due from banks                                                $   149,879            $   157,148
  Interest-bearing deposits in other banks                                     2,254                  1,926
  Securities-held to maturity (market value
    March 31, 2001-$432,339;
    December 31, 2000-$534,492)                                              423,995                533,524
  Securities-available for sale (market value)                               678,182                733,793

  Federal funds sold and securities
   purchased under agreements to resell                                      302,000                 81,071

  Loans held for sale                                                         83,127                 59,414
  Loans                                                                    2,309,433              2,241,187
    Unearned income                                                           (3,743)                (4,107)
                                                                         -----------            -----------
     Loans (net of unearned income)                                        2,388,817              2,296,494
    Allowance for loan losses                                                (27,911)               (27,508)
                                                                         -----------            -----------
     Net loans                                                             2,360,906              2,268,986

  Bank premises and equipment, net                                           104,553                 98,283
  Other assets                                                               114,826                101,960
                                                                         -----------            -----------

     Total assets                                                        $ 4,136,595            $ 3,976,691
                                                                         ===========            ===========

Liabilities and Shareholders' Equity:

Liabilities:
  Deposits
    Non-interest bearing                                                 $   751,712            $   701,252
    Interest bearing                                                       2,721,850              2,645,135
                                                                         -----------            -----------
     Total deposits                                                        3,473,562              3,346,387

  Federal funds purchased and securities
   sold under agreements to repurchase                                       166,573                163,972

  Other short-term borrowings                                                 14,425                 25,648
  Long-term debt                                                              20,110                 20,912
  Other liabilities                                                           46,407                 33,797
                                                                         -----------            -----------
    Total liabilities                                                      3,721,077              3,590,716
</TABLE>

                                                     2
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (000 OMITTED)
<CAPTION>
                                                                      (Unaudited)
                                                                     March 31, 2001            December 31, 2000
                                                                     --------------            -----------------
<S>                                                                  <C>                            <C>
Shareholders' Equity
Preferred stock, no par value:
  (Authorized 5,000,000 shares,
  no shares outstanding)                                                      --                           --

Common stock par value $2.00 per
  share, authorized 30,900,000 shares:
  issued March 31, 2001-28,444,307
  shares; issued December 31,
  2000-27,759,393 shares                                                  56,889                        5,519

Capital surplus                                                          116,358                      102,126
Retained earnings                                                        231,325                      224,258
Accumulated other
 comprehensive income                                                     10,946                        4,072
                                                                     -----------                    ---------

     Total shareholders' equity                                          415,518                      385,975
                                                                     -----------                    ---------

Total liabilities and
shareholders' equity                                                 $ 4,136,595                    3,976,691
                                                                     ===========                    =========


</TABLE>



See Accompanying Notes to Consolidated Financial Statements

                                                        3
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED)
<CAPTION>

                                                                                (Unaudited)
                                                                         For the Three Months Ended
                                                                      March 31,                March 31,
                                                                         2001                    2000
                                                                         ----                    ----
<S>                                                                    <C>                     <C>
Interest Income:
  Interest and fees on loans                                           $49,661                 $45,542

  Securities held to maturity:
    Taxable interest income                                              7,622                   6,761
    Interest income exempt from
     federal income taxes                                                  457                     398
  Securities available for sale:
    Taxable interest income                                             11,212                   7,880
    Interest income exempt from
     federal income taxes                                                   71                     314
    Dividend income                                                        395                     344
                                                                       -------                 -------
      Total security interest income19,757                              15,697

  Interest on federal funds sold and securities
   purchased under agreements to resell                                  1,709                   1,925
  Interest on deposits in banks                                             18                      17
                                                                       -------                 -------
      Total interest income                                             71,145                  63,181
                                                                       -------                 -------

  Interest Expense:
    Interest on deposits                                                29,222                  23,823
    Interest on short-term borrowings                                    2,047                   1,220
    Interest on long-term debt                                             317                     394
                                                                       -------                 -------
      Total interest expense                                            31,586                  25,437
                                                                       -------                 -------

        Net interest income                                             39,559                  37,744

  Provision for loan losses                                                994                     833
    Net interest income after
     provision for loan losses                                          38,565                  36,911

