UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended June 26, 1998

                         Commission file number 0-15105

                      SCOTT & STRINGFELLOW FINANCIAL, INC.
             (Exact name of Registrant as specified in its charter)

             Virginia                                             54-1315256
   State or other jurisdiction                                  I.R.S. Employer 
 of incorporation or organization                             Identification No.

                  909 East Main Street Richmond, Virginia 23219
               (Address of principal executive offices) (zip code)

                                 (804) 643-1811
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      none

           Securities registered pursuant to Section 12(g) of the Act:
                     Common stock, par value $0.10 per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                  Yes X No ....

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

On September 17, 1998, there were 3,402,239 shares of Scott & Stringfellow
Financial, Inc. Common Stock, par value $.10, issued and outstanding of which
2,220,490 shares were held by non-affiliates. The aggregate market value of such
Common Stock held by non-affiliates, based on the closing market price of $28.25
on September 17, 1998 was approximately $62,729,000.

                       DOCUMENTS INCORPORATED BY REFERENCE
                        (To the Extent Indicated Herein)

Certain Portions of the 1998 Annual Report to Shareholders (in Parts I and II)


Exhibit Index Appears on Page 18


                                        1

<PAGE>



                      SCOTT & STRINGFELLOW FINANCIAL, INC.
                                    FORM 10-K
                        For the Year Ended June 26, 1998

                                TABLE OF CONTENTS

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

                                                                                      Page
Item                                                                                 Number
----                                                                                 ------
PART I

1. Business                                                                             3

2. Properties                                                                          12

3. Legal Proceedings                                                                   12

4. Submission of Matters to a Vote of Security Holders                                 12

PART II

5. Market for Registrant's Common Stock and Related Shareholder Matters                14

6. Selected Financial Data                                                             14

7. Management's Discussion and Analysis of Financial
     Condition and Results of Operations                                               14

8. Financial Statements and Supplementary Data                                         15

9. Changes in and Disagreements with Accountants on
     Accounting and Financial Disclosure                                               15

PART III

10. Directors and Executive Officers of Registrant                                     15

11. Executive Compensation                                                             15

12. Security Ownership of Certain Beneficial Owners and Management                     17

13. Certain Relationships and Related Transactions                                     18

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                   19

SIGNATURES                                                                             21

FINANCIAL STATEMENT SCHEDULES                                                          23

EXHIBITS
</TABLE>


                                        2

<PAGE>



PART I

Item 1. BUSINESS

General

     The Registrant, Scott & Stringfellow Financial, Inc., is a holding company
whose principal business activities are conducted through its wholly-owned
subsidiary, Scott & Stringfellow, Inc. ("Scott & Stringfellow"). Scott &
Stringfellow is a regional brokerage, investment banking, and financial services
firm headquartered in Richmond, Virginia. It operates 31 offices in communities
located across Virginia, North Carolina, West Virginia, and South Carolina. Its
primary activity is retail securities brokerage. Other significant activities
include institutional securities brokerage, management of and participation in
the underwriting of corporate and municipal securities, investment management
services, corporate and municipal finance, trading of taxable and tax-exempt
fixed income and equity securities, equity research, money market accounts,
retirement accounts, financial planning and the distribution of mutual fund and
insurance products.

     Scott & Stringfellow was originally founded as a partnership in 1893. The
firm has been a member of the New York Stock Exchange, Inc. ("NYSE") since June
20, 1895. Scott & Stringfellow is believed to be the South's oldest continuous
member of the New York Stock Exchange and one of only three firms outside of New
York which have been members for at least 100 years. Scott & Stringfellow was
incorporated in 1974. In 1986, Scott & Stringfellow Financial, Inc. conducted an
initial public offering of its common stock, increasing its capital in that year
to approximately $14 million. Since 1986, Scott & Stringfellow has pursued a
growth strategy, increasing the number of its branch offices from 14 to 31
through expansion into North Carolina and South Carolina and a merger with
Norfolk-based Investment Corporation of Virginia in 1989. During this time, the
Company has also increased the number of products and services offered to
clients.

     For the fiscal year ended June 26, 1998, approximately 51% of total
revenues were derived from brokerage commissions on investments purchased and
sold on an agency basis, 15% from principal transactions, 13% from investment
banking, 9% from interest and dividends, and 12% from advisory and
administrative fees and other sources. (See table entitled "Revenues by Source"
on page 5 of this report.)

     In addition to its NYSE membership, Scott & Stringfellow has seats on the
American Stock Exchange, Inc. ("AMEX") and the Chicago Stock Exchange, and is a
member of the National Association of Securities Dealers ("NASD"), the
Securities Investor Protection Corporation ("SIPC"), the Securities Industry
Association, and the Public Securities Association. Scott & Stringfellow's two
NYSE seats are leased to third parties under one year agreements which may be
canceled by either party subject to 90 days' notice. The AMEX seat is leased to
a third party under three month agreements which may be canceled by either party
subject to 90 days' notice. SIPC provides protection for client accounts up to
$500,000 each, with a limitation of $100,000 for claims for cash balances. In
addition to the SIPC protection, Scott & Stringfellow has obtained a separate
excess SIPC bond issued by an insurance company which increases the protection
of client accounts by an additional $9.5 million. The combined insurance
coverage of client accounts is therefore $10 million, with a limitation of
$100,000 for cash balances.

     The Registrant has 31 offices located in 4 states. Retail sales activities
are conducted through registered investment brokers in all of its offices. Most
of its other activities are conducted at its main office located in Richmond,
Virginia. On June 26, 1998, the Registrant had approximately 616 employees
including 260 employees with full-time investment broker responsibilities. The
following table reflects the location of the Registrant's offices, the year each
office opened, and the number of investment brokers in each office as of June
26, 1998:



                                        3

<PAGE>




                                      Calendar
                                        Year                    Number of
                                       Branch                   Investment
       Location                        Opened                     Brokers
       --------                       ---------                 ----------
       Virginia
         Richmond                       1893                         54
         Alexandria                     1997                          5
         Blacksburg                     1988                          4
         Chesapeake                     1987                          2
         Charlottesville                1982                          8
         Chesterfield                   1987                          8
         Culpepper                      1971                          3
         Danville                       1986                          3
         Harrisonburg                   1991                          6
         Lexington                      1986                          2
         Lynchburg                      1984                          8
         Manassas                       1987                          7
         Martinsville                   1983                          5
         Norfolk                        1978                         25
         Roanoke                        1984                          9
         Staunton                       1970                          8
         Tyson's Corner                 1986                          8
         Virginia Beach                 1995                          1
         Warrenton                      1970                          6
         Williamsburg                   1995                          4
         Winchester                     1970                          4
           Total Virginia                                           180

       North Carolina
         Charlotte                      1988                         10
         Greensboro                     1988                         21
         Greenville                     1998                          2
         Kinston                        1988                          3
         North Wilkesboro               1988                          2
         Raleigh                        1992                         12
         Wilmington                     1990                          6
         Winston-Salem                  1987                         16
           Total North Carolina                                      72

       West Virginia
         Bluefield                      1971                          5

       South Carolina
         Charleston                     1996                          3

           Total Company                                            260






                                        4

<PAGE>





Revenues by Source

     The following table sets forth the consolidated revenues of the Registrant
and its subsidiaries for the periods indicated in dollars and as a percentage of
total revenues.


