SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                Date of Report (Date of earliest event reported):
                                  April 2, 1996
                                  -------------



                                   F&M BANCORP
                                   -----------
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                   <C>                             <C>   


      Maryland                       0-12638                    52-1316473
   -------------                  -------------                 -------------
(State of Incorporation)    (Commission File Number)  (IRS Employer Identification No.)
</TABLE>




                            110 Thomas Johnson Drive
                            Frederick, Maryland 21702
                            -------------------------
               (Address of principal executive offices) (Zip Code)



                                 (301) 694-4000
                                 --------------
                         (Registrant's telephone number)


<PAGE>

Item 5.  Other Events.

         On April 2, 1996,  F&M Bancorp  announced  the  execution of a Plan and
Agreement  to Merge  (the  "Plan")  dated as of April 2,  1996 by and  among F&M
Bancorp,  a Maryland  bank  holding  company,  and Home Federal  Corporation,  a
Maryland  thrift  holding  company  and  the  owner  of all of  the  issued  and
outstanding capital stock of Home Federal Savings Bank of Hagerstown, Maryland.

         Pursuant to the terms of the Plan, Home Federal Corporation is to merge
with and into F&M Bancorp  (the  "Merger").  F&M Bancorp  will be the  surviving
Maryland  corporation.  On the  effective  date of the  Merger,  each issued and
outstanding  share of the  Common  Stock of Home  Federal  Corporation  shall be
automatically  converted  into and become a number of shares of the Common Stock
of F&M Bancorp whose  aggregate  value is equal to 1.65 times the book value per
share  of  Home  Federal  Corporation  at the  end of the  month  preceding  the
effective  date,   rounded  to  the  nearest  one  hundredth  of  a  share.  The
stockholders of Home Federal  Corporation  will thus become  stockholders of F&M
Bancorp,  and F&M  Bancorp  will  become  the  owner  of all of the  issued  and
outstanding  capital stock of Home Federal Savings Bank. It is expected that the
effective date of the Merger will occur during the fourth quarter of 1996.

         There  are  2,519,010  shares  of the  Common  Stock  of  Home  Federal
Corporation outstanding. Options to acquire 68,601 shares of the Common Stock of
Home Federal Corporation will be converted into options to acquire shares of the
Common  Stock of F&M Bancorp on similar  terms.  F&M  Bancorp  and Home  Federal
Corporation  also  executed a Stock  Option  Agreement  granting  F&M Bancorp an
option  to  purchase  501,282  shares  of  the  Common  Stock  of  Home  Federal
Corporation   at  $8.25  per  share  if  the  Plan  is   terminated  in  certain
circumstances.  On April 1, 1996, the day preceding  announcement of the Merger,
the per share price of the Common  Stock of Home Federal  Corporation  closed at
$8.25,  and the per share  price of the Common  Stock of F&M  Bancorp  closed at
$29.625. Both stocks are quoted on the Nasdaq National Market System.

         Consummation  of  the  Merger  is  subject  to the  fulfillment  of the
conditions  specified in the Plan.  Among the conditions are the approval of the
stockholders  of both F&M Bancorp and Home Federal  Corporation.  An affirmative
vote of two-thirds of the issued and outstanding  shares of Common Stock of each
of F&M Bancorp and Home Federal  Corporation  is required to approve the Merger.
F&M Bancorp and Home Federal  Corporation will call and hold special meetings of
their  respective  stockholders  for the purpose of voting upon the Plan and the
Merger.  Among the other  conditions  that must be satisfied are the approval of
the relevant federal regulatory  authorities and qualification of the Merger for
favorable tax and accounting treatment.

         F&M Bancorp is  headquartered  in  Frederick,  Maryland  and conducts a
general  banking and trust  company  business  through  its banking  subsidiary,
Farmers and  Mechanics  National  Bank.  Farmers  and  Mechanics  National  Bank
operates 24 offices  located in Frederick,  Carroll,  and  Montgomery  Counties,
Maryland.  At December 31, 1995,  Farmers and Mechanics  National Bank had total




                                       -1-
<PAGE>


assets of $740 million,  total deposits of $621 million, and total loans, net of
unearned income, of $485 million.  Home Federal  Corporation is headquartered in
Hagerstown,  Maryland  and  operates 8 offices in  Washington  County,  Maryland
through  Home  Federal   Savings  Bank.  At  December  31,  1995,  Home  Federal
Corporation had $215 million in assets.

         Pursuant to General  Instruction F to Form 8-K, the press release dated
April 2, 1996  announcing  execution  of the Plan is  attached  to this  Current
Report as Exhibit 1, and is hereby incorporated by reference.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

               (c)  Exhibits.

                    1.   Press Release of F&M Bancorp dated April 2, 1996.

                    2.   Plan and  Agreement  to Merge dated as of April 2, 1996
                         by and among F&M Bancorp and Home Federal Corporation.



                                      -2-
<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Date:  April 8, 1996                    F&M BANCORP



                                        By:/s/ Charles W. Hoff, III
                                           ------------------------
                                           Charles W. Hoff, III
                                           Chairman and Chief Executive Officer






                                      -3-
<PAGE>




                                  EXHIBIT INDEX
                                                                            Page

          1.   Press Release of F&M Bancorp dated April 2, 1996              5

          2.   Plan and  Agreement to Merge dated April 2, 1996
               by and among F&M Bancorp and Home Federal Corporation.        7

The registrant  agrees to furnish  supplementally a copy of any omitted schedule
or annex to the Plan and Agreement to Merge to the Commission upon request.




                                      -4-
<PAGE>




                     EXHIBIT 1. PRESS RELEASE OF F&M BANCORP



         Charles W. Hoff, III, Chairman of the Board and Chief Executive Officer
of F&M Bancorp  headquartered  in Frederick,  Maryland,  and Richard W. Phoebus,
Sr., President and Chief Executive Officer of Home Federal  Corporation and Home
Federal Savings Bank, located in Hagerstown,  Maryland, announced today that F&M
Bancorp  has  entered  into a  definitive  agreement  to  acquire  Home  Federal
Corporation and its subsidiaries.

         Under the terms of the agreement,  Home Federal  Corporation will merge
into F&M  Bancorp,  which will  continue to operate  Home  Federal  Savings Bank
following  consummation of the  transaction.  Each  outstanding  share of common
stock of Home Federal  Corporation  will be exchanged for newly issued shares of
F&M Bancorp at a  conversion  ratio equal to 1.65 times the per share book value
of Home Federal Corporation common stock which shall be determined at the end of
the month  immediately  preceding the closing.  The value of F&M Bancorp  common
stock to be exchanged  will be based on the average NASDAQ closing price for the
20  business  days  preceding  that date.  The  transaction  is  expected  to be
completed  during the fourth  quarter of 1996. If the merger  consideration  had
been based on Home Federal  Corporation's  December 31, 1995 book value of $7.30
per share, each Home Federal  Corporation share would have been exchanged in the
merger  transaction  for $12.05 of F&M Bancorp common stock.  Using the December
31, 1995 closing stock price of F&M Bancorp  common stock of $29.75,  each share
of Home  Federal  Corporation  common  stock would have been  exchanged  for .41
shares of F&M Bancorp common stock.

         Two directors of Home Federal  Corporation  will be invited to serve as
directors of F&M Bancorp.  The acquisition is subject to the approval of federal
regulatory authorities and shareholder approval of both companies.  Charles Webb
& Company is serving as financial  advisor to Home Federal  Corporation  in this
transaction.

         Home  Federal  Corporation  had total assets as of December 31, 1995 of
approximately $214,615,000. F&M Bancorp had total assets as of December 31, 1995
of approximately $739,854,000. Home Federal Savings Bank, the primary subsidiary
of Home Federal Corporation, currently operates eight banking offices and eleven
ATMs in both  Washington  and  Allegheny  Counties  in  Maryland.  Home  Federal
Corporation currently has 2,519,010 shares of common stock outstanding,  and F&M
Bancorp currently has 4,419,424 shares of common stock outstanding.

         Mr.  Phoebus  stated,  "The  proposed  transaction  provides  a  unique
opportunity  for Home  Federal  Savings  Bank and for the  stockholders  of Home
Federal Corporation, as well as for our employees, customers, and the community.
By this  affiliation  with F&M Bancorp  and the  increased  resources  which the
merger makes  available,  Home  Federal can look forward to continued  growth by
expanding its products,  services and delivery systems to our existing customers
and new customers as well. We are very pleased that Home Federal will be able to



                                      -5-
<PAGE>



continue to operate as a subsidiary  of F&M Bancorp,  allowing our  employees to
continue to serve our customer base through our eight Home Federal offices."

         "We are delighted to welcome Home Federal Savings Bank to F&M Bancorp,"
stated Faye Cannon,  President of F&M Bancorp.  "This  transaction  provides the
opportunity  for F&M  Bancorp  to grow and  expand  into  contiguous  Washington
County, a significant industrial and transportation hub for Western Maryland. We
value the  importance  of placing the customer at the center of our business and
this community banking philosophy is one that is shared by Home Federal. Through
this  affiliation,  both  organizations  will be able to enhance the delivery of
products and services to our individual and business  customers,  while building
long term value for stockholders."

         As a subsidiary of F&M Bancorp,  Farmers and Mechanics National Bank is
the fifth largest banking institution  headquartered in Maryland and operates as
a full service commercial bank through 24 full service community banking offices
and 32 ATMs throughout  Frederick,  Carroll,  and Montgomery Counties in central
Maryland.  Farmers and Mechanics  National Bank, a member of the FDIC,  provides
financial  services to both  individuals and business markets and is a member of
the MOST,  CIRRUS,  MAC, and VISA  regional,  national,  and  international  ATM
networks.






                                      -6-
<PAGE>




                     EXHIBIT 2. PLAN AND AGREEMENT TO MERGE


         PLAN AND AGREEMENT TO MERGE (this "Plan"), dated as of April 2, 1996 by
and among F&M Bancorp ("F&M Bancorp"), a Maryland corporation,  and Home Federal
Corporation ("Home Corporation"), a Maryland corporation.

                              W I T N E S S E T H:

         WHEREAS, F&M Bancorp is a bank holding company and the holder of all of
the issued and outstanding  capital stock of Farmers and Mechanics National Bank
("F&M Bank"), a national banking  association;  and Home Corporation is a thrift
holding  company  and the holder of all of the issued  and  outstanding  capital
stock of Home Federal Savings Bank ("Home Bank"), a federally-chartered  savings
bank; and

         WHEREAS,  F&M Bancorp desires to have Home  Corporation  merge with F&M
Bancorp in such a manner that, upon the merger becoming  effective,  F&M Bancorp
will be the surviving Maryland corporation and all of the issued and outstanding
shares of the Common Stock of Home  Corporation will be converted into shares of
the Common Stock of F&M Bancorp,  subject to the terms and  conditions and based
upon Home Corporation's  representations,  warranties and covenants  hereinafter
set forth, such merger hereinafter referred to as the "Merger;" and

         WHEREAS, Home Corporation desires that it be merged with F&M Bancorp in
the manner set forth above,  and that the issued and  outstanding  shares of the
Common Stock of Home Corporation be converted into shares of the Common Stock of
F&M Bancorp,  subject to the terms and  conditions  and based upon F&M Bancorp's
representations, warranties and covenants hereinafter set forth.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein  contained and the mutual  benefits to be derived  herefrom,  the parties
agree as follows:

     1. Effective Date.  Pursuant to Md. Corps. & Ass'ns Code ss. 3-113(a),  the
effective  date of this Plan and the  Merger  (the  "Effective  Date")  shall be
either  (a)  the  15th  day of the  month  following  the  month  in  which  the
Calculation  Date (defined in Section 9.2(a) hereof)  occurs;  or (b) such other
date as F&M Bancorp and Home  Corporation  may agree upon.  F&M Bancorp and Home
Corporation  will prepare and execute  Articles of Merger in  substantially  the
form attached hereto as Appendix II which will set forth the Effective Date, and
will  file  the  Articles  of  Merger  with the  Maryland  State  Department  of
Assessments and Taxation.

     2. Events  Preceding  Effectiveness.  On or before the  Effective  Date the
following shall have occurred:

               (a) A  majority  of the  Boards  of  Directors  of  each  of Home
          Corporation  and F&M Bancorp  shall have  approved  and agreed to this
          Plan and the Merger;




                                      -7-
<PAGE>



               (b) A  majority  of the  Boards  of  Directors  of  each  of Home
          Corporation  and F&M  Bancorp  shall have  approved  and agreed to the
          Stock Option  Agreement in the form  attached  hereto as Appendix III;
          and Home  Corporation  shall have  authorized and reserved an adequate
          number of shares of its Common Stock for issuance upon exercise of the
          option granted by such Stock Option  Agreement,  and taken all actions
          necessary to fulfill its obligations thereunder;

               (c) the  Board of  Directors  of Home  Corporation  shall  call a
          meeting of the  stockholders of Home  Corporation.  Notice of the time
          and place of the  meeting  shall be provided  in  accordance  with Md.
          Corps.  & Ass'ns Code ss.  2-504,  and this Plan and the Merger  shall
          have been ratified and confirmed by the  affirmative  vote of not less
          than  two-thirds  of the issued and  outstanding  voting stock of Home
          Corporation  at the meeting,  in accordance  with Md. Corps.  & Ass'ns
          Code ss. 3-105(d);

               (d) the Board of Directors of F&M Bancorp shall call a meeting of
          the  stockholders of F&M Bancorp.  Notice of the time and place of the
          meeting shall be provided in accordance  with Md. Corps. & Ass'ns Code
          ss.  2-504,  and this Plan and the Merger shall have been ratified and
          confirmed by the  affirmative  vote of not less than two-thirds of the
          issued and  outstanding  voting stock of F&M Bank at the  meeting,  in
          accordance with Md. Corps. & Ass'ns Code ss. 3-105(d);

               (e) F&M  Bancorp  shall  have  procured  the  required  approval,
          consent,  waiver or other  administrative  action with respect to this
          Plan and the  transactions  contemplated  hereby  (i) by the Office of
          Thrift  Supervision under the Savings and Loan Holding Company Act and
          (ii) by the Board of Governors of the Federal Reserve System under the
          Bank Holding Company Act of 1956;

               (f)  the  parties  shall  have  procured  all  other   regulatory
          approvals, consents, waivers or administrative actions of governmental
          entities  or  other   persons  or  agencies   that  are  necessary  or
          appropriate to the  consummation of the  transactions  contemplated by
          this Plan, and no approval,  consent,  waiver or administrative action
          referred to in this Section 2(f) shall have  included any condition or
          requirement  that would (i) result in a materially  adverse  effect on
          F&M Bancorp or Home  Corporation  or (ii) so materially  and adversely
          affect the  economic  or  business  benefits  of the  Merger  that F&M
          Bancorp,  in the sole judgment of F&M Bancorp,  would not have entered
          into this Plan had such conditions or  requirements  been known at the
          date hereof;

               (g) F&M Bancorp shall have filed a  Registration  Statement  with
          the  Securities  and  Exchange   Commission   (the  "SEC")  under  the
          Securities Act of 1933, as amended (the "Securities Act"),  pertaining



                                      -8-
<PAGE>



          to the  shares  of  Common  Stock of F&M  Bancorp  to be issued to the
          stockholders of Home Corporation pursuant to this Plan and the Merger,
          and such Registration  Statement shall have become effective and there
          shall not be in effect a stop order with respect thereto;

               (h) F&M Bancorp  shall have made such filings and  obtained  such
          approvals as are  necessary  under the state  securities or "blue sky"
          laws  pertaining  to the shares of Common  Stock of F&M  Bancorp to be
          issued to the stockholders of Home  Corporation  pursuant to this Plan
          and the Merger; and

               (i) In accordance  with Section  10(c) of this Plan,  F&M Bancorp
          shall have offered to enter into an employment  agreement with Richard
          W. Phoebus,  Sr. substantially in the form attached hereto as Appendix
          VI, and with each of Celia S. Ausherman,  Steven G. Hull and Salvatore
          M. Savino substantially in the form attached hereto as Appendix VII.

     3.  Representations  and Warranties of Home  Corporation.  Home Corporation
represents and warrants to F&M Bancorp as follows:

          3.1.  Organization,  Standing,  and Capitalization of Home Corporation
     and Home Bank.

               (a) Home  Corporation  is a duly  organized and validly  existing
          corporation  and is in good  standing  under  the laws of the State of
          Maryland.  Home  Corporation  has the corporate power and authority to
          own and hold its material  properties  and to carry on its business as
          it is now being  conducted.  Home  Corporation is a registered  thrift
          holding  company under the Savings and Loan Holding  Company Act. Home
          Corporation has no  subsidiaries or affiliated  companies and is not a
          party to any joint  venture  or  partnership  other  than as listed on
          Schedule 3.1(a) hereto (collectively, the "Home Subsidiaries").

               (b)  Home  Bank  is  a  duly   organized  and  validly   existing
          federally-chartered  savings  bank and is in good  standing  under the
          federal laws of the United  States.  Home Bank's  deposits are insured
          under the provisions of the Federal Deposit Insurance Act, as amended.
          Each of the other Home  Subsidiaries  is a duly  organized and validly
          existing  corporation  and is in good  standing  under the laws of the
          jurisdiction  of its  incorporation  as set forth on Schedule  3.1(a).
          Each of the Home Subsidiaries has the corporate power and authority to
          own and hold its material  properties  and to carry on its business as
          it is now being  conducted.  All shares of capital stock of all of the
          Home Subsidiaries are validly issued and outstanding,  fully paid, and
          non-assessable.  Except as disclosed in Schedule  3.1(b),  each of the
          Home Subsidiaries is wholly owned by its parent corporation. There are
          no outstanding options,  warrants,  rights, or obligations of any kind
          entitling the holder thereof to acquire shares of the capital stock of
          any of the Home Subsidiaries,  and there are no outstanding securities



                                      -9-
<PAGE>



          or  instruments  of any kind that are  convertible  into shares of the
          capital stock of any of the Home Subsidiaries.  Except as disclosed in
          Schedule 3.1(b), none of the Home Subsidiaries is a party to any joint
          venture or partnership.

               (c)  Copies  of  all  charter   documents  and  by-laws  of  Home
          Corporation and each of the Home Subsidiaries are attached as Schedule
          3.1(c) hereto, and all such copies are true and correct as of the date
          hereof.  The  minute  books of Home  Corporation  and each of the Home
          Subsidiaries,  which  have  been made  available  to F&M  Bancorp  for
          inspection,  are  complete in all  material  respects  and  accurately
          record the actions  taken by the  stockholders  and  directors of Home
          Corporation and each of the Home Subsidiaries.

               (d) The  authorized  capital stock of Home  Corporation  consists
          exclusively of 10,000,000  shares of Common Stock, par value $1.00 per
          share,  2,519,010  shares of which are validly issued and outstanding,
          fully paid,  and  non-assessable,  and  5,000,000  shares of Preferred
          Stock,  par  value  $0.10  per  shares,  none of which  are  issued or
          outstanding.  Except  for the  option  to be  granted  to F&M  Bancorp
          pursuant to the Stock Option Agreement attached hereto as Appendix III
          and as disclosed in Schedule 3.1(d), there are no outstanding options,
          warrants,  rights,  or  obligations  of any kind  entitling the holder
          thereof to acquire shares of the Common Stock of Home Corporation, and
          there are no  outstanding  securities or  instruments of any kind that
          are convertible into shares of the Common Stock of Home Corporation.

     3.2.  Financial  Statements.  Home Corporation has provided in Schedule 3.2
hereto  copies  of the  following  consolidated  financial  statements  of  Home
Corporation and the Home Subsidiaries, all of which are true and complete in all
material  respects,  have been prepared in accordance  with  generally  accepted
accounting  principles  consistently  followed throughout the periods covered by
such  consolidated  financial  statements,  and present fairly the  consolidated
financial  position,   results  of  operations,   cash  flows,  and  changes  in
stockholders'  equity of Home Corporation and the Home Subsidiaries at the dates
of and for the periods covered by such financial statements:

     Consolidated   Financial  Statements  of  Home  Corporation  and  the  Home
     Subsidiaries at December 31, 1991,  1992,  1993, 1994 and 1995 and for each
     of the  years  then  ended,  as  reported  upon by Smith  Elliott  Kearns &
     Company.

     3.3.  Taxes.  Schedule  3.3 hereto  sets forth the tax  returns to federal,
state, county, municipal or foreign taxing authorities for the taxable year 1991
and all taxable years through and including  1994 for Home  Corporation  and the
Home  Subsidiaries.  Home Corporation and the Home  Subsidiaries have filed with
appropriate federal, state, county,  municipal or foreign taxing authorities all
tax  returns  required  to be  filed  (taking  any  applicable  extensions  into
consideration)  and have paid or reserved  for all taxes shown to be due on such
returns and all penalties  and interest  payable in respect  thereof.  Except as
disclosed  in  Schedule  3.3,  neither  Home  Corporation  nor  any of the  Home



                                      -10-
<PAGE>



Subsidiaries have received from any taxing authority any notice of deficiency or
assessment  of  additional  taxes  not paid or any  notice  of an  intention  to
commence an  examination  or audit of its tax returns,  and no tax audits by any
taxing  authority are in process.  Except as disclosed on Schedule 3.3,  neither
Home Corporation nor any of the Home Subsidiaries have granted any waiver of any
statute of limitations or otherwise  agreed to any extension of a period for the
assessment of any federal,  state, county,  municipal or foreign income tax. The
accruals and reserves reflected in the consolidated  financial  statements which
Home  Corporation  has  provided to F&M Bancorp as  described in Section 3.2 are
adequate to cover all taxes (including interest and penalties,  if any, thereon)
that are payable or accrued as a result of the  operations  of Home  Corporation
and the Home Subsidiaries for all periods prior to the date of such consolidated
financial  statements.  For purposes of this  Section 3.3, any  reference to the
Home  Subsidiaries  shall be deemed to include  any entity  listed on  Schedules
3.1(a) and 3.1 (b).

     3.4. No Undisclosed  Liabilities.  Except as and to the extent reflected or
reserved against in the consolidated financial statements referred to in Section
3.2, neither Home  Corporation nor any of the Home  Subsidiaries at the dates of
such  consolidated   financial   statements  had  any  material  liabilities  or
obligations (whether accrued,  absolute, or contingent) required under generally
accepted  accounting  principles to be reflected  thereon which would materially
and adversely affect the fair presentation of such financial statements. Neither
Home  Corporation nor any of the Home  Subsidiaries  have incurred any liability
since the date of the consolidated  financial  statements referred to in Section
3.2 which would  materially  and adversely  affect the  condition  (financial or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the Home Subsidiaries,  taken as a whole, other than liabilities which have been
incurred in the ordinary course of business.

     3.5.  Absence of Certain Changes or Events.  Since December 31, 1995, there
has not been:

          (a) Any materially adverse change in the financial  position,  results
     of operations,  assets, liabilities, or business of Home Corporation or the
     Home Subsidiaries, other than changes in the ordinary course of business;

          (b) any  increase  in  salaries or wages of  directors,  officers,  or
     employees of Home  Corporation or the Home  Subsidiaries  other than in the
     ordinary  course of  business;  or any  establishment  or  increase  of any
     employment,  compensation,  bonus, pension,  option,  incentive or deferred
     compensation,  retirement payments, profit sharing, or similar agreement or
     benefit,  authorized,  granted,  or accrued to any  directors,  officers or
     employees of Home  Corporation or the Home  Subsidiaries  other than in the
     ordinary course of business, except as set forth in Schedule 3.5; or

          (c) except with respect to the dividend  payment of $0.04 per share of
     Common Stock  declared on February 15, 1996,  to be paid on March 29, 1996,



                                      -11-
<PAGE>



     any declaration,  payment, or set aside by Home Corporation of any dividend
     or distribution  in respect of its Common Stock, or any purchase,  issuance
     or sale of any of its Common Stock.

     3.6.  Complete and Accurate  Disclosure.  Neither this Plan  (insofar as it
relates to Home Corporation and the Home Subsidiaries,  the Common Stock of Home
Corporation,  and  the  involvement  of  Home  Corporation  in the  transactions
contemplated  hereby) nor any financial  statement,  schedule,  certificate,  or
other  statement or document set forth on a schedule by Home  Corporation to F&M
Bancorp in connection with this Plan, when considered in the aggregate, contains
any statement which, at the time and in light of the  circumstances  under which
it is made, is false or misleading with respect to any material fact or omits to
state any material fact  necessary to make the  statements  contained  herein or
therein not false or misleading.

     3.7. Title to  Properties;  Absence of Liens and  Encumbrances;  Compliance
with Laws. Except as disclosed on Schedule 3.7, Home Corporation and each of the
Home  Subsidiaries  has good  and  marketable  title to all of their  respective
properties and assets,  including those reflected in the consolidated  financial
statements  referred to in Section 3.2, except as sold or otherwise  disposed of
for fair value and only in the ordinary  course of  business,  free and clear of
all liens and encumbrances, except (i) with respect to property as to which they
are lessees,  (ii) with respect to real estate owned by Home  Corporation or the
Home Subsidiaries,  for use, occupancy and similar restrictions of public record
that may be observed by an inspection  of the  property,  and such other utility
and other easements and  encumbrances as do not materially  adversely affect the
fair market value of such real property,  and (iii) liens to secure  borrowings,
liens to secure governmental  deposits,  and liens for current taxes not yet due
and payable.  Neither Home Corporation nor any of the Home  Subsidiaries owns or
leases real property  except as disclosed on Schedule 3.7, and is not in default
under any material lease of real or personal property to which it is a party. As
of the date hereof,  except as disclosed on Schedule  3.7, the real  properties,
structures,  buildings,  equipment,  and the tangible  personal  property owned,
operated or leased by Home  Corporation or any of the Home  Subsidiaries are (x)
in good repair,  order and  condition,  except for depletion,  depreciation  and
ordinary  wear and tear,  (y) suitable for the uses for which they were intended
and (z) free from any known structural defects. As of the date hereof, there are
no laws,  conditions of record or other impediments  which materially  interfere
with the intended uses by Home  Corporation or any of the Home  Subsidiaries  of
the real property or tangible personal property owned or leased by it, except as
set  forth  in  Schedule  3.7.  Neither  Home  Corporation  nor any of the  Home
Subsidiaries  have received any notice of any violation of any  applicable  law,
building code,  zoning  ordinance or other similar law. Home Corporation and the
Home Subsidiaries own or have the rights to use all real and personal properties
and assets  that are  material  to the  conduct  of the  business  as  presently
conducted of Home Corporation and the Home Subsidiaries, taken as a whole.

     3.8.  Contracts.  Except for the plans,  contracts  and  agreements of Home
Corporation and the Home  Subsidiaries  disclosed on Schedule 3.8,  neither Home
Corporation nor any of the Home Subsidiaries is a party to or subject to:




                                      -12-
<PAGE>



          (a)  Any  employment,   consultation,   or  compensation  contract  or
     arrangement  (other  than  those  terminable  at will)  with  any  officer,
     consultant, director, or employee;

          (b) any plan, contract, program, understanding, or agreement providing
     for bonuses, pensions, severance pay, options, stock purchases or any other
     form  of  retirement,   incentive  or  deferred  compensation,   retirement
     payments, death benefits,  profit sharing, or any health, accident or other
     welfare benefit, or any other employee or retired employee benefit in which
     any employee,  former employee,  retired employee (or beneficiary of any of
     them) of Home  Corporation or any of the Home  Subsidiaries  is entitled to
     participate except as disclosed on Schedule 3.8;

          (c) any contract or agreement with any labor union;

          (d) any lease of real or  personal  property  with  annual  rentals in
     excess of $5,000;

          (e) any agreement for services in excess of $5,000 per year or for the
     purchase or  disposition  of any  equipment or supplies  except  individual
     purchase  orders for office  supplies  incurred in the  ordinary  course of
     business of $5,000 or less;

          (f) any instrument evidencing or relating to indebtedness for borrowed
     money  except for customer  accounts,  deposits,  certificates  of deposit,
     federal funds purchased,  and the like which may be construed as borrowings
     and except for loans made by Home Bank as lender in the ordinary  course of
     its business;

          (g) any lease or other contract containing covenants not to enter into
     or consummate the  transactions  contemplated  hereby or which provides for
     payments  in excess of $2,000 and will be  terminated  or  violated  by the
     Merger  or in  respect  of  which  the  Merger  would  cause a  default  or
     acceleration of obligations; or

          (h) any other  contract or agreement not of the type covered by any of
     the other specific terms of this Section 3.8 obligating Home Corporation or
     any Home Subsidiary to expenditures in excess of $25,000.

Each of the instruments  disclosed on Section 3.8 is valid and in full force and
effect. Neither Home Corporation nor any of the Home Subsidiaries are in default
nor have any of them received any notice that they are in default,  nor to their
actual knowledge is any other party in default,  under any material  agreements,
instruments,  or  obligations  to  which  Home  Corporation  or any of the  Home
Subsidiaries is a party or by which they are bound.




                                      -13-
<PAGE>



     3.9. Litigation,  Etc. Except as disclosed on Schedule 3.9, (a) there is no
litigation,  proceeding,  or investigation  pending or, to the knowledge of Home
Corporation, threatened against Home Corporation or any of the Home Subsidiaries
which would result in any materially adverse change in the condition  (financial
or otherwise), assets, liabilities, business, operations, or future prospects of
Home Corporation and the Home  Subsidiaries,  taken as a whole; (b) there are no
outstanding orders, writs, injunctions,  judgments, decrees, directives, consent
agreements or memoranda of understanding  issued by any federal,  state or local
court or governmental  authority or arbitration  tribunal issued against or with
the consent of Home Corporation or any of the Home  Subsidiaries that materially
and  adversely   affect  the  condition   (financial  or   otherwise),   assets,
liabilities,  business,  operations,  or future  prospects or that in any manner
restrict Home  Corporation's  right to carry on its business or that of the Home
Subsidiaries  as presently  conducted;  and (c) Home  Corporation is aware of no
fact or condition  presently  existing  that might give rise to any  litigation,
investigation or proceeding  which, if determined  adversely to Home Corporation
or any of the Home  Subsidiaries,  would  materially  and  adversely  affect the
condition (financial or otherwise),  assets, liabilities,  business, operations,
or future  prospects of Home Corporation and the Home  Subsidiaries,  taken as a
whole, or would restrict in any manner Home Corporation's  right to carry on its
business  or  that  of  the  Home  Subsidiaries  as  presently  conducted.  Home
Corporation  has  disclosed  on  Schedule  3.9  all  litigation  in  which  Home
Corporation or any of the Home  Subsidiaries  is involved as a party (other than
bankruptcy proceedings in which Home Corporation or any of the Home Subsidiaries
has filed proofs of claim or routine  collection and foreclosure suits initiated
in the ordinary course of business).

     3.10.  Environmental  Matters.  (a) For purposes of this Section 3.10,  the
following terms shall have the indicated meaning:

     "Property"  or  "Properties"  means  all  branch  properties  presently  or
formerly  owned  or  operated  by  Home   Corporation   and  each  of  the  Home
Subsidiaries,  all other  real  property  presently  owned or  operated  by Home
Corporation and each of the Home Subsidiaries,  and any real properties formerly
owned or operated by Home  Corporation  and each of the Home  Subsidiaries on or
after January 1, 1994 and subsequently disposed of.

     "Environmental  Law"  means  (i) any  applicable  federal,  state  or local
statute, law, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, directive,  requirement or agreement
with any court,  governmental  authority or other  regulatory or  administrative
agency or commission,  domestic or foreign ("Governmental Entity") now existing,
relating to the use, storage, treatment, generation, transportation, processing,
handling,  labeling,  production,  release or disposal of Hazardous  Substances,
each as amended, or (ii) any common law that may impose liability or obligations
for  injuries  or damages due to the  presence  of or exposure to any  Hazardous
Substance.

     "Hazardous  Substance" means any substance,  whether liquid,  solid or gas,
listed, defined,  designated or classified as hazardous,  toxic,  radioactive or
dangerous,  under  any  applicable  Environmental  Law,  whether  by  type or by
quantity.  Hazardous Substance includes,  without limitation, (i) any "hazardous



                                      -14-
<PAGE>



substance" as defined in the Comprehensive Environmental Response,  Compensation
and Liability Act, as amended,  and (ii) any substance regulated by the Resource
Conservation and Recovery Act, as amended.