  Other Income:
    Commissions and fees from fiduciary activities                         935                     786
    Service charges on deposit accounts                                  5,123                   4,269
    Credit card fees                                                     1,194                   1,177
    Fees for other customer services                                     5,378                   2,713
    Insurance commissions                                                2,791                   2,339
    Other operating income                                               1,577                     780
    Profits on securities available for sale                               690                    --
                                                                       -------                 -------
      Total other income                                                17,688                  12,064
</TABLE>

                                                   4
<PAGE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED)


                                                          (Unaudited)
                                                   For the Three Months Ended
                                                    March 31,         March 31,
                                                      2001              2001
                                                      ----              ----

Other Expenses:
Salaries and employees' benefits                      19,867           17,436
Net occupancy expense of premises                      2,967            2,793
Furniture and equipment expense                        2,614            2,488
Credit card expense                                      881              851
Other operating expense                                8,188            6,960
                                                   ---------        ---------
Total other expense                                   34,517           30,528
                                                   ---------        ---------
Income before income taxes                            21,736           18,447
Income tax expense                                     7,559            6,250
                                                   ---------        ---------

Net income                                         $  14,177        $  12,197
                                                   =========        =========

Average shares:
Basic                                                 28,195           28,075
Assuming dilution                                     28,451           28,285

Earnings per common share:
 Basic                                             $    0.50        $    0.43

 Assuming dilution                                 $    0.50        $    0.43

 Dividends per share                               $    0.25        $    0.23




See Accompanying Notes to Consolidated Financial Statements


                                       5
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES-CONSOLIDATED  STATEMENTS OF CHANGES IN
SHAREHOLDERS'  EQUITY FOR THE THREE  MONTHS  ENDED  MARCH 31, 2001 AND 2000 (000
OMITTED)
<CAPTION>
                                                                             Accumulated
                                                                             Other
                               Common         Capital         Retained       Comprehensive       Comprehensive
                                Stock         Surplus         Earnings       Income (Loss)       Income              Total
                                -----         -------         --------       -------------       -------------       -----

<S>                           <C>            <C>             <C>                 <C>                <C>             <C>
Balances - January 1, 2000    $ 56,106       $ 108,453       $ 198,898           $(12,737)                          $350,720

Comprehensive Income:
  Net income                                                    12,197                              $ 12,197          12,197
Other comprehensive
  income-net of tax:
Unrealized loss on
  available for sale
  securities                                                                                             343

Reclassification
  adjustment for gains
  realized in net income                                                                                 - -
                                                                                                    --------

Other comprehensive income,
  net of tax                                                                          343                343             343
                                                                                                    --------
Total comprehensive income                                                                          $ 12,540
                                                                                                    ========

Cash dividends                                                  (6,315)                                               (6,315)
Acquisition of common stock      (294)          (3,158)                                                               (3,452)
Issuance of stock-benefit plans   281            3,666                                                                 3,947
                              --------        --------        --------         ----------                           --------

Balances - March 31, 2000     $ 56,093        $108,961        $204,780         $  (12,394)                          $357,440
                              ========        ========        ========         ==========                           ========
</TABLE>


See Accompanying Notes to Consolidated Financial Statements


                                                              6
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES-CONSOLIDATED  STATEMENTS OF CHANGES IN
SHAREHOLDERS'  EQUITY FOR THE THREE  MONTHS  ENDED  MARCH 31, 2001 AND 2000 (000
OMITTED)
<CAPTION>
                                                                             Accumulated
                                                                             Other
                               Common         Capital         Retained       Comprehensive       Comprehensive
                                Stock         Surplus         Earnings       (Loss)              Income              Total
                                -----         -------         --------       -------------       -------------       -----

<S>                           <C>            <C>             <C>                 <C>                <C>             <C>
Balances - January 1, 2001    $ 55,519       $ 102,126       $ 224,258           $   4,072                          $ 385,975

Comprehensive Income:
  Net income                                                    14,177                              $ 14,177           14,177

Other comprehensive
  income net of tax:
Unrealized gain on
  available for sale
  securities                                                                                           7,323

Reclassification
  adjustment for gains
  realized in net income                                                                               (449)
                                                                                                    -------