<TABLE>
<CAPTION>


Years Ended                          June 26, 1998               June 27, 1997             June 28, 1996
                                   Amount         %           Amount         %          Amount          %
                                ------------    -----      ------------     ----     -----------      -----
<S>     <C>    
Commissions:
   Exchange Listed Securities   $ 25,812,157     24.5      $ 21,384,632     26.4     $ 19,879,066     27.2
   Over-the-Counter Equities      10,713,180     10.2         7,801,982      9.6        8,549,871     11.7
   Mutual Funds                   11,561,328     11.0         9,113,106     11.3        7,574,445     10.3
   Annuities                       3,247,242      3.1         2,714,368      3.4        2,235,440      3.1
   Options                         1,657,406      1.6         1,410,963      1.7        1,207,922      1.6
   Other                             332,089      0.3           240,795      0.3          455,679      0.6
     Total Commissions            53,323,402     50.6        42,665,846     52.7       39,902,423     54.5

Principal Transactions:
   Municipal Bonds                 1,616,582      1.5         1,633,679      2.0        1,742,336      2.4
   Over-the-Counter Equities      11,850,833     11.2        10,185,985     12.6        7,764,215     10.6
   Corporate and Govt.
    Bonds and Other                1,943,545      1.8         2,067,174      2.6        1,652,883      2.3
     Total Principal Transactions 15,410,960     14.6        13,886,838     17.2       11,159,434     15.3

Investment Banking                14,228,186     13.5         8,357,622     10.3       10,559,244     14.4
Interest and Dividends             9,870,634      9.4         7,856,697      9.7        6,621,355      9.1
Advisory and Administrative
  Service Fees                    11,615,333     11.0         7,651,131      9.5        4,677,522      6.4
Other                                915,487      0.9           489,077      0.6          245,327      0.3

   Total Revenues              $ 105,364,002    100.0      $ 80,907,211    100.0     $ 73,165,305    100.0
</TABLE>


     The percentage contribution to total revenues of each aspect of the
Registrant's operations does not necessarily reflect a corresponding percentage
contribution to net income. Because of the interdependence of various activities
and departments of the Registrant's business, and the subjective assumptions
which would be involved in allocating overhead, including administrative,
operations, communications and data processing expenses, it is inappropriate to
state a percentage contribution to net income of each aspect of the Registrant's
operations.

Retail Markets

     Retail investment brokerage is the Registrant's principal business activity
and is the largest contributor to the Registrant's revenues. During fiscal 1998,
revenues from the Registrant's retail brokerage activities are estimated to
represent approximately 89% of the Registrant's brokerage and investment banking
revenues and 70% of total revenues. Revenues from retail brokerage activities
are generated through customer purchases and sales of stocks, bonds, mutual
funds, and other securities. Commissions are charged on both listed and
over-the-counter agency transactions. When the Registrant executes
over-the-counter transactions as a dealer, it may charge mark-ups or mark-downs
in lieu of commissions. (See "Market- Making and Principal Transactions.")

                                        5

<PAGE>



     Retail commissions are charged in accordance with a schedule which the
Registrant has formulated, and which may be changed from time to time. In many
cases, discounts from the schedule are granted to retail clients, generally on
large trades or to active customers. A significant portion of the Registrant's
retail clients are individuals who reside in the southeastern United States. The
Registrant is not dependent on any single client or small number of clients.
However, the Registrant is heavily dependent on the continued services of its
investment brokers to attract and retain clients. (See "Employees.")

     In addition to providing transaction executions on a commission basis, the
Registrant also provides managed account services. Under this arrangement,
revenues are derived from a fee based on a percentage of client account assets
in lieu of a separate commission for each securities transaction. This service
is provided for accounts managed by clients and investment brokers as well as
for professionally managed accounts. For fiscal 1998, revenues from managed
account fees approximated 2% of total revenues.

     In addition to brokerage revenues, the Registrant's client accounts are a
significant source of interest income. Approximately 89% of interest and
dividend income and 8% of total revenues is attributable to interest charged on
client margin accounts. Balances in client margin accounts increased by 37% from
1997 to 1998 to a total of approximately $124 million at year-end, following a
15% increase from 1996 to 1997. As a service to its retail clients, the
Registrant provides margin accounts which allow the customer to pay less than
the full cost of a security purchased, with the balance of the purchase price
being provided by the Registrant as a loan secured by the securities purchased.
Clients may also borrow money from the Registrant for other purposes, provided
the loan is adequately secured by marketable securities held in a margin
account. The amount of such margin loans are subject to the margin requirements
(Regulation T) of the Board of Governors of the Federal Reserve System, NYSE
margin requirements, and the Registrant's internal policies, which in some
instances are more, but in no event less stringent than requirements set by
Regulation T and the NYSE. In permitting customers to purchase securities on
margin or otherwise borrow money through a margin account, the Registrant bears
the risk of a market decline which could reduce the value of its collateral
below customers' indebtedness. The Registrant has a Credit Committee which
monitors compliance with margin policies, reviews large customer margin accounts
and securities concentrations within such accounts, and establishes and monitors
equity maintenance requirements.

     In addition to securities brokerage and margin lending services, the
Registrant also provides its retail clients specialized financial services
including equity and fixed income research, portfolio evaluation, retirement
planning, financial planning, individual retirement account custodial services,
money market services, and other personal investment advisory services. Fees are
charged for some, but not all, of these services. Advisory and administrative
service fees, which also include investment management fees, accounted for
approximately 11% of the Registrant's total revenues in 1998. (See also
"Investment Management." )

Capital Markets

     The Registrant's Capital Markets effort is coordinated through a Capital
Markets Group consisting of Institutional Brokerage, Trading, Research, and
Corporate and Municipal Finance departments. The Registrant's business strategy
for developing its Capital Markets business includes an emphasis on quality
investment research, with a primary focus on equity securities of companies
located within the Registrant's geographical region.

Institutional Brokerage

     The Registrant executes securities transactions for institutional investors
such as banks, mutual funds, insurance companies, and pension and profit-sharing
plans. The 12 investment brokers in the institutional equity and municipal bond
sales departments account for a significant portion of these transactions.
Institutional investors normally purchase and sell securities in large
quantities which require special marketing and trading expertise. The Registrant
believes that a significant portion of its institutional

                                       6

<PAGE>



brokerage commissions are received as a consequence of providing institutions
with research reports and services regarding specific corporations and
industries and securities market information. The Registrant provides services
to a nationwide institutional client base as well as several institutional
clients in Europe. During fiscal 1998, revenues from institutional brokerage
activities are estimated to represent approximately 8% of the Registrant's
brokerage and investment banking revenues and 7% of total revenues, up from 5%
and 4%, respectively, from the prior year. Transactions for institutional
investors are executed by the Registrant acting as broker or as principal. The
Company permits discounts from its commission schedule to its institutional
customers. The size of such discounts varies with the size of particular
transactions and other factors.

Market-Making and Principal Transactions

     The Registrant actively engages in trading as principal in various phases
of the over-the-counter securities business. To facilitate trading by its
customers, the Registrant buys, sells, and maintains inventories of municipal
and corporate bonds and common stocks in order to "make markets" in those
securities. Revenues from principal transactions, which include trading profits
or losses and sales credits, depend upon the general trend of prices, the level
of activity in the securities markets, the skill of employees engaged in
market-making, and the size of the inventories. The activities of the Registrant
in trading as principal require the commitment of capital and create an
opportunity for profit and risk of loss due to market fluctuations. As of June
26, 1998, Scott & Stringfellow made markets in the common stock or other equity
securities of approximately 157 NASDAQ listed corporations, emphasizing local
and regional companies, for which the Registrant has performed investment
banking services, or which are covered by the Registrant's research department.

