SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                                                                  

                                   FORM 10K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED JULY 31, 1996
                           COMMISSION FILE NO. 1-9015
                                                                  

                              MORGAN KEEGAN, INC.
            (Exact name of Registrant as specified in its charter)
                                                              
          
        Tennessee                                        62-1153850
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

                              Fifty Front Street
                              Memphis, Tennessee
                                     38103
    Registrant's telephone number, including area code: (901) 524-4100
                                                                            

    Title of each class            Name of each exchange on which registered
Common Stock, $.625 par value               New York Stock Exchange, Inc.
         Securities registered pursuant to Section 12 (g) of the Act
                   Common Stock, par value $.625 per share
                               (Title of Class)

  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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days.  Yes X     No    .

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (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 references in Part III of
this Form 10-K or any amendment to this Form 10-K.

  At October 11, 1996, the Registrant had approximately 20,427,631 shares of
Common Stock outstanding.  The aggregate market value of Common Stock held by
non-affiliates was approximately $324,288,642.

                DOCUMENTS INCORPORATED HEREIN BY REFERENCE:
  Portions of the Registrant's Annual Report to Shareholders for the year
ended July 31, 1996, which has been furnished to the Commission pursuant to
Regulation 240.14a(3) (c), are incorporated by reference into Parts I and II
of this Report on Form 10-K.  Portions of the Proxy Statement to be used in
connection with the solicitation of proxies to be voted at the Registrant's
annual meeting of shareholders to be held November 22, 1996, which will be
filed with the Commission pursuant to Regulation 240.14a(6)(c) prior to
October 18, 1996, are incorporated by reference into Part III and Part IV of 
this Report on Form 10-K.
PAGE
<PAGE>
<PAGE>                                 PART I

Item 1. BUSINESS

General

  Morgan Keegan, Inc. (Registrant) is a holding company whose principal
subsidiary, Morgan Keegan & Company, Inc. (M.K. & Co.) is a regional
securities broker/dealer serving retail customers in the southeastern United
States and institutional clients throughout the United States and abroad. 
The Registrant has very few operations and substantially all of the
Registrant's consolidated revenues are generated through the broker/dealer
subsidiary.  The subsidiary is a trader, broker and underwriter of fixed
income and equity securities and provides related financial services in
support of its broker/dealer activities.  Products offered by M.K. & Co.
include stocks; corporate and tax-exempt bonds; U.S. Government, agency and
guaranteed securities; tax advantaged investments; options; investment and
advisory services; a money market fund; and a regional mutual fund managed by
Morgan Asset Management, Inc., a subsidiary of the Registrant.  M.K. & Co.
also produces capital raising services for corporate and government clients,
margin credit for individual customers, research, and economic and business
analysis of financial and stock market data for its customers.  The
percentage (%) of total revenues derived from the various business areas is
as follows:
<TABLE>
                                                Year Ended July 31
                                          1996         1995         1994
<S>                                       <C>          <C>          <C>
Institutional clients                       24           26           31

Retail customers                            45           44           41

Investment banking fees, interest and
  other activities                          31           30           28

Total                                      100          100          100
</TABLE>
  M.K. & Co. is a two seat member of the New York Stock Exchange, Inc.
("NYSE"), owns seats on the American Stock Exchange, Inc. ("AMEX"); the New
York Financial Futures Exchange, Inc. ("NYFE"); the Philadelphia Stock
Exchange, Inc. ("PHLX"); the Chicago Board of Options Exchange, Inc. ("CBOE")
and the Chicago Stock Exchange ("CSE").  Certain seats are leased to third
parties under agreements which may be canceled by either party on 30 days'
notice.  M.K. & Co. is a member of the National Association of Securities
Dealers ("NASD"), the Securities Industry Association, and the Securities
Investor Protection Corporation ("SIPC").  SIPC provides protection for
customers up to $500,000 each, with a limitation of $100,000 for claims for
cash balances.
PAGE
<PAGE>
<PAGE>
  M.K. & Co. has thirty-five offices in twelve states.  The following table
reflects the number of account executives in each office as of July 31, 1996:
<TABLE>
                          Account                                  Account
Office                   Executives      Office                   Executives
<S>                      <C>             <S>                      <C>
Birmingham, Alabama          34          New Orleans, Louisiana      22

Decatur, Alabama              5          Shreveport, Louisiana       13

Fairhope, Alabama             1          Boston, Massachusetts        4

Huntsville, Alabama          14          Jackson, Mississippi        25

Mobile, Alabama              16          New York, New York           5

Montgomery, Alabama          25          Durham, North Carolina       8

Little Rock, Arkansas        44          Raleigh, North Carolina      6

Rogers, Arkansas              5          Wilmington, North Carolina   5

Ft. Lauderdale, Florida       6          Jackson, Tennessee           6

Pensacola, Florida            6          Knoxville, Tennessee        25

Athens, Georgia               4          Memphis, Tennessee          

Atlanta, Georgia             24                Headquarters         109

Bowling Green, Kentucky       5                Suburban Offices      38

Lexington, Kentucky           7          Nashville, Tennessee        25

Louisville, Kentucky         22          Austin, Texas               27

Baton Rouge, Louisiana       15          Dallas, Texas                7

Lafayette, Louisiana          9          Houston, Texas              29
                                             
     TOTAL                                                          596
</TABLE>
PAGE
<PAGE>
<PAGE>
Revenues by Source

  The following table sets forth the Registrant's consolidated revenues
indicated in dollars and as a percentage of total revenues for the periods:
<TABLE>
                                         (Dollars in Thousands)
                                           Year Ended July 31              

                                 1996           1995           1994

                            Amount     %     Amount     %     Amount     % 
<S>                        <C>        <C>   <C>        <C>   <C>        <C>
REVENUES
  Commissions
    Listed securities       $26,467   8.78   $21,246   9.32   $22,748   9.81
    Over-the-counter
        securities           21,849   7.25    12,624   5.54    10,076   4.35
    Options                   3,243   1.08     2,631   1.15     1,990   0.86
    Other                    16,311   5.41     9,661   4.24    11,723   5.06
      TOTAL                  67,870  22.52    46,162  20.25    46,537  20.08

  Principal transactions
    Corporate securities     59,567  19.76    36,724  16.10    33,541  14.47
    Municipal securities     16,345   5.42    16,404   7.19    14,135   6.10
    U.S. Government
        obligations          39,291  13.04    33,982  14.90    41,746  18.02

     TOTAL                  115,203  38.22    87,110  38.19    89,422  38.59

  Investment banking
    Corporate securities     25,990   8.62    25,009  10.97    32,850  14.18
    Municipal securities      2,427   0.81     1,926   0.84     4,059   1.75
    Underwriting, management
        and other fees       21,884   7.26    18,259   8.01    18,923   8.17
      TOTAL                  50,301  16.69    45,194  19.82    55,832  24.10

  Interest
    Interest on margin
        balances             19,752   6.55    17,519   7.68    10,824   4.67
    Interest on securities
        owned                30,171  10.01    20,261   8.88    14,070   6.07
      TOTAL                  49,923  16.56    37,780  16.56    24,894  10.74 

   Other Income              18,109   6.01    11,826   5.18    15,035   6.49
 
      TOTAL REVENUES      $301,406  100.0  $228,072  100.0  $231,720  100.0

</TABLE>
  Because of the interdependence of various activities and departments of the
Registrant's business, and the arbitrary assumptions involved in allocating
overhead, including administrative, communications and securities processing
expenses, it is not possible to state the percentage contribution to net
income of each aspect of the Registrant's operations.
PAGE
<PAGE>
<PAGE>
Institutional Business

  During the three years ended July 31, 1996, approximately 27% of the
Registrant's total consolidated revenues were derived from institutional
clients.  M.K. & Co.'s institutional clients include mutual funds, commercial
banks, thrift institutions, insurance companies, pension funds and private
money managers.  Most of these clients are located in the United States;
however, some are located abroad, principally in the United Kingdom and
Canada.  In the fiscal year ended July 31, 1996, no single institutional
client accounted for more than 2% of the Registrant's total revenues.  M.K.
& Co.'s institutional clients purchase or sell fixed income and equity
securities primarily in large dollar amounts; transactions in these
securities are usually executed for these clients on a principal basis.  See
PRINCIPAL TRANSACTIONS.  M.K. & Co. also provides other services, including
research, to its institutional clients.

  For the fiscal years ended July 31, 1996, 1995, and 1994, institutional
revenues and percentages of total consolidated revenues were $73,468,000
(24%), $60,097,000 (26%) and $72,774,000 (31%), respectively.

Retail Business

  During each of the three years ended July 31, 1996, approximately 43% of
the Registrant's total revenues were derived from transactions with retail
(individual) customers.  For the fiscal years ended July 31, 1996, 1995, and
1994, such revenues of total consolidated revenues were $134,807,000 (45%),
$100,239,000 (44%), and $95,576,000 (41%), respectively.

  Retail commissions are charged on both exchange and over-the-counter
transactions in accordance with a schedule which M.K. & Co. has formulated. 
In certain cases, discounts from the schedule are granted to retail
customers, generally on large trades or to active customers.  In addition to
acting as a broker/dealer for its retail customers, M.K. & Co. supplies them
with equity and fixed income research, conducts seminars and makes available
personal financial planning services.

  Transactions in securities may be executed on either a cash or margin
basis.  As a service to its retail customers, M.K. & Co. provides margin
accounts which allow the customer to pay less than the full cost of a
security purchased, the balance of the purchase price being provided by M.K.
& Co. as a loan secured by the securities purchased.  The amount of the loan
is subject to the margin requirements (Regulation T) of the Board of
Governors of the Federal Reserve System, NYSE margin requirements, and M.K.
& Co. internal policies, which in some instances are more stringent than
Regulation T or exchange requirements.  In permitting customers to purchase
securities on margin, M.K. & Co. bears the risk of a market decline which
could reduce the value of its collateral below the customers' indebtedness. 
Interest charged on customer margin accounts represented approximately 6.6%
of total revenues in fiscal 1996.

