<PAGE>   1

                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the quarterly period ended          September 30, 1997                  

                                       OR

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

For the transition period from                       to 
                               ---------------------    ---------------------
Commission file number      0-14553                                          

                         F & M Bancorporation, Inc.
           (Exact name of registrant as specified in its charter)

          Wisconsin                                         39-1365327       
-----------------------------------------------------------------------------
  (State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                            Identification No.)

   One Bank Avenue,          Kaukauna, Wisconsin                54130 
-----------------------------------------------------------------------------
                   (Address of principal executive offices)    (Zip Code)


                                (920) 766-1717
-----------------------------------------------------------------------------
            (Registrant's telephone number, including area code)

-----------------------------------------------------------------------------
    (Former name, former address and former fiscal year, if changed since
last 
report)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes   X    No 
     ---      ---

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

    Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of November 10, 1997

        $1.00 par value common
        9,749,980 shares 


<PAGE>   2



                           F & M BANCORPORATION, INC.
                                AND SUBSIDIARIES     
                           --------------------------
                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                   Number
                                                                                                   ------
PART I.     FINANCIAL INFORMATION:   
----------------------------------
<S>         <C>                                                                                    <C>     
Item l.     Financial Statements                                                                    3

            Condensed Consolidated Balance Sheets
              as of September 30, 1997 and December 31,
              1996 (Unaudited)                                                                      4

            Condensed Consolidated Statements of Earnings
              for the nine months ended September 30, 1997
              and 1996 (Unaudited)                                                                  5

            Condensed Consolidated Statements of Cash Flows
              for the nine months ended September 30, 1997
              and 1996 (Unaudited)                                                                  6

            Notes to Condensed Consolidated Financial
              Statements (Unaudited)                                                                7

Item 2.     Managements Discussion and Analysis of Financial
              Condition and Results of Operations                                                  10

Item 3.     Quantitative and
              Qualitative Disclosure about Market Risk                                             15

PART II.    OTHER INFORMATION
-----------------------------     


Item 6.     Exhibits and Reports on Form 8-K                                                       16
</TABLE>





                                      -2-


<PAGE>   3



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

The condensed consolidated financial statements included herein have been
included by F & M Bancorporation, Inc. (the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission.  Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.  This information is unaudited but includes all adjustments
(consisting only of normal recurring accruals) which, in the opinion of Company
management, are necessary for a fair presentation of the results for such
periods.

The results of operations for interim periods are not necessarily indicative of
the results of operations for the entire year.  It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1996 Annual Report.





                                      -3-


<PAGE>   4


                  F & M BANCORPORATION, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                    September 30,    December 31,                              
                                                                        1997           1996
                                                                    -------------    ------------
<S>                                                                <C>               <C>
ASSETS
Cash and cash equivalents                                             $ 48,717         $ 49,406
Investment securities (Note B)
  Held to maturity                                                     124,957           95,030
  Available for sale - stated at fair value                            173,961          154,942
Federal funds sold                                                      38,168           23,286
Loans (Note C)                                                       1,178,250          970,554
  Less:  Allowance for loan losses                                     (14,633)         (12,319)
                                                                    ----------      -----------
                 Net loans                                           1,163,617          958,235

Bank premises and equipment, net                                        32,737           29,623
Other real estate                                                        1,456            1,842
Other assets                                                            30,108           23,538
                                                                    ----------      -----------
         TOTAL ASSETS                                               $1,613,721       $1,335,902
                                                                    ==========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Deposits
    Non-interest bearing                                              $172,615         $150,849
    Interest bearing                                                 1,160,247          989,522
                                                                    ----------      -----------
                 Total deposits                                      1,332,862        1,140,371

  Short-term borrowing                                                  64,121           42,263
  Other borrowings                                                      56,929           18,194
  Accrued expenses and other liabilities                                14,484           12,869
                                                                    ----------      -----------
                 Total liabilities                                   1,468,396        1,213,697



Shareholders' Equity
  Common stock - $1 par value:
    Authorized - 20,000,000 shares
    Issued - 9,779,130 and
                 8,173,255 shares, respectively                          9,779            8,173
  Capital surplus                                                       85,397           59,452
  Retained earnings                                                     50,773           55,714
  Net unrealized loss on securities available for sale                     (37)            (473)
  Less-Common stock held in treasury at cost-
    33,220 shares and 39,000 shares, respectively                         (587)            (661)
                                                                    ----------      -----------
                 Total shareholders' equity                            145,325          122,205
                                                                    ----------      -----------
         Total liabilities and shareholders' equity                 $1,613,721       $1,335,902
                                                                    ==========      ===========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.