     The following table shows, for the fiscal year ended June 26, 1998, the
highest, lowest, and average monthly inventories (based upon the aggregate,
rather than the net, of both long and short positions) for securities in which
the Registrant trades as principal:

<TABLE>
<CAPTION>
                                            Highest                    Lowest                   Average 
                                           Inventory                  Inventory                Inventory
                                         ------------               ------------              ------------

<S>                                      <C>                         <C>                       <C>        
Municipal Securities                     $ 10,698,709                $ 4,141,370               $ 7,212,382
Equity Securities (primarily common
  stocks)                                   8,172,346                  2,147,419                 3,900,585
Corporate Debt Securities                   3,852,830                    517,737                 1,417,040
U. S. Government Securities                 3,856,551                    273,973                 2,191,906
Other Securities                            2,732,058                  1,867,329                 2,165,459
</TABLE>


     In executing customers' orders to buy or sell over-the-counter securities
in which it makes a market, the Registrant may sell to or purchase from its
customers at a price which is approximately equal to the current inter-dealer
market price, plus or minus a mark-up or mark-down. Alternatively, the
Registrant may act as an agent and execute a customer's purchase or sell order
with another broker-dealer which acts as a market- maker, at the best
inter-dealer market price, in which case a commission is charged.

     Personnel engaged in market-making and principal transactions include 7
employees involved in municipal bond trading, 8 employees in over-the-counter
equity trading, and 4 employees in taxable debt securities trading. Each trading
department is subject to internal position limits.

Investment Banking

     The Registrant participates in corporate and tax-exempt securities
distributions as a manager or as a member of an underwriting syndicate or
selling group. Corporate offerings involve common or preferred

                                        7

<PAGE>



stock, debt securities or other securities issued by corporations. Tax-exempt
securities are obligations issued by state and municipal governments, hospitals,
educational institutions, public utility systems, and industrial development
authorities. The following table sets forth corporate and tax-exempt
underwriting participations of the Registrant:
<TABLE>
<CAPTION>

                                  Managed or Co-Managed                    Syndicate Participations
Fiscal                         Number of        Amount of                 Number of    Amount of
Years                           Issues           Offering                  Issues    Participations
-----                          ---------        ---------                 ---------  --------------

<S>     <C>    
Corporate Stock and Bond Offerings:

1998                              16    $ 746,085,060                        114    $ 180,980,884
1997                               5      292,171,623                        138      511,520,858
1996                              10      615,862,188                        197      214,542,845
1995                               2      133,750,000                        149      154,448,702
1994                               9      430,922,500                        274      301,812,330

Tax-Exempt Bond Offerings

1998                              27      985,100,000                         17       13,250,000
1997                              26    1,017,250,000                         44       26,100,000
1996                              33    1,359,685,000                         35       19,035,000
1995                              12      326,308,000                         29       22,110,000
1994                              48    1,851,323,000                         31       30,775,000
</TABLE>

     The Registrant's underwriting activities, together with its selling group
participations, are an important source of securities for distribution to its
clients. Managed or co-managed equity offerings, in particular, are an important
source of revenue because of the availability of a large amount of securities
for distribution and management fees earned in connection with such offerings.
The Registrant's underwriting business is very competitive for both corporate
and tax-exempt offerings and is expected to remain so in the future. The
Registrant's corporate stock and bond offerings are highly dependent on market
conditions.

     Participation in an underwriting syndicate or selling group involves both
economic and regulatory risks. An underwriting participant may incur losses if
it is unable to resell the securities it is committed to purchase, or if it is
forced to liquidate its commitment at less than the agreed purchase price. In
addition, under federal securities laws, other statutes and court decisions, an
underwriting participant or selling group member may be subject to substantial
liability for material misstatements or omissions in prospectuses and other
communications with respect to such offerings. Further, underwriting commitments
require a charge against net capital and the Registrant's ability to make
underwriting commitments may be limited by the requirement that it must at all
times be in compliance with the net capital rule. (See "Regulation".)

     In addition to the underwriting and syndication activities described above,
the Registrant engages in other investment banking services such as structuring,
managing, and marketing private offerings of corporate and tax-exempt
securities, assisting in arranging mergers and acquisitions, and providing
valuation and financial consulting services for gift and estate tax purposes,
employee stock ownership plans, mergers, acquisitions, stock purchase
agreements, and other corporate finance purposes. Fees generated by corporate
and municipal finance fees accounted for approximately 2% of the Registrant's
total revenues during 1998.

Research Services

     The Registrant's research activities include reviewing and analyzing
general market conditions and specific industries and performing primary
research on individual companies, with particular emphasis on

                                        8

<PAGE>



companies in the southeastern and Middle Atlantic United States and selected
industries; making investment recommendations; reviewing client portfolios;
publishing portfolio strategy recommendations; providing investment seminars for
the benefit of clients and investment brokers; providing market and investment
commentary through local media outlets; and responding to inquiries from clients
and investment brokers. The Registrant's primary research effort is provided by
ten senior primary analysts, nine associate analysts, a technical analyst and is
supplemented by two New York correspondent firms which cover over 2,000
companies worldwide and provide extensive coverage on the economy and securities
markets. The services provided by the Research Department are critically
important to virtually all revenue-generating activities of the firm, including
retail and institutional brokerage, market-making, and investment banking.
Research reports are made available without charge to the Registrant's clients
although certain research is distributed by subscription.

Investment Management

     Scott & Stringfellow Capital Management, Inc. ("SSCM"), a subsidiary of the
Registrant, is a registered investment advisor which provides investment
management services for individuals and their estates and trusts, corporations,
charitable and educational foundations and employee benefit plans. Fees charged
on investment accounts managed by SSCM, which are included in advisory and
administrative service fees, represented approximately 4% of total revenues in
1998. As of June 26, 1998, SSCM had approximately $350 million of assets under
management, a decline of 42% from $600 million at June 27, 1997. The decline in
assets under management resulted from the formation of a new company, Atlantic
Capital Management, LLC ("ACM"), by former principals of SSCM, during the third
fiscal quarter of 1998. A significant number of SSCM's investment advisory
contracts, representing assets under management, were transferred to ACM. The
Registrant retains a 15% membership interest in ACM. Investment management
services are expected to continue as a significant and growing area of the
Registrant's business.

Administration and Operations

     The Registrant's operations and administrative personnel, consisting of 93
employees as of June 26, 1998, are responsible for the execution of orders;
processing of securities transactions; receipt, identification and delivery of
funds and securities; custody of clients' securities; cash management; credit;
internal financial control; accounting; finance; human resources; employee
benefits; purchasing; telecommunications; technology; facilities; general office
services; client services; marketing; and compliance with regulatory
requirements.

     There is considerable fluctuation in the volume of transactions which a
securities firm must handle. In the past, when the volume of trading in
securities reached record levels, the securities industry experienced
significant operating problems. The Registrant has never experienced any
significant operating difficulties, even during periods of exceptionally heavy
trading. There is, however, no assurance that heavy trading volume in the future
will not result in clearing and processing difficulties. The following table
sets forth the high, low, and average number of monthly sale and purchase
transactions processed by the Registrant during the periods shown.

                                                        Monthly
Fiscal Years                            High             Low             Average
------------                           ------           ------           -------

     1998                              53,814           38,020            43,547
     1997                              41,858           28,036            35,332
     1996                              42,272           25,281            32,048
     1995                              33,659           19,936            24,360
     1994                              25,141           18,857            21,485



                                        9

<PAGE>



     The Registrant currently utilizes the services of SunGard Financial
Systems, Inc. for the electronic data processing of all data pertinent to
security transactions. General accounting is performed through an in- house
general ledger system. Other computerized systems are used in support of various
administrative, operations, and trading functions. The Registrant also maintains
an administrative computer network ("intranet") to support electronic mail, the
sharing of computer applications and data files between employees, and access to
the Internet.

