FIRST M & F CORPORATION

                              SECURITIES AND EXCHANGE COMMISSION
                                    Washington, D.C.  20459

                                           FORM 10-Q


                 Quarterly Report Under Section 13 or 15 (d) of the
                           Securities Exchange Act of 1934

For the quarter ended September 30, 1998          Commission File Number 0-9424

                               FIRST M & F CORPORATION
--------------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter)

                     Mississippi                         64-0636653
           -------------------------------          ----------------------
          (State or other jurisdiction of            (I.R.S. Employer
          incorporation of organization)            Identification No.)

                    Registrant's telephone number:  (601) 289-5121

                                   No Change
--------------------------------------------------------------------------------
                  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
by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for shorter  period that the  registrant was required to
file such report),  and (2) has been subject to such filing requirements for the
past 90 days.

                               Yes   X       No
                                  ------         -------

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

            Class                             Outstanding at October 30, 1998
            -----                             -------------------------------
Common stock ($5.00 par value)                       3,394,656 shares



















                                                      Page 1 of 18



<PAGE>






                          FIRST M & F CORPORATION AND SUBSIDIARY

                                         FORM 10-Q

                                         CONTENTS

                                                                       Page

PART I:  FINANCIAL INFORMATION                                            3
  Item 1 - Financial Statements (unaudited):
             Condensed Consolidated Statements of Condition               4
             Condensed Consolidated Statements of Income                  5
             Condensed Consolidated Statements of Comprehensive
               Income                                                     6
             Condensed Consolidated Statements of Stockholders'
               Equity                                                     7
             Condensed Consolidated Statements of Cash Flows              8
             Notes to Condensed Consolidated Financial Statements         9

  Item 2 - Management's Discussion and Analysis of
             Financial Condition and Results of Operations            10-15


PART II:  OTHER INFORMATION
  Item 1 - Legal Proceedings                                             16
  Item 2 - Changes in Securities                                         16
  Item 3 - Defaults upon Senior Securities                               16
  Item 4 - Submission of Matters to a Vote of Security
             Holders                                                     16
  Item 5 - Other Information                                             16
  Item 6 - Exhibits and Reports on Form 8-K                              16
  Exhibit 11 - Computation of Earnings Per Share                         17

SIGNATURE                                                                18
























                                        -2-



<PAGE>












                            PART I:  FINANCIAL INFORMATION

                             Item 1 - Financial Statements

















































                                        -3-



<PAGE>






                        FIRST M & F CORPORATION AND SUBSIDIARY

                    Condensed Consolidated Statements of Condition


                                                    (Unaudited)
                                                   September 30,  December 31,
                   Assets                              1998         1997 (1)
                   ------                          -------------  -----------

Cash and due from banks                           $  21,585,117 $  24,719,193
Interest bearing bank balances                       11,256,785    10,801,934
Federal funds sold                                   10,000,000     2,000,000
Securities available for sale                       138,612,576   109,002,998
Investment securities, market value of
  $54,881,000 in 1998 and $59,696,000 in 1997        53,441,091    58,785,352

Loans                                               388,573,337   360,192,125
  Reserve for possible loan losses                   (5,576,512)   (5,170,000)
                                                    -----------    ----------
          Net loans                                 382,996,825   355,022,125

   
Bank premises and equipment                          10,982,745     9,326,709
Accrued interest receivable                           6,090,394     5,492,942
Other real estate                                       741,222       842,786
Intangible assets                                     2,391,685     2,519,053
Other assets                                         12,621,862     2,387,422
                                                    -----------   -----------
    

                                                  $ 650,720,302 $ 580,900,514
                                                    ===========   ===========

     Liabilities and Stockholders' Equity
     ------------------------------------

Liabilities:
  Deposits:
    Non-interest bearing                          $  68,415,825 $  60,577,750
    Interest bearing                                516,652,339   449,205,012
                                                    -----------   -----------
         Total deposits                             585,068,164   509,782,762
                                                    -----------   -----------

  Borrowings                                          2,972,765    12,860,760
  Accrued interest payable                            2,613,478     2,563,911
  Other liabilities                                   1,709,537     1,487,359
                                                    -----------   -----------
          Total liabilities                         592,363,944   526,694,792
                                                    -----------   -----------