     (b) Except as disclosed on Schedule 3.10 or as would not individually or in
the aggregate have a materially  adverse  effect on the condition  (financial or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the Home Subsidiaries, taken as a whole:

          (i) neither  Home  Corporation  nor any of the Home  Subsidiaries  has
     received  any  written  notices,  demand  letters or written  requests  for
     information from any Governmental Entity or any third party indicating that
     Home  Corporation or any Home  Subsidiary may be in violation of, or liable
     under, any Environmental Law;

          (ii) there are no civil,  criminal or administrative  actions,  suits,
     demands,  claims,  hearings,   investigations  or  proceedings  pending  or
     threatened  against Home  Corporation or any Home Subsidiary  alleging that
     they may be in violation of, or liable under, any Environmental Law;

          (iii) no reports have been filed with any Governmental  Entity, nor to
     the knowledge of Home Corporation are any reports required to be filed with
     any  Governmental   Entity,   by  Home  Corporation  or  any  of  the  Home
     Subsidiaries  concerning  the  release of any  Hazardous  Substance  or the
     violation of any Environmental Law on or at any of the Properties;

          (iv) to the  knowledge of Home  Corporation  or except as disclosed on
     Schedule 3.10,  there are no underground  storage tanks on, in or under any
     of the  Properties  and no  underground  storage  tanks have been closed or
     removed from any Property while such Property was owned or operated by Home
     Corporation or any of the Home Subsidiaries;

          (v) to the  knowledge  of Home  Corporation  or except as disclosed on
     Schedule 3.10, no environmental contaminant,  pollutant, toxic or hazardous
     substance or other similar  substance  has been  generated,  used,  stored,
     processed,  disposed  of or  discharged  on or into any of the  Properties,
     except  for  such  hazardous  substances  as may be  used  in the  everyday
     business of a bank office; and

          (vi) to the  knowledge of Home  Corporation  or except as disclosed on
     Schedule  3.10,  no  materials   containing  asbestos  have  been  used  or
     incorporated in any building or other  structure or improvement  located on
     any of the Properties.




                                      -15-
<PAGE>



     (c) There are no permits or licenses  required under any  Environmental Law
in respect of any of the  Properties  presently or formerly owned or operated by
Home  Corporation  or any of the Home  Subsidiaries  that the  absence  of which
could, individually or in the aggregate, have a materially adverse effect on the
condition (financial or otherwise), assets, liabilities,  business or operations
of Home Corporation and the Home Subsidiaries, taken as a whole.

     (d) Home  Corporation  has disclosed on Schedule 3.10 a copy of its current
policy regarding compliance with Environmental Laws.

     3.11.  Labor Matters.  To Home  Corporation's  knowledge,  no  organization
effort with respect to any of the  employees of Home  Corporation  or any of the
Home Subsidiaries is pending or threatened,  and no labor dispute,  strike, work
stoppage,  employee action or labor relation problem which may materially affect
Home  Corporation  or any of the  Home  Subsidiaries  currently  is  pending  or
threatened.

     3.12.  Pension and Welfare  Matters.  Home  Corporation  has  disclosed  on
Schedule 3.12 in respect of the plans,  contracts,  programs,  understandings or
agreements  delivered  under Section  3.8(b)  copies of the latest  summary plan
descriptions,  Forms 5500, tax  determination  letters from the Internal Revenue
Service (the "IRS"), and actuarial reports, as applicable,  for Home Corporation
and each of the Home  Subsidiaries.  With  respect to the plans,  contracts,  or
agreements  delivered to F&M Bancorp under Section  3.8(b) (for purposes of this
Section 3.12, the "plans"), (a) each such plan has been operated in all material
respects in accordance with its terms in all material respects and in accordance
with all applicable laws including,  but not limited to, the Employee Retirement
Income  Security Act of 1974  ("ERISA"),  the Internal  Revenue Code of 1986, as
amended (the "Code"), the Consolidated Omnibus Budget Reconciliation Act of 1985
and state  health care  continuation  laws;  (b) all  reporting  and  disclosure
requirements of ERISA imposed upon each such plan have been complied with in all
material  respects,  and all required  governmental  filings have been made with
respect to the plans; (c) neither any plan nor Home Corporation,  nor any of the
Home Subsidiaries,  nor, to Home Corporation's knowledge, any director, officer,
employee,  agent  or  representative  of  Home  Corporation  or any of the  Home
Subsidiaries,  nor, to Home Corporation's  knowledge,  any fiduciary of any plan
has engaged in any  transaction in connection  with any of the plans which would
be subject to a civil penalty assessed pursuant to Section 502(i) of ERISA, or a
tax  imposed by Section  4975 of the Code that could  reasonably  be expected to
have a  material  adverse  effect on the  condition  (financial  or  otherwise),
assets,  liabilities,  business or operations of Home  Corporation  and the Home
Subsidiaries,  taken as a whole,  or on such plan,  any parties in interest,  or
fiduciaries; (d) no such plan has any accumulated funding deficiency (as defined
in Section  302 of ERISA and  Section  412 of the Code),  whether or not waived,
with  respect to the latest five plan years,  nor any  liability  to the Pension
Benefit Guaranty  Corporation (the "PBGC") (other than normal premium payments);
(e) if  applicable,  the  assets of each such  funded  plan  equal or exceed the
liability  for  accrued  benefits  of all  participants  in such  plan when such
liabilities are valued (i) on a termination  basis using PBGC interest and other
assumptions and (ii) on a minimum funding basis using the appropriate  actuarial
methods,  tables,  and  assumptions;  (f) no contributions to any such plan from
Home Corporation or any of the Home  Subsidiaries are currently past due and, if



                                      -16-
<PAGE>



applicable,  all past  service  and other  liabilities  currently  existing  but
payable in the future,  if any, are reflected in the latest  actuarial report in
accordance with sound actuarial principles; (g) no proceedings,  investigations,
filings,  or other matters (excluding any determination  letter application that
has been or may be filed prior to the  Effective  Date) are  pending  before the
IRS, the Department of Labor, the PBGC, or other public or quasi-public  body in
connection  with any such plan;  (h) with  respect to plans  intended to qualify
under Section 401(a) of the Code, (i) either Home Corporation or any of the Home
Subsidiaries  have received a favorable  determination  letter from the IRS with
respect to the plan  documents  or the  remedial  amendment  period  (within the
meaning  of  regulation  under  Section  401(b) of the Code) has not ended  with
respect to an  application  for a  determination  letter,  and (ii)  nothing has
occurred with respect to the operation or administration of any such plans which
would cause the loss of such  qualifications  or exemptions or the imposition of
any liability,  penalty or tax under ERISA or the Code that could  reasonably be
expected  to have a  material  adverse  effect on the  condition  (financial  or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the  Home  Subsidiaries,  taken as a  whole,  or on such  plan;  (i)  except  as
disclosed in Schedule 3.12, through the Effective Date, there will be no changes
in the operation of the plans or in the documents  constituting or affecting the
plans except for amendments and operational  changes  required by applicable law
which do not  materially  increase  the cost of such  plans;  (j) no  employees,
former  employees,  or retired  employees of Home Corporation or any of the Home
Subsidiaries,  as a result of their  employment with Home  Corporation or any of
the Home Subsidiaries,  are participants in any "multiemployer  plan" which is a
"pension  plan," as such terms are defined in  Sections  3(2) and 3(37) of ERISA
and neither Home  Corporation nor any of the Home  Subsidiaries has any current,
contingent  or  potential  liability  with  respect  to any  such  plan;  (k) no
"reportable  event," as such term is defined  in Section  4043(c) of ERISA,  has
occurred with respect to any plan since the effective  date of ERISA;  (l) there
are no pending or  threatened  claims by or disputes  with any  participants  or
beneficiaries  of the plans,  except plan benefit  claims  arising in the normal
course of the  operations of the plans (other than  terminated  plans) and as to
which no dispute  exists;  (m) Home  Corporation  has no  knowledge of any facts
which could give rise to any claims  against any plan or the  fiduciaries of any
plan,  except  for plan  benefit  claims  arising  in the  normal  course of the
operations  of the  plans  (other  than  terminated  plans);  (n)  neither  Home
Corporation nor any of the Home  Subsidiaries  nor any fiduciary of any plan has
given  notice to any  fiduciary  liability  insurer of any  claims or  potential
claims in connection with any of the plans;  (o) except as disclosed in Schedule
3.12, each of the plans which benefits retired  employees of Home Corporation or
any of the Home  Subsidiaries  may effectively be terminated or amended,  in any
manner and at any time,  without further liability to its  participants,  by its
sponsoring employer; (p) Home Corporation and each of the Home Subsidiaries have
at all times in all material  respects  complied  with all  applicable  employee
termination  notice and similar laws; (q) Home  Corporation and each of the Home
Subsidiaries  have at all  times  complied  in all  material  respects  with all
applicable  family leave and similar laws; (r) if applicable,  Home  Corporation
and each of the Home  Subsidiaries  have at all times  complied in all  material
respects  with  all  applicable   requirements  of  the  Worker  Adjustment  and
Retraining  Notification  Act and all  similar  state  laws;  (s)  neither  Home
Corporation nor any of the Home  Subsidiaries  has provided,  nor is required to



                                      -17-
<PAGE>



provide, security to any pension plan or to any single-employer plan of an ERISA
Affiliate  pursuant  to Section  401(a)(29)  of the Code;  (t) there has been no
announcement  or legally  binding  commitment by Home  Corporation or any of the
Home  Subsidiaries  to create an additional  plan, or to amend a plan except for
amendments  required by applicable law which do not materially increase the cost
of such plan, and neither Home Corporation nor any of the Home  Subsidiaries has
any  obligation  for retiree health and life benefits under any plan that cannot
be terminated  without  incurring any  liability  thereunder;  and (u) as to any
terminated  plans,  all obligations for plan benefits or other  liabilities have
been satisfied in full.

     3.13.  Related Party  Transactions.  Except as disclosed on Schedule  3.13,
neither Home  Corporation  nor any of the Home  Subsidiaries  has any  contract,
extension of credit, business arrangement or other relationship of any kind with
any of the  following  persons:  (a) any  executive  officer or director of Home
Corporation or any of the Home  Subsidiaries;  (b) any  stockholder  owning five
percent or more of the outstanding Common Stock of Home Corporation;  or (c) any
"affiliate"  (as  defined in the SEC Rule 405) of the  foregoing  persons or any
business in which any of the foregoing persons is an officer, director, employee
or five percent or greater equity owner.

     3.14.  No Conflict  with Other  Documents.  Except as disclosed on Schedule
3.14,  neither the  execution  and delivery of this Plan nor the carrying out of
the   transactions   contemplated   hereunder  will  result  in  any  violation,
termination, or default or acceleration of, or be in conflict with, any terms of
any contract or other  instrument to which Home  Corporation  or any of the Home
Subsidiaries is a party, or of any judgment, decree, or order applicable to Home
Corporation  or any of the Home  Subsidiaries,  or result in the creation of any
lien,  charge,  or encumbrance upon any of its properties or assets,  except for
any of the  foregoing  which would not have a material  adverse  effect upon the
financial  condition,  assets,  liabilities,  business  or  operations  of  Home
Corporation and the Home Subsidiaries, taken as a whole.

     3.15. Compliance with Laws; Governmental  Authorizations.  (a) Except where
noncompliance  would not have a material and adverse  effect upon the  condition
(financial or otherwise),  assets,  liabilities,  business or operations of Home
Corporation and the Home  Subsidiaries,  taken as a whole,  (i) Home Corporation
and each of the Home  Subsidiaries  is in compliance  with all  statutes,  laws,
ordinances, rules, regulations,  judgments, orders, decrees, directives, consent
agreements, memoranda of understanding, permits, concessions, grants franchises,
licenses, and other governmental  authorizations or approvals applicable to Home
Corporation,  the Home  Subsidiaries,  or any of their properties;  and (ii) all
permits,  concessions,  grants,  franchises,  licenses  and  other  governmental
authorizations  and approvals  necessary for the conduct of the business of Home
Corporation  and the Home  Subsidiaries  as presently  conducted  have been duly
obtained and are in full force and effect, and there are no proceedings  pending
or,  to  Home  Corporation's  knowledge,  threatened  which  may  result  in the
revocation,  cancellation,  suspension or materially adverse modification of any
thereof.

     (b) Home  Corporation  has filed all reports  that it was  required to file
with the SEC  under  the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange  Act"),  all of  which  complied  in all  material  respects  with all



                                      -18-
<PAGE>



applicable  requirements  of the  Exchange  Act and the  rules  and  regulations
adopted thereunder.  As of their respective dates, each such report,  statement,
form or other document,  including without limitation,  any financial statements
or  schedules  included  therein,  did not  contain  any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not  misleading,  provided that  information as of a later
date shall be deemed to modify information as of an earlier date.

     3.16. Authority;  Enforceability.  The execution, delivery, and performance
of this Plan by Home  Corporation  have been duly and validly  authorized by its
Board  of  Directors,   subject  only  to  requisite   approval  by  appropriate
governmental  regulatory authorities and stockholders.  This Plan is a valid and
binding agreement of Home Corporation, enforceable against it in accordance with
its terms,  subject as to  enforcement  to  bankruptcy,  insolvency,  fraudulent
transfer,  reorganization,  moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.

     3.17.  Insurance.  All insurance  policies held by Home Corporation and the
Home  Subsidiaries  relating to their  operations  (except  for title  insurance
policies),  including without limitation all financial  institutions  bonds, are
set forth on  Schedule  3.17.  All such  policies  are in full force and effect.
Neither  Home  Corporation  nor any of the Home  Subsidiaries  has  received any
notice of  cancellation  with respect to any such  policies and has no reason to
expect  that it will  receive a notice of  cancellation  from any of its present
insurance  carriers;   provided,   however,   that  Home  Corporation  makes  no
representation  as to the  effect  of this  Plan or the  Merger  on its  present
financial institutions bond or bonds.

     3.18. Financial  Institutions Bond. Since January 1, 1989, Home Corporation
and the Home Subsidiaries have continuously  maintained in full force and effect
one or more financial  institutions bonds insuring Home Corporation and the Home
Subsidiaries against acts of dishonesty by each of their employees. No claim has
been made under any such bond since such date and Home  Corporation is not aware
of any fact or  condition  presently  existing  which forms the basis of a claim
under any such bond. Home Corporation and the Home  Subsidiaries  have no reason
to expect that their present  financial  institutions  bond or bonds will not be
renewed by their carrier on substantially the same terms as those now in effect;
provided,  however,  that Home  Corporation  makes no  representation  as to the
effect of this Plan or the Merger on its present financial  institutions bond or
bonds.

     3.19. Brokers;  Financial Advisors.  All negotiations relating to this Plan
and  the  transactions  contemplated  hereunder  have  been  carried  on by Home
Corporation  directly or through its counsel and there has been no  intervention
of any person as the result of any action of Home  Corporation  (and,  so far as
known to Home  Corporation,  no intervention of any other person) in such manner
as to give rise to any valid  claim  against  any of the  parties  hereto  for a
brokerage commission,  finder's fee, or other like payment. Home Corporation has
provided F&M Bancorp with a copy of its  agreement  with Charles Webb & Company,



                                      -19-
<PAGE>



which  has  been  engaged  to  deliver  an  opinion  as to the  fairness  of the
transactions contemplated by this Plan to Home Corporation.

     4.  Representations  and Warranties of F&M Bancorp.  F&M Bancorp represents
and warrants to Home Corporation as follows:

          4.1. Organization and Standing of F&M Bancorp.

               (a)  F&M  Bancorp  is  a  duly  organized  and  validly  existing
          corporation  in good standing under the laws of the State of Maryland.
          F&M Bancorp has the  corporate  power and lawful  authority to own and
          hold its  properties  and to carry on its  business as it is now being
          conducted.  F&M Bancorp is a registered bank holding company under the
          Bank Holding Company Act of 1956, as amended.

               (b)  The  authorized   capital  stock  of  F&M  Bancorp  consists
          exclusively of 10,000,000  shares of Common Stock, par value $5.00 per
          share,  4,421,337 of which are validly issued and outstanding on March
          19, 1996,  fully paid,  and  non-assessable.  F&M Bancorp has reserved
          50,000  shares of its Common  Stock for  issuance  under its  Dividend
          Reinvestment  and Stock  Purchase  Plan,  50,000  shares of its Common
          Stock for issuance under its Employee Stock Purchase Plan, and 346,480
          shares of its Common Stock for issuance  under its Stock Option Plans.
          On March 19, 1996, there were outstanding  options to purchase 211,209
          shares of F&M Bancorp's  Common Stock at prices ranging from $11.75 to
          $29.125  pursuant  to these  Stock  Option  Plans.  There are no other
          outstanding  options,  warrants,  rights,  or  obligations of any kind
          entitling the holder  thereof to acquire shares of the Common Stock of
          F&M Bancorp, and there are no outstanding securities or instruments of
          any kind that are  convertible  into shares of the Common Stock of F&M
          Bancorp.  The Common Stock of F&M Bancorp deliverable pursuant to this
          Plan will be, prior to its issuance,  duly authorized for issuance and
          will,  when issued and delivered in accordance with this Plan, be duly
          and validly issued, fully paid and nonassessable.

               (c) F&M  Bancorp  has no  subsidiaries  other  than as  listed on
          Schedule 4.1(c) hereto (collectively, the "F&M Subsidiaries"),  and is
          not a party to any joint  ventures  or  partnerships.  Each of the F&M
          Subsidiaries is a duly organized and validly existing  corporation and
          is in  good  standing  under  the  laws  of  the  jurisdiction  of its
          incorporation.  Each of the F&M  Subsidiaries  has the corporate power
          and authority to own and hold its material  properties and to carry on
          its business as it is now being conducted. All shares of capital stock
          of all of the F&M  Subsidiaries  are validly  issued and  outstanding,
          fully  paid,  and  non-assessable.  Except as  disclosed  on  Schedule
          4.1(c),  each of the F&M  Subsidiaries  is wholly  owned by its parent
          corporation.  There are no outstanding options,  warrants,  rights, or
          obligations of any kind entitling the holder thereof to acquire shares



                                      -20-
<PAGE>



          of the capital stock of any of the F&M Subsidiaries,  and there are no
          outstanding securities or instruments of any kind that are convertible
          into  shares  of the  capital  stock  of any of the F&M  Subsidiaries.
          Except  as  disclosed  on  Schedule  4.1(c)  hereto,  none  of the F&M
          Subsidiaries is a party to any joint venture or partnership.

               (d) F&M Bancorp's sole direct subsidiary is F&M Bank. F&M Bank is
          duly organized and validly existing as a national banking  association
          and is in good standing  under the federal laws of the United  States.
          F&M Bank has the corporate power and lawful  authority to own and hold
          its  properties  and to  carry  on  its  business  as it is now  being
          conducted.  F&M Bank is an insured  bank under the  provisions  of the
          Federal  Deposit  Insurance  Act, as  amended,  and is a member of the
          Federal Reserve System.

               (e) Copies of all  charter  documents  and by-laws of F&M Bancorp
          and each of the F&M  Subsidiaries  are  attached  hereto  as  Schedule
          4.1(e),  and all  such  copies  are true  and  correct  as of the date
          hereof.  The  minute  books  of  F&M  Bancorp  and  each  of  the  F&M
          Subsidiaries,  which have been made available to Home  Corporation for
          inspection,  are  complete in all  material  respects  and  accurately
          record the actions  taken by the  stockholders  and  directors  of F&M
          Bancorp and each of the F&M Subsidiaries.

     4.2. Financial Statements.  F&M Bancorp has provided in Schedule 4.2 hereto
copies of the  Consolidated  Financial  Statements  of F&M  Bancorp  and the F&M
Subsidiaries at December 31, 1991, 1992, 1993, 1994 and 1995 and for each of the
years then ended,  as reported upon by Keller Bruner & Company,  L.L.C.,  all of
which are true and  complete in all  material  respects,  have been  prepared in
accordance with generally accepted accounting  principles  consistently followed
throughout the periods  covered by such  consolidated  financial  statements and
present fairly the financial  position,  results of operations,  cash flows, and
changes in  shareholders'  equity of F&M Bancorp and the F&M Subsidiaries at the
dates of and for the periods covered by such financial statements.

     4.3. No Undisclosed  Liabilities.  Except as and to the extent reflected or
reserved against in the consolidated financial statements referred to in Section
4.2,  neither F&M Bancorp nor any of the F&M  Subsidiaries  at the dates of such
consolidated  financial  statements had any material  liabilities or obligations
(whether accrued,  absolute,  or contingent)  required under generally  accepted
accounting  principles  to be  reflected  thereon  which  would  materially  and
adversely affect the fair presentation of such financial statements. Neither F&M
Bancorp nor any of the F&M  Subsidiaries  has incurred any  liability  since the
date  of the  financial  statements  referred  to in  Section  4.2  which  would
materially and adversely affect the condition (financial or otherwise),  assets,
liabilities,  business or  operations  of F&M Bancorp and the F&M  Subsidiaries,
taken as a whole, other than liabilities which have been reasonably  incurred in
the ordinary course of business.




                                      -21-
<PAGE>



     4.4.  Absence of Certain Changes or Events.  Since December 31, 1995, there
has not been any materially adverse change in the financial position, results of
operations,  assets,  liabilities,  or business of F&M Bancorp or any of the F&M
Subsidiaries, other than changes in the ordinary course of business.

     4.5.  Complete and Accurate  Disclosure.  Neither this Plan  (insofar as it
relates to F&M Bancorp,  the Common Stock of F&M Bancorp, and the involvement of
F&M  Bancorp  in  the  transactions   contemplated  hereby)  nor  any  financial
statement,  certificate,  or other statement or document set forth on a schedule
delivered  by F&M  Bancorp to Home  Corporation  in  connection  with this Plan,
contains  any  statement  which,  at the time and in light of the  circumstances
under which it is made, is false or misleading with respect to any material fact
or omits to state any material fact necessary to make the  statements  contained
herein or therein not false or misleading.

     4.6. Litigation,  Etc. Except as disclosed on Schedule 4.6, (a) there is no
litigation,  proceeding,  or  investigation  pending or, to the knowledge of F&M
Bancorp,  threatened  against F&M Bancorp or any of the F&M  Subsidiaries  which
would result in any  materially  adverse  change in the condition  (financial or
otherwise),  assets, liabilities,  business,  operations, or future prospects of
F&M  Bancorp  and the F&M  Subsidiaries,  taken as a  whole;  (b)  there  are no
outstanding orders, writs, injunctions,  judgments, decrees, directives, consent
agreements or memoranda of understanding  issued by any federal,  state or local
court or governmental  authority or arbitration  tribunal issued against or with
the consent of F&M Bancorp or any of the F&M  Subsidiaries  that  materially and
adversely affect the condition  (financial or otherwise),  assets,  liabilities,
business,  operations  or future  prospects  or that in any manner  restrict F&M
Bancorp's  right to carry on its  business  or that of the F&M  Subsidiaries  as
presently  conducted;  and (c) F&M  Bancorp  is  aware  of no fact or  condition
presently  existing  that might give rise to any  litigation,  investigation  or
proceeding  which,  if  determined  adversely  to F&M  Bancorp or any of the F&M
Subsidiaries,  would materially and adversely affect the condition (financial or
otherwise),  assets, liabilities,  business,  operations, or future prospects of
F&M Bancorp and the F&M Subsidiaries, taken as a whole, or would restrict in any
manner  F&M  Bancorp's  right  to  carry  on its  business  or  that  of the F&M
Subsidiaries as presently  conducted.  F&M Bancorp has disclosed on Schedule 4.6
all litigation in which F&M Bancorp or any of the F&M  Subsidiaries  is involved
as a party (other than bankruptcy proceedings in which F&M Bancorp or any of the
F&M Subsidiaries has filed proofs of claim or routine collection and foreclosure
suits initiated in the ordinary course of business).

     4.7. No Conflict with Other  Documents.  Neither the execution and delivery
of this Plan nor the carrying  out of the  transactions  contemplated  hereunder
will result in any violation, termination, or modification of, or be in conflict
with, any terms of any contract or other  instrument to which F&M Bancorp or any
of the F&M  Subsidiaries  are a  party,  or of any  judgment,  decree,  or order
applicable  to F&M  Bancorp  or any of the F&M  Subsidiaries,  or  result in the
creation of any lien,  charge,  or encumbrance  upon any of their  properties or
assets,  except for any of the foregoing which would not have a material adverse



                                      -22-
<PAGE>



effect upon the financial condition, assets, liabilities, business or operations
of F&M Bancorp and the F&M Subsidiaries, taken as a whole.

     4.8. Compliance with Laws;  Governmental  Authorizations.  (a) Except where
noncompliance  would not have a material and adverse  effect upon the  condition
(financial or  otherwise),  assets,  liabilities,  business or operations of F&M
Bancorp and the F&M Subsidiaries,  taken as a whole, (i) F&M Bancorp and the F&M
Subsidiaries  are in compliance  with all  statutes,  laws,  ordinances,  rules,
regulations,   judgments,  orders,  decrees,  directives,   consent  agreements,
memoranda of understanding,  permits, concessions, grants franchises,  licenses,
and other governmental authorizations or approvals applicable to F&M Bancorp and
the F&M  Subsidiaries  or to any of their  properties;  and  (ii)  all  permits,
concessions,  grants, franchises, licenses and other governmental authorizations
and  approvals  necessary for the conduct of the business of F&M Bancorp and the
F&M Subsidiaries as presently  conducted have been duly obtained and are in full
force and effect,  and there are no proceedings  pending or threatened which may
result  in  the  revocation,  cancellation,  suspension  or  materially  adverse
modification of any thereof.

     (b) F&M Bancorp has filed all reports that it was required to file with the
SEC under the Exchange Act, all of which complied in all material  respects with
all applicable  requirements  of the Exchange Act and the rules and  regulations
adopted thereunder.  As of their respective dates, each such report,  statement,
form or other document,  including without limitation,  any financial statements
or  schedules  included  therein,  did not  contain  any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not  misleading,  provided that  information as of a later
date shall be deemed to modify information as of an earlier date.

     4.9. Authority; Enforceability. The execution, delivery, and performance of
this Plan by F&M Bancorp has been duly and  validly  authorized  by its Board of
Directors, subject only to requisite approval by the stockholders of F&M Bancorp
and appropriate  governmental regulatory  authorities.  This Plan is a valid and
binding agreement of F&M Bancorp,  enforceable against it in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.

     4.10. Brokers. All negotiations  relating to this Plan and the transactions
contemplated  hereunder have been carried on by F&M Bancorp  directly or through
its  counsel and there has been no  intervention  of any person as the result of
any action of F&M Bancorp (and, so far as known to F&M Bancorp,  no intervention
of any other  person) in such manner as to give rise to any valid claim  against
any of the parties  hereto for a brokerage  commission,  finder's  fee, or other
like payment.

     4.11. Beneficial Ownership of Home Corporation Common Stock. As of the date
hereof,  F&M Bancorp does not  beneficially  own any shares of Home  Corporation



                                      -23-
<PAGE>



Common  Stock or have any  option,  warrant or right of any kind to acquire  the
beneficial  ownership of any Home Corporation  Common Stock,  except pursuant to
the terms of this Plan, the terms of the Stock Option Agreement, attached hereto
as Appendix III, or in a fiduciary capacity.

     5.  Covenants  of Home  Corporation.  Except as  otherwise  consented to in
writing by F&M Bancorp after the date of this Plan, Home  Corporation  covenants
to and agrees with F&M Bancorp as follows:

     5.1. Information.  (a) Home Corporation shall, upon reasonable notice, give
to F&M Bancorp and to its officers,  accountants,  counsel,  financial advisers,
and other  representatives  reasonable access during Home  Corporation's and the
Home  Subsidiaries'  normal  business  hours  throughout the period prior to the
Effective  Date  to all of  their  properties,  books,  contracts,  commitments,
reports  of  examination   (consistent  with  applicable  law),   depositor  and
stockholder lists, and records. Home Corporation and the Home Subsidiaries will,
at their own  expense,  furnish  F&M  Bancorp  during  such period with all such
information  concerning  their  affairs as F&M Bancorp may  reasonably  request,
including  information  for use in  determining if the conditions of Section 7.3
have been satisfied, necessary to prepare the regulatory filings or applications
to be filed with  governmental  regulatory  authorities  to obtain the approvals
referred to in Section 2, and for use in any other necessary  filings to be made
with appropriate governmental regulatory authorities.

     (b) Home Corporation will not, and will cause its  representatives  not to,
use any information  obtained  pursuant to Section 6.3 for any purpose unrelated
to the  consummation of the transactions  contemplated by this Plan.  Subject to
the requirements of law, Home Corporation will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to Section 6.3 unless such  information  (i) was already  known to Home
Corporation,  (ii) becomes  available to Home Corporation from other sources not
known by Home Corporation to be bound by a confidentiality obligation,  (iii) is
disclosed with prior written  approval of F&M Bancorp and the F&M  Subsidiaries,
or (iv) is or becomes readily  ascertainable from published information or trade
sources.  In the  event  that  this  Plan  is  terminated  or  the  transactions
contemplated  by  this  Plan  shall  otherwise  fail  to  be  consummated,  Home
Corporation  shall  promptly  cause all copies of documents or extracts  thereof
containing information and data as to F&M Bancorp and the F&M Subsidiaries to be
returned.

     5.2.  Conduct  of  Business.  After the date of this Plan and  pending  the
Effective  Date, (a) Home  Corporation  and the Home  Subsidiaries  will conduct
their business only in the ordinary  course;  (b) Home  Corporation and the Home
Subsidiaries  shall not  effect  any  change or  amendment  in their  respective
Charters or By-Laws;  (c) except with respect to Home Corporation  stock options
outstanding  on the  date  of this  Plan  which  are or may  become  subject  to
exercise,  Home  Corporation  and the Home  Subsidiaries  shall not change their
authorized,  issued or outstanding capital stock; (d) Home Corporation shall not
declare any dividends in respect of its Common Stock; (e) except as disclosed in
Schedule 5.2(d),  Home Corporation and the Home Subsidiaries  shall not increase
employee  compensation  or benefit  levels  (except for annual  increases not in



                                      -24-
<PAGE>



excess  of  amounts  established  by its  regular  past  practices),  shall  not
establish or make any increase in any employment,  compensation, bonus, pension,
option, incentive or deferred compensation,  retirement,  death, profit sharing,
or similar agreements or benefits of any of its past, present or future officers
or  employees,  other  than  additional  premiums  to  obtain  an  extension  of
directors'  and  officers'   liability   coverage  for  six  years  (which  Home
Corporation  is  authorized  to  obtain),  and shall  not  modify  the  existing
employment agreements with Richard W. Phoebus,  Sr., Celia S. Ausherman,  Steven
G. Hull and Salvatore M. Savino;  (f) Home Corporation and the Home Subsidiaries
shall  not make any  change in any of their  accounting  policies  or  practices
unless required by generally accepted  accounting  principles or take any action
which would cause the Merger not to be accounted for as a  pooling-of-interests;
(g) Home Corporation and the Home Subsidiaries shall not incur any liability for
borrowed  money except  extensions  of credit from the Federal Home Loan Bank of
Atlanta (in which no single  transaction shall exceed  $5,000,000) and otherwise
in the  ordinary  course of their  banking  business or place upon or permit any
lien or encumbrance  upon any of their  properties or assets except liens of the
type  permitted in the exceptions to Section 3.7; and (h) Home Bank shall accept
no further  applications  from its directors for participation in, and shall not
designate any of its directors as  additional  participants  in, its Amended and
Restated Executive Compensation Plan for Directors.  Pending the Effective Date,
Home Corporation and the Home Subsidiaries shall (x) use commercially reasonable
efforts to preserve their business organization and assets and to keep available
the services of their full-time  officers and employees,  (y) continue in effect
the present  method of  conducting  their  business,  and (z)  consult  with F&M
Bancorp as to making decisions or actions in matters (i) other than those in the
ordinary course of business or (ii) except as disclosed in Schedule  5.2(z)(ii),
involving any capital expenditures in excess of $25,000.

     5.3.  Consents.  Home  Corporation  and  the  Home  Subsidiaries  will  use
commercially  reasonable efforts to obtain any consents,  approvals,  or waivers
from third  parties  necessary to the  assignments  and  transfers  contemplated
hereby  with  respect to leases or other  contracts,  if any,  delivered  to F&M
Bancorp pursuant to Section 3.8 or any other agreements requiring the same.

     5.4. Meeting of Stockholders of Home Corporation; Document Preparation. (a)
Home  Corporation  will duly call and will convene a meeting of its stockholders
to act upon the transactions contemplated hereby as soon as practicable.  Except
to the extent  legally  required for the  discharge by the board of directors of
its fiduciary duties,  Home Corporation will recommend approval of this Plan and
the Merger to its stockholders,  and will use commercially reasonable efforts to
obtain a favorable vote thereon. The calling and holding of such meeting and all
notices,  transactions,  documents,  and information  related thereto will be in
compliance with all applicable laws.

