SECURITIES AND EXCHANGE COMMISSION

                       Washington, D.C.  20549

                              FORM 10-K

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

             For the fiscal year ended December 31, 1996
                                or
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                   Commission file number 1-8186

                  Interra Financial Incorporated
      (Exact name of registrant as specified in its charter)

              DELAWARE                       41-1228350
   (State or other jurisdiction of          (IRS Employer
    incorporation of organization)       Identification Number)

  Dain Bosworth Plaza, 60 South Sixth Street,
           Minneapolis, Minnesota                55402-4422
 (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code (612) 371-7750
   Securities registered pursuant to Section 12(b) of the Act:

                                         Name of each exchange
   Title of each class                    on which registered
   -------------------                   ---------------------
 Common Stock, par value $.125                New York Stock
         per share                            Exchange, Inc.

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

                    Yes       X             No

Indicate  by  check  mark  if  disclosure  of  delinquent  filers
pursuant to Item 405 of  Regulation S-K (Section 229.405 of  this
chapter) is not contained  herein,  and  will  not  be contained,
to the best of  registrant's  knowledge, in  definitive  proxy or
information  statements  incorporated  by  reference  in Part III
of this Form 10-K  or any  amendment to  this  Form  10-K.   [ X]

As of  March 3, 1997,    12,239,145  shares  of common stock were
outstanding, and the aggregate  market value of the common shares
(based upon the  closing  price at  March 3, 1997,   on  the  New
York   Stock   Exchange )   of   Intera  Financial   Incorporated
held by non-affiliates was approximately $319,319,097.

               Documents Incorporated by Reference

       Portions of the Proxy Statement of Registrant to be
          filed within 120 days of December 31, 1995 are
            incorporated in Part III of this report.
<PAGE>
                             PART I
                                
ITEM 1. BUSINESS:

     (a)  General Development of Business.

     Interra Financial  Incorporated (the "Company" or "Interra")
is a  holding company  formed in  1973 and  based in Minneapolis,
Minnesota.   Prior to  its name  change  in  February  1997,  the
Company was  known as  Inter-Regional Financial  Group, Inc.  The
Company offers  regional securities  broker-dealer and investment
banking services  through its  wholly  owned  subsidiaries,  Dain
Bosworth  Incorporated   ("Dain  Bosworth"),   headquartered   in
Minneapolis,  Minnesota,   and  Rauscher   Pierce  Refsnes,  Inc.
("Rauscher Pierce Refsnes"), headquartered in Dallas, Texas.  The
Company's largest  subsidiary, Dain Bosworth, serves the Midwest,
Rocky Mountain  and  Pacific  Northwest  regions  of  the  United
States.   At December 31, 1996, Dain Bosworth had 1,959 employees
located in  18 states.   Rauscher Pierce Refsnes primarily serves
the Southwest region of the United States.  At December 31, 1996,
Rauscher Pierce  Refsnes had  1,008 employees  located  in  eight
states.   Each of  Dain Bosworth  and Rauscher Pierce Refsnes, as
well  as  178  correspondent  brokerage  firms  serviced  through
Rauscher  Pierce   Refsnes'  RPR   Correspondent  Services   unit
("Correspondent Services"),  based in St. Louis, Missouri, clears
and settles  all securities  trades on  a fully  disclosed  basis
through Interra  Clearing Services  Inc. ("Interra  Clearing"), a
third wholly  owned subsidiary and registered broker-dealer based
in Minneapolis.   Prior  to February  1997, Interra  Clearing was
known as Regional Operations Group, Inc.  Interra Clearing, which
also provides  technology and information services to Interra and
its  subsidiaries,  had  394  employees  at  December  31,  1996.
Interra  Advisory   Services  Inc.   ("Interra  Advisory"),   the
Company's wholly  owned investment  advisory services subsidiary,
provides product development, administration, research, marketing
and general  support services relating to a variety of investment
advisory products  and services offered through Dain Bosworth and
Rauscher Pierce Refsnes.  These products and services principally
include externally-sponsored  and managed mutual funds, insurance
and annuity products, mutual fund asset allocation programs, wrap
fee advisory  programs and cash management products and services.
Through its  Insight  Investment  Management  division  ("Insight
Management"), Interra  Advisory serves  as the investment adviser
to the  Great Hall  Investment Funds (three open-end money market
mutual funds)  and provides  fixed  income  portfolio  management
services to  a variety  of private  accounts.   Prior to February
1997,  Interra   Advisory  was  known  as  IFG  Asset  Management
Services, Inc.   The  Company is  a Delaware corporation with its
executive offices  located at Dain Bosworth Plaza, 60 South Sixth
Street, Minneapolis, Minnesota  55402-4422.  Its telephone number
is (612) 371-7750.

     (b)  Financial Information About Industry Segments

     The Company, through its principal subsidiaries, operates in
a  single segment, the  securities  broker-dealer  and investment
banking business.

     The following  table lists  the Company's revenues by source
for the  last three years.  Because these classes of services use
the same  distribution personnel  and  facilities  and  the  same
support  services,  it  is  impractical  to  identify  the  cost,
expenses and profitability of each class of service.
                                
<TABLE>
         INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
                       REVENUES BY SOURCE
                     (Dollars in thousands)
<CAPTION>
                                     Year Ended December 31,
                     ----------------------------------------------------
                             1996             1995             1994
                     ----------------------------------------------------
                               Percen-          Percen-          Percen-
                       Amount   tage    Amount    tage    Amount   tage
                     ----------------------------------------------------
<S>                  <C>       <C>    <C>        <C>     <C>       <C>
Commissions:
 Listed securities.  $87,862   12.9%  $79,6341    3.1%   $68,037   13.7%
 Mutual funds......   62,679    9.2     45,198    7.4     41,717    8.4
 Over-the-counter
  securities.......   46,845    6.8     29,507    4.9     16,033    3.2
 Insurance and
  annuity products.   15,399    2.2     12,703    2.1     11,241    2.3
 Options...........    7,065    1.0      5,845    1.0      4,434    0.9
 Commodities and
  other............    3,234    0.5      3,100    0.5      1,422    0.3
                     -------  -----    -------  -----    -------  -----
  Total............  223,084   32.6    175,987   29.0    142,884   28.8
                     -------  -----    -------  -----    -------  -----

Principal Transactions:
 Equity securities.   89,251   13.1     87,381  14.4      68,466   13.8
 Municipal
  securitiess......   29,451    4.3     33,245   5.5      26,343    5.3
 Government
  securities.......   20,826    3.0     27,021   4.4      17,351    3.5
 Corporate fixed
  income securities.  20,371    3.0     20,025   3.3      18,359    3.7
 Mortgage-backed and
  other securities.    9,141    1.3     11,508   1.9       8,608    1.7
                     -------  -----    -------  -----    -------  -----
  Total............  169,040   24.7    179,180   29.5    139,127   28.0
                     -------  -----    -------  -----    -------  -----

Investment Banking and Underwriting:
 Corporate.........   67,749    9.9     44,432    7.3     44,775    9.0
 Municipal.........   41,211    6.0     42,262    7.0     49,433   10.0
 Other.............    2,431     .4      3,069    0.5      2,503    0.5
                     -------  -----    -------  -----    -------  -----
  Total............  111,391   16.3     89,763   14.8     96,711   19.5
                     -------  -----    -------  -----    -------  -----
Interest:
 Customer margin
  accounts.........   66,770    9.8     55,60  3  9.2     37,307    7.5
 Trading inventories
  and other........   28,250    4.1     30,596    5.0     20,477    4.1
 Deposits and
  short-term
  investments......   15,531    2.3     23,194    3.8     17,386    3.5
                     -------  -----    -------  -----    -------  -----
  Total............  110,551   16.2    109,393   18.0     75,170   15.1
                     -------  -----    -------  -----    -------  -----
Asset Management:
 Individual and
  institutional
  accounts..........  21,697    3.2     16,521    2.7     11,349    2.3
 Money market funds.  13,821    2.0      9,972    1.7      7,115    1.4
 Other mutual funds.     372    0.1        595    0.1        489    0.1
                     -------  -----    -------  -----    -------  -----
  Total............   35,890    5.3     27,088    4.5     18,953    3.8
                     -------  -----    -------  -----    -------  -----

Correspondent
 Clearing...........  15,806    2.3     12,484    2.1     11,590    2.4
Other...............  17,554    2.6     12,852    2.1     11,854    2.4
                     -------  -----    -------  -----    -------  -----
 Total revenues.....$683,316  100.0%  $606,747  100.0%  $496,289  100.0%
                     =======  =====    =======  =====    =======  =====
</TABLE>

     (c)  Narrative Description of Business

Securities Business

     General.     The  securities  broker-dealer  and  investment
banking activities  of the  Company are  conducted  through  Dain
Bosworth and  Rauscher Pierce  Refsnes.   Both Dain  Bosworth and
Rauscher Pierce  Refsnes deal  in securities  of and  are market-
makers for  entities based  throughout the  United  States.    In
general  research   and   investment   banking   activities   are
concentrated on  entities based  in their respective regions.  At
December  31,   1996  Dain   Bosworth  had   853   retail   sales
representatives and  78 institutional sales representatives in 65
offices located  in 18 states and Rauscher Pierce Refsnes had 304
retail  sales   representatives  and   38   institutional   sales
representatives in  26 offices located in six states.  Both firms
are member  firms of  the New  York Stock Exchange, Inc. ("NYSE")
and are  registered in  the NASDAQ  system as  market makers.  At
December 31, 1996, Dain Bosworth was registered as a market maker
for 292 companies and Rauscher Pierce Refsnes was registered as a
market maker for 231 companies.

     Dain  Bosworth's  and  Rauscher  Pierce  Refsnes'  operating
results are  sensitive to many factors outside the control of the
Company, including  the general  volatility of  securities prices
and interest  rates, trading  volume of  securities,  income  and
capital gains  tax legislation  and demand for investment banking
services.   Economic conditions  in the  regions  in  which  Dain
Bosworth  and   Rauscher  Pierce   Refsnes  operate  also  affect
operating results.

     Commission Business.   As  securities brokers, Dain Bosworth
and Rauscher  Pierce Refsnes  act as  agents in  the purchase and
sale of  securities, options,  commodities and  futures contracts
traded on  various securities and commodities exchanges or in the
over-the-counter ("OTC")  market.   Dain  Bosworth  and  Rauscher
Pierce Refsnes charge a brokerage commission when acting as agent
for the  purchaser or  seller of  a security.  If the security is
listed on  an exchange,  the transaction  is  generally  effected
through Dain  Bosworth's or  Rauscher Pierce  Refsnes' own  floor
broker or a floor broker who is unaffiliated with either of them.
If the  security is  traded in  the OTC  market, transactions are
generally effected  with a  market maker  in the  security.    In
addition, Dain  Bosworth and  Rauscher Pierce  Refsnes also  earn
commissions from  transactions involving  various other financial
products including  mutual funds.   Dain  Bosworth's and Rauscher
Pierce Refsnes'  commission business  is derived  primarily  from
individual  investors.     However,   commission  revenues   from
institutional investors  have increased  in recent years and both
companies are  investing resources  to more  fully develop  their
institutional businesses.

     Principal Transactions.   Dain  Bosworth and Rauscher Pierce
Refsnes are  dealers in  corporate, tax-exempt  and  governmental
fixed income  securities  and  corporate  equity  securities  and
recognize profits  or losses  on transactions in, or fluctuations
in the value of, such securities held in inventory.  While nearly
all of  the Company's  principal  transactions  are  executed  to
facilitate customer  trades, Dain Bosworth also maintains certain
inventory  positions  for  its  own  account.    These  positions
typically include  U. S.  government or  U. S.  government agency
securities and  are usually  hedged with  a combination  of short
sales of  similar securities,  financial  futures  contracts  and
interest-rate option contracts in order to mitigate market risk.

These inventories  require the  commitment of substantial capital
and expose  the companies  to the risk of a loss if market prices
of the  securities held  in inventory  decrease.   General market
conditions,  interest  rates  and  the  financial  prospects  for
issuers of  such  securities  may  affect  the  market  price  of
securities held  in inventory.   Internal  guidelines intended to
limit the  size and  risk of  inventories  maintained  have  been
established and are reviewed periodically.

     Investment  Banking   and  Underwriting  Activities.    Dain
Bosworth and  Rauscher Pierce  Refsnes  earn  investment  banking
revenues by assisting clients in planning to meet their financial
needs and advising them on the most advantageous means of raising
capital.  Such plans are sometimes implemented by managing or co-
managing public  offerings of  securities or by arranging private
placements  of   securities  with   institutional  or  individual
investors.  The syndicate departments coordinate the distribution
of managed  and co-managed corporate equity underwritings, accept
invitations  to   participate  in   competitive   or   negotiated
underwritings managed  by other  investment  banking  firms,  and
allocate and  merchandise Dain  Bosworth's  and  Rauscher  Pierce
Refsnes' selling  allotments to  their branch  office systems, to
institutional  clients   and  to   other  broker-dealers.    Both
companies are  also among the leaders in their respective regions
in the origination, syndication and distribution of securities of
municipalities,   state   and   local   agencies,   health   care
organizations  and  financial  institutions.    Participation  in
underwritings can expose the companies to material risk since the
possibility  exists   that  securities  they  have  committed  to
purchase cannot  be sold  at the initial offering price.  Federal
and  state  securities  laws  and  regulations  also  affect  the
activities  of  underwriters  and  impose  substantial  potential
liabilities for violations in connection with sales of securities
by underwriters  to the  public.  In addition to public offerings
and private placements, Dain Bosworth and Rauscher Pierce Refsnes
provide other consulting services, including providing valuations
of securities and companies, arranging and evaluating mergers and
acquisitions and advising clients with respect to financing plans
and related matters.

     Customer  Financing.     A   significant  portion   of  Dain
Bosworth's and  Rauscher Pierce Refsnes' profitability is derived
from net  interest income,  the major portion of which relates to
customer balances.   Customer transactions are effected on either
a cash  or margin  basis.  Purchases on a cash basis require full
payment by  the designated  settlement date,  generally the third
business day  following the  transaction date.  Interra  Clearing
carries all  customer balances of each of Dain Bosworth, Rauscher
Pierce Refsnes  and the  introducing correspondent firms serviced
by RPR  Correspondent Services  and allocates interest income and
expense related  to customers,  as well  as uncollectible amounts
due from  customers, back  to Dain  Bosworth and  Rauscher Pierce
Refsnes and, through Rauscher Pierce Refsnes, to such introducing
correspondent firms.   Both  Dain Bosworth  and  Rauscher  Pierce
Refsnes are  at risk  in the  event a  customer fails to settle a
trade and  the value of the securities declines subsequent to the
transaction date. When a purchase is made on a margin basis, Dain
Bosworth or  Rauscher Pierce  Refsnes, through  Interra Clearing,
extends credit  to the  customer for  a portion  of the  purchase
price.   The amount  of the loan is subject to margin regulations
of the  Federal Reserve Board, the NYSE and the internal policies
of Dain  Bosworth, Rauscher  Pierce Refsnes and Interra Clearing,
which are  generally more  stringent than  applicable  rules  and
regulations.  In permitting customers to purchase on margin, Dain
Bosworth and  Rauscher Pierce  Refsnes, through Interra Clearing,
take the risk that a market decline could reduce the value of the
collateral securing  the margin  loan below  the  amount  of  the
customer's indebtedness  and that the customer might be unable to
repay the  indebtedness.   Interest is charged at a floating rate
based on  amounts borrowed  by customers  to finance purchases on
margin.   The rate  charged is dependent on the average net debit
balance in  the customer's  accounts, the  activity level  in the
accounts and the applicable cost of funds.

     Customers will  at times accumulate credit balances in their
accounts.   Such  balances  result  from  payment  of  dividends,
interest or principal on securities held for such customers, from
funds  received   in  connection   with  sales  of  a  customer's
securities and  from cash  deposits  made  by  customers  pending
investment.   Pending investment  of such  funds or reimbursement
upon the  customer's request,  Interra Clearing  pays interest on
those credit  balances on  behalf of  Dain Bosworth  and Rauscher
Pierce Refsnes.   Interra Clearing uses available credit balances
to lend  funds to  Dain  Bosworth  and  Rauscher  Pierce  Refsnes
customers purchasing  securities  on  margin.    Excess  customer
credit  balances   are  invested   in  short-term  securities  in
accordance with applicable regulations and are segregated for the
exclusive benefit  of customers.  Both Dain Bosworth and Rauscher
Pierce Refsnes  generate  net  interest  income  through  Interra
Clearing from  the positive interest rate spread between the rate
earned from margin lending and alternative short-term investments
and the rate paid on customer credit balances.

     Dain Bosworth,  Rauscher Pierce Refsnes and Interra Clearing
are members  of the  Securities Investor  Protection  Corporation
("SIPC"), which  insures customer accounts up to specified limits
in the  event of  liquidation.   Also, all  three firms  maintain
additional coverage  in order  to protect  customer  accounts  to
specified amounts in excess of SIPC coverage.

     Security Repurchase  Activities.  Dain Bosworth and Rauscher
Pierce Refsnes  act as  principals in  the purchase  and sale  to
their customers of securities of the United States Government and
its agencies,  including repurchase agreements in such securities
and certain  other money  market instruments.   Dain Bosworth and
Rauscher Pierce  Refsnes may  match purchases  and sales of these
securities and  are at  risk to  the  extent  that  they  do  not
properly match  the contracts  or their  customers are  unable to
meet their  obligations, especially  during  periods  of  rapidly
changing interest  rates and  fluctuations in  market conditions.
All positions  are collateralized.   Dain  Bosworth and  Rauscher
Pierce Refsnes  generally take  physical possession of securities
purchased under  agreements to  resell.   Such agreements provide
Dain Bosworth  and Rauscher  Pierce Refsnes  with  the  right  to
maintain  the  relationship  between  the  market  value  of  the
collateral and  the receivable.   Typically,  these contracts are
entered into  only with  clients of  substantial size and credit-
worthiness.   Dain Bosworth  and  Rauscher  Pierce  Refsnes  also
periodically utilize  securities sold under repurchase agreements
as a means of financing portions of their trading inventories and
facilitating hedging transactions.

