<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, 1996                  
                              --------------------------------------------------
                                       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)                      (ZipCode)

                               (414) 766-1717                              
-----------------------------------------------------------------------------  
              (Registrant's telephone number, including areacode)

                                                                        
----------------------------------------------------------------------------- 
(Former name, former address and former fiscal year, ifchanged 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 12, 1996.

        $1.00 par value common
        6,980,940 shares 


<PAGE>   2



                           F & M BANCORPORATION, INC.
                                AND SUBSIDIARIES     

                                     INDEX


<TABLE>
<CAPTION>

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

         Condensed Consolidated Balance Sheets
           as of September 30, 1996 and December 31,
           1995 (Unaudited)                                                            4

         Condensed Consolidated Statements of Earnings
           for the three and nine months ended September 30,
           1996 and 1995 (Unaudited)                                                   5

         Condensed Consolidated Statements of Cash Flows
           for the nine months ended September 30,
           1996 and 1995 (Unaudited)                                                   6

         Notes to Condensed Consolidated Financial
           Statements (Unaudited)                                                      7

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

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

Item 6.  Exhibits and Reports on Form 8-K                                             17
</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 1995 Annual Report.





                                     - 3 -
<PAGE>   4



                         F & M BANCORPORATION, INC. AND
                           SUBSIDIARIES CONSOLIDATED
                                 BALANCE SHEETS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                      September 30,     December 31,    
                                                                           1996             1995 
                                                                      -------------     ------------
<S>                                                                <C>                <C>
ASSETS
Cash and cash equivalents                                            $   43,729,858     $ 40,848,045
Federal funds sold                                                        5,039,000       22,118,000
                                                                      -------------     ------------

  Total cash and cash equivalents                                        48,768,858       62,966,045

Investment securities (Note B)
  Held to maturity                                                       90,237,168       65,948,661
  Available for sale - stated at fair value                             122,870,532      138,898,862
Loans (Note C)                                                          830,020,901      700,043,946
  Less:  Allowance for loan losses                                      (10,242,572)      (8,921,131)
                                                                      -------------     ------------ 
                 Net loans                                              819,778,329      691,122,815

Bank premises and equipment, net                                         26,743,588       20,718,823
Other real estate                                                         1,983,064          808,631
Other assets                                                             20,360,435       15,814,189
                                                                      -------------     ------------
                                                                     $1,130,741,974     $996,278,026
                                                                      =============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Deposits
    Non-interest bearing                                             $  130,831,381     $110,187,506
    Interest bearing                                                    840,447,134      756,524,375
                                                                      -------------     ------------
            Total deposits                                              971,278,515      866,711,881

  Short-term borrowing                                                   37,960,019       12,194,134
  Other borrowings                                                        9,216,622       10,833,244
  Accrued expenses and other liabilities                                 10,309,688       12,281,690
                                                                      -------------     ------------

            Total liabilities                                         1,028,764,844      902,020,949

Minority interest in subsidiaries                                                 0          189,863

Shareholders' Equity
  Common stock - $1 par value:
    Authorized - 20,000,000 shares
    Issued - 7,016,690 and 6,259,717                                      7,016,690        6,259,717
  Capital surplus                                                        60,157,038       43,600,295
  Retained earnings                                                      36,236,052       44,899,802
  Net unrealized loss on securities available for sale                     (750,169)         131,838
  Less-Common stock held in treasury at cost-
    35,750 shares and 45,000 shares, respectively                          (682,481)        (824,438)
                                                                      -------------     ------------ 
            Total shareholders' equity                                  101,977,130       94,067,214
                                                                      -------------     ------------
        Total liabilities and shareholders' equity                   $1,130,741,974     $996,278,026
                                                                      =============     ============
</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, 
                                                              1996            1995             1996            1995    
                                                        -----------      -----------       -----------      ----------
<S>                                                   <C>              <C>              <C>             <C>
Interest income
  Interest and fees on loans                             $18,755,595      $16,484,322      $53,591,224     $46,812,951
  Interest on investment securities
    Taxable                                                1,905,592        2,016,375        5,932,845       6,063,245
    Exempt from federal tax                                1,234,912          970,494        3,387,061       2,871,126
  Other interest income                                      190,942          202,944          987,633         406,105
                                                          ----------       ----------       ----------      ----------
     Total interest income                                22,087,041       19,674,135       63,898,763      56,153,427
                                                          ----------       ----------       ----------      ----------

