<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.E20549

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

For the quarterly period ended           June 30, 1998
                               ------------------------------------

                                       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 August 10, 1998.

        $1.00 par value common
        14,175,594 shares




<PAGE>   2


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

                                      INDEX
                                      -----



                                                                           Page
                                                                          Number
                                                                          ------
PART I.  FINANCIAL INFORMATION:
-------------------------------
Item l.           Financial Statements                                         3

                  Condensed Consolidated Balance Sheets 
                    as of June 30, 1998 and December 31,
                    1997 (Unaudited)                                           4

                  Condensed Consolidated Statements of Earnings
                    for the six months ended June 30, 1998
                    and 1997 (Unaudited)                                       5

                  Condensed Consolidated Statements of Changes in 
                    Stockholders' Equity for the six months ended 
                    June 30, 1998 and 1997 (Unaudited)                         6

                  Condensed Consolidated Statements of Cash Flows 
                    for the six months ended June 30, 1998 
                    and 1997 (Unaudited)                                       7

                  Notes to Condensed Consolidated Financial
                    Statements (Unaudited)                                     8

Item 2.           Managements Discussion and Analysis of Financial    
                  Condition and Results of Operations                         11
                                                                      
Item 3.           Quantitative and                                    
                  Qualitative Disclosure about Market Risk                    17
                                                                      
PART II.          OTHER INFORMATION                                   
---------         -----------------                                   
Item 4.           Submission of Matters to a Vote of Security Holders         19
                                                                      
Item 5.           Other Matters                                               20
                                                                      
Item 6.           Exhibits and Reports on Form 8-K                            20



                                       -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 1997 Annual Report.

































                                  -3-



<PAGE>   4


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

                                                        June 30,    December 31,
                                                          1998          1997
                                                      ----------    ------------
<S>                                                   <C>            <C>

ASSETS
Cash and cash equivalents                             $   55,603     $   56,581
Investment securities (Note B)
  Held to maturity                                       140,094        128,240
  Available for sale - stated at fair value              205,478        178,597
Federal funds sold                                        24,245         36,747
Loans (Note C)                                         1,320,293      1,197,895
  Less:  Allowance for loan losses                       (17,298)        15,090)
                                                       ---------      ---------
                  Net loans                            1,302,995      1,182,805

Bank premises and equipment, net                          37,265         32,858
Other real estate                                          3,218            917
Other assets                                              37,021         29,258
                                                      ----------      ---------
         TOTAL ASSETS                                 $1,805,919     $1,646,003
                                                      ==========     ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Deposits
    Non-interest bearing                              $  203,992     $  180,312
    Interest bearing                                   1,281,534      1,193,060
                                                      ----------     ----------
                  Total deposits                       1,485,526      1,373,372

  Short-term borrowing                                    44,731         47,685
  Other borrowings                                        85,133         60,929
  Accrued expenses and other liabilities                  16,907         15,174
                                                      ----------     ----------

                  Total liabilities                    1,632,297      1,497,160



Shareholders' Equity 
    Common stock - $1 par value:
    Authorized - 20,000,000 shares
    Issued - 10,564,776 and
                  9,779,130 shares, respectively          10,565          9,779
  Capital surplus                                         88,271         86,334
  Retained earnings                                       75,101         53,101
  Net unrealized gain on securities available for sale       133             21
  Less-Common stock held in treasury at cost-
    15,595 shares and 34,595 shares, respectively           (448)          (392)
                                                      ----------     ----------
                  Total shareholders' equity             173,622        148,843
                                                      ----------     ----------
         Total liabilities and shareholders' equity   $1,805,919     $1,646,003
                                                      ==========     ==========

</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       Six months ended
                                          June 30,                 June 30,
                                      1998        1997        1998        1997
                                   ----------- ----------- ----------- --------
<S>                                  <C>        <C>         <C>         <C> 

Interest income
  Interest and fees on loans         $30,376    $25,851     $59,922     $50,007
  Interest on investment securities
    Taxable                            2,987      2,453       5,946       4,688
    Exempt from federal tax            1,897      1,621       3,829       3,205
  Other interest income                  339        313         864         669


     Total interest income            35,599     30,238      70,561      58,569
                                     -------    -------     -------     -------

Interest expense
  Interest on deposits                14,676     12,637      29,469      25,063
  Interest on short-term borrowing       823        946       1,571       1,622
  Interest on other borrowing          1,085        617       2,067         876
                                      ------     ------      ------      ------
        Total interest expense        16,584     14,200      33,107      27,561
                                      ------     ------      ------      ------

        Net interest income           19,015     16,038      37,454      31,008

Provision for loan losses                764        872       1,456       1,255
                                      ------     ------      ------      ------
        Net interest income after
          provision for loan losses   18,251     15,166      35,998      29,753
                                      ------     ------      ------      ------
Other income
  Service charges on deposit accounts  1,245      1,153       2,365       2,169
  Other operating income               1,795      1,125       3,209       1,986
  Net securities gain (loss)               0         75           0          69
                                      ------     ------      ------      ------
                                       3,040      2,353       5,574       4,224
                                      ------     ------      ------      ------
Other expenses
  Salaries and employee benefits       6,648      5,705      13,190      11,096
  Other operating expense              5,558      4,599      10,827       8,978
                                      ------     ------      ------      ------
                                      12,206     10,304      24,017      20,074
                                      ------     ------      ------      ------