Principal Transactions

  M.K. & Co. trades for its own account in corporate and tax-exempt
securities and U.S. government, agency and guaranteed securities.  Most of
these transactions are entered into in order to facilitate the execution of
customers' orders to buy or sell these securities.  In addition, it trades
certain equity securities in order to "make a market" in these securities. 
<PAGE>
<PAGE>As of July 31, 1996, the Registrant made a market in common stock or
other equity securities of approximately 178 corporations, many of which are
stocks followed by its research department.
  M.K. & Co.'s trading activities require the commitment of capital.  All
principal transactions place the Registrant's capital at risk.  Profits and
losses are dependent upon the skills of employees and market fluctuations. 
In some cases, in order to hedge the risks of carrying inventory, MK & Co.
enters into transactions for U.S. Treasury note futures.  The following table
sets forth for the year ended July 31, 1996, the highest, lowest and average
month-end inventories (including the aggregate of both long and short
positions) for the types of securities in which M.K. & Co. acts as principal:
<TABLE>
                                   Highest         Lowest          Average
                                  Inventory       Inventory       Inventory
<S>                             <C>             <C>             <C>
Common stocks                   $ 34,207,250    $ 16,029,898    $ 20,557,670

Corporate debt securities         47,892,718      26,617,863      38,283,982

Tax-exempt securities            128,696,669      45,882,495      79,634,822

U.S. government, agency, 
 and guaranteed securities       229,145,299     145,894,183     200,377,278

</TABLE>


The following table sets forth the composition of revenues from principal
transactions: 
<TABLE>
                                           Year Ended July 31              
                                 1996             1995             1994     

                              Amount    %      Amount     %      Amount    % 
<S>                       <C>           <C> <C>          <C> <C>         <C>
Common stocks             $ 52,206,040  45  $31,123,000  36  $27,055,067  30

Corporate debt securities    7,361,130   7    5,601,396   6    6,486,202   7

Tax-exempt securities       16,344,828  14   16,404,132  19   14,135,366  16

U.S. government, agency,  
 and guaranteed
 securities                 39,291,236  34   33,981,688  39   41,746,006  47

Total                     $115,203,234 100  $87,110,216 100  $89,422,641 100
</TABLE>
PAGE
<PAGE>
<PAGE>
  M.K. & Co. participates in selling groups organized to distribute new
issues of securities of the Federal Home Loan Bank, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal
Farm Credit Bank and the Student Loan Mortgage Association.  The following
table sets forth selling group participation of M.K. & Co. in distributions
of agency securities:
<TABLE>
          Year Ended               Number               Amount of
           July 31                 Issues            Participation
            <C>                     <C>               <C>
            1996                    46                $317,690,000
            1995                    52                 382,075,000
            1994                    70                 566,630,000
            1993                    90                 690,705,000
            1992                    99                 963,215,000
</TABLE>

Repurchase Transactions

  M.K. & Co. engages in repurchase transactions primarily to facilitate the
sale of U.S. government, agency and guaranteed securities.  A repurchase
transaction is the sale of a security coupled with an agreement by the seller
to repurchase the security at the sale price.  A reverse repurchase
transaction is the purchase of the security with an agreement to resell it. 
M.K. & Co.'s repurchase transactions are generally matched in order to
minimize the risk of loss due to fluctuation in the underlying securities
prices.  In a matched repurchase transaction, M.K. & Co. will simultaneously
engage in a repurchase transaction and a reverse repurchase transaction
covering the same security.  The other party to a matched repurchase
agreement looks to M.K. & Co. for delivery of the securities or repurchase of
the securities, as the case may be.  M.K. & Co. takes a risk that it will be
obligated to perform whether or not the other party performs.  M.K. & Co.
attempts to minimize this risk by dealing with those deemed credit worthy.

  Although repurchase transactions are structured as sales, courts recently
have treated them as financing transactions, that is, loans collateralized by
securities.  Because of this uncertain nature of the transaction, it is M.K.
& Co.'s practice to take steps to perfect a security interest in the
securities to protect itself if a transaction were deemed a loan.  In
repurchase transactions M.K. & Co. bears the risk that the other party to the
transaction will fail to perform its obligation to repurchase the securities
(repay the loan) or to deliver the securities purchased (return the
collateral).  In such event, M.K. & Co. could incur a loss equal to the
difference between the price to be paid for the securities and their market
value at the repurchase date.  If the transaction is deemed to be a loan and
should M.K. & Co. fail to take possession of the securities acquired by it in
such a transaction, or otherwise fail to perfect a security interest in them,
the loss could be equal to the full repurchase price.
PAGE
<PAGE>
<PAGE>
Concentrations of Credit Risk

  As a securities broker/dealer, M.K. & Co. is engaged in various securities
trading and brokerage activities servicing a diverse group of domestic and
foreign corporations, governments, institutional and retail (individual)
investors.  A substantial portion of M.K. & Co.'s transactions are
collateralized and are executed with and on behalf of institutional investors
including other broker/dealers, commercial banks, insurance companies,
pension plans, mutual funds and other financial institutions.  M.K. & Co.'s
exposure to credit risk associated with the non-performance of these
customers in fulfilling their contractual obligations pursuant to securities
and commodities transactions, can be directly impacted by volatile trading
markets which may impair the customers' ability to perform.  M.K. & Co.'s
principal activities are also subject to the risk of the counterpart's non-
performance.

  In connection with these activities, particularly in U.S. government and
agency securities, M.K. & Co. enters into collateralized reverse repurchase
and repurchase agreements, securities lending arrangements and certain other
secured transactions which may result in significant credit exposure in the
event the counterparty to the transaction was unable to fulfill their
contractual obligations.  In accordance with industry practice, repurchase
agreements and securities borrowing arrangements are generally collateralized
by cash or securities with a market value in excess of the obligation under
the contract.  M.K. & Co. attempts to minimize credit risk associated with
these activities by monitoring customer credit exposure and collateral values
on a daily basis and requiring additional collateral to be deposited when
necessary.  M.K. & Co. participates in the trading of some derivative
securities for its customers which is not a major portion of its business.

Investment Banking

  M.K. & Co. participates in corporate and tax-exempt securities
distributions as a member of an underwriting syndicate or a member of a
selling group.  Tax-exempt securities are obligations issued by state and
municipal governments, hospitals, public utility systems and industrial
development authorities.  M.K. & Co.'s underwriting activities, together with
its selling group participation, are important as a source of securities for
sale to its customers.  The following table sets forth corporate and tax-
exempt underwriting syndicate participation of the subsidiary:
<TABLE>

                         CORPORATE                     TAX-EXEMPT

Year Ended        Number of     Amount of       Number of     Amount
 July 31           Issues    Participation       Issues    Participation
<C>                 <C>       <C>                  <C>     <C>
  1996               246      $744,497,589          322    $1,449,875,000
  1995               195       867,514,389          104       349,005,000
  1994               330       774,651,373          159       312,056,000
  1993               307       596,588,928          168       430,272,000
  1992               245       547,846,000          162       341,310,000
</TABLE>
  Participation in an underwriting syndicate or a selling group involves both
economic and regulatory risks.  A participant may incur losses if it is
unable to resell the securities it has committed to purchase, or if it is
forced to liquidate its commitment at less than the agreed purchase price.  

<PAGE>
<PAGE>
In addition, under federal securities laws, other statutes and court
decisions, a participant may be subject to substantial liability for material
misstatements or omissions in prospectuses and other communications with
respect to such offerings.  Further, underwriting commitments involve a
charge against net capital and the ability to make underwriting commitments
may be limited by the requirement that it must at all times be in compliance
with the net capital rule.  See Note 10 - Regulatory Requirements - on page
25 of the 1996 Annual Report to Shareholders.

In addition to its underwriting and selling group activities, M.K. & Co.
engages in structuring, managing and marketing private offerings of corporate
and tax-exempt securities, and assists in arranging mergers, acquisitions,
divestitures and venture capital financing.  M.K. & Co. provides valuation
and financial consulting services for gift and estate tax purposes, employee
stock ownership trusts, mergers, acquisitions, stock purchase agreements and
other corporate purposes, as well as valuations for private companies in the
process of going public.  Other services include long-range financial
planning, financial public relations and cash management services.  The
Registrant's subsidiary, Merchant Bankers, Inc., serves as a general partner
in two limited partnerships, Morgan Keegan Merchant Banking Fund Limited
Partnerships I and II, currently together have approximately $20,000,000 in
assets and are engaged in merchant banking activities.

Other Products

  M.K. & Co. offers special products, including insurance products and
interests in various tax advantaged investments.  Such tax advantaged
investments are generally in the form of limited partnership interests in
real estate, oil drilling, or similar ventures.  Neither the Registrant nor
the broker/dealer acts as the general partner for such partnerships.  Morgan
Keegan Managed Futures, Inc., a wholly-owned subsidiary of the Registrant,
acts as general partner to the Southern Capital Enhanced Equity Fund Limited
Partnership, (the "FUND"), an investment limited partnership.  The Fund seeks
substantial capital appreciation through investing approximately 80% of its
assets in growth stocks and the remaining assets in a stock index futures
trading program.

  M.K. & Co. is a distributor of shares of Bedford Money Market Fund, a money
market mutual fund whose shares are sold without a sales charge.  The fund is
managed by Provident Institutional Management Corporation.  M.K. & Co. also
sells shares in unit investment trusts which hold portfolios of tax-exempt
bonds, and as a service to its customers, offers shares of various mutual
funds including those of Southern Capital Fund.  This fund, which invests
primarily in equity securities of companies located in the southern United
States, is a mutual fund managed by Morgan Asset Management, Inc., a
subsidiary of the Registrant, and is solely distributed by M.K. & Co.  Also,
M.K. & Co. acts as a broker in the purchase and sale of put and call options
on the CBOE, AMEX and other exchanges.

Research Services

  M.K. & Co.'s research services include the review and analysis of the
economy, general market conditions, industries and specific companies;
recommendation of specific action with regard to industries and specific
companies; review of customer portfolios; furnishing of information to retail
and institutional customers; and responses to inquiries from customers and
account executives.  These services are made available generally without
charge to customers.
PAGE
<PAGE>
<PAGE>
Administration and Operations

  Administrative and operations personnel are responsible for the execution
of orders; processing of securities transactions; receipt, identification and
delivery of funds and securities; internal financial control; accounting
functions; office services; custody of customers' securities; and compliance
with regulatory requirements.

  There is considerable fluctuation in the volume of transactions which a
securities firm must handle.  In the past, when the volume of trading in
securities reached record levels, the securities industry experienced serious
operating problems.  M.K. & Co. has never experienced any significant
operating difficulties, even during periods of exceptionally heavy trading. 
There is, however, no assurance that heavy trading volume in the future will
not result in clearing and processing difficulties.

  The following table sets forth high, low and average monthly purchase and
sale transactions processed by M.K. & Co:
<TABLE>
     Year Ended                      Number of Transactions
      July 31                  High           Low           Average
       <C>                    <C>            <C>             <C>
       1996                   77,289         47,209          61,618
       1995                   57,362         41,414          47,875 
       1994                   56,859         38,457          43,340
       1993                   43,544         28,358          36,584
       1992                   40,019         24,847          31,344

</TABLE>
  M.K. & Co. uses its own electronic data processing equipment to process
orders and floor reports, transmit execution reports to its branches, and
record all data pertinent to trades.  It also clears its own securities
transactions.

