An apparatus and method for demodulating an FM RF signal is presented. An Adaptive Differentiate Cross Multiply (ADCM) system in which the energy estimate of the desired on-channel RF is generated using adaptive filtering. The adaptive filter includes low pass filtering of the instantaneous energy estimate. The bandwidth of the LPF is adjusted in real time based on the received signal strength energy estimate, the periodicity of any changes in the energy estimate, AGC setting for the receiver, and/or the type of sub-audible signaling applied to the RF signal if known. After the bandwidth is set, the optimum filtered energy estimate is applied to the system to demodulate the received information free from distortion artifacts associated with IQ imbalance. A normalized signal in the ADCM system is clipped by a limiter whose clipping threshold is equal to a maximum gain of differentiators in the ADCM system.