Other comprehensive income,
  net of tax                                                                         6,874             6,874            6,874
                                                                                                    --------
Total comprehensive income                                                                          $ 21,051
                                                                                                    ========

Cash dividends                                                 ( 7,110)                                                (7,110)
Purchase of Community Bank       1,090          11,626                                                                 12,716
Issuance of stock-benefit plans    280           2,606                                                                  2,886
                               -------        --------        --------             -------                           --------

Balances - March 31, 2001      $56,889        $116,358        $231,325             $10,946                           $415,518
                               =======        ========        ========             =======                           ========


</TABLE>

See Accompanying Notes to Consolidated Financial Statements

                                                              7
<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (000 Omitted)


<CAPTION>
                                                                                        For the Three Months Ended
                                                                                March 31, 2001            March 31, 2000
                                                                                --------------            --------------
                                                                                 (Unaudited)                (Unaudited)
<S>                                                                                 <C>                          <C>
Cash Flows From Operating Activities
Net income                                                                          $  14,177                    12,197
    Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                                                      2,771                     2,275
     Provision for loan losses                                                            994                       833
     Profit on securities available for sale                                              690                        --
     Increase in other assets                                                          (9,619)                   (2,208)
     Increase in other liabilities                                                     12,010                     4,133
                                                                                    ---------                    ------
     Net cash provided by operating activities                                         21,023                    17,230

Cash Flows From Investing Activities
    Increase in interest-bearing deposits in other banks                                 (328)                      (36)
    Proceeds from maturities and calls
     of available for sale securities                                                 134,099                    10,320
    Purchase of securities available for sale                                         (55,854)                  (34,307)
    Proceeds from maturities of investment securities                                 123,195                    16,577
    Purchase of investment securities                                                    (300)                 ( 18,979)
    Increase in federal funds sold and
     securities purchased under agreements to resell                                 (220,929)                  (37,574)
    Net increase in loans                                                             (51,313)                  (41,549)
    Purchases of bank premises and equipment                                           (4,935)                   (2,160)
    Proceeds from sale of other real estate owned                                         441                     1,044
    Cash acquired in acquisition of subsidiary                                          4,125                        --
                                                                                    ---------                    ------
 Net cash used in investing activities                                                (71,799)                 (106,664)

Cash Flows From Financing Activities
    Net increase in noninterest-bearing and
     interest-bearing demand deposits and savings accounts                             42,199                    45,832
    Net increase in certificates of deposit                                            23,063                    44,372
    Dividends paid                                                                     (7,110)                   (6,315)
    Decrease in other short-term borrowings                                           (15,446)                   (4,242)
    Decrease in long-term debt                                                           (802)                     (801)
    Acquisition of common stock                                                            --                     3,452)
    Net proceeds from issuance of common stock                                          1,603                     3,004
                                                                                    ---------                    ------
</TABLE>

                                                            8

<PAGE>
<TABLE>
F&M NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (000 Omitted)
<CAPTION>

                                                                          For the Three Months Ended
                                                                   March 31, 2001            March 31, 2000
                                                                   --------------            --------------
                                                                    (Unaudited)               (Unaudited)
<S>                                                                  <C>                       <C>
Net cash provided by financing activities                                 43,507                    78,398
                                                                     -----------               -----------

     Decrease in cash and cash equivalents                                (7,269)                  (11,036)

Cash and Cash Equivalents
    Beginning                                                        $   157,148               $   145,119
                                                                     -----------               -----------

    Ending                                                           $   149,879               $   134,083
                                                                     ===========               = =========


Supplemental Disclosures of Cash Flows Information
    Cash payments for:
     Interest paid to depositors                                          28,222                    24,699
     Interest paid on other short-term borrowings                          2,047                     1,199
                                                                     -----------               -----------

                                                                     $    30,269               $    25,898
                                                                     ===========               ===========

     Income taxes                                                    $       131               $     1,180

Supplemental Schedule of Noncash Investing and
Financing Activities
    Issuance of stock options under nonvariable compensatory plan:
     2001 - 51,750 shares;
     2000 - 68,500 shares                                            $     1,282               $       943
                                                                     ===========               -----------

