<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                                 FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1997

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE AT OF 1934 FOR THE TRANSITION PERIOD FROM
_________________ TO_____________________


                 Commission file number 2-63708

          METROPOLITAN MORTGAGE & SECURITIES CO., INC.
      (Exact name of registrant as specified in its charter)
                                
       WASHINGTON                              91-0609840
    (State or other jurisdiction of         (I.R.S. Employer
   incorporation or organization)          Identification No.)
                                
      West 929 Sprague Ave., Spokane, WA              99204
    (Address of principal executive offices)      (Zip Code)
                                
                          (509)838-3111
      (Registrant's telephone number, including area code)
                                
   __________________________________________________________
         (Former name, former address and former fiscal
               year, if changed since last report)

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 the past 90 days.  Yes /X/  No / /

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:  (Not Applicable)

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes / /  No / / N/A

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
            130 SHARES - Common "A" at April 30, 1997
             0 SHARES - Common "B" at April 30, 1997
<PAGE>
            METROPOLITAN MORTGAGE & SECURITIES CO., INC.
                                Index


Part I - Financial Information: Index to Part I

Item 1.   Financial Statements

   Consolidated Condensed Balance Sheets --
     March 31, 1997 and
     September 30, 1996  (unaudited)

   Consolidated Condensed Statements of Income
     Three and Six Months Ended March 31, 1997
     and 1996 (unaudited)

   Consolidated Condensed Statements of Cash Flows
     Six Months Ended March 31, 1997 and 1996
     (unaudited)

   Notes to Consolidated Condensed Financial Statements

Item 2.   Management's Discussion and Analysis of Financial
     Condition and Results of Operations.


<PAGE>


                       Part I - Financial Information


       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                 March 31,
September 30,
                                                   1997
1996
                                        (unaudited)
<S>                                            <C>              <C>
ASSETS
  Cash and Cash Equivalents                     $  20,146,241    $
35,226,746
  Restricted Cash and Cash Equivalents
132,652,334
  Investments:
    Available-for-Sale Securities,
     at market                                    75,962,119
38,554,498
    Held-to-Maturity Securities,
     at amortized cost (market value
     $115,830,548 and $119,200,084)              121,174,845
124,748,490
  Accrued Interest on Investments                   1,618,319
1,516,390
                                               --------------     ---
----------
      Total Cash and Investments                  218,901,524
332,698,458
                                               --------------     ---
----------
  Real Estate Contracts and Mortgage
    Notes and Other Receivables                   720,729,519
758,427,480
  Real Estate for Sale and
    Development - Including
    Foreclosed Real Estate                         82,253,196
84,333,288
                                                -------------     ---
----------
  Total Receivables and
    Real Estate Assets                            802,982,715
842,760,768
  Less Allowance for Losses                        (9,976,896)
(10,192,584)
                                                -------------     ---
----------
      Net Receivables and
      Real Estate Assets                          793,005,819
832,568,184
                                                -------------     ---
----------

  Deferred Acquisition Costs, Net                  74,398,522
74,530,361

  Land, Building and Equipment - net
    of accumulated depreciation                     9,072,655
8,516,598

  Other Assets, net of allowance                   37,449,520
34,345,227
                                               --------------      --
----------

    TOTAL ASSETS                               $1,132,828,040
$1,282,658,828
                                               ==============
==============
</TABLE>


The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>


       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      March 31,
September 30,
                                                        1997
1996
                                                  (unaudited)

<S>                                               <C>             <C>
LIABILITIES
 Life Insurance and Annuity Reserves             $  842,287,055    $
837,366,108
 Debenture Bonds                                    183,496,611
192,173,751
 Other Debt Payable                                  11,868,596
38,601,146
 Securities Sold, Not Owned
132,652,334
 Accounts Payable and Accrued
   Expenses                                          27,559,198
18,082,782
 Deferred Income Taxes                               15,001,400
15,894,831
 Minority Interest in Consolidated
   Subsidiaries                                       1,587,844
1,544,544
                                                  -------------    --
------------
   TOTAL LIABILITIES                              1,081,800,704
1,236,315,496
                                                  -------------    --
------------

STOCKHOLDERS' EQUITY
 Preferred Stock, Series A, B, C, D,
   E Cumulative with Variable Rate,
   $10 Par Value, Authorized 8,325,000
   Issued 2,155,267 Shares and
   2,151,820 Shares (Liquidation
   Preference $50,518,508 and
   $49,495,906, respectively)                        21,552,665
21,518,198
 Class A Common Stock - Voting,
   $2,250 Par Value, Authorized
   222 Shares, Issued 130 Shares                        293,417
293,417
 Additional Paid-In Capital                          17,779,728
16,791,670
 Retained Earnings                                   11,944,961
8,731,070
 Net Unrealized Losses on
    Investments                                        (543,435)
(991,023)
                                                   ------------     -
------------
    TOTAL STOCKHOLDERS' EQUITY                       51,027,336
46,343,332
                                                   ------------     -
------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY                     $1,132,828,040
$1,282,658,828
                                                 ==============
===============
</TABLE>

The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
          METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