     Securities Lending  and Borrowing  Activities.    Securities
brokers  and   dealers,  including   Interra   Clearing,   borrow
securities from  and lend securities to other brokers and dealers
to  facilitate   short  sales   and  clearance  and  delivery  of
securities   that have  been sold  by their  customers when  such
customers fail  to deliver  securities prior  to settlement date.
Interra  Clearing  also  will  act  as  a  conduit  by  arranging
securities lending  transactions between  brokers wishing to lend
securities and those wishing to borrow the same securities.  When
such transactions  occur,  the  lending  broker  provides  excess
customer margin  securities to the borrowing broker in return for
a cash deposit that is generally equivalent to 102 percent of the
market value  of the  securities loaned.   Both  the lending  and
borrowing brokers have the right to mark the securities to market
in order to maintain the relationship between the market value of
the securities  loaned and  the cash  collateral deposited.  When
the securities  are no  longer needed by the borrowing firm, they
are returned  to the  lending  broker,  which  returns  the  cash
deposit held,  plus interest,  to the  borrowing  broker.    When
engaging in  such securities  lending and  borrowing  activities,
Interra  Clearing   collects  cash  deposits  from  brokers  that
collateralize the securities loaned, invests the cash deposit and
profits from  the spread  between the  interest rate  paid to the
borrowing broker  on the  cash deposit  and the  rate  earned  by
Interra  Clearing.    In  all  securities  lending  transactions,
Interra Clearing  is at  risk to  the extent  that  it  does  not
maintain the  relationship between the market value of securities
loaned and  the value of the cash deposit held.  Interra Clearing
is also  at risk to the extent that securities it borrows decline
in  value   and  the  loaning  broker  fails  to  return  Interra
Clearing's cash deposit.

     Research Activities.  Both Dain Bosworth and Rauscher Pierce
Refsnes  have   research  departments   which  provide  analysis,
investment  recommendations   and  market   information  with  an
emphasis on  companies located  in their  respective regions.  At
December 31,  1996, Dain  Bosworth had 23 securities analysts and
Rauscher Pierce  Refsnes had  16.   Both companies  also purchase
certain research products from independent research organizations
to supplement their internal research activities.

     Regulation.     The  securities   industry  is   subject  to
comprehensive regulation  by federal  and state  governments, the
various securities  and commodities  exchanges  and  other  self-
regulatory bodies.   The  regulations cover  all aspects  of  the
securities business  including sales  methods,  registration  and
distribution of securities, trade practices among broker-dealers,
transactions with  affiliates, conflicts  of interest,  uses  and
safekeeping of customers' funds and securities, capital levels of
securities firms,  record keeping  and the  conduct of employees.
Violations of  these rules and regulations can result in censure,
fines, suspensions,  revocation of  the right  to do business and
private rights  of action  for damages.   Dain Bosworth, Rauscher
Pierce Refsnes,  Interra Clearing  and Interra  Advisory  believe
they have  operated  in  compliance  with  applicable  rules  and
regulations in all material respects.

     Uniform Net  Capital Rule.   As  broker-dealers  and  member
firms of  the NYSE,  Dain Bosworth,  Rauscher Pierce  Refsnes and
Interra Clearing are subject to the Uniform Net Capital Rule (the
"Rule") promulgated  by the  Securities and  Exchange Commission.
The Rule  is designed  to measure the general financial integrity
and liquidity  of a  broker-dealer and  the minimum  net  capital
deemed  necessary   to  meet   the   broker-dealer's   continuing
commitments to  its customers.  The Rule provides for two methods
of computing net capital.  Interra Clearing, which carries all of
the customer  accounts of  Dain Bosworth, Rauscher Pierce Refsnes
and the  correspondent firms  serviced through  RPR Correspondent
Services, currently  uses what  is generally  referred to  as the
alternative method.   Minimum  net capital  is defined under this
method to  be equal  to 2  percent of customer debit balances, as
defined.   The NYSE  may also  require a  member organization  to
reduce its business if net capital is less than 4 percent of such
aggregate debit  items  and  may  prohibit  a  member  firm  from
expanding its  business  and  declaring  cash  dividends  if  its
regulatory net  capital is  less than 5 percent of such aggregate
debit items.   In  computing net capital, various adjustments are
made to  exclude assets  which are  not readily  convertible into
cash and to provide a conservative valuation of other assets such
as a  company's trading  securities.   Failure  to  maintain  the
required  net  capital  may  subject  a  firm  to  suspension  or
expulsion by the NYSE, the Securities and Exchange Commission and
other  regulatory   bodies  and   may  ultimately   require   its
liquidation.  Dain Bosworth and Rauscher Pierce Refsnes, which do
not carry customer accounts, must maintain minimum net capital of
$1.0 million.   At  all times,  Dain  Bosworth,  Rauscher  Pierce
Refsnes and  Interra Clearing  have maintained  their net capital
above the required levels.  See Note J to "Consolidated Financial
Statements."

Money Management

     Interra Advisory  Services Inc. (formerly known as IFG Asset
Management Services,  Inc.) was restructured in January 1995 into
a new  financial services organization supporting all mutual fund
and cash  management products  sold by Dain Bosworth and Rauscher
Pierce Refsnes.   This  shared service  strategy was  expanded in
early 1996  to include  product management responsibility for all
externally managed  products and  services sold  by Dain Bosworth
and Rauscher  Pierce Refsnes.   In  addition Interra  Advisory, a
registered investment advisor, continues to conduct the portfolio
management business  of Insight Investment Management, a division
of Interra  Advisory, including  the provision  of  fixed  income
portfolio management  services to  Great Hall  Investment  Funds,
Inc. ("Great Hall"), and to individual and institutional clients.
Great Hall  is an  open-end management  investment  company  that
currently offers  shares in  three series,  each of  which is, in
essence, a  separate money  market mutual  fund.   Until November
1996 Interra  Advisory offered  five series.   However,  in  that
month Interra  Advisory sold  two of its Great Hall Series, which
invest primarily  in longer-term municipal securities.  All three
of the remaining Great Hall Series are money market funds.

Clearing and Other Services

     Interra Clearing  clears  and  settles  trades  on  a  fully
disclosed basis  for Dain  Bosworth, Rauscher  Pierce Refsnes and
the  introducing   correspondent  firms  clearing  through  them.
Correspondent Services,  currently a  division of Rauscher Pierce
Refsnes, is  in the  business of marketing correspondent clearing
services provided  by Interra Clearing.  As of December 31, 1996,
Interra Clearing  provided clearing  services to  178 introducing
correspondent firms introduced through Correspondent Services and
one correspondent firm introduced through Dain Bosworth.  Interra
Clearing also provides data processing and technology services to
the Company and its subsidiaries.  Correspondent firms introduced
through Correspondent  Services or  otherwise and cleared through
Interra Clearing are charged fees based on their use of services.

Competition

     Dain Bosworth,  Rauscher Pierce Refsnes and Interra Advisory
encounter intense  competition in  their businesses  and  compete
directly with  numerous firms,  many of  which have substantially
greater capital  and other  resources.   Such  subsidiaries  also
encounter  competition   from  banks,   insurance  companies  and
financial institutions in many elements of their businesses.  For
example,  with   the  prior  approval  of  the  Federal  Reserve,
securities  subsidiaries   of  bank  holding  companies  may  now
underwrite and  deal in  corporate debt  and  equity  securities,
provided that  they comply  with certain  firewalls and  that the
revenues from  such activities  do not  exceed 25  percent of the
securities  firm's   total  revenues.     Legislative   proposals
currently under  consideration would eliminate this limit on such
activities and  would permit  banks, bank  holding companies  and
their subsidiaries  and affiliates  to offer  additional services
which have  traditionally been  provided only  by securities  and
money  management   firms.     Additionally,  competition   among
securities firms  and  other  competitors  for  successful  sales
representatives,  securities  traders,  securities  analysts  and
investment bankers is intense and continuous.

     Dain Bosworth and Rauscher Pierce Refsnes compete with other
securities firms  and with  banks, insurance  companies and other
financial institutions  principally  on  the  basis  of  service,
product  selection,  price,  location  and  reputation  in  local
markets.   Dain Bosworth and Rauscher Pierce Refsnes operate at a
price disadvantage  to discount brokerage firms that do not offer
equivalent services.

     Correspondent  Services   competes  for   the  business   of
introducing  correspondent  brokers  on  the  basis  of  service,
product selection, reputation and price.

     Interra Advisory's Insight Management division competes with
other fixed income portfolio managers principally on the basis of
portfolio performance, price and service.

Employees

     At December  31, 1996,  the Company  had approximately 3,474
full-time employees.   Of  these, 1,959  were  employed  by  Dain
Bosworth, 1,008  were employed  by Rauscher  Pierce Refsnes,  394
were employed  by Interra  Clearing and the rest were employed by
Interra Advisory  or the  holding company.  None of the Company's
employees is represented by a collective bargaining unit.

ITEM 2. PROPERTIES:

     The headquarters  and administrative offices of the Company,
Dain  Bosworth,   Interra  Advisory   and  Interra  Clearing  are
presently located  in four  buildings  in  downtown  Minneapolis,
Minnesota, including  the Dain Bosworth Plaza.  The Company began
occupying space  in the  Dain Bosworth  Plaza under  a  long-term
operating lease  in January  1992.   In early  1997, the  Company
relocated its  data processing  operation to a fourth building in
downtown Minneapolis.   The  Company's office  space in  a second
building remains  under a  long-term  lease  commitment  and  was
renovated  in   1992  to  facilitate  the  consolidation  of  the
Company's  clearance   and  settlement   functions  into  Interra
Clearing (see  "Clearing and  Other Services").  Additional space
in a  third building  in Minneapolis  was  obtained  in  1994  by
Interra Clearing  under an  operating lease to facilitate growth.
During the  fourth quarter  of 1996,  the Company  entered into a
long-term operating lease for space adjacent to the Dain Bosworth
Plaza that  will be  used to  consolidate  all  Interra  Clearing
operations except  data processing.   Interra Clearing will begin
to occupy  this space  in the  1997 fourth  quarter.  During 1994
Rauscher Pierce  Refsnes entered into a long-term operating lease
for new  headquarters space  in Dallas,  Texas which  it began to
occupy during  the 1995  third quarter.   Both  Dain Bosworth and
Rauscher Pierce  Refsnes have  extensive  branch  office  systems
utilizing leased  office space  in various  locations  throughout
their regions.  The Company  believes  that  its  facilities  are
suitable and  adequate to meet its needs and that such facilities
have  sufficient   productive  capacity   and  are  appropriately
utilized.

     Further information  about  the  lease  obligations  of  the
Company is  provided in  Note H  to the  "Consolidated  Financial
Statements."

ITEM 3. LEGAL PROCEEDINGS:

     The  Company   and/or  its   securities   subsidiaries   are
defendants in  various civil  actions and arbitrations incidental
to their  businesses involving  alleged violations of federal and
state securities  laws and  other laws.   Some  of these actions,
including the  actions described  in  more  detail  below,  claim
substantial damages.   Some  of  these  actions  have  also  been
brought on  behalf of  purported classes of plaintiffs and relate
to underwritings of securities.
     
     Midwest Life Insurance Litigation

          The Company  and  Dain  Bosworth  have  been  named  as
     defendants in  ten actions  brought  by  insurance  guaranty
     associations and  certain  individuals  in  connection  with
     losses suffered  under  single  premium  deferred  annuities
     issued by  Midwest Life  Insurance Company ("MWL"), a former
     subsidiary acquired by the Company in 1980 and sold by it in
     early 1986.   Such annuities were sold primarily through the
     private client sales force of Dain Bosworth.  MWL, which was
     sold two times subsequent to its sale by the Company in 1986
     and was  relocated from  Nebraska to  Louisiana by the final
     owners, Southshore Holding Corp., was declared insolvent and
     ordered liquidated by the State of Louisiana in August 1991.
     Generally, MWL  policyholders have been reimbursed for their
     losses up  to $100,000  per holder  by  the  state  guaranty
     funds.   The plaintiffs  (or real  parties in  interest)  in
     these cases  are certain individual policyholders and/or the
     Life and  Health Guaranty  Associations of each of Colorado,
     Iowa, Minnesota,  Montana, Nebraska,  North Dakota,  Oregon,
     South Dakota,  Washington and  Wyoming, which  claim to have
     succeeded to the rights of policyholders they reimbursed for
     MWL losses.   Plaintiffs in the aggregate seek to recover in
     excess of  $64 million  in compensatory  damages, as well as
     punitive damages, interest, costs, attorneys' fees and other
     relief.

          The first  of these actions,  Karsian, et al. v. Inter-
     Regional  Financial   Group,   Inc.,   and   Dain   Bosworth
     Incorporated, is pending in the United States District Court
     for the  District of  Colorado.   This action  was initially
     brought in August 1993 as a purported class action and named
     Rauscher Pierce  Refsnes as  an additional  defendant.   The
     court has  since held,  however, that  there are  no  proper
     class claims  and the claims against Rauscher Pierce Refsnes
     have been  dismissed.   The plaintiffs  in this  action seek
     approximately $10.7  million in  compensatory damages.  They
     initially alleged  common law  fraud,  breach  of  fiduciary
     duty,  negligence  and  negligent  misrepresentation,  civil
     conspiracy, RICO  claims, breach  of  contract,  and  claims
     under the  Investment Advisors Act of 1940 and various state
     laws.  However, the RICO, breach of contract, and Investment
     Advisors Act  claims were dismissed by the trial court along
     with the class claims in July 1995.

          The other nine actions, which were brought in April and
     May 1995,  allege similar claims to the Colorado action.  In
     certain  states,  the  plaintiffs  also  allege  intentional
     infliction of  economic harm,  interference with contractual
     relations and/or aiding and abetting the breaches of duty by
     the final  sets of owners of MWL.  Eight of such actions are
     captioned and pending as follows, and the plaintiffs in each
     action seek  the amount of compensatory damages indicated in
     parentheses:

     Iowa Life  and Health  Insurance Guaranty  Ass'n  v.  Inter-
     Regional   Financial   Group,   Inc.   and   Dain   Bosworth
     Incorporated  (Iowa Dist. Ct., Polk County) ($5.7 million)
     
     C. Randolph,  L. Schnobrich, V. Troumbly, P. Dumke, E. Davis
     and Minnesota  Life and  Health Insurance  Guaranty Ass'n v.
     Inter-Regional  Financial  Group,  Inc.  and  Dain  Bosworth
     Incorporated   (Hennepin County, Minnesota Dist. Ct.) ($32.2
     million)
     
     Montana Life  and Health  Insurance Guaranty Ass'n v. Inter-
     Regional   Financial   Group,   Inc.   and   Dain   Bosworth
     Incorporated, (Montana  First Judicial  Court, Lewis & Clark
     County) ($3.4 million)
     
     Nebraska Life  and Health Insurance Guaranty Ass'n v. Inter-
     Regional   Financial   Group,   Inc.   and   Dain   Bosworth
     Incorporated, (Nebraska  Dist. Ct.,  Lancaster County) ($2.8
     million)
     
     North Dakota  Life and  Health Insurance  Guaranty Ass'n  v.
     Inter-Regional  Financial  Group,  Inc.  and  Dain  Bosworth
     Incorporated, (District  Court, Cass  County, North  Dakota)
     ($2.1 million)
     
     South Dakota  Life and  Health Insurance  Guaranty Ass'n  v.
     Inter-Regional  Financial  Group,  Inc.  and  Dain  Bosworth
     Incorporated,  (South   Dakota  Second   Judicial   Circuit,
     Minnehaha County) ($1.7 million)
     
     Washington Life  and  Health  Insurance  Guaranty  Ass'n  v.
     Inter-Regional  Financial  Group,  Inc.  and  Dain  Bosworth
     Incorporated, (Washington  Superior Court  for King  County)
     ($2.1 million)
     
     Wyoming Life  and Health  Insurance Guaranty Ass'n v. Inter-
     Regional   Financial   Group,   Inc.   and   Dain   Bosworth
     Incorporated, (Wyoming  District Court  for Laramie  County)
     ($2.7 million)
     

     The ninth  such action,  captioned Oregon  Life  and  Health
     Insurance Guaranty  Ass'n v. Inter-Regional Financial Group,
     Inc. and Dain Bosworth Incorporated, was filed in the Oregon
     Circuit Court  of Multnomah  County and sought approximately
     $0.5 million  in damages.   Such  action  was  dismissed  in
     October 1996  following a partial summary judgment ruling in
     favor of  the Company  on statute  of  limitations  grounds.
     Plaintiff has appealed such ruling.
     
          The Company  and Dain  Bosworth believe  that they have
     substantial and meritorious defenses available in all of the
     foregoing  actions   and  they   are  defending   themselves
     vigorously.