     The Registrant believes that its internal controls and safeguards against
securities theft, including use of depositories and periodic securities counts,
are adequate. As required by the NYSE and other regulatory bodies, the
Registrant carries fidelity bonds covering loss or theft of securities, as well
as employee dishonesty, forgery and alteration of checks or similar items, and
forgery of securities. Such bonds provide total coverage of $10,000,000 (subject
to a $250,000 deductible per claim.)

     Customer transactions are recorded and posted to the books daily;
designated personnel monitor them to ensure compliance with applicable laws,
rules, and regulations. An Administration and Operations Committee meets monthly
to review operational conditions in the firm. In addition, the Chief Operations
Officer, Chief Financial Officer, Chief Compliance Officer, Director of Human
Resources, and Director of Administrative Services sit on the Management
Committee which normally meets weekly to discuss current issues related to the
overall day-to-day management of the firm. The Registrant has an internal
auditor who performs periodic reviews of controls and has direct access to the
Audit Committee of the Board of Directors, which includes three outside
directors.

Competition

     The Registrant is engaged in the highly competitive securities brokerage
and financial services businesses. It competes directly with other regional
securities brokerage firms, large Wall Street securities firms, discount
brokerage firms, and internet brokerage firms for a share of the retail
brokerage business in its market area. To an increasing degree, the Registrant
also competes for various segments of the retail financial service business with
other institutions such as commercial banks, savings institutions, mutual fund
companies, life insurance companies and financial planning firms. In particular,
legal and regulatory changes have recently allowed commercial banks and their
holding companies to compete more directly in the brokerage and investment
banking businesses.

     In addition to the competition for retail investment business, there is
substantial competition among firms in the securities industry to attract and
retain experienced and productive investment brokers. (See "Employees.")

     Many of these competitors have far greater personnel and financial
resources than the Registrant. Larger competitors are able to advertise their
products and services on a national or regional basis and have a far greater
number and variety of distribution outlets for their products. Discount and
internet brokerage firms market their services through aggressive pricing and
promotional efforts. In addition, several regional competitors have much more
extensive investment banking activities than the Registrant and therefore
possess a relative advantage with regard to securities distribution.

     Recent rapid advancements in computing and communications technology are
substantially changing the means by which financial services are delivered.
These changes are providing consumers with more direct access to a wide variety
of financial and investment services including market information and on-line
trading and account information. Advancements in technology also create demand
for more sophisticated levels of client services. Provision of these services
may entail considerable cost without an offsetting source of revenue. Although
management is committed to utilizing technological advancements to provide a
high level of client service, many of the Registrant's competitors have far
greater technological and financial resources at their disposal.


                                       10

<PAGE>



     The Registrant follows a strategy of attempting to offer superior service
and investment advice in order to differentiate itself from competitors.

Employees

     As of June 26, 1998, the Registrant had 616 employees, of whom 260 had
full-time investment broker responsibilities. None of the Registrant's employees
are covered by a collective bargaining agreement.

     In large part, the Registrant's future success is dependent upon its
continuing ability to hire, train and retain qualified investment brokers. The
total number of investment brokers increased to 260 from 237 during the fiscal
year reflecting new hires offset by investment brokers leaving the Registrant's
employ and employees transferred to and from investment broker and other
positions. The Registrant trains new investment brokers who are required to take
examinations given by the NYSE, the NASD and certain state securities regulators
in order to be registered and qualified. The Registrant also provides for
continuing training programs for investment brokers. Investment brokers are
required to meet continuing education requirements as promulgated by the
industry. Competition is intense among securities firms for investment brokers
with good sales production records.

     The Registrant considers its employee relations to be very good and
considers its compensation and employee benefits, which include medical, life,
accidental death and disability insurance, a profit sharing and 401(k) plan, an
employee stock purchase plan, educational assistance, as well as a flexible
benefits plan which allows pre-tax contributions for medical insurance premiums,
out-of-pocket medical expenses, and dependent care expenses, to be competitive
with those offered by other securities firms. In addition to the benefits
offered to all eligible employees, the Registrant maintains a stock option plan,
a non-qualified deferred compensation plan, and a management stock purchase loan
plan to attract and retain executive personnel and investment brokers with
outstanding sales production records.

Regulation

     The securities industry in the United States is subject to extensive
regulation under federal and state laws. The Securities and Exchange Commission
("SEC") is the federal agency charged with administration of the federal
securities laws. Much of the regulation of broker-dealers, however, has been
delegated to self-regulatory organizations, principally the NASD and the
national securities exchanges. These self- regulatory organizations adopt rules
(which are subject to approval by the SEC) which govern the industry and conduct
periodic examinations of member broker-dealers. Securities firms are also
subject to regulation by state securities commissions in the states in which
they are registered. Scott & Stringfellow is currently registered in 42 states
and the District of Columbia.

     The regulations to which broker-dealers are subject cover all aspects of
the securities business, including sales practices, trade practices among
broker-dealers, capital structure of securities firms, uses and safekeeping of
clients' funds and securities, record keeping, and the conduct of directors,
officers and employees. Additional legislation, changes in rules promulgated by
the SEC and by self-regulatory organizations, or changes in interpretations or
enforcement of existing laws and rules, often affect directly the method of
operation and profitability of broker-dealers. The SEC and the self-regulatory
organizations may conduct administrative proceedings which can result in
censure, fines, suspension or expulsion of a broker-dealer, its officers or
employees. The principal purpose of regulation and discipline of broker- dealers
is the protection of clients and the securities market rather than the
protection of creditors or stockholders of broker-dealers.

     One of the most important regulations with which the Registrant's
broker-dealer subsidiary must continually comply is SEC Rule 15c3-1 and a
similar rule of the NYSE which require the Registrant's broker-dealer subsidiary
to maintain a minimum amount of net capital, as defined. These rules, under the

                                       11

<PAGE>



alternative method, prohibit a broker or dealer from engaging in any securities
transactions at a time when its net capital is less than 2% of aggregate debit
items arising from customer transactions; in addition, restrictions may be
imposed on the operations of a broker or dealer if its net capital is less than
5% of aggregate debit items. At June 26, 1998, the Registrant's broker-dealer
subsidiary's net capital was 12% of aggregate debit items. (See note 6 of Notes
to Consolidated Financial Statements for fiscal 1998 incorporated herein by
reference.)

     The laws, rules and regulations of the various federal, state and other
regulatory bodies of which the business of the Registrant is subject are
constantly changing. While the management believes that it is currently in
compliance in all material respects with all laws, rules and regulations
applicable to its business, it cannot predict what effect any such changes might
have.

Item 2. PROPERTIES

     The Registrant uses general office space for the conduct of its business.
The Registrant's main office is located in the Mutual Building, 909 East Main
Street, Richmond, Virginia, and its branch operations are conducted in various
office buildings located in 30 other municipalities in which it does business.
All of the Registrant's offices are leased. (See note 12 of Notes to
Consolidated Financial Statements for fiscal 1998 incorporated herein by
reference.) The Registrant renovates and relocates its retail branch offices as
needed to accommodate additional investment brokers and improve client service.
Although the Registrant's offices are leased, relocations and renovations often
require capital expenditures for leasehold improvements, furniture and
equipment. In addition, installation of new computer hardware, software and
supporting systems pursuant to the Registrant's technology plan requires
significant ongoing capital expenditures.

Item 3.  LEGAL PROCEEDINGS

     The Registrant has been named in legal actions relating to its securities
business. Management of the Registrant, after consultation with legal counsel,
believes the resolution of these various lawsuits and claims will have no
material adverse effect on the financial position of the Registrant.