                                      -4-


<PAGE>   5



                  F & M BANCORPORATION, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                      Three months ended       Nine months ended
                                                        September 30,             September 30,                                 
                                                      1997         1996        1997         1996
                                                      ------------------       ------------------
<S>                                                  <C>         <C>          <C>        <C>
Interest income
  Interest and fees on loans                          $26,988     $21,097      $76,995    $60,311
  Interest on investment securities
    Taxable                                             2,607       2,431        7,295      7,498
    Exempt from federal tax                             1,628       1,392        4,833      3,864
  Other interest income                                   273         209          942      1,150
                                                      -------     -------      -------    -------
     Total interest income                             31,496      25,129       90,065     72,823
                                                      -------     -------      -------    -------

Interest expense
  Interest on deposits                                 13,183      10,855       38,246     31,401
  Interest on short-term borrowing                        872         588        2,495      1,281
  Interest on other borrowing                             813          76        1,689        524
                                                      -------     -------      -------    -------
        Total interest expense                         14,868      11,519       42,430     33,206
                                                      -------     -------      -------    -------

        Net interest income                            16,628      13,610       47,635     39,617

Provision for loan losses                                 643         484        1,898      1,334
                                                      -------     -------      -------    -------

        Net interest income after
          provision for loan losses                    15,985      13,126       45,737     38,283
                                                      -------     -------      -------    -------

Other income
  Service charges on deposit accounts                   1,142         890        3,311      2,477
  Other operating income                                  889         800        2,875      2,272
  Net securities gain (loss)                                0          33           69          9
                                                      -------     -------      -------    -------
                                                        2,031       1,723        6,255      4,758
                                                      -------     -------      -------    -------

Other expenses
  Salaries and employee benefits                        5,787       4,795       16,883     13,757
  Other operating expense                               4,544       3,995       13,522     11,720
                                                      -------     -------      -------    -------
                                                       10,331       8,790       30,405     25,477
                                                      -------     -------      -------    -------

Income before income taxes                              7,685       6,059       21,587     17,564

Income taxes                                            2,373       1,725        6,624      5,397
                                                      -------     -------      -------    -------

   NET INCOME                                        $  5,312   $   4,334    $  14,963   $ 12,167
                                                     ========   =========    =========   ========

EARNINGS PER SHARE                                      $0.55       $0.49        $1.54      $1.37
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.



                                     - 5 -

<PAGE>   6


                  F & M BANCORPORATION, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                              Nine months ended
                                                                                                September 30,
                                                                                          1997                1996  
                                                                                       ---------           ---------
<S>                                                                                   <C>                  <C>
Increase (decrease) in cash and cash equivalents:
    Cash flows from operating activities:
      Net income                                                                       $    14,963          $     12,167
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Provision for depreciation and net amortization                                   2,351                 2,005 
           Provision for loan losses                                                         1,898                 1,334
           Gain/loss on sale of investment securities                                          (69)                   (9)
           Increase in other assets                                                         (2,362)               (2,021)
           Gain on sale of equipment                                                          (238)                  (49)
           Increase (decrease) in other liabilities                                            184                (1,891)
           Provision for other real estate losses                                                3                    41
           Gain on sale of other real estate                                                   (44)                   (7)
           Minority interest                                                                     0                      8
                                                                                       -----------          -------------   
    Net cash provided by operating activities                                               16,686                 11,578
                                                                                       -----------          -------------   

    Cash flows from investing activities:
           Proceeds from sale of investment securities
             available for sale                                                                256                  1,270
           Proceeds from maturities of investment
             securities available for sale                                                  32,090                 41,341
           Purchase of investment securities
             available for sale                                                            (54,640)               (26,225)
           Proceeds from maturities of investment
             securities held to maturity                                                     7,027                  4,897
           Purchase of investment securities
             held to maturity                                                              (15,174)               (21,058)
           Net increase in loans                                                          (119,349)               (98,636)
           Capital expenditures                                                             (3,145)                (6,357)
           Proceeds from sale of equipment                                                     322                    240
           Proceeds from sale of other real estate                                           1,300                    318
           Payment for purchase of stock of
             subsidiary banks, net of cash received                                         44,928                   (484)
                                                                                       -----------          -------------   
     Net cash used in investing activities                                                (106,387)              (104,694)
                                                                                       -----------          -------------   