     The Resolution Trust Corporation

          Rauscher Pierce  Refsnes  and  Robert  H.  Brown,  Jr.,
     Rauscher Pierce  Refsnes' executive vice president of equity
     capital markets,  have been named as defendants in an action
     captioned Federal Deposit Insurance Corporation, as receiver
     for Western  Savings &  Loan Association,  F.A. vs.  Express
     America Holdings  Corporation; Smith  Barney Harris  Upham &
     Co.; Rauscher Pierce Refsnes, Inc., et al.   This action was
     brought in  the U.S.  District Court  in Phoenix, Arizona in
     December 1995  by  The  Resolution  Trust  Corporation  (the
     "RTC") and  arose out  of the  RTC's sale through an auction
     process conducted  in the fall of 1990 of the stock of WESAV
     Mortgage Corporation  ("WESAV"),  a  subsidiary  of  Western
     Savings &  Loan Association,  F.A.   Rauscher Pierce Refsnes
     acted as broker for the sale and Smith Barney Harris Upham &
     Co. ("Smith  Barney") acted  as the RTC's financial advisor.
     WESAV was  eventually sold  to First  Western Partners,  the
     predecessor  to   Express   America   Holdings   Corporation
     ("Express America"),   in  May 1991  for a gross acquisition
     price of approximately $45 million, including the assumption
     of approximately $19 million in liabilities. The RTC alleged
     that Rauscher  Pierce Refsnes, as broker, improperly favored
     Express America  over other  allegedly higher  bidders,  and
     that Rauscher  Pierce Refsnes  and  Smith  Barney  committed
     fraud  in   connection  with  the  auction  and  sale,  were
     negligent in their analysis and communication of bids to the
     RTC, and  breached their contracts with and fiduciary duties
     to the  RTC. In addition to the corporate defendants and Mr.
     Brown, the  RTC also  named  as  defendants  in  the  action
     Express  America's   chief  executive   officer  and   chief
     financial officer,  the former  chief executive  officer and
     former chief  financial officer  of WESAV, and certain other
     individuals.   It alleged  such officers  of Express America
     and  WESAV   were  guilty   of  mismanagement   between  the
     conclusion of  the auction  process and closing of the sale.
     Rauscher Pierce Refsnes understands that the Federal Deposit
     Insurance Corporation,  which became  the plaintiff  in this
     action when  the RTC was merged into it effective January 1,
     1996, has  reached settlement  agreements in  principle with
     Smith Barney  and the  Express America and WESAV defendants.
     The plaintiff  seeks compensatory  damages of  approximately
     $15 million  and punitive damages of $60 million, along with
     interest, costs  and other  relief.   Defendants' motions to
     dismiss the case on the face of the complaint were denied in
     August 1996.   Rauscher Pierce Refsnes and Mr. Brown believe
     that  they   have  substantial   and  meritorious   defenses
     available, and  they are  defending themselves vigorously in
     this action.

     Orange County v. RPR

          Rauscher Pierce  Refsnes was also named in an adversary
     proceeding commenced by the County of Orange ("the County"),
     captioned County  of Orange,  a political subdivision of the
     State of  California v.  Rauscher Pierce  Refsnes,  Inc.,  a
     corporation and  filed in  the Chapter 9 proceeding entitled
     In re County of Orange, a political subdivision of the State
     of California  in the United States Bankruptcy Court for the
     Central District  of California.  The case was filed in June
     1996 simultaneously with the filing of adversary proceedings
     against Morgan  Stanley &  Co., Inc., Student Loan Marketing
     Association ("Sallie  Mae"), LeBouef, Lamb, Greene & MacRae,
     and McGraw-Hill  Companies, Inc.  d/b/a  Standard  &  Poors.
     Previously,  the  County  had  filed  adversary  proceedings
     against Merrill Lynch & Co., Inc. and KPMG Peat Marwick, and
     in September  1996 the  county filed an adversary proceeding
     against Fuji  Securities Inc.  In each of these proceedings,
     the County  seeks at  least $500 million in losses allegedly
     incurred in  the  Orange  County  Investment  Pool  ("OCIP")
     except that  it seeks  a lesser  amount (approximately  $120
     million) from  Fuji.   All of the foregoing proceedings have
     been transferred  from the  bankruptcy court  to the  United
     States District Court for the Central District of California
     upon the  request  of  Rauscher  Pierce  Refsnes  and  other
     defendants.   The County  has  brought  similar  proceedings
     against over  30 other  defendants which  are subject  to  a
     stay.
     
          The County  alleges that  Rauscher Pierce Refsnes was a
     financial advisor  on five note offerings by the County that
     took place  in June through August of 1994, for an aggregate
     of $975  million, including  an offering  of $600 million in
     taxable one-year  notes in  July 1994.   The  County alleges
     that by  failing to apprise the County of the risks involved
     in the  OCIP and in the County's 1994 note offering program,
     and  by   failing  to  prevent  the  issuance  of  allegedly
     inaccurate  official  statements,  Rauscher  Pierce  Refsnes
     became  liable   for  breach   of   contract,   professional
     negligence, breach of fiduciary duty and aiding and abetting
     breaches of fiduciary duty committed by the County Treasurer
     and Assistant  Treasurer.   Rauscher Pierce  Refsnes, denies
     these allegations,  including those  relating to  Rauscher's
     role in  connection with these transactions.  In each of the
     five transactions  in question,  Rauscher Pierce Refsnes was
     retained  solely  to  determine  whether  the  underwriter's
     spread  (including   the  portion  to  be  received  by  the
     financial and  marketing specialist)  and proposed  interest
     rate were  appropriate.  Rauscher Pierce Refsnes believes it
     has substantial  and meritorious  defenses available  and is
     defending itself vigorously in this action.

     While  the   outcome  of   any  litigation   is   uncertain,
management, based in part upon consultation with legal counsel as
to certain  of the actions pending against the Company and/or its
subsidiaries, believes  that the  resolution of  all such matters
will not  have a  material adverse  effect  on  the  consolidated
financial condition  or results  of operations  of the Company as
set forth  in the  consolidated  financial  statements  contained
herein.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

      No matters were submitted to a vote of security holders
during the fourth quarter ended December 31, 1996.


EXECUTIVE OFFICERS OF THE REGISTRANT

      The following officers have been designated by the Board of
Directors of  the Company as its current "executive officers" for
SEC reporting  purposes.   All  officers  are  generally  elected
annually at  the Board  meeting  held  in  conjunction  with  the
Company's annual stockholders meeting and hold such offices until
the following  year, subject  to their earlier death, resignation
or removal.

                                    Principal Occupation and
                                      Business Experience
Name                    Age         for the Past Five Years     
-----------------------------------------------------------------
John C. Appel........... 48   Chief   Executive   Officer,   Dain
                              Bosworth,  since   February   1997;
                              President,  Dain   Bosworth,  since
                              1994.   Executive  Vice  President,
                              Interra,  since   1990;   Director,
                              Interra,  since  1995.    Executive
                              Vice President  and Chief Financial
                              Officer,  Dain  Bosworth,  1990  to
                              1994.     Senior  Vice   President,
                              Interra, from  1986 to  1990; Chief
                              Financial  Officer,  Interra,  from
                              1986 to  1994.   Member of  Interra
                              Executive Committee.

Mary Alice Brophy....... 50   Senior    Vice     President    and
                              Compliance Director, Interra, since
                              May 1996.   Director of Compliance,
                              Dain    Bosworth,    since    1988.
                              Chairman of the Board of Governors,
                              National Association  of Securities
                              Dealers,  Inc.,  January  to  April
                              1996.   Chairman of the Board, NASD
                              Regulation,  Inc.,  April  1996  to
                              January 1997.

B. J. French............ 60   Senior  Vice   President,  Interra,
                              since   May   1996;   Director   of
                              Corporate       and        Investor
                              Communications,   Interra,    since
                              1991; Vice President, Interra, 1991
                              to May 1996.  Director of Corporate
                              Communications     and     Investor
                              Relations, Tonka  Corporation, from
                              1989 to 1991.

Louis C. Fornetti....... 47   Executive Vice  President and Chief
                              Financial Officer,  Interra,  since
                              1995.   Chief Executive  Officer of
                              Interra  Clearing   Services   Inc.
                              since  September  1996.  Treasurer,
                              Interra,  1995   to   April   1996.
                              Senior  Vice  President  and  Chief
                              Financial Officer, American Express
                              Financial Advisors,  Inc. (formerly
                              IDS), from  1993  to  1995;  Senior
                              Vice   President    and   Corporate
                              Controller,    American     Express
                              Financial Advisors, Inc., from 1988
                              to  1993.     Member   of   Interra
                              Executive Committee.

William A. Johnstone.... 52   President   and   Chief   Executive
                              Officer of  Rauscher Pierce Refsnes
                              since June  1996.   Executive  Vice
                              President,  Interra,   since   June
                              1996; Director, Interra, since June
                              1996.   Partner, Dorsey  & Whitney,
                              LLP, 1975  to  June  1996;  Member,
                              Dorsey &  Whitney, LLP,  Management
                              Committee from  1988 to  June 1996.
                              Member   of    Interra    Executive
                              Committee.

Sharon R. Quay.......... 62   Executive Vice  President, Director
                              of Human  Resources, Interra, since
                              June   1996.       Executive   Vice
                              President, Director  of  Education,
                              Everen Securities  (formerly Kemper
                              Securities), from  January 1996  to
                              June   1996.      Vice   President,
                              Director of Human Resources, Kemper
                              Corporation, 1994  to January 1996.
                              Senior Vice  President, Director of
                              Human Resources,  Kemper Securities
                              from 1990  to 1994.    Senior  Vice
                              President,   Director    of   Human
                              Resources,  Boettcher   &  Company,
                              1981 to  1990.   Member of  Interra
                              Executive Committee.

                              Senior  Vice   President,   Interra
Daniel J. Reuss......... 41   since April  1996 and 1991 to 1995;
                              Corporate   Controller,    Interra,
                              since April  1996 and 1985 to 1995;
                              Treasurer,  Interra,   since  April
                              1996 and  1989 to  1995.  Executive
                              Vice  President,   Dain   Bosworth,
                              since   1995;    Chief    Financial
                              Officer,  Dain  Bosworth,  1995  to
                              April 1996.

Carla J. Smith.......... 39   Senior  Vice   President,  Interra,
                              since  1994;  General  Counsel  and
                              Secretary,  Interra,   since  1991.
                              Partner,  Dorsey  &  Whitney,  from
                              1989 to  1990; Associate,  Dorsey &
                              Whitney, from 1981 to 1988.

J. Scott Spiker......... 41   President   and   Chief   Executive
                              Officer, Interra  Advisory Services
                              Inc., since  1995.   Executive Vice
                              President, Interra, since May 1996;
                              Senior Vice  President and Director
                              of Strategic Planning and Corporate
                              Development, Interra, 1994.  Senior
                              Vice President and Manager Employee
                              Benefit  Services,   Norwest   Bank
                              Minnesota, N.A., from 1989 to 1994.
                              Vice President,  Strategic Planning
                              and      Acquisitions,      Norwest
                              Corporation,  from  1987  to  1989.
                              Member   of    Interra    Executive
                              Committee.

Irving Weiser........... 49   Chairman  of  the  Board,  Interra,
                              since   1995;    Chief    Executive
                              Officer,   Interra,   since   1990;
                              President  and  Director,  Interra,
                              since 1985.  Chairman of the Board,
                              Dain Bosworth,  since  1990;  Chief
                              Executive Officer,  Dain  Bosworth,
                              1990 to February 1997.  Chairman of
                              the Board, Rauscher Pierce Refsnes,
                              since 1995;  Acting  President  and
                              Chief Executive  Officer,  Rauscher
                              Pierce Refsnes,  1995 to June 1996.
                              President, Dain Bosworth, from 1990
                              to  1994.     Member   of   Interra
                              Executive Committee.

                             PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
       EQUITY AND RELATED STOCKHOLDER MATTERS:

     (a)  Market Information.

     The Company's  common stock  trades on  the NYSE  under  the
symbol "IFI"  (prior to  February 10,  1997, the  Company's  NYSE
trading symbol  was "IFG").   The  high and  low sales prices per
share of  the Company's  common stock, with 1995 amounts adjusted
for the  3-for-2 split  effected on December 20, 1995, by quarter
for the last two years were as follows:

<TABLE>
<CAPTION>
                             1996                  1995
                      -----------------     --------------------
     QUARTER            HIGH      LOW         HIGH        LOW
                      -----------------     --------------------
     <S>              <C>       <C>         <C>        <C>
     First            $25-1/4   $20-1/2     $17        $14-27/32
     Second            26-7/8    20-3/4      19-27/32   16-5/32
     Third             33-1/2    22          24-5/32    19
     Fourth            36-7/8    31-1/4      27-5/32    23

</TABLE>

     (b)  Holders.

     At  February   28,  1997,  there  were  approximately  5,700
shareholders of  the Company's  common  stock.    The  number  of
shareholders was determined by adding the number of recordholders
to the  estimated number  of proxies  to be  sent to  street name
holders.

     (c)  Dividends.

     Cash dividends per common share paid by the Company, with
1995 amounts adjusted for the 3-for-2 split effected December 20,
1995, by quarter for the last two years were as follows:

<TABLE>
<CAPTION>
                    Quarter        1996       1995
                    -------------------------------
                    <S>           <C>      <C>
                    First         $.11     $.10-2/3
                    Second         .15      .10-2/3
                    Third          .15      .10-2/3
                    Fourth         .15      .10-2/3
</TABLE>

     The Company  declared an  increased regular  quarterly  cash
dividend of  $.18 per  share in  February 1997, which was paid in
March 1997.   The  determination of  the amount  of  future  cash
dividends, if  any, to  be declared  and paid  will depend on the
Company's future  financial  condition,  earnings  and  available
funds.

ITEM 6. SELECTED FINANCIAL DATA:

<TABLE>
<CAPTION>
                                 Year Ended December 31,
                 -----------------------------------------------------
                    1996       1995       1994       1993       1992
                 -----------------------------------------------------
(Dollars in
thousands,
except per-
share amounts)
<S>              <C>        <C>        <C>        <C>        <C>
Net revenues (A)  $625,756   $541,970   $457,351   $482,960   $405,908
                 =========  =========  =========  =========  =========
Revenues          $683,316   $606,747   $496,289   $511,615   $438,261
                 =========  =========  =========  =========  =========
Earnings before
 income taxes      $87,402    $56,271    $39,795    $77,353    $53,691
                 =========  =========  =========  =========  =========
Net earnings       $56,811    $35,873    $25,453    $47,649    $34,523
                 =========  =========  =========  =========  =========
Earnings per
 common and common
 equivalent share:
 Primary             $4.46      $2.86      $2.03      $3.78      $2.68
                 =========  =========  =========  =========  =========
 Fully diluted       $4.39      $2.81      $2.03      $3.75      $2.61
                 =========  =========  =========  =========  =========
Total assets    $1,827,425 $2,021,908 $1,952,611 $1,786,022 $1,270,945
                 =========  =========  =========  =========  =========
Long-term debt     $27,290    $41,410    $47,023    $22,166    $16,364
                 =========  =========  =========  =========  =========
Shareholders'
 equity           $275,886   $222,494   $195,420   $177,683   $131,953
                 =========  =========  =========  =========  =========

Other information:
Equity per
 common share       $22.66     $18.44     $16.20     $14.57     $10.88

Cash dividends
 per common
 share (B)            $.56   $.42-2/3   $.37-1/3   $.18-2/3       $.08

Common shares
 outstanding
 at year-end,
 in thousands       12,175     12,065     12,062     12,197     12,122

Pretax margin
 based on net
 revenues            14.0%      10.4%       8.7%      16.0%      13.2%

Net return on
 average equity      22.8%      17.3%      13.5%      31.0%      28.9%

Long-term debt-
 to-equity ratio      9.9%      18.6%      24.1%      12.5%      12.4%

Average number of
 employees           3,379      3,285      3,133      2,806      2,591

Average number
 of investment
 executives          1,263      1,271      1,205      1,084      1,009

Operating office
 locations at
 year end               91         91          9         81         78

<FN>
(A) Net revenues equal total revenues less interest expense.

(B) 1992 dividends exclude a $.10-2/3 per share special dividend
    paid in February 1992.

</TABLE>

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

     Business Environment

     The  Company's   subsidiaries  are   primarily  engaged   in
securities  brokerage,   investment  banking   and   trading   as
principals in  equity and  fixed income securities.  All of these
activities are  highly competitive  and sensitive to many factors
outside the  control of  the  Company,  including  volatility  of
securities  prices   and  interest   rates,  trading   volume  of
securities, economic  conditions in the regions where the Company
does business,  income tax  legislation and demand for investment
banking and  securities brokerage  services. While  revenues  are
dependent upon  the level  of trading  and  underwriting  volume,
which  may  fluctuate  significantly,  a  large  portion  of  the
Company's expenses  remain fixed.  Consequently, net earnings can
vary significantly from period to period.

Three Years Ended December 31, 1996

     Summary of Operating Results

     In 1996 net earnings totaled $56.8 million, a Company record
and an  increase of  $21.0 million  or 58 percent over 1995.  Net
revenues (revenues  less interest  expense) also reached a record
$625.8 million,  $83.8 million  or 15 percent more than the prior
year.   The Company,  along  with  the  rest  of  the  securities
industry, benefited  from relatively  low interest rates, as well
as steadily  increasing security prices and trade volumes.  While
1996 growth  in the  size of  the Company's  business  units  was
modest compared  with 1995 and 1994,  the Company was prepared to
take advantage  of favorable  equity securities market conditions
with a  larger, more  productive organization.  Additionally, the
Company contracted  the size  of its  fixed income  business amid
difficult fixed  income market  conditions.  Accordingly, in 1996
the Company  was able  to increase its revenues at a greater rate
than its  expenses and to better concentrate its resources in its
higher-margin businesses,  primarily corporate  underwriting  and
institutional equity sales.

     During 1995  net earnings totaled $35.9 million, an increase
of $10.4  million or 41 percent over 1994.  Net revenues for 1995
reached a  then -  Company record  $542.0 million.   The Company,
along with the rest of the securities industry, benefited in 1995
from the  resurgence in  the financial  markets in  the third and
fourth quarters  and accompanying stabilization of interest rates
and higher  securities prices.     The Company  also benefited in
1995 from the substantial investments in growth made during 1994,
including investments  in the size and quality of Dain Bosworth's
and Rauscher  Pierce Refsnes'  private client  sales  forces  and
operating  office   locations,  as   well  as   Dain   Bosworth's
integration  of   its  October  1994  acquisition,  Chicago-based
Clayton Brown Holding Company, Inc. ("Clayton Brown").  Such 1994
growth  investments  positioned  the  Company  to  capitalize  on
opportunities  afforded   by  1995's   more  favorable  operating
environment.   While the  Company generated  record  revenues  in
1995, net  earnings were  25-percent less  than 1993  due to  the
effects of  a larger  expense structure  and a change in business
mix from  higher margin  investment banking  activities to  lower
margin commission and principal transaction activities.