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

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The Executive Officers of the Registrant as of June 26, 1998, are as
follows:

<TABLE>
<CAPTION>

Name                        Age     Positions with the Registrant
----                        ---     -----------------------------
<S>                          <C>                         
S. Buford Scott              65     Chairman of the Board
Frederic Scott Bocock        66     Vice Chairman of the Board
John Sherman, Jr.            52     Director, President and Chief Executive Officer
Steven C. DeLaney            44     Director, Executive Vice President and Director of Capital Markets
Charles E. Mintz             44     Director, Executive Vice President and Director of Retail Markets
Sandra D. Glass              59     Senior Vice President and Director of Operations
William F. Gunter            55     Senior Vice President and Director of Financial Products and Services
Norman L. Hancock            60     Senior Vice President and Chief Compliance Officer
Kenneth A. Thomas            50     Senior Vice President and Director of Administrative Services
Diann D. Fox                 49     Senior Vice President and Director of Human Resources
Guy P. Chance                63     First Vice President and Director of Marketing
Mike D. Johnston             38     Senior Vice President and Chief Financial Officer
</TABLE>

                                       12

<PAGE>





     S. Buford Scott has served as Chairman of the Board of Directors of the
Registrant and Scott & Stringfellow since 1974. He also served as its Chief
Executive Officer from 1974 until 1984. Mr. Scott is a member of the Board of
Directors of Ethyl Corporation. He is also a Director of Sheltering Arms
Hospital, a Director of the Virginia Council on Economic Education, a Director
of the National Council on Economic Education, a Director of Richmond
Renaissance, a Director of the Atlantic Rural Exposition (State Fair of
Virginia), a Director of the Hollywood Cemetery Association, a Trustee of the
Securities Industry Foundation for Economic Education, and Chairman of Elk Hill
Farm, Inc.

     Frederic Scott Bocock has served as Vice Chairman of the Board of Directors
of the Registrant and Scott & Stringfellow since 1984, and served as President
of Scott & Stringfellow from 1974 until 1984. Mr. Bocock is Chairman of Scott &
Stringfellow Capital Management, Inc. and is President of the Men's Board of the
Virginia Home. Mr. Bocock, S. Buford Scott and R. Strother Scott, a First Vice
President - Corporate Finance, are first cousins to one another and grandsons of
Frederic William Scott, co-founder of Scott & Stringfellow.

     John Sherman, Jr. was elected President and Chief Executive Officer
effective January 1, 1996. Prior to that he was Executive Vice President and
Chief Operating Officer from August 1995 to January 1996. From 1993 until 1995
he served as Senior Vice President for Branch Administration and Retail Sales of
Scott & Stringfellow. Mr. Sherman joined Scott & Stringfellow in October 1988 as
Vice President and manager of the Kinston, North Carolina branch office. Prior
to joining Scott & Stringfellow, Mr. Sherman served as President of Shurgard
Capital Investments located in Seattle, Washington from January 1988 to October
1988. Prior to January 1988, Mr. Sherman held the position of Vice President and
Kinston branch manager of Wheat, First Securities, Inc.

     Steven C. DeLaney, was elected to the Board of Directors of the Registrant
in October 1995. Mr. DeLaney currently serves as Executive Vice President and
Director of Capital Markets with overall responsibility for equity and fixed
income research, investment banking, institutional sales, and trading. Mr.
DeLaney served as Chief Financial Officer of the Company from 1992 to 1995.
Prior to joining the Registrant, Mr. DeLaney was employed from 1976 to 1991 by a
Virginia-based, diversified financial services company where he held several
senior-level financial and executive positions. Mr. DeLaney is a financial and
operations principal (series 27) and general securities principal (series 24).

     Charles E. Mintz was elected to the Board of Directors and named Executive
Vice President in January 1998. Mr. Mintz has served as Director of Retail
Markets of Scott & Stringfellow since February 1997. From January 1996 to
February 1997, Mr. Mintz served as Chief Financial Officer after serving as
First Vice President and Chief Administrative Officer from May 1995 to January
1996. Mr. Mintz joined Scott & Stringfellow in August 1990 as manager of the
Wilmington, North Carolina branch office. Prior to joining Scott & Stringfellow,
Mr. Mintz served as President of Fox, Graham & Mintz Securities, Inc. from 1985
until its 1990 acquisition by Scott & Stringfellow. Prior to 1985, Mr. Mintz was
the Myrtle Beach, South Carolina branch manager of Wheat, First Securities, Inc.

     Sandra D. Glass joined the Registrant in 1986 as Director of Operations.
Previously, she was a Senior Vice President and Director of Operations for
Schneider, Bernet & Hickman, Inc., a regional brokerage firm in Dallas, Texas
where she was employed from 1965 to 1985. Ms. Glass was named Senior Vice
President in 1993 and served on the Board of Directors of Scott & Stringfellow,
Inc. from 1996 to 1998.

     William F. Gunter was elected Senior Vice President in 1993 and a Director
of Scott & Stringfellow, Inc. in April 1996. Mr. Gunter joined Scott &
Stringfellow in 1981, and is currently Director of Financial Products and
Services with overall responsibility for mutual funds, annuities, insurance,
retirement plans,

                                       13

<PAGE>



financial planning, and money markets. Prior to 1981, Mr. Gunter was a Vice
President with Wheat First Securities and a trust officer with First & Merchants
National Bank.

     Norman L. Hancock joined Scott & Stringfellow in October 1992 as Chief
Compliance Officer. Prior to joining Scott & Stringfellow, Mr. Hancock was with
Wheat, First Securities, Inc. for 35 years, where he was Senior Vice President
and Compliance Director for 18 years. He served as cashier and personnel
director in earlier years. Mr. Hancock was named Senior Vice President in 1996.

     Kenneth A. Thomas is a Senior Vice President and Chief Administrative
Officer at Scott & Stringfellow. He also serves on the firm's Management and
Operations Committees. Mr. Thomas joined Scott & Stringfellow 4 years ago and is
responsible for the firm's technology, communications, facilities, and other
office support systems and services. Previously, he was a Senior Vice President
with Wheat, First Securities, Inc., serving 21 years in various administrative,
systems, and operational management capacities.

     Diann D. Fox was elected Senior Vice President of Human Resources in
January 1997. Ms. Fox joined Scott & Stringfellow in 1972 after being with Paine
Webber (formerly Abbot, Proctor and Payne) since 1968. Prior to accepting an
administrative position in Human Resources, Ms. Fox served in the research
department providing analytical support to the firm's investment advisory,
primary, and correspondent research functions. Ms. Fox has managed the Human
Resources function since 1987.

     Guy P. Chance joined Scott & Stringfellow in 1985 and served as Director of
Research from 1987 to 1992. He then served as Director of National Research
until May 1996, when he was appointed Director of Marketing. Mr. Chance was
named First Vice President in 1987. Prior to joining Scott & Stringfellow, Mr.
Chance worked for several financial services firms in the Boston area in a
variety of institutional and retail marketing and research positions.

     Mike D. Johnston joined Scott & Stringfellow in 1987 and was named Vice
President and Treasurer in 1995. In February 1997, Mr. Johnston was named Chief
Financial Officer. As Chief Financial Officer, Mr. Johnston is responsible for
accounting, finance, and client services functions. Prior to joining Scott &
Stringfellow, Mr. Johnston was a tax manager for KPMG Peat Marwick. Mr. Johnston
holds a CPA certificate and serves on the board of directors of NOVA of Virginia
Aquatics. Mr. Johnston is a financial and operations principal (series 27).