Stockholders' equity:
  Common stock, $5.00 par value, 15,000,000 shares
    authorized, 3,394,656 issued and outstanding     16,973,280    16,973,280
  Additional paid-in capital                         10,698,388    10,698,388
  Retained earnings                                  29,375,576    26,013,973
  Net unrealized gain on securities available for
    sale, net of income taxes                         1,309,114       520,081
                                                    -----------   -----------
          Net stockholders' equity                   58,356,358    54,205,722
                                                    -----------   -----------

                                                  $ 650,720,302 $ 580,900,514
                                                    ===========   ===========



The accompanying notes are an integral part of these financial statements.

(1)  Derived from audited financial statements.

                                       -4-



<PAGE>






                            FIRST M & F CORPORATION AND SUBSIDIARY

                          Condensed Consolidated Statements of Income
                                          (Unaudited)

                                    Three Months Ended         Nine Months Ended
                                       September 30,              September 30,
                                    ---------------------- ---------------------
                                     1998         1997         1998         1997
                                     ----         ----         ----         ----
Interest income:
  Interest and fees on loans $  9,119,156 $  8,633,081 $ 26,573,079 $ 25,227,537
  Interest bearing bank
    balances                       86,403       55,312      347,107      146,382
  Taxable investments           1,960,787    1,896,127    5,832,116    5,299,360
  Tax exempt investments          742,638      542,642    1,986,247    1,561,566
  Federal funds sold              168,881      136,866      628,945      473,029
                               ----------   ----------   ----------   ----------
     Total interest income     12,077,865   11,264,028   35,367,494   32,707,874
                               ----------   ----------   ----------   ----------

Interest expense:
  Deposits                      5,820,019    5,308,178   16,897,188   15,136,741
  Securities sold under 
    agreements to repurchase        7,262          159        7,262        3,624
  Other borrowings                 36,258       45,508      256,940      193,149
                               ----------   ----------   ----------   ----------
     Total interest expense     5,863,539    5,353,845   17,161,390   15,333,514
                               ----------   ----------   ----------   ----------

     Net interest income        6,214,326    5,910,183   18,206,104   17,374,360
Provision for possible loan       518,302      866,780    1,456,648    1,658,068
     losses                     ----------   ----------   ----------   ---------
     Net interest income after
      provision for possible
      loan losses               5,696,024    5,043,403   16,749,456   15,716,292
                               ----------   ----------   ----------   ----------

Other operating income:
 Service charges on deposits      934,115      841,484    2,661,419    2,500,830
 Credit insurance income          187,266      664,192      385,758      854,307
 Gains on AFS investments          27,068       11,989       19,355       18,701
 Other income                     310,219       45,505      794,443      409,491
                               ----------   ----------   ----------   ----------
    Total other operating
     income                     1,458,668    1,563,170    3,860,975    3,783,329
                               ----------   ----------   ----------   ----------

Other operating expenses:
 Salaries and employee benefits 2,358,288    2,110,487    6,799,771    6,202,214
 Net occupancy expense            283,884      256,521      794,278      731,055
 Equipment and data processing
   expenses                       472,950      419,487    1,381,821    1,308,113
 Other expenses                 1,532,425    1,049,142    3,867,439    3,092,749
                                ---------   ----------   ----------   ----------
    Total other operating
     expenses                   4,647,547    3,835,637   12,843,309   11,334,131
                                ---------   ----------   ----------   ----------

          Income before income
            taxes               2,507,145    2,770,936    7,767,122    8,165,490
Income taxes                      606,145      794,976    1,961,367    2,339,040
                               ----------   ----------   ----------   ----------


     Net income              $  1,901,000 $  1,975,960 $  5,805,755 $  5,826,450
                               ==========   ==========   ==========   ==========


Earnings per share:
  Basic                            $ 0.56       $ 0.58       $ 1.71       $ 1.72
                                     ====         ====         ====         ====

The accompanying notes are an integral part of these financial statements.
                                        -5-