    Cash flows from financing activities:
           Net increase in deposits                                                         49,803                 47,162
           Net increase in short-term borrowings                                            21,658                 27,051
           Dividends paid                                                                   (5,370)                (3,958)
           Net increase (decrease) in other borrowings                                      37,736                 (1,066)
           Net proceeds options exercised                                                       67                    111
                                                                                       -----------          -------------   
    Net cash provided by financing activities                                              103,894                 69,300
                                                                                       -----------          -------------   

Net increase (decrease) in cash and cash equivalents                                        14,193                (23,816)
Cash and cash equivalents at beginning of period                                            72,692                 76,409
                                                                                       -----------          -------------   
Cash and cash equivalents at end of period                                                $ 86,885               $ 52,593
                                                                                       ===========          =============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.





                                      -6-

<PAGE>   7

                  F & M BANCORPORATION, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997
                                  (Unaudited)

NOTE A - BASIS OF PRESENTATION

    The accompanying unaudited condensed consolidated financial statements,
which include the accounts of F&M Bancorporation, Inc. and its subsidiaries,
have been prepared in accordance with generally accepted accounting principles
for interim financial information.   Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.  These statements have been
restated to reflect the acquisition of Community State Bank, acquired on June
28, 1996, Wisconsin Ban Corp., acquired on May 30, 1997 and Citizens National
Bancorporation, Inc. acquired on August 14, 1997.  These transactions have been
accounted for using the pooling of interests method of accounting.  Monycor
Bancshares, Inc., acquired on February 5, 1996, East Troy Bancshares, acquired
on January 10, 1997, Green County Bank, acquired on February 27, 1997 and Clear
Lake Bancorp., Inc. acquired on August 12, 1997, accounted for as pooling of
interests, were not material to prior years' reported operating results and
accordingly, previous years' results have not been restated.  The acquisitions
of the TCF office in Little Chute, acquired April 26, 1996, Bradley Bank,
acquired May 10, 1996 and the Security office in Antigo, acquired on September
29, 1997, were accounted for using the purchase method of accounting;
accordingly, the financial data includes results of operations only since the
dates of acquisition.  All per share information has been adjusted to reflect
the 10% stock dividends, paid to shareholders on June 10, 1996 and June 9,
1997.  Information as to the number of shares outstanding has not been
adjusted. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentation have been
included.

NOTE B - INVESTMENT SECURITIES

    Carrying amounts and market values of investment securities held to
maturity at September 30, 1997 are as follows:
                                                        Carrying     Market
                                                         Amount      Value 
                                                        --------    -------
                                                           (in thousands)

Exempt obligations of states and political subdivisions $124,957     $128,304
                                                        ========     ========


NOTE C - LOANS

    At September 30, 1997, loans are as follows:
                                 (in thousands)
Commercial and industrial                                      $239,138
Agricultural                                                     85,237
Real estate construction                                         37,513
Real estate mortgage                                            730,206
Installment and other consumer                                   86,156
                                                                -------
                                                              1,178,250
Less allowance for loan losses                                  (14,633)
                                                                ------- 
       Net loans                                             $1,163,617
                                                              =========

NOTE D - EARNINGS PER SHARE OF COMMON STOCK

    Earnings per share of common stock are based on weighted average number of
common shares outstanding of 9,744,953 and 8,893,259 for the three months ended
September 30, 1997 and 1996 and 9,743,824 and 8,889,289 for the nine months end
September 30, 1997 and 1996, respectively.






                                      -7-
<PAGE>   8


NOTE E - NON-PERFORMING ASSETS

    The following table sets forth the amount of non-performing loans, other
real estate owned and non-performing assets, and each of their percentages to
total loans at September 30, 1997:

(in thousands)
Non-accrual loans                       $10,587   0.90%
Loans past due 90 days or more              254   0.02
Restructured loans                          502   0.04
                                        -------   ----
Total non-performing loans               11,343   0.96

Other real estate owned                   1,456   0.13
                                        -------   ----

Total non-performing assets             $12,799   1.09%
                                        =======   ====

NOTE F - SUMMARY OF LOAN LOSS EXPERIENCE

    The following table summarizes loan balances at September 30, 1997; changes
in the allowance for loan losses arising from loans charged-off and recoveries
on loans previously charged-off, by loan category; and provisions for loan
losses which have been charged to expense:

(in thousands)
Average balance of loans year to date   $1,121,087
                                        ==========
Allowance for loan losses at
  beginning of period                       12,319