     (b) Home  Corporation  shall  furnish  F&M  Bancorp  with such  information
concerning Home  Corporation and the Home  Subsidiaries as is necessary in order
to cause the Proxy  Statement/Prospectus  (as  defined in Section  6.2  hereof),
insofar as it relates to such  corporations,  to comply with Section 6.2 hereof.
Home  Corporation  agrees promptly to advise F&M Bancorp if at any time prior to



                                      -25-
<PAGE>



the Home Corporation  stockholder's  meeting,  any information  provided by Home
Corporation in the Proxy Statement/Prospectus becomes incorrect or incomplete in
any material  respect and to provide F&M Bancorp with the information  needed to
correct such inaccuracy or omission.  Home Corporation shall furnish F&M Bancorp
with such  supplemental  information  as may be  necessary in order to cause the
Proxy  Statement/Prospectus,  insofar as it relates to Home  Corporation and the
Home Subsidiaries,  to comply with Section 6.2 after the mailing thereof to Home
Corporation stockholders.  The information provided and the representations made
by Home  Corporation  and  Home  Bank to F&M  Bancorp  in  connection  with  the
Registration  Statement  described  in  Section  6.2,  both  at  the  time  such
information and representations are provided and made and at the Effective Date,
will be true and  accurate  in all  material  respects  and will not contain any
false or misleading statement with respect to any material fact or omit to state
any  material  fact  required to be stated  therein or necessary in order (a) to
make the statements made therein not false or misleading,  or (b) to correct any
statement contained in an earlier communication with respect to such information
or  representations  which has become false or misleading.  Home Corporation may
rely upon all information  provided to it by F&M Bancorp and its representatives
in the preparation of the Proxy Statement/Prospectus and shall not be liable for
any untrue statement of a material fact or any omission to state a material fact
in the Proxy  Statement/Prospectus,  if such  statement is made in reliance upon
any  information  provided  to it by F&M  Bancorp or by any of its  officers  or
authorized representatives.

     (c)  Home  Corporation   shall  promptly  furnish  F&M  Bancorp  with  such
information regarding the Home Corporation  stockholders as F&M Bancorp requires
to enable it to  determine  what  filings are required  under  applicable  state
securities  laws.  Home  Corporation  authorizes  F&M Bancorp to utilize in such
filings the information  concerning Home  Corporation and the Home  Subsidiaries
provided  to F&M  Bancorp  in  connection  with,  or  contained  in,  the  Proxy
Statement/Prospectus.  Home Corporation shall promptly notify F&M Bancorp of all
communications,  oral or  written,  with  the SEC  concerning  the  Registration
Statement and the Proxy Statement/Prospectus.

     5.5.  Events  Preceding  Effectiveness.   Home  Corporation  and  the  Home
Subsidiaries will use commercially reasonable efforts to assure that each of the
events specified in Section 2 which require action on its part shall occur on or
before the Effective Date.

     5.6. No Solicitation of Other Offers.  Home Corporation agrees that neither
it nor any of the  Home  Subsidiaries  nor  any of  their  respective  officers,
directors and employees  shall,  and Home  Corporation  shall direct and use its
best efforts to cause its and the Home Subsidiaries'  agents and representatives
(including,  without limitation,  any investment banker,  attorney or accountant
retained by it or any of the Home  Subsidiaries) not to, directly or indirectly,
take any action to solicit or initiate any  inquiries or the making of any offer
or proposal  (including  without limitation any proposal to stockholders of Home
Corporation)  with  respect to a merger,  consolidation,  business  combination,
liquidation,  reorganization,  sale  or  other  disposition  of any  significant
portion of assets (except Problem Assets, as defined in Section 9.7(a)), sale of
shares of capital stock, or similar  transactions  involving Home Corporation or



                                      -26-
<PAGE>



any  of  the  Home  Subsidiaries  (any  such  inquiry,  offer  or  proposal,  an
"Acquisition Proposal"), or, except as may be legally required for the discharge
by the board of directors of its fiduciary  duties,  engage in any  negotiations
concerning,  or provide  any  confidential  information  or data to, or have any
discussions with, any person relating to an Acquisition Proposal. As of the time
hereof,  Home  Corporation  is not engaged in any  negotiations  or  discussions
relating to an Acquisition Proposal.  Home Corporation shall promptly notify F&M
Bancorp orally and in writing of any Acquisition  Proposal or any inquiries with
respect thereto, such written notification to include the identity of the Person
making such  inquiry or  Acquisition  Proposal and such other  information  with
respect  thereto  as is  reasonably  necessary  to  apprise  F&M  Bancorp of the
material terms of such Acquisition  Proposal.  Home  Corporation  shall give F&M
Bancorp   contemporaneous   written  notice  upon  engaging  in  discussions  or
negotiations  with, or providing any information  regarding Home  Corporation or
any of the Home  Subsidiaries  to,  any such  person  regarding  an  Acquisition
Proposal.

     5.7.  Reservation  of  Shares.  Home  Corporation  shall  have  reserved  a
sufficient  number of shares of its Common Stock for issuance  upon  exercise of
the option granted  pursuant to the Stock Option  Agreement,  attached hereto as
Appendix III, which is to be executed by F&M Bancorp and Home  Corporation,  and
shall  have  taken  all other  actions  necessary  to  fulfill  its  obligations
thereunder.

     5.8.  Affiliate  Agreements.  Within 10 days of the date of this Plan, Home
Corporation  shall  deliver or cause to be  delivered  to F&M Bancorp  memoranda
substantially  in the form  attached  hereto as  Appendix  IV (the  "Affiliates'
Memoranda") and agreements substantially in the form attached hereto as Appendix
V (the "Support  Agreements") from each of its executive  officers and directors
(and  shall use  commercially  reasonable  efforts to obtain  and  deliver  such
memoranda and agreements from each  stockholder of Home  Corporation who (a) may
be deemed to be an "affiliate" of Home Corporation,  as that term is defined for
purposes  of the  SEC  Rules  145 and 405 or (b)  may be  restricted  under  the
accounting rules applicable to a  pooling-of-interests).  Under the terms of the
Affiliates'  Memoranda,   each  such  officer,  director  or  stockholder  shall
acknowledge and agree (i) to abide by all limitations  imposed by the Securities
Act and by all rules, regulations and releases promulgated thereunder by the SEC
with respect to the sale or other  disposition of the shares of the Common Stock
of F&M Bancorp to be received by such person pursuant to the Merger, and (ii) to
abide by all  limitations  imposed by the accounting  rules for the Merger to be
accounted  for  as a  pooling-of-interests.  Under  the  terms  of  the  Support
Agreements,  each such officer,  director or stockholder  shall agree to support
and vote the shares of Common Stock of Home  Corporation  owned or controlled by
him or her to ratify and confirm this Plan and the Merger.

     5.9. Regulatory Approvals. Home Corporation and the Home Subsidiaries will,
where  necessary,  cooperate with F&M Bancorp's  efforts to obtain all necessary
regulatory approvals of the transactions contemplated by this Plan.

     5.10. Current  Information;  Advice of Changes.  (a) During the period from
the date of this Plan to the Effective Date, Home  Corporation will cause one or



                                      -27-
<PAGE>



more of its designated  representatives  to confer on a monthly or more frequent
basis with  representatives  of F&M Bancorp regarding its business,  operations,
properties,   assets  and  financial  condition  and  matters  relating  to  the
completion  of the  transactions  contemplated  herein.  As soon  as  reasonably
available,  but in no  event  more  than 45 days  after  the end of each  fiscal
quarter  (other than the last fiscal  quarter of each fiscal  year) ending after
the  date of this  Plan,  Home  Corporation  will  deliver  to F&M  Bancorp  its
quarterly reports on Form 10-Q, as filed with the SEC under the Exchange Act. As
soon as  reasonably  available,  but in no event  more  than 90 days  after  the
calendar year, Home Corporation will deliver to F&M Bancorp its Annual Report on
Form 10-K as filed with the SEC under the Exchange Act.

     (b) Between the date of this Plan and the Effective Date, Home  Corporation
shall promptly  advise F&M Bancorp in writing of any fact which,  if existing or
known at the date hereof,  would have been required to be set forth or disclosed
in or pursuant to this Plan or of any fact which, if existing or known as of the
date hereof, would have made any of the representations  contained herein untrue
in any material respect.

     5.11. Public Announcements. Between the date of this Plan and the Effective
Date, Home Corporation and the Home  Subsidiaries  will consult with F&M Bancorp
before issuing any press release or otherwise making any public  statements with
respect  to this Plan and the  transactions  contemplated  hereby  and shall not
issue any such press  release or make any such  public  statement  prior to such
consultation, except as counsel may advise is required by law.

     5.12. Taxes.  Home Corporation  shall have filed with appropriate  federal,
state, county,  municipal or foreign taxing authorities all tax returns required
to be filed (taking any applicable  extensions into  consideration) on or before
the Effective Date and shall have paid (or shall have made adequate provision or
set up an adequate  actual  reserve on the financial  statements  referred to in
Section 3.2 for the payment of) all taxes imposed by any taxing  authority  with
respect to any Pre-Closing Tax Period (as  hereinafter  defined),  together with
any interest,  additions or penalties related to any such taxes. For purposes of
this Section 5.12, any reference to Home Corporation  shall be deemed to include
any  corporation  more  than 50% of the  outstanding  capital  stock (by vote or
value) of which is owned by Home  Corporation.  "Pre-Closing  Tax Period"  shall
mean (i) each taxable  period that ends on or before the Effective Date and (ii)
any taxable  period that includes (but does not end on) the Effective  Date (the
period described in this clause (ii) being hereafter  referred to as a "Straddle
Period").  In the case of any tax for a Straddle  Period,  the  covenant  in the
first  sentence of this  Section  5.12 shall be limited to the  Pre-Closing  Tax
Amount determined as follows:

          (a) In the case of a  periodic  tax that is not  based  on  income  or
     receipts (e.g., an ad valorem  property tax), the  "Pre-Closing Tax Amount"
     shall be an amount equal to the amount of such tax for the entire  Straddle
     Period  multiplied  by a fraction  the  numerator of which is the number of
     days elapsed between the beginning of the Straddle Period and the Effective
     Date  and the  denominator  of  which is the  total  number  of days in the
     Straddle Period; and



                                      -28-
<PAGE>

          (b) in the case of any other  tax, the "Pre-Closing Tax Amount" shall 
      be the amount of such tax for  which Home  Corporation would have been
      liable if the Straddle Period had ended as of the close of business on
      the day of the Effective Date.

     5.13. Pooling-of-Interests. Home Corporation shall use its best efforts not
to permit  any of the  directors,  officers,  employees,  stockholders,  agents,
consultants  or other  representatives  of Home  Corporation  or any of the Home
Subsidiaries  to take any action that would  preclude F&M Bancorp from  treating
the Merger as a "pooling-of-interests" for financial reporting purposes.

     5.14. Directors'  Agreement.  Home Corporation shall present the Directors'
Agreement,  in substantially  the form attached hereto as Appendix X, to each of
Howard B. Bowen and John J.  McElwee,  Jr.,  both of whom are  directors of Home
Bank and participants in its Amended and Restated  Executive  Compensation  Plan
for  Directors,  and shall  cause  each of them to enter  into  such  Directors'
Agreement with F&M Bancorp.

     6. Covenants of F&M Bancorp. Except as otherwise consented to in writing by
Home  Corporation  after the date of this Plan,  F&M  Bancorp  covenants  to and
agrees with Home Corporation as follows:

     6.1. Applications to Governmental Regulatory Authorities.  F&M Bancorp will
promptly  prepare  and  file  with  the  appropriate   governmental   regulatory
authorities an application  requesting the regulatory  approvals  referred to in
Section  2(e) and 2(f) and will use  commercially  reasonable  efforts to secure
favorable action on such applications, including without limitation commercially
reasonable efforts to pursue an appeal of a denial of a regulatory approval.

     6.2.  Registration  of Shares.  F&M Bancorp,  with the  assistance  of Home
Corporation and its representatives, will promptly file a Registration Statement
with the SEC which  shall  include a joint proxy  statement  for F&M Bancorp and
Home   Corporation   and  a  prospectus   which  shall  satisfy  all  applicable
requirements of applicable state and federal laws, including the Securities Act,
the  Exchange  Act and  applicable  state  securities  laws  and the  rules  and
regulations thereunder (such joint proxy statement and prospectus, together with
any and all amendments or supplements  thereto,  being herein referred to as the
"Proxy  Statement/Prospectus,"  and the  various  documents  to be  filed by F&M
Bancorp under the Securities Act with the SEC to register the F&M Bancorp Common
Stock  into  which  shares  of the  Common  Stock  of Home  Corporation  held by
non-dissenting   stockholders   will   be   converted,   including   the   Proxy
Statement/Prospectus,  are referred to herein as the "Registration  Statement").
The number of shares to be registered will be an amount  sufficient to allow all
of the shares of the Common Stock of F&M Bancorp issued to holders of the Common
Stock of Home  Corporation  pursuant  to this  Plan to be  registered  under the
Securities Act. F&M Bancorp will use commercially  reasonable  efforts to secure
the  effectiveness  of the  Registration  Statement and, after the  Registration
Statement  has been declared  effective,  will issue the shares so registered to



                                      -29-
<PAGE>



the  non-dissenting  holders  of the  Common  Stock of Home  Corporation  on the
Effective Date. F&M Bancorp may rely upon all information provided to it by Home
Corporation  and its  representatives  in the  preparation  of the  Registration
Statement,  any  post-effective  amendment  thereto and the Proxy  Statement and
shall not be liable for any untrue  statement of a material fact or any omission
to state a  material  fact in the  Registration  Statement,  the  post-effective
amendment or the Proxy Statement, if such statement is made in reliance upon any
information  provided  to it by Home  Corporation  or by any of its  officers or
authorized representatives.  F&M Bancorp shall promptly take all such actions as
may be necessary or appropriate in order to comply in all material respects with
all  applicable  securities  laws of any  state  having  jurisdiction  over  the
transactions contemplated by this Plan and the Merger. F&M Bancorp shall furnish
Home  Corporation  with  copies of all such  filings  and keep Home  Corporation
advised  of  the  status  thereof.   F&M  Bancorp  shall  promptly  notify  Home
Corporation of all communications,  oral or written, with the SEC concerning the
Registration  Statement  and  the  Proxy  Statement/Prospectus.   Prior  to  the
Effective  Date,  F&M Bancorp  will cause the listing of the Common Stock of F&M
Bancorp deliverable pursuant to this Plan on The National Market of The National
Association of Securities Dealers, Inc. ("Nasdaq").

     6.3. Information.

     (a) F&M Bancorp shall, upon reasonable notice, give to Home Corporation and
to  its  officers,   accountants,   counsel,   financial  advisors,   and  other
representatives,  reasonable  access during F&M Bancorp's  normal business hours
throughout  the period prior to the Effective  Date to all of their  properties,
books,   contracts,   commitments,   reports  of  examination  (consistent  with
applicable law),  depositor and stockholder lists, and records.  F&M Bancorp and
the F&M Subsidiaries will, at their own expense, furnish Home Corporation during
such  period  with  all  such  information  concerning  their  affairs  as  Home
Corporation may reasonably request.

     (b) F&M Bancorp  acknowledges  that  information  received by it concerning
Home  Corporation and the Home  Subsidiaries  and their operations is subject to
the  Confidentiality  Agreement  dated July 3, 1995 between F&M Bancorp and Home
Corporation.  Without  limiting  the  foregoing,  F&M Bancorp will not, and will
cause its  representatives  not to, use any  information  obtained  pursuant  to
Section 5.1 for any purpose  unrelated to the  consummation of the  transactions
contemplated by this Plan.  Subject to the requirements of law, F&M Bancorp will
keep confidential,  and will cause its representatives to keep confidential, all
information  and  documents   obtained  pursuant  to  Section  5.1  unless  such
information (i) was already known to F&M Bancorp,  (ii) becomes available to F&M
Bancorp  from  other  sources  not  known  by  F&M  Bancorp  to  be  bound  by a
confidentiality  obligation,  (iii) is disclosed with prior written  approval of
Home  Corporation  and the  Home  Subsidiaries,  or (iv) is or  becomes  readily
ascertainable  from published  information  or trade sources.  In the event that
this Plan is  terminated  or the  transactions  contemplated  by this Plan shall
otherwise fail to be consummated, F&M Bancorp shall promptly cause all copies of
documents  or  extracts  thereof  containing  information  and  data  as to Home
Corporation and the Home  Subsidiaries  to be returned;  provided that the legal
department of F&M Bancorp may retain one copy of such  documents and  materials.
In the event that this Plan has been terminated or the transactions contemplated



                                      -30-
<PAGE>



hereby shall have failed to be consummated  and F&M Bancorp or any of its agents
or   representatives   are   requested   or   required   (by   oral   questions,
interrogatories,  requests for  information  or documents in legal  proceedings,
subpoena,  civil investigative  demand or other similar process) to disclose any
of the  materials  delivered  or  obtained  pursuant  to  the  Plan  (the  "Home
Corporation  Documentation"),  F&M Bancorp shall provide Home  Corporation  with
prompt  written  notice  of  any  such  request  or  requirement  so  that  Home
Corporation may seek a protective order or other appropriate  remedy. If, in the
absence of a protective order or other remedy,  F&M Bancorp or any of its agents
or  representatives  are  compelled  to  disclose  any of such Home  Corporation
Documentation  to any tribunal or else stand liable for contempt or suffer other
censure or penalty,  F&M Bancorp or its agents or  representatives  may, without
liability  hereunder,  disclose to such  tribunal  only that portion of the Home
Corporation  Documentation  which F&M Bancorp's  counsel  advises F&M Bancorp is
legally  required to be disclosed,  provided that F&M Bancorp shall exercise its
best  efforts  to  preserve  the   confidentiality   of  the  Home   Corporation
Documentation,   including,   without  limitation,   by  cooperating  with  Home
Corporation  to  obtain  an  appropriate  protective  order  or  other  reliable
assurance  that  confidential  treatment  will be accorded the Home  Corporation
Documentation by such tribunal.

     6.4.  Events  Preceding  Effectiveness.  F&M Bancorp will use  commercially
reasonable  efforts  to assure  that each of the events  specified  in Section 2
shall occur on or before the Effective Date.

     6.5.  Consents.  F&M Bancorp will use  commercially  reasonable  efforts to
obtain any  consents,  approvals  or  waivers  from third  parties  required  in
connection with the transactions contemplated hereunder.

     6.6. Current Information; Advice of Changes. (a) During the period from the
date of this Plan to the Effective  Date,  F&M Bancorp will cause one or more of
its  designated  representatives  to confer on a monthly or more frequent  basis
with  representatives  of Home Corporation  regarding its business,  operations,
properties,   assets  and  financial  condition  and  matters  relating  to  the
completion  of the  transactions  contemplated  herein.  As soon  as  reasonably
available,  but in no  event  more  than 45 days  after  the end of each  fiscal
quarter  (other than the last fiscal  quarter of each fiscal  year) ending after
the  date of this  Plan,  F&M  Bancorp  will  deliver  to Home  Corporation  its
quarterly reports on Form 10-Q, as filed with the SEC under the Exchange Act. As
soon as  reasonably  available,  but in no event  more  than 90 days  after  the
calendar year, F&M Bancorp will deliver to Home Corporation its Annual Report on
Form 10-K as filed with the SEC under the Exchange Act.

     (b) Between the date of this Plan and the Effective Date, F&M Bancorp shall
promptly  advise Home  Corporation in writing of any fact which,  if existing or
known at the date hereof,  would have been required to be set forth or disclosed
in or pursuant to this Plan or of any fact which, if existing or known as of the
date hereof, would have made any of the representations  contained herein untrue
in any material respect.




                                      -31-
<PAGE>



     6.7. Meeting of Stockholders of F&M Bancorp; Document Preparation.  (a) F&M
Bancorp  shall  duly call and  convene a  stockholders'  meeting to act upon the
transactions contemplated hereby as soon as practicable, will recommend approval
of this  Plan and the  Merger  to its  stockholders,  and will use  commercially
reasonable  efforts to obtain a favorable vote thereon.  The calling and holding
of such  meeting  and all  notices,  transactions,  documents,  and  information
related thereto will be in compliance with all applicable laws.

     (b) F&M Bancorp shall furnish such  information  concerning F&M Bancorp and
the  F&M   Subsidiaries   as  is   necessary   in  order  to  cause   the  Proxy
Statement/Prospectus, insofar as it relates to such corporations, to comply with
Section 6.2 hereof. F&M Bancorp agrees promptly to advise Home Corporation if at
any  time  prior  to the F&M  Bancorp  stockholders'  meeting,  any  information
provided by F&M Bancorp in the Proxy  Statement/Prospectus  becomes incorrect or
incomplete  in any  material  respect and to provide Home  Corporation  with the
information  needed to correct such  inaccuracy  or omission.  F&M Bancorp shall
furnish Home Corporation with such supplemental  information as may be necessary
in order to cause the Proxy  Statement/Prospectus,  insofar as it relates to F&M
Bancorp and the F&M  Subsidiaries,  to comply with Section 6.2 after the mailing
thereof  to  F&M  Bancorp   stockholders.   The  information  provided  and  the
representations   made  by  F&M   Bancorp   in   connection   with   the   Proxy
Statement/Prospectus,  both at the time such information and representations are
provided and made and at the  Effective  Date,  will be true and accurate in all
material  respects and will not contain any false or misleading  statement  with
respect to any material  fact or omit to state any material  fact required to be
stated therein or necessary in order (a) to make the statements made therein not
false or  misleading,  or (b) to correct any  statement  contained in an earlier
communication  with respect to such  information  or  representations  which has
become false or misleading.

     6.8. Employment Agreements. Pursuant to Section 10(c) of this Plan, between
the date of this Plan and the Effective  Date,  F&M Bancorp shall offer to enter
into an employment  agreement with Richard W. Phoebus,  Sr. substantially in the
form attached hereto as Appendix VI, and with each of Celia S. Ausherman, Steven
G. Hull and Salvatore M. Savino  substantially  in the form  attached  hereto as
Appendix VII.

     6.9. F&M Bancorp  Common  Stock.  At the  Effective  Date,  the F&M Bancorp
Common  Stock to be issued in exchange  for the Home  Corporation  Common  Stock
pursuant  to the terms of this Plan shall be duly  authorized,  validly  issued,
fully paid, and non-assessable,  free of preemptive rights and free and clear of
all liens,  encumbrances or restrictions created by or through F&M Bancorp, with
no personal liability attaching to the ownership thereof. The F&M Bancorp Common
Stock to be issued upon exchange for the Home Corporation  Common Stock pursuant
to the terms of this Plan will be issued in all material  respects in accordance
with applicable state and federal laws, rules and regulations.

     6.10.  Maintenance of Separate  Existence.  For a period of three (3) years
after the Effective Date, F&M Bancorp shall (i) preserve the separate  corporate
existence of Home Bank;  and (ii)  continue in office the directors of Home Bank



                                      -32-
<PAGE>



who are serving in such  capacity on the  Effective  Date for the  remainder  of
their current terms and until their  successors  are elected and have  qualified
(subject to the  addition  of two  directors  pursuant to Section  10(b) of this
Plan);  provided,  however,  that during the  three-year  period  following  the
Effective  Date, F&M Bancorp may terminate the separate  corporate  existence of
Home  Bank if  Maryland  or  federal  laws or  regulations  governing  financial
institutions are amended in such a way as to have a materially adverse effect on
the  business,  operations  or future  prospects  of F&M  Bancorp  if it were to
continue to operate Home Bank as a separate corporate entity.

     7.  Conditions  Precedent to F&M  Bancorp's  Obligations.  Unless waived in
writing by F&M Bancorp in its sole  discretion,  all  obligations of F&M Bancorp
hereunder shall be subject to the fulfillment  prior to or at the Effective Date
of the following conditions:

     7.1.  Representations,  Warranties,  and Covenants. The representations and
warranties of Home  Corporation  herein  contained shall be true in all material
respects  as of the date  hereof,  shall be deemed  made  again at and as of the
Effective  Date,  and shall be true in all  material  respects as so made again;
Home Corporation and the Home Subsidiaries  shall have performed in all material
respects all obligations and agreements,  and complied in all material  respects
with all  covenants  and  conditions  required by this Plan to be  performed  or
complied with by them on or prior to the Effective  Date;  and F&M Bancorp shall
have received from Home Corporation an officers' certificate to their knowledge,
information  and belief in such detail as F&M Bancorp  may  reasonably  request,
dated the Effective Date and signed by its Chairman and Chief Executive  Officer
and Secretary, to the foregoing effect.

     7.2. No Adverse Changes.  There shall not have been any materially  adverse
change in the financial condition,  results of operations,  assets, liabilities,
or business of Home  Corporation  and the Home  Subsidiaries,  taken as a whole,
from December 31, 1995 to the Effective  Date. For purposes of this Section 7.2,
a "materially adverse change" shall include, without limitation, (a) a reduction
of the stockholders' equity of Home Corporation to less than $18,382,000,  (b) a
decrease in the net income of Home Corporation for fiscal year 1996 to less than
$1,000,000 on an annualized basis, (c) the reduction of core deposits (i.e., all
deposits  excepting  certificates of deposit in excess of $100,000) of Home Bank
to less than 95% of core  deposits of Home Bank on December 31, 1995,  or (d) an
increase in Home  Corporation's  ratio of non-performing  assets to total assets
from that  reported  as of December  31, 1995 to greater  than 7.5 % at any time
before  the  Effective  Date (in the case of (a) and (b),  the  expenses  of the
transaction under this Plan shall not be taken into account).

     7.3.  Events  Preceding the Effective Date. Each of the events set forth in
Section 2 shall have occurred and any other required regulatory  approvals shall
have been obtained.

     7.4. Other Evidence.  Home Corporation  shall have delivered to F&M Bancorp
such further certificates and documents evidencing due action in accordance with
this  Plan,  including  certified  copies  of  all  applicable   proceedings  of


                                      -33-
<PAGE>


stockholders  or directors of Home  Corporation  pertaining to the  transactions
under this Plan, as F&M Bancorp shall reasonably request.

     7.5. No Adverse Proceedings,  Events or Regulatory Requirements.  No action
or proceeding against F&M Bancorp or any of the F&M Subsidiaries or against Home
Corporation  or any of the Home  Subsidiaries  shall be pending  which  seeks to
prevent consummation of the transactions contemplated by this Plan; and no order
of any court shall have been entered which prohibits  consummation of the Merger
and the transactions contemplated by this Plan. No approval,  consent, waiver or
administrative  action shall have  included any  condition or  requirement  that
would  (i)  result  in a  materially  adverse  effect  on F&M  Bancorp  or  Home
Corporation or (ii) so materially and adversely  affect the economic or business
benefits of the Merger that F&M  Bancorp,  in the sole  judgment of F&M Bancorp,
would not have entered into this Plan had such conditions or  requirements  been
known at the date hereof.

     7.6.  Consents,  Etc.  All  requisite  consents,  undertakings,  memoranda,
agreements,  exercises, and terminations by third parties which Home Corporation
and the Home Subsidiaries have covenanted to use commercially reasonable efforts
to obtain under  Sections 5.3 and 5.8 shall have been  obtained or waived by F&M
Bancorp.

     7.7.  Opinion of Tax Counsel.  F&M Bancorp  shall have received the opinion
from its tax counsel required by Section 11.

     7.8.  Opinion of  Counsel.  F&M Bancorp  shall have  received an opinion of
counsel to Home  Corporation,  dated the  Effective  Date, in form and substance
reasonably  satisfactory  to F&M  Bancorp,  covering  the  matters  set forth in
Appendix VIII hereto.

     7.9 Pooling-of-Interests  Accounting. The holders of no more than 8% of the
outstanding  Common Stock of Home  Corporation  shall have taken all appropriate
steps required by Md. Corps. & Ass'ns Code ss. 3-203(a)(1) and (2) to dissent to
this Plan,  and F&M Bancorp  shall have  received a letter  from an  independent
accounting  firm chosen by F&M  Bancorp to the effect that the Merger  qualifies
for pooling-of-interests  accounting treatment if consummated in accordance with
this Plan;  provided,  that such condition shall be void and of no further force
and effect if F&M Bancorp has not received such letter  because of any action or
inaction of F&M Bancorp.

     7.10.  Directors'  Agreement.  Each of Howard B. Bowen and John J. McElwee,
Jr. shall have entered into a Directors'  Agreement with F&M Bancorp in the form
attached hereto as Appendix X.

     8. Conditions Precedent to Home Corporation's Obligations. Unless waived in
writing by Home  Corporation  in its sole  discretion,  all  obligations of Home
Corporation  hereunder  shall be subject to the  fulfillment  prior to or at the
Effective Date of the following conditions:




                                      -34-
<PAGE>



     8.1.  Representations,  Warranties,  and Covenants. The representations and
warranties  of F&M  Bancorp  herein  contained  shall  be true  in all  material
respects  as of the date  hereof,  shall be deemed  made  again at and as of the
Effective Date, and shall be true in all material respects as so made again; F&M
Bancorp  shall have  performed in all  material  respects  all  obligations  and
agreements,  and  complied  in all  material  respects  with all  covenants  and
conditions  required by this Plan to be performed  or complied  with by it on or
prior to the Effective Date; and Home  Corporation  shall have received from F&M
Bancorp an officers'  certificate to their knowledge,  information and belief in
such detail as Home Corporation may reasonably request, dated the Effective Date
and signed by its President and Secretary or Cashier, to the foregoing effect.

     8.2. No Adverse Changes.  There shall not have been any materially  adverse
change in the financial condition,  results of operations,  assets, liabilities,
or business of F&M Bancorp from December 31, 1995 to the Effective Date.

     8.3.  Events  Preceding the Effective Date. Each of the events set forth in
Section 2 shall have occurred and any other required regulatory  approvals shall
have been obtained.

     8.4. Other Evidence.  F&M Bancorp shall have delivered to Home  Corporation
such further certificates and documents evidencing due action in accordance with
this Plan, including certified copies of all applicable proceedings of directors
of  F&M  Bancorp  pertaining  to the  transactions  under  this  Plan,  as  Home
Corporation shall reasonably request.

     8.5. Consents, Etc. All requisite consents,  approvals or waivers which F&M
Bancorp has covenanted to use  commercially  reasonable  efforts to obtain under
Section 6.5 shall have been obtained or waived by Home Corporation.

     8.6.  Opinion of Tax  Counsel.  Home  Corporation  shall have  received the
opinion from tax counsel to F&M Bancorp required by Section 11.

     8.7.  Fairness  Opinion.  Home  Corporation  shall have  received a written
opinion from Charles Webb & Company (or such other recognized investment firm as
Home Corporation may select), dated contemporaneously with the date of the Proxy
Statement,  to the effect that the consideration to be received in the Merger is
fair to the stockholders of Home Corporation from a financial point of view.

     8.8.  Employment  Agreements.  Pursuant to Section 10(c) of this Plan,  F&M
Bancorp shall have offered to enter into an employment agreement with Richard W.
Phoebus, Sr. substantially in the form attached hereto as Appendix VI, and shall
have  offered  to  enter  into an  employment  agreement  with  each of Celia S.
Ausherman,  Steven G. Hull and  Salvatore  M. Savino  substantially  in the form
attached hereto as Appendix VII.




                                      -35-
<PAGE>



     8.9. Opinion of Counsel. Home Corporation shall have received an opinion of
counsel  to F&M  Bancorp,  dated  the  Effective  Date,  in form  and  substance
reasonably  satisfactory to Home Corporation,  covering the matters set forth in
Appendix IX hereto.

     9. Terms of the Merger.

     9.1.  Structure of the Merger. At the Effective Date,  subject to the terms
and conditions of this Plan, Home Corporation will merge (the "Merger") with and
into F&M Bancorp,  the separate  corporate  existence of Home Corporation  shall
cease,  and  F&M  Bancorp  shall  continue  as the  successor  corporation  (the
"Successor   Corporation").   Home  Bank  shall  become  a  wholly-owned  direct
subsidiary of the Successor Corporation.  From and after the Effective Date, the
Merger shall have the effects set forth in Md. Corps. & Ass'ns Code ss. 3-114.

     9.2. Conversion of Stock; Conversion Ratio.

          (a) On the Effective Date, each share of the Home  Corporation  Common
     Stock  outstanding  immediately  prior to the  Effective  Date  (other than
     shares held by persons who perfect their dissenters'  rights under Maryland
     law),  shall,  without  any  action on the part of the holder  thereof,  be
     canceled  and  converted  into the number of shares of F&M  Bancorp  Common
     Stock   (rounded  to  the  nearest   0.01  share)   which   results   after
     multiplication  by the Conversion  Ratio.  The Conversion  Ratio shall be a
     fraction,  the numerator of which is the product of (i) 1.65  multiplied by
     (ii) the book value  (calculated in accordance  with Section 9.7) per share
     of  Home  Corporation  Common  Stock  on  the  Calculation  Date,  and  the
     denominator  of which is the Average Market Value of a share of F&M Bancorp
     Common  Stock.  The  Calculation  Date  shall be the last day of the  month
     during  which (i) all events  listed in Section 2 shall have  occurred  and
     (ii) all  conditions  precedent  listed in Sections 7 and 8 shall have been
     fulfilled or waived.