  M.K. & Co. believes that its internal controls and safeguards against
securities theft, including use of depositories and periodic securities
counts, are adequate.  As required by the NYSE and certain other authorities,
M.K. & Co. carries fidelity bonds covering any loss or theft of securities,
as well as embezzlement and forgery.  The amount of such bonds, which provide
total coverage of $20,000,000 (with $500,000 deductible provision per
incident) is considered adequate.

  M.K. & Co. posts its books and records daily and believes they are
accurate.  Periodic reviews of certain controls are conducted, and
administrative and operations personnel meet frequently with management to
review operational conditions in the firm.  Operations personnel monitor day
to day operations to assure compliance with applicable laws, rules and
regulations.  There is an internal audit department and an audit committee,
both of which help management place an emphasis on strong internal controls.

Employees

  As of July 31, 1996, M.K. & Co. had 1,491 employees, 596 of whom were
account executives, 272 of whom were engaged in other service areas,
including trading, research and investment banking, and 623 of whom were
employed in accounting, clearing, data processing, management and other
activities.

<PAGEp<PAGE>
<PAGE>
  In large part, the Registrant's future success is dependent upon its
subsidiary's continuing ability to hire, train and retain qualified account
executives.  During the fiscal year ended July 31, 1996, M.K. & Co. hired 110
account executives for a net increase of 45 over the beginning of the fiscal
year.  M.K. & Co. trains new account executives who are required to take
examinations given by the NYSE, the NASD and certain state securities
regulators in order to be registered and qualified.  M.K. & Co. also provides
continuing training programs for account executives.  Competition is intense
among securities firms for account executives with good sales production
records.

  M.K. & Co. considers its employee relations to be good and considers
compensation and employee benefits offered which includes medical, life and
disability insurance, 401(k) retirement plan and a discounted stock purchase
plan, to be competitive with those offered by other securities firms.

Regulation

  The securities industry in the United States is subject to extensive
regulation under federal and state laws.  The SEC is the federal agency
charged with administration of the federal securities laws.  Much of the
regulation of broker/dealers, however, has been delegated to self-regulatory
organizations, principally the NASD and the national securities exchanges. 
These self-regulatory organizations adopt rules (which are subject to
approval by the SEC) which govern the industry and conduct periodic
examinations of member broker/dealers.  Securities firms are also subject to
regulation by state securities commissions in the states in which they are
registered.  M.K. & Co. is registered in 50 states.

  The regulations to which broker/dealers are subject cover all aspects of
the securities business, including sales methods, trade practices among
broker/dealers, capital structure of securities firms, uses and safekeeping
of customers' funds and securities, recordkeeping, and the conduct of
directors, officers and employees.  Additional legislation, changes in rules
promulgated by the SEC and by self-regulatory organizations, or changes in
interpretation or enforcement of existing laws and rules, often affect
directly the method of operation and profitability of broker/dealers.  The
SEC and the self-regulatory organizations may conduct administrative
proceedings which can result in censure, fines, suspension or expulsion of a
broker/dealer, its officers or employees.  The principal purpose of
regulation and discipline of broker/dealers is the protection of customer and
the securities market rather than the protection of creditors and
stockholders of broker/dealers.

  One of the most important regulations with which the Registrant's
broker/dealer subsidiary must continually comply is the "net capital rule" of
the Securities and Exchange Commission and a similar rule of the New York
Stock Exchange.  These rules, under the alternative method, prohibit a
broker/dealer from engaging in any securities transactions at a time when its
net capital is less than 2% of aggregate debit balances arising from customer
transactions; in addition, restrictions may be imposed on the operations of
a broker/dealer if its net capital is less than 5% of aggregate debit items. 
At July 31, 1996, the Registrant's subsidiary's net capital was 33% of
aggregate debit items.  See Note 10 - Regulatory Requirements - page 25 of
the 1996 Annual Report to Shareholders.
PAGE
<PAGE>
<PAGE> 
 The laws, rules and regulations of the various federal, state and other
regulatory bodies to which the business of the Registrant is subject are
constantly changing.  While management believes that it is currently in
compliance in all material respects with all laws, rules and regulations
applicable to its business, it cannot predict what effect any such changes
might have.

Item 2.  PROPERTIES

  The Registrant's headquarters occupy approximately 134,000 square feet in
Morgan Keegan Tower in Memphis, Tennessee.  On May 31, 1996, Morgan Keegan
Tower was purchased by Morgan Properties, LLC, a wholly-owned subsidiary of
the Registrant.  The acquisition was financed with a twenty-five year term
mortgage payable at 8.25% fixed rate with the building as collateral. 
Management believes the acquisition will allow the Company to better control
and manage its future space needs.  The Registrant's offices are leased with
the exception of Morgan Properties, LLC.  See Note 4 - Leases - on page 22 of
the 1996 Annual Report to Shareholders.

Item 3.  LEGAL PROCEEDINGS

  The Registrant is named in and subject to various proceedings and claims
incidental to its securities business.  While the ultimate resolution of
pending litigation and claims cannot be predicted with certainty, based upon
the information currently known, management is of the opinion that the
resolution of such litigation and claims will have no material adverse effect
on the Registrant's results of operations or financial condition.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted to security holders during the fourth quarter of
the fiscal year covered by this report.


                                  PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

  The information required by this item is incorporated herein by reference
to Note 12 - Quarterly Results of Operations (Unaudited) - on page 26 of the
1996 Annual Report to Shareholders, a copy of which is enclosed.

Item 6.  SELECTED FINANCIAL DATA

  The information required by this item is incorporated herein by reference
to the Ten Year Financial Summary on pages 14 and 15 and Additional Financial
Information (Unaudited) on page 17 of the 1996 Annual Report to Shareholders,
a copy of this is enclosed.

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

  The information required by this item is incorporated herein by reference
to page 16 of the 1996 Annual Report to Shareholders, a copy of which is
enclosed.
PAGE
<PAGE>
<PAGE>
Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

  The information required by this item is incorporated herein by reference
to pages 18 through 26 of the 1996 Annual Report to Shareholders, a copy of
which is enclosed.

Item 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

  There were no disagreements on accounting and financial disclosure.


                                  PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   The information required by this item is incorporated herein by reference
to the Registrant's definitive Proxy Statement which was filed with the
Commission pursuant to Regulation 240.14a(6)(c) on October 18, 1996 and will
be used in connection with the solicitation of proxies to be voted at the
Registrant's annual meeting of shareholders to be held November 22, 1996.

Item 11. EXECUTIVE COMPENSATION

   The information required by this item is incorporated herein by reference
to the Registrant's definitive Proxy Statement which was filed with the
Commission pursuant to Regulation 240.14a(6)(c) on October 18, 1996 and will
be used in connection with the solicitation of proxies to be voted at the
Registrant's annual meeting of shareholders to be held November 22, 1996.
 
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The information required by this item is incorporated herein by reference
to the Registrant's definitive Proxy Statement which was filed with the
Commission pursuant to Regulation 240.14a(6)(c) on October 18, 1996 and will
be used in connection with the solicitation of proxies to be voted at the
Registrant's annual meeting of shareholders to be held November 22, 1996.
     
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information required by this item is incorporated herein by reference
to the Registrant's definitive Proxy Statement which was filed with the
Commission pursuant to Regulation 240.14a(6)(c) on October 18, 1996 and will
be used in connection with the solicitation of proxies to be voted at the
Registrant's annual meeting of shareholders to be held November 22, 1996.

PAGE
<PAGE>
<PAGE>
                                  PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) List of Financial Statements, Financial Statement Schedules and Exhibits

(1) The following consolidated financial statements of the Registrant and its 
    subsidiaries, included in the 1996 Annual Report to Shareholders are    
    incorporated by reference in Item 8:

    Consolidated Statements of Financial Condition     July 31, 1996 and 1995 
 
    Consolidated Statements of Income               Years ended July 31, 1996
                                                        1995, and 1994

    Consolidated Statements of Stockholders'        Years ended July 31, 1996
        Equity                                           1995, and 1994

    Consolidated Statements of Cash Flows           Years ended July 31, 1996 
                                                         1995, and 1994

    Notes to Consolidated Financial Statements                  July 31, 1996
PAGE
<PAGE>
<PAGE>
(2) The following consolidated financial statement schedule of Morgan       
    Keegan, Inc. and subsidiaries is included in Item 14 (d):

    Schedule I - Condensed Financial Statements of Registrant
    
    All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.

(3) The following exhibits are filed herewith or incorporated by reference as 
    indicated.  Exhibit numbers refer to Item 601 of Regulation S-K:

    Exhibit 3  - Articles of Incorporation filed as Exhibits B & C and Bylaws 
    to Proxy Statement.

    Exhibit 11 - Statement re:  Computation of Per Share Earnings    Page 19

    Exhibit 13 - Annual Report to Shareholders*

    Exhibit 22 - List of Subsidiaries of Registrant*

    Exhibit 23 - Consent of Independent Auditors                      Page 20

    Exhibit 27 - Financial Data Schedule                              Page 21

*Certain portions of the Annual Report to Shareholders are incorporated
herein by reference:  the Annual Report to Shareholders is not to be deemed
filed as a part of this Annual Report on Form 10-K.

(b) No reports on Form 8-K were filed during the fourth quarter of the year 
    ended July 31, 1996.

(c) Exhibits - The response to this portion of Item 14 is submitted as a    
    separate section of this report.

(d) Financial Statement Schedules - The response to this portion of Item 14 
    is submitted as a separate section of this report.
<PAGE>
<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.