    Loan balances transferred to foreclosed properties               $     1,283               $       754
                                                                     ===========               -----------

    Market value adjustment available for sale securities            $    10,651               $       531
                                                                     ===========               -----------

    Net assets acquired in acquisition of subsidiary                 $     8,543               $        --
                                                                     ===========               ===========
</TABLE>


See Accompanying Notes to Consolidated Financial Statements


                                                     9
<PAGE>
F&M NATIONAL  CORPORATION  AND  SUBSIDIARIES / NOTES TO  CONSOLIDATED  FINANCIAL
STATEMENTS / MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000

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 March 31, 2001,  and December 31, 2000,  and the results of  operations
      and  changes in cash flows for the three  months  ended March 31, 2001 and
      2000. The statements  should be read in conjunction  with the Consolidated
      Notes to  Financial  Statements  included  in F&M's Form 10-K for the year
      ended December 31, 2000.

     The  amounts  previously  reported  for the  periods  presented  have  been
     retroactively  restated to reflect the acquisition of F&M  Bank-Atlantic on
     February 26, 2001. The  transaction  was accounted for under the pooling of
     interests method.

2.    The results of operations for the three-month periods ended March 31, 2001
      and 2000, are not necessarily indicative of the results to be expected for
      the full year.

3.    On January 24, 2001, BB&T Corporation  ("BB&T") announced plans to acquire
      F&M in a transaction valued at $1.17 billion,  based on the fixed exchange
      ratio of 1.09  shares of BB&T  common  stock for each  share of F&M common
      stock and the market price of BB&T common  stock on January 23, 2001.  The
      transaction,  approved by the boards of directors of both  companies,  was
      valued at  $40.67  for each F&M share  based on  BB&T's  closing  price of
      $37.31 on January 23, 2001.  The  transaction  will be accounted  for as a
      pooling-of-interests.  The  merger,  which is subject to  approval  of F&M
      stockholders  and banking  regulators,  is expected to be completed in the
      third quarter 2001.

4.    F&M National Corporation's ("F&M" or the "Corporation") amortized cost and
      market  value of  securities  being held to maturity as of March 31, 2001,
      are as follows:
<TABLE>
<CAPTION>
                                                   March 31, 2001 (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              $397,115        $7,869            $  (  79)           $404,905
Obligations of states and
 political subdivisions                   26,123           542                  (9)             26,656
Corporate securities                         757            21                  --                 778
                                        --------       -------            ----- --            --------
                                        $423,995       $ 8,432            $   ( 88)           $432,339
                                        ========       =======            ========            ========
</TABLE>

                                       10
<PAGE>
<TABLE>
     F&M's  amortized cost and market value of the available for sale securities
     as of March 31, 2001, are as follows:
<CAPTION>
                                               March 31, 2001 (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               $518,953       $15,027            $   (274)           $533,706
Obligations of states and political
 subdivisions                              50,755         1,007                 (42)             51,720
Other                                      92,839         1,183              (1,266)             92,756
                                         --------       -------            ----- --            --------

                                         $662,547       $17,217             $(1,582)           $678,182
                                         ========       =======             =======            ========


5.    F&M's loan portfolio is composed of the following:
<CAPTION>
                                                       March 31, 2001            December 31, 2000
                                                       --------------            -----------------
                                                                      (000 Omitted)

         Loans - held for sale                             $    83,127                 $    59,414
         Commercial, financial and agricultural                353,770                     306,809
         Real estate-construction                              145,694                     138,867
         Real estate-mortgage                                1,495,635                   1,438,418
         Consumer loans to individuals                         314,334                     357,093
                                                           -----------                 -----------
           Total loans                                       2,392,560                   2,300,601
         Less:  Unearned income                                 (3,743)                     (4,107)
            Allowance for loan losses                          (27,911)                    (27,508)
                                                           -----------                 -----------
         Loans, net                                        $ 2,360,906                 $ 2,268,986
                                                           ===========                 ===========

6.    Reserve for Loan Losses:
<CAPTION>
                                                       March 31, 2001            December 31, 2000
                                                       --------------            -----------------
                                                                      (000 Omitted)