     Comparative  Net   Revenues  and   Expenses  Summary.    The
following is  a summary of the year-to-year increases (decreases)
in categories of net revenues and operating expenses:

<TABLE>
<CAPTION>
                             1996 vs. 1995       1995 vs. 1994
(Dollars in thousands)     Amount    Percent   Amount    Percent
                          ----------------------------------------
<S>                       <C>         <C>     <C>          <C>
Net Revenues:
Commissions.............  $47,097      27%    $33,103       23%
Principal transactions..  (10,140)     (6)     40,053       29
Investment banking and
 underwriting...........   21,628      24      (6,948)      (7)
Net interest............    8,375      19       8,384       23
Asset management........    8,802      32       8,135       43
Correspondent clearing..    3,322      27         894        8
Other...................    4,702      37         998        8
                          -------      --     -------       --
                           83,786      15      84,619       19
                          -------      --     -------       --
Expenses excluding
 interest:
Compensation and
 benefits...............   40,071      12      52,158       18
Communications..........    2,677       7       3,601       10
Occupancy and
 equipment rental.......    2,851       9       4,324       15
Travel and promotional..    3,631      18         984        5
Floor brokerage and
 clearing fees..........      557       6         496        5
Other...................    2,868       8       6,580       22
                          -------      --     -------       --
                           52,655      11      68,143       16
                          -------      --     -------       --
Earnings before income
 taxes..................  $31,131      55%    $16,476       41%
                          =======      ==     =======       ==
     
</TABLE>

     Commissions

     The $47.1  million  or  27-percent  increase  in  commission
revenues from 1995 to 1996 was due principally to increased sales
to individual  and institutional investors of:  (1) mutual funds;
(2) over-the-counter  equity securities  sold on an agency basis;
(3) listed  equity securities;  and  (4)  insurance  and  annuity
products.   While the  average number  of  investment  executives
declined  slightly   in  1996  from  1995,  investment  executive
productivity  (commissions  per  investment  executive)  improved
approximately 15  percent aided  by a  19-percent rise in the New
York Stock Exchange's average daily trading volume.

     Commission revenues  increased $33.1  million or  23 percent
during 1995  as a  result of  higher  sales  of  over-the-counter
equity securities  sold on  an agency  basis, as  well as  higher
sales of  listed  securities,  mutual  funds  and  insurance  and
annuity  products  to  individual  and  institutional  investors.
Contributing to  the increase was a 5-percent rise in the average
number of investment executives and an 18-percent rise in the New
York Stock Exchange's average daily trading volume.

     Principal Transactions

     Principal transaction  revenues declined  $10.1 million or 6
percent from  1995 to  1996.   The decline  resulted from reduced
trading revenues  on taxable and tax-exempt fixed income products
and was  partially offset by increases in over-the-counter equity
trading  revenues.    The  reductions  in  fixed  income  trading
revenues were  due primarily to the existence of a difficult 1996
fixed income  trading environment and the relatively low level of
individual investor  demand for  fixed income products due to the
comparatively larger  returns experienced  by investors in equity
instruments in 1996.

     Principal transaction revenues increased $40.1 million or 29
percent from  1994 to  1995 due primarily to more stable interest
rates, an  improved trading  environment and increased demand for
over-the-counter equity,  taxable  and  tax-exempt  fixed  income
securities generated,  in part,  from comparatively  larger sales
forces.    Principal  transaction revenues  related to  sales and
trading of over-the-counter equity, taxable fixed income and tax-
exempt fixed income securities, respectively, were 28 percent, 32
percent and 26 percent higher in 1995 than in the previous year.

     Investment Banking and Underwriting

     Investment banking and underwriting revenues increased $21.6
million or  24 percent  during 1996  primarily due  to  increased
corporate underwriting  activity.    In  addition to  the  strong
corporate underwriting  markets that  existed in 1996, management
believes that the prior year reorganization and refocusing of its
Equity  Capital   Markets  groups   around  specialized  industry
segments enabled  Dain Bosworth  and Rauscher  Pierce Refsnes  to
attract and  underwrite higher  levels of  corporate  securities.
Additionally,  financial   advisory  service   fees  earned  from
corporate clients increased in 1996 relative to 1995.

     Investment banking  and underwriting  revenues declined $6.9
million or  7 percent  from 1994  to 1995  chiefly as a result of
lower levels  of  municipal  underwriting  activity,  principally
municipal refunding  transactions.  A portion of this decline was
offset by  increases in  fee-based,  financial  advisory  service
revenue  earned   from  municipal,   governmental  and  corporate
clients.     Despite  a  significant  industry-wide  increase  in
initial  public   offering  transactions,  underwriting  revenues
earned from  corporate clients  were roughly  equal in  1995  and
1994.    Such  result  was  due,  in  large  part,  to  the  1995
reorganization of  Dain Bosworth's  Equity Capital Markets group,
which caused  the group's initial public offering market share to
decline in 1995 relative to 1994.

     Beginning  in   1995  and  continuing  in  1996,  regulatory
requirements  and  scrutiny  related  to  municipal  underwriting
activities  throughout   the   securities   industry   increased.
Uncertainty caused  by such  heightened regulation  and  scrutiny
could negatively  impact future levels of municipal underwriting-
related activities  and could also increase costs related to such
activities for  both the Company and the securities industry as a
whole.

     Net Interest Income

     The major sources of interest revenues and expenses for the
past three years are:

<TABLE>
<CAPTION>
                                   Year ended December 31,
                                 ---------------------------
(In thousands)                    1996      1995      1994
                                 ---------------------------
<S>                              <C>       <C>       <C>
Revenues:
Customer margin accounts......   $66,770   $55,603   $37,307
Trading inventories and other.    28,250    30,596    20,477
Deposits and short-term
 investments..................    15,531    23,194    17,386
                                 -------   -------   -------
                                 110,551   109,393    75,170
Expenses:
Customer funds on deposit.....    29,067    35,922    22,125
Short-term bank loans and
 other........................    25,526    25,154    14,946
Subordinated and other
 long-term debt...............     2,967     3,701     1,867
                                 -------   -------   -------
                                  57,560    64,777    38,938
                                 -------   -------   -------
Net interest income...........   $52,991   $44,616   $36,232
                                 =======   =======   =======
</TABLE>

     Margin  loans   to  customers   and  short-term  investments
segregated for  regulatory purposes,  both financed  primarily by
credit balances  in customer  accounts, comprise  the majority of
the Company's  interest-earning assets.    Fixed  income  trading
inventories, which  are generally  financed with  short-term bank
borrowings or  repurchase agreements,  also generated significant
net interest  income.   The  Company's  net  interest  income  is
dependent  upon  the  level  of  customer  balances  and  trading
inventories, as  well as  the spread between the rate it earns on
those assets compared with its cost of funds.

     During  1996  a  larger  proportion  of  the  Company's  net
interest income  was earned  from customer  margin loans  than in
previous years.   Management believes that this trend will likely
continue into 1997.

     Net interest income accounted for approximately 8 percent of
the Company's  net revenues  in 1996, 1995 and 1994.  In 1996 the
19-percent increase  in net  interest income  resulted  primarily
from the  29-percent rise  in average  margin loan balances.  The
margin loan  increase was  due principally  to  the  transfer  of
several large  customer accounts from competitors during the 1996
third quarter.  The resulting increase in net interest income was
partially offset  by the  effects  of  a  10-percent  decline  in
customer credit  balances from 1995, along with the corresponding
decline  in  short-term  investments  segregated  for  regulatory
purposes  precipitated  by  the  1996  second  half  transfer  of
approximately  $340   million  of  customer  credit  balances  to
Company-sponsored money  market funds.  The transfers occurred as
a result  of the Company offering new cash management products to
certain segments  of its  customers.   See "Liquidity and Capital
Resources."

     The majority  of the 1995 and 1994 increases in net interest
income were due to 19-percent and 35-percent rises in margin loan
balances, respectively, which resulted largely from the 5-percent
and 11-percent  increases in  the average  number  of  investment
executives.   Also, a portion of the 1994 increase was the result
of increasing spreads on all customer balances.

     As long  as favorable  interest rate  spreads are maintained
and the  level of  interest-bearing accounts  remains stable, the
Company  expects   net  interest  income  to  continue  to  be  a
significant component  of its  earnings. Management believes that
the  1996  introduction  of  new  cash  management  products  and
services resulted in increased asset management revenues, but was
offset  by  lower  net  interest  income  derived  from  customer
balances and,  accordingly, did not have a material effect on net
earnings.

     Average balances  and interest  rates for  1994 through 1996
are:

<TABLE>
<CAPTION>
                                    Year ended December 31,
                                 ------------------------------
(Dollars in thousands)             1996       1995      1994
                                 ------------------------------
<S>                              <C>        <C>        <C>
Interest revenues:
Margin loans to customers
 Average balance..............   $810,693   $628,392   $526,088
 Average interest rate........       8.2%       8.8%       7.1%
                                 --------   --------   --------
                                  $66,770    $55,603    $37,307
                                 ========   ========   ========
Deposits and short-term
 investments
 Average balance..............   $293,081   $398,027   $409,648
 Average interest rate........       5.3%       5.8%       4.2%
                                 --------   --------   --------
                                  $15,531    $23,194    $17,386
                                 ========   ========   ========
Interest expense:
Interest-bearing customer funds
 on deposit
 Average balance..............   $649,443   $723,803   $679,305
 Average interest rate........       4.5%       5.0%       3.3%
                                 --------   --------   --------
                                  $29,067    $35,922    $22,125
                                 ========   ========   ========
</TABLE>

     Asset Management

     Asset management  revenues increased 32 percent in 1996 from
1995 due  to increased  revenues from larger volumes of assets in
fee-based, managed account programs at Dain Bosworth and Rauscher
Pierce Refsnes  and, to a lesser degree, a 41-percent increase in
assets under management at Interra Advisory.

     In 1995  asset management revenues increased 43 percent from
1994 as  a result  of  a  47-percent  increase  in  assets  under
management at  Interra Advisory,  as well  as increased  revenues
from larger  volumes of  assets  in  fee-based,  managed  account
programs at Dain Bosworth and Rauscher Pierce Refsnes.

     Correspondent Clearing

     Correspondent clearing revenues increased $3.3 million or 27
percent in 1996 from the previous year as Correspondent Services,
the Rauscher  Pierce Refsnes  unit that  markets and  coordinates
correspondent clearing  services, benefited  from increased trade
volumes  associated  with  such  correspondents.    Additionally,
Correspondent Services benefited from a 5-percent increase to 178
in the  number of correspondent brokerage firms for which it does
business.

     Revenues from  correspondent clearing rose $0.9 million or 8
percent during  1995  as  Correspondent  Services  increased  the
number of  its correspondent  brokerage firms from 130 to 169 and
benefited from increased trade volumes from such correspondents.

     Other Revenues

     Other revenues  increased approximately  $4.7 million  or 37
percent in  1996 from  1995  principally  due  to  increased  fee
revenues from  larger volumes  of Individual Retirement Accounts,
cash  management   accounts  and   transactional   fees   charged
customers.   In 1996  other revenues  include approximately  $1.1
million in  gains  associated  with  Interra  Advisory's  fourth-
quarter sale  of two  tax-exempt mutual  funds.   In  1995  other
revenues included  approximately $1.8 million in gains related to
the sale  of securities  previously  obtained  as  a  portion  of
compensation for  certain corporate  underwriting activity.    No
such significant gains were included in other revenues in 1994.

     Compensation and Benefits

     Compensation and  benefits expense  is generally affected by
the level  of operating  revenues, earnings  and  the  number  of
employees.   During  1996  and  1995  compensation  and  benefits
expense increased  12 percent  and 18 percent, respectively, from
the previous  year, largely  the result of increased commissions,
incentive  compensation   and  related   benefits  that  rose  in
conjunction  with   operating  revenues   and  earnings.     Also
contributing  to  the  increases  were  3-percent  and  5-percent
increases, respectively,  in the  average number of employees, as
well as general salary increases.

     Other Expenses

     During 1996  expenses other  than compensation  and benefits
increased $12.5  million or  9 percent  primarily due  to:    (1)
increased  travel  and  promotional  costs  associated  with  the
generation  of   new  business;  (2)  increased  occupancy  costs
stemming from  expansion of  several operating  office locations,
including operating  costs and  real estate taxes associated with
such locations; (3) increased communications costs resulting from
the 1996  rollout of  improved investment executive workstations;
and (4) increased professional services fees.

     Expenses other  than  compensation  and  benefits  increased
$16.0 million or 13 percent from 1994 to 1995 principally due to:
(1)  increased   litigation-related   expenses;   (2)   increased
occupancy costs  related to the full-year effect of a significant
number of  operating office  additions during  the previous year,
the move  of Rauscher  Pierce Refsnes into a new headquarters and
the expansion of numerous operating office locations during 1995;
and (3)  volume-driven increases  in communications,  market-data
and clearing  services and increased travel costs associated with
the generation of new business.

     During the  first half  of 1995,  management took  steps  to
selectively reduce  expenses or  defer spending  in light  of the
market uncertainty  that characterized  the time  period.  During
the second  half of  1995, expense  levels increased  somewhat as
management began  to selectively make investments to grow certain
parts of  the business, primarily Interra Advisory and the Equity
Capital Markets  groups within  Dain Bosworth and Rauscher Pierce
Refsnes, and  to improve its infrastructure.  In 1996 the Company
continued growth  investments in  the same  areas of the business
and, at  the same  time, reduced  the cost  structure of the Dain
Bosworth  and   Rauscher  Pierce  Refsnes  Fixed  Income  groups.
Management continues  to  emphasize  prudent  expense  management
throughout the organization.

     Inflation

     Since the  Company's assets  are primarily  liquid in nature
and  experience   a  high   rate  of   turnover,  they   are  not
significantly  affected   by  inflation.  However,  the  rate  of
inflation does affect many of the Company's operating costs which
may  not  be  readily  recoverable  through  price  increases  on
services offered by the Company.

     Liquidity and Capital Resources

     The Company's  assets are substantially liquid in nature and
consist mainly  of cash  or assets readily convertible into cash.
These assets  are financed primarily by interest-bearing and non-
interest-bearing customer credit balances, repurchase agreements,
other payables,  short-term and  subordinated bank borrowings and
equity capital. Changes in the amount of trading and underwriting
securities owned  by the Company, customer and broker receivables
and securities  purchased under  agreements  to  resell  directly
affect the amount of the Company's financing requirements.

     The Company  has various  sources of  capital for operations
and growth.  In addition to capital provided by earnings, Interra
Clearing maintains  uncommitted lines  of credit from a number of
banks  to   finance   transactions   (principally   trading   and
underwriting positions  of  Dain  Bosworth  and  Rauscher  Pierce
Refsnes) when  internally generated  capital is  not  sufficient.
The  majority   of  these   uncommitted  lines   of  credit   are
collateralized  by   trading  securities  and  customers'  margin
securities. On February 28, 1997, approximately $311 million of a
total of $468 million in uncommitted lines of credit were unused.
Also,  the  Company  has  a  $15  million,  committed,  unsecured
revolving credit  facility that  is  used  for  advances  to  its
subsidiaries, irrevocable letters of credit and general corporate
purposes. On  February 28,  1997, all  of this  revolving  credit
facility was  unused. The Company expects to renew this revolving
credit facility  prior to  its scheduled  expiration on  June 30,
1997.

     Dain Bosworth  and Rauscher  Pierce Refsnes must comply with
certain regulations  of the  Securities and  Exchange  Commission
measuring capitalization and liquidity and restricting amounts of
capital that  may be transferred to affiliates.  Interra Clearing
clears and  settles trades  for Dain Bosworth and Rauscher Pierce
Refsnes  (including  the  accounts  of  Correspondent  Services).
Interra Clearing  carries all  customer accounts,  extends margin
credit  to   customers,  pays  interest  on  credit  balances  of
customers and invests any excess customer balances.  As a result,
Interra Clearing  is subject  to similar  Securities and Exchange
Commission regulations.   During  1996  Dain  Bosworth,  Rauscher
Pierce Refsnes  and  Interra  Clearing  all  operated  above  the
minimum net  capital standards.  At December 31, 1996, regulatory
net capital  was $74.9 million at Interra Clearing, which was 7.5
percent of  aggregate debit  balances and $25.0 million in excess
of the  5-percent requirement.    Dain  Bosworth's  and  Rauscher
Pierce Refsnes' net capital requirements are $1.0 million each as
neither firm  carries customer balances on its balance sheet.  At
December 31,  1996, Dain Bosworth and Rauscher Pierce Refsnes had
net capital  of $43.6 million and $22.6 million, respectively, in
excess of their minimum requirements.

     Late in  the 1996 second quarter, the Company began offering
new cash management products to certain segments of its customers
that  resulted   in  the   July  through   December  transfer  of
approximately  $340   million  of  customer  credit  balances  to
Company-sponsored money  market mutual  funds.  Additionally, the
Company  experienced   a  $146.8  million  increase  in  customer
receivables during  the third  quarter due mainly to the transfer
of several  large customer  accounts  to  the  Company's  broker-
dealers.  As a result of these developments, the Company's short-
term borrowings  increased during  the  third  and  early  fourth
quarters, in  part to  support the  increase in margin debits and
the temporary reduction in customer credits as a funding source.