Loans charged off
  Commercial and Industrial                    448
  Real Estate - Mortgage                       246
  Installments and Other Consumer Loans        507
                                           -------
  Total charge offs                          1,201

Recoveries on loans previously
  charged off
  Commercial and Industrial                    111
  Real Estate - Mortgage                        85
  Installment and Other Consumer Loans         102
                                           -------

  Total recoveries                             298

Net loans charged off                          903

Provisions for loan losses of banks
    acquired at date of acquisition          1,319
                                           

Provisions for loan
  losses                                     1,898
Allowance for loan losses                  -------
  at end of period                         $14,633
                                           =======
Ratio of net charge offs
  during period to average
  loans outstanding (annualized)              0.11%
Allowance for loan
  losses to total loans                       1.24%


                                      -8-

<PAGE>   9



NOTE G - ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

    The following table summarizes the allocation of allowances for loan losses
and gives a breakdown of the percentage of loans in each category at September
30, 1997:


                                                   Percent
                                                   of loans
                                       Amount of   in each
                                       reserve     category
                                       for loan    to total
(in thousands)                          losses      loans  
-----------------------------------------------------------
Commercial,
industrial, and
agricultural                           $ 5,997       27.5%
Real estate -
construction                               309        3.2
Real estate - mortgage                   5,479       62.0
Installment and other
consumer loans                           2,848        7.3
                                       -------      -----
                                       $14,633      100.0%
                                       =======      =====




                                      -9-

<PAGE>   10


Item 2
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL

    The following discussion and analysis provides information regarding
F & M Bancorporation, Inc.'s (the "Company") results of operations for the
three and nine months ended September 30, 1997 and 1996 and financial condition
at September 30, 1997.  These statements have been restated to reflect the
acquisition of Community State Bank ("Community"), acquired on June 28, 1996,
Prairie City Bank acquired on May 30, 1997, and Citizens National
Bancorporation, Inc., acquired on August 14, 1997.  These transactions have
been accounted for using the pooling of interests method of accounting.
Monycor Bancshares, Inc., acquired on February 5, 1996, East Troy Bancshares,
acquired on January 10, 1997, Green County Bank, acquired on February 27, 1997,
and Clear Lake Bancorp., Inc. acquired on August 12, 1997, accounted for as
pooling of interests, were not material to prior years' reported operating
results; accordingly, previous years' results have not been restated.  The
acquisitions of TCF office in Little Chute, acquired April 26, 1996, Bradley
Bank, acquired May 10, 1996, and the Security office in Antigo, acquired on
September 29, 1997, were accounted for using the purchase method of accounting;
accordingly, the Company's financial data includes results of operations of
these entities only since the dates of acquisition.  All per share information
has been adjusted to reflect the 10% stock dividends, paid to shareholders on
June 10, 1996 and June 9, 1997.  Information as to the number of shares
outstanding has not been adjusted.

    The Company has announced a pending acquisition which, if consummated,
would affect the Company's future operations.  In June 1997, the Company
announced that it had entered into a letter of intent to acquire Sentry
Bancorp. Inc., Dundas, Minnesota, a holding company of the Cannon Valley Bank,
which has an office in Dundas, with total assets of approximately $25 million.
The company intends to account for this pending acquisition using the purchase
method of accounting.  Consummation of this acquisition is expected in the
fourth quarter of 1997 or at the beginning of 1998.

    Discussions in this Management's Discussion and analysis that are not
statements of historical fact (including statements which include terms such as
"believe", "expect", "anticipate", "will" or "may") are forward-looking
statements that involve risks and uncertainties, and the Company's actual
future results could materially differ from those discussed.  Factors that
could cause or contribute to such differences include, but are not limited to,
the Company's future lending and collections experiences, the effects of
acquisitions, competition from other institutions, changes in the banking
industry  and its regulation, changes in prevailing interest rates, needs for
technological change, and other factors, including those described in this
Management's Discussion and analysis and elsewhere in this report.

SUBSEQUENT EVENTS

On October 6, 1997, the Company announced an execution of a Definitive
Agreement to purchase the Bank of South Wayne, which has an office in South
Wayne, with total assets of approximately $20 million.  On November 4, 1997,
the Company announced an execution of a Letter of Intent providing for the
affiliation of Financial Management Services of Jefferson, Inc., a holding
company of The Farmers & Merchants Bank of Jefferson, with two offices in
Jefferson and total assets of approximately $100 million.  Consummation of
these acquisition is expected in the first and second quarter of 1998,
respectively.