Income before income taxes             9,085      7,215      17,555      13,903

Income taxes                           2,924      2,249       5,531       4,252
                                      ------     ------      ------      ------

   NET INCOME                        $ 6,161    $ 4,966     $12,024     $ 9,651
                                      ======     ======      ======      ======

EARNINGS PER SHARE - BASIC           $  0.58    $  0.51     $  1.14     $  0.99
EARNINGS PER SHARE - DILUTED         $  0.58    $  0.51     $  1.14     $  0.99

</TABLE>
     See accompanying notes to unaudited consolidated financial statements.



                                     - 5 -




<PAGE>   6
                    F&M BANCORPORATION, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                 Six Months                Six Months
                                                   Ended                      Ended
                                               June 30, 1998              June 30, 1997
                                               -------------              -------------
                                            Shares   Equity Total     Shares   Equity Total
                                            ------   ------------     ------   ------------
<S>                                       <C>            <C>         <C>           <C>

Balance-beginning of
  period                                   9,779,130     $148,843    8,173,255     $122,205
Acquisition of Financial Management
               Services of Jefferson, Inc    641,854       12,599
Acquisition of Bank of South Wayne           143,792        4,451
Acquisition of East Troy                                               439,993        7,722
Acquisition of Green County                                            182,967        3,237
Acquisition of Clear Lake                                              161,040        1,952
Ten percent stock dividend                                             821,875
Comprehensive income:
  Net Income                                               12,024                     9,651
  Other comprehensive
income - Change in net
unrealized gain (loss) on
securities available for
sale                                                          112                      (102)
                                          -------------------------------------------------
Total comprehensive
income                                                     12,136                     9,549
                                          -------------------------------------------------
Cash dividends                                             (4,360)                   (3,310)
Purchase Treasury shares                                     (448)
Exercise of stock options                                     401                        67
                                          -------------------------------------------------

Totals                                    10,564,776     $173,622    9,779,130     $141,422
                                          -------------------------------------------------

</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

















                                      -6-


<PAGE>   7
                   F & M BANCORPORATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                  Six months ended
                                                                     June 30,
                                                                1998          1997
<S>                                                         <C>            <C>
Increase (decrease) in cash and cash equivalents: 
     Cash flows from operating activities:
       Net income                                             $  12,024     $  9,651
       Adjustments to reconcile net income to net cash 
          provided by operating activities:
            Provision for depreciation and net amortization       2,137        1,575
            Provision for loan losses                             1,456        1,255
            Gain on sale of investment securities                                (69)
            Increase in other assets                             (3,038)      (1,621)
            Gain on sale of equipment                                 0            35
            Increase in other liabilities                            66         1,483
            Provision for other real estate losses                    2            11
            Gain on sale of other real estate                       (10)          (58)
                                                              ---------     --------- 
     Net cash provided by operating activities                   12,637        12,262
                                                              =========     ========= 
     Cash flows from investing activities:
            Proceeds from sale of investment securities
              available for sale                                      0           256
            Proceeds from maturities of investment
              securities available for sale                      53,103        24,157
            Purchase of investment securities
              available for sale                                (57,243)      (51,941)
            Proceeds from maturities of investment
              securities held to maturity                        10,497         5,462
            Purchase of investment securities
              held to maturity                                   (6,001)       (8,395)
            Net increase in loans                               (35,193)      (84,801)
            Capital expenditures                                 (3,297)       (1,721)
            Proceeds from sale of equipment                          60           322
            Proceeds from sale of other real estate                   0           912
            Payment for purchase of stock of
              subsidiary banks, net of cash received              6,303        12,566
                                                              ---------     --------- 
     Net cash used in investing activities                      (31,771)     (103,183)
                                                              ---------     --------- 
     Cash flows from financing activities:
            Net increase (decrease) in deposits                  (6,810)       16,852
            Net increase (decrease) in short-term borrowings     (3,455)       34,900
            Dividends paid                                       (4,545)       (3,310)
            Purchase of common stock                               (448)            0
            Net increase in other borrowings                     20,504        34,701
            Net proceeds options exercised                          408            67
                                                              ---------     --------- 
    Net cash provided by financing activities                     5,654        83,210
                                                              ---------     --------- 
Net decrease in cash and cash equivalents                       (13,480)       (7,711)
Cash and cash equivalents at beginning of period                 93,328        72,692
Cash and cash equivalents at end of period                    $  79,848     $  64,981
                                                              =========     ========= 
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.