     Dain Bosworth  and Rauscher  Pierce Refsnes  are dealers  in
corporate, tax-exempt  and governmental  fixed income securities.
While nearly  all of  the Company's  principal  transactions  are
executed  to  facilitate  customer  trades,  Dain  Bosworth  also
maintains certain inventory positions for its own account.  These
positions typically  include U. S. government or U. S. government
agency securities  and are  usually hedged  with a combination of
short sales  of similar  securities, financial  futures contracts
and interest-rate  option contracts  in order  to mitigate market
risk.   Holdings of high-yield securities are not material.  Each
of the  Company's securities subsidiaries maintains comprehensive
risk  management   policies  including  position  limits,  aging,
duration and credit requirements.  These policies are intended to
limit the size of and risk in the Company's trading inventories.

  The  Company  periodically  hedges  its  fixed  income  trading
inventories  with   financial  futures  or  interest-rate  option
contracts.   The Company may also trade treasury option contracts
for its  own account to minimize interest rate risk.  At December
31, 1996,  the  Company  had  open  commitments  under  financial
futures contracts  with notional  amounts of  $6.9 million.    At
December 31,  1996, the  Company owned  no interest  rate  option
contracts.   The fair  market value of these option and financial
futures contracts  was not  material at  December 31,  1996.   In
addition, the  average fair  market value  and  trading  revenues
associated with  these contracts  during 1996  were not material.
Such option and financial futures contracts expose the Company to
off-balance-sheet market  risk in  the event  that the changes in
interest rates  do not  closely correlate  with the change in the
inventory price.  Transactions in futures contracts are conducted
through  regulated   exchanges  which  guarantee  performance  of
counterparties and  are settled in cash on a daily basis, thereby
minimizing credit risk.   Maintaining futures contracts typically
requires the  Company to  deposit  cash  or  securities  with  an
exchange or  other financial  intermediary as  security  for  its
obligations.  Additional cash or securities may be required to be
deposited thereafter  due to  fluctuations in the market value of
the futures  contract.   In writing option contracts, the Company
receives a  premium from  the purchaser in exchange for incurring
an obligation to purchase or sell securities upon exercise of the
option.    These  obligations may require the Company to purchase
securities at prices higher than prevailing market prices or sell
securities at  prices below  prevailing market prices in order to
fulfill its  obligations under  the contracts.    Other  than  as
described, the  Company does  not  enter  into  foreign  currency
contracts or  other derivative  financial instruments  with  off-
balance-sheet risk.
 .
     In  January  1996  the  Company  entered into a $4.6 million
operating lease agreement to finance the acquisition of state-of-
the-art technology   in   the   form  of  investment    executive
workstations.  Minimum lease payments for the three-year term are
included  under "operating leases" in Note H  to the Consolidated
Financial Statements.   In conjunction  with  this  project,  the
Company also  purchased  with cash  an additional $2.8 million of
related equipment during 1996.

  In November 1996  the  Company  entered  into  a  $7.4  million
operating  lease  agreement  for office   space  in  Minneapolis,
Minnesota   which   will   house   the  securities  clearing  and
information technology divisions of Interra Clearing beginning in
late 1997.  Minimum  lease  payments  for the  nine-year term are
included  under  "operating leases" in Note H to the Consolidated
Financial Statements.

     In April  1994 the Company's Board of Directors authorized a
plan to  repurchase up  to 600,000 shares of the Company's common
stock.  The final 59,000 shares associated with this program were
purchased in  July 1996.  The total cash cost of this program was
$11.8 million.   In  August 1996 the Company's Board of Directors
approved a 100,000 share extension of the common stock repurchase
plan.   Purchases of  the common  stock may  be made from time to
time at prevailing prices in the open market, by block purchases,
or in  privately negotiated transactions.  The repurchased shares
will be used for the Company's employee stock incentive and other
benefit plans, or for other corporate purposes.  Through February
28, 1997,  no  shares  had  been  repurchased  pursuant  to  this
extension.

     The Company  paid a  regular quarterly cash dividend of $.11
per share in the first quarter of 1996 and $.15 per share in each
of the remaining quarters of 1996.  In the first quarter of 1997,
the Company declared and paid an increased regular quarterly cash
dividend of  $.18 per  share.  The determination of the amount of
future cash  dividends, if  any, to  be declared  and  paid  will
depend on  the Company's future financial condition, earnings and
available funds.

<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

           Index to Consolidated Financial Statements
        As of December 31, 1996 and 1995, and for each of
   the years in the three-year period ended December 31, 1996
                     and Supplementary Data
                                
                                                            Page  
                                                            ----
Independent Auditors' Report.................................22

Consolidated Financial Statements:

     Consolidated statements of operations...................23

     Consolidated balance sheets.............................24

     Consolidated statements of shareholders' equity.........25

     Consolidated statements of cash flows...................26

     Notes to consolidated financial statements..............27

Quarterly Financial Information (unaudited)..................37

<PAGE>
                  INDEPENDENT AUDITORS' REPORT
                                
Board of Directors and Shareholders
Interra Financial Incorporated:

     We have audited the accompanying consolidated balance sheets
of Interra  Financial Incorporated  and subsidiaries    (formerly
Inter-Regional Financial Group, Inc.) as of December 31, 1996 and
1995, and  the related  consolidated  statements  of  operations,
shareholders' equity  and cash flows for each of the years in the
three-year period  ended December  31, 1996.   In connection with
our audits of the consolidated financial statements, we have also
audited the  financial statement  schedule listed in the table of
contents  on  page  42  hereof.    These  consolidated  financial
statements   and    financial   statement    schedule   are   the
responsibility of  the Company's  management.  Our responsibility
is  to   express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audits.

     We  conducted   our  audits  in  accordance  with  generally
accepted auditing  standards.   Those standards  require that  we
plan and  perform the  audit to obtain reasonable assurance about
whether  the   financial  statements   are   free   of   material
misstatement.   An audit  includes examining,  on a  test  basis,
evidence supporting  the amounts and disclosures in the financial
statements.   An audit  also includes  assessing  the  accounting
principles used  and significant estimates made by management, as
well as  evaluating the overall financial statement presentation.
We believe  that our  audits provide  a reasonable  basis for our
opinion.

     In  our   opinion,  the  consolidated  financial  statements
referred to  above present  fairly, in all material respects, the
financial  position   of  Interra   Financial  Incorporated   and
subsidiaries as of December 31, 1996 and 1995, and the results of
their operations  and their  cash flows  for each of the years in
the three-year period ended December 31, 1996, in conformity with
generally accepted  accounting principles.  Also, in our opinion,
the related  financial statement  schedule,  when  considered  in
relation to  the basic consolidated financial statements taken as
a  whole,   presents  fairly,   in  all  material  respects,  the
information set forth therein.

                                         KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 4, 1997

<PAGE>
<TABLE>
         INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS
            (In thousands, except per-share amounts)
<CAPTION>
                                    Year ended December 31,
                                   1996      1995      1994 
                                ----------------------------
<S>                             <C>       <C>       <C>
Revenues:
Commissions...................  $223,084  $175,987  $142,884
Principal transactions........   169,040   179,180   139,127
Investment banking and
 underwriting.................   111,391    89,763    96,711
Interest......................   110,551   109,393    75,170
Asset management..............    35,890    27,088    18,953
Correspondent clearing........    15,806    12,484    11,590
Other.........................    17,554    12,852    11,854
                                 -------   -------   -------
Total revenues................   683,316   606,747   496,289
                                 -------   -------   -------
Interest expense..............   (57,560)  (64,777)  (38,938)
                                 -------   -------   -------
Net revenues..................   625,756   541,970   457,351
                                 -------   -------   -------
Expenses excluding interest:
Compensation and benefits.....   385,905   345,834   293,676
Communications................    43,301    40,624    37,023
Occupancy and equipment rental    35,870    33,019    28,695
Travel and promotional........    24,296    20,665    19,681
Floor brokerage and clearing
 fees.........................    10,271     9,714     9,218
Other.........................    38,711    35,843    29,263
                                 -------   -------   -------
Total expenses excluding
 interest.....................   538,354   485,699   417,556
                                 -------   -------   -------
Earnings:
Earnings before income taxes..    87,402    56,271    39,795
Income tax expense............   (30,591)  (20,398)  (14,342)
                                 -------   -------   -------
Net earnings .................   $56,811   $35,873   $25,453
                                 =======   =======   =======
Earnings per common and common
 equivalent share:
Primary.......................     $4.46     $2.86     $2.03
                                 =======   =======   =======
Fully diluted.................     $4.39     $2.81     $2.03
                                 =======   =======   =======

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
         INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                     (Dollars in thousands)
<CAPTION>
                                                December 31,
                                       -----------------------------
                                            1996           1995
                                       -----------------------------
<S>                                     <C>             <C>
Assets:
Cash and cash equivalents...............   $34,387         $26,167
Cash and short-term investments
 segregated for regulatory purposes.....    15,000         411,000
Receivable from customers............... 1,035,847         763,793
Receivable from brokers and dealers.....   202,040         257,717
Securities purchased under agreements
 to resell                                  81,631          80,233
Trading securities owned................   288,824         322,892
Equipment, leasehold improvements and
 buildings, net.........................    32,946          31,108
Other receivables.......................    75,685          80,838
Deferred income taxes...................    39,704          31,993
Other assets............................    21,361          16,167
                                         ---------       ---------
                                        $1,827,425      $2,021,908
                                         =========       =========

Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings...................   $25,000         $97,000
Drafts payable..........................    69,989          50,431
Payable to customers....................   869,641         982,098
Payable to brokers and dealers..........   229,852         254,542
Securities sold under repurchase
 agreements.............................    57,967         120,808
Trading securities sold, but not
 yet purchased..........................    58,805          61,050
Accrued compensation....................   119,244          95,988
Other accrued expenses and accounts
 payable................................    77,366          84,973
Accrued income taxes....................    16,385          11,114
Subordinated and other debt.............    27,290          41,410
                                         ---------       ---------
                                         1,551,539       1,799,414
                                         ---------       ---------
Shareholders' equity:
Common stock (issued and outstanding,
 12,174,968 and 12,064,969 shares,
 respectively)..........................     1,522           1,508
Additional paid-in capital..............    81,316          76,623
Retained earnings.......................   193,048         144,363
                                         ---------       ---------
                                           275,886         222,494
                                         ---------       ---------
                                        $1,827,425      $2,021,908
                                         =========       =========

See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>
         INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
            (In thousands, except per-share amounts)
<CAPTION>
                                            Addi-
                                            tional             Share-
                              Common Stock  Paid-In  Retained holders'
                             -------------- 
                              Shares Amount Capital  Earnings  Equity
                             -----------------------------------------
<S>                           <C>     <C>    <C>      <C>     <C>
Balances at December 31,
 1993........................ 12,197 $1,525 $72,989  $103,169 $177,683
                              ------  -----  ------  -------  -------
Net earnings.................      -      -       -    25,453   25,453
Repurchase of common stock...   (244)   (30)      -    (3,608) (3,638)
Common stock issued upon
 exercise of stock options...    109     13     445         -      458
Cash dividends on common
 stock ($.37-1/3 per share)..      -      -       -    (4,536) (4,536)

                              ------  -----  ------  -------  -------
Balances at December 31,
 1994........................ 12,062  1,508  73,434   120,478  195,420
                              ------  -----  ------  -------  -------
Net earnings.................      -      -       -    35,873   35,873
Repurchase of common stock...   (297)   (38)      -    (6,811) (6,849)
Common stock issued upon
 exercise of stock options...    280     36   2,277        -     2,313
Restricted common stock
 issued......................     20      2      53        -        55
Stock credited to deferred
 compensation plan
 participants................      -      -     859        -       859
Cash dividends on common
 stock ($.42-2/3 per share)..      -      -       -   (5,177)  (5,177)
                              ------  -----  ------  -------  -------
Balances at December 31,
 1995........................ 12,065  1,508  76,623  144,363   222,494
                              ------  -----  ------  -------  -------
Net earnings.................      -      -       -   56,811    56,811
Repurchase of common stock...    (59)    (7)      -   (1,334)  (1,341)
Common stock issued upon
 exercise of stock options...    136     17   1,217        -     1,234
Restricted common stock
 issued......................     33      4     342        -      346
Stock credited to deferred
 compensation plan
 participants................      -      -   3,134        -    3,134
Cash dividends on common
 stock ($.56 per share)......      -      -       -   (6,792)  (6,792)
                              ------  -----  ------  -------  -------
Balances at December 31,
 1996........................ 12,175 $1,522 $81,316 $193,048 $275,886
                              ======  =====  ======  =======  =======

See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>
         INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands)
<CAPTION>
                                      Year ended December 31,
                                 ---------------------------------
                                   1996        1995         1994
                                 ---------------------------------
<S>                               <C>         <C>          <C>
Cash flows from operating
 activities:
Net earnings..................    $56,811     $35,873      $25,453
Adjustments to reconcile net
 earnings to cash provided by
 operating activities, net of
 effect of 1994 acquisition:
 Depreciation and amortization.     9,563       8,973        8,415
 Deferred income taxes.........    (7,711)     (2,992)      (5,302)
 Other non-cash items..........     8,626      10,486       11,388
 Cash and short-term investments
  segregated for regulatory
  purposes.....................   396,000     (73,000)     244,005
 Securities purchased under
  agreements to resell.........    (1,398)    118,328      (25,737)
 Net trading securities owned
  and trading securities sold,
  but not yet purchased........    31,823     (59,503)      16,021
 Other receivables.............     5,153      (2,051)     (38,032)
 Drafts payable and short-term
  borrowings of securities
  companies....................   (52,442)    (22,783)     (13,147)
 Net receivable from/payable
  to customers.................  (384,511)     60,411     (174,425)
 Net receivable from/payable
  to brokers and dealers.......    30,987      (8,617)     (99,114)
 Securities sold under
  repurchase agreements........   (62,841)    (53,164)      89,994
 Accrued compensation..........    23,256      27,233      (14,884)
 Other.........................    (9,809)      3,412      (12,582)
                                   -------     -------      -------
Cash provided by operating
 activities....................    43,507      42,606       12,053
                                   -------     -------      -------
Cash flows from financing
 activities:
Proceeds from:
 Issuance of common stock......     1,580       2,368          458
 Subordinated and other debt...         -           -       27,237
 Revolving credit agreement,
  net..........................         -           -       15,000
Payments for:
 Subordinated and other debt...   (14,120)     (5,613)      (2,380)
 Dividends on common stock.....    (6,792)     (5,177)      (4,536)
 Purchase of common stock......    (1,341)     (6,849)      (3,638)
 Revolving credit agreement,
  net..........................         -     (15,000)           -
                                   -------     -------      -------
Cash provided (used) by
 financing activities..........   (20,673)    (30,271)      32,141
                                   -------     -------      -------
Cash flows from investing
 activities:
 Proceeds from investment
  dividends and sales..........      1,227       1,826          934
 Payments for:
 Equipment, leasehold
  improvements and other.......    (15,841)    (10,758)     (13,044)
 Acquisition, net of cash
  acquired                              -           -      (23,367)
                                   -------     -------      -------
Cash (used) by investing
 activities....................    (14,614)     (8,932)     (35,477)
                                   -------     -------      -------
Increase in cash and cash
 equivalents...................      8,220       3,403        8,717
 Cash and cash equivalents:
  At beginning of year.........     26,167      22,764       14,047
                                   -------     -------      -------
At end of year.................    $34,387     $26,167      $22,764
                                   =======     =======      =======
<FN>
Cash income tax payments totaled $32,841,000 in 1996, $18,884,000
in 1995  and $19,916,000 in 1994.  Cash interest payments totaled
$56,901,000, $64,592,000,  and $37,959,000  in  1996,  1995,  and
1994, respectively.

See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          Years ended December 31, 1996, 1995 and 1994

Interra Financial Incorporated and Subsidiaries

A.  Summary of Significant Accounting Policies

   Nature of  Business:    Interra  Financial  Incorporated  (the
"Company") is  a holding  company formed  in 1973 and is based in
Minneapolis, Minnesota.   Until  February 1997  the  Company  was
known as Inter-Regional Financial Group, Inc.  Through its wholly
owned subsidiaries,  Dain Bosworth Incorporated, headquartered in
Minneapolis,  Minnesota,   and  Rauscher  Pierce  Refsnes,  Inc.,
headquartered in  Dallas,  Texas,  the  Company  offers  regional
securities  broker-dealer  and  investment  banking  services  to
individual, institutional,  corporate  and  governmental  clients
predominantly in  the western  half of  the United  States.   The
Company is  also parent  to Interra Clearing Services Inc., which
provides brokerage  operations and  technology  services  to  the
Company's broker-dealers  and correspondent  firms,  and  Interra
Advisory Services  Inc., whose business is to develop services to
support  the   sale  of  non-affiliated  mutual  funds  and  cash
management and  packaged products  and which, through its Insight
Investment Management  division, manages  the  Great  Hall  money
market funds and institutional fixed income accounts.

  Basis of  Presentation:   The consolidated financial statements
include the Company and its subsidiaries, all of which are wholly
owned.   All inter-company  balances and  transactions have  been
eliminated in  consolidation.   Certain prior-year amounts in the
consolidated  financial  statements  have  been  reclassified  to
conform to the 1996 presentation.

  Cash and  Cash Equivalents:   Cash and cash equivalents include
cash on  hand, cash  in depository  accounts with other financial
institutions  and   money  market   investments   with   original
maturities of 90 days or less.

  Securities:  Securities transactions and the related commission
revenues and  expenses are  recorded on settlement date, which is
not materially  different than  if transactions  were recorded on
trade date.

  Trading securities  owned, trading securities sold, but not yet
purchased, and  derivative financial  instruments are  stated  at
market value.  Unrealized gains and losses on such securities are
recognized currently  in revenues.  Market value is determined by
using public  market quotations,  quote prices  from  dealers  or
recent  market   transactions,  depending   upon  the  underlying
security.

  The Company  may, from time to time, receive equity instruments
as  a  portion  of  its  compensation  for  certain  underwriting
activity.   Such instruments are accounted for as investments and
are recorded  at the  lower of cost or market, which is generally
zero.   The Company  also owns certain non-marketable investments
accounted for  at lower  of cost  or market which are included in
other assets.

