UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

      (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 159(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
                                       or
    ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                         Commission file number 0-09424

                             FIRST M & F CORPORATION
             (exact name of Registrant as specified in its charter)

          MISSISSIPPI                                           64-0636653
(State or other jurisdiction of                               (IRS Employer
incorporation of organization)                            Identification Number)

            221 East Washington Street, Kosciusko, Mississippi 39090
               (Address of principal executive offices) (Zip Code)

        Registrants telephone number, including area code; (601) 289-5121
        Securities registered pursuant to section 12(g) of the Act: None

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 shorted  periods 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 ( )

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 February 28, 1999

Common stock ($5.00 par value)                             3,639,779 Shares

Based on bid price for shares on February 28, 1999,  the aggregate  market value
of the voting stock held by nonaffiliates of the Registrant was $81,876,800.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference to Part I, II,
and III of the  Form  10-K  report:  (1)  Registrant's  1998  Annual  Report  to
Shareholders (Parts I and II), and (2) Proxy Statement dated March 17, 1999, for
Registrant's  Annual Meeting of  Shareholders  to be held April 14, 1999,  (Part
III).
























                                     1 of 15

<PAGE>



                             FIRST M & F CORPORATION
                                    FORM 10-K

                                      INDEX


Part I

Item 1.   Business                                                             3
Item 2.   Properties                                                          11
Item 3.   Legal Proceedings                                                   11
Item 4.   Submission of Matters to a Vote of Security Holders                 11


Part II

Item 5.   Market for the Registrant's Common Stock and Related
          Stockholder Matters                                                 11
Item 6.   Selected Financial Data                                             11
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                 11
Item 8.   Financial Statements and Supplementary Data                         11
Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                                 11


Part III

Item 10.  Directors and Executive Officers of the Registrant                  12
Item 11.  Executive Compensation                                              12
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                          12
Item 13.  Certain Relationships and Related Transactions                      12


Part IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K                                                         12


SIGNATURES                                                                 13-14


EXHIBIT INDEX                                                                 15






























                                     2 of 15

<PAGE>
                             FIRST M & F CORPORATION
                                    FORM 10-K

                                     PART I


ITEM 1.  BUSINESS

GENERAL

First M & F Corporation  (the Company) is a one-bank  holding company  chartered
and organized under Mississippi laws in 1979. The Company engages exclusively in
the banking business through its wholly-owned subsidiary,  Merchants and Farmers
Bank of Kosciusko (the Bank).

The Bank was chartered and organized  under the laws of the State of Mississippi
in 1890, and accounts for  substantially all of the total assets and revenues of
the  Company.  The Bank is the sixth  largest  bank in the state,  having  total
assets of  approximately  $702 million at December  31, 1998.  The Bank offers a
complete range of commercial and consumer  services  through its main office and
two branches in Kosciusko and its branches within central Mississippi, including
Ackerman,  Bruce, Brandon,  Canton,  Cleveland,  Clinton, Durant, Lena, Madison,
Oxford, Pearl, Philadelphia,  Puckett, Ridgeland,  Starkville, Grenada and Weir,
Mississippi.

The Bank has four wholly-owned  subsidiaries,  M & F Financial  Services,  Inc.,
which operates one finance company office, First M & F Insurance Company,  Inc.,
a credit  life  insurance  company,  M & F  Insurance  Agency,  Inc.,  a general
insurance agency and Merchants and Farmers Bank Securities  Corporation,  a real
estate property management company.

The  Company's  primary  means of growth over the past several years has been an
aggressive lending program funded by exceptional  deposit growth.  Additionally,
the Company acquired the deposits of several locations from the Resolution Trust
Corporation in 1994.  Effective with the close of business on December 31, 1995,
the Company merged with Farmers and Merchants Bank of Bruce,  Mississippi.  This
merger involved the exchange of 450,000 shares of the Company's common stock for
all of the issued and outstanding  shares of Farmers and Merchant's Bank and has
been  accounted for as a pooling of  interests.  Farmers and Merchants had total
assets of $32 million at December 31, 1995. Effective with the close of business
on December 31,  1998,  the Company  merged with First  Bolivar  Corporation  of
Cleveland,  Mississippi.  This merger involved the exchange of 243,214 shares of
the Company's common stock for all of the issued and outstanding shares of First
Bolivar and has been  accounted for as a pooling of interests.  First  Bolivar's
banking subsidiary,  First National Bank of Bolivar County, was also merged with
the Bank.  First Bolivar and  subsidiary  had total  consolidated  assets of $46
million at December 31, 1998.

The banking system offers a variety of deposit,  investment and credit  products
to customers. The Bank provides these services to middle market and professional
businesses,  ranging from payroll checking, business checking, corporate savings
and secured and unsecured lines of credit.  Additional  services  include direct
deposit  payroll,  sweep  accounts  and letters of credit.  The Bank also offers
credit  card  services  to its  customers,  to  include  check  debit  cards and
automated teller machine cards through several networks. Trust services are also
offered in the Kosciusko main office.

As of February 28, 1999, the Company and its  subsidiary  employed 314 full-time
equivalent employees.