RESULTS OF OPERATIONS

   For the three months ended September 30, 1997, net income increased $1.0
million, or 22.6%, to $5.3 million from $4.3 million in the third quarter of
1996.  The annualized return on average assets was 1.35% for the third quarter
of 1997 compared with 1.36% for the third quarter of 1996.  Returns on average
stockholders' equity on an annualized basis for the third quarters of 1997 and
1996 were 14.67% and 14.61%, respectively.

    For the nine months ended September 30, 1997, net income increased $2.8
million, or 23.0%, to $15.0 million from $12.2 million for the same period of
1996.  The annualized return on average assets was 1.33% for the nine months
ended September 30, 1997 compared with 1.33% for the same period of 1996.
Return on average stockholders' equity on an annualized basis for the nine
months ended September 30, 1997 and 1996 were 14.33% and 14.03%, respectively.


                                      -10-

<PAGE>   11

Net Interest Income

   Net interest income for the three months ended September 30, 1997 increased
$3.0 million, or 22.2%, to $16.6 million from $13.6 million in the third
quarter of 1996.  Total interest income for the third quarter of 1997 increased
$6.4 million, or 25.3%, to $31.5 million from $25.1 million in the third
quarter of 1996.  Interest expense increased $3.4 million, or 29.1%, to $14.9
million in the third quarter of 1997 from $11.5 million in the third quarter of
1996.

    Net interest income for the nine months ended September 30, 1997 increased
$8.0 million, or 20.2%, to $47.6 million from $39.6 million in the first nine
months of 1996.  Total interest income for the nine months ended September 30,
1997 increased $17.2 million, or 23.7%, to $90.1 million from $72.8 million in
the first nine months of 1996, while interest expense increased $9.2 million,
or 27.8%, to $42.4 million in the nine months ended September 30, 1997 from
$33.2 million in 1996.

   Increased net interest income for the three and nine month periods is
attributable to the increase in asset volume due to the Company's acquisitions
for which prior periods were not restated and internal growth in an environment
of relative stability of the Company's net interest margin.  Total interest
income increased for the three and nine month period in 1997 compared to the
same periods last year as a result of an increase in interest and fees on loans
due to increased loan activity and acquisitions, and as interest rates were
relatively stable, while total interest expense increased for the three and
nine month periods in 1997 compared to 1996 as a result of increased levels of
deposits primarily due to acquisitions.

Provision for Loan Losses

    The provision for loan losses for the three months ended September 30, 1997
increased $159,000, or 32.8%, to $643,000 from $484,000 in the third quarter of
1996.  The provision for loan losses for the nine months ended September 30,
1997 was $1.9 million, a 42.3% increase from $1.3 million for the nine months
ended September 30, 1996.  This increase in the provision for the first nine
months was due mainly to reflect an increase in net charge offs which increased
from $576,000 in the first nine months of 1996 to $903,000 in the first nine
months of 1997 and an increase in the loan portfolio.  Due to the increase in
net charge offs and the increase in the loan portfolio for the first nine
months the allowance for loan losses slightly decreased as a percentage of
loans to 1.24% from 1.27% at December 31, 1996. See "Allowance for Loan 
Losses" for further discussion.

Non-Interest Income

    The Company stresses the importance of growth in non-interest income as one
of its key long-term strategies.  Non-interest income for the three months
ended September 30, 1997 increased $309,000, or 17.9%, to $2.0 million from
$1.7 million in the third quarter of 1996.  Non- interest income for the nine
months ended September 30, 1997 increased $1.5 million, or 31.5%, to $6.3
million.  The increase was due principally to increases in service charges,
other fee income and security gains.  Increases for both the three and nine
month periods were due primarily to increases in service charges, other fee
income, resulting from increase customer activity and the acquisitions in which
prior period information was not restated.

Non-Interest Expense

    Non-interest expense for the three months ended September 30, 1997
increased $1.5 million, or 17.5%, to $10.3 million from $8.8 million in the
third quarter of 1996.  Non-interest expense for the nine months ended
September 30, 1997 increased $4.9 million, or 19.3% to $30.4 million from $25.5
million in the first nine months of the year.   The increase was primarily due
to the acquisitions in 1996 and 1997, resulting from both the cost of the
acquisitions and increase from those with respect for which prior periods were
not restated (additional staffing, occupancy expense, etc.), and the normal
increases in salaries and employee benefits.