          (b) For purposes of the  computation of the Conversion  Ratio,  if, at
     the Calculation  Date, the Average Market Value of F&M Bancorp Common Stock
     is greater  than 1.9 times the book value per share of F&M  Bancorp  Common
     Stock   determined  in  accordance  with  generally   accepted   accounting
     principles, then in lieu of the Average Market Value, F&M Bancorp shall use
     a per share  price for its Common  Stock  equal to 1.9 times the book value
     per share of its Common Stock as of the  Calculation  Date,  determined  in
     accordance with generally accepted accounting principles.

          (c) The Average  Market Value of each share of the F&M Bancorp  Common
     Stock  shall be the  arithmetic  average of closing  prices of F&M  Bancorp
     Common Stock in the Composite Transaction Summary to the extent reported in
     The Wall  Street  Journal  for the twenty  (20)  consecutive  trading  days
     preceding the Calculation Date.


                                      -36-
<PAGE>


          (d) No certificates for fractional  shares of F&M Bancorp Common Stock
     shall be issued;  in lieu  thereof,  each  holder  otherwise  entitled to a
     fractional  interest  shall  receive an amount in cash based on the Average
     Market Value of F&M Bancorp Common Stock on the Calculation Date. Each such
     holder shall have no other rights with respect to such fractional interest.

          9.3. Exchange Procedure.

          (a) After the Effective Date, certificates representing such shares of
     Common  Stock of Home  Corporation  shall  represent  the right to  receive
     certificates  representing shares of Common Stock of F&M Bancorp determined
     in accordance with Section 9.2 hereof;  such Home Corporation  certificates
     at any time  after  the  Effective  Date may be  exchanged  by the  holders
     thereof for new certificates for the appropriate number of shares of Common
     Stock of F&M  Bancorp by  forwarding  such Home  Corporation  Common  Stock
     certificates  and the letter of transmittal  provided by F&M Bancorp to the
     transfer  agent for F&M Bancorp  Common  Stock,  and the payment of cash in
     lieu of fractions,  dividends, and other distributions on said stock may be
     withheld  until  the Home  Corporation  certificates  are  surrendered  for
     exchange to the transfer agent for F&M Bancorp Common Stock;  when such new
     certificates  are issued,  the holders thereof shall be entitled to be paid
     the amount (without any interest thereon) of all such withheld cash in lieu
     of fractions,  dividends,  or other  distributions  which have  theretofore
     become payable with respect to such shares of Common Stock of F&M Bancorp.

          (b) As soon as possible  after the Effective  Date, the transfer agent
     for F&M  Bancorp  Common  Stock shall send or cause to be sent a notice and
     transmittal  form  to  each  recordholder  of  a  certificate   theretofore
     evidencing  shares of the Home  Corporation  Common  Stock  (other  than to
     holders who have perfected their dissenters' rights under Maryland law).

          (c) All shares of F&M Bancorp  Common  Stock into which shares of Home
     Corporation  Common Stock shall have been converted shall be deemed to have
     been issued in full satisfaction of all rights pertaining to such shares of
     Home Corporation Common Stock.

          9.4. Stock Options.

          (a) At the Effective  Date,  all options  granted by Home  Corporation
     which are outstanding  under all Stock Option Plans  previously  adopted by
     Home Corporation to purchase shares of Home Corporation Common Stock, which
     are  outstanding  and  unexercised  immediately  prior  thereto  (each,  an
     "Outstanding Option"), shall be converted as to each whole share subject to
     such  Outstanding  Option into an option  (each,  an "Exchange  Option") to


                                      -37-
<PAGE>


     purchase a number of shares of the Common Stock of F&M Bancorp equal to the
     number of shares of Home  Corporation  Common  Stock  which could have been
     purchased under the Outstanding Option multiplied by the Conversion Ratio.

          (b) The per share  exercise  price of each  Exchange  Option  shall be
     equal to the price per share set forth in the Outstanding Option divided by
     the Conversion Ratio, rounded up to the nearest whole cent.

          (c) The Exchange  Option shall  otherwise  have the same  duration and
     other terms as the Outstanding Option.

          (d) The adjustments  provided herein with respect to any options which
     are  "incentive  stock  options" (as defined in Section 422 of the Internal
     Revenue  Code of 1986,  as amended  (the  "Code"))  shall be  effected in a
     manner consistent with Section 424(a) of the Code.

     9.5. Articles of Incorporation of the Successor  Corporation.  The Articles
of Incorporation of F&M Bancorp, as in effect immediately prior to the Effective
Date, shall be the Articles of Incorporation of the Successor  Corporation until
thereafter amended as provided by law.

     9.6. By-Laws of the Successor  Corporation.  The By-Laws of F&M Bancorp, as
in effect  immediately  prior to the Effective Date, shall be the By-Laws of the
Successor Corporation until thereafter amended as provided by law.

     9.7.  Calculation of Home Corporation's Book Value. For purposes of Section
9.2 hereof,  the book value of Home Corporation shall mean,  subject to addition
or subtraction for the items set forth in paragraphs (a) through (c) below,  the
calculation as of the Calculation Date of Home Corporation's  total assets minus
its  total  liabilities,   calculated  in  conformity  with  generally  accepted
accounting  principles applied on a basis consistent with past practices of Home
Corporation:

          (a) Home  Corporation's  Allowance  for  Possible  Losses (as shown on
     Schedule 9.7(a) hereof) (its "Total Allowance") as of the close of business
     on the  Calculation  Date  shall be  35.12%  of its  Problem  Assets on the
     Calculation  Date,  with any  adjustments to the Total  Allowance and other
     accounts  necessary to achieve this  percentage  being  accounted  for in a
     manner that reflects the principles of Financial Accounting Standards Board
     Statement  109  ("FAS  109") and any other  generally  accepted  accounting
     principles  applicable to income taxes.  For purposes of this  calculation,
     Problem Assets consist of (i) loans classified as substandard,  doubtful or
     loss and (ii) other real estate owned at the Calculation  Date,  based upon
     loan classification standards in effect as of December 31, 1995. No Problem
     Assets at December  31, 1995  (except for  consumer  loans and  one-to-four
     family residential loans) shall be reduced or eliminated at the Calculation



                                      -38-
<PAGE>



     Date except to the extent  payment is received by Home Bank or written off.
     Home  Corporation  has scheduled its Problem Assets at December 31, 1995 on
     Schedule 9.7(a).

          (b)  If  a  special   recapitalization   assessment  for  the  Savings
     Association  Insurance  Fund is  imposed  on Home  Bank  on or  before  the
     Calculation  Date,  the amount of the special  recapitalization  assessment
     shall be added  back to Home  Corporation's  book  value as of the close of
     business  on the  Calculation  Date and the  income  tax  accounts  of Home
     Corporation shall be adjusted to reflect the treatment that would have been
     required  under  FAS  109  and  any  other  generally  accepted  accounting
     principles applicable to income taxes as if the amount added back had never
     been imposed;  provided that such calculation shall not increase book value
     by more than $925,000.

          (c) For purposes of determining book value,  only normal and recurring
     items of income and expense  (including any  additional  premiums to obtain
     extended  directors' and officers' liability coverage) shall be considered;
     provided, that transactional expenses hereunder (other than such additional
     premiums) shall not be deducted as an expense.

          (d) Home  Corporation  shall  prepare  and  provide  to F&M  Bancorp a
     schedule reflecting the calculation of its book value as of the Calculation
     Date, determined in accordance with the terms of this Section 9.7 within 10
     days of the Calculation Date. Such schedule shall be submitted along with a
     report of Home Corporation's independent auditors which shall indicate that
     they have reviewed (i) each of the reports filed by Home  Corporation  with
     the  SEC  since  the  date  of  the  1995  audited  consolidated  financial
     statements,  and  specifying  that  they  are  not  aware  of any  material
     modifications that should be made to such financial statements in order for
     them to be calculated  in conformity  with  generally  accepted  accounting
     principles  applied  on a  basis  consistent  with  past  practice  of Home
     Corporation,  and (ii) the schedule  reflecting the calculation of the book
     value as of the  Calculation  Date in  accordance  with  the  terms of this
     Section 9.7 and specifying that nothing came to their attention that caused
     them to believe  that the  calculation  of book value is not in  accordance
     with  the  terms  of  this  Section  9.7.  Such  schedule  and   supporting
     documentation  are  referred  to  as  the  Book  Value  Documentation.  F&M
     Bancorp's  certified public accountants shall, within 5 days of the receipt
     of the  Book  Value  Documentation,  either  confirm  in  writing  to  Home
     Corporation that it finds the  determination of book value to be acceptable
     or, if such is not the case,  F&M Bancorp's  independent  certified  public
     accountants shall set forth  specifically and with  particularity the basis
     for its  disagreement.  In the  event  that F&M  Bancorp  believes  that an
     adjustment to book value is required,  representatives of F&M Bancorp, Home
     Corporation  and each of their  independent  certified  public  accountants
     shall meet within 5 days to discuss any areas of disagreement. In the event
     that the parties hereto determine to adjust Home  Corporation's  book value



                                      -39-
<PAGE>



     from that previously  determined,  Home Corporation shall promptly make the
     appropriate  adjustments.  If the parties  hereto  cannot  reach  agreement
     within 5 days of first meeting on this matter, they shall submit the matter
     for  determination  to  a  mutually  acceptable   independent  third  party
     independent  accounting firm, whose  determination shall be required within
     10 days thereafter and shall be binding upon the parties.

     9.8.  Anti-Dilution  Provision.  If F&M  Bancorp  takes  any  action  which
establishes,  prior to the Effective Date, a record date or effective date for a
stock dividend on its Common Stock, a split or reverse split of its Common Stock
or any distribution on all shares of its Common Stock other than cash dividends,
F&M Bancorp will take such action as shall be necessary in order that each share
of Common Stock of Home  Corporation  will be converted  into the same number of
shares of the Common  Stock of F&M  Bancorp  (whether  such number is greater or
less than the  number  otherwise  provided  for  herein)  that the owner of such
shares would have owned  immediately  after the record date or effective date of
such event had the Effective Date occurred  immediately  before such record date
or effective  date, and the  Conversion  Ratio set forth in Section 9.2 shall be
adjusted  accordingly.  Home  Corporation  hereby  agrees to any revision in the
exchange ratio pursuant to this Section 9.8.

     9.9. Rights of Dissenting Stockholders. Each holder of shares of the Common
Stock of Home Corporation which are voted against the approval of the Merger who
perfects his appraisal  rights pursuant to the provisions of Md. Corps. & Ass'ns
Code ss. 3-201 et seq. (a "dissenting stockholder") shall be entitled to receive
from F&M  Bancorp in cash the value of such  shares of the Common  Stock of Home
Corporation  determined in accordance with the provisions of Md. Corps. & Ass'ns
Code ss. 3-201 et seq.

     9.10. Restriction on Issuance or Repurchase of Securities.  Nothing in this
Plan  shall  limit the right of F&M  Bancorp to issue or  repurchase  any of its
stock or other securities in any manner and for any  consideration  permitted by
law either in connection with acquisitions of new affiliates or otherwise, prior
to or after the Effective Date.

     10. Boards of Directors and Employment Matters. Upon the Effective Date:

          (a) Promptly after the Effective Date of the Merger,  F&M Bancorp will
     cause its Board of  Directors  to be  expanded  to include  two  additional
     members.  Two of the directors of Home  Corporation will then be elected to
     fill the two newly created  vacancies  until the next annual meeting of the
     stockholders of F&M Bancorp and until their successors are elected and have
     qualified.  Prior  to the  Effective  Date  of the  Merger,  the  Board  of
     Directors  of  Home  Corporation  will  designate  the  directors  to be so
     elected,  subject to the approval of the Nominating  Committee of the Board
     of Directors of F&M Bancorp.

          (b)  The  members  of the  Board  of  Directors  of  Home  Bank on the
     Effective  Date will serve for the  remainder  of their  current  terms and



                                      -40-
<PAGE>



     until their successors are elected and have qualified.  However,  after the
     Effective  Date, F&M Bancorp,  as the sole  stockholder of Home Bank,  will
     cause the Board of  Directors  of Home Bank to be  expanded  to include two
     additional  members,  and shall appoint two  individuals  designated by the
     Nominating  Committee  of the Board of Directors of F&M Bancorp to fill the
     two newly created vacancies.

          (c) F&M  Bancorp  will  offer to enter  into an  employment  agreement
     substantially  in the form  attached  hereto as Appendix VI with Richard W.
     Phoebus, Sr., the President and Chief Executive Officer of Home Corporation
     and Home  Bank.  F&M  Bancorp  will  also  offer to enter  into  employment
     agreements  substantially  in the form attached hereto as Appendix VII with
     each of  Celia  S.  Ausherman,  Steven  G.  Hull and  Salvatore  M.  Savino
     (collectively and together with Mr. Phoebus, the "Contract Employees"). F&M
     Bancorp will offer to enter into each of these employment agreements before
     the Effective Date, but the effectiveness of each is to be conditioned upon
     the  completion  of  the  Merger.  All  such  employment  agreements  shall
     constitute the entire understanding with respect to employment arrangements
     between F&M Bancorp and each of the Contract Employees, and shall supersede
     any and all prior  understandings,  written  or oral,  including  any prior
     employment  agreements  between the Contract Employees and Home Corporation
     or  Home  Bank.  The  Contract  Employees  shall  not  be  subject  to  the
     employment,  compensation,  severance,  or  benefit  plan  eligibility  and
     participation arrangements set forth in Sections 10(e), (f), (g) and (h) of
     this Plan.

          (d) The  employment of all officers and employees of Home  Corporation
     will terminate on the Effective Date. One officer of Home  Corporation will
     be appointed  to serve as an officer of F&M  Bancorp.  Such officer will be
     designated  by Home  Corporation,  subject to the  approval of the Board of
     Directors  of  F&M  Bancorp.   Such  officer  may  also  continue  to  hold
     responsibilities  he or she held at Home Bank prior to the Effective  Date,
     and shall only be  compensated in his or her capacity as an officer of Home
     Bank.

          (e) The officers and  employees of Home Bank,  other than the Contract
     Employees,  will  continue  in their  employment  with Home Bank as at-will
     employees  at the same  compensation  level  they  received  with Home Bank
     before the Effective Date.

          (f)  Payments of $1,000,  $500,  or $250 will be made to each of those
     officers,  full-time employees,  or part-time employees,  respectively,  of
     Home  Bank,  other  than the  Contract  Employees,  who  either  (i) remain
     employed by Home Bank for six months continuously  thereafter or (ii) leave
     such  employment  at the request of Home Bank  within six months  after the
     Effective  Date. Such payments shall be made six months after the Effective
     Date,  in the case of those who remain in the  employment  of Home Bank, or



                                      -41-
<PAGE>



     within 15 business days after the date of termination, in the case of those
     who are requested to leave employment.

          (g) In  addition to any  payments  required  under  Section  10(f),  a
     severance  payment will be made to those employees of Home Bank, other than
     the Contract  Employees,  who remain employed by Home Bank on the Effective
     Date,  but leave such  employment  at the  request of Home Bank  within six
     months after the  Effective  Date for other than just cause.  The amount of
     the severance  payment for each such employee will be two weeks' pay at the
     most recent  compensation  level of that  employee.  The severance  payment
     shall be made within 15 business days after the date of  termination of the
     employee.

          (h) F&M Bancorp will review the benefits provided to employees of Home
     Bank under the employee benefit plans maintained by Home Bank and disclosed
     pursuant to Section 3.8(b).  F&M Bancorp will provide the employees of Home
     Bank who continue as at-will  employees of F&M Bancorp  after the Effective
     Date either with  benefits  under F&M Bancorp's  employee  benefit plans or
     with  benefits  under Home Bank's  employee  benefit  plans,  whichever F&M
     Bancorp in its sole  discretion  deems to be more  advantageous  taken as a
     whole (and not on a  plan-by-plan  basis) to the employees of Home Bank. In
     that  connection,  F&M  Bancorp  may,  in its sole  discretion,  freeze  or
     terminate the employee  benefit plans of Home Bank,  merge them with one or
     more employee  benefit plans of F&M Bancorp,  or continue to maintain them.
     If F&M Bancorp decides to freeze,  terminate or merge the employee  benefit
     plans of Home Bank,  after the Effective  Date all  full-time  officers and
     employees of Home Bank who  continue as at-will  employees of Home Bank may
     participate in the equivalent  employee benefit plans of F&M Bancorp to the
     extent they are eligible to do so under the terms of such plans or programs
     as are in force on the  Effective  Date,  with credit given for their prior
     service with Home Bank for purposes of allocation, eligibility and vesting.

          (i) Except as disclosed on Schedule 3.8, F&M Bancorp will  discontinue
     health and life  insurance  benefits to retired  officers and  employees of
     Home Corporation except to the extent that coverage may continue after, and
     Home  Corporation  may have paid for the coverage  prior to, the  Effective
     Date.

          (j) For such  period of time as is  covered  by any  extension  of the
     directors' and officers'  liability  coverage of Home  Corporation  and the
     Home  Subsidiaries,  but in no event longer than 6 years from the Effective
     Date, after the Effective Date F&M Bancorp agrees to cause Home Bank, or if
     such  entity is no longer in  existence,  F&M  Bancorp  shall  continue  to
     indemnify  all  persons  who,  as of the  Effective  Date,  are  directors,
     officers, employees and agents of Home Corporation or the Home Subsidiaries
     to the same  extent  that such  persons  are  indemnified  pursuant  to the
     Articles of Incorporation  or By-Laws of Home  Corporation  and/or the Home



                                      -42-
<PAGE>



     Subsidiaries on the date hereof, with respect to matters occurring prior to
     the Effective Date.

     11.  Opinion of Tax Counsel.  F&M Bancorp and Home  Corporation  shall have
received an opinion from tax counsel to F&M Bancorp to the effect that:

          (a) The  transfer  of all of the  assets  of Home  Corporation  to F&M
     Bancorp,  and the  assumption  by F&M  Bancorp of the  liabilities  of Home
     Corporation  pursuant  to  the  terms  of  this  Plan,  will  constitute  a
     reorganization within the meaning of Section 368(a)(1)(A) of the Code. Home
     Corporation  and F&M Bancorp  will each be a "party to the  reorganization"
     within the meaning of Section 368(b) of the Code.

          (b) No gain  or  loss  will be  recognized  to a  stockholder  of Home
     Corporation  on the conversion of Common Stock of Home  Corporation  solely
     into  shares of the Common  Stock of F&M  Bancorp.  No gain or loss will be
     recognized  by Home  Corporation  upon the transfer of all of its assets to
     F&M Bancorp in exchange  for shares of the Common  Stock of F&M Bancorp and
     the assumption by F&M Bancorp of the  liabilities of Home  Corporation.  No
     gain or loss will be  recognized  to F&M  Bancorp  upon the  receipt by F&M
     Bancorp of all of the assets of Home  Corporation in exchange for shares of
     the Common  Stock of F&M Bancorp and the  assumption  by F&M Bancorp of the
     liabilities of Home Corporation.

          (c) The  basis  of the  shares  of the  Common  Stock  of F&M  Bancorp
     received by a stockholder of Home Corporation will be the same as the basis
     of the shares of the Common Stock of Home Corporation  which were converted
     into F&M  Bancorp  shares  pursuant to the  Merger.  The holding  period of
     shares of the Common Stock of F&M Bancorp received by a stockholder of Home
     Corporation  will include the period during which he held the shares of the
     Common  Stock of Home  Corporation  which were  converted  into F&M Bancorp
     shares pursuant to the Merger,  provided that the shares of Common Stock of
     Home  Corporation  is held as a capital  asset by the  stockholder  of Home
     Corporation on the Effective Date.

          (d) The basis of each  asset of Home  Corporation  in the hands of F&M
     Bancorp  will be the same as the  basis of such  asset in the hands of Home
     Corporation  immediately  prior to the Merger;  the holding  period of each
     such asset in the hands of F&M Bancorp  will  include  the  periods  during
     which such asset was held by Home Corporation.

          (e) No gain or loss  will be  recognized  to the  stockholders  of F&M
     Bancorp as a result of the transactions contemplated by this Plan.




                                      -43-
<PAGE>



          (f) Where cash is received by a  stockholder  of Home  Corporation  in
     lieu of a fractional  share of the Common Stock of F&M Bancorp to which the
     stockholder  may be entitled,  such cash will be treated as received by the
     stockholder  as a  distribution  in  redemption  of  his  fractional  share
     interest.

          (g) The  accumulated  earnings and profits of Home  Corporation on the
     Effective Date will be added to the accumulated earnings and profits of F&M
     Bancorp and will be available  for  subsequent  distributions  of dividends
     within the meaning of Section 316 of the Code.

     12.  Amendment  of the Plan.  This Plan may be amended at any time prior to
the  Effective  Date  in  response  to  comments  of   governmental   regulatory
authorities or otherwise;  provided that any such amendment is in writing and is
approved by the Board of Directors of each of the parties hereto.

     13.  Abandonment  of the  Plan;  Effect  Thereof.  Anything  herein  to the
contrary notwithstanding,  and notwithstanding any stockholder vote or approval,
this Plan may be terminated and abandoned:

          (a) by mutual  consent of the Boards of Directors of Home  Corporation
     and F&M Bancorp, or

          (b) by F&M Bancorp or Home  Corporation,  if its Board of Directors so
     determines,  in the event of the failure of the stockholders of F&M Bancorp
     or Home  Corporation  to approve this Plan at the meetings of  stockholders
     called to consider such  approval,  unless in each case the failure of such
     occurrence  shall be due to the failure of the party  seeking to  terminate
     this Plan to  perform  or  observe  its  agreement  set forth  herein to be
     performed or observed by such party at or before the Effective Date; or

          (c) by F&M Bancorp or Home  Corporation,  if its Board of Directors so
     determines,  in the event of a material breach by the other party hereto of
     any representation,  warranty, covenant or agreement contained herein which
     is not cured or not  curable  within 60 days after  written  notice of such
     breach is given to the party committing such breach by the other party; or

          (d) by F&M Bancorp by written  notice to Home  Corporation if prior to
     December 31, 1996 (i) any approval,  consent or waiver of any  governmental
     entity  required to permit  consummation of the  transactions  contemplated
     hereby shall have been denied, (ii) any approval,  consent or waiver of any
     governmental  entity required to permit  consummation  of the  transactions
     contemplated  hereby shall include any condition or requirement  that would
     (i)  result  in  a  materially  adverse  effect  on  F&M  Bancorp  or  Home
     Corporation  or (ii) so  materially  and  adversely  affect the economic or
     business  benefits of the Merger that F&M Bancorp,  in the sole judgment of



                                      -44-
<PAGE>



     F&M Bancorp,  would not have entered into this Plan had such  conditions or
     requirements been known at the date hereof,  (iii) any action or proceeding
     against  F&M  Bancorp  or any of  the  F&M  Subsidiaries  or  against  Home
     Corporation or any of the Home Subsidiaries shall be pending which seeks to
     prevent consummation of the transactions contemplated by this Plan, or (iv)
     any court shall have entered an order which  prohibits  consummation of the
     Merger and the transactions contemplated by this Plan, or

          (e) by F&M  Bancorp  or Home  Corporation,  by  action of the Board of
     Directors  of either  party and the  delivery  of written  notice by either
     party to the  other,  in the event that the  Merger is not  consummated  by
     December 31, 1996,  unless the failure to so consummate by such time is due
     to the  breach  of any  representation,  warranty,  agreement  or  covenant
     contained in this Plan by the party  seeking to  terminate,  or if prior to
     December 31, 1996, any governmental entity of competent  jurisdiction shall
     have issued a final,  unappealable  order or ruling  enjoining or otherwise
     prohibiting consummation of the transactions contemplated by this Plan, or

          (f) by action of the Board of Directors of Home  Corporation  in their
     sole discretion in accordance with Section 5.6, or

          (g) By either F&M Bancorp or Home  Corporation  if, at the Calculation
     Date,  the  Average  Market  Value (as  defined in  Section  9.2(c)) of F&M
     Bancorp Common Stock is less than 1.6 times the book value per share of F&M
     Bancorp  Common Stock  determined in  accordance  with  generally  accepted
     accounting principles;  provided,  however, that if F&M Bancorp elects (and
     Home Corporation agrees), for purposes of the computation of the Conversion
     Ratio (as defined in Section 9.2(a)), F&M Bancorp may use a per share price
     for the F&M Bancorp  Common  Stock of 1.6 times the book value per share of
     its Common Stock on the  Calculation  Date,  determined in accordance  with
     generally  accepted  accounting  principles,  in lieu of the Average Market
     Value.  In either such case, F&M Bancorp or Home  Corporation,  as the case
     may be, shall give prompt written notice to Home Corporation or F&M Bancorp
     of such election and Home  Corporation or F&M Bancorp,  as the case may be,
     shall then provide prompt written notice to F&M Bancorp or Home Corporation
     of its  willingness  to proceed  with such  modification;  and,  under such
     circumstances,  no  abandonment  or  termination  shall be  deemed  to have
     occurred pursuant to this Section 13(e), and this Plan shall remain in full
     force and  effect in  accordance  with its  terms,  except as the per share
     price for the Common Stock of F&M Bancorp shall have been so modified; or

          (h) in the event of the termination of this Plan by either F&M Bancorp
     or Home  Corporation,  as provided above, this Plan shall thereafter become



                                      -45-
<PAGE>



     void and there  shall be no  liability  on the part of any party  hereto or
     their  respective  officers or directors,  except that any such termination
     shall be without prejudice to the rights of any party hereto arising out of
     the  willful  breach  of  any  other  party  of  any  covenant  or  willful
     misrepresentation contained in this Plan.

     14. Expenses.  Whether or not the  transactions  hereunder are consummated,
each party to the Plan shall pay its own  expenses  relating  hereto,  including
fees and disbursements of its counsel and accountants;  provided,  however, that
F&M  Bancorp  shall pay (a)  filing  fees in  respect  of  regulatory  approvals
required in order to consummate the Merger,  including the  registration  fee of
the SEC, filing fees in respect of state "blue sky" laws, the fee payable to The
National  Association of Securities  Dealers,  Inc. in respect of the listing on
Nasdaq of the shares of F&M Bancorp  Common Stock to be issued  pursuant to this
Plan and (b) the costs of printing  and mailing the Proxy  Statement/Prospectus.
The foregoing  shall not be construed as a limitation of damages in the event of
breach.

     15. Notices. All notices, requests, demands, and other communications under
or  connected  with this Plan shall be in  writing,  and (a) if to F&M  Bancorp,
shall be addressed to F&M Bancorp,  110 Thomas  Johnson  Drive,  Post Office Box
518,  Frederick,  Maryland 21705,  attention of Gordon M. Cooley,  Secretary and
Legal  Officer,  with a copy to its counsel,  Piper & Marbury  l.l.p.,  36 South
Charles Street, Baltimore, Maryland 21201-3010, attention of James J. Winn, Jr.,
Esquire;  or (b) if to Home  Corporation,  shall be  addressed  to Home  Federal
Corporation,   122-128  West  Washington  Street,  Hagerstown,  Maryland  21740,
attention of Richard W. Phoebus,  Sr.,  President and Chief  Executive  Officer,
with a copy to its counsel,  Elias, Matz, Tiernan & Herrick L.L.P.,  12th floor,
The Walker Building, 734 15th Street, N.W.,  Washington,  D.C., 20005, attention
of Norman B. Antin,  Esquire.  Any such notices,  requests,  demands,  and other
communications shall be mailed,  postage prepaid, first class mail, or delivered
personally  and shall be sufficient  and effective when delivered to or received
at the address as specified. Each of the parties may change the address at which
it is to receive communications by like written notice to the other.

     16.  Entire   Agreement;   Effect.   This  Plan  (including  the  financial
statements, lists, schedules, and documents delivered pursuant hereto, which are
made a part hereof) is intended by the parties to and does constitute the entire
agreement of the parties with respect to the transaction contemplated hereunder.
This Plan supersedes any and all prior  understandings,  including prior letters
of intent, and it may not be changed, waived,  discharged, or terminated orally,
but only in writing by a party against which enforcement of the change,  waiver,
discharge, or termination is sought.

     17. Representations, Warranties and Agreements. Except as set forth in this
Section 17, all  representations,  warranties  and agreements of F&M Bancorp and
Home  Corporation  made in this  Plan,  or in any  instrument  delivered  by F&M
Bancorp or Home Corporation pursuant to this Plan, shall expire at the Effective
Date. In the event of the consummation of the transactions  contemplated hereby,



                                      -46-
<PAGE>



the  agreements  contained in or referred to in Sections 9 and 10 shall  survive
the Effective  Date. In the event of the  termination of this Plan in accordance
with its terms, the agreements contained in or referred to in Sections 5.1, 5.6,
6.3 and 14 shall  survive  such  termination.  Except as  provided  in the first
sentence of this  Section 17,  nothing  contained  herein  shall be construed to
limit the liability of a party to another  party for damages  caused by a breach
of this Plan.

         18.  Governing  Law.  This  Plan  shall be  governed  by,  and shall be
interpreted  in  accordance  with,  the laws of the State of Maryland or, to the
extent applicable, the federal laws of the United States of America.

         19.  General.  The  section  headings  contained  in this  Plan are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretations of this Plan. This Plan may be executed simultaneously in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.  This Plan shall inure to
the  benefit  of and be binding  upon the  parties  hereto and their  respective
successors but shall not be assigned to and shall not create any rights in favor
of any other party.  Any  purported  assignment  in violation of this Section 19
shall be void.





                                      -47-
<PAGE>




     IN WITNESS WHEREOF,  F&M Bancorp and Home Corporation have caused this Plan
to be duly  executed  by their  respective  chairmen  or  presidents,  and their
respective  seals to be  hereunto  affixed  and  attested  by  their  respective
secretaries, thereunto duly authorized as of the date first above written.


ATTEST:      [SEAL]               F&M BANCORP



/s/ Gordon M. Cooley              By:    /s/ Charles W. Hoff, III
- --------------------                     ------------------------
Gordon M. Cooley                         Charles W. Hoff, III
Secretary                                Chairman of the Board and
                                         Chief Executive Officer


ATTEST:      [SEAL]               HOME FEDERAL CORPORATION



/s/ Celia S. Ausherman             By:    /s/ Richard W. Phoebus, Sr.
- ----------------------                   ---------------------------
Celia S. Ausherman                        Richard W. Phoebus, Sr.
Secretary                                 President and Chief Executive Officer






                                      -48-
<PAGE>




                                                                    APPENDIX I
                                LIST OF SCHEDULES


A. Schedules to be Provided by Home Corporation to F&M Bancorp.

Schedule  3.1(a).   List of subsidiaries of Home Corporation and their places of
                    incorporation.

Schedule   3.1(b).  Ownership   of  Home   Subsidiaries;   Joint  Ventures  and
                    Partnerships.

Schedule 3.1(c).   Charters and by-laws of Home Corporation and each of the Home
                   Subsidiaries.

Schedule 3.1(d).   List of outstanding options, warrants, rights, or obligations
                   of any kind  entitling the holder  thereof to acquire  shares
                   of  the Common Stock  of  Home  Corporation  or  outstanding 
                   securities or instruments that are convertible into shares of
                   the Common Stock of Home Corporation.

Schedule  3.2.     Consolidated   Financial  Statements  of  Home  Corporation  
                   at December 31, 1991, 1992, 1993, 1994 and 1995 and for each 
                   of  the  years  then  ended,  as  reported upon by Smith, 
                   Elliott, Kearns & Company.

Schedule  3.3.    Tax  Returns of Home Corporation  to Federal,  State,  County,
                  Municipal or Foreign Taxing  Authorities for the taxable years
                  1990,  1991, 1992, 1993 and 1994.

Schedule 3.7.1.   List of Liens and Encumbrances on Property.

Schedule 3.7.2.   List of Leases.

Schedule 3.8.     Plans, Contracts and Agreements.

Schedule 3.9.     Litigation, Etc.

Schedule 3.10.    Environmental Matters.

Schedule 3.12.    Pension and Welfare Matters.

Schedule 3.13.    Related Party Transactions.

Schedule 3.14.    No Conflicts with Other Documents.

Schedule 3.17.    Insurance Policies, including Financial Institutions Bonds.

Schedule 3.19.    Agreement between Home Corporation and Charles Webb & Company.




                                      -49-
<PAGE>



Schedule 5.2(e)     Increases in Employee Compensation or Benefit Levels.

Schedule 5.2(z)(ii) Capital Expenditures In Excess of $25,000.

Schedule9.7(a).     Schedule  of  Home   Corporation's  (i)  loans  classified 
                    as  substandard,  doubtful or loss;  and (ii)   real estate 
                    owned;  Home  Corporation's  Allowance  for Possible Losses.






                                      -50-
<PAGE>






B.   Schedules to be Provided by F&M Bancorp to Home Corporation.

Schedule 4.1(c).        List of subsidiaries of F&M Bancorp.

Schedule  4.1(e).  Charters  and  by-laws  of F&M  Bancorp  and  each of the F&M
                   Subsidiaries.