COMPETITION

The  Company  competes  generally  with  other  banking  institutions,   savings
associations, credit unions, mortgage banking firms, consumer finance companies,
mutual funds, insurance companies, securities brokerage firms, and other finance
related institutions;  many of which have greater resources than those available
to the Company. The competition is primarily related to areas of interest rates,
the availability and quality of services and products,  and the pricing of those
services and products.


SUPERVISION AND REGULATION

As a bank holding  company,  First M & F  Corporation  is subject to  regulation
under the Bank  Holding  Company Act of 1956,  as amended,  (the "BHCA") and the
examination and reporting  requirements of the Board of Governors of the Federal
Reserve  System (the "Federal  Reserve  Board").  Under the BHCA, a bank holding
company may not directly or indirectly acquire ownership or control of more than
5% of the voting shares or substantially  all of the assets of any bank or merge
or consolidate  with another bank holding  company without the prior approval of
the Federal  Reserve Board.  The BHCA also generally  limits the activities of a
bank holding company to that of banking,  managing or controlling  banks, or any
other  activity  which is  determined  to be so  closely  related  to banking or
managing or controlling banks that an exception is allowed for those activities.
                                     3 of 15

<PAGE>


As a  state-chartered  commercial bank,  Merchants and Farmers Bank, First M & F
Corporation's  banking  subsidiary,  is subject to regulation,  supervision  and
examination  by the  Mississippi  Department  of Banking and  Consumer  Finance.
Merchants  and Farmers Bank ("M&F") is also subject to  regulation,  supervision
and examination by the Federal Deposit Insurance Corporation (the "FDIC"). State
and  Federal  law also  govern the  activities  in which the Bank  engages,  the
investments  it makes and the  aggregate  amount of loans that may be granted to
one borrower.  The  insurance  company  subsidiary of M&F is also  regulated and
examined by the insurance Department of the State of Mississippi.

The earnings of First M & F Corporation's  subsidiary bank and its  subsidiaries
are affected by general  economic  condition,  management  policies,  changes in
state and Federal  legislation  and actions of various  regulatory  authorities,
including  those  referred to above.  The following  description  summarizes the
significant  state  and  Federal  laws to which  First M & F Corp,  M&F Bank and
subsidiaries are subject.

Capital
-------

First M & F Corp and M&F Bank are  required to comply with the capital  adequacy
standards  established by the Federal Reserve Board and the FDIC.  There are two
basic measures of capital adequacy for bank holding  companies and their banking
subsidiaries; a risk-based measure and a leverage measure.

The  risk-based  capital  standards  are  designed  to make  regulatory  capital
requirements  more  sensitive to  differences  in risk profile among  depository
institutions  and bank  holding  companies,  to account for off-  balance  sheet
exposure,  and to minimize  disincentives for holding liquid assets.  Assets and
off-balance  sheet  items  are  assigned  to broad  risk  categories,  each with
appropriate  weights.  The  resulting  capital  ratios  represent  capital  as a
percentage of total risk-weighted assets and off-balance sheet items.

The minimum guideline for the total capital to risk-weighted  assets,  including
certain  off-balance  sheet  items  such as standby  letters  of credit  ("total
capital ratio") is 8.0 percent.  At least half of total capital must be composed
of common equity,  undivided profits,  minority interests in the equity accounts
of consolidated  subsidiaries,  noncumulative  perpetual  preferred stock, and a
limited  amount of  cumulative  perpetual  preferred  stock,  less  goodwill and
certain other intangible assets ("Tier 1 capital"). The remainder may consist of
subordinated  debt,  other  preferred  stock,  a  limited  amount  of loan  loss
reserves,  and  unrealized  gains on equity  securities  subject to  limitations
("Tier 2 capital").  At December 31, 1998, First M & F Corp and M&F Bank were in
compliance   with  the  total  capital  ratio  and  the  Tier  1  capital  ratio
requirements. Note 17 of the Notes to Consolidated Financial Statements presents
First M & F Corp's and M&F Bank's capital ratios.

Deposit Insurance Assessments
-----------------------------

The  deposits  of M&F Bank are  insured  by the FDIC up to the  limits set forth
under  applicable law. A majority of the deposits of M&F Bank are subject to the
deposit  insurance  assessments  of the Bank Insurance Fund ("BIF") of the FDIC.
However,  a portion of the Bank's  deposits,  relating to a savings  association
acquisition,  are  subject to  assessments  imposed by the  Savings  Association
Insurance Fund ("SAIF") of the FDIC. The FDIC equalized the assessment rates for
BIF-insured and SAIF-insured deposits effective January 1, 1997. The assessments
imposed on all FDIC  deposits  for  deposit  insurance  have an  effective  rate
ranging from 0 to 27 basis points per $100 of insured deposits, depending on the
institution's  capital position and other supervisory  factors.  Legislation was
enacted in 1996 requiring both  SAIF-insured  and BIF-insured  deposits to pay a
pro rata portion of the interest due on the obligations  issued by the Financing
Corporation ("FICO").  The FDIC is currently assessing,  effective for the first
quarter of 1999,  BIF-insured  deposits totaling an additional 1.22 basis points
per $100 of deposits,  and SAIF-insured deposits an additional 6.10 basis points
per $100 of deposits, to cover those obligations.