  Repurchase Transactions:  Securities purchased under agreements
to resell  (reverse repurchase  agreements) and  securities  sold
under  repurchase  agreements  are  accounted  for  as  financing
transactions and are recorded at the contract amount at which the
securities  will  subsequently  be  resold  or  reacquired,  plus
accrued interest.

  Other  Receivables:     Included   in  other   receivables  are
forgivable loans made to investment executives and other revenue-
producing  employees,   typically  in   connection   with   their
recruitment.   Such  loans  are  forgivable  based  on  continued
employment and  are amortized over the life of the loan, which is
generally three to five years, using the straight-line method.

  Depreciation and  Amortization:  Equipment is depreciated using
the straight-line  method over  estimated useful  lives of two to
eight years. Leasehold improvements are amortized over the lesser
of the  estimated useful  life of  the improvement or the life of
the lease.   Buildings  are depreciated  using the  straight-line
method over an estimated useful life of 25 years.

  Income Taxes:    The  Company  accounts  for  income  taxes  in
accordance with  Statement of  Financial Accounting Standards No.
109, "Accounting  for Income  Taxes." Under this method, deferred
tax liabilities and assets and the resultant provision for income
taxes  are  determined  based  on  the  differences  between  the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse.

  Fair Values of Financial Instruments:  Substantially all of the
Company's financial  assets and liabilities are carried at market
value or  at amounts  which, because  of their short-term nature,
approximate current  fair value.  The fair value of the Company's
borrowings, if  recalculated based  on  current  interest  rates,
would not  differ significantly  from  the  amounts  recorded  at
December 31, 1996.

  Stock-Based Compensation:    The  Company  accounts  for  stock
option grants under APB Opinion No. 25 (APB 25) and, accordingly,
does not recognize compensation expense related to option grants.
The  Company,  however,  applies  the  disclosure  provisions  of
Statement of  Financial Accounting  Standards No. 123 (SFAS 123),
"Accounting  for   Stock-Based  Compensation."    For  grants  of
restricted stock,  the Company amortizes the value of such shares
as determined  on grant  date to  compensation expense and equity
over the vesting period.

  Recent Accounting  Pronouncements:   In June 1996 the Financial
Accounting Standards  Board issued  Statement No. 125 (SFAS 125),
"Transfers and  Servicing of Financial Assets and Extinguishments
of Liabilities."   The  Company intends  to adopt  the applicable
portions of SFAS 125 when required in 1997 or 1998, respectively,
and does  not expect  SFAS 125  to have  a material affect on the
Company's consolidated financial statements.

  Earnings Per  Share: Primary  earnings per share are based upon
the weighted  average number of common shares outstanding and the
dilutive effect  of common  stock options  in 1996, 1995 and 1994
and shares credited to deferred compensation plan participants in
1996.   The weighted average number of shares used in the primary
and fully  diluted  computations,  respectively,  are:    1996  -
12,751,922 and  12,945,841; 1995 - 12,546,290 and 12,744,593; and
1994 - 12,541,626 and 12,541,626.

  Use of  Estimates:   Management of the Company has made certain
estimates and assumptions relating to the reporting of assets and
liabilities and  the  disclosure  of  contingent  liabilities  in
preparing these financial statements in conformity with generally
accepted accounting principles.  Actual results could differ from
those estimates.

B.  Receivable from and Payable to Customers

The amounts  receivable from customers primarily represent margin
balances.   Other customer  receivables and  payables result from
cash transactions.   Securities  owned by  customers and  held as
collateral for receivables and securities sold short by customers
are not  reflected  in  the  consolidated  financial  statements.
Included in  payable to  customers are  customer funds on deposit
for reinvestment  totaling $623  million and  $706 million  as of
December 31,  1996 and  1995, respectively.    The  Company  pays
interest on  such funds at varying rates, the weighted average of
which was 4.5 percent at December 31, 1996.

C.  Receivable from and Payable to Brokers and Dealers
<TABLE>
<CAPTION>
                                                 December 31,
                                              ------------------
(In thousands)                                  1996      1995
                                              ------------------
<S>                                           <C>       <C>
Receivable from brokers and dealers:
  Deposits for securities borrowed.........   $158,246  $226,062
  Securities failed to deliver.............     35,570    24,833
  Clearing organizations, correspondent
   brokers and other.......................      8,224     6,822
                                               -------   -------
                                              $202,040  $257,717
                                               =======   =======
Payable to brokers and dealers:
  Deposits for securities loaned...........   $178,900  $223,685
  Securities failed to receive.............     34,384    25,293
  Clearing organizations, correspondent
   brokers and other                            16,568     5,564
                                               -------   -------
                                              $229,852  $254,542
                                               =======   =======
</TABLE>

Securities failed  to deliver  and receive represent the contract
value of  securities which  have not  been delivered  or received
subsequent  to   settlement  date.     Securities   borrowed  and
securities loaned  are recorded  at the amount of cash collateral
advanced  or   received  in   connection  with  the  transaction.
Securities borrowed  transactions require  the Company to deposit
cash or  other collateral  with the  lender.    With  respect  to
securities loaned, the Company receives cash or other collateral.
The initial  collateral advanced  or received  has a market value
equal to  or greater  than the  market value  of  the  securities
borrowed or loaned.  The Company monitors the market value of the
securities borrowed  and loaned  on a  daily basis  and  requests
additional  collateral   or   returns   excess   collateral,   as
appropriate.

D.  Trading Securities

The market values of trading security positions are summarized as
follows:

<TABLE>
<CAPTION>
                                                    December 31,
                                                 ------------------
(In thousands)                                     1996      1995
                                                 ------------------
<S>                                              <C>       <C>
Owned:
  Government securities.......................   $154,801  $185,268
  Municipal securities........................     67,474    76,209
  Corporate fixed income and other securities      53,597    50,298
  Equity securities...........................     12,952    11,117
                                                  -------   -------
                                                 $288,824  $322,892
                                                  =======   =======
Sold, but not yet purchased:
  Government and municipal securities.........    $52,328   $56,166
  Corporate and other securities..............      6,477     4,884
                                                  -------   -------
                                                  $58,805   $61,050
                                                  =======   =======
</TABLE>

E.  Short-Term Borrowings

  Short-term borrowings at December 31, 1996 and 1995, consist of
$25.0 million  and $97.0 million, respectively,  in bank loans to
the securities  subsidiaries on uncommitted lines of credit.  The
majority  of  these  borrowings  are  collateralized  by  trading
securities owned  and customers'  margin securities,  and have  a
floating rate of interest approximately 50 basis points above the
Federal Funds  rate (7.6  percent as  of December 31, 1996).  The
market value  of trading  securities  pledged  as  collateral  at
December 31,  1996 was  $29.9 million.   At  December  31,  1996,
approximately $443  million of  additional credit  was  available
under uncommitted credit lines.

  Revolving credit  loan borrowings  and irrevocable  letters  of
credit are  available under  a commitment  totaling  $15  million
which expires  June 30,  1997.   Loans under  this  facility  are
unsecured and  bear interest  at a floating rate of Federal Funds
plus 1.125  percent.   No amounts  were  outstanding  under  this
facility at December 31, 1996 or 1995.  The Company must maintain
certain levels of net worth under the agreement.

F.  Subordinated and Other Debt
<TABLE>
<CAPTION>
                                                 December 31,
                                             -------------------
(In thousands)                                  1996      1995
                                             -------------------
<S>                                           <C>       <C>
Subordinated debt of securities
 subsidiaries.............................    $20,667   $32,333
Other debt:
  Capital lease obligations (Note H)......      5,794     6,174
  Other...................................        829     2,903
                                               ------    ------
                                              $27,290   $41,410
                                               ======    ======
</TABLE>

  The  four-year   subordinated  bank  loans  of  the  securities
subsidiaries qualify  as regulatory  capital.   The loans require
monthly, interest-only  payments throughout  the four-year terms,
with equal  quarterly principal payments during years two through
four.  The outstanding subordinated debt bears a floating rate of
interest of  approximately 2.5  percent to 2.75 percent above the
London Interbank  Offered Rates.    At  December  31,  1996,  the
weighted  average   interest  rate   on  all   of  the  Company's
subordinated debt was 8.3 percent.

  Other debt  is used primarily to finance equipment and building
improvements, is payable in monthly or quarterly installments and
bears interest  at floating  rates which approximated 6.9 percent
at December  31, 1996.   The Company must maintain certain levels
of net worth under one of the debt agreements.

  Annual principal  payments on subordinated bank loans and other
debt (excluding obligations under capital leases) during the next
five years  are as  follows:  1997-$12,497,000;  1998-$8,999,000;
1999 and thereafter - $0.

G.  Shareholders' Equity

  Common Stock:   The  common stock  has a par value of $.125 per
share; 30,000,000  shares are  authorized.   In 1996  the Company
completed the  repurchase of 600,000 shares of common stock under
a program  that was  initiated in  1994.   Under this program the
Company repurchased  59,000, 297,000  and 244,000 shares in 1996,
1995 and  1994, respectively,  at a  total cost of $11.8 million.
In August  1996 the  Company's Board  of Directors  authorized an
additional program  to repurchase  up to  100,000 shares  of  the
Company's common  stock.   Purchases of  the common  stock may be
made from  time to  time at prevailing prices in the open market,
by block purchases, or in privately negotiated transactions.  The
repurchased shares  will be used for the Company's employee stock
option and  other benefit plans, or for other corporate purposes.
During 1996  no shares  were repurchased  pursuant to the 100,000
share program.

  On October  31, 1995, the Company's Board of Directors declared
a three-for-two  stock split effected in the form of a 50-percent
stock dividend  payable on  December 20, 1995, to shareholders of
record at  the close of business on December 6. All references in
the  consolidated  financial  statements  to  numbers  of  shares
outstanding and  related prices  and per-share  amounts have been
restated to reflect the split.

  At December  31, 1996, 2,967,000 shares of the Company's common
stock were  reserved for  issuance under the 1996 Stock Incentive
Plan, 2,084,000  shares were reserved for issuance under the 1986
Stock Option  Plan and  159,000 shares were reserved for issuance
to the  Company's stock  bonus plan (which was merged, along with
the Company's  profit sharing plan, into a single plan on January
1, 1997).

  Stock Compensation  Plans:   The Company  maintains  two  fixed
stock compensation plans, the 1986 Stock Option Plan and the 1996
Stock Incentive  Plan, which are used to provide stock incentives
to key employees and outside directors.  Each plan authorizes the
grant of  incentive and  non-qualified options  and the 1996 Plan
also authorizes  the grant  of restricted and other stock awards.
The Company made its final grants under the 1986 Plan in February
1996.  The 1996 Plan requires and the Company under the 1986 Plan
made, but  did not  require, all  option grants at 100 percent of
the fair  market value  of the  shares  at  the  date  of  grant.
Options generally  become exercisable  at rates of 20, 50 and 100
percent as  of two, three and four years, respectively, after the
date of  grant and  expire 10  years from date of grant.  Options
granted to  outside directors become exercisable six months after
grant date  and expire  five years  after grant date. At December
31, 1996,  2,869,369 shares  of common  stock were  available for
grant under the 1996 Plan.

The  Company  applies  APB  25  and  related  Interpretations  in
accounting  for   its  stock   option  plans.    Accordingly,  no
compensation expense  has been  recognized  in  the  consolidated
financial statements  for stock  option grants.  Had compensation
expense been determined based on the fair value of the options at
grant date for 1996 and 1995 awards consistent with SFAS 123, the
Company's net  earnings and  earnings per  share would  have been
reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
(In thousands, except per-share amounts)     1996      1995
                                           ------------------
<S>                                         <C>       <C>
Net earnings:
  As reported...........................    $56,811   $35,873
  Pro forma.............................     56,392    35,681

Earnings per share:
Primary:
  As reported...........................      $4.46     $2.86
  Pro forma.............................       4.42      2.84
Fully diluted:
  As reported...........................       4.39      2.81
  Pro forma.............................       4.36      2.80
</TABLE>

The weighted  average per-share  fair value  of  options  granted
during 1996  and 1995,  based on  the following  assumptions, was
$7.96 and  $4.51, respectively.   The  fair value  of each option
granted is estimated on the date of grant using the Black-Scholes
option-pricing  model   with  the   following  weighted   average
assumptions used  for grants  in  1996  and  1995,  respectively:
dividend yields  of    2.3  percent  and  2.7  percent;  expected
volatility of  30.2 percent  for both  years; risk-free  interest
rates of  5.0 percent and 5.9 percent; and expected lives of five
years for both years.  Pro forma amounts may not be indicative of
future results.

The following  table  summarizes  the  activity  related  to  the
Company's stock option plans for each of the last three years:

<TABLE>
<CAPTION>
                        1996               1995               1994
                  ----------------   ----------------   ----------------
                          Weighted           Weighted           Weighted
                           Average            Average            Average
                          Exercise           Exercise           Exercise
                  Shares    Price    Shares    Price    Shares    Price
                  ------  --------   ------  --------   ------  --------
<S>             <C>        <C>    <C>         <C>     <C>        <C>
Options
outstanding
at beginning
of year........ 1,243,987  $14.7  11,303,500  $13.11  1,040,250  $9.36
Granted........   260,600   24.86    357,900   16.38    402,000  20.44
Exercised......  (140,492)   9.66   (298,493)   8.73   (109,425)  5.18
Canceled.......   (60,050)  17.86   (118,920)  17.19    (29,325) 10.03
                ---------   -----  ---------   -----  ---------  -----
Options
outstanding
at end of
year..........  1,304,045  $17.14  1,243,987  $14.71  1,303,500 $13.11
                =========   =====  =========   =====  =========  =====
Options
exercisable
at end of
year..........    405,980            268,837            301,410
                =========          =========          =========
Price range
of outstanding
options.......  $4.58-$33.38       $4.58-$20.83      $4.33-$20.83
Price range
of exercised
 options......  $4.58-$20.83       $4.33-$20.83      $4.58-$11.75

</TABLE>

The  following   table  summarizes   currently  outstanding   and
exercisable options at December 31, 1996:

<TABLE>
<CAPTION>
                         Options Outstanding   Options Exerciseable
                         -------------------   --------------------
                          Weighted
                          Average
                          Remaining  Weighted               Weighted
   Range of      Number    Contrac-   Average    Number      Average
   Exercise    Outstanding   tual    Exercise  Exercisable  Exercise
    Prices     at 12/31/96   Life      Price   at 12/31/96    Price
-------------  ----------- --------- --------  -----------  --------
<C>          <C>           <C>         <C>       <C>        <C>
 $4.58-$4.67    105,850    3.5 years    $4.63    105,850     $4.63
$10.00-$15.83   585,925    6.7          14.18    210,100     12.79
$16.83-$22.38   526,770    7.7          20.86     90,030     20.01
$25.25-$33.38    85,500    7.0          30.03          0         0
              ---------                 -----    -------     -----
              1,304,045                $17.14    405,980    $12.26
              =========                 =====    =======     =====
</TABLE>
The Company's closing stock price on December 31, 1996 was $35.25.

The Company  issued 33,131  and 19,743  shares of common stock to
key  employees   and  outside   directors  in   1996  and   1995,
respectively, which  were restricted  in that  such  shares  were
subject to  certain vesting  provisions.   The restricted  shares
awarded had  weighted average per share fair values at grant date
of $25.07 and $20.18 in 1996 and 1995, respectively, and resulted
in compensation expense of $355,000 and $20,000 being recorded in
the  consolidated   financial  statements   in  1996   and  1995,
respectively.

H.  Commitments and Contingent Liabilities

  Leases: The  Company and  its subsidiaries  lease office space,
furniture and  communications and data processing equipment under
several  noncancelable  leases.  Most  office  space  leases  are
subject to  escalation and provide for the payment of real estate
taxes, insurance  and other expenses of occupancy, in addition to
rent.

  Aggregate minimum  rental commitments  as of December 31, 1996,
are as follows:

<TABLE>
<CAPTION>
                                             Capital  Operating
(In thousands)                                leases    leases
                                             -------  ---------
<S>                                           <C>      <C>
1997.......................................   $1,336   $18,493
1998.......................................    1,076    14,848
1999.......................................      940    11,822
2000.......................................      940     8,873
2001.......................................      940     6,897
Thereafter.................................    5,953    37,570
                                              ------    ------
Total minimum lease payments...............   11,185   $98,503
Less amount representing interest..........   (5,391)
                                              ------
Present value of minimum lease payments....   $5,794
                                              ======
</TABLE>

  Rental  expense   for   operating   leases   was   $25,558,000,
$25,771,000 and  $22,414,000, for  the years  ended December  31,
1996, 1995  and 1994,  respectively. Included  in net  equipment,
leasehold improvements  and buildings  at December  31, 1996  and
1995, is  $3,837,000 and  $4,483,000,  respectively,  for  leases
which have been capitalized.

  Litigation:  The Company and/or its securities subsidiaries are
defendants in  various civil  actions and arbitrations incidental
to their  businesses involving  alleged violations of federal and
state securities  laws and  other laws.   Some  of these actions,
including the  actions described  in  more  detail  below,  claim
substantial damages.   Some  of  these  actions  have  also  been
brought on  behalf of  purported classes of plaintiffs and relate
to underwritings of securities.

  The Company  and Dain Bosworth have been named as defendants in
ten  actions  brought  by  insurance  guaranty  associations  and
certain individuals  in connection  with  losses  suffered  under
single premium  deferred annuities  issued by  The  Midwest  Life
Insurance Company  ("MWL") and sold primarily through the private
client sales  force of  Dain Bosworth.  MWL was a subsidiary that
the Company acquired in 1980 and sold in 1986. MWL was sold twice
more thereafter,  relocated to  Louisiana and ultimately declared
insolvent and  placed in liquidation by the State of Louisiana in
August 1991.   Generally,  MWL policyholders have been reimbursed
for their  losses up to $100,000 per holder by the state guaranty
funds which  claim  to  have  succeeded  to  the  rights  of  the
policyholders they  reimbursed.   Plaintiffs  allege  common  law
fraud,  breach   of  fiduciary  duty,  negligence  and  negligent
misrepresentation,  civil   conspiracy  and   various  state  law
violations and  seek in the aggregate in excess of $64 million in
compensatory damages,  as well  as  punitive  damages,  interest,
costs, attorney's  fees and  other relief.   The Company and Dain
Bosworth believe  they have  substantial and meritorious defenses
available  and  are  defending  themselves  vigorously  in  these
actions.

