EXHIBIT 10.2

                 MODIFICATION, RESTATEMENT, AND CONSOLIDATION
                    OF UNFUNDED DEFERRED COMPENSATION PLAN
                          FOR NON-EMPLOYEE DIRECTORS


     This Modification, Restatement, and Consolidation of Unfunded Deferred
Compensation Plan for Non-Employee Directors (hereinafter "Plan") is made as of
the 1st day of July, 1996, by F&M Bancorp (hereinafter the "Company").

     WHEREAS, the Company presently has in place an Unfunded Deferred
Compensation Plan for Non-employee Directors; and,

     WHEREAS, the Company has determined to make certain amendments to the Plan
and to simplify the administration of the Plan by consolidating all amendments
into one document which restates the Plan;

     NOW, THEREFORE, and in consideration of the premises and of other good and
valuable consideration the receipt of which is hereby acknowledged by each of
the parties hereto, the parties hereto do hereby covenant and agree as follows:

     I.  CONSOLIDATION.

     Consolidation of Amendment.  From and after the date hereof, the Plan
evidenced by the Unfunded Deferred Compensation Plan for Non-Employee Directors
as amended shall be consolidated into this single Plan document.

     II.  MODIFIED AND RESTATED TEXT:  UNFUNDED DEFERRED COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS

          THIS PLAN is adopted as of the 1st day of July, 1996, by F&M Bancorp
(hereinafter the "Company").

          INTRODUCTION

          To encourage Directors to remain a member of the Company's Board of
Directors, the Company is willing to provide to Directors a deferred fee
opportunity. The Company will pay the benefits from its general assets.

          Article 1

          DEFINITIONS

          1.1.  Definitions.  Whenever used in this Plan, the following words
and phrases shall have the meanings specified:

          1.1.1.  "Change of Control" means the transfer of 51% or more of the
Company's outstanding voting common stock followed within twelve (12) months by
termination of the Director's status as a member of the Company's Board of
Directors.

          1.1.2.  "Company" means each of F&M Bancorp, its direct or indirect
wholly-owned subsidiaries, and its other direct or indirect subsidiaries that
adopt this Plan.

          1.1.3.  "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provisions.

          1.1.4.  "Disability" means the Director's inability to perform
substantially all normal duties of a Director, as determined by the Company's
Board of Directors in its sole discretion. As a condition to any benefits, the
Company may require the Director to submit to such physical or mental
evaluations and tests as the Board of Directors deems appropriate.

          1.1.5.  "Election Form" means the Form attached as Exhibit 1.

          1.1.6.  "Fees" means any and all of the total director's fees payable
to the Director.

          1.1.7.  "Mandatory Termination Date" means the annual meeting first
occurring following the Director attaining age 70, except for those Directors
serving in that capacity on March 11, 1975, for whom no Mandatory Termination
Date exists.

          1.1.8.  "Termination of Service" means the Director is ceasing to be
a member of the Company's Board of Directors for any reason whatsoever.

          Article 2

          Deferral Election

          2.1.  Initial Election.  Current Directors shall have made an initial
deferral election under this Plan by filing with the Company a signed Election
Form prior to July 1, 1996. Directors commencing service after July 1, 1996
will make an initial deferral election by filing with the Company a signed
Election Form within 30 days of commencing service. The Election Form shall, in
all instances, set forth the amount of Fees to be deferred and the form of
benefit payment. The Election Form shall be effective to defer only Fees earned
after the date the Election Form is received by the Company.

          2.2.  Election Changes

          2.2.1.  Annual.  Directors will be required to make an election
annually in December by filing a signed Election Form with the Company. The
Election Form shall be effective for the following calendar year.

          2.2.2.  Hardship.  If an unforeseeable financial emergency arising
from the death of a family member, divorce, sickness, injury, catastrophe or
similar event outside the control of the Director occurs, the Director, by
written instructions to the Company may reduce future deferrals under this
Plan.

          Article 3

          Deferral Account

          3.1.  Establishing and Crediting.  The Company shall establish a
deferral account ("Deferral Account") on its books for the Director, and shall
credit to the Deferral Account the following amounts:

          3.1.1.  Deferrals.  The Fees specified to be deferred by the Director
(including fees deferred under earlier versions of this Plan) as of the time
the Fees would have otherwise been paid to the Director.