                                        Morgan Keegan, Inc.
                                           (Registrant)



                                  BY /s/ Allen B. Morgan, Jr.     
                                             Allen B. Morgan, Jr.
                                                  Chairman


Date:  October 25, 1996

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

SIGNATURE                       TITLE                        DATE


 /s/ Kenneth F. Clark, Jr.   
Kenneth F. Clark, Jr.           Director                     October 25, 1996



 /s/ William W. Deupree, Jr. 
William W. Deupree, Jr.         Director                     October 25, 1996


                             
 /s/ Allen B. Morgan, Jr.    
Allen B. Morgan, Jr.            Chairman and Director        October 25, 1996



 /s/ Donald Ratajczak        
Donald Ratajczak                Director                     October 25, 1996



 /s/ John W. Stokes, Jr.     
John W. Stokes, Jr.             Vice President and Director  October 25, 1996



 /s/ Joseph C. Weller        
Joseph C. Weller                Secretary/Treasurer and      October 25, 1996
                                Director


 /s/ Peter S. Willmott      
Peter S. Willmott               Director                     October 25, 1996
<PAGE>

<PAGE>
Schedule I
Condensed Financial Statements of Registrant
Morgan Keegan, Inc. (Parent Company)
<TABLE>
Condensed Balance Sheets                             July 31               
                                       
                                            1996                  1995 
<S>                                        <C>                    <C>
ASSETS
  Cash                                    $      1,000            $    1,000
  Securities owned                           2,080,105             1,931,470
  Furniture, equipment and leasehold
    improvements less allowances for
    depreciation and amortization
    ($7,774,721 at July 31, 1996,
     $7,324,441 at July 31, 1995)           10,187,711             6,807,524
  Investments in subsidiaries (a)          173,434,119           143,568,182
  Intercompany receivables (a)              21,803,616                      
  Other assets                               5,921,080             6,403,139
      Total Assets                        $213,427,631          $158,711,315

LIABILITIES
  Short-term borrowings                   $  1,400,000           $11,400,000
  Commercial paper                          42,928,286             7,468,217
  Intercompany payables (a)                                          384,222
  Other liabilities                             91,425                 1,424
STOCKHOLDERS' EQUITY
  Common Stock                              12,773,497            12,605,439
  Additional paid-in-capital                 1,510,383               712,098
  Retained earnings                        154,724,040           126,139,915
                                           169,007,920           139,457,452
      Total Liabilities and 
        Stockholders' Equity              $213,427,631          $158,711,315
</TABLE>


<TABLE>
Condensed Income Statements                           July 31              

                                          1996         1995         1994
<S>                                   <C>          <C>          <C>
  Rental income                      $ 2,492,649  $ 2,167,988  $ 1,881,486
  Interest income                        396,957      185,095    4,198,859
  Investment income                        5,064                 2,248,375
  Depreciation                        (2,492,649)  (2,167,988)  (1,881,486)
  Other                                    7,507      402,300        6,636
  Interest expense                       (90,000)
  Income taxes                          (125,000)    (300,000)    (915,000)
  Equity in net income
    of subsidiaries                   33,672,460   23,560,974   26,302,292

    Net Income                       $33,866,988  $23,848,369  $31,841,162





<FN>
(a) Eliminated in consolidation
</TABLE>
PAGE
<PAGE>
<PAGE>
Schedule I - Continued
Condensed Financial Statements of Registrant
Morgan Keegan, Inc. (Parent Company)
<TABLE>
Condensed Statement of Cash Flows                      July 31              

                                           1996         1995         1994
<S>                                  <C>          <C>          <C> 
Cash Flows From Operating Activities
 Operations (net income)             $33,866,988  $23,848,369  $31,841,162
 Less:Income from subsidiaries       (33,672,460) (23,560,974) (26,302,292)
 Amortization of restricted stock      2,580,000    1,800,000    1,580,000
 Depreciation expense                  2,492,649    2,167,988    1,881,486
 Decrease (increase) in other assets     482,059   (3,494,309)  (2,637,163)
 (Decrease) increase in intercompany
   payables                             (384,222)  (2,672,397)   6,973,383
 (Decrease) increase in other
   liabilities                            90,001        1,424
 Increase in intercompany
   receivables                       (21,803,616)                         
 Increase (decrease) from operating
   activities                        (16,348,601)  (1,909,899)  13,336,576

Cash Flows From Financing Activities
 Proceeds (payments) from short
   term borrowings                   (10,000,000)  10,000,000
 Proceeds from sale or
   issuance of common stock            2,920,669    2,232,853    6,423,113
 Proceeds (payments) of
   commercial paper                   35,460,069   (1,724,909)  (1,863,691)
 Dividends paid                       (5,282,864)  (4,438,988)  (4,036,931)
 Retirement of common stock           (4,534,325)  (9,349,500) (16,777,386)
 (Decrease)increase from
   financing activities               18,563,549   (3,280,544) (16,254,895)

Cash Flows From Investing Activities
 (Increase) decrease in securities
   owned                                (148,635)    (164,105)    (396,476)
 (Increase) decrease in investment
   in subsidiaries                     3,806,523    8,754,208    5,386,772
 Purchase of furniture, equipment
   and leasehold improvements         (5,872,836)  (3,399,660)  (2,071,977)
 (Increase) decrease from investing
   activities                         (2,214,948)   5,190,443    2,918,319
 Increase in cash                              0            0            0
       CASH AT BEGINNING OF YEAR           1,000        1,000        1,000
       CASH AT END OF YEAR                $1,000       $1,000       $1,000

Notes to Financial Statements

1.  Basis of Presentation - In the Parent-Company-only financial statements,
the Registrant's investment in subsidiaries is stated at cost plus equity in
undistributed earnings of subsidiaries since date of acquisition.  The
Registrant's share of net income of its unconsolidated subsidiaries is
included in consolidated income using the equity method.  Parent-Company-only
financial statements should be read in conjunction with the Registrant's
consolidated financial statements.
</TABLE>
PAGE
<PAGE>
<PAGE>
EXHIBIT 11 - STATEMENT RE:  COMPUTATION OF PER SHARE EARNINGS

<TABLE>
                                           Year Ended July 31           

                                    1996          1995          1994 
<S>                              <C>            <C>           <C>
PRIMARY

Average shares outstanding       20,390,236     20,308,407    21,145,595

Net effect of dilutive stock
  options - based on the treasury 
  stock method using average
  market price.                      95,004         82,360        71,614

     TOTAL                       20,485,240     20,390,767    21,217,209

Net Income                      $33,866,988    $23,848,369   $31,841,162

Per share amount                      $1.65          $1.17         $1.46



FULLY DILUTED

Average shares outstanding       20,390,236     20,308,407    21,145,595

Net effect of dilutive stock
  options - based on the treasury 
  stock method using the year end
  market price, if higher than
  average market price.              95,004         82,360        71,614

     TOTAL                       20,485,240     20,390,767    21,217,209

Net Income                      $33,866,988    $23,848,369   $31,841,162

Per share amount                      $1.65          $1.17         $1.46


</TABLE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS

  We consent to the incorporation by reference in this Annual Report (Form
10-K) of Morgan Keegan, Inc. of our report dated September 19, 1996, included
in the 1996 Annual Report to Shareholders of Morgan Keegan, Inc.

  Our audit also included the financial statement schedule of Morgan Keegan,
Inc. listed in Item 14(a).  This schedule is the responsibility of the
Company's management.  Our responsibility is to express an opinion based on
our audits.  In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

  We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-16982) pertaining to the 1985 Restricted Stock and
Stock Option Plan and in the Registration Statement (Form S-8 No. 33-32974)
pertaining to the Employee Stock Purchase Plan of Morgan Keegan, Inc. of our
report dated September 19, 1996, with respect to the consolidated financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule included
in this Annual Report (Form 10-K) of Morgan Keegan, Inc.




                                         /S/ Ernst & Young LLP
                                         ERNST & YOUNG LLP




Memphis, Tennessee
October 25, 1996
PAGE
<PAGE>
Report of Independent Auditors



Board of Directors
Morgan Keegan, Inc.

  We have audited the accompanying consolidated statements of financial
condition of Morgan Keegan, Inc. and subsidiaries as of July 31, 1996 and
1995, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended July
31, 1996.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.
  We conducted our audits in accordance with generally accepted auditing
standards.  These standards require that we plan and perform an 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 financial statements referred to above present fairly
in all material respects, the consolidated financial position of Morgan
Keegan, Inc. and subsidiaries at July 31, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended July 31, 1996 in conformity with generally accepted
accounting principles.



                                                    ERNST & YOUNG LLP


Memphis, Tennessee
September 19, 1996
PAGE
<PAGE>
<PAGE>
Ten Year Financial Summary
Morgan Keegan, Inc. and Subsidiaries                                       
<TABLE>
                                 (In thousands, except per share amounts)
Years ended July 31                           1996                      
<S>                                        <C>
Revenues
Commissions
  Listed securities                        $ 26,467
  Over-the-counter                           21,849
  Options                                     3,243
  Other                                      16,311                     
                                             67,870                     
Principal transactions:
  Corporate securities                       59,567
  Municipal securities                       16,345
  U.S. government securities                 39,291                     
                                            115,203                     
Investment banking:
  Corporate securities                       25,990
  Municipal securities                        2,427
  Underwriting management and other fees     21,884                     
                                             50,301                     
Interest:
  Interest on margin balances                19,752
  Interest on securities owned               30,171                     
                                             49,923                     
Other                                        18,109                     
                                            301,406                     

Expenses
Compensation                                158,352
Floor brokerage and clearance                 4,397
Communications                               18,892
Travel and promotional                        7,336
Occupancy and equipment costs                11,812
Interest                                     32,930
Taxes, other than income taxes                7,006
Other operating expenses                      5,514                     
                                            246,239                     
Income (loss) before income taxes            55,167
Income tax expense (credit)                  21,300                     
Net income                                 $ 33,867                     
Per Share Data*
Net income                                 $   1.65
Book value                                 $   8.27
Other Data (at year end):
Total assets                               $947,338
Stockholders' equity                       $169,008
Common shares outstanding*                   20,438                     
<FN>
*Adjusted for a three-for-two stock split in April, 1986, a four-for-three
stock split in September, 1991, a three-for-two stock split in March, 1992,
a three-for-two stock split in June, 1993, and a three-for-two stock split in
June, 1995.
</TABLE>
<PAGE>
<PAGE>
Ten Year Financial Summary
Morgan Keegan, Inc. and Subsidiaries                                       
<TABLE>
                                 (In thousands, except per share amounts)
Years ended July 31                       1995       1994       1993    
<S>                                    <C>        <C>        <C>
Revenues
Commissions
  Listed securities                    $ 21,246   $ 22,748   $ 20,457
  Over-the-counter                       12,624     10,076     10,159
  Options                                 2,631      1,990      1,927
  Other                                   9,661     11,723     11,196   
                                         46,162     46,537     43,739   
Principal transactions:
  Corporate securities                   36,724     33,541     34,404
  Municipal securities                   16,404     14,135     17,432
  U.S. government securities             33,982     41,746     51,297   
                                         87,110     89,422    103,133   
Investment banking:
  Corporate securities                   25,009     32,850     15,760
  Municipal securities                    1,926      4,059      3,947
  Underwriting management and other fees 18,259     18,923      9,571   
                                         45,194     55,832     29,278   
Interest:
  Interest on margin balances            17,519     10,824      7,047
  Interest on securities owned           20,261     14,070     12,627   
                                         37,780     24,894     19,674   
Other                                    11,826     15,035     13,371   
                                        228,072    231,720    209,195   