Interest expense
  Interest on deposits                                     9,462,602        8,394,625       27,273,432      23,357,142
  Interest on short-term borrowing                           547,221          140,856        1,223,285         780,265
  Interest on other borrowing                                 40,802          303,396          284,487         752,591
                                                          ----------       ----------       ----------      ----------
        Total interest expense                            10,050,625        8,838,877       28,781,204      24,889,998
                                                          ----------       ----------       ----------      ----------

        Net interest income                               12,036,416       10,835,258       35,117,559      31,263,429

Provision for loan losses                                    469,000          491,750        1,289,332       1,126,750
                                                          ----------       ----------       ----------      ----------

        Net interest income after
          provision for loan losses                       11,567,416       10,343,508       33,828,227      30,136,679
                                                          ----------       ----------       ----------      ----------

Other income
  Service charges on deposit accounts                        805,343          689,658        2,229,592       1,946,631
  Other operating income                                     701,742          537,055        1,943,234       1,481,559
  Net security gain (loss)                                    33,360            7,156            8,840          32,741
                                                          ----------       ----------       ----------      ----------
                                                           1,540,445        1,233,869        4,181,666       3,460,931
                                                          ----------       ----------       ----------      ----------

Other expenses
  Salaries and employee benefits                           4,219,809        3,582,366       12,024,547      10,590,506
  Other operating expense                                  3,524,455        3,099,700       10,328,723      10,269,886
                                                          ----------       ----------       ----------      ----------
                                                           7,744,264        6,682,066       22,353,270      20,860,392
                                                           ---------       ----------       ----------      ----------

Income before income taxes                                 5,363,597        4,895,311       15,656,623      12,737,218

Income taxes                                               1,660,994        1,646,597        4,976,409       4,060,917
                                                          ----------       ----------       ----------      ----------

   NET INCOME                                            $ 3,702,603      $ 3,248,714      $10,680,214     $ 8,676,301
                                                          ==========       ==========       ==========      ==========


EARNINGS PER SHARE                                       $      0.53      $      0.48      $      1.53     $      1.28
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.



                                     - 5 -



<PAGE>   6
                                      
                        F & M BANCORPORATION, INC. AND
                          SUBSIDIARIES CONSOLIDATED
                           STATEMENTS OF CASH FLOWS
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                              Nine months ended
                                                                                                September 30,
                                                                                       1996                   1995  
                                                                                    ---------              ---------
<S>                                                                               <C>               <C>
Increase (decrease) in cash and cash equivalents:
    Cash flows from operating activities:
      Net income                                                                    $ 10,680,214        $  8,676,301
      Adjustments to reconcile net income to net cash
        provided by operating activities:
         Provision for depreciation and net amortization                               1,832,820           1,709,585              
         Provision for loan losses1,289,332     1,126,750
         (Gain) loss on sale of investment securities                                     (8,840)            (32,741)
         Increase in other assets                                                     (1,156,995)         (1,078,350)
         Gain on sale of equipment                                                       (49,334)             (4,215)
         Increase (decrease) in other liabilities                                     (2,347,876)          2,028,449
         Provision for other real estate losses                                           40,785              48,775
         Gain on sale of other real estate                                                (6,778)            (60,322)
         Minority interest                                                                 8,383             (17,511)
                                                                                     -----------         ----------- 
    Net cash provided by operating activities                                         10,281,711          12,396,721
                                                                                     -----------         -----------

    Cash flows from investing activities:
         Proceeds from sale of investment securities
           available for sale                                                          1,270,160          11,229,819
         Proceeds from maturities of investment
           securities available for sale                                              39,228,279          19,033,518
         Purchase of investment securities
           available for sale                                                        (20,535,322)        (27,717,785)
         Proceeds from maturities of investment
           securities held to maturity                                                 4,822,968           5,015,332
         Purchase of investment securities
           held to maturity                                                          (20,808,299)         (7,555,811)
         Net increase in loans                                                       (87,307,408)        (52,957,827)
         Capital expenditures                                                         (6,231,244)         (1,515,791)
         Proceeds from sale of equipment                                                 240,286               6,091
         Proceeds from sale of other real estate                                         309,717             688,356
         Payment for purchase of other real estate                                         ---               (48,991)
         Payment for purchase of stock of
           subsidiary banks, net of cash received                                       (483,579)              ---  
                                                                                     -----------         -----------
    Net cash used in investing activities                                            (89,494,442)        (53,823,089)
                                                                                     -----------         ----------- 