<PAGE>






                  FIRST M & F CORPORATION AND SUBSIDIARY

         Condensed Consolidated Statements of Comprehensive Income
                                (Unaudited)


                                    Three Months Ended     Nine Months Ended
                                       September 30,            September 30,
                              -------------------------- ----------------------

                                    1998        1997       1998           1997
                                    ----        ----       ----           ----
Net income                      $ 1,901,000 $ 1,975,960 $ 5,805,755 $ 5,826,450
                                  ---------   ---------   ---------   ---------

Other comprehensive income:
  Unrealized holding gains
    (losses) on securities,
     net                            778,786     361,883     801,168     191,274
  Plus (minus) reclassification
    adjustments for losses
    (gains) included in net
    income                          (16,971)     (7,518)    (12,135)    (11,726)
                                  ---------   ---------   ---------   ---------
        Other comprehensive
          income                    761,815     354,365     789,033     179,548
                                  ---------   ---------   ---------   ---------

        Total comprehensive
          income                $ 2,662,815 $ 2,330,325 $ 6,594,788 $ 6,005,998
                                  =========   =========   =========   =========

































                                     -6-



<PAGE>
<TABLE>
<CAPTION>






                    FIRST M & F CORPORATION AND SUBSIDIARY

                   Condensed Consolidated Statements of Stockholders' Equity
                                     (Unaudited)


                             Additional
                 Common       Paid-In       Retained    Treasury   Unrealized
                 Stock        Capital       Earnings     Stock     Gain (Loss)        Total
                 -----        -------       --------     -----     -----------        -----
<S>          <C>           <C>           <C>             <C>       <C>            <C>         
January 1,
  1997       $ 16,973,280  $ 10,698,388  $ 21,087,077    $    -    $   329,835    $ 49,088,580

Net income              -             -     5,826,450         -              -       5,826,450

Cash
  dividends
  paid ($.64
  per share)            -             -    (2,172,533)        -              -      (2,172,533)

Net change in
  unrealized
  gain                  -             -             -         -        179,548         179,548
               ----------    ----------    ----------      ----        -------      ----------

September 30,
  1997       $ 16,973,280  $ 10,698,388  $ 24,740,994    $    -    $   509,383    $ 52,922,045
               ==========    ==========    ==========      ====        =======      ==========



January 1,
  1998       $ 16,973,280  $ 10,698,388  $ 26,013,973    $    -    $   520,081    $ 54,205,722

Net income              -             -     5,805,755         -              -       5,805,755

Cash
  dividends
  paid ($.72
  per share)            -             -    (2,444,152)        -              -      (2,444,152)

Net change in
  unrealized
  gain                  -             -             -         -        789,033         789,033
               ----------    ----------    ----------      ----      ---------      ----------

September 30,
  1998       $ 16,973,280  $ 10,698,388  $ 29,375,576    $    -    $ 1,309,114    $ 58,356,358
               ==========    ==========    ==========      ====      =========      ==========









<FN>

The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>


                                                                    -7-



<PAGE>






                     FIRST M & F CORPORATION AND SUBSIDIARY

                     Condensed Consolidated Statements of Cash Flows
                                      (Unaudited)


                                                         Nine Months Ended
                                                           September 30,
                                                        ------------------------

                                                          1998          1997
                                                          ----          ----

Cash flows from operating activities:
  Net income                                         $  5,805,755  $  5,826,450
  Adjustments to reconcile net income to cash
    provided by operating activities:
    Depreciation and amortization                         932,715       895,607
    Provision for possible loan losses                  1,456,648     1,658,068
    Increase in interest receivable                      (597,452)     (556,280)
    Increase in interest payable                           49,567       397,642
    Increase in CSV of insurance                         (293,314)            -
    Other, net                                            296,137       253,308
                                                       ----------    ----------

          Net cash provided by operating activities     7,650,056     8,474,795
                                                       ----------    ----------