                                      -7-

<PAGE>   8
                   F & M BANCORPORATION, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1998
                                   (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 Wisconsin Ban Corp, acquired on May 30, 1997 and
Citizen's National Bancorporation, Inc., acquired August 14, 1997. These
transactions have been accounted for using the pooling of interests method of
accounting. East Troy Bancshares, acquired on January 10, 1997, Green County
Bank, acquired on February 27, 1997, Clear Lake Bancorp., acquired on August 12,
1997, Bank of South Wayne, acquired on February 9, 1998, and Financial
Management Services of Jefferson, Inc., acquired on May 28, 1998, 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 Security office in Antigo, Wisconsin, acquired on September
29, 1997, and the Sentry Bancorp, acquired on January 27, 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 dividend, paid to
shareholders on June 9, 1997. 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 June 30, 1998 are as follows:

                                                         Carrying     Market
                                                          Amount      Value
                                                          ------      -----
                                                            (in thousands)

Exempt obligations of states and political subdivisions  $140,094   $  145,161
                                                         --------   ----------
NOTE C - LOANS

     At June 30, 1998, loans are as follows:
                            (in thousands)
Commercial and industrial                                           $  301,086
Agricultural                                                            94,746
Real estate construction                                                41,908
Real estate mortgage                                                   790,193
Installment and other consumer                                          92,360
                                                                    ----------
                                                                     1,320,293
Less allowance for loan losses                                         (17,298)
                                                                    ----------
       Net loans                                                    $1,302,995
                                                                    ==========

NOTE D - EARNINGS PER SHARE OF COMMON STOCK Earnings per share are based on
weighted average number of common shares outstanding restated to reflect the 
10% stock dividend paid to stockholders on June 9, 1997. The following shows 
the computation of the basic and diluted earnings per share for the six months
ended June 30, 1998 and 1997.

                                                 Weighted
                                                  Average
                                                 Number of  Earnings Per
                              Net Income          Shares       Share
--------------------------------------------------------------------------------
                            (in Thousands)
1998
Earnings per share-Basic      $12,024           10,545,187     $1.14
Effect of Stock options                             41,601
--------------------------------------------------------------------------------
Earnings per share-Diluted    $12,024           10,586,788     $1.14
================================================================================
1997
Earnings per share-Basic      $ 9,651            9,762,335     $0.99
Effect of stock options                             30,007
--------------------------------------------------------------------------------
Earnings per share-Diluted    $ 9,651            9,792,342     $0.99
================================================================================

                                      -8-

<PAGE>   9


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 June 30, 1998:

<TABLE>
<S>                              <C>          <C>

(in thousands)
Non-accrual loans                $ 9,236      0.70%
Loans past due 90 days or more       433      0.04
Restructured loans                     0      0.00
                                 -------      ----

Total non-performing loans         9,669      0.74

Other real estate owned            3,218      0.24
                                 -------      ----

Total non-performing assets      $12,887      0.98%
                                 =======      ====
</TABLE>


NOTE F - SUMMARY OF LOAN LOSS EXPERIENCE

     The following table summarizes loan balances at June 30, 1998; 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     $1,306,933
                                          ==========

Allowance for loan losses at
  beginning of period                         15,090

Loans charged off
  Commercial and Industrial                      670
  Real Estate - Mortgage                          10
  Installments and Other Consumer Loans          433
                                          ----------

  Total charge offs                            1,113

Recoveries on loans previously
  charged off
  Commercial and Industrial                       60
  Real Estate - Mortgage                           8
  Installment and Other Consumer Loans            96
                                          ----------

  Total recoveries                               164

Net loans charged off                            949

Provisions for loan losses of banks
     acquired at date of acquisition           1,701

Provisions for loan
  losses                                       1,456
                                          ----------
Allowance for loan losses
  at end of period                        $   17,298
                                          ----------

Ratio of net charge offs
  during period to average
  loans outstanding (annualized)                0.15%
Allowance for loan
  losses to total loans                         1.31%

</TABLE>

                                      -9-

<PAGE>   10


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 June 30,
1998:


                                     Percent
                                     of loans
                         Amount of   in each
                          reserve    category
                         for loan    to total
(in thousands)            losses      loans
-------------------------------------------------
Commercial,
industrial, and
agricultural             $ 7,958       30.0%
Real estate -
construction                 280        3.2
Real estate - mortgage     6,133       59.8
Installment and other
consumer loans             2,927        7.0
                         -------      -----
                         $17,298      100.0%
                         =======      ====== 

































                                 -10-


<PAGE>   11


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
     The following discussion and analysis provides information regarding the
Company's results of operations for the three and six months ended June 30, 1998
and 1997 and financial condition at June 30, 1998. These statements have been
restated to reflect the acquisitions of Wisconsin Ban Corp ("WBC"), acquired on
May 30, 1997 and Citizens National Bancorporation, Inc. ("CNB"), acquired on
August 14, 1997. These transactions have been accounted for using the pooling of
interests method of accounting. East Troy Bancshares ("ETB"), acquired on
January 10, 1997, Green County Bank ("GCB"), acquired on February 27, 1997,
Clear Lake Bancorp.("CLB"), Inc., acquired on August 12, 1997, Bank of South
Wayne, acquired on February 9, 1998, and Financial Management Services of
Jefferson, Inc., acquired on May 28, 1998, 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
the Security office in Antigo, acquired on September 29, 1997 and the Sentry
Bancorp, acquired on January 27, 1998, 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 9, 1997.