Schedule  4.2.  Consolidated   Financial  Statements  of  F&M  Bancorp  and  its
                subsidiary at December 31, 1990,  1991,  1992,  1993, 1994 and 
                1995 and for ach of the years then ended,  as  reported upon by 
                Keller Bruner & Company, L.L.C.

Schedule 4.4. List of Certain Changes or Events.

Schedule 4.6. Litigation, Etc.


                                      -51-
<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported):
                                  April 2, 1996
                                  -------------

                                   F&M BANCORP
                                   -----------
             (Exact name of registrant as specified in its charter)
Maryland                       0-12638                    52-1316473
   -------------                  -------------                 -------------
(State of Incorporation)    (Commission File Number)  (IRS Employer Identification No.)
110 Thomas Johnson Drive
                            Frederick, Maryland 21702
                            -------------------------
               (Address of principal executive offices) (Zip Code)

                                 (301) 694-4000
                                 --------------
                         (Registrant's telephone number)
Item 5.  Other Events.

         On April 2, 1996,  F&M Bancorp  announced  the  execution of a Plan and
Agreement  to Merge  (the  "Plan")  dated as of April 2,  1996 by and  among F&M
Bancorp,  a Maryland  bank  holding  company,  and Home Federal  Corporation,  a
Maryland  thrift  holding  company  and  the  owner  of all of  the  issued  and
outstanding capital stock of Home Federal Savings Bank of Hagerstown, Maryland.

         Pursuant to the terms of the Plan, Home Federal Corporation is to merge
with and into F&M Bancorp  (the  "Merger").  F&M Bancorp  will be the  surviving
Maryland  corporation.  On the  effective  date of the  Merger,  each issued and
outstanding  share of the  Common  Stock of Home  Federal  Corporation  shall be
automatically  converted  into and become a number of shares of the Common Stock
of F&M Bancorp whose  aggregate  value is equal to 1.65 times the book value per
share  of  Home  Federal  Corporation  at the  end of the  month  preceding  the
effective  date,   rounded  to  the  nearest  one  hundredth  of  a  share.  The
stockholders of Home Federal  Corporation  will thus become  stockholders of F&M
Bancorp,  and F&M  Bancorp  will  become  the  owner  of all of the  issued  and
outstanding  capital stock of Home Federal Savings Bank. It is expected that the
effective date of the Merger will occur during the fourth quarter of 1996.

         There  are  2,519,010  shares  of the  Common  Stock  of  Home  Federal
Corporation outstanding. Options to acquire 68,601 shares of the Common Stock of
Home Federal Corporation will be converted into options to acquire shares of the
Common  Stock of F&M Bancorp on similar  terms.  F&M  Bancorp  and Home  Federal
Corporation  also  executed a Stock  Option  Agreement  granting  F&M Bancorp an
option  to  purchase  501,282  shares  of  the  Common  Stock  of  Home  Federal
Corporation   at  $8.25  per  share  if  the  Plan  is   terminated  in  certain
circumstances.  On April 1, 1996, the day preceding  announcement of the Merger,
the per share price of the Common  Stock of Home Federal  Corporation  closed at
$8.25,  and the per share  price of the Common  Stock of F&M  Bancorp  closed at
$29.625. Both stocks are quoted on the Nasdaq National Market System.

         Consummation  of  the  Merger  is  subject  to the  fulfillment  of the
conditions  specified in the Plan.  Among the conditions are the approval of the
stockholders  of both F&M Bancorp and Home Federal  Corporation.  An affirmative
vote of two-thirds of the issued and outstanding  shares of Common Stock of each
of F&M Bancorp and Home Federal  Corporation  is required to approve the Merger.
F&M Bancorp and Home Federal  Corporation will call and hold special meetings of
their  respective  stockholders  for the purpose of voting upon the Plan and the
Merger.  Among the other  conditions  that must be satisfied are the approval of
the relevant federal regulatory  authorities and qualification of the Merger for
favorable tax and accounting treatment.

         F&M Bancorp is  headquartered  in  Frederick,  Maryland  and conducts a
general  banking and trust  company  business  through  its banking  subsidiary,
Farmers and  Mechanics  National  Bank.  Farmers  and  Mechanics  National  Bank
operates 24 offices  located in Frederick,  Carroll,  and  Montgomery  Counties,
Maryland.  At December 31, 1995,  Farmers and Mechanics  National Bank had total

                                       -1-
assets of $740 million,  total deposits of $621 million, and total loans, net of
unearned income, of $485 million.  Home Federal  Corporation is headquartered in
Hagerstown,  Maryland  and  operates 8 offices in  Washington  County,  Maryland
through  Home  Federal   Savings  Bank.  At  December  31,  1995,  Home  Federal
Corporation had $215 million in assets.

         Pursuant to General  Instruction F to Form 8-K, the press release dated
April 2, 1996  announcing  execution  of the Plan is  attached  to this  Current
Report as Exhibit 1, and is hereby incorporated by reference.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

               (c)  Exhibits.

                    1.   Press Release of F&M Bancorp dated April 2, 1996.

                    2.   Plan and  Agreement  to Merge dated as of April 2, 1996
                         by and among F&M Bancorp and Home Federal Corporation.

                                      -2-
SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  April 8, 1996                    F&M BANCORP

                                        By:/s/ Charles W. Hoff, III
                                           ------------------------
                                           Charles W. Hoff, III
                                           Chairman and Chief Executive Officer

                                      -3-
EXHIBIT INDEX
                                                                            Page

          1.   Press Release of F&M Bancorp dated April 2, 1996              5

          2.   Plan and  Agreement to Merge dated April 2, 1996
               by and among F&M Bancorp and Home Federal Corporation.        7

The registrant  agrees to furnish  supplementally a copy of any omitted schedule
or annex to the Plan and Agreement to Merge to the Commission upon request.

                                      -4-
EXHIBIT 1. PRESS RELEASE OF F&M BANCORP

         Charles W. Hoff, III, Chairman of the Board and Chief Executive Officer
of F&M Bancorp  headquartered  in Frederick,  Maryland,  and Richard W. Phoebus,
Sr., President and Chief Executive Officer of Home Federal  Corporation and Home
Federal Savings Bank, located in Hagerstown,  Maryland, announced today that F&M
Bancorp  has  entered  into a  definitive  agreement  to  acquire  Home  Federal
Corporation and its subsidiaries.

         Under the terms of the agreement,  Home Federal  Corporation will merge
into F&M  Bancorp,  which will  continue to operate  Home  Federal  Savings Bank
following  consummation of the  transaction.  Each  outstanding  share of common
stock of Home Federal  Corporation  will be exchanged for newly issued shares of
F&M Bancorp at a  conversion  ratio equal to 1.65 times the per share book value
of Home Federal Corporation common stock which shall be determined at the end of
the month  immediately  preceding the closing.  The value of F&M Bancorp  common
stock to be exchanged  will be based on the average NASDAQ closing price for the
20  business  days  preceding  that date.  The  transaction  is  expected  to be
completed  during the fourth  quarter of 1996. If the merger  consideration  had
been based on Home Federal  Corporation's  December 31, 1995 book value of $7.30
per share, each Home Federal  Corporation share would have been exchanged in the
merger  transaction  for $12.05 of F&M Bancorp common stock.  Using the December
31, 1995 closing stock price of F&M Bancorp  common stock of $29.75,  each share
of Home  Federal  Corporation  common  stock would have been  exchanged  for .41
shares of F&M Bancorp common stock.

         Two directors of Home Federal  Corporation  will be invited to serve as
directors of F&M Bancorp.  The acquisition is subject to the approval of federal
regulatory authorities and shareholder approval of both companies.  Charles Webb
& Company is serving as financial  advisor to Home Federal  Corporation  in this
transaction.

         Home  Federal  Corporation  had total assets as of December 31, 1995 of
approximately $214,615,000. F&M Bancorp had total assets as of December 31, 1995
of approximately $739,854,000. Home Federal Savings Bank, the primary subsidiary
of Home Federal Corporation, currently operates eight banking offices and eleven
ATMs in both  Washington  and  Allegheny  Counties  in  Maryland.  Home  Federal
Corporation currently has 2,519,010 shares of common stock outstanding,  and F&M
Bancorp currently has 4,419,424 shares of common stock outstanding.

         Mr.  Phoebus  stated,  "The  proposed  transaction  provides  a  unique
opportunity  for Home  Federal  Savings  Bank and for the  stockholders  of Home
Federal Corporation, as well as for our employees, customers, and the community.
By this  affiliation  with F&M Bancorp  and the  increased  resources  which the
merger makes  available,  Home  Federal can look forward to continued  growth by
expanding its products,  services and delivery systems to our existing customers
and new customers as well. We are very pleased that Home Federal will be able to

                                      -5-
continue to operate as a subsidiary  of F&M Bancorp,  allowing our  employees to
continue to serve our customer base through our eight Home Federal offices."

         "We are delighted to welcome Home Federal Savings Bank to F&M Bancorp,"
stated Faye Cannon,  President of F&M Bancorp.  "This  transaction  provides the
opportunity  for F&M  Bancorp  to grow and  expand  into  contiguous  Washington
County, a significant industrial and transportation hub for Western Maryland. We
value the  importance  of placing the customer at the center of our business and
this community banking philosophy is one that is shared by Home Federal. Through
this  affiliation,  both  organizations  will be able to enhance the delivery of
products and services to our individual and business  customers,  while building
long term value for stockholders."

         As a subsidiary of F&M Bancorp,  Farmers and Mechanics National Bank is
the fifth largest banking institution  headquartered in Maryland and operates as
a full service commercial bank through 24 full service community banking offices
and 32 ATMs throughout  Frederick,  Carroll,  and Montgomery Counties in central
Maryland.  Farmers and Mechanics  National Bank, a member of the FDIC,  provides
financial  services to both  individuals and business markets and is a member of
the MOST,  CIRRUS,  MAC, and VISA  regional,  national,  and  international  ATM
networks.

                                      -6-
EXHIBIT 2. PLAN AND AGREEMENT TO MERGE

         PLAN AND AGREEMENT TO MERGE (this "Plan"), dated as of April 2, 1996 by
and among F&M Bancorp ("F&M Bancorp"), a Maryland corporation,  and Home Federal
Corporation ("Home Corporation"), a Maryland corporation.

                              W I T N E S S E T H:

         WHEREAS, F&M Bancorp is a bank holding company and the holder of all of
the issued and outstanding  capital stock of Farmers and Mechanics National Bank
("F&M Bank"), a national banking  association;  and Home Corporation is a thrift
holding  company  and the holder of all of the issued  and  outstanding  capital
stock of Home Federal Savings Bank ("Home Bank"), a federally-chartered  savings
bank; and

         WHEREAS,  F&M Bancorp desires to have Home  Corporation  merge with F&M
Bancorp in such a manner that, upon the merger becoming  effective,  F&M Bancorp
will be the surviving Maryland corporation and all of the issued and outstanding
shares of the Common Stock of Home  Corporation will be converted into shares of
the Common Stock of F&M Bancorp,  subject to the terms and  conditions and based
upon Home Corporation's  representations,  warranties and covenants  hereinafter
set forth, such merger hereinafter referred to as the "Merger;" and

         WHEREAS, Home Corporation desires that it be merged with F&M Bancorp in
the manner set forth above,  and that the issued and  outstanding  shares of the
Common Stock of Home Corporation be converted into shares of the Common Stock of
F&M Bancorp,  subject to the terms and  conditions  and based upon F&M Bancorp's
representations, warranties and covenants hereinafter set forth.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein  contained and the mutual  benefits to be derived  herefrom,  the parties
agree as follows:

     1. Effective Date.  Pursuant to Md. Corps. & Ass'ns Code ss. 3-113(a),  the
effective  date of this Plan and the  Merger  (the  "Effective  Date")  shall be
either  (a)  the  15th  day of the  month  following  the  month  in  which  the
Calculation  Date (defined in Section 9.2(a) hereof)  occurs;  or (b) such other
date as F&M Bancorp and Home  Corporation  may agree upon.  F&M Bancorp and Home
Corporation  will prepare and execute  Articles of Merger in  substantially  the
form attached hereto as Appendix II which will set forth the Effective Date, and
will  file  the  Articles  of  Merger  with the  Maryland  State  Department  of
Assessments and Taxation.

     2. Events  Preceding  Effectiveness.  On or before the  Effective  Date the
following shall have occurred:

               (a) A  majority  of the  Boards  of  Directors  of  each  of Home
          Corporation  and F&M Bancorp  shall have  approved  and agreed to this
          Plan and the Merger;

                                      -7-
(b) A  majority  of the  Boards  of  Directors  of  each  of Home
          Corporation  and F&M  Bancorp  shall have  approved  and agreed to the
          Stock Option  Agreement in the form  attached  hereto as Appendix III;
          and Home  Corporation  shall have  authorized and reserved an adequate
          number of shares of its Common Stock for issuance upon exercise of the
          option granted by such Stock Option  Agreement,  and taken all actions
          necessary to fulfill its obligations thereunder;

               (c) the  Board of  Directors  of Home  Corporation  shall  call a
          meeting of the  stockholders of Home  Corporation.  Notice of the time
          and place of the  meeting  shall be provided  in  accordance  with Md.
          Corps.  & Ass'ns Code ss.  2-504,  and this Plan and the Merger  shall
          have been ratified and confirmed by the  affirmative  vote of not less
          than  two-thirds  of the issued and  outstanding  voting stock of Home
          Corporation  at the meeting,  in accordance  with Md. Corps.  & Ass'ns
          Code ss. 3-105(d);

               (d) the Board of Directors of F&M Bancorp shall call a meeting of
          the  stockholders of F&M Bancorp.  Notice of the time and place of the
          meeting shall be provided in accordance  with Md. Corps. & Ass'ns Code
          ss.  2-504,  and this Plan and the Merger shall have been ratified and
          confirmed by the  affirmative  vote of not less than two-thirds of the
          issued and  outstanding  voting stock of F&M Bank at the  meeting,  in
          accordance with Md. Corps. & Ass'ns Code ss. 3-105(d);

               (e) F&M  Bancorp  shall  have  procured  the  required  approval,
          consent,  waiver or other  administrative  action with respect to this
          Plan and the  transactions  contemplated  hereby  (i) by the Office of
          Thrift  Supervision under the Savings and Loan Holding Company Act and
          (ii) by the Board of Governors of the Federal Reserve System under the
          Bank Holding Company Act of 1956;

               (f)  the  parties  shall  have  procured  all  other   regulatory
          approvals, consents, waivers or administrative actions of governmental
          entities  or  other   persons  or  agencies   that  are  necessary  or
          appropriate to the  consummation of the  transactions  contemplated by
          this Plan, and no approval,  consent,  waiver or administrative action
          referred to in this Section 2(f) shall have  included any condition or
          requirement  that would (i) result in a materially  adverse  effect on
          F&M Bancorp or Home  Corporation  or (ii) so materially  and adversely
          affect the  economic  or  business  benefits  of the  Merger  that F&M
          Bancorp,  in the sole judgment of F&M Bancorp,  would not have entered
          into this Plan had such conditions or  requirements  been known at the
          date hereof;

               (g) F&M Bancorp shall have filed a  Registration  Statement  with
          the  Securities  and  Exchange   Commission   (the  "SEC")  under  the
          Securities Act of 1933, as amended (the "Securities Act"),  pertaining

                                      -8-
to the  shares  of  Common  Stock of F&M  Bancorp  to be issued to the
          stockholders of Home Corporation pursuant to this Plan and the Merger,
          and such Registration  Statement shall have become effective and there
          shall not be in effect a stop order with respect thereto;

               (h) F&M Bancorp  shall have made such filings and  obtained  such
          approvals as are  necessary  under the state  securities or "blue sky"
          laws  pertaining  to the shares of Common  Stock of F&M  Bancorp to be
          issued to the stockholders of Home  Corporation  pursuant to this Plan
          and the Merger; and

               (i) In accordance  with Section  10(c) of this Plan,  F&M Bancorp
          shall have offered to enter into an employment  agreement with Richard
          W. Phoebus,  Sr. substantially in the form attached hereto as Appendix
          VI, and with each of Celia S. Ausherman,  Steven G. Hull and Salvatore
          M. Savino substantially in the form attached hereto as Appendix VII.

     3.  Representations  and Warranties of Home  Corporation.  Home Corporation
represents and warrants to F&M Bancorp as follows:

          3.1.  Organization,  Standing,  and Capitalization of Home Corporation
     and Home Bank.

               (a) Home  Corporation  is a duly  organized and validly  existing
          corporation  and is in good  standing  under  the laws of the State of
          Maryland.  Home  Corporation  has the corporate power and authority to
          own and hold its material  properties  and to carry on its business as
          it is now being  conducted.  Home  Corporation is a registered  thrift
          holding  company under the Savings and Loan Holding  Company Act. Home
          Corporation has no  subsidiaries or affiliated  companies and is not a
          party to any joint  venture  or  partnership  other  than as listed on
          Schedule 3.1(a) hereto (collectively, the "Home Subsidiaries").

               (b)  Home  Bank  is  a  duly   organized  and  validly   existing
          federally-chartered  savings  bank and is in good  standing  under the
          federal laws of the United  States.  Home Bank's  deposits are insured
          under the provisions of the Federal Deposit Insurance Act, as amended.
          Each of the other Home  Subsidiaries  is a duly  organized and validly
          existing  corporation  and is in good  standing  under the laws of the
          jurisdiction  of its  incorporation  as set forth on Schedule  3.1(a).
          Each of the Home Subsidiaries has the corporate power and authority to
          own and hold its material  properties  and to carry on its business as
          it is now being  conducted.  All shares of capital stock of all of the
          Home Subsidiaries are validly issued and outstanding,  fully paid, and
          non-assessable.  Except as disclosed in Schedule  3.1(b),  each of the
          Home Subsidiaries is wholly owned by its parent corporation. There are
          no outstanding options,  warrants,  rights, or obligations of any kind
          entitling the holder thereof to acquire shares of the capital stock of
          any of the Home Subsidiaries,  and there are no outstanding securities

                                      -9-
or  instruments  of any kind that are  convertible  into shares of the
          capital stock of any of the Home Subsidiaries.  Except as disclosed in
          Schedule 3.1(b), none of the Home Subsidiaries is a party to any joint
          venture or partnership.

               (c)  Copies  of  all  charter   documents  and  by-laws  of  Home
          Corporation and each of the Home Subsidiaries are attached as Schedule
          3.1(c) hereto, and all such copies are true and correct as of the date
          hereof.  The  minute  books of Home  Corporation  and each of the Home
          Subsidiaries,  which  have  been made  available  to F&M  Bancorp  for
          inspection,  are  complete in all  material  respects  and  accurately
          record the actions  taken by the  stockholders  and  directors of Home
          Corporation and each of the Home Subsidiaries.

               (d) The  authorized  capital stock of Home  Corporation  consists
          exclusively of 10,000,000  shares of Common Stock, par value $1.00 per
          share,  2,519,010  shares of which are validly issued and outstanding,
          fully paid,  and  non-assessable,  and  5,000,000  shares of Preferred
          Stock,  par  value  $0.10  per  shares,  none of which  are  issued or
          outstanding.  Except  for the  option  to be  granted  to F&M  Bancorp
          pursuant to the Stock Option Agreement attached hereto as Appendix III
          and as disclosed in Schedule 3.1(d), there are no outstanding options,
          warrants,  rights,  or  obligations  of any kind  entitling the holder
          thereof to acquire shares of the Common Stock of Home Corporation, and
          there are no  outstanding  securities or  instruments of any kind that
          are convertible into shares of the Common Stock of Home Corporation.

     3.2.  Financial  Statements.  Home Corporation has provided in Schedule 3.2
hereto  copies  of the  following  consolidated  financial  statements  of  Home
Corporation and the Home Subsidiaries, all of which are true and complete in all
material  respects,  have been prepared in accordance  with  generally  accepted
accounting  principles  consistently  followed throughout the periods covered by
such  consolidated  financial  statements,  and present fairly the  consolidated
financial  position,   results  of  operations,   cash  flows,  and  changes  in
stockholders'  equity of Home Corporation and the Home Subsidiaries at the dates
of and for the periods covered by such financial statements:

     Consolidated   Financial  Statements  of  Home  Corporation  and  the  Home
     Subsidiaries at December 31, 1991,  1992,  1993, 1994 and 1995 and for each
     of the  years  then  ended,  as  reported  upon by Smith  Elliott  Kearns &
     Company.

     3.3.  Taxes.  Schedule  3.3 hereto  sets forth the tax  returns to federal,
state, county, municipal or foreign taxing authorities for the taxable year 1991
and all taxable years through and including  1994 for Home  Corporation  and the
Home  Subsidiaries.  Home Corporation and the Home  Subsidiaries have filed with
appropriate federal, state, county,  municipal or foreign taxing authorities all
tax  returns  required  to be  filed  (taking  any  applicable  extensions  into
consideration)  and have paid or reserved  for all taxes shown to be due on such
returns and all penalties  and interest  payable in respect  thereof.  Except as
disclosed  in  Schedule  3.3,  neither  Home  Corporation  nor  any of the  Home

                                      -10-
Subsidiaries have received from any taxing authority any notice of deficiency or
assessment  of  additional  taxes  not paid or any  notice  of an  intention  to
commence an  examination  or audit of its tax returns,  and no tax audits by any
taxing  authority are in process.  Except as disclosed on Schedule 3.3,  neither
Home Corporation nor any of the Home Subsidiaries have granted any waiver of any
statute of limitations or otherwise  agreed to any extension of a period for the
assessment of any federal,  state, county,  municipal or foreign income tax. The
accruals and reserves reflected in the consolidated  financial  statements which
Home  Corporation  has  provided to F&M Bancorp as  described in Section 3.2 are
adequate to cover all taxes (including interest and penalties,  if any, thereon)
that are payable or accrued as a result of the  operations  of Home  Corporation
and the Home Subsidiaries for all periods prior to the date of such consolidated
financial  statements.  For purposes of this  Section 3.3, any  reference to the
Home  Subsidiaries  shall be deemed to include  any entity  listed on  Schedules
3.1(a) and 3.1 (b).

     3.4. No Undisclosed  Liabilities.  Except as and to the extent reflected or
reserved against in the consolidated financial statements referred to in Section
3.2, neither Home  Corporation nor any of the Home  Subsidiaries at the dates of
such  consolidated   financial   statements  had  any  material  liabilities  or
obligations (whether accrued,  absolute, or contingent) required under generally
accepted  accounting  principles to be reflected  thereon which would materially
and adversely affect the fair presentation of such financial statements. Neither
Home  Corporation nor any of the Home  Subsidiaries  have incurred any liability
since the date of the consolidated  financial  statements referred to in Section
3.2 which would  materially  and adversely  affect the  condition  (financial or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the Home Subsidiaries,  taken as a whole, other than liabilities which have been
incurred in the ordinary course of business.

     3.5.  Absence of Certain Changes or Events.  Since December 31, 1995, there
has not been:

          (a) Any materially adverse change in the financial  position,  results
     of operations,  assets, liabilities, or business of Home Corporation or the
     Home Subsidiaries, other than changes in the ordinary course of business;

          (b) any  increase  in  salaries or wages of  directors,  officers,  or
     employees of Home  Corporation or the Home  Subsidiaries  other than in the
     ordinary  course of  business;  or any  establishment  or  increase  of any
     employment,  compensation,  bonus, pension,  option,  incentive or deferred
     compensation,  retirement payments, profit sharing, or similar agreement or
     benefit,  authorized,  granted,  or accrued to any  directors,  officers or
     employees of Home  Corporation or the Home  Subsidiaries  other than in the
     ordinary course of business, except as set forth in Schedule 3.5; or

          (c) except with respect to the dividend  payment of $0.04 per share of
     Common Stock  declared on February 15, 1996,  to be paid on March 29, 1996,

                                      -11-
any declaration,  payment, or set aside by Home Corporation of any dividend
     or distribution  in respect of its Common Stock, or any purchase,  issuance
     or sale of any of its Common Stock.

     3.6.  Complete and Accurate  Disclosure.  Neither this Plan  (insofar as it
relates to Home Corporation and the Home Subsidiaries,  the Common Stock of Home
Corporation,  and  the  involvement  of  Home  Corporation  in the  transactions
contemplated  hereby) nor any financial  statement,  schedule,  certificate,  or
other  statement or document set forth on a schedule by Home  Corporation to F&M
Bancorp in connection with this Plan, when considered in the aggregate, contains
any statement which, at the time and in light of the  circumstances  under which
it is made, is false or misleading with respect to any material fact or omits to
state any material fact  necessary to make the  statements  contained  herein or
therein not false or misleading.

     3.7. Title to  Properties;  Absence of Liens and  Encumbrances;  Compliance
with Laws. Except as disclosed on Schedule 3.7, Home Corporation and each of the
Home  Subsidiaries  has good  and  marketable  title to all of their  respective
properties and assets,  including those reflected in the consolidated  financial
statements  referred to in Section 3.2, except as sold or otherwise  disposed of
for fair value and only in the ordinary  course of  business,  free and clear of
all liens and encumbrances, except (i) with respect to property as to which they
are lessees,  (ii) with respect to real estate owned by Home  Corporation or the
Home Subsidiaries,  for use, occupancy and similar restrictions of public record
that may be observed by an inspection  of the  property,  and such other utility
and other easements and  encumbrances as do not materially  adversely affect the
fair market value of such real property,  and (iii) liens to secure  borrowings,
liens to secure governmental  deposits,  and liens for current taxes not yet due
and payable.  Neither Home Corporation nor any of the Home  Subsidiaries owns or
leases real property  except as disclosed on Schedule 3.7, and is not in default
under any material lease of real or personal property to which it is a party. As
of the date hereof,  except as disclosed on Schedule  3.7, the real  properties,
structures,  buildings,  equipment,  and the tangible  personal  property owned,
operated or leased by Home  Corporation or any of the Home  Subsidiaries are (x)
in good repair,  order and  condition,  except for depletion,  depreciation  and
ordinary  wear and tear,  (y) suitable for the uses for which they were intended
and (z) free from any known structural defects. As of the date hereof, there are
no laws,  conditions of record or other impediments  which materially  interfere
with the intended uses by Home  Corporation or any of the Home  Subsidiaries  of
the real property or tangible personal property owned or leased by it, except as
set  forth  in  Schedule  3.7.  Neither  Home  Corporation  nor any of the  Home
Subsidiaries  have received any notice of any violation of any  applicable  law,
building code,  zoning  ordinance or other similar law. Home Corporation and the
Home Subsidiaries own or have the rights to use all real and personal properties
and assets  that are  material  to the  conduct  of the  business  as  presently
conducted of Home Corporation and the Home Subsidiaries, taken as a whole.

     3.8.  Contracts.  Except for the plans,  contracts  and  agreements of Home
Corporation and the Home  Subsidiaries  disclosed on Schedule 3.8,  neither Home
Corporation nor any of the Home Subsidiaries is a party to or subject to:

                                      -12-
(a)  Any  employment,   consultation,   or  compensation  contract  or
     arrangement  (other  than  those  terminable  at will)  with  any  officer,
     consultant, director, or employee;

          (b) any plan, contract, program, understanding, or agreement providing
     for bonuses, pensions, severance pay, options, stock purchases or any other
     form  of  retirement,   incentive  or  deferred  compensation,   retirement
     payments, death benefits,  profit sharing, or any health, accident or other
     welfare benefit, or any other employee or retired employee benefit in which
     any employee,  former employee,  retired employee (or beneficiary of any of
     them) of Home  Corporation or any of the Home  Subsidiaries  is entitled to
     participate except as disclosed on Schedule 3.8;

          (c) any contract or agreement with any labor union;

          (d) any lease of real or  personal  property  with  annual  rentals in
     excess of $5,000;

          (e) any agreement for services in excess of $5,000 per year or for the
     purchase or  disposition  of any  equipment or supplies  except  individual
     purchase  orders for office  supplies  incurred in the  ordinary  course of
     business of $5,000 or less;

          (f) any instrument evidencing or relating to indebtedness for borrowed
     money  except for customer  accounts,  deposits,  certificates  of deposit,
     federal funds purchased,  and the like which may be construed as borrowings
     and except for loans made by Home Bank as lender in the ordinary  course of
     its business;

          (g) any lease or other contract containing covenants not to enter into
     or consummate the  transactions  contemplated  hereby or which provides for
     payments  in excess of $2,000 and will be  terminated  or  violated  by the
     Merger  or in  respect  of  which  the  Merger  would  cause a  default  or
     acceleration of obligations; or

          (h) any other  contract or agreement not of the type covered by any of
     the other specific terms of this Section 3.8 obligating Home Corporation or
     any Home Subsidiary to expenditures in excess of $25,000.

Each of the instruments  disclosed on Section 3.8 is valid and in full force and
effect. Neither Home Corporation nor any of the Home Subsidiaries are in default
nor have any of them received any notice that they are in default,  nor to their
actual knowledge is any other party in default,  under any material  agreements,
instruments,  or  obligations  to  which  Home  Corporation  or any of the  Home
Subsidiaries is a party or by which they are bound.

                                      -13-
3.9. Litigation,  Etc. Except as disclosed on Schedule 3.9, (a) there is no
litigation,  proceeding,  or investigation  pending or, to the knowledge of Home
Corporation, threatened against Home Corporation or any of the Home Subsidiaries
which would result in any materially adverse change in the condition  (financial
or otherwise), assets, liabilities, business, operations, or future prospects of
Home Corporation and the Home  Subsidiaries,  taken as a whole; (b) there are no
outstanding orders, writs, injunctions,  judgments, decrees, directives, consent
agreements or memoranda of understanding  issued by any federal,  state or local
court or governmental  authority or arbitration  tribunal issued against or with
the consent of Home Corporation or any of the Home  Subsidiaries that materially
and  adversely   affect  the  condition   (financial  or   otherwise),   assets,
liabilities,  business,  operations,  or future  prospects or that in any manner
restrict Home  Corporation's  right to carry on its business or that of the Home
Subsidiaries  as presently  conducted;  and (c) Home  Corporation is aware of no
fact or condition  presently  existing  that might give rise to any  litigation,
investigation or proceeding  which, if determined  adversely to Home Corporation
or any of the Home  Subsidiaries,  would  materially  and  adversely  affect the
condition (financial or otherwise),  assets, liabilities,  business, operations,
or future  prospects of Home Corporation and the Home  Subsidiaries,  taken as a
whole, or would restrict in any manner Home Corporation's  right to carry on its
business  or  that  of  the  Home  Subsidiaries  as  presently  conducted.  Home
Corporation  has  disclosed  on  Schedule  3.9  all  litigation  in  which  Home
Corporation or any of the Home  Subsidiaries  is involved as a party (other than
bankruptcy proceedings in which Home Corporation or any of the Home Subsidiaries
has filed proofs of claim or routine  collection and foreclosure suits initiated
in the ordinary course of business).

     3.10.  Environmental  Matters.  (a) For purposes of this Section 3.10,  the
following terms shall have the indicated meaning:

     "Property"  or  "Properties"  means  all  branch  properties  presently  or
formerly  owned  or  operated  by  Home   Corporation   and  each  of  the  Home
Subsidiaries,  all other  real  property  presently  owned or  operated  by Home
Corporation and each of the Home Subsidiaries,  and any real properties formerly
owned or operated by Home  Corporation  and each of the Home  Subsidiaries on or
after January 1, 1994 and subsequently disposed of.

     "Environmental  Law"  means  (i) any  applicable  federal,  state  or local
statute, law, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, directive,  requirement or agreement
with any court,  governmental  authority or other  regulatory or  administrative
agency or commission,  domestic or foreign ("Governmental Entity") now existing,
relating to the use, storage, treatment, generation, transportation, processing,
handling,  labeling,  production,  release or disposal of Hazardous  Substances,
each as amended, or (ii) any common law that may impose liability or obligations
for  injuries  or damages due to the  presence  of or exposure to any  Hazardous
Substance.

     "Hazardous  Substance" means any substance,  whether liquid,  solid or gas,
listed, defined,  designated or classified as hazardous,  toxic,  radioactive or
dangerous,  under  any  applicable  Environmental  Law,  whether  by  type or by
quantity.  Hazardous Substance includes,  without limitation, (i) any "hazardous

                                      -14-
substance" as defined in the Comprehensive Environmental Response,  Compensation
and Liability Act, as amended,  and (ii) any substance regulated by the Resource
Conservation and Recovery Act, as amended.