YEAR 2000

The "Year 2000" issue  confronting First M & F Corporation and its customers and
suppliers  centers on the  inability of computer  systems to recognize  the year
2000, or to  distinguish  it from the year 1900.  Computer  programs are written
using dates to calculate and trigger events and actions.  During the 1950's,  in
the interest of saving valuable space in lengthy programs,  the date fields were
shortened  to 5 or 6  characters  using  Gregorian  (MMDDYY)  or  Julian  (YYDD)
formats.  If computer  systems are not  adequately  changed to identify the year
2000, many computer applications could fail or create erroneous results. Failure
to adequately  address the year 2000 issue could adversely  affect the viability
of our suppliers and creditors and the creditworthiness of our borrowers.


                                     4 of 15

<PAGE>



The Company's plan to address the year 2000 issue is set out in five (5) phases,
(1) the awareness phase, (2) the assessment phase, (3) the renovation phase, (4)
the validation phase, and (5) the implementation  phase. The awareness phase was
completed in the first  quarter of 1998 and  consisted of informing the Board of
Directors of year 2000 issues,  creating an internal  year 2000  committee,  and
distributing   information  such  as  employee   information  sheets,   customer
information  sheets, and lending officer assistance  guidelines.  The assessment
phase is an ongoing process which was  substantially  complete by the end of the
second  quarter of 1998.  This phase  consists of  assessing  the  hardware  and
software of the Company,  and determining the degree to which items are critical
as well as the  potential  impact of the item on the  operations of the Company.
All mission critical hardware and software has been identified and the degree of
necessary testing has been determined.  The management of the Company constantly
evaluates the year 2000 effect on other strategic  business  initiatives such as
merger and acquisitions,  corporate  alliances,  system  interdependencies,  and
potential issues that may arise from acquired systems. The renovation phase does
not require software  re-programming on the part of Company personnel due to the
use of a third-party software vendor for our main processing systems. This third
party vendor has been tested,  and has delivered  programming to the Company for
the testing of year 2000 critical dates at our computer  center.  The validation
phase, which includes this testing,  has been ongoing since the third quarter of
1998. The validation  phase also includes our efforts to determine the year 2000
readiness of our customers  and  suppliers.  The  assessment of third parties is
expected to be completed by the end of the first quarter of 1999. The testing of
the Company's  mission critical hardware and systems is expected to be completed
by the end of the first  quarter of 1999.  The final phase,  the  implementation
phase,  is when  all  systems  are  certified  as year  2000  compliant  and all
contingency plans are in place. This should be complete by the end of the second
quarter of 1999.  The Company has also  designed  contingency  plans  related to
potential  credit  problems of  commercial  customers who are at risk as well as
liquidity  plans to provide for customer needs for additional  liquidity in late
1999 and early 2000.


EXECUTIVE OFFICERS OF THE REGISTRANT

The executive  officers of the  Registrant  including  their  positions with the
Registrant,  their ages and their principal  occupations for the last five years
are as follows:

     Hugh S. Potts, Jr., 54, Director, Chairman of the Board and Chief Executive
     Officer,  First M & F Corporation  and  Merchants  and Farmers Bank,  since
     1994. Vice Chairman, First M & F Corporation, prior to 1994.

     Scott M. Wiggers,  54,  Director,  president,  First M & F Corporation  and
     Merchants and Farmers Bank, since 1990.

     Robert  C.  Thompson,  III,  40,  Treasurer,  First M & F  Corporation  and
     Executive Vice PResident and Chief Financial Officer, Merchants and Farmers
     Bank, since 1997. Doctoral student,  1995-1997.  Controller,  Merchants and
     Farmers Bank through 1994.


STATISTICAL DISCLOSURES

The  statistical  disclosures  for the Company are contained in Tables 1 through
13.











                                     5 of 15

<PAGE>


                             FIRST M & F CORPORATION
                             STATISTICAL DISCLOSURES


TABLE 1 - COMPARATIVE AVERAGE BALANCES - YIELDS AND RATES

The tables below shows the average  balances for all assets and  liabilities for
the Company at each  year-end for the past three years,  the interest  income or
expense  associated with these assets and liabilities and the computed yields or
rates for each (in thousands of dollars):

<TABLE>
<CAPTION>

                                         1998                                1997                                 1996
                            -------------------------------     -------------------------------     --------------------------------
                             Average                 Yield/      Average                 Yield/      Average                  Yield/
                             Balance     Interest     Cost       Balance     Interest     Cost       Balance     Interest      Cost
                            ---------    --------    ------     ---------    --------    ------     --------     --------     ------

Interest bearing bank

<S>                         <C>          <C>          <C>       <C>          <C>          <C>       <C>          <C>          <C>  
  balances                  $   6,727    $    403     5.99%     $   3,378    $    192     5.68%     $   3,934    $    208     5.28%
Federal funds sold             15,787         871     5.51%        11,245         626     5.57%        14,939         822     5.50%
Taxable investments           145,147       8,582     5.91%       135,229       8,419     6.23%       135,485       8,202     6.05%
Tax-exempt investments         59,968       4,650     7.75%        44,458       3,401     7.65%        41,525       3,310     7.97%
Loans                         393,894      37,499     9.52%       365,252      35,601     9.75%       331,969      32,726     9.86%
                              -------      ------     -----       -------      ------     -----       -------      ------     ------
  Total earning assets        621,523      52,005     8.37%       559,562      48,239     8.62%       527,852      45,268     8.58%
Nonearning assets              50,528      ------                  43,571      ------                  38,424      ------
                              -------                             -------                             -------