    Cash flows from financing activities:
         Net increase in deposits                                                     44,858,774          41,777,315
         Net increase (decrease) in short-term borrowings                             25,765,885          (8,299,037)
         Dividends paid                                                               (3,643,943)         (2,910,705)
         Purchase of common stock                                                         ---               (845,625)
         Net increase (decrease) in other borrowings                                  (2,075,872)          9,466,756
         Net proceeds options exercised                                                  110,700              14,025
                                                                                     -----------         -----------
    Net cash provided by financing activities                                         65,015,544          39,202,729
                                                                                     -----------         -----------

Net decrease in cash and cash equivalents                                            (14,197,187)         (2,223,639)
Cash and cash equivalents at beginning of period                                      62,966,045          43,483,408
                                                                                     -----------         -----------
Cash and cash equivalents at end of period                                          $ 48,768,858        $ 41,259,769
                                                                                     ===========         ===========
</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, 1996
                                  (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 Union State Bank, acquired January 9,
1995, and Community State Bank, acquired on June 28, 1996.  These transactions
have been accounted for using the pooling of interests method of accounting.
Monycor Bancshares, Inc., acquired on February 5, 1996, accounted for as
pooling of interests, was 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, and
the Bradley Bank, acquired May 10, 1996, 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 dividend, paid to shareholders on June
10, 1996.  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, 1996 are as follows:

<TABLE>
<CAPTION>
                                                                  Carrying     Market
                                                                   Amount      Value 
                                                                 --------    -------
                                                                    (in thousands)
<S>                                                             <C>         <C>
Exempt obligations of states and political subdivisions            $90,237     $91,020
                                                                   =======     =======
</TABLE>

NOTE C - LOANS

    At September 30, 1996, loans are as follows:
                                 (in thousands)
<TABLE>
<S>                                                                           <C>
Commercial and industrial                                                     $147,570
Agricultural                                                                    47,617
Real estate construction                                                        32,214
Real estate mortgage                                                           535,746
Installment and other consumer                                                  66,874
                                                                              --------
                                                                               830,021
Less allowance for loan losses                                                 (10,243)
   Net loans                                                                           
                                                                               -------                 
                                                                              $819,778
                                                                              ========
</TABLE>

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 6,980,713 and 6,794,768 for the three months ended
September 30, 1996 and 1995 and 6,977,104 and 6,800,540 for the nine months
ended September 30, 1996 and 1995, 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, 1996:

 (in thousands)
<TABLE>
<S>                                <C>          <C>
Non-accrual loans                       $10,858   1.31%
Loans past due 90 days or more               69   0.01
Restructured loans                            0   0.00
                                         ------   ----

Total non-performing loans               10,927   1.32

Other real estate owned                   1,983   0.24
                                         ------   ----

Total non-performing assets             $12,910   1.56%
                                        =======   ==== 
</TABLE>


NOTE F - SUMMARY OF LOAN LOSS EXPERIENCE

    The following table summarizes loan balances at September 30, 1996; 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:

<TABLE>
<S>                                       <C>
(in thousands)
Average balance of loans year-to-date         $772,964
                                              ========

Allowance for loan losses at
  December 31, 1995                              8,921

Loans charged off
  Commercial and Industrial                        395
  Real Estate - Mortgage                            26
  Installments and Other Consumer Loans            314
                                              --------

  Total charge offs                                735

Recoveries on loans previously
  charged off
  Commercial and Industrial                         99
  Real Estate - Mortgage                             3
  Installment and Other Consumer Loans              80
                                              --------

  Total recoveries                                 182

Net loans charged off                              553

Adjustments
  Balance related to acquisitions                  586

Provisions for loan
  losses                                         1,289
                                              --------
Allowance for loan losses
  at end of period                            $ 10,243
                                              ========

Ratio of net charge offs
  during period to average
  loans outstanding (annualized)                  0.10%
Allowance for loan
  losses to total loans                           1.23%
</TABLE>

                                     - 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, 1996:


<TABLE>
<CAPTION>
                                                   Percent
                                                   of loans
                                       Amount of   in each
                                       reserve     category
                                       for loan    to total
(in thousands)                          losses      loans  
------------------------------------------------------------
<S>                                <C>             <C>
Commercial,
industrial, and
agricultural                            $ 4,226       23.5%
Real estate -
construction                                170        3.9
Real estate - mortgage                    3,807       64.5
Installment and other
consumer loans                            2,040        8.1
                                         ------      -----
                                        $10,243      100.0%
                                        =======      ===== 
</TABLE>





                                     - 9 -
<PAGE>   10

                    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, 1996 and 1995 and financial condition
at September 30, 1996.  These statements have been restated to reflect the
acquisitions of Union State Bank ("Union"), acquired January 9, 1995 and
Community State Bank ("Community"), acquired on June 28, 1996.  These
transactions have been accounted for using the pooling of interests method of
accounting.  Monycor Bancshares, Inc., acquired on February 5, 1996, accounted
for as pooling of interests, was 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, and
Bradley Bank, acquired May 10, 1996, 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 dividend,
paid to shareholders on June 10, 1996.

    The Company has announced three pending acquisition which, if consummated,
would affect the Company's future operations.  In August 1996, the Company
announced that it had entered into a letter of intent to acquire Green County
Bank, Brodhead, Wisconsin, and a definitive agreement to acquire the State Bank
of East Troy, East Troy, Wisconsin, with total assets of approximately $30
million and $55 million respectively.  In October 1996, the Company announced
that it had entered into a letter of intent to acquire Prairie City Bank,
Prairie du Chien, Wisconsin, a bank with total assets of approximately $85
million. The Company intends to account for the pending acquisitions using the
pooling of interests method of accounting.  The Company expects these
acquisitions to be consummated in the first half of 1997.

RESULTS OF OPERATIONS

   For the three months ended September 30, 1996, net income increased
$454,000, or 14.0%, to $3.7 million from $3.2 million in the third quarter of
1995.  The annualized return on average assets was 1.32% for the third quarter
of 1996 compared with 1.33% for the third quarter of 1995.  Returns on average
stockholders' equity on an annualized basis for the third quarters of 1996 and
1995 were 14.68% and 14.43%, respectively.

    For the nine months ended September 30, 1996, net income increased $2.0
million, or 23.1%, to $10.7 million from $8.7 million in the first nine months
of 1995.  The annualized return on average assets was 1.33% for the nine months
ended September 30, 1996 compared with 1.23% for the first nine months of 1995.
Returns on average stockholders' equity on an annualized basis for the nine
months ended June 30, 1996 and 1995 were 14.49% and 13.48%, respectively.

Net Interest Income

   Net interest income for the three months ended September 30, 1996 increased
$1.2 million, or 11.1%, to $12.0 million from $10.8 million in the third
quarter of 1995.  Total interest income for the third quarter of 1996 increased
$2.4 million, or 12.3%, to $22.1 million from $19.7 million in the third
quarter of 1995, while interest expense increased $1.2 million, or 13.7%, to
$10.1 million in the second quarter of 1996 from $8.9 million in 1995.



                                     - 10 -



<PAGE>   11

    Net interest income for the nine months ended September 30, 1996 increased
$3.9 million, or 12.3%, to $35.1 million from $31.2 million in the first nine
months of 1995.  Total interest income for the nine months ended September 30,
1996 increased $7.7 million, or 13.8%, to $63.9 million from $56.2 million for
the nine months ended September 30, 1995, while interest expense increased $3.9
million, or 15.6%, to $28.8 million in the nine months ended September 30, 1996
from $24.9 million in 1995.

    Increased net interest income for the nine month period resulted primarily
from maintaining net interest margins and increased lending activity.  Total
interest income increased for the three and nine month period in 1996 compared
to the same periods last year as a result of an increase in interest and fees
on loans due to increased loan activity (including the increased loans
resulting from recent company acquisitions), and generally stable interest
rates, while total interest expense increased for the three and six month
period in 1996 compared to 1995 as a result of increased levels of deposits
including those resulting from acquisitions.

Provision for Loan Losses

    The provision for loan losses for the three months ended September 30, 1996
decreased $23,000, or 4.6%, to $469,000 from $492,000 in the third quarter of
1995.  The provision for loan losses for the nine months ended September 30,
1996 was $1.3 million a 14.4% increase from $1.1 million for the nine months
ended September 30, 1995.  This increase in the provision for the first nine
months was due mainly to the increase in the loan portfolio.  Subject to its
continuing review, developments related to nonperforming assets and other
factors that determine the loan loss provision, management anticipates the
provision for the last quarter of the year will be consistent with the
provision for the previous three quarters of 1996.  See "Allowance for Loan
Losses" for further discussion.