Expenses
Compensation                            120,795    125,205    109,748 
Floor brokerage and clearance             3,724      3,875      5,296
Communications                           15,962     13,852     12,012
Travel and promotional                    5,855      5,721      4,241
Occupancy and equipment costs             9,716      8,320      8,153
Interest                                 23,600     14,393     11,185
Taxes, other than income taxes            6,298      4,972      4,199
Other operating expenses                  3,774      3,741      4,659   
                                        189,724    180,079    159,493   
Income (loss) before income taxes        38,348     51,641     49,702
Income tax expense (credit)              14,500     19,800     19,000   
Net income                             $ 23,848   $ 31,841   $ 30,702   
Per Share Data*
Net income                             $   1.17   $   1.46   $   1.45
Book value                             $   6.91   $   6.10   $   4.97
Other Data (at year end):
Total assets                           $882,292   $571,009   $527,084
Stockholders' equity                   $139,457   $125,365   $106,335
Common shares outstanding*               20,169     20,556     21,408   
<FN>
*Adjusted for a three-for-two stock split in April, 1986, a four-for-three
stock split in September, 1991, a three-for-two stock split in March, 1992,
a three-for-two stock split in June, 1993, and a three-for-two stock split in
June, 1995.
</TABLE>
PAGE
<PAGE>
<PAGE>
Ten Year Financial Summary
Morgan Keegan, Inc. and Subsidiaries                                       
<TABLE>
                                 (In thousands, except per share amounts)
Years ended July 31                       1992       1991       1990    
<S>                                    <C>        <C>        <C>
Revenues
Commissions
  Listed securities                    $ 18,378   $ 13,143   $ 14,444
  Over-the-counter                        9,041      5,347      1,745
  Options                                 2,089      2,143      2,180
  Other                                   7,632      4,824      4,434   
                                         37,140     25,448     22,803   
Principal transactions:
  Corporate securities                   28,161     16,554     11,808
  Municipal securities                   12,037     10,730      7,445
  U.S. government securities             48,588     30,279     18,478   
                                         88,786     57,563     37,731   
Investment banking:
  Corporate securities                   16,730      4,836      2,947
  Municipal securities                    3,960        376        159
  Underwriting management and other fees  9,862      5,436      3,926   
                                         30,552     10,648      7,032   
Interest:
  Interest on margin balances             5,941      4,867      5,521
  Interest on securities owned           12,709     12,490     10,769   
                                         18,650     17,357     16,290   
Other                                     7,536      5,501      5,152   
                                        182,664    116,517     89,008   

Expenses
Compensation                             94,348     61,265     48,243
Floor brokerage and clearance             4,571      3,751      3,749
Communications                            9,791      8,764      8,436
Travel and promotional                    3,699      2,982      2,660
Occupancy and equipment costs             7,557      8,194      7,789
Interest                                 12,562     12,953     12,591
Taxes, other than income taxes            3,823      3,116      2,682
Other operating expenses                  4,122      3,288      3,308   
                                        140,473    104,313     89,458   
Income (loss) before income taxes        42,191     12,204       (450)
Income tax expense (credit)              16,400      4,500       (475)  
Net income                             $ 25,791   $  7,704   $     25   
Per Share Data*
Net income                             $   1.25   $    .38   $    .01
Book value                             $   3.67   $   2.50   $   2.14
Other Data (at year end):
Total assets                           $434,448   $304,445   $236,991
Stockholders' equity                   $ 76,690   $ 50,837   $ 44,888
Common shares outstanding*               20,893     20,336     20,959   
<FN>
*Adjusted for a three-for-two stock split in April, 1986, a four-for-three
stock split in September, 1991, a three-for-two stock split in March, 1992,
a three-for-two stock split in June, 1993, and a three-for-two stock split in
June, 1995.
</TABLE>
PAGE
<PAGE>
<PAGE>
Ten Year Financial Summary
Morgan Keegan, Inc. and Subsidiaries                                       
<TABLE>
                                 (In thousands, except per share amounts)
Years ended July 31                       1989       1988       1987    
<S>                                    <C>        <C>        <C>
Revenues
Commissions
  Listed securities                    $ 13,675   $ 12,901   $ 10,829
  Over-the-counter                        1,848      2,088      2,313
  Options                                 2,339      2,509      2,564
  Other                                   4,192      3,943      6,714   
                                         22,054     21,441     22,420   
Principal transactions:
  Corporate securities                   14,369     15,421     17,723
  Municipal securities                    5,993      6,401      4,550
  U.S. government securities             14,707     14,829     19,927   
                                         35,069     36,651     42,200   
Investment banking:
  Corporate securities                    3,461      2,225      8,152
  Municipal securities                      213         19        394
  Underwriting management and other fees  4,057      3,302      5,267   
                                          7,731      5,546     13,813   
Interest:
  Interest on margin balances             5,698      5,406      4,753
  Interest on securities owned            6,129      3,407      2,307   
                                         11,827      8,813      7,060   
Other                                     2,750      1,105        902   
                                         79,431     73,556     86,395   

Expenses
Compensation                             43,953     42,242     50,119
Floor brokerage and clearance             2,966      2,900      2,044
Communications                            7,996      7,366      6,744
Travel and promotional                    1,990      2,649      3,040
Occupancy and equipment costs             6,852      5,755      4,645
Interest                                  7,931      4,620      3,928
Taxes, other than income taxes            2,326      2,179      1,934
Other operating expenses                  2,330      1,989      1,342   
                                         76,344     69,700     73,796   
Income (loss) before income taxes         3,087      3,856     12,599
Income tax expense (credit)                 715      1,351      5,900   
Net income                             $  2,372   $  2,505   $  6,699   
Per Share Data*
Net income                             $    .10   $    .10   $    .29
Book value                             $   2.18   $   2.11   $   2.10
Other Data (at year end):
Total assets                           $397,007   $236,209   $195,128
Stockholders' equity                   $ 48,432   $ 49,325   $ 55,999
Common shares outstanding*               22,219     23,374     26,697   
<FN>
*Adjusted for a three-for-two stock split in April, 1986, a four-for-three
stock split in September, 1991, a three-for-two stock split in March, 1992,
a three-for-two stock split in June, 1993, and a three-for-two stock split in
June, 1995.
</TABLE>
PAGE
<PAGE>
<PAGE>
General Business Environment. Morgan Keegan, Inc. (the "Company") operates a
full service regional brokerage business through its principal subsidiary,
Morgan Keegan & Company, Inc. The Company is involved in the origination,
underwriting, distribution, trading and brokerage of fixed income and equity
securities and also provides investment advisory services. The Company is not
involved with  high yield securities, bridge loan financing, or any other
ventures that management feels may not be appropriate for the Company's
strategic approach.

Many factors affect the Company's revenues including changes in economic
conditions, investor sentiment, the level and volatility of interest rates,
inflation, political events and competition.  As these factors are beyond the
Company's control, and certain expenses are relatively fixed, earnings can
significantly vary from year to year regardless of management's efforts to
enhance revenue and control costs.

Increasing competition from commercial banks and thrift institutions is
anticipated as these institutions begin to offer investment banking and
financial services which were previously only offered by securities firms. 
The Company anticipates increasing regulation in the securities industry,
meaning that continued compliance may be more difficult and costly.  At
present, the Company is unable to predict the extent of changes that may be
enacted or the effect on the Company's business.

The Company's long term plan is to continue to grow its regional brokerage
and other services in the southeastern United States.

Results of Operations. Revenues soared past $300,000,000 for the first time
as the Company had a record year for revenues, earnings and earnings per
share.  Total revenues of $301,406,000 for fiscal 1996 were $73,334,000 in
excess of fiscal 1995 revenues of $228,072,000 and $69,686,000 in excess of
the previous record 1994 revenues of $231,720,000.  Fiscal 1995 saw rising
interest rates and uncertain market conditions for most of the year resulting
in fiscal 1995 revenues trailing fiscal 1994 revenues.

Principal transactions increased in fiscal 1995 $28,093,000 or 32% after a
decline of $2,312,000 or 3% for fiscal 1995 over fiscal 1994.  The increase
was primarily due to the higher volume dictated by the outstanding market
conditions for most of the year.  The decline in the previous year was due to
lower volumes and OTC trading losses.

Continued expansion of the Investment Banking area allowed the Company to
benefit from the excellent markets in 1996 with banking revenues rising
$5,107,000 to $50,301,000.  The decline of $10,638,000 from fiscal 1994 to
fiscal 1995 resulted from less favorable market conditions for equity
securities and continued weakness in the taxable debt securities markets.

Interest income increased in both fiscal years as rates continued to creep up
and the continued expansion of the retail branch system meant an increase in
margin account balances.  Other income had the largest percentage increase of
53% from $11,826,000 to $18,109,000.  The increase was due to the continued
expansion of the fee-based products coinciding with the growth of the retail
business.

Operating expenses increased $56,515,000 or 30% to $246,239,000.  The largest
component of the increase was compensation which rose 31% or $37,557,000 to
$158,352,000.  This increase corresponds with the increase in revenues of
<PAGE>
<PAGE>
32%.  Interest expense was second largest component of the increase which
increased $9,330,000 or 40% which was slightly less than the 32% increase in
revenues.  Other expenses increased moderately due to the higher volume and
continued growth of the Company.

Operating expenses increased $9,645,000 or 5% for fiscal 1995 over fiscal
1994.  The largest component of the increase was the rise in interest expense
which was due to the higher interest rates for the year, as well as larger
inventory and customer credit positions.

Fiscal 1996 was highly profitable for the securities industry in general as
indicated by the Dow's rise from 4700 to 5528 or 18% and the Nasdaq increase
from 999 to 1080 or 8%.  During the favorable market conditions, the Company
benefited from its retail office expansion in the southeast and management's
expense cutting efforts to allow record earnings per share of $1.65 which was
$.48 per share above 1995 and $.19 above the previous record of fiscal 1994.
 
Liquidity and Capital Resources. 
Most of the Company's assets are highly liquid, consisting mainly of cash or
assets readily convertible into cash.  These assets are financed by the
Company's equity capital, short-term bank loans, commercial paper, repurchase
agreements and other payables.  Changes in the amount of securities owned by
the Company and customer and broker receivables affect directly the amount of
the Company's financing requirements.  During the year, the Company purchased
its corporate headquarters and negotiated a 25 year mortgage payable for
$20,000,000 at the rate of 8.25%.

The Company's broker-dealer subsidiary is subject to requirements of the
Securities and Exchange Commission and the New York Stock Exchange relating
to liquidity and capital standards.  It has historically operated well in
excess of the minimum requirements.  At July 31, 1996, the net capital of the
Company's broker-dealer subsidiary exceeded the SEC's minimum requirements by
more than $96,000,000, which is slightly more than the $82,000,000 at the end
of last year.  Continued expansion is not expected to have a significant
adverse impact on liquidity or capital.  Funds available from operations and
lines of credit should provide sufficient sources to meet capital needs of
the foreseeable future.

During the year, the Company continued its stock repurchase program,
purchasing 381,800 shares for an aggregate value of $4,534,000.  This
followed fiscal 1995 repurchases of 1,030,200 shares valued at $9,348,000.
During the year, the board authorized the purchase of an additional 1,000,000
shares to the 3,750,000 which had been previously authorized.

During the prior year, the board of directors declared a three-for-two stock
split.  The purpose of the stock split was to allow the shareholders to
participate in the Company's outstanding growth for the past several years
and to increase the cash dividend.