    Total average assets    $ 672,051                           $ 603,133                           $ 566,276
                              =======                             =======                             =======

NOW, MMDA and savings       $ 263,459       9,499     3.61%     $ 218,428       7,897     3.62%     $ 187,536       6,481     3.46%
Certificates of deposit       263,458      14,304     5.43%       254,820      13,764     5.40%       236,440      12,917     5.46%
Short-term borrowings             452          22     4.87%           264          17     6.44%        19,330         966     5.00%
Other borrowings                9,423         565     6.00%         7,302         507     6.94%         9,867         643     6.52%
                              -------      ------     -----       -------      ------     -----       -------      ------     ------
    Total interest bearing
      liabilities             536,792      24,390     4.54%       480,814      22,185     4.61%       453,173      21,007     4.64%
Noninterest bearing                        ------                              ------                              ------
  deposits                     69,578                              60,689                              57,697
Noninterest bearing
  liabilities                   5,041                               6,622                               5,623
Capital                        60,640                              55,008                              49,783
    Total average             -------                             -------                             -------
      liabilities
      and equity            $ 672,051                           $ 603,133                           $ 566,276
                              =======                             =======                             =======

Net interest margin                        27,615     4.44%                    26,054     4.66%                    24,261     4.60%
Less tax equivalent
  adjustment:
  Investments                               1,735                               1,156                               1,125
  Loans                                       261                                 195                                 123
Reported net interest                      ------                              ------                              ------
  margin                                 $ 25,619     4.12%                  $ 24,703     4.41%                  $ 23,013     4.36%
                                           ======                              ======                              ======

</TABLE>

Tax equivalent adjustments for 1998 were made using a blended Federal/state rate
of 37.3%.  Tax  equivalent  adjustments  for 1997 and 1996 were made using a 34%
Federal rate.








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<PAGE>


                             FIRST M & F CORPORATION
                       STATISTICAL DISCLOSURES (CONTINUED)


TABLE 2 - VOLUME AND YIELD/RATE VARIANCE ANALYSIS

The volume and  yield/rate  tables shown below  reflects the change from year to
year for  each  component  of the net  interest  margin  classified  into  those
occurring as a result of changes in volume and those  resulting from  yield/rate
changes on a tax equivalent basis (in thousands):

<TABLE>
<CAPTION>

                                                  1998 Compared To 1997                       1997 Compared To 1996
                                                Increase (Decrease) Due To                  Increase (Decrease) Due To
                                           -------------------------------------        -----------------------------------
                                                          Yield/                                      Yield/
                                            Volume         Cost            Net           Volume        Cost          Net
                                           -------       ---------       -------        --------      -------      --------

Interest earned on:

<S>                                        <C>           <C>             <C>            <C>           <C>          <C>     
  Interest bearing bank balances           $   200       $     11        $   211        $   (34)      $   18       $   (16)
  Federal funds sold                           250             (6)           244           (206)          10          (196)
  Taxable investments                          519           (356)           163            (15)         232           217
  Tax-exempt investments                     1,202             47          1,249            212         (121)           91
  Loans                                      2,700           (801)         1,899          3,239         (364)        2,875
                                             -----         -------         -----         -------        -----        ------
    Total earning assets                     4,871         (1,105)         3,766          3,196         (225)        2,971
                                             -----         -------         -----         -------        -----        ------

Interest paid on:
  NOW, MMDA and savings                      1,623            (21)         1,602          1,107          309         1,416
  Certificates of deposit                      468             72            540            991         (144)          847
  Short-term borrowings                          8             (3)             5         (1,342)         393          (949)
  Other borrowings                             110            (51)            59           (182)          46          (136)
    Total interest bearing                   -----         -------         -----         -------        -----        ------
      liabilities                            2,209             (3)         2,206            574          604         1,178
    Change in net interest income            -----         -------         -----         -------        -----        ------
      on a tax-equivalent basis            $ 2,662      $  (1,102)       $ 1,560        $ 2,622       $ (829)      $ 1,793
                                             =====         =======         =====          =====         =====        =====

</TABLE>

TABLE 3 - SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY

The table below  indicates  amortized cost of securities  available for sale and
securities held to maturity by type at year-end for each of the last three years
(in thousands):

                                                 Amortized Cost of Securities
                                                         December 31,
                                           -------------------------------------
                                               1998          1997          1996
                                               ----          ----          ----
Securities available for sale:
  U. S. Treasury                           $  17,541     $  23,575     $  21,728
  Government agencies                         25,412        26,085        20,792
  Mortgage-backed securities                  91,154        55,060        42,910
  Obligations of states and political
   subdivisions                               68,665        17,165        20,348
  Other securities                             5,022         4,922         2,393
                                             -------       -------       -------
    Total securities available for sale    $ 207,794     $ 126,807     $ 108,171
                                             =======       =======       =======
Securities held to maturity:
  U. S. Treasury                           $       -     $   1,050     $   1,050
  Government agencies                              -        11,018        13,980
  Mortgage-backed securities                       -        13,094        17,888
  Obligations of states and political
   subdivisions                                    -        33,623        24,235
  Other securities                                 -             -             -
                                             -------       -------       -------
    Total securities available for sale    $       -     $  58,785     $  57,153
                                             =======       =======       =======