     All officers serve at the discretion of the Board of Directors.


PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS

     The information required by this item is incorporated herein by reference
to the Corporate Information on exhibit page 13.40 of the Annual Report to
Shareholders for fiscal 1998. The computation of the approximate number of
holders of the Registrant's common stock is based on the number of holders of
record as of June 26, 1998. Information on the holders of record of the
Registrant's common stock is maintained and produced by the Registrant's
transfer agent, ChaseMellon Shareholder Services.

Item 6.  SELECTED FINANCIAL DATA

     The information required by this item is incorporated herein by reference
to exhibit page 13.1 of the Annual Report to Shareholders for fiscal 1998.



                                       14

<PAGE>



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

     The information required by this item is incorporated herein by reference
to exhibit pages 13.2 to 13.10 of the Annual Report to Shareholders for fiscal
1998.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item, except for the required financial
statement schedule, is incorporated herein by reference to exhibit pages 13.11
to 13.23 of the Annual Report to Shareholders for fiscal 1998. The financial
statement schedule, which includes the Parent-only Condensed Financial
Statements of the Registrant, is included on pages 22 to 24 of this Form 10-K.

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

     There were no changes in accountants or disagreements on accounting and
financial disclosure.


PART II

Item 10.   INFORMATION REGARDING EXECUTIVE OFFICERS

     The information regarding Executive Officers required by Item 10 is shown
on page 12 of this Form 10-K.

Item 11.  EXECUTIVE COMPENSATION

     The following table provides information concerning the compensation and
stock option grants received by the Company's Chief Executive Officer and each
of its four other most highly compensated executive officers for the fiscal year
ended June 26, 1998, and for each of the two previous fiscal years.

<TABLE>
<CAPTION>

                                         SUMMARY COMPENSATION TABLE
                                                                               Long Term
                                            Annual Compensation               Compensation    All Other
   Name and                                                    Other Annual     Options      Compensation
 Principal Position       Year       Salary      Bonus (1)   Compensation (2)   Granted #      (3)(4)(5)
-------------------       ----      --------     --------    ----------------   ---------    ------------
<S>                       <C>       <C>          <C>            <C>                   <C>       <C>        
John Sherman, Jr.         1998      $200,000     $337,000       $4,312                0         $42,296    
President and             1997       184,769      163,731        3,889                0          42,453    
Chief Executive Officer   1996       149,054       98,678       12,072            2,500          45,866    
                                                                                                           
Sidney Buford Scott       1998             0      130,000        2,272                0         261,188    
Chairman of the Board     1997             0      120,657        1,404                0         207,763    
                          1996             0      120,000        1,404                0         250,380    
                                                                                                           
Frederic Scott Bocock     1998        40,000      225,000        1,197                0         342,656    
Vice Chairman             1997        40,000      207,357        2,810                0         285,205    
                          1996        40,000      139,500        1,776                0         249,381    
                                                                                                           
Steven C. DeLaney         1998       150,000      238,000        2,344                0          15,371    
Executive Vice President  1997       139,259      134,640        2,128                0          13,141    
                          1996       107,500      106,500          204            2,500           9,046    
                                                                                                           
Charles E. Mintz          1998       150,000      240,000       10,712                0          18,601    
Executive Vice President  1997       128,731      114,695       11,560                0          13,189    
                          1996        94,382       57,849        9,918            2,500          16,050    
</TABLE>   

                                       15

<PAGE>


(1) The Company pays discretionary cash bonuses to executive and management
personnel based on individual performance and Company financial results. See
Committee Report on Executive Compensation -- Cash Bonuses. Included in the
amounts shown as Bonus for 1998 are the following discretionary cash bonuses:
Mr. Sherman -- $337,000; Mr. Scott -- $130,000; Mr. Bocock -- $125,000; Mr.
DeLaney -- $238,000; and Mr. Mintz -- $240,000. The 1998 Bonus amounts also
include bonuses of $100,000 paid to Mr. Bocock based on departmental results.

(2) Included in Other Annual Compensation for 1998 are amounts representing
forgivable loan expense for Mr. Mintz in the amount of $6,944. Also included are
the following amounts representing non-cash awards and other miscellaneous
perquisites and benefits: Mr. Sherman -- $4,312; Mr. Scott -- $2,272; Mr. Bocock
--$1,197; Mr. DeLaney -- $2,344; Mr. Mintz -- $3,768.

(3) Included in All Other Compensation for fiscal 1998, the following amounts of
commissions and incentives earned from securities brokerage activities: Mr.
Sherman -- $22,887; Mr. Scott -- $245,730; Mr. Bocock -- $323,247; Mr. DeLaney
-- $492 and Mr. Mintz -- $4,092.

(4) The Company has a voluntary contributory profit sharing plan that covers
substantially all employees. See Committee Report on Executive Compensation --
Profit Sharing and Deferred Plans. Company contributions to the plan may be in
the form of either discretionary matching contributions or additional
discretionary contributions. Included in All Other Compensation for fiscal year
1998 are the following amounts representing Company contributions to the profit
sharing plan: Mr. Sherman -- $8,969; Mr. Scott -- $8,969; Mr. Bocock -- $8,969;
Mr. DeLaney -- $8,969; and Mr. Mintz -- $8,969.

(5) The Company has established a non-qualified deferred compensation plan for
selected highly- compensated employees. See Committee Report on Executive
Compensation -- Profit Sharing and Deferral Plans. Voluntary deferrals under the
deferred compensation plan during fiscal 1998 are included in the category of
compensation from which such deferrals were elected. Company contributions under
the deferred compensation plan for fiscal 1998 in the following amounts are
included in All Other Compensation: Mr. Sherman -- $10,440; Mr. Scott -- $6,489;
Mr. Bocock -- $10,440; Mr. DeLaney -- $5,909; and Mr. Mintz -- $5,450.

There were no stock options granted to the Company's five most
highly-compensated executive officers during the fiscal year ended June 26,
1998.

The following table provides information concerning any stock options exercised
during the fiscal year ended June 26, 1998 by the Company's five most highly
compensated executive officers and the value of their unexercised stock options
at June 26, 1998.



                                       16

<PAGE>




                  AGGREGATE OPTION EXERCISES DURING FISCAL 1998
                        AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
                                                             Number Of                 Value Of Unexercised
                                                      Unexercised Options At           In-The-Money Options
                      Shares Acquired    Value           June 26, 1998 (#)            At June 26, 1998 (1)(2)
    Name              On Exercise (#)   Realized    Exercisable    Unexercisable    Exercisable    Unexercisable
   ------             ---------------   --------    -----------    -------------    -----------    -------------    
<S>                      <C>            <C>                           <C>           <C>               <C>      
John Sherman, Jr.        5,670          $80,182         --            6,870         $       --        $111,294 
Sidney Buford Scott      --               --            6,660           540            116,685           9,202 
Frederic Scott Bocock    --               --            9,360           540            172,883           9,202 
Steven C. DeLaney        2,910           40,279         2,220         6,870             36,332         111,294 
Charles E. Mintz         --               --            2,010         4,440             32,762          70,225 
</TABLE>

                                                                    

(1) The closing price of the Company's Common Stock was $24.75 per share on June
26, 1998.

(2) The value of unexercised options is determined by the difference between the
fair market value of the option shares ($24.75 per share) and the exercise
prices of the options held at June 26, 1998.