  Rauscher Pierce Refsnes and one of its officers have been named
as defendants  in  an  action  brought  by  the  Federal  Deposit
Insurance Corporation  ("FDIC"), as  successor to  The Resolution
Trust Corporation  (the "RTC"),  alleging negligence,  breach  of
contract, breach  of fiduciary  duty and fraud in connection with
the May  1991 sale  by the  RTC of  the stock  of WESAV  Mortgage
Corporation ("WESAV").   Rauscher  Pierce Refsnes  acted  as  the
broker for  the sale.   Smith  Barney, which  acted as  the RTC's
financial advisor,  Express  America  Holdings  Corporation,  the
successor to  the winning bidder, and certain individual officers
of Express  America and  WESAV were  also named  as defendants in
this action;  however, the  Company understands  such  defendants
reached settlements  in principle  with the FDIC in late February
1997.   The plaintiff  seeks alleged damages of approximately $15
million and  punitive damages  of $60  million.   Rauscher Pierce
Refsnes  and  its  officer  believe  they  have  substantial  and
meritorious  defenses  available  and  are  defending  themselves
vigorously in this action.

  Rauscher Pierce  Refsnes has  also been named as a defendant in
an action  brought by  Orange County,  California, in  connection
with five  note offerings for an aggregate of $975 million by the
County in  June through  August of 1994.  The County alleges that
Rauscher  Pierce  Refsnes  acted  as  its  financial  advisor  in
connection with  these offerings  and that, by failing to apprise
it of  the alleged risks involved in the Orange County Investment
Pool  (the   "OCIP")  and   prevent  the  issuance  of  allegedly
inaccurate official  statements, Rauscher  Pierce Refsnes  became
liable for breach of contract, professional negligence, breach of
fiduciary duty and aiding and abetting breaches of fiduciary duty
committed by  the County's  Treasurer  and  Assistant  Treasurer.
Rauscher  Pierce   Refsnes  denies   the  County's   allegations,
including those  relating to  Rauscher's role  in connection with
these transactions.   The  County seeks  to recover at least $500
million in  damages for  losses it allegedly suffered in the OCIP
from Rauscher  Pierce Refsnes  and defendants  in other  actions.
Rauscher  Pierce   Refsnes  believes   it  has   substantial  and
meritorious defenses available and is defending itself vigorously
in this action.

  While the  outcome of  any litigation is uncertain, management,
based in  part upon consultation with legal counsel as to certain
of  the   actions  pending   against  the   Company  and/or   its
subsidiaries, believes  that the  resolution of  all such matters
will  not  have  a  material  adverse  effect  on  the  Company's
consolidated financial  condition or results of operations of the
Company as  set forth  in the  consolidated financial  statements
contained herein.

I. Trading Activities and Financial Instruments with Off-Balance-
Sheet Risk

  Dain Bosworth  and  Rauscher  Pierce  Refsnes  are  dealers  in
corporate, tax-exempt  and governmental  fixed income  securities
and corporate  equity securities  and may  recognize  profits  or
losses on  transactions in, or fluctuations in the value of, such
securities held  in inventory.   Internal  guidelines intended to
limit the  size and  risk of  inventories  maintained  have  been
established and are periodically reviewed.  These inventories are
positioned primarily  for distribution  to  Dain  Bosworth's  and
Rauscher Pierce  Refsnes' individual and institutional clients in
order to  meet those  clients' needs.   Revenues  from  principal
transactions for the two years ended December 31, 1996, originate
from the following:

<TABLE>
<CAPTION>
                                                December 31,
                                            ------------------
(In thousands)                                 1996      1995
                                            ------------------
<S>                                         <C>       <C>
Equity securities..........................  $89,251   $87,381
Municipal securities.......................   29,451    33,245
Government securities......................   20,826    27,021
Corporate fixed income securities..........   20,371    20,025
Mortgage-backed and other securities.......    9,141    11,508
                                             -------   -------
                                            $169,040  $179,180
                                             =======   =======
</TABLE>

  Dain Bosworth  and Rauscher  Pierce Refsnes sell securities not
yet purchased  (short sales)  for their own accounts primarily to
hedge their  fixed income trading inventories.  The establishment
of short  positions  exposes  the  Company  to  off-balance-sheet
market risk  in the  event prices increase, as the Company may be
obligated to acquire the securities at prevailing market prices.

  The  Company  periodically  hedges  its  fixed  income  trading
inventories  with   financial  futures  or  interest-rate  option
contracts.   The Company may also trade treasury option contracts
for its  own account to minimize interest rate risk.  At December
31, 1996 and 1995, respectively, the Company had open commitments
under financial  futures contracts  with notional amounts of $6.9
million and  $3.0 million.  At December 31, 1995, the Company had
open commitments to purchase $27.5 million and sell $25.0 million
of treasury  securities under  option contracts.  The Company had
no such  open option  contracts at December 31, 1996 and owned no
interest rate option contracts at December 31, 1996 or 1995.  The
fair market value of these option and financial futures contracts
was not  material at December 31, 1996 or 1995.  In addition, the
average fair  market value  and trading  revenues associated with
these contracts  during 1996  and 1995  were not  material.  Such
option and financial futures contracts expose the Company to off-
balance-sheet market  risk in  the  event  that  the  changes  in
interest rates  do not  closely correlate  with the change in the
inventory price.  Transactions in futures contracts are conducted
through  regulated   exchanges  which  guarantee  performance  of
counterparties and  are settled in cash on a daily basis, thereby
minimizing credit risk.   Maintaining futures contracts typically
requires the  Company to  deposit  cash  or  securities  with  an
exchange or  other financial  intermediary as  security  for  its
obligations.  Additional cash or securities may be required to be
deposited thereafter  due to  fluctuations in the market value of
the futures  contract.   In writing option contracts, the Company
receives a  premium from  the purchaser in exchange for incurring
an obligation to purchase or sell securities upon exercise of the
option.    These  obligations may require the Company to purchase
securities at prices higher than prevailing market prices or sell
securities at  prices below  prevailing market prices in order to
fulfill its  obligations under  the contracts.    Other  than  as
described, the  Company does  not  enter  into  foreign  currency
contracts or  other derivative  financial instruments  with  off-
balance-sheet risk.

  In the  normal course  of  business  the  Company's  activities
involve  the  execution,  settlement  and  financing  of  various
securities transactions.  These activities may expose the Company
to off-balance-sheet  credit and  market risks  in the  event the
customer or  counterparty is  unable to  fulfill its  contractual
obligations.   Such risks  may be  increased by  volatile trading
markets.

  In the  normal course  of business  the securities subsidiaries
enter into  when-issued underwriting  and  purchase  commitments.
Transactions relating  to such  commitments open  at year end and
subsequently settled  had no  material effect on the consolidated
financial statements.

  The Company  seeks to  control the  risks associated  with  its
customer activities  by requiring  customers to  maintain  margin
collateral in  compliance with  various regulatory  and  internal
guidelines.   The Company  monitors required  margin levels daily
and, pursuant  to such  guidelines, requires customers to deposit
additional collateral  or to  reduce  positions  when  necessary.
Market declines  could, however,  reduce the  value of collateral
below the  amount  loaned,  plus  accrued  interest,  before  the
collateral could be sold.

  A portion  of the Company's customer activity involves the sale
of securities  not yet purchased (short sales) and the writing of
option contracts.  Such transactions  may require  the Company to
purchase or  sell  financial  instruments  at  prevailing  market
prices in order to fulfill the customer's obligations.

  The  Company   lends  money   subject  to   reverse  repurchase
agreements. All positions are collateralized, primarily with U.S.
government or  U.S. government  agency securities.   The  Company
generally takes physical possession of securities purchased under
agreements to resell. Such transactions may expose the Company to
risk in  the event  such borrowers do not repay the loans and the
value of  collateral held  is less  than that  of the  underlying
receivable.   These agreements provide the Company with the right
to  maintain   the  relationship  between  market  value  of  the
collateral and the receivable.

  The Company  may pledge  firm or customer margin securities for
bank  loans,  repurchase  agreements,  securities  loaned  or  to
satisfy  margin   deposits  of   clearing  organizations.     All
repurchase agreements  are collateralized  by cash  or securities
delivered by  the Company.   In  the event  the  counterparty  is
unable to  return such  securities pledged,  the Company  may  be
exposed to  the risks  of acquiring  the securities at prevailing
market prices  or holding  collateral possessing  a market  value
less than  that of  the related  pledged securities.  The Company
seeks to  control these  risks by  monitoring the market value of
securities pledged and requiring adjustments of collateral levels
where necessary.   At December 31, 1996, the market value of such
securities pledged approximated the borrowings outstanding.

J.  Regulatory Requirements

  Dain Bosworth  and Rauscher  Pierce Refsnes  are subject to the
Securities and  Exchange Commission's  Uniform Net  Capital Rule.
Interra Clearing, the Company's operations subsidiary, clears and
settles trades  for Dain  Bosworth and  Rauscher  Pierce  Refsnes
(including the  customers  of  Correspondent  Services).  Interra
Clearing carries  all customer accounts, extends margin credit to
customers, pays  interest on  credit balances  of  customers  and
invests any  excess customer  balances.    As  a  result  Interra
Clearing is  subject to  the Uniform Net Capital Rule whereby net
capital of  not less than 2 percent of aggregate debit items must
be maintained.   The  New York  Stock  Exchange,  Inc.  also  may
require  a   member  organization   to  reduce  its  business  if
regulatory net  capital is  less than 4 percent of such aggregate
debit items,  and may  prohibit a  member firm from expanding its
business and  declaring cash  dividends  if  its  regulatory  net
capital is less than 5 percent of such aggregate debit items.  At
December 31,  1996, net  capital was  $74.9  million  at  Interra
Clearing, which  was 7.5  percent of aggregate debit balances and
$25.0 million  in excess  of the  5-percent  requirement.    Dain
Bosworth's and  Rauscher Pierce Refsnes' net capital requirements
are $1.0  million each  as neither firm carries customer balances
on its  balance sheet.   At  December 31, 1996, Dain Bosworth and
Rauscher Pierce  Refsnes had  net capital  of $43.6  million  and
$22.6  million,   respectively,  in   excess  of   their  minimum
requirements.

  Rule 15c3-3  of the  Securities Exchange  Act of 1934 specifies
certain conditions  under  which  brokers  and  dealers  carrying
customer accounts  are required  to maintain  cash  or  qualified
securities in a special reserve account for the exclusive benefit
of  customers.     Amounts  to  be  maintained  are  computed  in
accordance with  a formula  defined in  the Rule. At December 31,
1996, Interra  Clearing had  $15.0 million  segregated in special
reserve accounts.   This amount consisted of qualified securities
purchased under  agreements to  resell and  was collateralized by
U.S. government or government agency securities.

K.  Employee Benefit Plans

  Until December  31, 1996,  the Company  and  its  participating
subsidiaries had  profit sharing  and  stock  bonus  plans  which
covered substantially  all full-time  employees who were at least
21 years of age and had been employed for at least six months.    
Participants could  contribute on a pretax basis up to 12 percent
of eligible  compensation to  the stock  bonus  plan  and/or  the
profit sharing plan subject to certain aggregate limitations; the
Company then  matched up to 5 percent of eligible compensation at
a 40-percent rate.  Matching contributions were limited to $3,000
per employee  annually and were paid to the stock bonus plan.  At
the end  of each  calendar year,  a contribution  to  the  profit
sharing plan  is determined by each participating company's board
of directors.   The minimum contribution is 3 percent of eligible
compensation.   On January  1, 1997,  the  Company  combined  the
Profit Sharing and Stock Bonus Plans into a single plan.

  The Company's  policy is  to fund  currently profit sharing and
stock  bonus   plan  costs.    Earnings  have  been  charged  for
contributions, net of forfeitures, to the above plans as follows:

<TABLE>
<CAPTION>
                                      Year ended December 31,
                                    --------------------------
(In thousands)                       1996      1995      1994
                                    --------------------------
<S>                                 <C>      <C>       <C>
Profit sharing plan...............  $15,993  $14,168   $11,489
Stock bonus plan..................    2,908    2,712     2,763
                                     ------   ------    ------
                                    $18,901  $16,880   $14,252
                                     ======   ======    ======
</TABLE>

L.  Income Taxes

  Income tax expense consists of the following:

<TABLE>
<CAPTION>
                                      Year ended December 31,
                                    --------------------------
(In thousands)                       1996      1995      1994
                                    --------------------------
<S>                                 <C>      <C>       <C>
Current:
   Federal........................  $33,693  $20,183   $16,526
   State..........................    4,609    3,207     3,118
Deferred:
   Federal........................   (6,783)  (2,410)   (4,287)
   State..........................     (928)    (582)   (1,015)
                                     ------   ------    ------
                                    $30,591  $20,398   $14,342
                                     ======   ======    ======
</TABLE>

  A reconciliation of ordinary federal income taxes (based on a
rate of 35 percent) with the actual tax expense provided on
earnings is as follows:

<TABLE>
<CAPTION>
                                      Year ended December 31,
                                    --------------------------
(Dollars in thousands)               1996      1995      1994
                                    --------------------------
<S>                                 <C>      <C>       <C>
Ordinary federal income tax
 expense..........................  $30,571  $19,695   $13,928
State income taxes, net of
 federal tax benefit..............    2,504    1,599     1,367
Tax-exempt interest, net of
 related interest expense.........     (872)  (1,324)     (863)
Other.............................   (1,612)     428       (90)
                                     ------   ------    ------
                                    $30,591  $20,398   $14,342
                                     ======   ======    ======
Effective tax rate................     35.0%    36.3%     36.0%
                                     ======   ======    ======
</TABLE>

  The tax  effects of temporary differences that give rise to the
deferred tax assets and deferred tax liabilities are:
<TABLE>
<CAPTION>
                                                 December 31,
                                             -------------------
(In thousands)                                  1996      1995
                                             -------------------
<S>                                           <C>       <C>
Deferred tax assets:
  Accruals not currently deductible........   $36,025   $27,473
  Tax attributes acquired..................     1,632     2,443
  Fixed assets.............................     1,573     1,516
  Other....................................       514       575
                                               ------    ------
                                               39,744    32,007
                                               ------    ------
Deferred tax liabilities:
  Other....................................       (40)      (14)
                                               ------    ------
                                              $39,704   $31,993
                                               ======    ======
</TABLE>

  The Company has determined that it is not required to establish
a valuation allowance for the deferred tax asset since it is more
likely than  not that  the deferred  tax asset  will be  realized
principally through  carryback to  taxable income in prior years,
and future  reversals of  existing taxable temporary differences,
and, to  a lesser  extent, future taxable income.   The Company's
conclusion that  it is  "more likely  than not" that the deferred
tax asset  will be realized is based on federal taxable income of
over $185  million in  the carryback  period,  substantial  state
taxable income  in the carryback period, as well as prospects for
continued earnings.

<TABLE>
                 INTERRA FINANCIAL INCORPORATED
                 QUARTERLY FINANCIAL INFORMATION
       (Unaudited, in thousands, except per-share amounts)

<CAPTION>
                          First     Second    Third     Fourth
                         Quarter   Quarter   Quarter   Quarter
                         --------------------------------------
<S>                      <C>       <C>       <C>       <C>
1996

Net revenues..........   $156,034  $153,843  $151,035  $164,844
                          =======   =======   =======   =======
Earnings before
 income taxes.........    $23,289   $19,954   $19,984   $24,175
                          =======   =======   =======   =======
Net earnings..........    $15,080   $13,028   $12,990   $15,713
                          =======   =======   =======   =======
Per share data:
 Primary net earnings
 per share............      $1.20     $1.03     $1.02     $1.21
                          =======   =======   =======   =======
 Fully diluted net
 earnings per share...      $1.20     $1.03     $1.01     $1.21
                          =======   =======   =======   =======
 Dividends............       $.11      $.15      $.15      $.15
                          =======   =======   =======   =======

1995

Net revenues..........   $118,841  $130,373  $143,106  $149,650
                          =======   =======   =======   =======
Earnings before
 income taxes.........     $8,726   $13,547   $16,966   $17,032
                          =======   =======   =======   =======
Net earnings..........     $5,563    $8,636   $10,816   $10,858
                          =======   =======   =======   =======
Per share data:
 Primary net earnings
 per share............       $.45      $.69      $.86      $.86
                          =======   =======   =======   =======
 Fully diluted net
 earnings per share...       $.45      $.69      $.85      $.86
                          =======   =======   =======   =======
 Dividends.............  $.10-2/3  $.10-2/3  $.10-2/3  $.10-2/3
                          =======   =======   =======   =======
</TABLE>

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

       None.

                            PART III
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

     See Part  I, Item  4 of  this Annual  Report for information
with respect  to  executive  officers  of  the  Company.    Other
information  required  in  Item  10  will  be  contained  in  the
Company's definitive  Proxy Statement  to be  filed  pursuant  to
Regulation 14A within 120 days after the close of the fiscal year
for which  this Report  is filed  and is  incorporated herein  by
reference.