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<PAGE>




                             FIRST M & F CORPORATION
                       STATISTICAL DISCLOSURES (CONTINUED)


TABLE 4 - MATURITY DISTRIBUTION AND YIELDS OF SECURITIES AVAILABLE FOR SALE AND
SECURITIES HELD TO MATURITY

The following  table details the maturities and weighted  average tax equivalent
yield for each range of maturities of securities  available for sale at December
31, 1998 (in thousands of dollars):

<TABLE>
<CAPTION>

                                                   After One
                                Within             But Within           After Five
                                 One                  Five              But Within              Over
                                 Year     Yield      Years      Yield   Ten Years    Yield    Ten Years   Yield       Total
                                ------    -----    ----------   -----   ----------   -----    ---------   -----       -----

<S>                           <C>         <C>       <C>         <C>      <C>         <C>      <C>         <C>      <C>      
U. S. Treasury                $  9,503    5.78%     $  8,038    6.04%    $      -    0.00%    $      -    0.00%    $  17,541
Government agencies             14,161    6.28%        9,177    6.06%       2,074    6.49%           -    0.00%       25,412
Mortgage-backed securities      30,139    6.23%       31,288    6.25%      17,229    6.13%      12,498    5.64%       91,154
Obligations of states and
  political subdivisions         5,435    8.65%       31,875    7.57%      31,228    7.24%         127    6.83%       68,665
Other securities                   515    6.52%          974    6.28%       1,466    7.07%           -    0.00%        2,955
                                ------    -----       ------    -----      ------    -----      ------    -----      -------
  Total debt securities       $ 59,753    6.39%     $ 81,352    6.72%    $ 51,997    6.84%    $ 12,625    5.65%      205,727
                                ======    =====       ======    =====      ======    =====      ======    =====
Equity securities                                                                                                      2,067
                                                                                                                     -------
  Total securities                                                                                                 $ 207,794
                                                                                                                     =======
</TABLE>

Tax equivalent adjustments for 1998 were made using a blended Federal/state rate
of 37.3%.

Nonmortgage-backed  securities are  categorized in the earlier of their maturity
dates or their call dates.  Mortgaged-backed  securities are  distributed  based
upon their estimated average lives.


TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO

The table below shows the  carrying  value of the loan  portfolio  at the end of
each year for the last five years (in thousands):

<TABLE>
<CAPTION>

                                                                        December 31,
                                             -----------------------------------------------------------------
                                                1998          1997          1996          1995          1994
                                                ----          ----          ----          ----          ----

<S>                                          <C>           <C>           <C>           <C>           <C>      
Commercial, financial and agricultural       $  55,177     $  54,044     $  47,861     $  41,050     $  41,077
Residential real estate                        121,885       106,439        94,187        81,704        71,537
Non-residential real estate                    142,027       124,369       116,337       100,204        86,995
Consumer loans                                  95,040        91,035       100,117        84,907        75,691
Lease financing                                     55            19           137           271           247
                                               -------       -------       -------       -------       -------
    Total loans                              $ 414,184     $ 375,906     $ 358,639     $ 308,136     $ 275,547
                                               =======       =======       =======       =======       =======
</TABLE>

TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

The table below shows the amounts of loans in several categories at December 31,
1998,  along  with the  schedule  of  repayments  of  principal  in the  periods
indicated (in thousands):

Maturity distribution of loans:
                                      Within   One to Five  After Five
                                     One Year     Years       Years       Total
                                    ---------  -----------  ---------- ---------
  Commercial and real estate loans  $ 118,963   $ 163,262   $ 36,919   $ 319,144
  Consumer loans                       41,553      49,606      3,881      95,040
                                      -------     -------     ------     -------
    Total loans                     $ 160,516   $ 212,868   $ 40,800   $ 414,184
                                      =======     =======     ======     =======
Rate sensitivity loans:
                                               One to Five  After Five
                                                  Years       Years       Total
                                               -----------  ---------- ---------
  Fixed rate loans                              $ 181,948   $ 27,838   $ 209,786
  Floating rate loans                              30,920     12,962      43,882
                                                  -------     ------     -------
                                                $ 212,868   $ 40,800   $ 253,668
                                                  =======     ======     =======

                                     8 of 15

<PAGE>


                             FIRST M & F CORPORATION
                       STATISTICAL DISCLOSURES (CONTINUED)


TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS

The table below shows the Company's  nonperforming  assets and past due loans at
the end of each of the last five years (in thousands):

<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                                  ----------------------------------------------------------
                                                    1998         1997         1996       1995         1994
                                                    ----         ----         ----       ----         ----

<S>                                               <C>          <C>          <C>          <C>        <C>    
  Nonaccrual loans                                $   852      $   328      $   206      $  84      $   279
  Restructured loans                                    -            -            -          -            -
                                                    -----        -----        -----        ---        -----
    Total nonperforming loans                         852          328          206         84          279
  Other real estate owned                           1,123          843          724        148          911
                                                    -----        -----        -----        ---        -----
    Total nonperforming assets                      1,975        1,171          930        232        1,190
  Accruing loans past due 90 days or more           1,155        1,149          968        707          448
                                                    -----        -----        -----        ---        -----
    Total nonperforming assets and loans          $ 3,130      $ 2,320      $ 1,898      $ 939      $ 1,638
                                                    =====        =====        =====        ===        =====
</TABLE>


Interest  which  would have been  accrued on  nonaccrual  loans had they been in
compliance with their original terms and conditions is immaterial.