    The overhead ratio, which is computed by subtracting non-interest income
from non-interest expense (excluding net securities transactions) and dividing
by average total assets, was 2.15% in the first nine months of 1997 compared
with 2.26% in the first nine months of 1996.  The decrease in this ratio in the
first nine months of 1997 was the result of the factors set forth above.


                                      -11-

<PAGE>   12

Provision for Income Taxes

    The Company's provision for income taxes for the three months ended
September 30, 1997 increased $648,000, or 37.6%, to $2.4 million from $1.7
million in the third quarter of 1996.  The increase in income tax provision was
principally due to increased taxable income.

    The provision for income taxes for the nine months ended September 30, 1997
increased $1.2 million, or 22.7% to $6.6 million from $5.4 million in 1996.
The increase in income tax provision was principally due to increased taxable
income.

Net Income

    Net income for the first nine months of 1997 increased by $1.0 million, or
22.6% to $5.3 million from $4.3 million in the same period for 1996.  Net
income for the first nine months of 1997 increased by $2.8 million, or 23.0%,
to $15.0 million from $12.2 million in the first nine months of 1996.

    Net income per common share was $0.55 for the third quarter of 1997
compared with $0.49 in the third quarter of 1996  an increase of 12.2%.
Although the Company adopted a stock option plan in 1993, as of September 30,
1997, fully diluted earnings per share are equal to the stated earnings per
share numbers.  The increase in shares outstanding resulted primarily from
acquisitions for which prior period financial statements were not restated.

    Net income per share was $1.54 for the first nine months of 1997, compared
with $1.37 in the same period for 1996, an increase of 12.4%.  As of September
30, 1997, fully diluted earnings per share are equal to the stated earnings per
share numbers.

FINANCIAL CONDITION

Loan Portfolio

    At September 30, 1997, total loans increased $207.7 million, or 21.4%, to
$1.178 billion from $970.6 million at December 31, 1996.  The loan mix in the
Company's portfolio at September 30, 1997 did not change in any material
respect compared with December 31, 1996.  Based on the current economic
conditions, management has established a range of average loans to average
earning assets of between 70% and 80% which it believes to be the optimum level
for F&M.  At September 30, 1997, year-to-date average loans to average earning
assets are within the acceptable range at 78.9%.  Approximately $93 million in
loans, or 45% of the first nine months of the year's growth, resulted from
acquisitions in which the Company did not restate its prior financial
statements.  The remaining balance resulted primarily from loan demand spread
throughout the Company's subsidiary banks.

Non-Performing Assets

    Maintaining excellent credit quality continues to be a priority for the
Company.  At September 30, 1997, non-performing assets amounted to $12.8
million, compared to $14.8 million at December 31, 1996.  Non-performing loans
at September 30, 1997 were $11.3 million, or 0.97% of total loans, compared to
$13.0 million at December 31, 1996.  Other real estate owned ("OREO") at
September 30, 1997 was $1.5 million as compared to $1.8 million at December 31,
1996.  The ratio of non-performing assets to total loans at September 30, 1997
was 1.15%.  Management continues to work at reducing the level of
non-performing assets.  Non-performing assets increased in 1996 because of
acquisitions and developments with respect to a number of separate loans, in
different locations and industries, and decreased slightly in the first nine
months of 1997 due to write-offs, and improvements in repayments of
non-performing loans offset by non-performing loans of banks acquired in 1997
for which prior periods were not restated.  Management does not believe that
there is any common reason or general trend which accounts for the increase (or
that it necessarily is an indication of expected future developments).
However, particularly in view of the developments, management continues to take
an aggressive collection effort on these assets, carefully monitors these (and
other) loans, and regularly reviews and evaluates the non-performing credits to
determine appropriate handling and action.

Summary of Loan Loss Experience

    For the first nine months of 1997, total charge-offs were $1.2 million and
total recoveries were $291,000.  The annualized ratio of net charge-offs to
average loans outstanding for the nine months ended September 30, 1997 was
0.11%.  The charge-offs were not concentrated in any particular industry.


                                      -12-

<PAGE>   13

Allowance for Loan Losses

    At September 30, 1997 and December 31, 1996, the allowance for loan losses
as a percentage of total loans was 1.24% and 1.27%, respectively.  Management
continually reviews the loan portfolio, and other factors, to determine the
appropriate allowance. The allowance for loan losses is an amount that
management believes will be  adequate to absorb possible losses on existing
loans that may become uncollectible based on evaluations of the collectibility
of loans and prior loan loss experience.  In determining the additions to the
allowance charged to operating expenses, management considered historical loss
experience, changes in the nature and volume of the loan portfolio, overall
portfolio quality, and current economic conditions that may affect the
borrower's ability to pay.