Cash flows from investing activities:
  Net (increase) decrease in:
    Interest bearing bank balances                       (454,851)   (1,075,481)
    Federal funds sold                                 (8,000,000)   (3,400,000)
    Investment securities-purchases                   (11,861,891)   (7,280,798)
    Investment securities-maturities and calls         17,206,152     6,592,978
    Securities available for sale-purchases           (59,589,199)  (40,010,947)
    Securities available for sale-maturities
      and calls                                        30,808,129    18,300,160
    Loans                                             (29,384,271)  (13,191,677)
    Bank premises and equipment                        (2,461,456)   (1,231,600)
    Investment in bank owned life insurance           (10,000,000)            -
                                                       ----------    ----------

          Net cash used in investing activities      (73,737,387)   (41,297,365)
                                                      ----------     ----------

Cash flows from financing activities: 
  Net increase (decrease) in:
    Deposits                                           75,285,402    44,484,754
    Other borrowings                                   (9,887,995)   (3,691,271)
  Cash dividends                                       (2,444,152)   (2,172,533)
                                                       ----------    ----------

          Net cash provided by financing activities    62,953,255    38,620,950
                                                       ----------    ----------

          Net increase (decrease) in cash and
            due from banks                             (3,134,076)    5,798,380

Cash and due from banks at January 1                   24,719,193    20,213,398
                                                       ----------    ----------

Cash and due from banks at September 30              $ 21,585,117  $ 26,011,778
                                                       ==========    ==========



The accompanying notes are an integral part of these financial statements.

                                          -8-



<PAGE>






                           FIRST M & F CORPORATION AND SUBSIDIARY

                    Notes to Condensed Consolidated Financial Statements
                                      (Unaudited)


Note 1:  Basis of Presentation
------------------------------

   The accompanying  unaudited condensed  consolidated financial statements have
   been prepared in accordance with generally accepted accounting principles for
   interim  financial  information  and with the  instructions  to Form 10-Q and
   Article  10 of  Regulation  S-X.  Accordingly,  they do not  include  all the
   information  and  footnotes   required  by  generally   accepted   accounting
   principles for complete financial  statements.  In the opinion of management,
   all  adjustments   (consisting  of  normal  recurring  accruals)   considered
   necessary  for  a  fair  presentation  have  been  included.   The  condensed
   consolidated  financial  statements  of First M & F  Corporation  include the
   financial  statements of Merchants & Farmers Bank, a wholly owned subsidiary,
   and its wholly owned subsidiaries, First M & F Insurance Co., M & F Financial
   Services,  Inc.  and  M  &  F  Bank  Securities   Corporation.   For  further
   information,  refer to the  consolidated  financial  statements and footnotes
   thereto  included in the  Company's  annual  report on Form 10-K for the year
   ended December 31, 1997.


Note 2:  Statements of Cash Flows
---------------------------------

   During the nine months ended September 30, 1998 and 1997, the Company had the
   following payments:

                                               1998                  1997
                                               ----                  ----

      Income taxes                        $  2,284,000          $  2,315,000
      Interest on deposit liabilities       16,850,000            14,724,000
      Interest on other borrowings             261,000               211,000
                                            ==========            ==========


Note 3:  Comprehensive Income
-----------------------------

   On  January  1,  1998,  First  M&F  Corp  adopted  SFAS No.  130,  "Reporting
   Comprehensive  Income"  which  establishes  standards  for the  reporting and
   display  of  comprehensive  income and its  components,  net income and other
   comprehensive  income,  in  a  full  set  of  financial   statements.   Other
   comprehensive  income consists of revenues,  expenses,  gains and losses that
   are excluded from earnings under current accounting standards.


Note 4:  Bank Owned Life Insurance
----------------------------------

   In March, 1998,  Merchants and Farmers Bank invested $10,000,000 in corporate
   owned life insurance  policies  covering  approximately  160  employees.  The
   policies  are  designed  to  generate  earnings  through  increases  in  cash
   surrender  value,  thus  covering  costs of current  and  potential  employee
   benefit plans. The cash surrender value of the policies at September 30, 1998
   was $10,293,314.





                                                           -9-



<PAGE>






                                                 FIRST M & F CORPORATION


Item 2:  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
  of Operations
  -------------

The  following  provides a narrative  discussion  and  analyses  of  significant
changes in the Company's  results of operations  and financial  condition.  This
discussion should be read in conjunction with the interim consolidated financial
statements and supplemental financial data presented elsewhere in this report.