     (b) Except as disclosed on Schedule 3.10 or as would not individually or in
the aggregate have a materially  adverse  effect on the condition  (financial or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the Home Subsidiaries, taken as a whole:

          (i) neither  Home  Corporation  nor any of the Home  Subsidiaries  has
     received  any  written  notices,  demand  letters or written  requests  for
     information from any Governmental Entity or any third party indicating that
     Home  Corporation or any Home  Subsidiary may be in violation of, or liable
     under, any Environmental Law;

          (ii) there are no civil,  criminal or administrative  actions,  suits,
     demands,  claims,  hearings,   investigations  or  proceedings  pending  or
     threatened  against Home  Corporation or any Home Subsidiary  alleging that
     they may be in violation of, or liable under, any Environmental Law;

          (iii) no reports have been filed with any Governmental  Entity, nor to
     the knowledge of Home Corporation are any reports required to be filed with
     any  Governmental   Entity,   by  Home  Corporation  or  any  of  the  Home
     Subsidiaries  concerning  the  release of any  Hazardous  Substance  or the
     violation of any Environmental Law on or at any of the Properties;

          (iv) to the  knowledge of Home  Corporation  or except as disclosed on
     Schedule 3.10,  there are no underground  storage tanks on, in or under any
     of the  Properties  and no  underground  storage  tanks have been closed or
     removed from any Property while such Property was owned or operated by Home
     Corporation or any of the Home Subsidiaries;

          (v) to the  knowledge  of Home  Corporation  or except as disclosed on
     Schedule 3.10, no environmental contaminant,  pollutant, toxic or hazardous
     substance or other similar  substance  has been  generated,  used,  stored,
     processed,  disposed  of or  discharged  on or into any of the  Properties,
     except  for  such  hazardous  substances  as may be  used  in the  everyday
     business of a bank office; and

          (vi) to the  knowledge of Home  Corporation  or except as disclosed on
     Schedule  3.10,  no  materials   containing  asbestos  have  been  used  or
     incorporated in any building or other  structure or improvement  located on
     any of the Properties.

                                      -15-
(c) There are no permits or licenses  required under any  Environmental Law
in respect of any of the  Properties  presently or formerly owned or operated by
Home  Corporation  or any of the Home  Subsidiaries  that the  absence  of which
could, individually or in the aggregate, have a materially adverse effect on the
condition (financial or otherwise), assets, liabilities,  business or operations
of Home Corporation and the Home Subsidiaries, taken as a whole.

     (d) Home  Corporation  has disclosed on Schedule 3.10 a copy of its current
policy regarding compliance with Environmental Laws.

     3.11.  Labor Matters.  To Home  Corporation's  knowledge,  no  organization
effort with respect to any of the  employees of Home  Corporation  or any of the
Home Subsidiaries is pending or threatened,  and no labor dispute,  strike, work
stoppage,  employee action or labor relation problem which may materially affect
Home  Corporation  or any of the  Home  Subsidiaries  currently  is  pending  or
threatened.

     3.12.  Pension and Welfare  Matters.  Home  Corporation  has  disclosed  on
Schedule 3.12 in respect of the plans,  contracts,  programs,  understandings or
agreements  delivered  under Section  3.8(b)  copies of the latest  summary plan
descriptions,  Forms 5500, tax  determination  letters from the Internal Revenue
Service (the "IRS"), and actuarial reports, as applicable,  for Home Corporation
and each of the Home  Subsidiaries.  With  respect to the plans,  contracts,  or
agreements  delivered to F&M Bancorp under Section  3.8(b) (for purposes of this
Section 3.12, the "plans"), (a) each such plan has been operated in all material
respects in accordance with its terms in all material respects and in accordance
with all applicable laws including,  but not limited to, the Employee Retirement
Income  Security Act of 1974  ("ERISA"),  the Internal  Revenue Code of 1986, as
amended (the "Code"), the Consolidated Omnibus Budget Reconciliation Act of 1985
and state  health care  continuation  laws;  (b) all  reporting  and  disclosure
requirements of ERISA imposed upon each such plan have been complied with in all
material  respects,  and all required  governmental  filings have been made with
respect to the plans; (c) neither any plan nor Home Corporation,  nor any of the
Home Subsidiaries,  nor, to Home Corporation's knowledge, any director, officer,
employee,  agent  or  representative  of  Home  Corporation  or any of the  Home
Subsidiaries,  nor, to Home Corporation's  knowledge,  any fiduciary of any plan
has engaged in any  transaction in connection  with any of the plans which would
be subject to a civil penalty assessed pursuant to Section 502(i) of ERISA, or a
tax  imposed by Section  4975 of the Code that could  reasonably  be expected to
have a  material  adverse  effect on the  condition  (financial  or  otherwise),
assets,  liabilities,  business or operations of Home  Corporation  and the Home
Subsidiaries,  taken as a whole,  or on such plan,  any parties in interest,  or
fiduciaries; (d) no such plan has any accumulated funding deficiency (as defined
in Section  302 of ERISA and  Section  412 of the Code),  whether or not waived,
with  respect to the latest five plan years,  nor any  liability  to the Pension
Benefit Guaranty  Corporation (the "PBGC") (other than normal premium payments);
(e) if  applicable,  the  assets of each such  funded  plan  equal or exceed the
liability  for  accrued  benefits  of all  participants  in such  plan when such
liabilities are valued (i) on a termination  basis using PBGC interest and other
assumptions and (ii) on a minimum funding basis using the appropriate  actuarial
methods,  tables,  and  assumptions;  (f) no contributions to any such plan from
Home Corporation or any of the Home  Subsidiaries are currently past due and, if

                                      -16-
applicable,  all past  service  and other  liabilities  currently  existing  but
payable in the future,  if any, are reflected in the latest  actuarial report in
accordance with sound actuarial principles; (g) no proceedings,  investigations,
filings,  or other matters (excluding any determination  letter application that
has been or may be filed prior to the  Effective  Date) are  pending  before the
IRS, the Department of Labor, the PBGC, or other public or quasi-public  body in
connection  with any such plan;  (h) with  respect to plans  intended to qualify
under Section 401(a) of the Code, (i) either Home Corporation or any of the Home
Subsidiaries  have received a favorable  determination  letter from the IRS with
respect to the plan  documents  or the  remedial  amendment  period  (within the
meaning  of  regulation  under  Section  401(b) of the Code) has not ended  with
respect to an  application  for a  determination  letter,  and (ii)  nothing has
occurred with respect to the operation or administration of any such plans which
would cause the loss of such  qualifications  or exemptions or the imposition of
any liability,  penalty or tax under ERISA or the Code that could  reasonably be
expected  to have a  material  adverse  effect on the  condition  (financial  or
otherwise), assets, liabilities,  business or operations of Home Corporation and
the  Home  Subsidiaries,  taken as a  whole,  or on such  plan;  (i)  except  as
disclosed in Schedule 3.12, through the Effective Date, there will be no changes
in the operation of the plans or in the documents  constituting or affecting the
plans except for amendments and operational  changes  required by applicable law
which do not  materially  increase  the cost of such  plans;  (j) no  employees,
former  employees,  or retired  employees of Home Corporation or any of the Home
Subsidiaries,  as a result of their  employment with Home  Corporation or any of
the Home Subsidiaries,  are participants in any "multiemployer  plan" which is a
"pension  plan," as such terms are defined in  Sections  3(2) and 3(37) of ERISA
and neither Home  Corporation nor any of the Home  Subsidiaries has any current,
contingent  or  potential  liability  with  respect  to any  such  plan;  (k) no
"reportable  event," as such term is defined  in Section  4043(c) of ERISA,  has
occurred with respect to any plan since the effective  date of ERISA;  (l) there
are no pending or  threatened  claims by or disputes  with any  participants  or
beneficiaries  of the plans,  except plan benefit  claims  arising in the normal
course of the  operations of the plans (other than  terminated  plans) and as to
which no dispute  exists;  (m) Home  Corporation  has no  knowledge of any facts
which could give rise to any claims  against any plan or the  fiduciaries of any
plan,  except  for plan  benefit  claims  arising  in the  normal  course of the
operations  of the  plans  (other  than  terminated  plans);  (n)  neither  Home
Corporation nor any of the Home  Subsidiaries  nor any fiduciary of any plan has
given  notice to any  fiduciary  liability  insurer of any  claims or  potential
claims in connection with any of the plans;  (o) except as disclosed in Schedule
3.12, each of the plans which benefits retired  employees of Home Corporation or
any of the Home  Subsidiaries  may effectively be terminated or amended,  in any
manner and at any time,  without further liability to its  participants,  by its
sponsoring employer; (p) Home Corporation and each of the Home Subsidiaries have
at all times in all material  respects  complied  with all  applicable  employee
termination  notice and similar laws; (q) Home  Corporation and each of the Home
Subsidiaries  have at all  times  complied  in all  material  respects  with all
applicable  family leave and similar laws; (r) if applicable,  Home  Corporation
and each of the Home  Subsidiaries  have at all times  complied in all  material
respects  with  all  applicable   requirements  of  the  Worker  Adjustment  and
Retraining  Notification  Act and all  similar  state  laws;  (s)  neither  Home
Corporation nor any of the Home  Subsidiaries  has provided,  nor is required to

                                      -17-
provide, security to any pension plan or to any single-employer plan of an ERISA
Affiliate  pursuant  to Section  401(a)(29)  of the Code;  (t) there has been no
announcement  or legally  binding  commitment by Home  Corporation or any of the
Home  Subsidiaries  to create an additional  plan, or to amend a plan except for
amendments  required by applicable law which do not materially increase the cost
of such plan, and neither Home Corporation nor any of the Home  Subsidiaries has
any  obligation  for retiree health and life benefits under any plan that cannot
be terminated  without  incurring any  liability  thereunder;  and (u) as to any
terminated  plans,  all obligations for plan benefits or other  liabilities have
been satisfied in full.

     3.13.  Related Party  Transactions.  Except as disclosed on Schedule  3.13,
neither Home  Corporation  nor any of the Home  Subsidiaries  has any  contract,
extension of credit, business arrangement or other relationship of any kind with
any of the  following  persons:  (a) any  executive  officer or director of Home
Corporation or any of the Home  Subsidiaries;  (b) any  stockholder  owning five
percent or more of the outstanding Common Stock of Home Corporation;  or (c) any
"affiliate"  (as  defined in the SEC Rule 405) of the  foregoing  persons or any
business in which any of the foregoing persons is an officer, director, employee
or five percent or greater equity owner.

     3.14.  No Conflict  with Other  Documents.  Except as disclosed on Schedule
3.14,  neither the  execution  and delivery of this Plan nor the carrying out of
the   transactions   contemplated   hereunder  will  result  in  any  violation,
termination, or default or acceleration of, or be in conflict with, any terms of
any contract or other  instrument to which Home  Corporation  or any of the Home
Subsidiaries is a party, or of any judgment, decree, or order applicable to Home
Corporation  or any of the Home  Subsidiaries,  or result in the creation of any
lien,  charge,  or encumbrance upon any of its properties or assets,  except for
any of the  foregoing  which would not have a material  adverse  effect upon the
financial  condition,  assets,  liabilities,  business  or  operations  of  Home
Corporation and the Home Subsidiaries, taken as a whole.

     3.15. Compliance with Laws; Governmental  Authorizations.  (a) Except where
noncompliance  would not have a material and adverse  effect upon the  condition
(financial or otherwise),  assets,  liabilities,  business or operations of Home
Corporation and the Home  Subsidiaries,  taken as a whole,  (i) Home Corporation
and each of the Home  Subsidiaries  is in compliance  with all  statutes,  laws,
ordinances, rules, regulations,  judgments, orders, decrees, directives, consent
agreements, memoranda of understanding, permits, concessions, grants franchises,
licenses, and other governmental  authorizations or approvals applicable to Home
Corporation,  the Home  Subsidiaries,  or any of their properties;  and (ii) all
permits,  concessions,  grants,  franchises,  licenses  and  other  governmental
authorizations  and approvals  necessary for the conduct of the business of Home
Corporation  and the Home  Subsidiaries  as presently  conducted  have been duly
obtained and are in full force and effect, and there are no proceedings  pending
or,  to  Home  Corporation's  knowledge,  threatened  which  may  result  in the
revocation,  cancellation,  suspension or materially adverse modification of any
thereof.

     (b) Home  Corporation  has filed all reports  that it was  required to file
with the SEC  under  the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange  Act"),  all of  which  complied  in all  material  respects  with all

                                      -18-
applicable  requirements  of the  Exchange  Act and the  rules  and  regulations
adopted thereunder.  As of their respective dates, each such report,  statement,
form or other document,  including without limitation,  any financial statements
or  schedules  included  therein,  did not  contain  any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not  misleading,  provided that  information as of a later
date shall be deemed to modify information as of an earlier date.

     3.16. Authority;  Enforceability.  The execution, delivery, and performance
of this Plan by Home  Corporation  have been duly and validly  authorized by its
Board  of  Directors,   subject  only  to  requisite   approval  by  appropriate
governmental  regulatory authorities and stockholders.  This Plan is a valid and
binding agreement of Home Corporation, enforceable against it in accordance with
its terms,  subject as to  enforcement  to  bankruptcy,  insolvency,  fraudulent
transfer,  reorganization,  moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.

     3.17.  Insurance.  All insurance  policies held by Home Corporation and the
Home  Subsidiaries  relating to their  operations  (except  for title  insurance
policies),  including without limitation all financial  institutions  bonds, are
set forth on  Schedule  3.17.  All such  policies  are in full force and effect.
Neither  Home  Corporation  nor any of the Home  Subsidiaries  has  received any
notice of  cancellation  with respect to any such  policies and has no reason to
expect  that it will  receive a notice of  cancellation  from any of its present
insurance  carriers;   provided,   however,   that  Home  Corporation  makes  no
representation  as to the  effect  of this  Plan or the  Merger  on its  present
financial institutions bond or bonds.

     3.18. Financial  Institutions Bond. Since January 1, 1989, Home Corporation
and the Home Subsidiaries have continuously  maintained in full force and effect
one or more financial  institutions bonds insuring Home Corporation and the Home
Subsidiaries against acts of dishonesty by each of their employees. No claim has
been made under any such bond since such date and Home  Corporation is not aware
of any fact or  condition  presently  existing  which forms the basis of a claim
under any such bond. Home Corporation and the Home  Subsidiaries  have no reason
to expect that their present  financial  institutions  bond or bonds will not be
renewed by their carrier on substantially the same terms as those now in effect;
provided,  however,  that Home  Corporation  makes no  representation  as to the
effect of this Plan or the Merger on its present financial  institutions bond or
bonds.

     3.19. Brokers;  Financial Advisors.  All negotiations relating to this Plan
and  the  transactions  contemplated  hereunder  have  been  carried  on by Home
Corporation  directly or through its counsel and there has been no  intervention
of any person as the result of any action of Home  Corporation  (and,  so far as
known to Home  Corporation,  no intervention of any other person) in such manner
as to give rise to any valid  claim  against  any of the  parties  hereto  for a
brokerage commission,  finder's fee, or other like payment. Home Corporation has
provided F&M Bancorp with a copy of its  agreement  with Charles Webb & Company,

                                      -19-
which  has  been  engaged  to  deliver  an  opinion  as to the  fairness  of the
transactions contemplated by this Plan to Home Corporation.

     4.  Representations  and Warranties of F&M Bancorp.  F&M Bancorp represents
and warrants to Home Corporation as follows:

          4.1. Organization and Standing of F&M Bancorp.

               (a)  F&M  Bancorp  is  a  duly  organized  and  validly  existing
          corporation  in good standing under the laws of the State of Maryland.
          F&M Bancorp has the  corporate  power and lawful  authority to own and
          hold its  properties  and to carry on its  business as it is now being
          conducted.  F&M Bancorp is a registered bank holding company under the
          Bank Holding Company Act of 1956, as amended.

               (b)  The  authorized   capital  stock  of  F&M  Bancorp  consists
          exclusively of 10,000,000  shares of Common Stock, par value $5.00 per
          share,  4,421,337 of which are validly issued and outstanding on March
          19, 1996,  fully paid,  and  non-assessable.  F&M Bancorp has reserved
          50,000  shares of its Common  Stock for  issuance  under its  Dividend
          Reinvestment  and Stock  Purchase  Plan,  50,000  shares of its Common
          Stock for issuance under its Employee Stock Purchase Plan, and 346,480
          shares of its Common Stock for issuance  under its Stock Option Plans.
          On March 19, 1996, there were outstanding  options to purchase 211,209
          shares of F&M Bancorp's  Common Stock at prices ranging from $11.75 to
          $29.125  pursuant  to these  Stock  Option  Plans.  There are no other
          outstanding  options,  warrants,  rights,  or  obligations of any kind
          entitling the holder  thereof to acquire shares of the Common Stock of
          F&M Bancorp, and there are no outstanding securities or instruments of
          any kind that are  convertible  into shares of the Common Stock of F&M
          Bancorp.  The Common Stock of F&M Bancorp deliverable pursuant to this
          Plan will be, prior to its issuance,  duly authorized for issuance and
          will,  when issued and delivered in accordance with this Plan, be duly
          and validly issued, fully paid and nonassessable.

               (c) F&M  Bancorp  has no  subsidiaries  other  than as  listed on
          Schedule 4.1(c) hereto (collectively, the "F&M Subsidiaries"),  and is
          not a party to any joint  ventures  or  partnerships.  Each of the F&M
          Subsidiaries is a duly organized and validly existing  corporation and
          is in  good  standing  under  the  laws  of  the  jurisdiction  of its
          incorporation.  Each of the F&M  Subsidiaries  has the corporate power
          and authority to own and hold its material  properties and to carry on
          its business as it is now being conducted. All shares of capital stock
          of all of the F&M  Subsidiaries  are validly  issued and  outstanding,
          fully  paid,  and  non-assessable.  Except as  disclosed  on  Schedule
          4.1(c),  each of the F&M  Subsidiaries  is wholly  owned by its parent
          corporation.  There are no outstanding options,  warrants,  rights, or
          obligations of any kind entitling the holder thereof to acquire shares

                                      -20-
of the capital stock of any of the F&M Subsidiaries,  and there are no
          outstanding securities or instruments of any kind that are convertible
          into  shares  of the  capital  stock  of any of the F&M  Subsidiaries.
          Except  as  disclosed  on  Schedule  4.1(c)  hereto,  none  of the F&M
          Subsidiaries is a party to any joint venture or partnership.

               (d) F&M Bancorp's sole direct subsidiary is F&M Bank. F&M Bank is
          duly organized and validly existing as a national banking  association
          and is in good standing  under the federal laws of the United  States.
          F&M Bank has the corporate power and lawful  authority to own and hold
          its  properties  and to  carry  on  its  business  as it is now  being
          conducted.  F&M Bank is an insured  bank under the  provisions  of the
          Federal  Deposit  Insurance  Act, as  amended,  and is a member of the
          Federal Reserve System.

               (e) Copies of all  charter  documents  and by-laws of F&M Bancorp
          and each of the F&M  Subsidiaries  are  attached  hereto  as  Schedule
          4.1(e),  and all  such  copies  are true  and  correct  as of the date
          hereof.  The  minute  books  of  F&M  Bancorp  and  each  of  the  F&M
          Subsidiaries,  which have been made available to Home  Corporation for
          inspection,  are  complete in all  material  respects  and  accurately
          record the actions  taken by the  stockholders  and  directors  of F&M
          Bancorp and each of the F&M Subsidiaries.

     4.2. Financial Statements.  F&M Bancorp has provided in Schedule 4.2 hereto
copies of the  Consolidated  Financial  Statements  of F&M  Bancorp  and the F&M
Subsidiaries at December 31, 1991, 1992, 1993, 1994 and 1995 and for each of the
years then ended,  as reported upon by Keller Bruner & Company,  L.L.C.,  all of
which are true and  complete in all  material  respects,  have been  prepared in
accordance with generally accepted accounting  principles  consistently followed
throughout the periods  covered by such  consolidated  financial  statements and
present fairly the financial  position,  results of operations,  cash flows, and
changes in  shareholders'  equity of F&M Bancorp and the F&M Subsidiaries at the
dates of and for the periods covered by such financial statements.

     4.3. No Undisclosed  Liabilities.  Except as and to the extent reflected or
reserved against in the consolidated financial statements referred to in Section
4.2,  neither F&M Bancorp nor any of the F&M  Subsidiaries  at the dates of such
consolidated  financial  statements had any material  liabilities or obligations
(whether accrued,  absolute,  or contingent)  required under generally  accepted
accounting  principles  to be  reflected  thereon  which  would  materially  and
adversely affect the fair presentation of such financial statements. Neither F&M
Bancorp nor any of the F&M  Subsidiaries  has incurred any  liability  since the
date  of the  financial  statements  referred  to in  Section  4.2  which  would
materially and adversely affect the condition (financial or otherwise),  assets,
liabilities,  business or  operations  of F&M Bancorp and the F&M  Subsidiaries,
taken as a whole, other than liabilities which have been reasonably  incurred in
the ordinary course of business.

                                      -21-
4.4.  Absence of Certain Changes or Events.  Since December 31, 1995, there
has not been any materially adverse change in the financial position, results of
operations,  assets,  liabilities,  or business of F&M Bancorp or any of the F&M
Subsidiaries, other than changes in the ordinary course of business.

     4.5.  Complete and Accurate  Disclosure.  Neither this Plan  (insofar as it
relates to F&M Bancorp,  the Common Stock of F&M Bancorp, and the involvement of
F&M  Bancorp  in  the  transactions   contemplated  hereby)  nor  any  financial
statement,  certificate,  or other statement or document set forth on a schedule
delivered  by F&M  Bancorp to Home  Corporation  in  connection  with this Plan,
contains  any  statement  which,  at the time and in light of the  circumstances
under which it is made, is false or misleading with respect to any material fact
or omits to state any material fact necessary to make the  statements  contained
herein or therein not false or misleading.

     4.6. Litigation,  Etc. Except as disclosed on Schedule 4.6, (a) there is no
litigation,  proceeding,  or  investigation  pending or, to the knowledge of F&M
Bancorp,  threatened  against F&M Bancorp or any of the F&M  Subsidiaries  which
would result in any  materially  adverse  change in the condition  (financial or
otherwise),  assets, liabilities,  business,  operations, or future prospects of
F&M  Bancorp  and the F&M  Subsidiaries,  taken as a  whole;  (b)  there  are no
outstanding orders, writs, injunctions,  judgments, decrees, directives, consent
agreements or memoranda of understanding  issued by any federal,  state or local
court or governmental  authority or arbitration  tribunal issued against or with
the consent of F&M Bancorp or any of the F&M  Subsidiaries  that  materially and
adversely affect the condition  (financial or otherwise),  assets,  liabilities,
business,  operations  or future  prospects  or that in any manner  restrict F&M
Bancorp's  right to carry on its  business  or that of the F&M  Subsidiaries  as
presently  conducted;  and (c) F&M  Bancorp  is  aware  of no fact or  condition
presently  existing  that might give rise to any  litigation,  investigation  or
proceeding  which,  if  determined  adversely  to F&M  Bancorp or any of the F&M
Subsidiaries,  would materially and adversely affect the condition (financial or
otherwise),  assets, liabilities,  business,  operations, or future prospects of
F&M Bancorp and the F&M Subsidiaries, taken as a whole, or would restrict in any
manner  F&M  Bancorp's  right  to  carry  on its  business  or  that  of the F&M
Subsidiaries as presently  conducted.  F&M Bancorp has disclosed on Schedule 4.6
all litigation in which F&M Bancorp or any of the F&M  Subsidiaries  is involved
as a party (other than bankruptcy proceedings in which F&M Bancorp or any of the
F&M Subsidiaries has filed proofs of claim or routine collection and foreclosure
suits initiated in the ordinary course of business).

     4.7. No Conflict with Other  Documents.  Neither the execution and delivery
of this Plan nor the carrying  out of the  transactions  contemplated  hereunder
will result in any violation, termination, or modification of, or be in conflict
with, any terms of any contract or other  instrument to which F&M Bancorp or any
of the F&M  Subsidiaries  are a  party,  or of any  judgment,  decree,  or order
applicable  to F&M  Bancorp  or any of the F&M  Subsidiaries,  or  result in the
creation of any lien,  charge,  or encumbrance  upon any of their  properties or
assets,  except for any of the foregoing which would not have a material adverse

                                      -22-
effect upon the financial condition, assets, liabilities, business or operations
of F&M Bancorp and the F&M Subsidiaries, taken as a whole.

     4.8. Compliance with Laws;  Governmental  Authorizations.  (a) Except where
noncompliance  would not have a material and adverse  effect upon the  condition
(financial or  otherwise),  assets,  liabilities,  business or operations of F&M
Bancorp and the F&M Subsidiaries,  taken as a whole, (i) F&M Bancorp and the F&M
Subsidiaries  are in compliance  with all  statutes,  laws,  ordinances,  rules,
regulations,   judgments,  orders,  decrees,  directives,   consent  agreements,
memoranda of understanding,  permits, concessions, grants franchises,  licenses,
and other governmental authorizations or approvals applicable to F&M Bancorp and
the F&M  Subsidiaries  or to any of their  properties;  and  (ii)  all  permits,
concessions,  grants, franchises, licenses and other governmental authorizations
and  approvals  necessary for the conduct of the business of F&M Bancorp and the
F&M Subsidiaries as presently  conducted have been duly obtained and are in full
force and effect,  and there are no proceedings  pending or threatened which may
result  in  the  revocation,  cancellation,  suspension  or  materially  adverse
modification of any thereof.

     (b) F&M Bancorp has filed all reports that it was required to file with the
SEC under the Exchange Act, all of which complied in all material  respects with
all applicable  requirements  of the Exchange Act and the rules and  regulations
adopted thereunder.  As of their respective dates, each such report,  statement,
form or other document,  including without limitation,  any financial statements
or  schedules  included  therein,  did not  contain  any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not  misleading,  provided that  information as of a later
date shall be deemed to modify information as of an earlier date.

     4.9. Authority; Enforceability. The execution, delivery, and performance of
this Plan by F&M Bancorp has been duly and  validly  authorized  by its Board of
Directors, subject only to requisite approval by the stockholders of F&M Bancorp
and appropriate  governmental regulatory  authorities.  This Plan is a valid and
binding agreement of F&M Bancorp,  enforceable against it in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.

     4.10. Brokers. All negotiations  relating to this Plan and the transactions
contemplated  hereunder have been carried on by F&M Bancorp  directly or through
its  counsel and there has been no  intervention  of any person as the result of
any action of F&M Bancorp (and, so far as known to F&M Bancorp,  no intervention
of any other  person) in such manner as to give rise to any valid claim  against
any of the parties  hereto for a brokerage  commission,  finder's  fee, or other
like payment.

     4.11. Beneficial Ownership of Home Corporation Common Stock. As of the date
hereof,  F&M Bancorp does not  beneficially  own any shares of Home  Corporation

                                      -23-
Common  Stock or have any  option,  warrant or right of any kind to acquire  the
beneficial  ownership of any Home Corporation  Common Stock,  except pursuant to
the terms of this Plan, the terms of the Stock Option Agreement, attached hereto
as Appendix III, or in a fiduciary capacity.

     5.  Covenants  of Home  Corporation.  Except as  otherwise  consented to in
writing by F&M Bancorp after the date of this Plan, Home  Corporation  covenants
to and agrees with F&M Bancorp as follows:

     5.1. Information.  (a) Home Corporation shall, upon reasonable notice, give
to F&M Bancorp and to its officers,  accountants,  counsel,  financial advisers,
and other  representatives  reasonable access during Home  Corporation's and the
Home  Subsidiaries'  normal  business  hours  throughout the period prior to the
Effective  Date  to all of  their  properties,  books,  contracts,  commitments,
reports  of  examination   (consistent  with  applicable  law),   depositor  and
stockholder lists, and records. Home Corporation and the Home Subsidiaries will,
at their own  expense,  furnish  F&M  Bancorp  during  such period with all such
information  concerning  their  affairs as F&M Bancorp may  reasonably  request,
including  information  for use in  determining if the conditions of Section 7.3
have been satisfied, necessary to prepare the regulatory filings or applications
to be filed with  governmental  regulatory  authorities  to obtain the approvals
referred to in Section 2, and for use in any other necessary  filings to be made
with appropriate governmental regulatory authorities.

     (b) Home Corporation will not, and will cause its  representatives  not to,
use any information  obtained  pursuant to Section 6.3 for any purpose unrelated
to the  consummation of the transactions  contemplated by this Plan.  Subject to
the requirements of law, Home Corporation will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to Section 6.3 unless such  information  (i) was already  known to Home
Corporation,  (ii) becomes  available to Home Corporation from other sources not
known by Home Corporation to be bound by a confidentiality obligation,  (iii) is
disclosed with prior written  approval of F&M Bancorp and the F&M  Subsidiaries,
or (iv) is or becomes readily  ascertainable from published information or trade
sources.  In the  event  that  this  Plan  is  terminated  or  the  transactions
contemplated  by  this  Plan  shall  otherwise  fail  to  be  consummated,  Home
Corporation  shall  promptly  cause all copies of documents or extracts  thereof
containing information and data as to F&M Bancorp and the F&M Subsidiaries to be
returned.

     5.2.  Conduct  of  Business.  After the date of this Plan and  pending  the
Effective  Date, (a) Home  Corporation  and the Home  Subsidiaries  will conduct
their business only in the ordinary  course;  (b) Home  Corporation and the Home
Subsidiaries  shall not  effect  any  change or  amendment  in their  respective
Charters or By-Laws;  (c) except with respect to Home Corporation  stock options
outstanding  on the  date  of this  Plan  which  are or may  become  subject  to
exercise,  Home  Corporation  and the Home  Subsidiaries  shall not change their
authorized,  issued or outstanding capital stock; (d) Home Corporation shall not
declare any dividends in respect of its Common Stock; (e) except as disclosed in
Schedule 5.2(d),  Home Corporation and the Home Subsidiaries  shall not increase
employee  compensation  or benefit  levels  (except for annual  increases not in

                                      -24-
excess  of  amounts  established  by its  regular  past  practices),  shall  not
establish or make any increase in any employment,  compensation, bonus, pension,
option, incentive or deferred compensation,  retirement,  death, profit sharing,
or similar agreements or benefits of any of its past, present or future officers
or  employees,  other  than  additional  premiums  to  obtain  an  extension  of
directors'  and  officers'   liability   coverage  for  six  years  (which  Home
Corporation  is  authorized  to  obtain),  and shall  not  modify  the  existing
employment agreements with Richard W. Phoebus,  Sr., Celia S. Ausherman,  Steven
G. Hull and Salvatore M. Savino;  (f) Home Corporation and the Home Subsidiaries
shall  not make any  change in any of their  accounting  policies  or  practices
unless required by generally accepted  accounting  principles or take any action
which would cause the Merger not to be accounted for as a  pooling-of-interests;
(g) Home Corporation and the Home Subsidiaries shall not incur any liability for
borrowed  money except  extensions  of credit from the Federal Home Loan Bank of
Atlanta (in which no single  transaction shall exceed  $5,000,000) and otherwise
in the  ordinary  course of their  banking  business or place upon or permit any
lien or encumbrance  upon any of their  properties or assets except liens of the
type  permitted in the exceptions to Section 3.7; and (h) Home Bank shall accept
no further  applications  from its directors for participation in, and shall not
designate any of its directors as  additional  participants  in, its Amended and
Restated Executive Compensation Plan for Directors.  Pending the Effective Date,
Home Corporation and the Home Subsidiaries shall (x) use commercially reasonable
efforts to preserve their business organization and assets and to keep available
the services of their full-time  officers and employees,  (y) continue in effect
the present  method of  conducting  their  business,  and (z)  consult  with F&M
Bancorp as to making decisions or actions in matters (i) other than those in the
ordinary course of business or (ii) except as disclosed in Schedule  5.2(z)(ii),
involving any capital expenditures in excess of $25,000.

     5.3.  Consents.  Home  Corporation  and  the  Home  Subsidiaries  will  use
commercially  reasonable efforts to obtain any consents,  approvals,  or waivers
from third  parties  necessary to the  assignments  and  transfers  contemplated
hereby  with  respect to leases or other  contracts,  if any,  delivered  to F&M
Bancorp pursuant to Section 3.8 or any other agreements requiring the same.

     5.4. Meeting of Stockholders of Home Corporation; Document Preparation. (a)
Home  Corporation  will duly call and will convene a meeting of its stockholders
to act upon the transactions contemplated hereby as soon as practicable.  Except
to the extent  legally  required for the  discharge by the board of directors of
its fiduciary duties,  Home Corporation will recommend approval of this Plan and
the Merger to its stockholders,  and will use commercially reasonable efforts to
obtain a favorable vote thereon. The calling and holding of such meeting and all
notices,  transactions,  documents,  and information  related thereto will be in
compliance with all applicable laws.

