Once a week, H. Manson Williams, a retired postal worker, goes to a Virginia National Bank branch to withdraw cash for gasoline, groceries and other incidental expenses. But relatives sometimes drop by his home unexpectely on weekends, and then he and his wife Helen often find themselves a little short of cash.

When that happens, Williams goes to one of VNBs two "Cash Flow" machines at a local shopping mall, inserts a plastic card and withdraws $10 or so to tide him over until the bank opens on Monday.

"I like the convenience of being able to withdraw money from my checking account when the bank is closed," William said.

He could perform virtually any banking transaction with Cash Flow, which is the VNB trademark for its network of automated teller machines. (ATMs). The bank has installed 47 of them throughout Virginia as extensions of its 150-branch office system, and they are viewed as far more than vendors of automated cash.

More and more people like Williams are starting to use ATMs for their everyday banking transactions, and that suits VNB just fine. Once customers become familiar with the machines and their capabilities, they tend to use them for all aspects of their banking, VNB says.

The bank already has laid $11 million on the line to detronic funds transfer, and ATMs represents a big part of the picture.

In so doing, Virginia's largest bank has bet heavily that do-it-yourself banking will be as common in the 1980s as self-service gasoline stations are today-and that bank profits consequently will improve.

"ATMs and other types of electronic funds transfer represent an historic development in the banking industry," said David O' Connor, a senior vice president of VNB and the man who oversees development of the bank's electronic banking network. "What we are talking about doing is changing the basic medium of monetary exchange."

O'Connor said that the advent of the credit card was a step in the same direction because it provided customers convenient access to credit at the point of sale. But electronic funds technology encompasses much more.

Besides making cash withdrawals, users of VNB's Cash Flow machines can make account deposits, transfer funds between accounts and pay bills by depositing the money in the machine or transferring it from an account.

And because the machines are linked directly to the bank's central computers, customers have immediate access to their account balances and reap the benefit of technical safeguards preventing intrusion into their account.

The bank's electronic funds transfer network also includes 300 point-of-sale terminals in 214 merchant locations which electronically verify checks and credit cards.

By the end of the year, VNB will begin testing some of these terminals as vehicles for the automatic transfer of funds from the bank account of the customer to the store's account. This eventually would made check writing obsolete, the bank says.

ATMs now account for 12 percent of VNB's customer transactions. By the mid-1980s, the bank projects that more than a third of all transactions will be performed by a customer on a customer-operated facility.

VNB's O'Connor said the bank's investment in such technology will swell to about $22 million. But by 1986, VNB projects that the system will save the bank $20 million more than it cost, with savings growing geometrically each year after that as the machines gain wider consumer acceptance.

VNB looks upon electronic banking as the primary means to get a handle on the continually escalating costs of paper, personnel and branch office construction.

O'Connor said that the bank processes 4,700 miles of paper a year through its computers, about a third of it checks. And the figure is growing 10 percent a year. He also said a VNB branch facility now costs $500,000 and takes more than three years to operate profitably.

"We figured there had to be a cheaper way to improve our marketing postition than to keep building a lot of new branches," O'Connor said.

The need to improve bank profitability might seem debatable in light of generally record high bank earnings in the past couple of years. But Wright Harrison, board chairman of Virginia National, said bank profitability has been deteriorating over the long term.

Harrison said a bank's return on assets is the best yardstick of bank earnings, and VNB's return declined steadily from 1968 to 1975 because of escalating operating costs.

In 1968, VNB registered a 0.92 percent return on assets, which fell to 0.67 percent by 1975. Last year, the bank's return on assets was 0.81 percent, and Harrison said the gain was due partly to the rise in interest rates but also to the larger volume of bank transactions handled on ATMs.

"When the interest rate situation changes, we would find ourselves swallowed in people and paper without eleectronic funds technology," Harrison said.

"We think it will be a very significant factor in our net income growth in coming years."

Virginia National is far from the only bank interested in ATMs and other electronic funds transfer technolgy. Although on a much smaller scale, most of Virginia's statewide banks with offices here have ATMs strewn across Tidewater.

Nationwide, ATM users range from massive Citibank of New York, which has 400 ATMs processing more than 4 million transactions a month, to Panola County Bank in Sardis, Miss., which has one ATM processing 1,800 transactions a month.

Linda Zimmer, a well-known ATM authority and former researcher for the Bank Administration Institute, says there were 10,750 ATM units nationwide at the end of 1978, assuming delivery schedules for some 3,000 new units last year were met. About 200 machines are being installed a month, or double the rate of two years ago, she said.

"The demand for ATMs is there," Mrs. Zimmer said. "It's just a matter of how quickly manufacturers want to act to meet it."

Virginia National's electronic funds network has exploded into existence in less than three years. The program started inquspiciously in the summer of 1976 with an installation of three pilot machines in Northern Virginia, including one in the recreation room of an affluent singles apartment complex in Arlington.

Buta harbinger of the popularity of ATMs appeared almost immediately. Mary Beth Patterson, a Virginia National spokesman, said that apartment residents at first waited in line two to three hours to try the ATM.

"They all wanted to get their hands on it," she said. "They were impressed with the fact that they had their own banking facility virtually right next door."

The bank soon began expanding its ATM network in a variety of bank and non-bank locations in Tidewater, Richmond and Charlottesville, and also installed 12 pilot, point-of sale terminals in a dozen stores in a Norfolk shopping mall. Those terminals later were replaced with units linked to a superior computer, and an additional 40 or so clerk-operated terminals were installed by the end of 1977.

Last year, VNB installed customer-operated terminals in Tidewater, mostly inside supermarkets.

More electronic innovations are in store for 1979 and beyond. In April, VNB plans to install on-line terminals inside tellers' booths in three Tidewater branches to improve productivity, and the bank hopes that every VNB teller will have one by early 1980.Some time in the fourth quarter of the year, VNB will begin testing consumer-operated, point-of-sale terminals for electronic funds transfer.

Into the 1980s, VNB expects to play a leadership role in the development of a universal point-of-sale system allowing banks and other corporations to be linked in one electronic network.

Some 2.2 million transactions involving $148 million were completed on the bank's ATM network last year, up 56 percent from 1977, said VNB's O'Connor.

"Customers appreciate the range of things at ATM can do," he added. "And the machines mean they no longer have to structure their day around going to the bank."

The Virginia Bankers Association (VBA) says that 25 Virginia banks already are considering development of some sort of point-of-sale system. The success of such systems ultimately depends on the willingness of banks to participate in one statewide point-of-sale network on a collective basis, said VBA Executive Vice President W. O. Pearce.

"A supermarket won't permit 15 banks to put a point-of-sale terminal at each checkout counter," Pearce said. "A point-of-sale network represents a bigger opportunity - and challenge - for the banking industry than ATMs." CAPTION: Picture, VNB's David O'Connor at "Cash Flow" machine. By Bruce Colwell for The Washington Post