Certain of the information  included in this discussion contains forward looking
financial data and information that is based upon management's belief as well as
certain assumptions made by, and information  currently available to management.
Specifically,  this discussion  includes statements with respect to the adequacy
of the reserve for possible loan losses; the effect of legal proceedings against
the Company's  financial  condition,  results of operations and liquidity;  year
2000 compliance issues; and market risk disclosures. Should one or more of these
risks materialize or the assumptions prove to be significantly different, actual
results may vary from those estimated, anticipated, projected or expected.

Financial Summary
-----------------

For the nine month period ended September 30, 1998, the Company's net income was
$5,805,755  as compared  to  $5,826,450  for the same period of 1997.  Basic and
diluted  earnings  per share  was  $1.71 for 1998 and $1.72 for 1997.  Quarterly
earnings  for the two  periods  reflect  $.56 per share for the  quarter  ending
Seqtember  30, 1998 and $.58 per share for the same quarter of 1997.  Net income
for 1998  reflects  several  factors  which have  contributed  to the  Company's
overall  flatness in earnings.  These include a lack of anticipated  loan growth
during the period;  higher than  anticipated  interest  bearing  deposit growth;
increased  operating  expenses  associated with new branch locations;  and added
personnel costs at both the administrative and operating levels.

Total  assets at  September  30,  1998,  increased  12.02% over year end 1997 to
$650.7 million,  while  stockholders'  equity increased 7.66% over year end 1997
and equaled  $58.4  million.  The return on average  assets for the period ended
September  30, 1998,  was 1.24% as compared to the same period of 1997 of 1.41%;
the return on average  equity in 1998 was 13.75% as compared to 15.34% for 1997.
Both of these  declines  reflect a percentage  growth in total assets during the
quarter and year-to-date that exceeded the percentage growth in net income.

















                                                          -10-



<PAGE>






                                                 FIRST M & F CORPORATION


Asset/Liability Management/Liquidity
------------------------------------

Responsibility for managing the Company's program for controlling and monitoring
interest rate risk and for  maintaining  income  stability,  given the Company's
exposure  to  changes  in  interest  rates,  is  vested  in the  asset/liability
committee.   Appropriate  policy  and  guidelines,  approved  by  the  board  of
directors,  govern these actions.  Monitoring is primarily  accomplished through
weekly reviews and analysis of asset/liability market conditions.  These include
rate shocked scenarios of up and down 100, 200 and 300 basis points; yield curve
scenarios; and prepayment risk scenarios.  Additionally,  static gap analysis is
used  to  highlight  short-term  repricing  volumes.   Management  believes,  at
September 30, 1998, there is adequate flexibility to alter the rate structure as
necessary  to minimize the  exposure to changes in interest  rates,  should they
occur.

The  asset/liability  committee  further  establishes  guidelines,  approved  by
appropriate board action, by which the current liquidity position of the Company
is  monitored  to ensure  adequate  funding  capacity.  Accessibility  to local,
regional  and other  funding  sources is also  maintained  in order to  actively
manage both the asset and liability  sides of the balance  sheet.  These funding
requirements and the Company's ability to maintain liquidity is also enhanced by
the Company's consistent earning capacity and adequate capital.

Net Interest Income
-------------------

Net interest income (NII) is income produced by interest  earning assets reduced
by the interest expense associated with the funding of those assets.  Changes in
the mix of these interest  earning assets and interest  bearing  liabilities and
their  yields  and rates  contribute  to the levels of NII  realized  and have a
significant impact on earnings.

During  the three  month  period  ended  September  30,  1998,  the level of NII
increased  $304,143 or 5.15% over the  comparable  period of 1997.  NII for 1998
increased  $831,744 or 4.79% over 1997's period.  Average earning assets for the
period ended  September 30, 1998, was $579.1 million as contrasted to $509.1 for
1997's period, reflecting a $70.0 million or 13.8% increase.