     (b) Home  Corporation  shall  furnish  F&M  Bancorp  with such  information
concerning Home  Corporation and the Home  Subsidiaries as is necessary in order
to cause the Proxy  Statement/Prospectus  (as  defined in Section  6.2  hereof),
insofar as it relates to such  corporations,  to comply with Section 6.2 hereof.
Home  Corporation  agrees promptly to advise F&M Bancorp if at any time prior to

                                      -25-
the Home Corporation  stockholder's  meeting,  any information  provided by Home
Corporation in the Proxy Statement/Prospectus becomes incorrect or incomplete in
any material  respect and to provide F&M Bancorp with the information  needed to
correct such inaccuracy or omission.  Home Corporation shall furnish F&M Bancorp
with such  supplemental  information  as may be  necessary in order to cause the
Proxy  Statement/Prospectus,  insofar as it relates to Home  Corporation and the
Home Subsidiaries,  to comply with Section 6.2 after the mailing thereof to Home
Corporation stockholders.  The information provided and the representations made
by Home  Corporation  and  Home  Bank to F&M  Bancorp  in  connection  with  the
Registration  Statement  described  in  Section  6.2,  both  at  the  time  such
information and representations are provided and made and at the Effective Date,
will be true and  accurate  in all  material  respects  and will not contain any
false or misleading statement with respect to any material fact or omit to state
any  material  fact  required to be stated  therein or necessary in order (a) to
make the statements made therein not false or misleading,  or (b) to correct any
statement contained in an earlier communication with respect to such information
or  representations  which has become false or misleading.  Home Corporation may
rely upon all information  provided to it by F&M Bancorp and its representatives
in the preparation of the Proxy Statement/Prospectus and shall not be liable for
any untrue statement of a material fact or any omission to state a material fact
in the Proxy  Statement/Prospectus,  if such  statement is made in reliance upon
any  information  provided  to it by F&M  Bancorp or by any of its  officers  or
authorized representatives.

     (c)  Home  Corporation   shall  promptly  furnish  F&M  Bancorp  with  such
information regarding the Home Corporation  stockholders as F&M Bancorp requires
to enable it to  determine  what  filings are required  under  applicable  state
securities  laws.  Home  Corporation  authorizes  F&M Bancorp to utilize in such
filings the information  concerning Home  Corporation and the Home  Subsidiaries
provided  to F&M  Bancorp  in  connection  with,  or  contained  in,  the  Proxy
Statement/Prospectus.  Home Corporation shall promptly notify F&M Bancorp of all
communications,  oral or  written,  with  the SEC  concerning  the  Registration
Statement and the Proxy Statement/Prospectus.

     5.5.  Events  Preceding  Effectiveness.   Home  Corporation  and  the  Home
Subsidiaries will use commercially reasonable efforts to assure that each of the
events specified in Section 2 which require action on its part shall occur on or
before the Effective Date.

     5.6. No Solicitation of Other Offers.  Home Corporation agrees that neither
it nor any of the  Home  Subsidiaries  nor  any of  their  respective  officers,
directors and employees  shall,  and Home  Corporation  shall direct and use its
best efforts to cause its and the Home Subsidiaries'  agents and representatives
(including,  without limitation,  any investment banker,  attorney or accountant
retained by it or any of the Home  Subsidiaries) not to, directly or indirectly,
take any action to solicit or initiate any  inquiries or the making of any offer
or proposal  (including  without limitation any proposal to stockholders of Home
Corporation)  with  respect to a merger,  consolidation,  business  combination,
liquidation,  reorganization,  sale  or  other  disposition  of any  significant
portion of assets (except Problem Assets, as defined in Section 9.7(a)), sale of
shares of capital stock, or similar  transactions  involving Home Corporation or

                                      -26-
any  of  the  Home  Subsidiaries  (any  such  inquiry,  offer  or  proposal,  an
"Acquisition Proposal"), or, except as may be legally required for the discharge
by the board of directors of its fiduciary  duties,  engage in any  negotiations
concerning,  or provide  any  confidential  information  or data to, or have any
discussions with, any person relating to an Acquisition Proposal. As of the time
hereof,  Home  Corporation  is not engaged in any  negotiations  or  discussions
relating to an Acquisition Proposal.  Home Corporation shall promptly notify F&M
Bancorp orally and in writing of any Acquisition  Proposal or any inquiries with
respect thereto, such written notification to include the identity of the Person
making such  inquiry or  Acquisition  Proposal and such other  information  with
respect  thereto  as is  reasonably  necessary  to  apprise  F&M  Bancorp of the
material terms of such Acquisition  Proposal.  Home  Corporation  shall give F&M
Bancorp   contemporaneous   written  notice  upon  engaging  in  discussions  or
negotiations  with, or providing any information  regarding Home  Corporation or
any of the Home  Subsidiaries  to,  any such  person  regarding  an  Acquisition
Proposal.

     5.7.  Reservation  of  Shares.  Home  Corporation  shall  have  reserved  a
sufficient  number of shares of its Common Stock for issuance  upon  exercise of
the option granted  pursuant to the Stock Option  Agreement,  attached hereto as
Appendix III, which is to be executed by F&M Bancorp and Home  Corporation,  and
shall  have  taken  all other  actions  necessary  to  fulfill  its  obligations
thereunder.

     5.8.  Affiliate  Agreements.  Within 10 days of the date of this Plan, Home
Corporation  shall  deliver or cause to be  delivered  to F&M Bancorp  memoranda
substantially  in the form  attached  hereto as  Appendix  IV (the  "Affiliates'
Memoranda") and agreements substantially in the form attached hereto as Appendix
V (the "Support  Agreements") from each of its executive  officers and directors
(and  shall use  commercially  reasonable  efforts to obtain  and  deliver  such
memoranda and agreements from each  stockholder of Home  Corporation who (a) may
be deemed to be an "affiliate" of Home Corporation,  as that term is defined for
purposes  of the  SEC  Rules  145 and 405 or (b)  may be  restricted  under  the
accounting rules applicable to a  pooling-of-interests).  Under the terms of the
Affiliates'  Memoranda,   each  such  officer,  director  or  stockholder  shall
acknowledge and agree (i) to abide by all limitations  imposed by the Securities
Act and by all rules, regulations and releases promulgated thereunder by the SEC
with respect to the sale or other  disposition of the shares of the Common Stock
of F&M Bancorp to be received by such person pursuant to the Merger, and (ii) to
abide by all  limitations  imposed by the accounting  rules for the Merger to be
accounted  for  as a  pooling-of-interests.  Under  the  terms  of  the  Support
Agreements,  each such officer,  director or stockholder  shall agree to support
and vote the shares of Common Stock of Home  Corporation  owned or controlled by
him or her to ratify and confirm this Plan and the Merger.

     5.9. Regulatory Approvals. Home Corporation and the Home Subsidiaries will,
where  necessary,  cooperate with F&M Bancorp's  efforts to obtain all necessary
regulatory approvals of the transactions contemplated by this Plan.

     5.10. Current  Information;  Advice of Changes.  (a) During the period from
the date of this Plan to the Effective Date, Home  Corporation will cause one or

                                      -27-
more of its designated  representatives  to confer on a monthly or more frequent
basis with  representatives  of F&M Bancorp regarding its business,  operations,
properties,   assets  and  financial  condition  and  matters  relating  to  the
completion  of the  transactions  contemplated  herein.  As soon  as  reasonably
available,  but in no  event  more  than 45 days  after  the end of each  fiscal
quarter  (other than the last fiscal  quarter of each fiscal  year) ending after
the  date of this  Plan,  Home  Corporation  will  deliver  to F&M  Bancorp  its
quarterly reports on Form 10-Q, as filed with the SEC under the Exchange Act. As
soon as  reasonably  available,  but in no event  more  than 90 days  after  the
calendar year, Home Corporation will deliver to F&M Bancorp its Annual Report on
Form 10-K as filed with the SEC under the Exchange Act.

     (b) Between the date of this Plan and the Effective Date, Home  Corporation
shall promptly  advise F&M Bancorp in writing of any fact which,  if existing or
known at the date hereof,  would have been required to be set forth or disclosed
in or pursuant to this Plan or of any fact which, if existing or known as of the
date hereof, would have made any of the representations  contained herein untrue
in any material respect.

     5.11. Public Announcements. Between the date of this Plan and the Effective
Date, Home Corporation and the Home  Subsidiaries  will consult with F&M Bancorp
before issuing any press release or otherwise making any public  statements with
respect  to this Plan and the  transactions  contemplated  hereby  and shall not
issue any such press  release or make any such  public  statement  prior to such
consultation, except as counsel may advise is required by law.

     5.12. Taxes.  Home Corporation  shall have filed with appropriate  federal,
state, county,  municipal or foreign taxing authorities all tax returns required
to be filed (taking any applicable  extensions into  consideration) on or before
the Effective Date and shall have paid (or shall have made adequate provision or
set up an adequate  actual  reserve on the financial  statements  referred to in
Section 3.2 for the payment of) all taxes imposed by any taxing  authority  with
respect to any Pre-Closing Tax Period (as  hereinafter  defined),  together with
any interest,  additions or penalties related to any such taxes. For purposes of
this Section 5.12, any reference to Home Corporation  shall be deemed to include
any  corporation  more  than 50% of the  outstanding  capital  stock (by vote or
value) of which is owned by Home  Corporation.  "Pre-Closing  Tax Period"  shall
mean (i) each taxable  period that ends on or before the Effective Date and (ii)
any taxable  period that includes (but does not end on) the Effective  Date (the
period described in this clause (ii) being hereafter  referred to as a "Straddle
Period").  In the case of any tax for a Straddle  Period,  the  covenant  in the
first  sentence of this  Section  5.12 shall be limited to the  Pre-Closing  Tax
Amount determined as follows:

          (a) In the case of a  periodic  tax that is not  based  on  income  or
     receipts (e.g., an ad valorem  property tax), the  "Pre-Closing Tax Amount"
     shall be an amount equal to the amount of such tax for the entire  Straddle
     Period  multiplied  by a fraction  the  numerator of which is the number of
     days elapsed between the beginning of the Straddle Period and the Effective
     Date  and the  denominator  of  which is the  total  number  of days in the
     Straddle Period; and

                                      -28-
(b) in the case of any other  tax, the "Pre-Closing Tax Amount" shall 
      be the amount of such tax for  which Home  Corporation would have been
      liable if the Straddle Period had ended as of the close of business on
      the day of the Effective Date.

     5.13. Pooling-of-Interests. Home Corporation shall use its best efforts not
to permit  any of the  directors,  officers,  employees,  stockholders,  agents,
consultants  or other  representatives  of Home  Corporation  or any of the Home
Subsidiaries  to take any action that would  preclude F&M Bancorp from  treating
the Merger as a "pooling-of-interests" for financial reporting purposes.

     5.14. Directors'  Agreement.  Home Corporation shall present the Directors'
Agreement,  in substantially  the form attached hereto as Appendix X, to each of
Howard B. Bowen and John J.  McElwee,  Jr.,  both of whom are  directors of Home
Bank and participants in its Amended and Restated  Executive  Compensation  Plan
for  Directors,  and shall  cause  each of them to enter  into  such  Directors'
Agreement with F&M Bancorp.

     6. Covenants of F&M Bancorp. Except as otherwise consented to in writing by
Home  Corporation  after the date of this Plan,  F&M  Bancorp  covenants  to and
agrees with Home Corporation as follows:

     6.1. Applications to Governmental Regulatory Authorities.  F&M Bancorp will
promptly  prepare  and  file  with  the  appropriate   governmental   regulatory
authorities an application  requesting the regulatory  approvals  referred to in
Section  2(e) and 2(f) and will use  commercially  reasonable  efforts to secure
favorable action on such applications, including without limitation commercially
reasonable efforts to pursue an appeal of a denial of a regulatory approval.

     6.2.  Registration  of Shares.  F&M Bancorp,  with the  assistance  of Home
Corporation and its representatives, will promptly file a Registration Statement
with the SEC which  shall  include a joint proxy  statement  for F&M Bancorp and
Home   Corporation   and  a  prospectus   which  shall  satisfy  all  applicable
requirements of applicable state and federal laws, including the Securities Act,
the  Exchange  Act and  applicable  state  securities  laws  and the  rules  and
regulations thereunder (such joint proxy statement and prospectus, together with
any and all amendments or supplements  thereto,  being herein referred to as the
"Proxy  Statement/Prospectus,"  and the  various  documents  to be  filed by F&M
Bancorp under the Securities Act with the SEC to register the F&M Bancorp Common
Stock  into  which  shares  of the  Common  Stock  of Home  Corporation  held by
non-dissenting   stockholders   will   be   converted,   including   the   Proxy
Statement/Prospectus,  are referred to herein as the "Registration  Statement").
The number of shares to be registered will be an amount  sufficient to allow all
of the shares of the Common Stock of F&M Bancorp issued to holders of the Common
Stock of Home  Corporation  pursuant  to this  Plan to be  registered  under the
Securities Act. F&M Bancorp will use commercially  reasonable  efforts to secure
the  effectiveness  of the  Registration  Statement and, after the  Registration
Statement  has been declared  effective,  will issue the shares so registered to

                                      -29-
the  non-dissenting  holders  of the  Common  Stock of Home  Corporation  on the
Effective Date. F&M Bancorp may rely upon all information provided to it by Home
Corporation  and its  representatives  in the  preparation  of the  Registration
Statement,  any  post-effective  amendment  thereto and the Proxy  Statement and
shall not be liable for any untrue  statement of a material fact or any omission
to state a  material  fact in the  Registration  Statement,  the  post-effective
amendment or the Proxy Statement, if such statement is made in reliance upon any
information  provided  to it by Home  Corporation  or by any of its  officers or
authorized representatives.  F&M Bancorp shall promptly take all such actions as
may be necessary or appropriate in order to comply in all material respects with
all  applicable  securities  laws of any  state  having  jurisdiction  over  the
transactions contemplated by this Plan and the Merger. F&M Bancorp shall furnish
Home  Corporation  with  copies of all such  filings  and keep Home  Corporation
advised  of  the  status  thereof.   F&M  Bancorp  shall  promptly  notify  Home
Corporation of all communications,  oral or written, with the SEC concerning the
Registration  Statement  and  the  Proxy  Statement/Prospectus.   Prior  to  the
Effective  Date,  F&M Bancorp  will cause the listing of the Common Stock of F&M
Bancorp deliverable pursuant to this Plan on The National Market of The National
Association of Securities Dealers, Inc. ("Nasdaq").

     6.3. Information.

     (a) F&M Bancorp shall, upon reasonable notice, give to Home Corporation and
to  its  officers,   accountants,   counsel,   financial  advisors,   and  other
representatives,  reasonable  access during F&M Bancorp's  normal business hours
throughout  the period prior to the Effective  Date to all of their  properties,
books,   contracts,   commitments,   reports  of  examination  (consistent  with
applicable law),  depositor and stockholder lists, and records.  F&M Bancorp and
the F&M Subsidiaries will, at their own expense, furnish Home Corporation during
such  period  with  all  such  information  concerning  their  affairs  as  Home
Corporation may reasonably request.

     (b) F&M Bancorp  acknowledges  that  information  received by it concerning
Home  Corporation and the Home  Subsidiaries  and their operations is subject to
the  Confidentiality  Agreement  dated July 3, 1995 between F&M Bancorp and Home
Corporation.  Without  limiting  the  foregoing,  F&M Bancorp will not, and will
cause its  representatives  not to, use any  information  obtained  pursuant  to
Section 5.1 for any purpose  unrelated to the  consummation of the  transactions
contemplated by this Plan.  Subject to the requirements of law, F&M Bancorp will
keep confidential,  and will cause its representatives to keep confidential, all
information  and  documents   obtained  pursuant  to  Section  5.1  unless  such
information (i) was already known to F&M Bancorp,  (ii) becomes available to F&M
Bancorp  from  other  sources  not  known  by  F&M  Bancorp  to  be  bound  by a
confidentiality  obligation,  (iii) is disclosed with prior written  approval of
Home  Corporation  and the  Home  Subsidiaries,  or (iv) is or  becomes  readily
ascertainable  from published  information  or trade sources.  In the event that
this Plan is  terminated  or the  transactions  contemplated  by this Plan shall
otherwise fail to be consummated, F&M Bancorp shall promptly cause all copies of
documents  or  extracts  thereof  containing  information  and  data  as to Home
Corporation and the Home  Subsidiaries  to be returned;  provided that the legal
department of F&M Bancorp may retain one copy of such  documents and  materials.
In the event that this Plan has been terminated or the transactions contemplated

                                      -30-
hereby shall have failed to be consummated  and F&M Bancorp or any of its agents
or   representatives   are   requested   or   required   (by   oral   questions,
interrogatories,  requests for  information  or documents in legal  proceedings,
subpoena,  civil investigative  demand or other similar process) to disclose any
of the  materials  delivered  or  obtained  pursuant  to  the  Plan  (the  "Home
Corporation  Documentation"),  F&M Bancorp shall provide Home  Corporation  with
prompt  written  notice  of  any  such  request  or  requirement  so  that  Home
Corporation may seek a protective order or other appropriate  remedy. If, in the
absence of a protective order or other remedy,  F&M Bancorp or any of its agents
or  representatives  are  compelled  to  disclose  any of such Home  Corporation
Documentation  to any tribunal or else stand liable for contempt or suffer other
censure or penalty,  F&M Bancorp or its agents or  representatives  may, without
liability  hereunder,  disclose to such  tribunal  only that portion of the Home
Corporation  Documentation  which F&M Bancorp's  counsel  advises F&M Bancorp is
legally  required to be disclosed,  provided that F&M Bancorp shall exercise its
best  efforts  to  preserve  the   confidentiality   of  the  Home   Corporation
Documentation,   including,   without  limitation,   by  cooperating  with  Home
Corporation  to  obtain  an  appropriate  protective  order  or  other  reliable
assurance  that  confidential  treatment  will be accorded the Home  Corporation
Documentation by such tribunal.

     6.4.  Events  Preceding  Effectiveness.  F&M Bancorp will use  commercially
reasonable  efforts  to assure  that each of the events  specified  in Section 2
shall occur on or before the Effective Date.

     6.5.  Consents.  F&M Bancorp will use  commercially  reasonable  efforts to
obtain any  consents,  approvals  or  waivers  from third  parties  required  in
connection with the transactions contemplated hereunder.

     6.6. Current Information; Advice of Changes. (a) During the period from the
date of this Plan to the Effective  Date,  F&M Bancorp will cause one or more of
its  designated  representatives  to confer on a monthly or more frequent  basis
with  representatives  of Home Corporation  regarding its business,  operations,
properties,   assets  and  financial  condition  and  matters  relating  to  the
completion  of the  transactions  contemplated  herein.  As soon  as  reasonably
available,  but in no  event  more  than 45 days  after  the end of each  fiscal
quarter  (other than the last fiscal  quarter of each fiscal  year) ending after
the  date of this  Plan,  F&M  Bancorp  will  deliver  to Home  Corporation  its
quarterly reports on Form 10-Q, as filed with the SEC under the Exchange Act. As
soon as  reasonably  available,  but in no event  more  than 90 days  after  the
calendar year, F&M Bancorp will deliver to Home Corporation its Annual Report on
Form 10-K as filed with the SEC under the Exchange Act.

     (b) Between the date of this Plan and the Effective Date, F&M Bancorp shall
promptly  advise Home  Corporation in writing of any fact which,  if existing or
known at the date hereof,  would have been required to be set forth or disclosed
in or pursuant to this Plan or of any fact which, if existing or known as of the
date hereof, would have made any of the representations  contained herein untrue
in any material respect.

                                      -31-
6.7. Meeting of Stockholders of F&M Bancorp; Document Preparation.  (a) F&M
Bancorp  shall  duly call and  convene a  stockholders'  meeting to act upon the
transactions contemplated hereby as soon as practicable, will recommend approval
of this  Plan and the  Merger  to its  stockholders,  and will use  commercially
reasonable  efforts to obtain a favorable vote thereon.  The calling and holding
of such  meeting  and all  notices,  transactions,  documents,  and  information
related thereto will be in compliance with all applicable laws.

     (b) F&M Bancorp shall furnish such  information  concerning F&M Bancorp and
the  F&M   Subsidiaries   as  is   necessary   in  order  to  cause   the  Proxy
Statement/Prospectus, insofar as it relates to such corporations, to comply with
Section 6.2 hereof. F&M Bancorp agrees promptly to advise Home Corporation if at
any  time  prior  to the F&M  Bancorp  stockholders'  meeting,  any  information
provided by F&M Bancorp in the Proxy  Statement/Prospectus  becomes incorrect or
incomplete  in any  material  respect and to provide Home  Corporation  with the
information  needed to correct such  inaccuracy  or omission.  F&M Bancorp shall
furnish Home Corporation with such supplemental  information as may be necessary
in order to cause the Proxy  Statement/Prospectus,  insofar as it relates to F&M
Bancorp and the F&M  Subsidiaries,  to comply with Section 6.2 after the mailing
thereof  to  F&M  Bancorp   stockholders.   The  information  provided  and  the
representations   made  by  F&M   Bancorp   in   connection   with   the   Proxy
Statement/Prospectus,  both at the time such information and representations are
provided and made and at the  Effective  Date,  will be true and accurate in all
material  respects and will not contain any false or misleading  statement  with
respect to any material  fact or omit to state any material  fact required to be
stated therein or necessary in order (a) to make the statements made therein not
false or  misleading,  or (b) to correct any  statement  contained in an earlier
communication  with respect to such  information  or  representations  which has
become false or misleading.

     6.8. Employment Agreements. Pursuant to Section 10(c) of this Plan, between
the date of this Plan and the Effective  Date,  F&M Bancorp shall offer to enter
into an employment  agreement with Richard W. Phoebus,  Sr. substantially in the
form attached hereto as Appendix VI, and with each of Celia S. Ausherman, Steven
G. Hull and Salvatore M. Savino  substantially  in the form  attached  hereto as
Appendix VII.

     6.9. F&M Bancorp  Common  Stock.  At the  Effective  Date,  the F&M Bancorp
Common  Stock to be issued in exchange  for the Home  Corporation  Common  Stock
pursuant  to the terms of this Plan shall be duly  authorized,  validly  issued,
fully paid, and non-assessable,  free of preemptive rights and free and clear of
all liens,  encumbrances or restrictions created by or through F&M Bancorp, with
no personal liability attaching to the ownership thereof. The F&M Bancorp Common
Stock to be issued upon exchange for the Home Corporation  Common Stock pursuant
to the terms of this Plan will be issued in all material  respects in accordance
with applicable state and federal laws, rules and regulations.

     6.10.  Maintenance of Separate  Existence.  For a period of three (3) years
after the Effective Date, F&M Bancorp shall (i) preserve the separate  corporate
existence of Home Bank;  and (ii)  continue in office the directors of Home Bank

                                      -32-
who are serving in such  capacity on the  Effective  Date for the  remainder  of
their current terms and until their  successors  are elected and have  qualified
(subject to the  addition  of two  directors  pursuant to Section  10(b) of this
Plan);  provided,  however,  that during the  three-year  period  following  the
Effective  Date, F&M Bancorp may terminate the separate  corporate  existence of
Home  Bank if  Maryland  or  federal  laws or  regulations  governing  financial
institutions are amended in such a way as to have a materially adverse effect on
the  business,  operations  or future  prospects  of F&M  Bancorp  if it were to
continue to operate Home Bank as a separate corporate entity.

     7.  Conditions  Precedent to F&M  Bancorp's  Obligations.  Unless waived in
writing by F&M Bancorp in its sole  discretion,  all  obligations of F&M Bancorp
hereunder shall be subject to the fulfillment  prior to or at the Effective Date
of the following conditions:

     7.1.  Representations,  Warranties,  and Covenants. The representations and
warranties of Home  Corporation  herein  contained shall be true in all material
respects  as of the date  hereof,  shall be deemed  made  again at and as of the
Effective  Date,  and shall be true in all  material  respects as so made again;
Home Corporation and the Home Subsidiaries  shall have performed in all material
respects all obligations and agreements,  and complied in all material  respects
with all  covenants  and  conditions  required by this Plan to be  performed  or
complied with by them on or prior to the Effective  Date;  and F&M Bancorp shall
have received from Home Corporation an officers' certificate to their knowledge,
information  and belief in such detail as F&M Bancorp  may  reasonably  request,
dated the Effective Date and signed by its Chairman and Chief Executive  Officer
and Secretary, to the foregoing effect.

     7.2. No Adverse Changes.  There shall not have been any materially  adverse
change in the financial condition,  results of operations,  assets, liabilities,
or business of Home  Corporation  and the Home  Subsidiaries,  taken as a whole,
from December 31, 1995 to the Effective  Date. For purposes of this Section 7.2,
a "materially adverse change" shall include, without limitation, (a) a reduction
of the stockholders' equity of Home Corporation to less than $18,382,000,  (b) a
decrease in the net income of Home Corporation for fiscal year 1996 to less than
$1,000,000 on an annualized basis, (c) the reduction of core deposits (i.e., all
deposits  excepting  certificates of deposit in excess of $100,000) of Home Bank
to less than 95% of core  deposits of Home Bank on December 31, 1995,  or (d) an
increase in Home  Corporation's  ratio of non-performing  assets to total assets
from that  reported  as of December  31, 1995 to greater  than 7.5 % at any time
before  the  Effective  Date (in the case of (a) and (b),  the  expenses  of the
transaction under this Plan shall not be taken into account).

     7.3.  Events  Preceding the Effective Date. Each of the events set forth in
Section 2 shall have occurred and any other required regulatory  approvals shall
have been obtained.

     7.4. Other Evidence.  Home Corporation  shall have delivered to F&M Bancorp
such further certificates and documents evidencing due action in accordance with
this  Plan,  including  certified  copies  of  all  applicable   proceedings  of

                                      -33-
stockholders  or directors of Home  Corporation  pertaining to the  transactions
under this Plan, as F&M Bancorp shall reasonably request.

     7.5. No Adverse Proceedings,  Events or Regulatory Requirements.  No action
or proceeding against F&M Bancorp or any of the F&M Subsidiaries or against Home
Corporation  or any of the Home  Subsidiaries  shall be pending  which  seeks to
prevent consummation of the transactions contemplated by this Plan; and no order
of any court shall have been entered which prohibits  consummation of the Merger
and the transactions contemplated by this Plan. No approval,  consent, waiver or
administrative  action shall have  included any  condition or  requirement  that
would  (i)  result  in a  materially  adverse  effect  on F&M  Bancorp  or  Home
Corporation or (ii) so materially and adversely  affect the economic or business
benefits of the Merger that F&M  Bancorp,  in the sole  judgment of F&M Bancorp,
would not have entered into this Plan had such conditions or  requirements  been
known at the date hereof.

     7.6.  Consents,  Etc.  All  requisite  consents,  undertakings,  memoranda,
agreements,  exercises, and terminations by third parties which Home Corporation
and the Home Subsidiaries have covenanted to use commercially reasonable efforts
to obtain under  Sections 5.3 and 5.8 shall have been  obtained or waived by F&M
Bancorp.

     7.7.  Opinion of Tax Counsel.  F&M Bancorp  shall have received the opinion
from its tax counsel required by Section 11.

     7.8.  Opinion of  Counsel.  F&M Bancorp  shall have  received an opinion of
counsel to Home  Corporation,  dated the  Effective  Date, in form and substance
reasonably  satisfactory  to F&M  Bancorp,  covering  the  matters  set forth in
Appendix VIII hereto.

     7.9 Pooling-of-Interests  Accounting. The holders of no more than 8% of the
outstanding  Common Stock of Home  Corporation  shall have taken all appropriate
steps required by Md. Corps. & Ass'ns Code ss. 3-203(a)(1) and (2) to dissent to
this Plan,  and F&M Bancorp  shall have  received a letter  from an  independent
accounting  firm chosen by F&M  Bancorp to the effect that the Merger  qualifies
for pooling-of-interests  accounting treatment if consummated in accordance with
this Plan;  provided,  that such condition shall be void and of no further force
and effect if F&M Bancorp has not received such letter  because of any action or
inaction of F&M Bancorp.

     7.10.  Directors'  Agreement.  Each of Howard B. Bowen and John J. McElwee,
Jr. shall have entered into a Directors'  Agreement with F&M Bancorp in the form
attached hereto as Appendix X.

     8. Conditions Precedent to Home Corporation's Obligations. Unless waived in
writing by Home  Corporation  in its sole  discretion,  all  obligations of Home
Corporation  hereunder  shall be subject to the  fulfillment  prior to or at the
Effective Date of the following conditions:

                                      -34-
8.1.  Representations,  Warranties,  and Covenants. The representations and
warranties  of F&M  Bancorp  herein  contained  shall  be true  in all  material
respects  as of the date  hereof,  shall be deemed  made  again at and as of the
Effective Date, and shall be true in all material respects as so made again; F&M
Bancorp  shall have  performed in all  material  respects  all  obligations  and
agreements,  and  complied  in all  material  respects  with all  covenants  and
conditions  required by this Plan to be performed  or complied  with by it on or
prior to the Effective Date; and Home  Corporation  shall have received from F&M
Bancorp an officers'  certificate to their knowledge,  information and belief in
such detail as Home Corporation may reasonably request, dated the Effective Date
and signed by its President and Secretary or Cashier, to the foregoing effect.

     8.2. No Adverse Changes.  There shall not have been any materially  adverse
change in the financial condition,  results of operations,  assets, liabilities,
or business of F&M Bancorp from December 31, 1995 to the Effective Date.

     8.3.  Events  Preceding the Effective Date. Each of the events set forth in
Section 2 shall have occurred and any other required regulatory  approvals shall
have been obtained.

     8.4. Other Evidence.  F&M Bancorp shall have delivered to Home  Corporation
such further certificates and documents evidencing due action in accordance with
this Plan, including certified copies of all applicable proceedings of directors
of  F&M  Bancorp  pertaining  to the  transactions  under  this  Plan,  as  Home
Corporation shall reasonably request.

     8.5. Consents, Etc. All requisite consents,  approvals or waivers which F&M
Bancorp has covenanted to use  commercially  reasonable  efforts to obtain under
Section 6.5 shall have been obtained or waived by Home Corporation.

     8.6.  Opinion of Tax  Counsel.  Home  Corporation  shall have  received the
opinion from tax counsel to F&M Bancorp required by Section 11.

     8.7.  Fairness  Opinion.  Home  Corporation  shall have  received a written
opinion from Charles Webb & Company (or such other recognized investment firm as
Home Corporation may select), dated contemporaneously with the date of the Proxy
Statement,  to the effect that the consideration to be received in the Merger is
fair to the stockholders of Home Corporation from a financial point of view.

     8.8.  Employment  Agreements.  Pursuant to Section 10(c) of this Plan,  F&M
Bancorp shall have offered to enter into an employment agreement with Richard W.
Phoebus, Sr. substantially in the form attached hereto as Appendix VI, and shall
have  offered  to  enter  into an  employment  agreement  with  each of Celia S.
Ausherman,  Steven G. Hull and  Salvatore  M. Savino  substantially  in the form
attached hereto as Appendix VII.

                                      -35-
8.9. Opinion of Counsel. Home Corporation shall have received an opinion of
counsel  to F&M  Bancorp,  dated  the  Effective  Date,  in form  and  substance
reasonably  satisfactory to Home Corporation,  covering the matters set forth in
Appendix IX hereto.

     9. Terms of the Merger.

     9.1.  Structure of the Merger. At the Effective Date,  subject to the terms
and conditions of this Plan, Home Corporation will merge (the "Merger") with and
into F&M Bancorp,  the separate  corporate  existence of Home Corporation  shall
cease,  and  F&M  Bancorp  shall  continue  as the  successor  corporation  (the
"Successor   Corporation").   Home  Bank  shall  become  a  wholly-owned  direct
subsidiary of the Successor Corporation.  From and after the Effective Date, the
Merger shall have the effects set forth in Md. Corps. & Ass'ns Code ss. 3-114.

     9.2. Conversion of Stock; Conversion Ratio.

          (a) On the Effective Date, each share of the Home  Corporation  Common
     Stock  outstanding  immediately  prior to the  Effective  Date  (other than
     shares held by persons who perfect their dissenters'  rights under Maryland
     law),  shall,  without  any  action on the part of the holder  thereof,  be
     canceled  and  converted  into the number of shares of F&M  Bancorp  Common
     Stock   (rounded  to  the  nearest   0.01  share)   which   results   after
     multiplication  by the Conversion  Ratio.  The Conversion  Ratio shall be a
     fraction,  the numerator of which is the product of (i) 1.65  multiplied by
     (ii) the book value  (calculated in accordance  with Section 9.7) per share
     of  Home  Corporation  Common  Stock  on  the  Calculation  Date,  and  the
     denominator  of which is the Average Market Value of a share of F&M Bancorp
     Common  Stock.  The  Calculation  Date  shall be the last day of the  month
     during  which (i) all events  listed in Section 2 shall have  occurred  and
     (ii) all  conditions  precedent  listed in Sections 7 and 8 shall have been
     fulfilled or waived.