     Discussions in this Management's Discussion and elsewhere in the Annual
Report, that are not statements of historical fact (including statements in the
future tense or which include terms such as "believe", "expect", "anticipate" or
"may") are forward-looking statements that involve risks and uncertainties, and
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, 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 July 1, 1998 the Company acquired 100% of the outstanding shares of
BancSecurity Corporation, Marshalltown, Iowa, a holding company of the Security
Bank, Security Bank Jasper-Poweshiek, and Story County Bank and Trust, which has
fourteen offices in twelve Iowa communities, with total assets of approximately
$537 million. The Company is accounting for this acquisition using the pooling
of interests method of accounting. Information within this report has not been
restated to reflect this acquisition due to the consummation occurring after
June 30, 1998. Because of its relative size as compared to the Company, the
BancSecurity acquisition and the integration of BancSecurity into the Company
may affect both historical and future reported operations and financial
condition.

     The Company has also announced one pending acquisition which, if
consummated, would affect the Company's future operations. In July 1998, The
Company announced that it had signed a Definitive Agreement to acquire Community
Bank of Elkhorn ("Bank"). The Bank, which has assets of approximately $100
million and one location in Elkhorn, Wisconsin, is a wholly owned subsidiary of
CBE, Inc. This acquisition will be accounted for using the pooling of interests
method of accounting. Although the pending acquisition is expected to be
consummated in the first quarter of 1999, it remains subject to conditions
precedent and there can be no assurance of completion.

RESULTS OF OPERATIONS

   For the three months ended June 30, 1998, net income increased $1.2 million,
or 24.1%, to $6.2 million from $5.0 million in the second quarter of 1997. The
annualized return on average assets was 1.38% for the second quarter of 1998
compared with 1.33% for the second quarter of 1997. Return on average
stockholders' equity on an annualized basis for the second quarter of 1998 and
1997 were 14.49% and 14.28%, respectively.

     For the six months ended June 30, 1998, net income increased $2.3 million,
or 24.6%, to $12.0 million from $9.7 million in the first half of 1997. The
annualized return on average assets was 1.36% for the six months ended June 30,
1998 compared with 1.32% for the first half of 1997. Return on average
stockholders' equity on an annualized basis for the six months ended June 30,
1998 and 1997 were 14.29% and 14.19%, respectively.

                                      -11-


<PAGE>   12


Net Interest Income

   Net interest income for the three months ended June 30, 1998 increased $3.0
million, or 18.6%, to $19.0 million from $16.0 million in the second quarter of
1997. Total interest income for the second quarter of 1998 increased $5.4
million, or 17.8%, to $35.6 million from $30.2 million in the second quarter of
1997. Interest expense increased $2.4 million, or 16.8%, to $16.6 million in the
second quarter of 1998 from $14.2 million in the second quarter of 1997.

     Net interest income for the six months ended June 30, 1998 increased $6.4
million, or 20.8%, to $37.5 million from $31.0 million in the first half of
1997. Total interest income for the six months ended June 30, 1998 increased
$12.0 million, or 20.5%, to $70.6 million from $58.6 million in the first half
of 1997, while interest expense increased $5.5 million, or 20.1%, to $33.1
million in the six months ended June 30, 1998 from $27.6 million in 1997.

   Increased net interest income for the three and six month periods is
attributable to the increase in asset volume due to the Company's internal
acquisitions, growth, and relative stability of the Company's net interest
margin (4.74% vs 4.73% at June 30, 1998 and 1997, respectively). Total interest
income increased for the three and six month period in 1998 compared to the same
periods last year as a result of an increase in interest and fees on loans due
to acquisitions, increased loan activity, and generally stable interest rates,
while total interest expense increased for the three and six month periods in
1998 compared to 1997 as a result of increased levels of deposits primarily due
to acquisitions.

Provision for Loan Losses

     The amount charged to provision for loan losses is based on Management's
evaluation of the loan portfolio. Management determines the adequacy of the
allowance for loan losses, both on a bank by bank basis and on an overall basis
for the Company, based on past loan loss experience, current economic
conditions, composition of the loan portfolio (including the historical
performance of, and the F&M subsidiary banks' evaluation of the prospects for,
each of the component loans, and the collateral value therefor) and the
anticipated potential for future loss. Management is also mindful of the
expectations of banking industry regulators for certain levels of allowances,
although no particular regulatory obligations have been imposed on the Company
in this regard.

     The provision for loan losses for the three months ended June 30, 1998
decreased $108,000, or -12.3%, to $764,000 from $872,000 in the second quarter
of 1997. The provision for loan losses for the six months ended June 30, 1998
was $1.5 million, a 16.0% increase from $1.3 million for the six months ended
June 30, 1997. This increase in the provision for the first six months was made
mainly to reflect an increase in net charge offs which increased from $655,000
in the first six months of 1997 to $949,000 in the first six months of 1998 and
an increase in the loan portfolio. Despite the increases in charge offs and the
loan portfolio, but reflecting allowances of banks acquired in 1998, the Company
was able to increase the loan loss reserve as a percentage of loans to 1.31% due
to an increased provision and recovery activity. 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
June 30, 1998 increased $687,000, or 29.2%, to $3.0 million from $2.4 million in
the second quarter of 1997. Non-interest income for the six months ended June
30, 1998 increased $1.4 million, or 32.0%, to $5.6 million. The increase was due
principally to increases in secondary market commissions, service charges and
other fee income. Purchase acquisitions and acquisitions of banks for which
prior period information was not restated also contributed to the increase of
non-interest income.