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding shares of Common Stock
beneficially owned as of September 17, 1998 by (i) each person who is known by
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock; (ii) each director and nominee for director of the Company; and (iii) the
directors and executive officers as a group. Unless otherwise noted, each
individual has sole voting power and sole investment power with respect to the
number of shares set forth opposite his name. The address of Mr. Bocock and Mr.
Scott is 909 East Main Street, Richmond, Virginia 23219. The address of Mr.
Kellogg is c/o Spear, Leeds & Kellogg, 120 Broadway, New York, New York 10271.



<TABLE>
<CAPTION>

                                                                            Percent  of
Name                                            Number of Shares (1)     Outstanding Shares
<S> <C>
Peter R. Kellogg (2)                                  375,000                    11.1%
Frederic Scott Bocock (3)                             294,300                     8.6
Sidney Buford Scott (4)                               219,316                     6.4
John J. Muldowney                                     129,600                     3.8
John Sherman, Jr. (6)                                  56,941                     1.7
R. Bruce Campbell (7)                                  53,795                     1.6
William F. Calliott                                    50,434                     1.5
David Plageman (5)                                     47,450                     1.4
Steven C. DeLaney (6)                                  33,530                     1.0
Charles E. Mintz (6)                                   33,495                     1.0
Robert L. Hintz                                         9,569                     0.3
R. Gordon Smith                                         7,769                     0.2
William W. Berry                                        4,169                     0.1

All directors and executive officers
as a group (19 persons) (6)                           999,921                    28.9

</TABLE>




                                       17

<PAGE>



(1) Beneficial ownership shown for the following individuals and group includes
the indicated number of shares of Common Stock that may be purchased upon the
exercise of stock options which are exercisable within the next sixty days: Mr.
Bocock (9,900), Mr. Scott (7,200), Mr. Muldowney (3,600), Mr. Sherman (6,870),
Mr. Campbell (4,500), Mr. DeLaney (6,750), Mr. Mintz (6,450) and all directors
and executive officers as a group (62,280).

(2) Information concerning the shares owned by Mr. Kellogg was derived from a
Form 4 filed with the Securities and Exchange Commission on March 7, 1995.
According to this filing, Mr. Kellogg owns 90,000 shares directly. He also
indirectly controls: 142,500 shares owned by IAT Reinsurance Syndicate Ltd., a
Bermuda corporation of which he is the sole holder of voting stock; 90,000
shares owned by his wife; and 52,500 shares owned by a family trust of which he
is a trustee. Mr. Kellogg disclaims beneficial ownership of the shares owned by
the corporation, his wife, and the trust.

(3) Includes 222,800 shares owned by Mr. Bocock's children and trusts for his
children, as to which shares Mr. Bocock disclaims beneficial ownership.

(4) Includes 31,816 shares owned by Mr. Scott's wife, children, and
grandchildren, as to which shares Mr. Scott disclaims beneficial ownership.

(5) Includes 3,300 shares owned by Mr. Plageman's children as to which Mr.
Plageman shares voting and/or investment power.

(6) Includes shares purchased pursuant to the Management Stock Purchase Loan
Plan for the following individuals: Mr. Sherman -- 22,940 shares; Mr. DeLaney --
20,440 shares; Mr. Mintz -- 20,440; Mr. Campbell -- 1,500 shares; and all
directors and executive officers as a group -- 90,320 shares.

(7) Includes 19,500 shares owned by Mr. Campbell's wife, as to which shares Mr.
Campbell disclaims beneficial ownership.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Pursuant to the terms of the Management Stock Purchase Loan Plan, the
Company issues common stock to certain management employees, including some
directors and executive officers, in exchange for promissory notes.  The stock
is issued at fair market value.  The notes are payable on demand, full recourse,
secured by a collateral pledge of the common stock, and bear interest at the
short-term applicable federal rate.  The following table lists directors and
executive officers with indebtedness in excess of $60,000 under this plan:

                                 Largest Amount  Balance          Interest
 Name               Position     of Indebtedness August 31, 1998   Rate

 John Sherman, Jr.  Director         $304,635   $274,635         5.39% to 6.23%
 Charles E. Mintz   Director          262,510    242,510         5.39% to 6.23%
 Steven C. DeLaney  Director          267,010    242,510         5.39% to 6.23%
 Kenneth A. Thomas  Executive Officer  94,375     94,375         5.39% to 6.23%
 William F. Gunter  Executive Officer  83,438     83,438         5.39% to 6.23%
 Mike D. Johnston   Executive Officer  84,250     84,250         5.39% to 6.23%
 Diann D. Fox       Executive Officer  73,313     73,313         5.39% to 6.23%
 Norman L. Hancock  Executive Officer  73,313     73,313         5.39% to 6.23%

      Certain directors and officers of the Registrant maintain margin accounts
with Scott & Stringfellow, Inc..  Such extensions of credit are made in the

                                       18

<PAGE>


ordinary course of business on the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unaffiliated persons and do not involve more than the usual risk of
collectability or present other unfavorable terms.

      McGuire, Woods, Battle & Boothe, LLP, of which R. Gordon Smith, a
director, is a partner, serves as General Counsel to the Registrant.

PART IV

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

  (a) List of Financial Statements, Financial Statement Schedules, and Exhibits

      (1) The following consolidated financial statements of the Registrant and
      its subsidiaries, included on exhibit pages 13.11 to 13.23 of the Annual
      Report to Stockholders for fiscal 1998, are incorporated herein by
      reference:

      Consolidated Statements of Financial Condition - June 26, 1998 and June
      27, 1997. Consolidated Statements of Income - Fiscal years ended June 26,
      1998, June 27, 1997, and June 28, 1996.
      Consolidated Statements of Changes in Stockholders' Equity - Fiscal years
      ended June 26, 1998, June 27, 1997, and June 28, 1996.
      Consolidated Statements of Cash Flows - Fiscal years ended June 26, 1998,
      June 27, 1997 and June 28, 1996.
      Notes to Consolidated Financial Statements.
      Report of Independent Auditors

                                       18

<PAGE>



      (2) The following financial statement schedules of Scott & Stringfellow
      Financial, Inc. are required by Section 210.5-04 of Regulation S-X:

      Independent Auditors' Report on Financial Statement Schedule        pg. 23
      Schedule I - Condensed Financial Statements of Registrant           pg. 24

      All other schedules for which provision is made in the applicable
      accounting regulations of the Securities and Exchange Commission are not
      required under the related instructions, or are inapplicable, or the
      required information is included in the consolidated financial statements
      or notes thereto and therefore have been omitted.

      (3) The following exhibits are filed herewith or incorporated by reference
      as indicated. Exhibit number refers to Item 601 of Regulation S-K:

<TABLE>
<CAPTION>


      EXHIBIT NUMBER                                                PAGE                          
<S> <C>                                                                                           
                                                                                                  
      3. Articles of Incorporation                                  Filed as Exhibits 3.1 through 
                                                                    3.4 to Form S-18              
                                                                    Registration Statement        
                                                                    #33-8967 and incorporated     
                                                                    herein by reference           
                                                                                                  
      4. Material Contracts -                                                                     
                                                                                                  
          Other Material Contracts                                  Filed as Exhibits 10.1        
                                                                    through 10.5                  
                                                                    in Form S-18 Registration     
                                                                    Statement #33-8967 and        
                                                                    incorporated herein by        
                                                                    reference                     
                                                                                                  
          Bank Loan Agreements with Crestar Bank                    Exhibit 10                    
                                                                                                  
          Bank Loan Agreements with Branch Banking and                                            
          Trust Company                                             Exhibit 10                    
                                                                    

     13. Certain portions of the Annual Report to Shareholders for
         the year ended June 26, 1998, to the extent specifically
         incorporated by reference herein                           Exhibit 13

     22. List of Subsidiaries of Registrant                         Filed as Exhibit 22 with the                  
                                                                    Registrant's Annual Report      
                                                                    on Form 10-K for the fiscal     
                                                                    year ended June 24, 1994 and    
                                                                    incorporated by reference       
                                                                                                    
     23. Consent of Independent Auditors                            Exhibit 23                      
                                                                                                    
     27. Financial Data Schedule                                    Exhibit 27                      
                                                                    

</TABLE>


                                       19

<PAGE>



   (b)   Reports on Form 8-K.