Total assets of the Company were $64,356,000 higher at July 31, 1996 than
1995, with the two most significant increases coming in receivables from
customers of $53,729,000 and securities owned of $19,363,000.  These
increases resulted primarily from the favorable securities markets relating
to the retail area.
<PAGE>


<PAGE>
Liabilities increased from $742,835,000 in the previous year to $777,640,000
or $34,805,000.  The biggest component of the increase was payable to
customers which increased $46,029,000 reflecting the strong markets and
continued effects of the industry's change to T+3 in 1995.
Cash used in financing activities was $5,671,000 as the Company was able to
lower its short term borrowings significantly.  Cash used for investing was
$29,750,000 in fiscal 1996, which increased mostly by the cost of the
purchase of the headquarters for $20,000,000 mentioned earlier.

Effects of Inflation. The Company's assets are primarily monetary, consisting
of cash, assets convertible into cash, securities and owned and receivables. 
Because of their liquidity, these assets are not significantly affected by
inflation.  Management believes that replacement costs of furniture,
equipment and leasehold improvements will not materially affect operations. 
However, the rate of inflation affects the Company's expenses, such as those
for employee compensation and communications, which may not be readily
recoverable in the price of services offered by the Company.

The table below summarizes the changes in the major categories of revenues
and expense for the past three (3) years.
                                                                            
<TABLE>
(Dollars in thousands)                          Increase (Decrease)
Revenues:                                 1996 vs 1995     1995 vs 1994  
<S>                                       <C>       <C>    <C>       <C>  
  Commissions                             $21,708   47%    $  (375)  (1%)
  Principal transactions                   28,093   32%     (2,312)  (3%)
  Investment banking                        5,107   11%    (10,638) (19%)
  Interest                                 12,143   32%     12,886   52%
  Other                                     6,283   53%     (3,209) (21%)
                                          $73,334   32%    $(3,648)  (2%)


Expenses:
  Compensation                            $37,557   31%    $(4,410)  (4%)
  Floor brokerage and clearance               673   18%       (151)  (4%)
  Communications                            2,930   18%      2,110   15%
  Travel and promotional                    1,481   25%        134    2%
  Occupancy and equipment costs             2,096   22%      1,396   17%
  Interest                                  9,330   40%      9,207   64%
  Taxes, other than income taxes              708   11%      1,326   27%
  Other operating expenses                  1,740   46%         33    1% 
                                          $56,515   30%    $ 9,645    5% 
</TABLE>
PAGE
<PAGE>
<PAGE>
Additional Financial Information (Unaudited)

Morgan Keegan, Inc. and Subsidiaries                                        
<TABLE>
                                    (In thousands, except per share amounts)
Summary of Quarterly Results                                                
                                    First      Second     Third      Fourth
                                    Quarter    Quarter    Quarter    Quarter
<S>                                 <C>        <C>        <C>       <C>  
Fiscal 1996
  Revenues                          $68,940    $77,457    $79,297    $75,712
  Income before income taxes         14,230     14,917     14,076     11,944
  Net income                          8,830      9,217      8,576      7,244
  Net income per share                 0.44       0.45       0.41       0.35
                                                                            

Fiscal 1995
  Revenues                          $56,206    $55,267    $50,147    $66,452
  Income before income taxes         10,971      9,537      6,960     10,880
  Net income                          6,771      5,937      4,360      6,780
  Net income per share                 0.33       0.29       0.22       0.33
                                                                            

Fiscal 1994
  Revenues                          $57,664    $60,125    $56,294    $57,637
  Income before income taxes         13,732     14,310     10,657     12,942
  Net income                          8,432      8,810      6,657      7,942
  Net income per share                 0.39       0.40       0.30       0.37
                                                                            

Fiscal 1993
  Revenues                          $47,047    $49,397    $55,312    $57,439
  Income before income taxes         11,207     11,270     13,235     13,990
  Net income                          6,808      7,170      8,085      8,639
  Net income per share                 0.33       0.34       0.38       0.40
                                                                            

Fiscal 1992
  Revenues                          $37,923    $48,094    $50,837    $45,810
  Income before income taxes          7,697     11,126     12,665     10,703
  Net income                          4,772      6,701      7,715      6,603
  Net income per share                 0.24       0.33       0.37       0.31
                                                                            
</TABLE>
PAGE
<PAGE>
<PAGE>
Statistical Comparison of Production                             
<TABLE>
                                                                               
                      1996         1995         1994         1993         1992 
<S>             <C>          <C>          <C>          <C>          <C>
Total
 production     $208,275,740 $160,335,704 $168,350,637 $154,251,186 $136,760,330
Percentage
 change in
 production            +29.9%        -4.8%        +9.1%       +12.8%       +58.3% 
Number of
 tickets             749,560      558,967      480,564      439,006      376,128 
Average
 commissions
 per ticket     $        278 $        287 $        350 $        351 $        363 
Number of
 investment
 brokers                 596          551          492          438          409 
Number of
 Investment
 brokers
 (over 1 year)           487          438          436          403          379
Total number
 of employees          1,491        1,335        1,218        1,088          969
Average
 commissions
 per investment
 broker
 (over 1 year)  $     34,885 $    334,555 $    346,274 $    359,817 $    327,096
Number of
 new accounts
 opened               33,835       29,559       25,861       21,451        25,322
                                                                                
</TABLE>
PAGE
<PAGE>
<PAGE>
Consolidated Statements of Income
Morgan Keegan, Inc. and Subsidiaries                                      
<TABLE>                                        Years ended
                                                 July 31
                                 (In thousands, except per share amounts)
                                    1996         1995         1994      
<S>                          <C>         <C>        <C>
Revenues
  Commissions                    $ 67,870     $ 46,162     $ 46,537
  Principal transactions          115,203       87,110       89,422
  Investment banking               50,301       45,194       55,832
  Interest                         49,923       37,780       24,894
  Other                            18,109       11,826       15,035   
                                  301,406      228,072      231,720   
Expenses
  Compensation                    158,352      120,795      125,205
  Floor brokerage and clearance     4,397        3,724        3,875
  Communications                   18,892       15,962       13,852
  Travel and promotional            7,336        5,855        5,721
  Occupancy and equipment costs    11,812        9,716        8,320
  Interest                         32,930       23,600       14,393
  Taxes, other than income taxes    7,006        6,298        4,972
  Other operating expenses          5,514        3,774        3,741   
                                  246,239      189,724      180,079   
  Income Before Income Taxes       55,167       38,348       51,641
  Income Tax Expense               21,300       14,500       19,800   
  Net Income                     $ 33,867     $ 23,848     $ 31,841   

 Net Income Per Share            $   1.65     $   1.17     $  1.46   

  Average shares outstanding   20,516,442   20,390,767   21,786,861   

  See accompanying notes.
</TABLE>
PAGE
<PAGE>
<PAGE>
Consolidated Statements of Stockholders' Equity
Morgan Keegan, Inc. and Subsidiaries                                           
<TABLE>
                               Common   Common  Additional            Stock-
                               Stock    Stock    Paid-In   Retained   holders'
                               Shares   Amount   Capital   Earnings   Equity  
                                     (In thousands, except per share amounts)
<S>                            <C>      <C>      <C>       <C>        <C>
Balance at July 31, 1993     14,271,993   8,920    13,941   83,474   106,335 
Issuance of restricted
 stock                          219,073     137      (137)
Issuance of Common
 Stock                          553,071     346     6,078              6,424
Dividends paid ($.19
 per share)                                                 (4,037)   (4,037)
Repurchase & retirement
 of Common Stock             (1,340,126)   (838)  (15,940)           (16,778)
Amortization of
 restricted stock                                   1,580              1,580
Net income                                                  31,841    31,841 
Balance at July 31, 1994     13,704,011   8,565     5,522  111,278   125,365 
Stock split effected
 in the form of a stock
 dividend                     6,852,005   4,283       (81)  (4,202)
Issuance of restricted 
 stock                          298,072     186      (186)
Issuance of Common
 Stock                          344,924     216     2,017              2,233
Dividends paid ($.22  
 per share)                                                 (4,440)   (4,440)
Repurchase & retirement
 of Common Stock             (1,030,309)   (645)   (8,360)    (344)   (9,349)
Amortization of
 restricted stock                                   1,800              1,800
Net income                                                  23,848    23,848 
Balance at July 31, 1995     20,168,703 $12,605    $  712 $126,140  $139,457 
Issuance of restricted 
 stock                          292,231     183      (183)
Issuance of Common
 Stock                          358,463     224     2,698              2,922
Dividends paid ($.26  
 per share)                                                 (5,283)   (5,283)
Repurchase & retirement
 of Common Stock               (381,800)   (239)   (4,296)            (4,535)
Amortization of
 restricted stock                                   2,580              2,580
Net income                                                  33,867    33,867 
Balance at July 31, 1996     20,437,597 $12,773    $1,511 $154,724  $169,008 

See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<PAGE>
Consolidated Statements of Financial Condition
Morgan Keegan, Inc. and Subsidiaries                                            
<TABLE>
                                                            (In thousands)
July 31                                                   1996         1995     
<S>                                                    <C>          <C>
Assets
  Cash                                                 $ 17,156     $ 22,287
  Securities segregated for regulatory purposes,
    at market                                           225,200      226,000
  Deposits with clearing organizations and others         7,655        7,655
  Receivable from brokers and dealers and 
    clearing organizations                               16,978       25,046
  Receivables from customers                            314,436      260,707
  Securities purchased under agreements to resell        69,278       91,861
  Securities owned, at market                           229,278      209,915
  Memberships in exchanges, at cost (market value-
    $3,722,000 at July 31, 1996; $2,367,000 at 
    July 31, 1995)                                          719          719
  Furniture, equipment and leasehold improvements,
    at cost (less allowances for depreciation and
    amortization-$13,362,000 at July 31, 1996;
    $12,159,000 at July 31, 1995)                        18,492       13,037
  Building and improvements, at cost (less
    allowance for depreciation-$92,000 at 
    July 31, 1996)                                       19,908            0
  Other assets                                           27,548       25,065   
                                                       $946,648     $882,292    

                                                                                
Liabilities and Stockholders' Equity
  Short-term borrowings                                $ 31,400     $127,649
  Mortgage note payable                                  19,965            0
  Commercial paper                                       42,928        7,468
  Payable to brokers and dealers and clearing
    organizations                                         9,201        5,387
  Payable to customers                                  484,547      438,518
  Customers drafts payable                               14,456       13,774
  Securities sold under agreements to repurchase         54,826       35,360
  Securities sold, not yet purchased, at market          62,972       68,430
  Other liabilities                                      57,345       46,249  
                                                        777,640      742,835  
  Stockholders' equity
    Common Stock, par value $.625 per share:
    authorized 100,000,000 shares;
    20,437,597 shares issued and outstanding
    at July 31, 1996; 20,168,703 at July 31, 1995        12,773       12,605
  Additional paid-in capital                              1,511          712
  Retained earnings                                     154,724      126,140  
                                                        169,008      139,457  
    