For the 1998 period,  this increase in average  earning assets  compared to same
period of 1997 was  driven by a $28.4  million or 7.9%  increase  in loans and a
$24.3 million or 14.5% increase in the investment  portfolio.  Average  interest
bearing  liabilities  increased $55.4 million or 12.5%.  As a result,  there was
only a slight  improvement in NII, 1998's quarter versus 1997's quarter,  as the
cost of funding the increase in funding  sources  almost equaled the earnings of
the higher volume of interest earning assets.












                                          -11-



<PAGE>






                              FIRST M & F CORPORATION



Provision for Loan Losses
-------------------------

During the nine month period ending September 30, 1998, the Company's  provision
for loan losses was  $1,456,648  contrasted to $1,658,068 for the same period of
1997.  This provision  reflects  management's  assessment of the adequacy of the
reserve  for  possible  loan  losses  to  absorb  potential  losses  in the loan
portfolio. Factors considered involve an assessment of growth and composition of
the  portfolio;  historical  credit loss  experience;  current  and  anticipated
economic  conditions;  and changes in the borrower's  financial  condition.  Net
charge  offs for the first nine  months of 1998 were  $1,050,136  as compared to
$925,079 for the same period in 1997.

Non Interest Income
-------------------

One of the Company's key long-term strategies is to continue to boost its growth
in non interest income. For the nine month period ending September 30, 1998, non
interest  income was  $3,860,975  as compared to  $3,783,329  for 1997.  Service
charges on deposits  reflected an increase of $160,589 or 6.4% for 1998.  Credit
insurance income for 1997 was effected by a $530,000 receipt of a settlement for
reinsurance  premiums  due to the  Company,  but  not  paid in  previous  years.
Management continues to emphasize the non interest income area through increased
focus and budget/incentive processes.

Non Interest Expense
--------------------

Another  strategy of the Company is to contain non interest  expenses  within an
overall  growth  discipline.  At September 30, 1998,  the  Company's  efficiency
ratio,  an indicator of control of non interest  expenses,  was 58% and compared
favorably  with peer  groups.  Improvements  continue  to be made in the overall
monitoring and control of expense through the budgeting and review process.

Salaries and benefits  comprise the largest portion of non interest  expense and
increased 9.6% when compared to the same period of 1997. Additional staffing has
been required in several locations as a result of volume and increased demand.

Other expense reflects an increase of approximately $775,000 in 1998 compared to
1997.  Other expense for 1997 increased  $64,000 over 1996.  Both are considered
normal  increases  given the overall  growth of the  Company  and the  expansion
efforts made in 1998.

Income Taxes
------------

For the nine months ended  September 30, 1998, the Company's  effective tax rate
was 25.3% as  compared to 28.7% for the same  period of 1997.  This  decrease in
effective  rate  is the  result  of the  increase  in the  level  of  tax-exempt
investment income and other tax advantaged strategies.










                                        -12-



<PAGE>






                                FIRST M & F CORPORATION


Assets/Liabilities
------------------

Loans,  net of unearned  discount,  increased to $388.6 million at September 30,
1998, as compared to $360.2 million at the end of 1997. This  approximate  $28.4
million, or 7.9% increase in loans since December 31, 1997, generally reflects a
lack of consumer and commercial loan volumes. The commercial real estate lending
sector has remained fairly strong, showing 10.7% growth in the first nine months
of 1998.

The current level of the reserve for possible loan losses  approximates 1.44% of
net loans  outstanding.  The Company's  nonperforming  loans past due 90 days or
more remain well  controlled  and continue to compare  favorably to peer levels.
The adequacy of the reserve is reviewed  quarterly  using  criteria and guidance
provided by the appropriate regulatory agencies and is presented to the Board of
Directors for subsequent review and approval. Management will continue to take a
prudent approach in the evaluation of the reserve for loan losses.

The securities portfolio is utilized to provide quality investment  alternatives
for  available  funds and a stable source of interest  income.  At September 30,
1998, the total securities portfolio was approximately $192 million, up from the
December 31, 1997 level by  approximately  $24 million.  Yield for the portfolio
was at 5.63% for the nine months ended  September  30, 1998 and is comparable to
peer  groups.  There  were no sales of held to  maturity  securities  during the
period.