                                      -12-





<PAGE>   13


Non-Interest Expense

     Non-interest expense for the three months ended June 30, 1998 increased
$1.9 million, or 18.5%, to $12.2 million from $10.3 million in the second
quarter of 1997. Non-interest expense for the six months ended June 30, 1998
increased $3.9 million, or 19.6% to $24.0 million from $20.1 million in the
first half of the year. The increase was primarily due to the acquisitions in
1997 and 1998, resulting from both the cost of the acquisitions and increase
from those with respect for which prior periods were not restated (additional
staffing, data processing fees, 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 2.09% in the first half of 1998 compared with 2.17%
in the first half of 1997. The decrease in this ratio in the first half of 1998
was the result of the factors set forth above.

     Due to the sensitivity of the overhead ratio to changes in the balance
sheet, management also looks at trends in the efficiency ratio to assess the
changing relationship between operating expenses and income. The efficiency
ratio measures the amount of cost expended by the Company to generate a given
level of revenues in the normal course of business. It is computed by dividing
total operating expense by net interest income on a fully-taxable equivalent
basis and non-interest income from ongoing operations, excluding nonrecurring
items. The efficiency ratio was 53.3% in the first six months of 1998 compared
with 54.5% in the first six months of 1997. The decreases in this ratio and the
overhead ratio resulted from the various factors set forth above.

Provision for Income Taxes

     The Company's provision for income taxes for the three months ended June
30, 1998 increased $675,000, or 30.0%, to $2.9 million from $2.2 million in the
second quarter of 1997. The increase in income tax provision was principally due
to increased taxable income.

     The provision for income taxes for the six months ended June 30, 1998
increased $1.2 million, or 30.1% to $5.5 million from $4.3 million in 1997. The
increase in income tax provision was principally due to increased taxable
income.

Net Income

     As a result of the preceding factors, net income for the second quarter of
1998 increased by $1.2 million, or 24.1% to $6.2 million from $5.0 million in
the same period for 1997. Net income for the first half of 1998 increased by
$2.3 million, or 24.6%, to $12.0 million from $9.7 million in the first half of
1997.

     Basic net income per common share was $0.58 for the second quarter of 1998
compared with $0.51 in the second quarter of 1997 an increase of 13.7%. The
Company maintains a stock option plans for officers and directors. Fully diluted
earnings per share are equal to the stated basic earnings per share numbers.

     Basic net income per share was $1.14 for the first half of 1998, compared
with $0.99 in the same period for 1997, an increase of 15.2%. As of June 30,
1998, fully diluted earnings per share are equal to the stated basic earnings
per share numbers.











                                      -13-







<PAGE>   14


FINANCIAL CONDITION

Loan Portfolio

     At June 30, 1998, total loans increased $122.4 million, or 10.2%, to $1.320
billion from $1.198 billion at December 31, 1997. The loan mix in the Company's
portfolio at June 30, 1998 did not change in any material respect compared with
December 31, 1997. Approximately $89 million in loans, or 73% of the first half
of the year's growth, resulted from acquisitions in which the Company did not
restate its prior financial statements and 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 June 30, 1998, non-performing assets amounted to $12.9 million,
compared to $11.9 million at December 31, 1997. Non-performing loans at June 30,
1998 were $9.7 million, or 0.74% of total loans, compared to $11.0 million at
December 31, 1997. Other real estate owned ("OREO") at June 30, 1998 was $3.2
million as compared to $917,000 at December 31, 1997. The ratio of
non-performing assets to total loans at June 30, 1998 was 0.98%. Management
continues to work at reducing the level of non-performing assets. Non-performing
assets increased the first six months of 1998 because of acquisitions and
developments with respect to a number of separate loans, in different locations
and industries. 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, 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 half of 1998, total charge-offs were $1.1 million and total
recoveries were $164,000. The annualized ratio of net charge-offs to average
loans outstanding for the six months ended June 30, 1998 was 0.15%. The
charge-offs were not concentrated in any particular industry.

Allowance for Loan Losses

     The allowance for loan losses as a percentage of total loans was 1.31% and
1.26% at June 30, 1998 and December 31, 1997, 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, the reserve levels at acquired banks, and current economic
conditions that may affect the borrower's ability to pay. The ultimate recovery
of all loans is susceptible to future market and economic factors beyond the
Company's control as well as factors affecting particular borrowers. Also, the
process of setting loss reserves involves an estimation of future occurrences,
and is inherently uncertain. These factors may result in future losses or
recoveries differing significantly from the allowances and reserves provided in
the financial statements.

Investment Portfolio

     At June 30, 1998, the investment portfolio increased $38.7 million, or
12.6%, to $345.6 million from $306.8 million at December 31, 1997. At June 30,
1998 and December 31, 1997, the investment portfolio represented 19.1% and 18.6%
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.