Investment Portfolio

    At September 30, 1997, the investment portfolio increased $48.9 million, or
19.6%, to $298.9 million from $250.0 million at December 31, 1996.  At
September 30, 1997 and December 31, 1996, the investment portfolio represented
18.5% and 18.7% of total assets, respectively.  Increases in the investment
portfolio is primarily attributed to acquisitions that have not been restated
and due to the Company's decision to increase the investment portfolio.

Deposits

    Total deposits at September 30, 1997 increased $192.5 million, or 16.9%, to
$1.333 billion from $1.140 billion at December 31, 1996.  Interest-bearing
deposits at September 30, 1997 increased $170.7 million, or 17.3%, to $1.160
billion from $989.5 million at December 31, 1996.  The increase in deposits is
primarily attributable to the four acquisitions in the first nine months of
1997 for which financial statements were not restated representing
approximately $145 million.

Borrowings

    Short-term borrowings at September 30, 1997 were $64.1 million, as compared
to $42.3 million at December 31, 1996.  Short-term borrowings consist primarily
of federal funds purchased.  The Company has used short-term borrowings to
assist in funding its increasing loan demand, as loans have grown more rapidly
than deposits.  Management has taken steps to monitor short-term borrowings and
is comfortable with the current level.

    Several of the Company's subsidiary banks, as members of the Federal Home
Loan Bank (FHLB), had borrowings from the FHLB as of September 30, 1997.  These
borrowings are secured by pledges of mortgage loans, and totaled $56.9 million
at September 30, 1997, compared to $18.2 million at December 31, 1996.  These
FHLB borrowings had original maturities of three months to nine years at
September 30, 1997.

CAPITAL ADEQUACY

    During the first nine months of 1997, stockholders' equity increased $23.1
million due to net income of $15.0 million in the first nine months of 1997 and
the acquisitions of East Troy, Landmark, and Brodhead, offset by dividends paid
to stockholders and a slight increase due to the effect of FASB 115 resulting
from the decreased net unrealized loss on securities available for sale.  At
September 30, 1997, the Company's risk-based Tier 1 capital ratio was 11.21%.
The total risk-based capital ratio was 12.42% and the leverage ratio was 8.71%.
All such ratios exceed regulatory minimums of 4.0%, 8.0% and 3.0%,
respectively.  The average equity to average assets ratio was 9.28% at
September 30, 1997, compared with 9.47% at September 30, 1996.

    F & M's common stock dividend payout ratio was 33.1% in the first nine
months of 1997 as compared to 27.4% in the comparable 1996 period.  These
numbers do not include the dividends historically paid by acquired entities
prior to their acquisitions by the Company.

   At September 30, 1997, each of the Company's subsidiary banks was in
compliance with all applicable capital requirements, and management believes
that the capitalization of those banks is adequate.

    During the first nine months of the year the Company incurred minimal
capital expenditures for replacement and renovation of facilities.  The Company
to date has not committed to any major commitments to build or purchase in
1997, but also expects to finance any such expenditures through earnings and
existing capital resources.  The Company expects to finance the cash purchase
of Cannon Valley Bank through earnings and existing capital resources.


                                      -13-

<PAGE>   14


LIQUIDITY

    As shown in the Company's Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997, cash and cash equivalents increased by
$14.2 million during the period to $86.9 million at September 30, 1997.  The
increase primarily reflected $16.7 million in net cash provided by operating
activities and $103.9 million in net cash provided by financing activities,
offset by $106.4 million in net cash used in investing activities.  Net cash
provided by operating activities primarily consisted of the Company's net
income in the period increased by adjustments for non-cash credits.  Net cash
provided by financing activities principally reflected an increase in
short-term and other borrowings.  Net cash used in investing activities
consisted primarily of a net increase in loans plus necessary capital
expenditures offset by net cash received in acquisitions for which prior
periods were not restated.
    The Company manages its liquidity to provide adequate funds to support the
borrowing requirements and deposit flow of its customers.  Management views
liquidity as the ability to raise cash at a reasonable cost or with a minimum
of loss and as a measure of balance sheet flexibility to react to marketplace,
regulatory and competitive changes.  The primary sources of the Company's
liquidity are investment securities available for sale and other marketable
assets maturing within one year.  The Company attempts, when possible, to match
relative maturities of assets and liabilities, while maintaining the desired
net interest margin.  The Company can also utilize borrowing capacities if
appropriate.  Although the percentage of earning assets represented by loans is
increasing, management believes that its sources of liquidity are adequate.