Non-Interest Income

    Non-interest income for the three months ended September 30, 1996 increased
$307,000, or 24.8%, to $1.5 million from $1.2 million in the third quarter of
1995.  Non-interest income for the nine months ended September 30, 1996
increased $721,000, or 20.8%, to $4.2 million.  Increases for both the three
and nine month periods were due primarily to increases in service charges and
other fee income, resulting from increased customer activity and the effect of
the recent acquisitions.

Non-Interest Expense

    Non-interest expense for the three months ended September 30, 1996
increased $1.1 million, or 15.9%, to $7.7 million from $6.6 million in the
third quarter of 1995.  Non-interest expense for the nine months ended
September 30, 1996 increased $1.5 million, or 7.2%, to $22.4 million from $20.9
million in the first nine months of 1995.  The increases were due primarily to
the effect of acquisitions, additional staffing and normal increases in
salaries and employee benefits, partially offset for the nine month period by
the decrease in FDIC insurance premiums which occurred in May, 1995.

   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 2.23% in the third quarter of 1996 compared with
2.23% in the third quarter of 1995.  On a year-to-date basis the overhead
ratio was 2.27% for the first nine months of 1996 as compared to 2.46% for the
same time period in 1995.  The decrease in this ratio in the first nine months
of 1996 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, 1996 increased $14,000, or 0.9%, to $1.7 million from $1.6
million in the third quarter of 1995.  The provision for income taxes for the
nine months ended September 30, 1996 increased $915,000, or 22.5%, to $5.0
million from $4.1 million in 1995.  The increase in income tax provision was
principally due to increased taxable income.

Net Income

    As a result of the foregoing factors, net income for the third quarter of
1996 increased by $454,000, or 14.0%, to $3.7 million from $3.2 million in the
same period for 1995.  Net income for the nine months of 1996 increased by $2.0
million, or 23.1%, to $10.7 million from $8.7 million in the first nine months
of 1995.

    Net income per share was $0.53 for the third quarter of 1996 compared with
$0.48 in the third quarter of 1995, an increase of 10.4%.  Net income per share
was $1.53 for the first half of 1996, compared with $1.28 in the same period
for 1995, an increase of 19.5%.  As of September 30, 1996, fully diluted
earnings per share are equal to the stated earnings per share numbers.

FINANCIAL CONDITION

Loan Portfolio

    At September 30, 1996, total loans increased $130 million, or 18.6%, to
$830 million from $700 million at December 31, 1995.  The loan mix in the
Company's portfolio at September 30, 1996 did not change in any material
respect compared with December 31, 1995.  The increase resulted primarily from
continued strong loan demand spread throughout the Company's subsidiary banks
and the acquisitions in the first nine months of 1996.

Non-Performing Assets

    At September 30, 1996, non-performing assets amounted to $12.9 million
compared to $7.6 million at December 31, 1995.  Non-performing loans at
September 30, 1996 were $10.9 million, or 1.32% of total loans, compared to
$6.8 million at December 31, 1995.  Other real estate owned ("OREO") at
September 30, 1996 was $2.0 million as compared to $809,000 at December 31,
1995.  The ratio of non-performing assets to total loans at September 30, 1996
was 1.56%.  Management continues to work at reducing the level of
non-performing assets.

Summary of Loan Loss Experience

    For the nine months of 1996, total charge-offs were $735,000 and total
recoveries were $182,000.  The annualized ratio of net charge-offs to average
loans outstanding for the nine months ended September 30, 1996 was .10%.  The
charge-offs were not concentrated in any particular industry.






                                     - 12 -



<PAGE>   13

Allowance for Loan Losses

    At September 30, 1996, the allowance for loan losses as a percentage of
total loans was 1.23% compared with a ratio of 1.27% at December 31, 1995.
This decrease in the first nine months of 1996 was due primarily to the robust
growth in the loan portfolio, which more than offsets the effect of a $1.3
million net increase in the allowance in the first nine months of 1996.
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, although actual
experience will depend on future developments with particular loans and may be
affected by general economic trends and developments.  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, 1996, the investment portfolio increased $8.3 million, or
4.0%, to $213 million from $205 million at December 31, 1995.  At September 30,
1996, the investment portfolio represented 18.8% of total assets compared with
20.6% at December 31, 1995.