At  December  31,  1998,  the Company  did not have any  concentration  of loans
greater than ten percent of total loans except those shown in Table 5.

It is the  Company's  policy that  interest not be accrued on any loan for which
payment in full of interest and principal is not expected,  on any loan which is
seriously  delinquent  unless the  obligation  is both well  secured  and in the
process of  collection,  or on any loan that is maintained  on a cash basis.  At
December 31, 1998,  the Company had no loans about which  Management had serious
doubts as to their collectibility other than those disclosed above.


TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

The table below  summarizes the Company's  loan loss  experience for each of the
last five years (in thousands):

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                ------------------------------------------------------------
                                                   1998         1997         1996         1995         1994
                                                   ----         ----         ----         ----         ----

<S>                                             <C>          <C>          <C>          <C>          <C>    
Balance at beginning of year                    $ 5,315      $ 4,610      $ 4,373      $ 3,449      $ 3,020
Adjustments for sale of finance company
  office                                              -          (77)           -            -            -
Charge offs:
  Commercial, financial and agricultural           (188)        (365)        (235)        (117)        (195)
  Real estate                                      (451)        (185)        (174)         (53)        (124)
  Consumer                                       (1,380)        (914)        (743)        (709)        (480)
                                                  -----        -----        -----        -----        -----
    Total                                        (2,019)      (1,464)      (1,152)        (879)        (799)
                                                  -----        -----        -----        -----        -----
Recoveries:
  Commercial, financial and agricultural             52           23           13           18           16
  Real estate                                        93           23           14          106           40
  Consumer                                          429          138          129          124          201
                                                  -----        -----        -----        -----        -----
    Total                                           574          184          156          248          257
                                                  -----        -----        -----        -----        -----
Net charge offs                                  (1,445)      (1,280)        (996)        (631)        (542)
Provision for loan losses                         1,965        2,062        1,233        1,555          971
                                                  -----        -----        -----        -----        -----
Balance at end of year                          $ 5,835      $ 5,315      $ 4,610      $ 4,373      $ 3,449
                                                  =====        =====        =====        =====        =====
</TABLE>


The  allowance  for loan losses is  established  through a provision  charged to
expense.  Loans are charged against the allowance when Management  believes that
the  collection of the  principal is unlikely.  The allowance for loan losses is
maintained at a level which Management and the Board of Directors  believe to be
adequate  to absorb  estimated  losses  inherent in the loan  portfolio,  and is
reviewed  quarterly using specific criteria required by regulatory  authority as
well  as  various  analytical   devices  which   incorporates   historical  loss
experience, trends and current economic conditions.



                                     9 of 15

<PAGE>


                             FIRST M & F CORPORATION
                       STATISTICAL DISCLOSURES (CONTINUED)


TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

The table below is a summary of the  allocation  categories  used by the Company
for its  allowance  for loan loss at December 31, 1998.  These  allocations  are
determined by internal  formulas  based upon an analysis of the various types of
risk associated with the loan portfolio (in thousands):

  General reserves for past due and other classified loans               $ 1,602
  General reserves of finance company portfolio                              135
  Year 2000 risk reserve                                                     150
  Other general reserves                                                   3,948
                                                                           -----
      Total reserve for loan losses                                      $ 5,835
                                                                           =====

The Company  maintains the allowance at a level considered by Management and the
Board of Directors to be sufficient to absorb potential losses. Loss percentages
were  uniformly  applied to the various pools of risk that exist within the loan
portfolio  based  upon  accepted   analysis   procedures  and  current  economic
conditions.  Additional  allocations  were made for particular  areas based upon
recommendations of lending and asset review personnel.

Allowances  for consumer  loans are  determined  through an analysis of past due
status,  legal  efforts  to  establish  repayment  schedules  for  bankruptcies,
charge-off trends, collateral value, and general economic conditions. Commercial
and real estate loans are  evaluated  through a "watch loan"  methodology  which
assigns risk ratings based upon a financial  analysis of the borrower's  ability
to provide sufficient cash flows,  collateral value and liquidity,  and past due
status.  Allowances are also provided based upon economic trends that may affect
specific borrowers or industries,  trends in past due statistics,  and migration
analysis of historical charge-offs.


TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE

The table below shows  maturities  of  outstanding  time deposits of $100,000 or
more at December 31, 1998 (in thousands):



  Three months or less                                                  $ 27,389
  Over three months through twelve months                                 20,612
  Over one year through three years                                       12,661
  Over three years                                                         3,733
                                                                          ------
      Total                                                             $ 64,395
                                                                          ======

TABLE 11 - SELECTED RATIOS

The following table reflects ratios for the Company for the last three years:

                                           1998            1997            1996
                                           ----            ----            ----
  Return on average assets                 1.17%           1.35%           1.35%
  Return on average equity                12.93%          14.81%          15.31%
  Dividend payout ratio                   44.44%          39.29%          35.71%
  Equity to assets ratio                   9.02%           9.12%           8.79%


TABLE 12 - SHORT-TERM BORROWINGS

The table below presents certain information  regarding the Company's short-term
borrowings for each of the last three years (in thousands of dollars):

                                         1998            1997             1996
                                         ----            ----             ----
  Outstanding at end of period         $   829          $   -          $     70
  Maximum outstanding at any
   month-end during the period           2,384              -            51,236
  Average outstanding during
   the period                              534            294            19,588
  Interest paid                             22             17               966
                                         -----           ----            ------
  Weighted average rate during
   each period                            4.13%          5.65%             4.80%
                                         =====           ====              ====

                                    10 of 15

<PAGE>

ITEM 2.  PROPERTIES

The  Bank's  main  office,  located  at 221 East  Jefferson  Street,  Kosciusko,
Mississippi,  is a two story, brick building with drive-up facilities.  The Bank
owns its main office  building and 26 of its branch  facilities.  The  remaining
facilities are occupied under lease agreements,  terms of which range from month
to month to five years. It is anticipated that all leases will be renewed.


ITEM 3.  LEGAL PROCEEDING

The Bank is  involved  in  various  legal  matters  and  claims  which are being
defended and handled in the ordinary  course of business.  None of these matters
are expected, in the opinion of Management, to have a material adverse effect on
the financial position or results of operations of the Bank or the Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to the Company's  shareholders during the fourth
quarter of 1998.


PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

At February 28, 1999,  there were 606  shareholders  of record of the  Company's
common stock. Effective September 1, 1996, the Company's common stock was listed
with the National  Association of Securities  Dealers,  Inc. Automated Quotation
National Market System (NASDAQ) and became subject to trading and reporting over
the counter with most securities dealers. Prior to the date of registration with
NASDAQ,  the stock was  traded on a  limited  basis and no  securities  firm was
acting as a market maker.  Other  information  for this item can be found in the
table captioned "Quarterly Closing Common Stock Price Ranges and Dividends Paid"
included  in  the  Registrant's  1998  Annual  Report  to  Shareholders  and  is
incorporated herein by reference (page 14).


ITEM 6.  SELECTED FINANCIAL DATA

The  information  required  by this  item can be found  in the  table  captioned
"Selected Financial Data" in the Registrant's 1998 Annual Report to Shareholders
and is incorporated herein by reference (page 19).


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The information  required by this item can be found in "Management's  Discussion
and Analysis of Financial  Condition and Results of Operations"  included in the
Registrant's  Proxy  Statement  to  Shareholders  dated March 17,  1999,  and is
incorporated  herein by reference  (pages 50-53).  In June,  1997, the Financial
Accounting  Standards  Board (FASB) issued  Statements  of Financial  Accounting
Standards  (SFAS) No.'s 130 and 131  regarding  the  reporting of  comprehensive
income and  disclosures  about  segments  of business  enterprises.  The Company
adopted both standards during 1998 without a material impact on the consolidated
financial  statements.  In February,  1998,  FASB issued SFAS No. 132 "Employers
Disclosures  About  Pensions and Other Post  Retirement  Benefits".  The Company
adopted  SFAS No.  132 in 1998  without a  material  impact on the  consolidated
financial  statements.  In June, 1998, FASB issued SFAS No. 133, "Accounting for
Derivatives  and Hedging  Activities".  The Company adopted SFAS No. 133 in 1998
without a material impact on the consolidated financial statements. As disclosed
in Note 3 to the consolidated financial statements, the Company reclassified its
portfolio of  securities  held to maturity as  securities  available for sale in
1998 under the provisions of SFAS No. 133.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  consolidated  financial  statements of the Registrant and the  accompanying
notes to the  financial  statements  along  with the  report of the  independent
public  accountants  are  contained  in  the  Registrant's  Proxy  Statement  to
Shareholders  dated March 17,  1999,  and are  incorporated  herein by reference
(pages 21-49).


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

There  has been no  change  in  accountants  within  the two year  period  ended
December 31, 1998.

                                    11 of 15

<PAGE>

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  on the  Directors  of the  Registrant  can be found  on pages  4-6,
"Election of Directors",  and page 9, "Director Compensation",  contained in the
Proxy Statement to Shareholders dated March 17, 1999, and is incorporated herein
by reference.  Information on the Registrants  executive officers is included on
pages 8- 9, "Executive Compensation", in the Proxy Statement.