         Balance at January 1                               $   27,508                   $  26,713
         Provision charged to operating expense                    994                       4,960
         Recoveries added to the reserve                           307                       1,001
         Allowance of purchased company                            482                          --
         Loan losses charged to the reserve                     (1,380)                     (5,166)
                                                            ----------                   ---------
         Balance at end of period                           $   27,911                   $  27,508
                                                            ==========                   =========
</TABLE>


                                       11
<PAGE>
<TABLE>
7.    Earnings and dividends paid per share:
<CAPTION>
                                                March 31, 2001                           March 31, 2000
                                        -------------------------------           -------------------------------
                                        (in 000s)             Per Share           (in 000s)             Per Share
                                          Shares                Amount              Shares                Amount
                                         --------             ---------            --------             ---------
<S>                                        <C>                  <C>                 <C>                  <C>
Basic EPS                                  28,195               0.50                28,075               0.43
Effective of dilutive securities:
 Stock options                                256                                      210
                                         --------                                 --------
Diluted EPS                                28,451               0.50                28,285               0.43
                                         ========                                 ========
</TABLE>


8.    On August 25, 2000, the Company acquired  deposits of  approximately  $300
      million and 15 branch offices valued at  approximately  $8.0 million.  F&M
      immediately  invested  net proceeds of  approximately  $242 million of the
      acquired funds in U.S.  Agency  securities.  Goodwill  associated with the
      acquisition was approximately $23 million, which will be amortized over 15
      years.  All former  employees  of the  acquired  branches  were invited to
      become  employees of F&M after the acquisition.  The new location,  all of
      which were located in Virginia,  were acquired by five of F&M's  community
      banks.


9.    On January 25, 2001,  the Company  completed its  acquisition of Community
      Bankshares  of Maryland,  Inc.  for  approximately  545,131  shares of F&M
      common stock in a transaction which was accounted for as a purchase.  Upon
      completion of the merger,  Community  was merged into F&M's  subsidiary in
      Maryland, F&M Bank-Maryland.

10.   On February 26, 2001,  the Company  completed the  acquisition of Atlantic
      Financial Corp.,  Newport News,  Virginia  ("Atlantic") for  approximately
      3,159,186  shares of F&M common stock in a transaction  accounted for as a
      pooling-of-interests. Atlantic has changed its name to F&M Bank-Atlantic.


                                       12

<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 March 31, 2001, and the related  consolidated
statements  of income,  changes in  shareholders'  equity and cash flows for the
three-month  periods ended March 31, 2001 and 2000.  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  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,  2000,   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  31,  2001  except  for the  second
paragraph of Note 23 as to which the date is February 26, 2001,  we expressed an
unqualified  opinion  on  those  financial  statements.   In  our  opinion,  the
information set forth in the accompanying  balance sheet as of December 31, 2000
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
May 14, 2001

                                       13
<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
-------------------

F&M's improved earnings for the first quarter 2001 was primarily attributable to
increased   earnings   associated   with   increases  in   noninterest   income,
implementation  of  projects  to  improve  operational  efficiencies,   and  the
acquisition  of 15 bank  branches  in August,  2000.  The  following  discussion
elaborates on balance sheet growth and earnings improvement.

Noninterest  income has  increased  $4.9  million  or 40.9% for the first  three
months 2001 as compared to the first three months 2000, if nonrecurring security
gains are eliminated.  Revenues  increased  primarily as a result of refinancing
real estate loans,  insurance  commissions from nonbank insurance  subsidiaries,
increased debit card fees, point of sale charges and foreign ATM transactions.

F&M has  implemented  over the past  year a  program  known as  "Getting  Better
Quicker" or GBQ. This program  spearheaded by F&M's software vendor  established
policies  and  procedures  aimed at  improving  service to bank  customers.  GBQ
provided cross training of employees to better serve  customers and realign back
office  departments,  thereby,  reducing  overhead  expenditures  and  improving
earnings.

Total assets on March 31, 2001, were $4.137 billion,  up $559.1 million or 15.6%
from $3.577 billion at March 31, 2000.  Total assets at December 31, 2000,  were
$3.977 billion. For the first three months of 2001, total assets averaged $3.934
billion, 12.8% above the first three months 2000 average of $3.489 billion.