                                      -14-

<PAGE>   15


Deposits

     Total deposits at June 30, 1998 increased $112.2 million, or 8.2%, to
$1.486 billion from $1.373 billion at December 31, 1997. Interest-bearing
deposits at June 30, 1998 increased $88.5 million, or 7.4%, to $1.282 billion
from $1.193 billion at December 31, 1997. The increase in deposits is primarily
attributable to the three acquisitions in the first half of 1998 representing
approximately $115 million offset by internal decrease in deposits of
approximately $3 million. Historically, deposits have typically increased at
year end and the gradually returned to prior levels.

Borrowings

     Short-term borrowings at June 30, 1998 were $44.7 million, as compared to
$47.7 million at December 31, 1997. 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 borrowings and is comfortable with the current level. Going forward,
continued reliance on short-term funds may be required if loan demand continues
to outpace deposit growth, and, therefore, short-term borrowings are expected to
vary from time to time.

     Several of the Company's subsidiary banks, as members of the Federal Home
Loan Bank (FHLB), had borrowings from the FHLB as of June 30, 1998. These
borrowings are secured by pledges of mortgage loans, and totaled $85.1 million
at June 30, 1998, compared to $60.9 million at December 31, 1997. These FHLB
borrowings had original maturities of three months to nine years at June 30,
1998. The increase in other borrowings in 1997 and early 1998 was due to
attractiveness in longer term rates and the Company's implementation of a
leverage program in which FHLB borrowings are matched to securities purchased.

CAPITAL ADEQUACY

     During the first half of 1998, stockholders' equity increased $24.8 million
due to net income of $12.0 million in the first half of 1998 and the
acquisitions of Bank of South Wayne and Financial Management Services, Inc.,
offset by dividends paid to stockholders. At June 30, 1998, the Company's
risk-based Tier 1 capital ratio was 11.63%. The total risk-based capital ratio
was 12.88% and the leverage ratio was 9.06%. All such ratios exceed regulatory
minimums of 4.0%, 8.0% and 3.0%, respectively. The average equity to average
assets ratio was 9.53% at June 30, 1998, compared with 9.28% at June 30, 1997.

     F & M's common stock dividend payout ratio was 36.3% in the first half of
1998 as compared to 31.1% in the comparable 1997 period. These numbers do not
include the dividends historically paid by acquisitions prior to their
acquisitions by the Company.

   At June 30, 1998, 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 half 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 1998, but
also expects to finance any such expenditures through earnings and existing
capital resources. The Company financed the cash purchase of Cannon Valley Bank
through earnings and existing capital resources.

LIQUIDITY

     As shown in the Company's Consolidated Statements of Cash Flows for the six
months ended June 30, 1998, cash and cash equivalents decreased by $13.5 million
during the period to $79.8 million at June 30, 1998. The decrease primarily
reflected $12.6 million in net cash provided by operating activities and $5.7
million in net cash provided by financing activities, offset by $31.8 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 a decrease in deposits offset by an increase in 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.





                                      -15-


<PAGE>   16


     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.

YEAR 2000

     Like other financial institutions, F&M must assure that its computer and
other systems are "year 2000 compliant." "Year 2000 compliant" means being
capable of operating, and accurately recognizing dates and processing
information, in and after the year 2000. To help assure that F&M's systems are
year 2000 compliant on a timely basis, F&M began a focused compliance program
primarily using F&M personnel. As the program has continued, F&M has identified
certain functions and roles in which the use of outside consultants or experts
would help F&M address year 2000 issues on a more expedited basis or in more
depth. Therefore, in addition to the designation of particular F&M employees to
coordinate F&M's year 2000 compliance efforts, F&M has retained outside
assistance. F&M is nearing completion of its review process, and has begun
testing and implementing solutions where necessary. F&M has to date budgeted
$500,000.00 for its compliance efforts, and expended $100,000.00 through June
30, 1998.

     As part of that effort, F&M is monitoring year 2000 compliance efforts by
its suppliers, because many of F&M's affected systems (such as data processing)
are contracted from third parties. Therefore, a significant part of F&M being
year 2000 compliant requires such compliance by the third parties, F&M regularly
receives updates from its "mission-critical" suppliers (such as data processors)
as to their Year 2000 compliance efforts. F&M loan officers and others are also
reviewing year 2000 efforts and compliance of F&M's credit customers, as failure
of these customers to be Year 2000 compliant could pose credit risks which could
have a material effect on F&M.

     F&M's year 2000 compliance efforts are ongoing. Based in part upon
information being received from the third parties providing services to F&M, F&M
currently believes that it will be year 2000 compliant on a timely basis to
avoid material operational disruptions and to comply in material respects with
the requirements of its regulators. To date, F&M has not identified material
extraordinary expenditures which will be required to become year 2000 compliant,
although further expenditures remain to be incurred and the use of outside
personnel or other factors may increase the costs of year 2000 compliance beyond
F&M's current budget. While not currently anticipated by F&M, it is possible
that F&M may identify or experience material operational difficulties or
expenditures in the future.