                                                       $946,648     $882,292  
  

See accompanying notes. 
</TABLE>
PAGE
<PAGE>
<PAGE>
Consolidated Statements of Cash Flows
Morgan Keegan, Inc. and Subsidiaries                                            
<TABLE>
                                                        (In thousands)
Years ended July 31                                 1996      1995      1994    
<S>                                               <C>       <C>       <C>
Cash Flows From Operating Activities:
Net Income                                        $33,867   $23,848   $31,841
Non-cash items included in earnings:
  Depreciation and amortization                     4,387     3,501     3,321
  Deferred income taxes                              (750)   (1,900)     (958)
  Amortization of restricted stock                  2,580     1,800     1,580  
                                                   40,084    27,249    35,784  
  (Increase) decease in operating assets:
    Receivable from brokers and dealers and
      clearing organizations                        8,068     4,899   (10,321)
    Deposits with clearing organizations
      and others                                             (5,064)     (127)
    Receivable from customers                     (53,729)  (23,943)  (80,131)
    Securities segregated for regulatory
      purposes, at market                             800  (190,299)    3,100
    Securities owned, at market                   (19,363)  (42,347)   22,114
    Other assets                                   (1,733)  (10,462)   (4,240)
  (Decrease) increase in operating liabilities:
    Payable to brokers and dealers and 
      clearing organizations                        3,814    (8,194)   (3,919)
    Payable to customers                           46,029   197,377    63,933
    Customer drafts payable                           682     2,824     3,077  
    Securities sold, not yet purchased, at market  (5,458)   32,445    19,974
    Other liabilities                              11,096    (8,796)   11,924  
                                                   (9,794)  (51,560)   25,384  
 Cash provided by (used in) operating activities   30,290   (24,311)   61,168  

Cash Flows From Financing Activities:
    Commercial paper                               35,460    (3,125)   (1,864)
    Mortgage note payable                          20,000         0         0 
    Mortgage note payments                            (35)        0         0
    Issuance of Common Stock                        2,922     2,233     6,424
    Retirement of Common Stock                     (4,535)   (9,349)  (16,778)
    Dividends paid                                 (5,283)   (4,440)   (4,037)
    Short-term borrowings                         (96,249)  111,149   (51,605)
    Securities purchased under agreements
      to resell                                    19,466   (29,050)   25,827
    Securities sold under agreement to 
      repurchase                                   22,583   (26,489)  (16,625) 
  Cash provided by (used in) financing activities  (5,671)   40,929   (58,658) 
Cash Flows From Investing Activities:
  Payments for furniture, equipment and
    leasehold improvements                         (9,750)   (7,185)   (4,515) 
  Building purchase                               (20,000)        0         0  
      Cash used in investing activities           (29,750)   (7,185    (4,515) 
      Increase (decrease) in cash                  (5,131)    9,433    (2,005) 
Cash at beginning of period                        22,287    12,854    14,859  
Cash at end of period                             $17,156   $22,287   $12,854  
<FN>
Income tax payments totaled $20,275,000 in 1996, $14,651,000 in 1995, and
$17,769,000 in 1994.  Interest payments totaled $32,761,000 in 1996, $23,445,000
in 1995, and $14,519,000 in 1994.

See accompanying notes.
</TABLE>
PAGE
<PAGE>
<PAGE>
Notes to Consolidated Financial Statements
Morgan Keegan, Inc., and Subsidiaries
July 31, 1996                                                               

NOTE 1-SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The consolidated financial statements include the
accounts of Morgan Keegan, Inc. and its subsidiaries (collectively referred
to as the Company).  All significant intercompany balances and transactions
have been eliminated in consolidation.  The Company is in one principal line
of business, that of providing investment services primarily in the Southern
United States.

Financial Assets and Liabilities: Substantially all of the Company's
financial assets and liabilities are carried at market value or at amounts
which because of the short-term nature of the financial instruments,
approximate current fair value.

Securities Transactions: Securities transactions and related commission
revenue and expense are recorded on a settlement date basis, generally the
third business day following the transaction date, which is not materially
different from a trade date basis.

Securities: Securities owned and securities sold, not yet purchased are
carried at market value and unrealized gains and losses are reflected in
revenues.

Investment Banking: Management fees on investment banking transactions and
selling concessions are recorded on settlement date, which is not materially
different from a trade date basis.  Underwriting fees are generally recorded
on the date the underwriting syndicate is closed.

Fixed Assets: Furniture, equipment and leasehold improvements are carried at
cost.  Depreciation and amortization are provided on a straight-line basis
over the estimated useful lives of the assets.  Building and improvements are
carried at cost and are being depreciated over a thirty-one year period.

Reverse Repurchase and Repurchase Agreements: Securities purchased under
agreements to resell (Reverse Repurchase Agreements) and securities sold
under agreements to repurchase (Repurchase Agreements) are carried at the
amounts at which the securities will be subsequently resold or reacquired as
specified in the respective agreements.  Government securities segregated in
a special reserve bank account for the benefit of customers under rule 15c3-3
of the Securities and Exchange Commission represent securities purchased
under an agreement to resell of $225,200,000 and $226,000,000 at July 31,
1996 and 1995, respectively.

Income Taxes: The parent and its subsidiaries file a consolidated income tax
return.  Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.  

Net Income Per Share: Net income per share is computed based on the weighted
average number of shares outstanding including shares issuable under stock
options, when dilutive.  All earnings per share date included in the
consolidated financial statements and notes thereto have been adjusted to
give effect to all stock splits.
<PAGE>
<PAGE>
Accounts with Customers: Accounts with customers include amounts arising from
uncompleted transactions and margin balances.  Securities which are owned by
customers but held as collateral for receivables from customers are not
included in the consolidated financial statement.

Restricted Stock: Amortization of restricted stock is provided on the
straight-line basis over the life of the restriction, which is five years.

Stock-based Compensation: The Company grants stock options for a fixed number
of shares to employees with an exercise price equal to the fair value of the
shares at the date of grant.  The Company accounts for stock option grants in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and, accordingly, recognized no compensation expense for the
stock option grants.

In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-based Compensation," which provides an
alternative to APB Opinion No. 25 in accounting for stock-based compensation
issued to employees.  The statement allows for a fair value based method of
accounting for employee stock options and similar equity instruments. 
However, for companies that continue to account for stock-based compensation
arrangements under Opinion No. 25, FAS No. 123 required disclosure of the pro
forma effect on net income and earnings per share of its fair value based
accounting for those arrangements.  These disclosure requirements are
effective for fiscal year beginning after December 15, 1995.

Other Accounting Pronouncements:  In March 1995, the FASB issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of," which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. 
Statement 121 also addresses the accounting for long-lived assets that are
expected to be disposed of.  The Company will adopt Statement 121 in the
first quarter of fiscal 1997 and, based on current circumstances, does not
believe the effect of adoption will be material.

In June 1996, the FASB issued Statement No. 125,  "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," which
provides new accounting and reporting standards for sales, securitization,
and servicing of receivables and other financial assets and extinguishments
of liabilities.  The provisions of the Statement are to be applied to
transactions occurring after December 31, 1996, even for transfers of assets
pursuant to securitization transactions that previously were established. 
The company does not believe that the adoption of this statement will have a
material adverse effect on its consolidated financial condition or results of
operations.

Use of Estimates:  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.  Actual results could differ from those
estimates.
PAGE
<PAGE>
<PAGE>
NOTE 2-BORROWINGS

The mortgage note payable relates to the Memphis headquarters location
acquired May 31, 1996, and requires monthly principal and interest payments
of approximately $160,000.  The mortgage bears interest at 8.25% and is
secured by buildings and improvements with a book value of $19,908,000. 
Principal maturities under the mortgage note payable for the succeeding 5
years are as follows, in thousands:
<TABLE>
                    <C>                       <C>
                    1997                      $253
                    1998                       275
                    1999                       299
                    2000                       324
                    2001                       352
              Thereafter                    18,462
                                           $19,965
</TABLE>
The short-term borrowings of $31,400,000 and 127,649,000 at July 31, 1996 and
1995 respectively, consist of loans payable on demand primarily used to
finance clearance of securities and to carry customers' margin accounts and
firm positions.  The notes bear interest at the broker loan rate, which was
6.0% and 6.5% at July 31, 1996 and 1995, respectively.

The Company had total lines of credit of $345,000,000 at July 31, 1996, with
expirations prior to July 31, 1997, under which a maximum of $170,000,000
could be borrowed on an unsecured basis.  There were no compensating balances
associated with these lines of credit.

At July 31, 1995, the secured short-term borrowings were collateralized by
securities with market values of approximately $170,322,000 of firm-owned
securities and $12,581,000 of customer-owned securities.

The Company also issues its own commercial paper to investors at fluctuating
interest rates (5.625% and 5.5% at July 31, 1996 and 1995, respectively). 
The paper matures over various terms not to exceed nine months.

NOTE 3-SECURITIES

Securities owned for trading purposes consist of the following at July 31,
in thousands:
<TABLE> 
                                               1996           1995
     <S>                                     <C>            <C>
     U.S. government obligations             $121,142       $ 94,814
     State and municipal obligations           45,863         72,389
     Corporate bonds                           48,055         32,058
     Stocks                                    14,202         10,627
     Bankers' acceptance                           16             27
                                             $229,278       $209,915
</TABLE>
State and municipal obligations include an issue with a par value of
$12,700,000 which has been written down to an approximate fair market value
of $5,715,000 at July 31, 1996 and July 31, 1995, as determined by management
of the Company.
PAGE
<PAGE>
<PAGE>
Securities sold, not yet purchased consist of the following at July 31,
in thousands:
<TABLE>
                                                1996           1995
     <S>                                      <C>            <C>
     U.S. government obligations              $54,422        $58,057
     State and municipal obligations              122          2,276
     Corporate bonds                            3,095          1,758
     Stocks                                     5,333          6,339
                                              $62,972        $68,430
</TABLE>
NOTE 4-LEASES

The Company leases office space, furniture and equipment under noncancellable
leases expiring through 2008, with options to renew the leases for up to five
years.  Total rental expense for each of the years ended July 31 was as
follows, in thousands:
<TABLE>
               <C>                          <C>
               1996                         $8,838
               1995                         $7,615
               1994                         $6,729
</TABLE>
Aggregate future annual minimum rental commitments, excluding escalations,
for the years ending July 31 are as follows, in thousands:
<TABLE>
               <C>                         <C>
               1997                        $ 4,406
               1998                          4,296
               1999                          3,380
               2000                          2,927
               2001                          1,922
        Thereafter                           4,678
                                           $21,609

</TABLE>
NOTE 5-COMMITMENTS AND CONTINGENCIES

At July 31, 1996, the Company was obligated under commercial letters of
credit of approximately $12,500,000 drawn in favor of certain clearing
organizations which were collateralized by customer-owned securities of
$9,232,232 and firm-owned securities of $5,500,000.  These obligations
normally settle through the clearance of the related securities transactions
with the respective organizations.