          3.1.2.  Interest Rate.  For each calendar year, interest shall be
calculated at a rate equal to the "prime rate" as published in the Wall Street
Journal's Money Rates Table, or the highest rate if more than one rate is
published on December 15 of the immediately preceding year, or if the 15th is
not a business day, then the next business day. For example, for calendar year
1997, the interest rate shall be the prime rate as published in the Wall Street
Journal on December 15, 1996. Notwithstanding the foregoing, the interest rate
to be paid on the balance of the Deferral Account from July 1 through December
31, 1996 shall be the prime rate as published in the Wall Street Journal's
Money Rates Table on July 1, 1996.

          3.1.3.  Interest Accrual.  Interest will be compounded daily at the
rate specified in paragraph 3.1.2. and credited to the Deferral Account monthly
and immediately prior to the payment of any benefits.

          3.2.  Statement of Accounts.  The Company shall provide to the
Director, within one hundred twenty (120) days after each calendar year end, a
statement setting forth the Deferral Account balance.

          3.3.  Accounting Device Only.  The Deferral Account is solely a
device for measuring amounts to be paid under this Plan. The Deferral Account
is not a trust fund of any kind. The Director is a general unsecured creditor
of the Company for the payment of benefits. The benefits represent the mere
Company promise to pay such benefits. The Director's rights are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

          Article 4

          Lifetime Benefits

          4.1.  Normal Termination Benefit.  Upon the Director's Termination of
Service at the Director's Mandatory Retirement Date, or for those Directors for
whom no Mandatory Retirement Date exists, when such a Director's Termination of
Service occurs after such Director has attained age 70, the Company shall pay
to
the Director the benefit described in this Section 4.1.

          4.1.1.  Amount of Benefit.  The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Termination of Service.

          4.1.2.  Payment of Benefit.  The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. If the ten
(10) year payment is elected, the amount of the accrued benefit payment will be
calculated by using the ten (10) year annuity rate determined using the sum of
the mid-term Applicable Federal Rate (AFR) for the previous month as published
monthly by the Internal Revenue Service, plus 1% rounded to the nearest 1/2 of
1%, on the date that the benefit payments commence.

          4.2.  Early Termination Benefit.  If the Director terminates service
as a Director before the Mandatory Termination Date, the Company shall pay to
the Director the benefit described in this Section 4.2.

          4.2.1.  Amount of Benefit.  The benefit under this Section 4.2 shall
be the Deferral Account balance.

          4.2.2.  Payment of Benefit.  The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. If the ten
(10) year payment is elected, the amount of the accrued benefit payment will be
calculated by using the ten (10) year annuity rate determined using the sum of
the mid-term Applicable Federal Rate (AFR) for the previous month as published
monthly by the Internal Revenue Service, plus 1% rounded to the nearest 1/2 of
1%, on the date that the benefit payments commence.

          4.3.  Disability Benefit.  If the Director terminates service as a
Director for Disability prior to the Mandatory Termination Date, the Company
shall pay to the Director the benefit described in this Section 4.3.

          4.3.1.  Amount of Benefit.  The benefit under this Section 4.3 is the
Deferral Account balance.

          4.3.2.  Payment of Benefit.  The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. If the ten
(10) year payment is elected, the amount of the accrued benefit payment will be
calculated by using the ten (10) year annuity rate determined using the sum of
the mid-term Applicable Federal Rate (AFR) for the previous month as published
monthly by the Internal Revenue Service, plus 1% rounded to the nearest 1/2 of
1%, on the date that the benefit payments commence.

          4.4.  Change of Control Benefit.  Upon a Change of Control while the
Director is in the active service of the Company, the Company shall pay to the
Director the benefit described in this Section in lieu of any other benefit
under this Plan.

          4.4.1.  Amount of Benefit.  The benefit under this Section 4.4. is
the Deferral Account balance at the date of the Director's Termination of
Service.

          4.4.2.  Payment of Benefit.  The Company shall pay the benefit to the
Director in a lump sum within ninety (90) days after the Director's Termination
of Service.