OTHER

Accounting Changes

     In June 1997, The FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements. This statement supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise," but retains the
requirement to report information about major customers. It also amends SFAS No.
94, "Consolidation of All Majority-Owned Subsidiaries," to remove the special
disclosure requirements for previously unconsolidated subsidiaries. The
statement is effective for fiscal years beginning after December 15, 1997. In
the initial year of application, comparative information for earlier years is to
be restated. The statement is not expected to have an effect on the financial
position or operating results of the Company, but may require additional
disclosures in the consolidated financial statements.







                                      -16-


<PAGE>   17


Item 3.     Quantitative and Qualitative Disclosures About Market Risk

     Interest rate risk is the most significant market risk affecting the
Company. Other types of market risk, such as foreign currency exchange rate risk
and commodity price risk do not arise in the normal course of the Company's
business activities. Managing interest rate risk is fundamental to banking.
Banking institutions manage the inherently different maturity and repricing
characteristics of the lending and deposit-taking lines of business to achieve a
desired interest rate sensitivity position and to limit their exposure to
interest rate risk, the Company manages its balance sheet to achieve maximum
shareholder value within the constraints of its interest rate risk discipline,
the maintenance of high credit quality, and sound leverage and liquidity
positions. Both the interest rate sensitivity and liquidity position of the
Company are reviewed regularly. The primary objective of interest rate
sensitivity management is to maintain net interest income growth while reducing
exposure to the risks inherent in interest rate movements.

     The Company's Asset and Liability Management Committee ("ALCO") attempts to
structure the Company's balance sheet to provide for an approximately equal
amount of rate sensitive assets and rate sensitive liabilities. In addition to
facilitating liquidity needs, this strategy assists management in maintaining
relative stability in net interest income despite unexpected fluctuations in
interest rates. The Company believes its market risk exposure, based on the
potential of near-term losses in future earnings, fair values, and cash flows
from reasonably possible near-term changes in market rates or prices is
acceptable at this time.

     The Company employs various strategies to reduce its exposure to interest
rate fluctuations. These strategies include: selling longer term maturity
mortgages to the secondary market, utilizing the Federal Home Loan Bank and
other sources to fund assets, and applying various asset positioning strategies
consistent with the overall needs of the Company at any given time. Management
has chosen to sell 15 year and 30 year mortgages to the secondary market as a
means of removing such a long original stated maturity asset off of the bank's
balance sheet and reduce the accompanying interest rate risk associated with the
assets. Instead, member banks are encouraged to retain adjustable rate mortgages
with 1-5 year rate locks on their balance sheets. Federal Home Loan Bank
membership by affiliate banks has enabled banks to diversify their funding
maturity options as well as employ match funding strategies for longer duration
assets. Depending on the interest rate risk position of the Company, the ALCO,
which meets quarterly, implements strategies to re-balance the Company to its
desired position. When the Company is overly liability sensitive,
floating/variable rate commercial loans by subsidiary banks are encouraged by
management. Furthermore, the purchase of floating/variable rate investment
securities are directly coordinated through the Company's Investment Department
when loan demand for this loan type is not present. To help offset longer
assumed maturity core deposits or to extend the duration of the Company's assets
at any given time, longer term securities are purchased directly through the
Company's Investment Department. In addition to these strategies, the Company
has chosen to offer a premium rate money market deposit product to customers
maintaining average balances exceeding $10,000. The rate on the product is tied
directly to the weekly average auction rate on the 3 month United States
Treasury Bill, which management believes positions the Company competitively in
the market.

     The method of analysis presented is "earnings at risk" ("EAR"). While the
model employed by the Company is capable of both EAR and "value at risk"
("VAR"), it has chosen to place greater emphasis on EAR because the measurement
is believed to be of greatest concern to Company shareholders, as evidenced by
the marketplace's focus on quarterly and annual earnings. Furthermore, an
immediate rate shock of up or down 100-200 basis points is likely to have a more
visible immediate impact on the Company's earnings as compared to its market
value. Nevertheless, EAR has shortcomings inherent in its analysis. First, the
whole issue as to what maturity should be assigned to the Company's core
deposits is one that can vastly impact the results that the model produces. The
model employed assumes a longer duration assignment to these liabilities based
off of historical experience. Second, the model assumes a normal bell-shaped
curve distribution, although this assumption is elusive in volatile financial
markets. Frequently, the extreme may be the reality as evidenced by the
experience seen in the early 1980s. Third, the model assumes fairly normal
correlation patterns. In reality, however, correlation structures are unstable
over time. Fourth, most EAR approaches measure risk over less than two years.
However, this is likely not enough time to detect structural relationships
between

                                      -17-

<PAGE>   18


variables. And fifth, the model assumes theoretical pricing based off of a
linear relationship between market rates and earnings. This relationship
actually has more of a curvature relationship based off of the inherent
convexity present in all fixed rate instruments having a defined maturity; in
other words, a fixed rate instrument will appreciate by a greater amount than it
will decline.