Deposits

    Total deposits at September 30, 1996 increased $104.6 million, or 12.1%, to
$971 million from $867 million at December 31, 1995.  Interest-bearing
deposits at September 30, 1996 increased $83.9 million, or 11.1%, to $840
million from $756 million at December 31, 1995.

Borrowings

    Short-term borrowings at September 30, 1996 were $38.0 million, as compared
to $12.2 million at December 31, 1995.  Short-term borrowings consist primarily
of federal funds purchased.  The Company has used short-term borrowings to
assist in funding its increasing loan demand.  Management has taken steps to
monitor short-term borrowing levels and supplement them by increasing interest
rates paid to depositors, developing new deposit products, and carefully
monitoring the growth in the loan portfolio, although loan growth has continued
to outpace the growth in deposits.

    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, 1996.  These
borrowings are secured by pledges of mortgage loans, and totaled $9.2 million
at September 30, 1996, compared to $10.8 million at December 31, 1995.  These
FHLB borrowings had original maturities of three month to seven years at
September 30, 1996.

Capital Adequacy

    During the nine months ended September 30, 1996, stockholders' equity
increased $7.9 million due to net income of $10.7 million in the nine months,
offset by the effect of SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" which decreased stockholders' equity by $882,000
during the nine months, along with dividends paid to stockholders.  At
September 30, 1996, the Company's risk-based Tier 1 capital ratio was 11.35%.
The total risk-based capital ratio was 12.57% and the leverage ratio was 8.63%.
All such ratios exceed regulatory minimums of 4.0%, 8.0% and 3.0%,
respectively.  The average equity to average assets ratio was 9.19% at
September 30, 1996, compared with 9.09% at September 30, 1995.




                                     - 13 -



<PAGE>   14



    F & M's common stock dividend payout ratio was 31.2% in the first nine
months of 1996 as compared to 30.0% in the comparable 1995 period.  These
numbers do not include the dividends historically paid by Union and Community
prior to their acquisitions by the Company.

   At September 30, 1996, 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 the Company incurred capital expenditures of
approximately $3.6 million for replacement and renovation of facilities and the
purchase of a new branch location.  In addition, on May 10, 1996, the Company
acquired Bradley for $6.6 million in cash.  The Company's Little Chute
acquisition resulted in net cash of $6.6 million paid to F&M, in exchange for
F&M's assumption of $7.5 million in deposits and transfer to F&M of the
physical assets of the Little Chute branch.  The capital expenditures are being
paid for by cash provided by operations.

Liquidity

    As shown in the Company's Consolidated Statements of Cash Flows for the
nine months ended September 30, 1996, cash and cash equivalents decreased by
$14.2 million during the period to $48.8 million at September 30, 1996.  The
decrease primarily reflected $10.3 million in net cash provided by operating
activities and $65.0 million in net cash provided by financing activities,
offset by $89.5 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 deposits
and short-term borrowing, partially offset by a decrease in other borrowings.
Net cash used in investing activities consisted primarily of a net increase in
loans plus necessary capital expenditures.

    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.  Although the percentage of earning assets represented by
loans is increasing, management believes that its source of liquidity is
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.

    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.




                                     - 15 -




<PAGE>   16

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.

    The foregoing discussion contains forward-looking statements (statements
which are not historical fact, and which may include the terms "believe,"
"expect" or "anticipate") that involve risks and uncertainties.  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, general economic trends, acquisition activity, changes in borrowers'
conditions, regulatory changes and those discussed above and in the Company's
annual report on Form 10-K for the year ended December 31, 1995 (including the
Management's Discussion and Analysis incorporated by reference therein).





                                      -16-



<PAGE>   17

                           PART II  OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

    (a)    Exhibits
           27 Financial Data Schedule

    (b)    Reports on Form 8-K
           None during the quarter





                                     - 17 -
<PAGE>   18





                                   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  11/11/96                         Gail E. Janssen                       
     -------------------               ----------------------------------------
                                       Gail E. Janssen
                                       Chief Executive Officer


Date  November 11, 1996                Daniel E. Voet                     
     -------------------               ----------------------------------------
                                       Daniel E. Voet
                                       Chief Financial Officer and Treasurer