          4.5.  Hardship Distribution.  Upon the Company's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2., the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Director, but in no event shall the distribution
be
greater than is necessary to relieve the financial hardship. The Director
expressly accepts the responsibility for all income tax implications resulting
from Director's exercise of Director's rights under this Section.

          Article 5

          Death Benefits

          5.1.  Death During Active Service.  If the Director dies while in the
active service of the Company, the Company shall pay to the Director's
beneficiary the benefit described in this Section 5.1.

          5.1.1.  Amount of Benefit.  If Company owned life insurance is in
force on the life of the Director on the date of the Director's death, the
benefit under Section 5.1 is the projected age 70 benefit based on the Deferred
Account balance and projected further deferrals until age 70. If Company owned
life insurance is not in force on the life of the Director on the date of
Director's death, the benefit will be the Deferral Account balance on the date
of death of the Director.

          5.1.2.  Payment of Benefit.  The Company shall pay the benefit to the
beneficiary in one hundred twenty (120) equal monthly installments commencing
on the first day of the month following the Director's death.

          5.2.  Death During Benefit Period.  If the Director dies after
benefit payments have commenced under this Plan but not before receiving all
such payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have paid to
the Director had the director survived.

     Article 6

          Beneficiaries

          6.1.  Beneficiary Designations.  The Director shall designate a
beneficiary by filing a written designation with the Company. The Director may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Director and
accepted by the Company during the Director's lifetime. The Director's
beneficiary designation shall be deemed automatically revoked if the
beneficiary predeceases the Director, or if the Director names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Director dies
without a valid beneficiary designation, all payments shall be made to the
Director's surviving spouse, if any, and if none, to the Director's surviving
children and the descendants of any deceased child by right of representation,
and if no children or descendants survive, to the Director's estate.

          6.2.  Facility of Payment.  If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. The Company may require proof of
incompetency, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.

          Article 7

          Claims and Review Procedure

          7.1.  Claims Procedure.  The Company shall notify the Director's
beneficiary in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or non-eligibility for
benefits under the Plan . If the Company determines that the beneficiary is not
eligible for benefits or full benefits, the notice shall set forth (1) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Plan on which the denial is based, (3) a description of any additional
information or material necessary for the claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Plan's
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.

          7.2.  Review Procedure.  If the beneficiary is determined by the
Company not to be eligible for benefits, or if the beneficiary believes that he
or she is entitled to greater or different benefits, the beneficiary shall have
the opportunity to have such claim reviewed by the Company by filing a petition
for review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
beneficiary believes entitles him or her to benefits or to greater or different
benefits. Within sixty (60 days after receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity
to present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent
documents. The Company shall notify the beneficiary of its decision in writing
within the sixty-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the beneficiary and the
specific provisions of the Plan on which the decision is based. If, because of
the need for a hearing, the sixty-day period is not sufficient, the decision
may be deferred for up to another sixty-day period at the election of the
Company, but notice of this deferral shall be given to the beneficiary.

          Article 8

          Amendments and Termination

          The Plan may be amended or terminated at any time by the Company but
no modification or termination shall effect the rights of any Director who is
at the time or had previously elected to defer Fees unless such Director and
the Company shall mutually agree in writing.

          Article 9

          Miscellaneous

          9.1.  Binding Effect.  This Plan shall bind the Director and the
Company and their beneficiaries, survivors, executors, administrators and
transferees.

          9.2.  No Guaranty of Employment.  This Plan is not a contract for
services. It does not give the Director the right to remain a Director of the
Company, nor does it interfere with any rights to replace the Director. It also
does not require the Director to remain a Director nor interfere with the
Director's right to terminate services at any time.

          9.3.  Non-Transferability.  Benefits under this Plan cannot be sold,
transferred, assigned, pledge, attached or encumbered in any manner.

          9.4.  Applicable Law.  The Plan and all rights hereunder shall be
governed by the Laws of the State of Maryland, except to the extent preempted
by the Laws of the United States of America.

          9.5.  Unfunded Arrangement.  The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this Plan.
The benefits represent the mere promise by the Company to pay such benefits.
The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and Beneficiary have no preferred or
secured claim.