     Based on the model utilized, the interest rate risk of the Company
expressed as a percentage change in net interest income over a one-year time
horizon due to changes in interest rates, at June 30, 1998, is as follows:

                                  Basis Point Change
                                  -------------------------------------
                                    +200       +100      -100     -200
                                     ---        ---       ---      ---
                                                     
Percentage change in net interest                    
income due to an immediate change                    
in interest over a one-year time                     
horizon                            (2.20%)    (1.47%)    0.74%    1.07%
                                                     
    Management has only recently begun to evaluate the Company's interest rate
risk by using EAR. As a result, no set EAR parameters have yet been identified.
Instead, management continues to utilize rate sensitive asset/rate sensitive
liability (RSA/RSL) measurements for establishing interest rate risk parameters.
Nevertheless, management is expected to establish conservative EAR parameters
consistent with its .70 - 1.20 acceptable range for 0 - 6 month RSA/RSL and .80
- 1.10 acceptable range for 0 - 1 year RSA/RSL interest rate risk parameters.






















                                      -18-


<PAGE>   19




                           PART II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

     At the annual meeting of the Company's shareholders on May 21, 1998,
pursuant to Proposal 1 (the only matter voted upon), management's nominees named
below were elected as directors, of the class whose term expires in the year
2001, by the indicated votes cast for and withheld with respect to each nominee.
Of the 7,835,494 shares of Common Stock which were represented at the meeting,
the shares voting were voted for the election of each of management's nominees
as follows:

Name of Nominee            For                     Withheld
-----------------------------------------------------------   
Paul J. Hernke             7,758,906                 76,588
Gail E. Janssen            7,788,119                 47,375
Robert C. Safford          7,783,931                 51,563

There were no abstentions or broker non-votes with respect to the election of   
directors.  In addition to the directors elected at the meeting, the Company's
continuing directors are Otto L. Cox, John W. Johnson, Douglas A. Martin, Duane
G. Peppler, Glenn Shilling and Joseph F Walsh.  (On July 1, 1998, Mr. Peppler
retired as a director of the Company; on that date, Ronald E. Fenton was
elected an additional director.)

     At a special meeting of the Company's shareholders held on June 29, 1998,
Company shareholders (1) approved the Company's acquisition of BancSecurity
Corporation ("BancSecurity"), and (2) approved an amendment to the Company's
Articles of Incorporation to authorize the issuance of up to 50 million shares
(increased from 20 million shares) of Common Stock. Shares were voted as
follows:

Proposal 1 (BancSecurity):              6,529,080 For
                                           66,903 Against
                                          105,820 Abstain
                                          790,163 Broker Non-votes

Proposal 2 (Add'l Shares):              6,936,541 For
                                          461,800 Against
                                           93,625 Abstain
                                                0 Broker Non-votes









                                      -19-



<PAGE>   20
Item 5.  Other Matters

     The Securities and Exchange Commission recently adopted new rules relating
to the discretionary voting of proxies at shareholder meetings. Under the new
rules, if a proponent of a matter for shareholder consideration fails to notify
the Company at least 45 days prior to the month and day of mailing the prior
years's proxy statement, then persons voting management proxies would be allowed
to use their discretionary voting authority when the proposal is raised at the
annual meeting, without any discussion of the matter in the proxy statement.
This deadline could be overridden by any advance bylaws notice provision in the
Company's bylaws. In the event the date of the meeting changes by more than 30
days from the prior year (which is expected to be the case for the Company in
1999), then notice must be received a reasonable time before the Company mails
its proxy materials. Because the Company would expect to mail proxy materials no
later than the beginning of April 1999, a reasonable time would be at least 
45 days before the anticipated latest mailing date of April 2, 1999.


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 second
            quarter of fiscal 1998. The Report on Form 8-K, dated May 29, 1998,
            related to the Company's acquisition of Financial Management
            Services of Jefferson, Inc. ("FMSJ") on that date. Because of the
            relative size of the Company and FMSJ, the report did not include
            historical financial statements of FMSJ or pro forma financial
            statements of the Company.

               Subsequent to the end of the quarter, but prior to the filing of
            this report on Form 10-Q, the Company filed a Report on Form 8-K
            dated July 1, 1998, related to the Company's acquisition of
            BancSecurity on that date. That report included:

                           1.       Audited financial statements of BancSecurity
                                    for the three years ended December 31, 1997
                                    and quarters ended March 31, 1998 and 1997;

                           2.       Pro forma financial statements of the
                                    Company (at March 31, 1998, for three years
                                    ended December 31, 1997 and for quarters
                                    ended March 31, 1998 and 1997) giving effect
                                    to the acquisition.

                                      -20-





<PAGE>   21

                        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  August 13, 1998                   /s/ John W Johnson
     -------------------               ----------------------------------------
                                       John W Johnson
                                       President and Chief Executive Officer


Date  August 13, 1998                   /s/ Daniel E. Voet
     -------------------               ----------------------------------------
                                       Daniel E. Voet
                                       Chief Financial Officer and Treasurer





























<PAGE>   22

                                  EXHIBIT INDEX

                           F & M BANCORPORATION, INC.

                    Form 10-Q for Quarter Ended June 30, 1998


Exhibit No.                                  Description
-----------                                  -----------

   2.1                              Agreement of Merger and reorganization dated
                                    as of July 22, 1998 among the Company, CBE,
                                    Inc. and F&M Merger Corporation

   3(i)                             Restated Articles of Incorporation of the
                                    Company, as amended through July 22, 1998
                                    [(composite copy)]

   27                               Financial Data Schedule