The Company is named in and subject to various proceedings and claims
incidental to its securities business.  While the ultimate resolution of
pending litigation and claims cannot be predicted with certainty, based upon
the information currently known, management is of the opinion that the
resolution of such litigation and claims will have no material adverse effect
on the Company's results of operations or financial condition.
PAGE
<PAGE>
<PAGE>
NOTE 6-INCOME TAXES

Significant components of the provision (credit) for income taxes are as
follows at July 31, in thousands:
<TABLE>
                             1996         1995         1994          
     <S>                   <C>          <C>          <C>
     Federal:
       Current             $18,450      $14,000      $17,458
       Deferred               (750)      (1,900)        (958)
                            17,700       12,100       16,500
     State                   3,600        2,400        3,300
                           $21,300      $14,500      $19,800
</TABLE>
The principal reasons for the difference between the effective rate and the
federal statutory income tax rate for the years ended July 31 are as follows,
in thousands:
<TABLE>
                           1996                1995                1994    
                      Amount  Percent     Amount  Percent     Amount  Percent
<S>                 <C>        <C>      <C>       <C>       <C>       <C>
Federal Statutory
 rate applied to
 pretax earnings    $19,308    35.0%    $13,422    35.0%    $18,074    35.0%
State and local
 taxes, less income
 tax benefit          2,340     4.2       1,560     4.0       2,145     4.2
Non-taxable interest,
 less non-deductible
 interest              (353)   (0.6)       (404)   (1.0)      (410)   (0.8)
Other - net               5       -         (78)   (0.2)        (9)   (0.1)
                    $21,300    38.6%    $14,500    37.8%   $19,800    38.3%
</TABLE>
The components of the deferred tax provision (credit) for the years ended
July 31 are as follows, in thousands:
<TABLE>
                                             1996       1995       1994 
<S>                                       <C>        <C>        <C>
Depreciation and other building
 related items                            $   537    $  (675)   $  (324)
Deferred compensation                        (163)       (73)       (27)
Restricted Stock                             (728)      (311)       (75)
Non-deductible reserves                      (220)      (356)      (281)
Trade date profit                             (45)      (178)        24
Insurance and benefits                       (168)      (341)      (377)
Other - net                                    37         34        102
                                          $  (750)   $(1,900)   $  (958)
</TABLE>
PAGE
<PAGE>
<PAGE>
Significant components of the Company's deferred tax assets and liabilities
as of July 31 are as follows, in thousands:
<TABLE>                                                                     
 
                                                   1996           1995
 <S>                                              <C>            <C>
 Deferred tax assets:
  Deferred compensation and restricted stock      $2,125         $1,234
  Non-deductible reserves                          1,915          1,695
  Insurance and benefits                           1,709          1,541
  Trade date profit                                  271            226
  Other                                               67             20
                                                   6,087          4,716

Deferred tax liabilities:
  Depreciation and other building related items    1,778          1,241 
  Other                                              309            225
                                                   2,087          1,466
  Net deferred tax assets                         $4,000         $3,250
                                                                           
</TABLE>



NOTE 7-COMMON STOCK

The Board of Directors has reserved 6,112,500 shares for issuance under the
Company's Restricted Stock and Incentive Stock Option plans of 1983 and 1985. 
Under provisions of the Restricted Stock and the Incentive Stock Options
Plans, benefits may be granted to key officers and employees in either, or a
combination of, incentive stock options or restricted stock awards. 
Incentive stock options are granted at the fair market value of the stock at
the time of grant.  There were approximately 1,480,000 remaining shares
available to be granted at July 31, 1996.

The Board of Directors has authorized 450,000 shares to be granted to non-
employee directors in the form of incentive stock options.  As of July 31,
1996, 153,000 options were outstanding and exercisable at an average price of
$8.58.  During fiscal year 1996, 31,500 options were exercised at an average
price of $4.65 and 36,000 options were granted at an average price of $11.63.
PAGE
<PAGE>
<PAGE>
  Employee stock option activity, which includes 10,850 shares that are
exercisable, is summarized as follows:
<TABLE>
                                            Average 
                                 Shares      Price      Aggregate     Exercisable
<S>                             <C>         <C>          <C>          <C>
Outstanding at July 31, 1993     68,625      $2.65       181,936
  Granted                        31,407      $8.35       262,100       1994-1999
  Exercised                     (16,875)    ($2.18)      (36,788)
Outstanding at July 31, 1994     83,157      $4.90       407,248
  Granted                        58,750      $8.80       516,790       1995-2001
  Exercised                     (10,125)    ($2.55)      (25,773)
  Forfeited                     (20,133)    ($6.74)     (135,651)
Outstanding at July 31, 1995    111,649      $6.83       762,614
  Granted                        18,875      $8.40       158,463        1995-2001
  Exercised                     (41,625)    ($2.55)     (106,324)
Outstanding at July 31, 1996     88,899      $9.16       814,753
</TABLE>
The Company has approximately 1,550,000 shares of restricted stock included
in common stock outstanding which was issued at the fair market value at the
date of grant.

Under an Employee Stock Purchase Plan, 2,850,000 shares have been reserved to
allow employees to purchase company shares at a 15% discount, not to exceed
337,500 shares to all employees in any year.

Activity by year under the plan is summarized as follows:
<TABLE>
                     <C>                   <C>
                     Year                  Shares sold
                     1994                    264,887
                     1995                    325,799
                     1996                    285,338

</TABLE>
NOTE 8-REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

The Company enters into sales of securities under agreements to repurchase,
with the obligation to repurchase the securities sold reflected as a
liability in the consolidated statement of financial condition.
  
The Company also enters into purchases of securities under agreements to
resell (reverse repurchase agreements).  The amounts advanced under these
agreements represent short-term loans and are reflected as a receivable in
the consolidated statement of financial condition.  Securities purchased
under agreements to resell are held in safekeeping in the Company's name. 
Should the market value of the underlying securities decrease below the
amount recorded, the counterparty is required to place an equivalent amount
of additional securities in safekeeping in the name of the Company.

NOTE 9-EMPLOYEE BENEFIT PLANS

The Company makes discretionary contributions to its 401k defined
contribution plan and its profit sharing plan covering substantially all
employees.  The Company also has a defined retirement plan covering certain
executives.  Total provisions for expenses under all plans for each of the
years ended July 31, 1996, 1995, and 1994 totaled $1,475,000, $974,000, and
$916,000, respectively.
PAGE
<PAGE>
<PAGE>
NOTE 10-REGULATORY REQUIREMENTS

The Company's broker/dealer subsidiary, Morgan Keegan & Company, Inc., is a
member of the New York Stock Exchange and is subject to the Securities and
Exchange Commission's (SEC) uniform net capital rule.  The subsidiary
broker/dealer company has elected to operate under the alternate method of
the rule, which prohibits a dealer from engaging in any securities
transactions when its net capital is less than 2% of its aggregate debit
balances, as defined, arising from customer transactions.  The SEC may also
require a member to reduce its business and restrict withdrawal of
subordinated capital if its net capital is less than 4% of aggregate debit
balances, and may prohibit a member firm from expanding its business and
declaring cash dividends if its net capital is less than 5% of aggregate
debit balances.

At July 31, 1996, subsidiary had net capital of $102,154,559 which was 32% of
its aggregate debit balances and $95,900,041 in excess of the 2% net capital
requirement.  At July 31, 1995, subsidiary had net capital of $87,185,586,
which was 32% of its aggregate debit balances and $81,657,792 in excess of
the 2% net capital requirement.

                                                                            

NOTE 11-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 risk in the event the customer is
unable to fulfill its contractual obligations.  The Company maintains cash
and margin accounts for its customers located throughout the United States
but primarily in the Southeast.

The Company, as part of its normal brokerage activities, assumes short
positions on securities.  The establishment of short positions exposes the
Company to off-balance sheet risk in the event prices increase, as the
Company may be obligated to cover such positions at a loss.  The Company
manages its exposure to these instruments by entering into offsetting or
other positions in a variety of financial instruments.

As a securities broker/dealer, a substantial portion of the Company's
transactions are collateralized.  The Company's exposure to credit risk
associated with nonperformance in fulfilling contractual obligations pursuant
to securities transactions can be directly impacted by volatile trading
markets which may impair the customer's or contra party's ability to satisfy
their obligations to the Company.  Where considered necessary, the Company
requires a deposit of additional collateral, or a reduction of securities
positions.

In the normal course of business, the Company enters into underwriting and
forward and future commitments.  At July 31, 1996, the contract amount of
future contracts to purchase and sell U.S. Government securities was
approximately $20 and $36 million, respectively.  At July 31, 1995, the
contract amount of future contracts to purchase and sell U.S. Government
securities was approximately $7 million each.  The Company typically settles
its position by entering into equal but opposite contracts and, as such, the
contract amounts do not necessarily represent future cash requirements.  
Substantially all transactions relating to such commitments were subsequently
<PAGE>
<PAGE>
settled and had no material effect on the Company's consolidated financial
position.

The Company will occasionally hedge a portion of its long proprietary
inventory position through the use of short positions in financial future
contracts.  At July 31, 1996, the Company had approximately $47,000,000 of
these contracts.  The contract amounts do not necessarily represent future
cash requirements.

While the Company regularly participates in the trading of some derivative
securities for its customers, this trading is not a significant portion of
the Company's business.



NOTE 12-QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
                                (In thousands, except per share amounts)

                                             Quarter Ended

                             October 31   January 31    April 30    July 31 
<S>                          <C>          <C>           <C>         <C>
1995:
  Revenues                    $68,940      $77,457      $79,297     $75,712
  Expenses                     54,710       62,540       65,221      63,768
  Income before income taxes   14,230       14,917       14,076      11,944
  Net income                    8,830        9,217        8,576       7,244
  Net income per share           0.44         0.45         0.41        0.35
  Dividends per share            0.06         0.06         0.07        0.07
  Stock price range:
   High                         12.63        13.63        13.38       13.25
   Low                          10.88        10.88        12.00       12.13



1995:
  Revenues                    $56,206      $55,267      $50,147     $66,452
  Expenses                     45,235       45,730       43,187      55,572
  Income before income taxes   10,971        9,537        6,960      10,880
  Net income                    6,771        5,937        4,360       6,780
  Net income per share           0.33         0.29         0.22        0.33
  Dividends per share            0.05         0.05         0.05        0.07
  Stock price range:
   High                          9.00         8.75        10.67       13.13
   Low                           8.16         7.83         8.50       10.42
</TABLE>
<PAGE>