Total loans,  net of unearned  income,  amounted to $2.389  billion at March 31,
2001,  an increase of $234.9  million or 10.9% from $2.154  billion at March 31,
2000. At December 31, 2000, total loans, net, were $2.296 billion.  Total loans,
net of  unearned  income,  as a percent of total  assets were 57.7% at March 31,
2001,  compared to 60.2% at March 31, 2000,  and 57.7% at December 31, 2000. Net
loan volume for the first three months of 2001 was $92.3  million as compared to
$21.9  million for the first three  months of 2000.  Loan volume has been strong
due to decreases in the prime lending rate.

On March 31, 2001, the securities  portfolio  totaled $1.102 billion,  which was
$91.8 million or 9.1% higher than the year before,  and $165.1  million or 13.0%
lower than at December 31, 2000. The  securities  portfolio was lower at quarter
end  2001  than  at year  end  2000  primarily  due to  U.S.  agency  securities
exercising  their call option  prior to maturity.  Reinvestment  of liquid funds
have been limited in the first quarter 2001 due to  unattractive  market yields.
Federal  funds sold and  securities  purchased  under  agreement  to resell were
$302.0  million at March 31, 2001,  $220.9  million or 272.5%  higher than $81.1
million  outstanding at December 31, 2000.  Federal funds sold are one-day sales
of funds to large  regional  correspondent  banks and are  normally  the  lowest
earning pool of interest-earning funds. In the first quarter 2001, federal funds
yield had a temporary  inverse  relationship with longer-term  investments.  The
average  federal  funds  yield was  higher  than the  market  yield  for  2-year
investments.



                                       14
<PAGE>

The market value of available for sale ("AFS") securities at March 31, 2001, was
$678.2  million as compared to $548.2  million at March 31, 2000.  The effect of
the market value of AFS securities less the book value of AFS securities, net of
income taxes  reflected in  Shareholders'  Equity was $10.9 million at March 31,
2001,  a increase  from the March 31,  2000,  which is an  improvement  of $23.3
million.  Recent  decreases  in  interest  rates by the Federal  Reserve  have a
converse   relationship  to  the  market  rates  in  the  investment   portfolio
contributing to the increase in market value of securities.

Total deposits  increased $430.5 million or 14.1% to $3.474 billion at March 31,
2001,  compared to one year earlier.  At December 31, 2000,  total deposits were
$3.346 billion.  Noninterest-bearing  deposits increased $139.9 million or 22.9%
from $611.8  million at March 31,  2000,  to $751.7  million at March 31,  2001.
Interest-bearing  deposits increased $290.5 million or 11.9% from $2.431 billion
at March 31, 2000, to $2.722 billion at March 31, 2001. F&M customers are moving
funds into interest  bearing  deposits to take advantage of attractive  interest
rates.  Recent declines in the stock market have encouraged  customers to invest
in the  guaranteed  rate of  return  in  banking.  F&M  offers  attractive,  yet
competitive, rates that are set to maintain a fair net interest margin.

Long-term  debt was $20.1 million at March 31, 2001,  down $4.5 million or 18.4%
from  March  31,  2000.  Long-term  debt was $20.9  million  at  year-end  2000.
Long-term  debt  consists of borrowed  funds from  Federal  Home Loan Banks that
supports  loans to eligible  bank  customers  for a period of 10 to 15 years for
low-income housing.

RESULTS OF OPERATIONS
---------------------

Net  income  for the first  three  months  of 2001  amounted  to $14.2  million,
increasing  $2.0 million or 16.2% from $12.2  million for the first three months
of 2000. Net income for the first three months 2001 was $13.8 million increasing
$1.3  million or 10.4% from $12.5  million  for the first  three  months 2000 if
nonrecurring items of income and expense were eliminated.

The yield on  interest-earning  assets was 7.80% for the first three months 2001
as  compared  to  7.84%  for the  first  three  months  2000,  and the  yield on
interest-bearing  deposits was 4.42% for the first three months 2001 as compared
to 3.98% for the first three months 2000.