     The Registrant filed a Current Report on Form 8-K on August 10, 1998, which
reported the announcement of a plan to merge with BB&T Corporation.

                                       20

<PAGE>



SIGNATURES

     Pursuant to the requirements of Sections 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, in the City of
Richmond, State of Virginia, on the 23rd day of September, 1998.

                           SCOTT & STRINGFELLOW FINANCIAL, INC. (REGISTRANT)

BY    /s/John Sherman, Jr.                               September 23, 1998
      John Sherman, Jr.                                  Date
      President and Chief Executive Officer

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

<TABLE>
<CAPTION>


Signature                               Title                                              Date
<S> <C>

/s/John Sherman, Jr.                    President and Director                             September 23, 1998
John Sherman, Jr.                       (Principal Executive Officer)
                                                                                                                
/s/Mike D. Johnston                     Senior Vice President and                          September 23, 1998
Mike D. Johnston                        Chief Financial Officer                            
                                        (Principal Financial / Accounting Officer)

/s/S. Buford Scott                      Director                                           September 23, 1998
S. Buford Scott                                                                                               
                                                                                                              
__________________                      Director                                           September 23, 1998
Frederic S. Bocock                                                                                            
                                                                                                              
/s/William F. Calliott                  Director                                           September 23, 1998
William F. Calliott                                                                                           
                                                                                                              
/s/David Plageman                       Director                                           September 23, 1998
David Plageman                                                                                                
                                                                                                              
/s/John J. Muldowney                    Director                                           September 23, 1998
John. J. Muldowney                                                                                            
                                                                                                              
/s/R. Bruce Campbell                    Director                                           September 23, 1998
R. Bruce Campbell                                                                                             
                                                                                                              
/s/Charles E. Mintz                     Director                                           September 23, 1998
Charles E. Mintz                                                                                              
                                                                                                              
/s/Steven C. DeLaney                    Director                                           September 23, 1998
Steven C. DeLaney                                                                                             

/s/William W. Berry                     Director                                           September 23, 1998
William W. Berry
                                                                                           
</TABLE>

                                       21

<PAGE>


<TABLE>
<CAPTION>


<S> <C>

/s/R. Gordon Smith                      Director                                            September 23, 1998
R. Gordon Smith                                                                                               
                                                                                                              
__________________                      Director                                            September 23, 1998
Robert L. Hintz                                                                            

</TABLE>


                                       22

<PAGE>








          INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE



The Board of Directors
Scott & Stringfellow Financial, Inc.


Under date of August 14 , 1998, we reported on the consolidated statements of
financial condition of Scott & Stringfellow Financial, Inc. and subsidiaries as
of June 26, 1998 and June 27, 1997 and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for the years ended June
26, 1998, June 27, 1997 and June 28, 1996, as contained in the 1998 annual
report to shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the 1998 annual report on Form 10-K. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement Schedule I.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.



In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.



/s/KPMG Peat Marwick LLP


Richmond, Virginia
August 14, 1998

                                       23

<PAGE>



Schedule I - Condensed Financial Statements of Registrant
Scott & Stringfellow Financial, Inc. (Parent only)

Condensed Statements of Financial Condition

<TABLE>
<CAPTION>


                                                     June 26,           June 27,
                                                      1998               1997

<S> <C>
ASSETS
   Cash                                            $    14,107       $    65,385
   Investments in not readily
     marketable securities                                 -              77,831
   Investments in subsidiaries (a)                  34,574,425        29,486,822
   Other assets                                         35,111             6,010

   Total Assets                                    $34,623,643       $29,636,048

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Intercompany (a)                                $     5,000       $   172,831
   Accounts payable and other liabilities              332,743           285,565

   Total Liabilities                                   337,743           458,396

Stockholders' Equity:
   Common stock, $0.10 par value. Authorized
     10,000,000 shares; issued and outstanding
     3,277,657 in 1998 and 3,172,946 shares
     in 1997                                           327,767           317,295
   Additional paid-in capital                       15,430,595        12,540,734
   Retained earnings                                20,251,287        17,384,953
   Less: Subscriptions Receivable                   -1,723,749        -1,065,330

   Total Stockholders' Equity                       34,285,900        29,177,652

   Total Liabilities and Stockholders' Equity      $34,623,643       $29,636,048


Condensed Statements of Income
                                                                     Years Ended
                                                 June 26, 1998     June 27, 1997    June 28, 1996

Equity in undistributed net income
   from subsidiaries (a)                           $ 4,511,991       $ 2,418,346      $ 3,318,072
Cash dividends (a)                                   1,146,720         1,003,409          857,641
Interest income                                         99,610            35,824            -
Income before income taxes                           5,758,321         3,457,579        4,175,713

Income taxes                                            23,600              -               -

Net income                                         $ 5,781,921       $ 3,457,579      $ 4,175,713


</TABLE>


(a) Eliminated in consolidation. See Notes to Consolidated Financial Statements
contained in the 1998 Annual Report to Shareholders and incorporated herein by
reference. See accompanying auditors' report.

                                       24

<PAGE>



Schedule I (continued)
Condensed Financial Statements of Registrant
Scott & Stringfellow Financial, Inc. (Parent only)

Condensed Statements of Cash Flows
<TABLE>
<CAPTION>


                                                                           Years Ended
                                                       June 26, 1998     June 27, 1997    June 28, 1996
<S> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                           $ 5,781,921       $ 3,457,579      $ 4,175,713
     Adjustments to reconcile net income to net                                                       
     cash provided by operating activities:                                                           
     Equity in undistributed net income                                                               
     of subsidiaries                                     -4,511,991        -2,418,346       -3,318,072
   Changes in assets and liabilities:                                                                 
     Inter-company payable                                 -167,831              -             -      
     Other assets                                           -29,101            -6,010          -      
                                                                                                      
Net cash provided by operating activities                 1,072,998         1,033,223          857,641
                                                                                                      
CASH FLOWS FROM FINANCING ACTIVITIES                                                                  
   Cash dividends paid                                   -1,146,720        -1,003,409         -857,641
   Purchase and retirement of common stock               -2,048,653        -4,296,161          -19,140
   Issuance of common stock                               2,568,877         1,548,070        1,009,250
                                                                                                      
Net cash provided by (used for) financing activities       -626,496        -3,751,500          132,469
                                                                                                      
CASH FLOWS FROM INVESTING ACTIVITIES                                                                  
   Distributions from subsidiaries                        2,048,653         4,296,161           19,140
   Contributions to subsidiaries                         -2,546,433        -1,512,499       -1,009,250
                                                                                                      
Net cash provided by (used for) investing activities       -497,780         2,783,662         -990,110
                                                                                                      
Net change in cash and cash equivalents                     -51,278            65,385             -    
                                                                                                      
Cash and cash equivalents at beginning of year               65,385              -                -    
                                                                                                      
Cash and cash equivalents at end of year                     14,107            65,385             -    

</TABLE>

                                                         
See Notes to Consolidated Financial Statements contained in the 1998 Annual
Report to Shareholders and incorporated herein by reference.

See accompanying independent auditors' report.


                                       25