Potomac Electric Power Co. yesterday reported a decline in profits during the first quarter of 1978. Allegheny Airlines, meanwhile, reported a record March and a reduced quarterly loss.

Pepco, a Washington-based electric utility, listed first-quarter profits of $15 million (31 cents a share) compared with $16.6 million (35 cents) in tha same period last year.

Revenues for the quarter rose to $161.8 million from $146.5 million in the 1977 period.

For a 12-month period ended March 31, Pepco's profits rose slightly to $83.4 million ($1.77 a share) from $78 million ($1.74).

Directors of Pepco yesterday declared a regular quarterly dividend of 33 1/2 cents a share on common stock, payable June 30 to owners of record May 30.

Passenger traffic soared for Allegheny Airlines last month, giving the Washington-based company its most profitable March on record and helping to trim its first-quarter loss.

The quarterly loss was $7 million compared with an operating loss of $10.2 million in the same period last year. Bad winter weather adversely affected profitability in both periods but revenues were higher in the 1978 quarter at $118 million vs. $103 million.

In March, Allegheny earned $2.1 million on revenues of $46 million compared with a loss of $354,000 on revenues of $38 million in the same month last year.

President Edwin 1. Colodny said the "very strong" passenger growth trend of March has continued into the first half of April. He noted that in the 12 months ended March 31, the airline's revenues had exceeded a half billion dollars for the first time with earnings of $12.6 million.

A restatement of 1977 earnings to reflect retroactive mail revenues for the years 1973 through 1976 reduced the first-quarter net loss last year to $2.7 million, Colony said.

National Bank of Washington, the District's third-largest bank, reported that first-quarter profits rose 32 percent to $1.37 million ($1.25 a share) compared with $1.04 million (95 cents) in the same period last year.

Total assets rose to $791 million from $650 million and loan volume increased to $427.5 million from $372 million.

Dominion Bankshares Corp., a bank holding company in Roanoke, reported first-quarter operating profits of $3.8 million (60 cents a share) compared with $2.7 million (43 cents) in the same period last year.

Richmond, Fredericksburg & Potomac Railroad Co. reported first-quarter profits rose to $2.2 million ($6.20 a share) compared with $1.8 million ($5.03) in the 1977 quarter. Revenues rose 5 percent to $8.8 million.

United Consolidated Industries, an auto parts distributor in Hanover, Md., reported record profits of $225,411 (75 cents a share) in the year ended Jan. 31 compared with $178,494 (54 cents) the previous fiscal period. Sales rose to $17.8 million from $16 million.

Directors voted a dividend of 5 cents a share payable to stockholders of record April 28 - the first cash payout in five years. UCI said the decision represents a restoration of a former policy of paying cash dividends.

Flow General Inc., a McLean manufacturer of biomedical and broadcast industry products, reported a 41 percent increase in profits for the nine months ended March 31. Earnings totaled $1.1 million (73 cents a share) on sales of $35 million compared with profits of $782,000 (62 cents) and sales of $31 million in the same period last year.