Return on average assets was 1.42% for the first three months of 2001,  compared
with 1.39% for the same  period in 2000 and for the year 2000.  F&M's  return on
average  equity was 14.15% for the first  three  months of 2001,  13.73% for the
first three months of 2000, and 14.81% for the year ended 2000.

Net interest  income totaled $39.6 million for the first three months of 2001, a
$1.8 million or 4.8% increase over F&M's  performance for the first three months
of 2000. The net interest margin on a Federal tax equivalent basis for the first
three  months of 2000 was 4.36%,  down 37 basis  points from 4.73% for the first
three  months of 2000.  The decrease in net  interest  margin is  primarily  the
effect of lower prime  lending rates and lower  reinvestment  yields from called
securities.

Total  nonperforming  assets,  which consist of nonaccrual  loans,  restructured
loans,  and  foreclosed  properties  were $24.2  million at March 31,  2001,  an
increase  of $2.2  million or 10.0% from $22.0  million at  December  31,  2000.
Nonperforming  assets are composed largely of 1-4 family  residential  loans and
commercial loans secured by real property.



                                       15
<PAGE>

Nonperforming loans (nonaccrual loans and restructured loans) at March 31, 2001,
were $14.4 million or 0.6% of total loans, up $1.0 million from $13.4 million at
December 31, 2000.  Nonperforming loans are those loans where, in the opinion of
management, the full collection of principal or interest is unlikely.

FASB 114 defines impaired loans as all loans excluding  personal real estate and
consumer  loans about which there is doubt as to the ability of the  customer to
meet their contractual obligations.

                                                 March 31, 2001
                                                 --------------

         Commercial nonaccrual loans                 $  6,206
         Commercial accrual loans                      14,987
                                                     --------
         Total impaired loans                        $ 21,193
                                                     ========

At March 31, 2001,  impaired loans totaled $21.2 million upon which an allowance
of $3.1 million has been provided, which is included in the total loan portfolio
allowance for loan losses.  Interest  income  recognized on impaired loans as of
March 31, 2001, was $560 thousand. The average balance of impaired loans for the
first three  months 2001 was $21.2  million.  Loans past due 90 days or more and
still  accruing  interest  because  they were well secured and in the process of
collection were $3.2 million at March 31, 2001, and $6.4 million at December 31,
2000.

Foreclosed properties consist of 27 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  March  31,  2001,  foreclosed
properties were $9.8 million as compared to $8.6 million at December 31, 2000.

The  allowance  for loan losses was $27.9 million at March 31, 2001, as compared
to $27.5 million at year-end 2000. The allowance for loan losses  increased $403
thousand  in the first  three  months  of 2001 as  compared  to a $422  thousand
increase for the first three months of 2000. The amount provided for loan losses
in 2001 and 2000 is an amount, in management's  judgment,  is sufficient for the
risk associated with the loan portfolio.  The ratio of allowance for loan losses
to total loans was 1.17% at March 31,  2001,  as compared to 1.26% for March 31,
2000 and 1.20% at year-end 2000.

Total noninterest  income increased $5.6 million or 46.6% from $12.1 million for
the first three  months of 2000 to $17.7  million for the first three  months of
2001. If security gains were eliminated for the three-month periods, noninterest
income  increased $4.9 million or 40.9%.  For the first three months 2001, gains
realized on  securities  available  for sale were $690 thousand or 3.9% of total
noninterest  income,  whereas,  for the first three months of 2000 there were no
securities gains taken. 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 $1.2  million for the first three  months of 2001,  up $17
thousand  or 1.4% over the first three  months of 2000 as a result of  marketing
efforts to attract new credit card customers and additional  customer  activity.
Insurance commission income for the first three months of 2001 was $2.8 million,
up $452  thousand  from the first three months of 2000  primarily as a result of
increased business activity of F&M's insurance  agencies,  whose primary sources
of revenue are derived from selling  insurance  policies to  customers.  Service
charges on deposit  accounts  were $5.1 million for the first three months 2001,


                                       16
<PAGE>

up $854  thousand  or 20.0% over the  three-month  period  2000.  Revenues  have
increased from fees charged for debit card transactions,  point of sale charges,
and ATM transactions.  Revenues from fees for other customer services  increased
$2.7  million or 98.2% from $2.7  million for the first three  months of 2000 to
$5.4  million in 2001  primarily  as a result of fees  charged  customers in the
secondary  market.  Other operating income increased $797 thousand or 102.2%, up
from $780  thousand  for the first three  months of 2000 to $1.6 million for the
first three months of 2001. The increase in other operating income is a seasonal
variation in other fees and charges.