          (b) For purposes of the  computation of the Conversion  Ratio,  if, at
     the Calculation  Date, the Average Market Value of F&M Bancorp Common Stock
     is greater  than 1.9 times the book value per share of F&M  Bancorp  Common
     Stock   determined  in  accordance  with  generally   accepted   accounting
     principles, then in lieu of the Average Market Value, F&M Bancorp shall use
     a per share  price for its Common  Stock  equal to 1.9 times the book value
     per share of its Common Stock as of the  Calculation  Date,  determined  in
     accordance with generally accepted accounting principles.

          (c) The Average  Market Value of each share of the F&M Bancorp  Common
     Stock  shall be the  arithmetic  average of closing  prices of F&M  Bancorp
     Common Stock in the Composite Transaction Summary to the extent reported in
     The Wall  Street  Journal  for the twenty  (20)  consecutive  trading  days
     preceding the Calculation Date.

                                      -36-
(d) No certificates for fractional  shares of F&M Bancorp Common Stock
     shall be issued;  in lieu  thereof,  each  holder  otherwise  entitled to a
     fractional  interest  shall  receive an amount in cash based on the Average
     Market Value of F&M Bancorp Common Stock on the Calculation Date. Each such
     holder shall have no other rights with respect to such fractional interest.

          9.3. Exchange Procedure.

          (a) After the Effective Date, certificates representing such shares of
     Common  Stock of Home  Corporation  shall  represent  the right to  receive
     certificates  representing shares of Common Stock of F&M Bancorp determined
     in accordance with Section 9.2 hereof;  such Home Corporation  certificates
     at any time  after  the  Effective  Date may be  exchanged  by the  holders
     thereof for new certificates for the appropriate number of shares of Common
     Stock of F&M  Bancorp by  forwarding  such Home  Corporation  Common  Stock
     certificates  and the letter of transmittal  provided by F&M Bancorp to the
     transfer  agent for F&M Bancorp  Common  Stock,  and the payment of cash in
     lieu of fractions,  dividends, and other distributions on said stock may be
     withheld  until  the Home  Corporation  certificates  are  surrendered  for
     exchange to the transfer agent for F&M Bancorp Common Stock;  when such new
     certificates  are issued,  the holders thereof shall be entitled to be paid
     the amount (without any interest thereon) of all such withheld cash in lieu
     of fractions,  dividends,  or other  distributions  which have  theretofore
     become payable with respect to such shares of Common Stock of F&M Bancorp.

          (b) As soon as possible  after the Effective  Date, the transfer agent
     for F&M  Bancorp  Common  Stock shall send or cause to be sent a notice and
     transmittal  form  to  each  recordholder  of  a  certificate   theretofore
     evidencing  shares of the Home  Corporation  Common  Stock  (other  than to
     holders who have perfected their dissenters' rights under Maryland law).

          (c) All shares of F&M Bancorp  Common  Stock into which shares of Home
     Corporation  Common Stock shall have been converted shall be deemed to have
     been issued in full satisfaction of all rights pertaining to such shares of
     Home Corporation Common Stock.

          9.4. Stock Options.

          (a) At the Effective  Date,  all options  granted by Home  Corporation
     which are outstanding  under all Stock Option Plans  previously  adopted by
     Home Corporation to purchase shares of Home Corporation Common Stock, which
     are  outstanding  and  unexercised  immediately  prior  thereto  (each,  an
     "Outstanding Option"), shall be converted as to each whole share subject to
     such  Outstanding  Option into an option  (each,  an "Exchange  Option") to

                                      -37-
purchase a number of shares of the Common Stock of F&M Bancorp equal to the
     number of shares of Home  Corporation  Common  Stock  which could have been
     purchased under the Outstanding Option multiplied by the Conversion Ratio.

          (b) The per share  exercise  price of each  Exchange  Option  shall be
     equal to the price per share set forth in the Outstanding Option divided by
     the Conversion Ratio, rounded up to the nearest whole cent.

          (c) The Exchange  Option shall  otherwise  have the same  duration and
     other terms as the Outstanding Option.

          (d) The adjustments  provided herein with respect to any options which
     are  "incentive  stock  options" (as defined in Section 422 of the Internal
     Revenue  Code of 1986,  as amended  (the  "Code"))  shall be  effected in a
     manner consistent with Section 424(a) of the Code.

     9.5. Articles of Incorporation of the Successor  Corporation.  The Articles
of Incorporation of F&M Bancorp, as in effect immediately prior to the Effective
Date, shall be the Articles of Incorporation of the Successor  Corporation until
thereafter amended as provided by law.

     9.6. By-Laws of the Successor  Corporation.  The By-Laws of F&M Bancorp, as
in effect  immediately  prior to the Effective Date, shall be the By-Laws of the
Successor Corporation until thereafter amended as provided by law.

     9.7.  Calculation of Home Corporation's Book Value. For purposes of Section
9.2 hereof,  the book value of Home Corporation shall mean,  subject to addition
or subtraction for the items set forth in paragraphs (a) through (c) below,  the
calculation as of the Calculation Date of Home Corporation's  total assets minus
its  total  liabilities,   calculated  in  conformity  with  generally  accepted
accounting  principles applied on a basis consistent with past practices of Home
Corporation:

          (a) Home  Corporation's  Allowance  for  Possible  Losses (as shown on
     Schedule 9.7(a) hereof) (its "Total Allowance") as of the close of business
     on the  Calculation  Date  shall be  35.12%  of its  Problem  Assets on the
     Calculation  Date,  with any  adjustments to the Total  Allowance and other
     accounts  necessary to achieve this  percentage  being  accounted  for in a
     manner that reflects the principles of Financial Accounting Standards Board
     Statement  109  ("FAS  109") and any other  generally  accepted  accounting
     principles  applicable to income taxes.  For purposes of this  calculation,
     Problem Assets consist of (i) loans classified as substandard,  doubtful or
     loss and (ii) other real estate owned at the Calculation  Date,  based upon
     loan classification standards in effect as of December 31, 1995. No Problem
     Assets at December  31, 1995  (except for  consumer  loans and  one-to-four
     family residential loans) shall be reduced or eliminated at the Calculation

                                      -38-
Date except to the extent  payment is received by Home Bank or written off.
     Home  Corporation  has scheduled its Problem Assets at December 31, 1995 on
     Schedule 9.7(a).

          (b)  If  a  special   recapitalization   assessment  for  the  Savings
     Association  Insurance  Fund is  imposed  on Home  Bank  on or  before  the
     Calculation  Date,  the amount of the special  recapitalization  assessment
     shall be added  back to Home  Corporation's  book  value as of the close of
     business  on the  Calculation  Date and the  income  tax  accounts  of Home
     Corporation shall be adjusted to reflect the treatment that would have been
     required  under  FAS  109  and  any  other  generally  accepted  accounting
     principles applicable to income taxes as if the amount added back had never
     been imposed;  provided that such calculation shall not increase book value
     by more than $925,000.

          (c) For purposes of determining book value,  only normal and recurring
     items of income and expense  (including any  additional  premiums to obtain
     extended  directors' and officers' liability coverage) shall be considered;
     provided, that transactional expenses hereunder (other than such additional
     premiums) shall not be deducted as an expense.

          (d) Home  Corporation  shall  prepare  and  provide  to F&M  Bancorp a
     schedule reflecting the calculation of its book value as of the Calculation
     Date, determined in accordance with the terms of this Section 9.7 within 10
     days of the Calculation Date. Such schedule shall be submitted along with a
     report of Home Corporation's independent auditors which shall indicate that
     they have reviewed (i) each of the reports filed by Home  Corporation  with
     the  SEC  since  the  date  of  the  1995  audited  consolidated  financial
     statements,  and  specifying  that  they  are  not  aware  of any  material
     modifications that should be made to such financial statements in order for
     them to be calculated  in conformity  with  generally  accepted  accounting
     principles  applied  on a  basis  consistent  with  past  practice  of Home
     Corporation,  and (ii) the schedule  reflecting the calculation of the book
     value as of the  Calculation  Date in  accordance  with  the  terms of this
     Section 9.7 and specifying that nothing came to their attention that caused
     them to believe  that the  calculation  of book value is not in  accordance
     with  the  terms  of  this  Section  9.7.  Such  schedule  and   supporting
     documentation  are  referred  to  as  the  Book  Value  Documentation.  F&M
     Bancorp's  certified public accountants shall, within 5 days of the receipt
     of the  Book  Value  Documentation,  either  confirm  in  writing  to  Home
     Corporation that it finds the  determination of book value to be acceptable
     or, if such is not the case,  F&M Bancorp's  independent  certified  public
     accountants shall set forth  specifically and with  particularity the basis
     for its  disagreement.  In the  event  that F&M  Bancorp  believes  that an
     adjustment to book value is required,  representatives of F&M Bancorp, Home
     Corporation  and each of their  independent  certified  public  accountants
     shall meet within 5 days to discuss any areas of disagreement. In the event
     that the parties hereto determine to adjust Home  Corporation's  book value

                                      -39-
from that previously  determined,  Home Corporation shall promptly make the
     appropriate  adjustments.  If the parties  hereto  cannot  reach  agreement
     within 5 days of first meeting on this matter, they shall submit the matter
     for  determination  to  a  mutually  acceptable   independent  third  party
     independent  accounting firm, whose  determination shall be required within
     10 days thereafter and shall be binding upon the parties.

     9.8.  Anti-Dilution  Provision.  If F&M  Bancorp  takes  any  action  which
establishes,  prior to the Effective Date, a record date or effective date for a
stock dividend on its Common Stock, a split or reverse split of its Common Stock
or any distribution on all shares of its Common Stock other than cash dividends,
F&M Bancorp will take such action as shall be necessary in order that each share
of Common Stock of Home  Corporation  will be converted  into the same number of
shares of the Common  Stock of F&M  Bancorp  (whether  such number is greater or
less than the  number  otherwise  provided  for  herein)  that the owner of such
shares would have owned  immediately  after the record date or effective date of
such event had the Effective Date occurred  immediately  before such record date
or effective  date, and the  Conversion  Ratio set forth in Section 9.2 shall be
adjusted  accordingly.  Home  Corporation  hereby  agrees to any revision in the
exchange ratio pursuant to this Section 9.8.

     9.9. Rights of Dissenting Stockholders. Each holder of shares of the Common
Stock of Home Corporation which are voted against the approval of the Merger who
perfects his appraisal  rights pursuant to the provisions of Md. Corps. & Ass'ns
Code ss. 3-201 et seq. (a "dissenting stockholder") shall be entitled to receive
from F&M  Bancorp in cash the value of such  shares of the Common  Stock of Home
Corporation  determined in accordance with the provisions of Md. Corps. & Ass'ns
Code ss. 3-201 et seq.

     9.10. Restriction on Issuance or Repurchase of Securities.  Nothing in this
Plan  shall  limit the right of F&M  Bancorp to issue or  repurchase  any of its
stock or other securities in any manner and for any  consideration  permitted by
law either in connection with acquisitions of new affiliates or otherwise, prior
to or after the Effective Date.

     10. Boards of Directors and Employment Matters. Upon the Effective Date:

          (a) Promptly after the Effective Date of the Merger,  F&M Bancorp will
     cause its Board of  Directors  to be  expanded  to include  two  additional
     members.  Two of the directors of Home  Corporation will then be elected to
     fill the two newly created  vacancies  until the next annual meeting of the
     stockholders of F&M Bancorp and until their successors are elected and have
     qualified.  Prior  to the  Effective  Date  of the  Merger,  the  Board  of
     Directors  of  Home  Corporation  will  designate  the  directors  to be so
     elected,  subject to the approval of the Nominating  Committee of the Board
     of Directors of F&M Bancorp.

          (b)  The  members  of the  Board  of  Directors  of  Home  Bank on the
     Effective  Date will serve for the  remainder  of their  current  terms and

                                      -40-
until their successors are elected and have qualified.  However,  after the
     Effective  Date, F&M Bancorp,  as the sole  stockholder of Home Bank,  will
     cause the Board of  Directors  of Home Bank to be  expanded  to include two
     additional  members,  and shall appoint two  individuals  designated by the
     Nominating  Committee  of the Board of Directors of F&M Bancorp to fill the
     two newly created vacancies.

          (c) F&M  Bancorp  will  offer to enter  into an  employment  agreement
     substantially  in the form  attached  hereto as Appendix VI with Richard W.
     Phoebus, Sr., the President and Chief Executive Officer of Home Corporation
     and Home  Bank.  F&M  Bancorp  will  also  offer to enter  into  employment
     agreements  substantially  in the form attached hereto as Appendix VII with
     each of  Celia  S.  Ausherman,  Steven  G.  Hull and  Salvatore  M.  Savino
     (collectively and together with Mr. Phoebus, the "Contract Employees"). F&M
     Bancorp will offer to enter into each of these employment agreements before
     the Effective Date, but the effectiveness of each is to be conditioned upon
     the  completion  of  the  Merger.  All  such  employment  agreements  shall
     constitute the entire understanding with respect to employment arrangements
     between F&M Bancorp and each of the Contract Employees, and shall supersede
     any and all prior  understandings,  written  or oral,  including  any prior
     employment  agreements  between the Contract Employees and Home Corporation
     or  Home  Bank.  The  Contract  Employees  shall  not  be  subject  to  the
     employment,  compensation,  severance,  or  benefit  plan  eligibility  and
     participation arrangements set forth in Sections 10(e), (f), (g) and (h) of
     this Plan.

          (d) The  employment of all officers and employees of Home  Corporation
     will terminate on the Effective Date. One officer of Home  Corporation will
     be appointed  to serve as an officer of F&M  Bancorp.  Such officer will be
     designated  by Home  Corporation,  subject to the  approval of the Board of
     Directors  of  F&M  Bancorp.   Such  officer  may  also  continue  to  hold
     responsibilities  he or she held at Home Bank prior to the Effective  Date,
     and shall only be  compensated in his or her capacity as an officer of Home
     Bank.

          (e) The officers and  employees of Home Bank,  other than the Contract
     Employees,  will  continue  in their  employment  with Home Bank as at-will
     employees  at the same  compensation  level  they  received  with Home Bank
     before the Effective Date.

          (f)  Payments of $1,000,  $500,  or $250 will be made to each of those
     officers,  full-time employees,  or part-time employees,  respectively,  of
     Home  Bank,  other  than the  Contract  Employees,  who  either  (i) remain
     employed by Home Bank for six months continuously  thereafter or (ii) leave
     such  employment  at the request of Home Bank  within six months  after the
     Effective  Date. Such payments shall be made six months after the Effective
     Date,  in the case of those who remain in the  employment  of Home Bank, or

                                      -41-
within 15 business days after the date of termination, in the case of those
     who are requested to leave employment.

          (g) In  addition to any  payments  required  under  Section  10(f),  a
     severance  payment will be made to those employees of Home Bank, other than
     the Contract  Employees,  who remain employed by Home Bank on the Effective
     Date,  but leave such  employment  at the  request of Home Bank  within six
     months after the  Effective  Date for other than just cause.  The amount of
     the severance  payment for each such employee will be two weeks' pay at the
     most recent  compensation  level of that  employee.  The severance  payment
     shall be made within 15 business days after the date of  termination of the
     employee.

          (h) F&M Bancorp will review the benefits provided to employees of Home
     Bank under the employee benefit plans maintained by Home Bank and disclosed
     pursuant to Section 3.8(b).  F&M Bancorp will provide the employees of Home
     Bank who continue as at-will  employees of F&M Bancorp  after the Effective
     Date either with  benefits  under F&M Bancorp's  employee  benefit plans or
     with  benefits  under Home Bank's  employee  benefit  plans,  whichever F&M
     Bancorp in its sole  discretion  deems to be more  advantageous  taken as a
     whole (and not on a  plan-by-plan  basis) to the employees of Home Bank. In
     that  connection,  F&M  Bancorp  may,  in its sole  discretion,  freeze  or
     terminate the employee  benefit plans of Home Bank,  merge them with one or
     more employee  benefit plans of F&M Bancorp,  or continue to maintain them.
     If F&M Bancorp decides to freeze,  terminate or merge the employee  benefit
     plans of Home Bank,  after the Effective  Date all  full-time  officers and
     employees of Home Bank who  continue as at-will  employees of Home Bank may
     participate in the equivalent  employee benefit plans of F&M Bancorp to the
     extent they are eligible to do so under the terms of such plans or programs
     as are in force on the  Effective  Date,  with credit given for their prior
     service with Home Bank for purposes of allocation, eligibility and vesting.

          (i) Except as disclosed on Schedule 3.8, F&M Bancorp will  discontinue
     health and life  insurance  benefits to retired  officers and  employees of
     Home Corporation except to the extent that coverage may continue after, and
     Home  Corporation  may have paid for the coverage  prior to, the  Effective
     Date.

          (j) For such  period of time as is  covered  by any  extension  of the
     directors' and officers'  liability  coverage of Home  Corporation  and the
     Home  Subsidiaries,  but in no event longer than 6 years from the Effective
     Date, after the Effective Date F&M Bancorp agrees to cause Home Bank, or if
     such  entity is no longer in  existence,  F&M  Bancorp  shall  continue  to
     indemnify  all  persons  who,  as of the  Effective  Date,  are  directors,
     officers, employees and agents of Home Corporation or the Home Subsidiaries
     to the same  extent  that such  persons  are  indemnified  pursuant  to the
     Articles of Incorporation  or By-Laws of Home  Corporation  and/or the Home

                                      -42-
Subsidiaries on the date hereof, with respect to matters occurring prior to
     the Effective Date.

     11.  Opinion of Tax Counsel.  F&M Bancorp and Home  Corporation  shall have
received an opinion from tax counsel to F&M Bancorp to the effect that:

          (a) The  transfer  of all of the  assets  of Home  Corporation  to F&M
     Bancorp,  and the  assumption  by F&M  Bancorp of the  liabilities  of Home
     Corporation  pursuant  to  the  terms  of  this  Plan,  will  constitute  a
     reorganization within the meaning of Section 368(a)(1)(A) of the Code. Home
     Corporation  and F&M Bancorp  will each be a "party to the  reorganization"
     within the meaning of Section 368(b) of the Code.

          (b) No gain  or  loss  will be  recognized  to a  stockholder  of Home
     Corporation  on the conversion of Common Stock of Home  Corporation  solely
     into  shares of the Common  Stock of F&M  Bancorp.  No gain or loss will be
     recognized  by Home  Corporation  upon the transfer of all of its assets to
     F&M Bancorp in exchange  for shares of the Common  Stock of F&M Bancorp and
     the assumption by F&M Bancorp of the  liabilities of Home  Corporation.  No
     gain or loss will be  recognized  to F&M  Bancorp  upon the  receipt by F&M
     Bancorp of all of the assets of Home  Corporation in exchange for shares of
     the Common  Stock of F&M Bancorp and the  assumption  by F&M Bancorp of the
     liabilities of Home Corporation.

          (c) The  basis  of the  shares  of the  Common  Stock  of F&M  Bancorp
     received by a stockholder of Home Corporation will be the same as the basis
     of the shares of the Common Stock of Home Corporation  which were converted
     into F&M  Bancorp  shares  pursuant to the  Merger.  The holding  period of
     shares of the Common Stock of F&M Bancorp received by a stockholder of Home
     Corporation  will include the period during which he held the shares of the
     Common  Stock of Home  Corporation  which were  converted  into F&M Bancorp
     shares pursuant to the Merger,  provided that the shares of Common Stock of
     Home  Corporation  is held as a capital  asset by the  stockholder  of Home
     Corporation on the Effective Date.

          (d) The basis of each  asset of Home  Corporation  in the hands of F&M
     Bancorp  will be the same as the  basis of such  asset in the hands of Home
     Corporation  immediately  prior to the Merger;  the holding  period of each
     such asset in the hands of F&M Bancorp  will  include  the  periods  during
     which such asset was held by Home Corporation.

          (e) No gain or loss  will be  recognized  to the  stockholders  of F&M
     Bancorp as a result of the transactions contemplated by this Plan.

                                      -43-
(f) Where cash is received by a  stockholder  of Home  Corporation  in
     lieu of a fractional  share of the Common Stock of F&M Bancorp to which the
     stockholder  may be entitled,  such cash will be treated as received by the
     stockholder  as a  distribution  in  redemption  of  his  fractional  share
     interest.

          (g) The  accumulated  earnings and profits of Home  Corporation on the
     Effective Date will be added to the accumulated earnings and profits of F&M
     Bancorp and will be available  for  subsequent  distributions  of dividends
     within the meaning of Section 316 of the Code.

     12.  Amendment  of the Plan.  This Plan may be amended at any time prior to
the  Effective  Date  in  response  to  comments  of   governmental   regulatory
authorities or otherwise;  provided that any such amendment is in writing and is
approved by the Board of Directors of each of the parties hereto.

     13.  Abandonment  of the  Plan;  Effect  Thereof.  Anything  herein  to the
contrary notwithstanding,  and notwithstanding any stockholder vote or approval,
this Plan may be terminated and abandoned:

          (a) by mutual  consent of the Boards of Directors of Home  Corporation
     and F&M Bancorp, or

          (b) by F&M Bancorp or Home  Corporation,  if its Board of Directors so
     determines,  in the event of the failure of the stockholders of F&M Bancorp
     or Home  Corporation  to approve this Plan at the meetings of  stockholders
     called to consider such  approval,  unless in each case the failure of such
     occurrence  shall be due to the failure of the party  seeking to  terminate
     this Plan to  perform  or  observe  its  agreement  set forth  herein to be
     performed or observed by such party at or before the Effective Date; or

          (c) by F&M Bancorp or Home  Corporation,  if its Board of Directors so
     determines,  in the event of a material breach by the other party hereto of
     any representation,  warranty, covenant or agreement contained herein which
     is not cured or not  curable  within 60 days after  written  notice of such
     breach is given to the party committing such breach by the other party; or

          (d) by F&M Bancorp by written  notice to Home  Corporation if prior to
     December 31, 1996 (i) any approval,  consent or waiver of any  governmental
     entity  required to permit  consummation of the  transactions  contemplated
     hereby shall have been denied, (ii) any approval,  consent or waiver of any
     governmental  entity required to permit  consummation  of the  transactions
     contemplated  hereby shall include any condition or requirement  that would
     (i)  result  in  a  materially  adverse  effect  on  F&M  Bancorp  or  Home
     Corporation  or (ii) so  materially  and  adversely  affect the economic or
     business  benefits of the Merger that F&M Bancorp,  in the sole judgment of

                                      -44-
F&M Bancorp,  would not have entered into this Plan had such  conditions or
     requirements been known at the date hereof,  (iii) any action or proceeding
     against  F&M  Bancorp  or any of  the  F&M  Subsidiaries  or  against  Home
     Corporation or any of the Home Subsidiaries shall be pending which seeks to
     prevent consummation of the transactions contemplated by this Plan, or (iv)
     any court shall have entered an order which  prohibits  consummation of the
     Merger and the transactions contemplated by this Plan, or

          (e) by F&M  Bancorp  or Home  Corporation,  by  action of the Board of
     Directors  of either  party and the  delivery  of written  notice by either
     party to the  other,  in the event that the  Merger is not  consummated  by
     December 31, 1996,  unless the failure to so consummate by such time is due
     to the  breach  of any  representation,  warranty,  agreement  or  covenant
     contained in this Plan by the party  seeking to  terminate,  or if prior to
     December 31, 1996, any governmental entity of competent  jurisdiction shall
     have issued a final,  unappealable  order or ruling  enjoining or otherwise
     prohibiting consummation of the transactions contemplated by this Plan, or

          (f) by action of the Board of Directors of Home  Corporation  in their
     sole discretion in accordance with Section 5.6, or

          (g) By either F&M Bancorp or Home  Corporation  if, at the Calculation
     Date,  the  Average  Market  Value (as  defined in  Section  9.2(c)) of F&M
     Bancorp Common Stock is less than 1.6 times the book value per share of F&M
     Bancorp  Common Stock  determined in  accordance  with  generally  accepted
     accounting principles;  provided,  however, that if F&M Bancorp elects (and
     Home Corporation agrees), for purposes of the computation of the Conversion
     Ratio (as defined in Section 9.2(a)), F&M Bancorp may use a per share price
     for the F&M Bancorp  Common  Stock of 1.6 times the book value per share of
     its Common Stock on the  Calculation  Date,  determined in accordance  with
     generally  accepted  accounting  principles,  in lieu of the Average Market
     Value.  In either such case, F&M Bancorp or Home  Corporation,  as the case
     may be, shall give prompt written notice to Home Corporation or F&M Bancorp
     of such election and Home  Corporation or F&M Bancorp,  as the case may be,
     shall then provide prompt written notice to F&M Bancorp or Home Corporation
     of its  willingness  to proceed  with such  modification;  and,  under such
     circumstances,  no  abandonment  or  termination  shall be  deemed  to have
     occurred pursuant to this Section 13(e), and this Plan shall remain in full
     force and  effect in  accordance  with its  terms,  except as the per share
     price for the Common Stock of F&M Bancorp shall have been so modified; or

          (h) in the event of the termination of this Plan by either F&M Bancorp
     or Home  Corporation,  as provided above, this Plan shall thereafter become

                                      -45-
void and there  shall be no  liability  on the part of any party  hereto or
     their  respective  officers or directors,  except that any such termination
     shall be without prejudice to the rights of any party hereto arising out of
     the  willful  breach  of  any  other  party  of  any  covenant  or  willful
     misrepresentation contained in this Plan.

     14. Expenses.  Whether or not the  transactions  hereunder are consummated,
each party to the Plan shall pay its own  expenses  relating  hereto,  including
fees and disbursements of its counsel and accountants;  provided,  however, that
F&M  Bancorp  shall pay (a)  filing  fees in  respect  of  regulatory  approvals
required in order to consummate the Merger,  including the  registration  fee of
the SEC, filing fees in respect of state "blue sky" laws, the fee payable to The
National  Association of Securities  Dealers,  Inc. in respect of the listing on
Nasdaq of the shares of F&M Bancorp  Common Stock to be issued  pursuant to this
Plan and (b) the costs of printing  and mailing the Proxy  Statement/Prospectus.
The foregoing  shall not be construed as a limitation of damages in the event of
breach.

     15. Notices. All notices, requests, demands, and other communications under
or  connected  with this Plan shall be in  writing,  and (a) if to F&M  Bancorp,
shall be addressed to F&M Bancorp,  110 Thomas  Johnson  Drive,  Post Office Box
518,  Frederick,  Maryland 21705,  attention of Gordon M. Cooley,  Secretary and
Legal  Officer,  with a copy to its counsel,  Piper & Marbury  l.l.p.,  36 South
Charles Street, Baltimore, Maryland 21201-3010, attention of James J. Winn, Jr.,
Esquire;  or (b) if to Home  Corporation,  shall be  addressed  to Home  Federal
Corporation,   122-128  West  Washington  Street,  Hagerstown,  Maryland  21740,
attention of Richard W. Phoebus,  Sr.,  President and Chief  Executive  Officer,
with a copy to its counsel,  Elias, Matz, Tiernan & Herrick L.L.P.,  12th floor,
The Walker Building, 734 15th Street, N.W.,  Washington,  D.C., 20005, attention
of Norman B. Antin,  Esquire.  Any such notices,  requests,  demands,  and other
communications shall be mailed,  postage prepaid, first class mail, or delivered
personally  and shall be sufficient  and effective when delivered to or received
at the address as specified. Each of the parties may change the address at which
it is to receive communications by like written notice to the other.

     16.  Entire   Agreement;   Effect.   This  Plan  (including  the  financial
statements, lists, schedules, and documents delivered pursuant hereto, which are
made a part hereof) is intended by the parties to and does constitute the entire
agreement of the parties with respect to the transaction contemplated hereunder.
This Plan supersedes any and all prior  understandings,  including prior letters
of intent, and it may not be changed, waived,  discharged, or terminated orally,
but only in writing by a party against which enforcement of the change,  waiver,
discharge, or termination is sought.

     17. Representations, Warranties and Agreements. Except as set forth in this
Section 17, all  representations,  warranties  and agreements of F&M Bancorp and
Home  Corporation  made in this  Plan,  or in any  instrument  delivered  by F&M
Bancorp or Home Corporation pursuant to this Plan, shall expire at the Effective
Date. In the event of the consummation of the transactions  contemplated hereby,

                                      -46-
the  agreements  contained in or referred to in Sections 9 and 10 shall  survive
the Effective  Date. In the event of the  termination of this Plan in accordance
with its terms, the agreements contained in or referred to in Sections 5.1, 5.6,
6.3 and 14 shall  survive  such  termination.  Except as  provided  in the first
sentence of this  Section 17,  nothing  contained  herein  shall be construed to
limit the liability of a party to another  party for damages  caused by a breach
of this Plan.

         18.  Governing  Law.  This  Plan  shall be  governed  by,  and shall be
interpreted  in  accordance  with,  the laws of the State of Maryland or, to the
extent applicable, the federal laws of the United States of America.

         19.  General.  The  section  headings  contained  in this  Plan are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretations of this Plan. This Plan may be executed simultaneously in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.  This Plan shall inure to
the  benefit  of and be binding  upon the  parties  hereto and their  respective
successors but shall not be assigned to and shall not create any rights in favor
of any other party.  Any  purported  assignment  in violation of this Section 19
shall be void.

                                      -47-
IN WITNESS WHEREOF,  F&M Bancorp and Home Corporation have caused this Plan
to be duly  executed  by their  respective  chairmen  or  presidents,  and their
respective  seals to be  hereunto  affixed  and  attested  by  their  respective
secretaries, thereunto duly authorized as of the date first above written.

ATTEST:      [SEAL]               F&M BANCORP

/s/ Gordon M. Cooley              By:    /s/ Charles W. Hoff, III
- --------------------                     ------------------------
Gordon M. Cooley                         Charles W. Hoff, III
Secretary                                Chairman of the Board and
                                         Chief Executive Officer

ATTEST:      [SEAL]               HOME FEDERAL CORPORATION

/s/ Celia S. Ausherman             By:    /s/ Richard W. Phoebus, Sr.
- ----------------------                   ---------------------------
Celia S. Ausherman                        Richard W. Phoebus, Sr.
Secretary                                 President and Chief Executive Officer

                                      -48-
APPENDIX I
                                LIST OF SCHEDULES

A. Schedules to be Provided by Home Corporation to F&M Bancorp.

Schedule  3.1(a).   List of subsidiaries of Home Corporation and their places of
                    incorporation.

Schedule   3.1(b).  Ownership   of  Home   Subsidiaries;   Joint  Ventures  and
                    Partnerships.

Schedule 3.1(c).   Charters and by-laws of Home Corporation and each of the Home
                   Subsidiaries.

Schedule 3.1(d).   List of outstanding options, warrants, rights, or obligations
                   of any kind  entitling the holder  thereof to acquire  shares
                   of  the Common Stock  of  Home  Corporation  or  outstanding 
                   securities or instruments that are convertible into shares of
                   the Common Stock of Home Corporation.

Schedule  3.2.     Consolidated   Financial  Statements  of  Home  Corporation  
                   at December 31, 1991, 1992, 1993, 1994 and 1995 and for each 
                   of  the  years  then  ended,  as  reported upon by Smith, 
                   Elliott, Kearns & Company.

Schedule  3.3.    Tax  Returns of Home Corporation  to Federal,  State,  County,
                  Municipal or Foreign Taxing  Authorities for the taxable years
                  1990,  1991, 1992, 1993 and 1994.

Schedule 3.7.1.   List of Liens and Encumbrances on Property.

Schedule 3.7.2.   List of Leases.

Schedule 3.8.     Plans, Contracts and Agreements.

Schedule 3.9.     Litigation, Etc.

Schedule 3.10.    Environmental Matters.

Schedule 3.12.    Pension and Welfare Matters.

Schedule 3.13.    Related Party Transactions.

Schedule 3.14.    No Conflicts with Other Documents.

Schedule 3.17.    Insurance Policies, including Financial Institutions Bonds.

Schedule 3.19.    Agreement between Home Corporation and Charles Webb & Company.

                                      -49-
Schedule 5.2(e)     Increases in Employee Compensation or Benefit Levels.

Schedule 5.2(z)(ii) Capital Expenditures In Excess of $25,000.

Schedule9.7(a).     Schedule  of  Home   Corporation's  (i)  loans  classified 
                    as  substandard,  doubtful or loss;  and (ii)   real estate 
                    owned;  Home  Corporation's  Allowance  for Possible Losses.

                                      -50-
B.   Schedules to be Provided by F&M Bancorp to Home Corporation.

Schedule 4.1(c).        List of subsidiaries of F&M Bancorp.

Schedule  4.1(e).  Charters  and  by-laws  of F&M  Bancorp  and  each of the F&M
                   Subsidiaries.

Schedule  4.2.  Consolidated   Financial  Statements  of  F&M  Bancorp  and  its
                subsidiary at December 31, 1990,  1991,  1992,  1993, 1994 and 
                1995 and for ach of the years then ended,  as  reported upon by 
                Keller Bruner & Company, L.L.C.

Schedule 4.4. List of Certain Changes or Events.

Schedule 4.6. Litigation, Etc.

                                      -51-