ITEM 11.  EXECUTIVE COMPENSATION

Information  required  by this  item  can be  found  on  pages  8-9,  "Executive
Compensation",  and page 9,  "Directors  Compensation",  of the Proxy  Statement
dated March 17, 1999, and is incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  regarding  security  ownership  of  certain  beneficial  owners and
Management can be found on page 7, "Beneficial Ownership Reporting  Compliance",
and page 7,  "Principal  Shareholder",  in the Proxy  Statement to  Shareholders
dated March 17, 1999, and is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  regarding  certain  relationships  and related  transactions can be
found on page 11 under the caption "Transactions with Management",  in the proxy
Statement to Shareholders  dated March 17, 1999, and is  incorporated  herein by
reference.


PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

A-1.  Financial Statements

The  report  of  Shearer,  Taylor & Co.,  P.A.,  independent  auditors,  and the
following  consolidated  financial  statements  of First M & F  Corporation  and
Subsidiary are included in the  Registrant's  Proxy  Statement to  Shareholders,
dated  March 17,  1999,  and are  incorporated  into Part II,  Item 8, herein by
reference.

     Report of Independent Certified Public Accountants  Consolidated Statements
     of Condition as of December 31, 1998 and 1997  Consolidated  Statements  of
     Income for the Years Ended December 31, 1998, 1997 and 1996
     Consolidated  Statements  of  Stockholders'  Equity  for  the  Years  Ended
     December 31, 1998, 1997 and 1996 Consolidated  Statements of Cash Flows for
     the Years Ended December 31, 1998, 1997 and 1996 Notes to the  Consolidated
     Financial  Statements Selected Financial Data, Summary of Quarterly Results
     of Operations, and Principal Markets and Prices of the Corporation's Stock


A-2.  Financial Statement Schedules

The schedules to the consolidated financial statements set forth by Article 9 of
Regulation  S-X  are  not  required  under  the  related   instructions  or  are
inapplicable and therefore have been omitted.


A-3.  Exhibits

The  exhibits  listed in the Exhibit  Index are filed  herewith or  incorporated
herein by reference.


B.  Reports on Form 8-K

None

                                    12 of 15

<PAGE>



SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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



BY: /S/    Hugh S. Potts, Jr.                BY: /S/   Robert C. Thompson, III
      --------------------------                   -----------------------------
      Hugh S. Potts, Jr.                           Robert C. Thompson, III
      Chairman of the Board and                    Treasurer
      Chief Executive Officer


      DATE:   March 26, 1999                       DATE:   March 26, 1999
            ------------------                           -------------------






















                                    13 of 15

<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following  persons on behalf of the Registrant and in the
capacities and on the dates indicated:



DATE:       March 26, 1999                 BY: /S/  Hugh S. Potts, Jr.
        ---------------------                  ---------------------------------
                                                Hugh S. Potts, Jr., Director


DATE:       March 26, 1999                 BY: /S/  Scott M. Wiggers
        ---------------------                  ---------------------------------
                                                Scott M. Wiggers, Director


DATE:       March 26, 1999                 BY: /S/  Fred A. Bell, Jr.
        ---------------------                  ---------------------------------
                                                Fred A. Bell, Jr., Director


DATE:       March 26, 1999                 BY: /S/  Jon A. Crocker
        ---------------------                  ---------------------------------
                                                Jon A. Crocker, Director


DATE:       March 26, 1999                 BY: /S/  Charles T. England
        ---------------------                  ---------------------------------
                                                Charles T. England, Director


DATE:    ____________________              BY:__________________________________
                                                Toxey Hall, III, Director


DATE:    ____________________              BY:__________________________________
                                                Barbara K. Hammond, Director

DATE:    ____________________              BY:__________________________________
                                                J. Marlin Ivey, Director


DATE:    ____________________              BY:__________________________________
                                                Joe Ivey, Director


DATE:       March 26, 1999                 BY: /S/  R. Dale McBride
         --------------------                  ---------------------------------
                                                R. Dale McBride


DATE:    ____________________              BY:__________________________________
                                                Susan P. McCaffery, Director


DATE:       March 26, 1999                 BY: /S/  Otho E. Pettit, Jr.
         --------------------                  ---------------------------------
                                                Otho E. Pettit, Jr., Director


DATE:       March 26, 1999                 BY: /S/  Charles W. Ritter, Jr.
         --------------------                  ---------------------------------
                                                Charles W. Ritter, Jr., Director


DATE:       March 26, 1999                 BY: /S/  W. C. Shoemaker
         --------------------                  ---------------------------------
                                                W. C. Shoemaker, Director


DATE:       March 26, 1999                 BY: /S/  Edward G. Woodard
         --------------------                  ---------------------------------
                                                Edward G. Woodard, Director



                                    14 of 15

<PAGE>






EXHIBIT INDEX

3 (A)  Articles of Incorporation, as amended.  Filed as Exhibit 3 to the
       Company's Form S-1 (File No. 33-08751) September 15, 1986, incorporated
       herein by reference.

3 (B)  Bylaws, as amended.  Filed as Exhibit 3-b to the Company's Form S-1 (File
       No. 33-08751) September 15, 1986, incorporated herein by reference.

13.    Only those  portions of the  Registrant's  Annual Report to  Shareholders
       expressly  incorporated by reference  herein are included in this exhibit
       and, therefore, are filed as a party of this report of Form 10-K.

27.    Financial Data Schedule.  All other exhibits are omitted as they are
       inapplicable or not required by the related instructions.































                                    15 of 15