                                      -14-


<PAGE>   15


OTHER

    SFAS No. 114 (Accounting by Creditors for Impairment of a Loan) as amended
by SFAS No. 118 (Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures) was adopted by the Company as of January 1, 1995.
In accordance with the new standard, the 1995 allowance for loan losses
includes specific allowances related to loans which have been judged to be
impaired and which fall within the scope of SFAS No. 114 (primarily commercial
loans). A loan is impaired when, based on current information, it is probable
that the Company will not collect all amounts due in accordance with the
contractual terms of the loan agreement.  These specific allowances are based
on discounted cash flows of expected future payments using the loan's initial
effective interest rate or the fair value of the collateral if the loan is
collateral dependent.  Since the Company evaluates the overall adequacy of the
allowance for credit losses on an ongoing basis, the adoption of SFAS No. 114
did not affect the amount of the allowance for credit losses or the existing
income recognition and charge-off policies for nonperforming loans.

    SFAS No. 121 (Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of) was issued by FASB in March 1995.  SFAS
No. 121 requires long-lived assets and certain intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
The statement also requires long-lived assets and certain intangibles to be
disposed of or be reported at the lower of carrying amount or fair value less
cost to sell.  This statement was adopted by the Company effective January 1,
1996.  The adoption of SFAS No. 121 did not have a significant impact on the
Company's financial condition or results of operations once implemented.

    SFAS No. 122 (Accounting for Mortgage Servicing Rights) was issued by FASB
in May 1995.  SFAS No. 122 requires accounting recognition of the rights to
service mortgage loans for others.  The total cost of the mortgage loan will be
allocated between the relative fair values of the loan and the mortgage
servicing rights.  The cost allocated to mortgage servicing rights will be
recognized as a separate asset and amortized over the period of estimated
servicing income.  This statement was adopted by the Company effective January
1, 1996.  The adoption of SFAS No.  122 did not have a significant impact on
the Company's financial condition or results of operations.  Future impact of
adoption is contingent on the future levels of mortgage loan sales.

    SFAS No. 123 (Accounting for Stock-Based Compensation) was issued by FASB
in October 1995.  SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans.  The statement
encourages a "fair value-based method" of accounting for stock-based
compensation plans.  Upon adoption of SFAS No. 123, the Company will be
required to disclose in the notes to the financial statements the difference
between the "fair value method" and the "intrinsic value method" as prescribed
by APB Opinion No. 25, "Accounting for Stock Issued to Employees."  The Company
will continue to account for stock-based compensation in accordance with APB
Opinion No. 25 on the Company's financial statements.  SFAS No. 123 was adopted
as of January 1, 1996, and did not have a significant impact on the Company's
financial condition or results of operations.

    The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," in June
1996, SFAS No. 125 provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishment of liabilities.


Item 3.    Quantitative and Qualitative Disclosure about Market Risk Not Yet
Applicable to the Company.





                                      -15-

<PAGE>   16




                          PART II.  OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

  (a)      Exhibits:  See Exhibit Index, which follows the 
           signature page hereof.

  (b)      Reports on Form 8-K:

                  The Registrant filed one report on Form 8-K during the third
           quarter of fiscal 1997.  The Report, dated August 12, 1997, related
           to the Registrant's acquisitions of Clear Lake Bancorp., Inc. and
           Citizens National Bancorporation, Inc.





                                      -16-     


<PAGE>   17




                                   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 BANCORPORATION, INC.              
                                  -------------------------------------------
                                  (Registrant)


Date  November 13, 1997            /s/ John W. Johnson                
                                  -------------------------------------------
                                  John W. Johnson
                                  President and Chief Executive Officer


Date  November 13, 1997            /s/ Daniel E. Voet                     
                                  -------------------------------------------
                                  Daniel E. Voet
                                  Chief Financial Officer and Treasurer

<PAGE>   18



                                 EXHIBIT INDEX

                           F & M BANCORPORATION, INC.

                Form 10-Q for Quarter Ended September 30, 1997


Exhibit No.                                           Description

      27                                         Financial Data Schedule