ITEM 11.  EXECUTIVE COMPENSATION:

     The information required in Item 11 will be contained in the
Company's definitive  Proxy Statement  to be  filed  pursuant  to
Regulation 14A within 120 days after the close of the fiscal year
for which  this Report  is filed  and is  incorporated herein  by
reference, except  that, pursuant to Item 402(a)(8) of Regulation
S-K, the  information to be contained in the Company's definitive
Proxy Statement in response to paragraphs (k) and (l) of Item 402
is not incorporated by reference herein.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:

     The information required in Item 12 will be contained in the
Company's definitive  Proxy Statement  to be  filed  pursuant  to
Regulation 14A within 120 days after the close of the fiscal year
for which  this Report  is filed  and is  incorporated herein  by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

     The information required in Item 13 will be contained in the
Company's definitive  Proxy Statement  to be  filed  pursuant  to
Regulation 14A within 120 days after the close of the fiscal year
for which  this Report  is filed  and is  incorporated herein  by
reference.

                             PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K:

(a)    Documents filed as part of this Report:
                                                           Page
                                                           ----
1.  Financial statements:
    Reference is made to the table of contents to
    financial statements and financial statement
    schedule hereinafter contained.......................   42

2.  Financial statement schedules:
    Reference is made to the table of contents to
    financial statements and financial statement
    schedule hereinafter contained for all other
    financial statement schedules........................   42

3.  Exhibits:

Item No.       Item                          Method of Filing
----------------------------------------------------------------------
3.1     Restated    Certificate   of   Incorporated  by  reference  to
        Incorporation of the Company.  Exhibit 4.1  to  the  Company's
                                       Registration Statement  on Form
                                       S-8 dated  March 14, 1995, File
                                       No. 33-58069.

3.2     Amended and Restated Bylaws    Incorporated  by  reference  to
        of the Company.                Exhibit 3.1  to  the  Company's
                                       Quarterly Report  on Form  10-Q
                                       dated September 30, 1996.

4.1     Credit Agreement dated June    Incorporated  by  reference  to
        29, 1995.                      Exhibit 4.1  to  the  Company's
                                       Quarterly Report  on Form  10-Q
                                       dated June 30, 1995.

4.2     First Amendment  to  Credit    Incorporated  by  reference  to
        Agreement dated  March  14,    Exhibit 4.2  to  the  Company's
        1996.                          Annual Report  on Form 10-K for
                                       the  year  ended  December  31,
                                       1995.

4.3     Term Loan  Agreement  dated    Incorporated  by  reference  to
        October 16, 1992.              Exhibit 4(e)  to the  Company's
                                       Annual Report  on Form 10-K for
                                       the  year  ended  December  31,
                                       1992.

4.4     First  Amendment   to  Term    Incorporated  by  reference  to
        Loan Agreement  dated March    Exhibit 4(g)  to the  Company's
        12, 1993.                      Annual Report  on Form 10-K for
                                       the  year  ended  December  31,
                                       1992.

4.5     Second  Amendment  to  Term    Incorporated  by  reference  to
        Loan Agreement  dated  June    Exhibit 4(b)  to the  Company's
        23, 1993.                      Current  Report   on  Form  8-K
                                       dated July 15, 1993.

4.6     Third  Amendment   to  Term    Incorporated  by  reference  to
        Loan    Agreement     dated    Exhibit 4(b)  to the  Company's
        November 30, 1993.             Current  Report   on  Form  8-K
                                       dated February 11, 1994.

4.7     Fourth  Amendment  to  Term    Incorporated  by  reference  to
        Loan Agreement  dated  June    Exhibit 4  (b) to the Company's
        27, 1994.                      Quarterly Report  on Form  10-Q
                                       dated June 30, 1994.

4.8     Fifth  Amendment  to  Term-    Incorporated  by  reference  to
        Loan    Agreement     dated    Exhibit 4  (b) to the Company's
        September 30, 1994.            Current  Report   on  Form  8-K
                                       dated September 26, 1994.

4.9     Sixth  Amendment  to  Term-    Incorporated  by  reference  to
        Loan Agreement  dated  June    Exhibit 4  (b) to the Company's
        29, 1995.                      Quarterly Report  on form  10-Q
                                       dated June 30, 1995.

4.10    Seventh    Amendment     to    Incorporated  by  reference  to
        Term-Loan  Agreement  dated    Exhibit 4.10  to the  Company's
        March 15, 1996.                Annual Report  on Form 10-K for
                                       the  year  ended  December  31,
                                       1995.

10.1*   1986  Stock   Option  Plan,    Incorporated  by  reference  to
        as  amended  on  April  24,    Exhibit 10(b)  to the Company's
        1987,   May 9,  1990, March    Current  Report   on  Form  8-K
        3, 1993 and April 27, 1993.    dated July 15, 1993.

10.2    Form      of      Indemnity    Incorporated  by  reference  to
        Agreement  with   Directors    Exhibit 10(c)  to the Company's
        and   Officers    of    the    Annual Report  on Form 10-K for
        Company.                       the  year  ended  December  31,
                                       1990.

10.3*   Form    of     Non-Employee    Incorporated  by  reference  to
        Director         Retirement    Exhibit 10(g)  to the Company's
        Compensation Agreement.        Annual Report  on Form 10-K for
                                       the  year  ended  December  31,
                                       1992.

10.4*   IFG   Executive    Deferred    Incorporated  by  reference  to
        Compensation   Plan   dated    Exhibit 10(a)  to the Company's
        March 31, 1993.                Current  Report   on  Form  8-K
                                       dated July 15, 1993.

10.5    Trust  Agreement  for   IFG    Incorporated  by  reference  to
        Executive          Deferred    Exhibit 10.5  to the  Company's
        Compensation   Plan   dated    Annual  Report   on  Form  10-K
        February 11, 1994.             dated December 31, 1994.

10.6*   Offer of   Employment   and    Incorporated  by  reference  to
        Restricted Stock Agreements    Exhibit 10.7  to the  Company's
        between  the   Company  and    Annual Report  on Form 10-K for
        Louis  C.   Fornetti  dated    the  year  ended  December  31,
        July 14, 1995, and July 17,    1995.
        1995, respectively.
  
10.7*   1996 Stock Incentive Plan      Incorporated  by  reference  to
                                       Exhibit  10  to  the  Company's
                                       Quarterly Report  on Form  10-Q
                                       dated March 31, 1996.

10.8*   Agreement    between    the    Incorporated  by  reference  to
        Company and  David A. Smith    Exhibit 10.1  to the  Company's
        dated September 26, 1995.      Quarterly Report  on Form  10-Q
                                       dated September 30, 1995.

11*     Computation of net earnings    Filed herewith.
        per share.

21      List of subsidiaries.          Filed herewith.

23      Independent       Auditors'    Filed herewith.
        consent.

24      Power of attorney.             Filed herewith

27      Financial Data Schedule        Filed herewith.

*  Management contract or compensatory plan or arrangement required to
   be filed as an exhibit pursuant to Item 14(c) of this report.

(b)   No reports  on Form  8-K were filed during the fourth quarter of
      1996.

REPORT FOR EMPLOYEE STOCK PURCHASE PLAN:

     The financial  statements required  by Form  11-K with respect to
the Company's Retirement Plan will be filed by amendment hereto within
180 days of such plan's fiscal year end as permitted by Rule 15d-21.

<PAGE>

                              SIGNATURES

     Pursuant to  the requirements  of Section  13  or  15(d)  of  the
Securities Exchange  Act of  1934, the Registrant has duly caused this
Report to  be signed  on its  behalf by the undersigned thereunto duly
authorized.

                                INTERRA FINANCIAL INCORPORATED

                                By   Louis C. Fornetti
                                     --------------------------
                                     Louis C. Fornetti
                                 Executive Vice President and
                                   Chief Financial Officer
                                    Dated: March 21, 1997

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

Signature                      Title
---------------------------------------------------------------------
Irving Weiser                  Chairman of the Board, President,
-------------------------      Chief Executive Officer and Director
Irving Weiser                  (Principal Executive Officer)

Louis C. Fornetti              Executive Vice President,
-------------------------      Chief Financial Officer
Louis C. Fornetti              (Principal Financial Officer)

Daniel J. Reuss                Senior Vice President, Controller and
-------------------------      Treasurer
Daniel J. Reuss                (Principal Accounting Officer)

John C. Appel                  Executive Vice President and Director
-------------------------
John C. Appel           

William A. Johnstone           Executive Vice President and Director
-------------------------
William A. Johnstone

J. Evans Attwell               Director
-------------------------
J. Evans Attwell

Susan S. Boren                 Director
-------------------------
Susan S. Boren

F. Gregory Fitz-Gerald         Director           Louis C. Fornetti
-------------------------                    By   ------------------
F. Gregory Fitz-Gerald                            Louis C. Fornetti
                                           Pro Se and as Attorney-in-Fact
                                              Dated:  March 21, 1997

C.A. Rundell, Jr.              Director
-------------------------
C.A. Rundell, Jr.
                                           
Robert L. Ryan                 Director
-------------------------
Robert L. Ryan

Arthur R. Schulze, Jr.         Director
-------------------------
Arthur R. Schulze, Jr.

<PAGE>

           INTERRA FINANCIAL INCORPORATED AND SUBSIDIARIES
        FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

            As of December 31, 1996 and 1995 and for each
                of the years in the three-year period
                       ended December 31, 1996
                                   
                          TABLE OF CONTENTS

                                                                  Page
                                                                  ----
Independent Auditors' Report.......................................22
Consolidated Financial Statements:
     Consolidated statements of operations.........................23
     Consolidated balance sheets...................................24
     Consolidated statements of shareholders' equity...............25
     Consolidated statements of cash flows.........................26
     Notes to consolidated financial statements....................27
Financial Statement Schedule:
     Schedule III - Condensed financial information of
      the registrant...............................................43

     Schedules not listed above  have  been  omitted  because they are
either not applicable or the required information has been provided in
the consolidated financial statements or notes thereto.

<TABLE>
           SCHEDULE III -- CONDENSED FINANCIAL INFORMATION
                           OF THE REGISTRANT
                                   
                    INTERRA FINANCIAL INCORPORATED
                           (Parent Company)
                                   
                       STATEMENTS OF OPERATIONS
                            (In thousands)
<CAPTION>
                                       Year ended December 31,
                                   -----------------------------
                                      1996      1995      1994
                                   -----------------------------
<S>                                  <C>       <C>       <C>
Revenues:
 Management fees..................   $9,373    $5,980    $3,650
 Facilities rental................    1,058     1,057     1,056
 Interest.........................    1,743     1,365     1,126
                                     ------    ------    ------
                                     12,174     8,402     5,832
                                     ------    ------    ------
Expenses:
 Compensation and benefits........    8,010     4,988     3,002
 Interest.........................    2,011     1,947     1,386
 Other operating expenses.........    8,619     5,960     3,967
                                     ------    ------    ------
                                     18,640    12,895     8,355
                                     ------    ------    ------
Loss before income taxes and
 equity in subsidiaries' earnings.   (6,466)   (4,493)   (2,523)
Income tax benefit................    2,520     1,929       953
                                     ------    ------    ------
Loss before equity in
 subsidiaries' earnings...........   (3,946)   (2,564)   (1,570)

Equity in subsidiaries' earnings..   60,757    38,437    27,023
                                     ------    ------    ------
Net earnings......................  $56,811   $35,873   $25,453
                                     ======    ======    ======

See accompanying notes to condensed financial information.
</TABLE>

<TABLE>

           SCHEDULE III -- CONDENSED FINANCIAL INFORMATION
                   OF THE REGISTRANT -- (Continued)
                                   
                    INTERRA FINANCIAL INCORPORATED
                           (Parent Company)                                   
                            BALANCE SHEETS
                            (In thousands)
<CAPTION>
                                                December 31,
                                            -------------------
                                               1996      1995
                                            -------------------
<S>                                          <C>       <C>
Assets:
 Cash....................................     $1,070      $918
 Advances to subsidiaries (eliminated
  in consolidation)......................     28,419    28,130
 Equipment, leasehold improvements and
  building, at cost, less accumulated
  depreciation of $12,498 and $8,484,
  respectively...........................     16,428    13,976
 Investment in subsidiaries, at cost,
  plus equity in undistributed earnings
  (eliminated in consolidation)..........    348,894   283,276
 Other assets............................      5,446     4,611
                                             -------   -------
                                            $400,257  $330,911
                                             =======   =======
Liabilities and Shareholders' Equity:
Liabilities:
Advances from subsidiaries (eliminated
 in consolidation).......................    $87,630   $72,144
 Accounts payable and accrued expenses...     30,137    27,215
 Capital lease obligations and other debt      6,604     9,058
                                             -------   -------
                                             124,371   108,417
                                             -------   -------
Shareholders' equity:
 Common stock............................      1,522     1,508
 Additional paid-in capital..............     81,316    76,623
 Retained earnings.......................    193,048   144,363
                                             -------   -------
                                             275,886   222,494
                                             -------   -------
                                            $400,257  $330,911
                                             =======   =======

See accompanying notes to condensed financial information.
</TABLE>

<TABLE>
           SCHEDULE III -- CONDENSED FINANCIAL INFORMATION
                   OF THE REGISTRANT -- (Continued)

                    INTERRA FINANCIAL INCORPORATED
                           (Parent Company)

                       STATEMENTS OF CASH FLOWS
                            (In thousands)
<CAPTION>
                                          Year ended December 31,
                                        ----------------------------
                                         1996      1995      1994
                                        ----------------------------
<S>                                      <C>       <C>       <C>
Cash flows from operating activities:
Net earnings..........................   $56,811   $35,873   $25,453
Non-cash items included in earnings:
 Equity in net earnings of
 subsidiaries.........................   (60,788)  (38,437)  (27,023)
 Depreciation and amortization........     4,014     3,299     3,537
                                          ------    ------    ------
                                              37       735     1,967
Change in operating assets and
 liabilities..........................     7,054     4,423     3,617
                                          ------    ------    ------
Cash provided by operating activities.     7,091     5,158     5,584
                                          ------    ------    ------
Cash flows from financing activities:
Proceeds from:
 Advances from subsidiaries, net......    15,197    15,829         -
 Issuance of common stock.............     1,580     2,368       458
 Revolving credit agreement...........         -         -    15,000
 Long-term debt.......................         -         -       237
Payments for:
 Dividends on common stock............    (6,792)   (5,177)   (4,536)
 Capital leases and other  debt.......    (2,454)   (2,473)   (2,340)
 Purchases of common stock............    (1,341)   (6,849)   (3,638)
 Revolving credit agreement...........         -   (15,000)        -
 Advances to subsidiaries, net........         -         -    (5,763)
                                          ------    ------    ------
Cash provided (used) by financing
 activities...........................     6,190   (11,302)     (582)
                                          ------    ------    ------
Cash flows from investing activities:   
 Dividends from subsidiaries..........    13,170    18,700     8,468
 Investment in subsidiaries...........   (18,000)   (9,000)   (8,300)
 Purchases of fixed assets............    (8,299)   (3,513)   (4,340)
                                          ------    ------    ------
Cash provided (used) by investing
 activities...........................   (13,129)    6,187    (4,172)
                                          ------    ------    ------
Increase in cash......................       152        43       830
Cash at beginning of year.............       918       875        45
                                          ------    ------    ------
Cash at end of year...................    $1,070      $918      $875
                                          ======    ======    ======

See accompanying notes to condensed financial information.

</TABLE>

           SCHEDULE III -- CONDENSED FINANCIAL INFORMATION
                   OF THE REGISTRANT -- (Continued)     
                    INTERRA FINANCIAL INCORPORATED
                           (Parent Company)

               NOTES TO CONDENSED FINANCIAL INFORMATION

A. The   condensed   financial   statements   of   Interra   Financial
   Incorporated (Parent  Company), should  be read in conjunction with
   the  consolidated   financial  statements   of  Interra   Financial
   Incorporated, and the notes thereto beginning on Page 21.

B. Investments in  subsidiaries are  carried at  cost plus  equity  in
   undistributed earnings.   See  Note  J  to  consolidated  financial
   statements for  information regarding  net capital  requirements of
   the broker-dealer subsidiaries which could result in restriction on
   the ability  of the subsidiaries to transfer funds to the parent in
   the form of loans, advances or cash dividends.

   The Parent  Company utilizes  loans  from  two  of  its  subsidiary
   broker-dealers, Dain Bosworth and Rauscher Pierce Refsnes, in order
   to capitalize  its third  broker-dealer, Interra  Clearing Services
   Inc.  During 1996 and 1995, respectively, the Parent received loans
   totaling $17 million and $9 million from Dain Bosworth and Rauscher
   Pierce Refsnes  in order to add to Interra Clearing's capital.  See
   Item  1(c)   "Securities  Business   -  Customer   Financing"   and
   "Securities Business - Uniform Net Capital Rule."

C. Other Debt:

   Other debt  is used  primarily to  finance equipment  and  building
   improvements and  is payable  in monthly and quarterly installments
   and bears interest at floating rates which approximated 8.3 percent
   at December  31, 1996.   The  Parent Company  must maintain certain
   levels of net worth under one of the debt agreements.

   Annual principal  payments on  other  debt  (excluding  obligations
   under capital  leases) during  the next  four years are as follows:
   1997 - $813,000; 1998 - $16,000; 1999 and thereafter - $0.

D. Commitments:

   At December  31, 1996,  the Parent Company has guaranteed the $20.7
   million outstanding  balance of  four-year subordinated  bank  debt
   incurred by  Dain Bosworth and Rauscher Pierce Refsnes in September
   and October  1994.   See  Note  F  to  the  consolidated  financial
   statements.

   Aggregate minimum  rental commitments  as of December 31, 1996, are
   as follows:
     
<TABLE>
<CAPTION>
(In thousands)                     Capital leases    Operating leases
---------------------------------------------------------------------
<S>                                     <C>              <C>
1997..............................      $1,336           $2,268
1998..............................       1,076            1,373
1999..............................         940              833
2000..............................         940              705
2001..............................         940              705
Thereafter........................       5,953            4,386
                                         -----           ------
                                        11,185          $10,270
Less amount representing interest.      (5,410)          ======
Present value of minimum lease          ------
  payments........................      $5,775
                                        ======
</TABLE>