Total  noninterest  expenses  increased $4.0 million or 13.1% from $30.5 million
for the first three  months of 2000 to $34.5  million for the first three months
of 2001.  Salary expense  increased $2.4 million or 13.9% from $17.4 million for
the first three  months of 2000 to $19.9  million for the first three  months of
2001 as a result of employing  additional personnel due to the branch expansion,
certain  employees  who are paid on a commission  basis,  and increases in costs
associated  with  salaries and benefits.  The cost of net occupancy  expense has
increased  $174  thousand or 6.2% to $3.0  million for the first three months of
2001, as a result of acquiring new branches and remodeling older branches.  Part
of occupancy  expense was the  acquisition  price  associated  with acquiring 15
branch  banks in  August  2000 of  approximately  $8.0  million,  which is being
amortized over the  appropriate  depreciable  life of each asset.  Furniture and
equipment  expense increased $126 thousand or 5.1% to $2.6 million for the first
three  months of 2001,  which is  reflective  of higher  2000  costs  related to
equipment and software upgrades.  Other operating expense increased $1.2 million
from $7.0  million  for the first three  months of 2000 to $8.2  million for the
first three months of 2001. Goodwill expense for the first three months 2001 was
$673 thousand, which is included in other operating expense.

Income  taxes  increased  $1.3  million or 20.9% from $6.3 million for the first
three  months of 2000 to $7.6  million for the first three  months of 2001.  The
increase in income  taxes is the result of larger  amounts of income  subject to
income taxes.

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 $1.1  million for the first
three months of 2001,  representing  a ratio of net charge offs to total average
loans,  net of unearned  income,  of 0.20%,  annualized.  This  compares to 2000
twelve-month net charge-offs of $4.2 million, or 0.17% of average loans.

As of March 31, 2001, loans on non-accrual  basis amounted to $14.1 million,  or
0.59% of total  loans,  net of unearned  discount,  up from $9.1 million for the
same period 2000. Loans 90 days or more past due and still accruing totaled $3.2
million,  or 0.13% of total loans,  net of unearned  discount.  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.


                                       17
<PAGE>

At March 31, 2001,  the potential  problem loans were $20.9 million and included
11 lending relationships with principal balance in excess of $500,000.  Those 11
lending  relationships had an aggregate  principal balance  outstanding of $11.1
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 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 March 31, 2001 was $367.6 million, or 14.1%
of  risk-weighted  assets,  for Tier I capital and $395.3 million,  or 15.2% 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,  banks are well capitalized if they have Tier I capital of at
least 6% and total risk-based capital of 10%.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material  changes in information  reported as of December 31,
2000, in Form 10-K.


                                       18
<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,  2000,  filed  with  the
            Commission on March 29, 2001, under Exhibit 10.

      (11)  Statement re Computation of Per Share Earnings.

            Incorporated   herein  by   reference   to  Note  12,  page  60,  of
            Registrant's Form 10-K Annual Report for the year ended December 31,
            2000, filed with the Commission on March 29, 2001.

      (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   Form  S-4
            Registration Statement No. 333-58824,  Notice of Special Meeting and
            Proxy Statement dated May 4, 2001,  filed with the Commission on May
            4, 2001.

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


                                       19
<PAGE>

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

      (24)  Power of Attorney - not applicable.

      (99)  Additional Exhibits - None.

(b)  Reports on Form 8-K.

      (1)   January  30,  2001,  for event of  January  25,  2001,  to  announce
            completion of the  acquisition of Community  Bankshares of Maryland,
            Inc., Bowie, Maryland

      (2)   February  27,  2001,  for event of February  26,  2001,  to announce
            completion of the acquisition of Atlantic  Financial  Corp,  Newport
            News, Virginia





                                   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/CEO, Vice Chairman, and Chief Financial Officer



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

Date:  May 14, 2001


                                       20