Deposits  originating from the various communities served by the Company provide
the primary source of its funds.  Total  deposits  increased  approximately  $75
million or 14.8% during the nine month period ended September 30, 1998, ahead of
growth plans for the year.

Other  borrowings  of $2,972,765  represent  advances from the Federal Home Loan
Bank of  Dallas  and are  primarily  funding  sources  tied to  specific  loans.
Approximately $10 million of advances were repaid prior to quarter-end March 31,
1998.
























                                         -13-



<PAGE>






                           FIRST M & F CORPORATION


Equity
------

The Company's  regulatory  capital  ratios at September 30, 1998, as shown below
are in excess of the minimum  requirements  and qualify the institution as "well
capitalized" under the definition of such.

                                                             ($ in Thousands)
                                                             ---------------
  Tier 1 capital                                              $  54,656
  Tier 2 capital element                                          5,180
                                                                 ------

            Total qualifying capital                          $  59,836
                                                                 ======


  Risk weighted assets                                        $ 414,098
                                                                =======


  Total qualifying capital/risk weighted assets                   14.45%
                                                                  =====

  Leverage ratio                                                   8.45%
                                                                   ====

The dividend payout ratio for the nine months ended September 30, 1998 was 42.1%
of net income reflecting total dividends of $.72 per share. Book value per share
at September 30, 1998 was $17.19 compared to a $35.50 per share market price.





























                                            -14-



<PAGE>






                               FIRST M & F CORPORATION

Year 2000 Compliance
--------------------

The Company has  established a task-force  to review all computer  based systems
and  applications  to ensure proper  functioning  in the year 2000. The plan has
been  approved  by  the  Board  of  Directors,   and  management  believes  that
implementation  will not materially effect operations in the future.  Management
does not  expect  costs of  achieving  year 2000  compliance  to have a material
adverse effect on the Company's consolidated financial statements.

Management  has also begun the process of  reviewing  commercial  loans for year
2000 risk and expects to determine a reserve for loan loss  allocation  for this
risk by December 31, 1998.












































                                        -15-



<PAGE>




                                FIRST M & F CORPORATION

                            PART II:  OTHER INFORMATION
                            ---------------------------

Item 1 - Legal Proceedings
--------------------------

No new legal proceedings occurred in the second quarter of 1998.


Item 2 - Changes in Securities
------------------------------

None


Item 3 - Defaults Upon Senior Securities
----------------------------------------

None


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

None

Item 5 - Other Information
--------------------------

None


Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------

(a)      Exhibit 11 - Statement of computation of earnings per share

(b)      A Form 8-K was filed on September 14, 1998,  reporting the signing of a
         definitive  merger  agreement  whereby the Company  would acquire First
         Bolivar Capital Corporation, Cleveland, Mississippi.






















                                           -16-



<PAGE>






                             FIRST M & F CORPORATION


Exhibit 11 - Computation of Earnings Per Share
----------------------------------------------



                                              Three Months Ended
                                                 September 30,
                                      ----------------------------------
                                          1998                  1997
                                          ----                  ----


Net income                            $ 1,901,000           $ 1,975,960
                                        =========             =========


Weighted average shares outstanding   $ 3,394,656           $ 3,394,656
                                        =========             =========


Earnings per share:
  Basic                                     $ .56                 $ .58
                                              ===                   ===



                                               Nine Months Ended
                                                  September 30,
                                      ----------------------------------
                                            1998                  1997
                                            ----                  ----

Net income                            $ 5,805,755           $ 5,826,450
                                        =========             =========


Weighted average shares outstanding   $ 3,394,656           $ 3,394,656
                                        =========             =========


Earnings per share:
  Basic                                    $ 1.71                $ 1.72
                                             ====                  ====
























                                              -17-



<PAGE>





                                                 FIRST M & F CORPORATION


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.


FIRST M & F CORPORATION
-----------------------
     (Registrant)



DATE:  November 16, 1998                   ____________________________________
                                            Hugh S. Potts, Jr.
                                            Chairman and Chief Executive Officer



DATE:  November 16, 1998                   ____________________________________
                                           Robert C. Thompson, III
                                           Executive Vice President and
                                             Treasurer



































                                  -18-



<PAGE>