                                            Three Months Ended
Six Months Ended
                                                  March 31,
March 31
                                           1997               1996
1997                1996
                                         --------------------------
---------------------------
<S>                                   <C>           <C>
REVENUES:
 Insurance Premiums Earned              $   750,000    $   750,000             $
1,500,000          $ 1,500,000
 Interest and Earned Discounts           22,774,077     22,755,006
46,879,593           44,674,881
 Real Estate Sales                        7,305,686     12,683,339
14,152,386           23,291,364
 Fees, Commissions, Service
  and Other Income                        1,177,497        761,133
2,385,584            1,452,690
 Realized Investment Gains (Losses)          43,996         21,290
(2,116,159)              24,090
 Realized Gains on Sales of
  Receivables                             1,712,582      1,051,230
11,547,541            1,135,720
                                       ------------     ----------             -
---------           -----------

  TOTAL REVENUES                         33,763,838     38,021,998
74,348,945           72,078,745
                                       ------------     ----------             -
----------           ----------
EXPENSES:
 Insurance Policy and Annuity
   Benefits                              12,009,603     11,748,235
25,065,014           23,809,875
 Interest Expense                         3,983,599      4,301,929
9,818,921            8,080,764
 Cost of Real Estate Sold                 7,702,652     12,063,139
15,142,661           22,529,781
 Provision for Losses on Real
   Estate Assets                          1,410,613      1,336,950
1,996,834            2,271,493
 Salaries and Employee
   Benefits                               3,337,224      2,553,940
6,370,158            4,834,808
 Commissions to Agents                    2,065,315      2,930,412
4,224,085            5,361,611
 Other Operating and
   Underwriting Expenses                  1,517,514      1,530,022
3,817,418            3,158,585
 Decease (Increase) in Deferred
   Acquisition Costs                         (5,582)      (192,868)
232,373             (202,000)
                                         ----------     ----------
---------            ---------

   TOTAL EXPENSES                        32,020,938     36,271,759
66,667,464           69,844,917
                                         ----------     ----------             -
----------           ----------

Income Before Income Taxes and
   Minority Interest                      1,742,900      1,750,239
7,681,481            2,233,828
Provision For Income Taxes                 (595,884)      (589,460)
(2,618,051)            (760,393)
                                         -----------     ----------
----------            ---------

Income Before Minority
   Interest                               1,147,016      1,160,779
5,063,430            1,473,435

Income of Consolidated
   Subsidiaries Allocated to
   Minority Stockholders                    (26,740)       (26,887)
(62,300)              (36,198)
                                         ----------     -----------
---------            ----------

NET INCOME                                1,120,276      1,133,892
5,001,130             1,437,237

Preferred Stock Dividends                (1,013,595)      (900,489)
(2,036,960)           (1,823,895)
                                         ----------     ------------
----------             ---------
Income (Loss) Applicable to
   Common Stockholders                  $   106,681      $ 233,403
$2,964,170            $ (386,658)
                                        ===========     ===========
==========            ==========

The accompanying notes are an integral part of the consolidated financial
statements.

</TABLE>

       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                               (UNAUDITED)
<TABLE>
<CAPTION>
                                                   Six Months Ended
                                                       March 31,
                                                1997             1996
                                               ----------------------
-

<S>                                             <C>           <C>
Net Cash Provided By  (Used In)
  Operating Activities                      $(108,186,295)   $
22,956,405
                                              ------------    -------
----
Cash Flows From Investing Activities:
Change in Restricted Cash and Cash
    Equivalents                               132,652,334
Principal Payments on Real Estate
    Contracts and Mortgage Notes
    and Other Receivables                      67,805,747
58,058,181
Proceeds From Real Estate Sales                 3,137,570
3,072,548
Proceeds From Investment Maturities            11,065,918
13,003,474
Proceeds from Sale of Available-
    for-Sale Securities                         1,266,029
31,684,176
Purchase of Available-for-Sale
    Securities                                (46,041,430)
(2,139)
Purchase of Held-to-Maturity
    Securities                                    (99,625)
(3,311,988)
Proceeds From Sale of Real Estate
    Contracts and Mortgage Notes
    and Other Receivables                     172,200,857
18,311,296
Acquisition of Real Estate Contracts and
     Mortgage Notes and Other Receivables    (185,348,456)
(150,597,581)
Additions to Real Estate Held                 (10,858,716)
(16,135,196)
Capital Expenditures                           (1,061,356)
(619,562)
                                              -----------     -------
-----

Net Cash Provided By (Used In)
    Investing Activities                      144,718,872
(46,536,791)
                                              -----------     -------
-----
Cash Flows From Financing Activities:
Net Change in Short Term Borrowings from
  Brokers and Banks                           (25,484,750)
7,913,375
Receipts From Life and Annuity Products        36,290,797
59,493,607
Withdrawals on Life and Annuity Products      (54,523,739)
(45,305,669)
Repayment to Banks and Others                  (1,995,409)
(1,912,362)
Issuance of Debenture Bonds                    21,561,718
7,650,338
Issuance of Preferred Stock                     1,099,990
1,105,664
Repayment of Debenture Bonds                  (26,696,985)
(16,145,440)
Preferred Stock Dividends                      (2,036,960)
(1,823,895)
Redemption of Capital Stock                       (77,465)
(97,533)
Receipt of Contingent Sale Price
  for Subsidiary Sold to Related Party            249,721
                                               ----------     -------
------

Net Cash Provided By (Used In)
  Financing Activities                        (51,613,082)
10,878,085
                                              -----------    --------
-----

Net Decrease in Cash and
  Cash Equivalents                            (15,080,505)
(12,702,301)
Cash and Cash Equivalents at Beginning
  of Period                                    35,226,746
32,798,627
                                             ------------    --------
-----

Cash and Cash Equivalents at End
  of Period                                  $ 20,146,241    $
20,096,326
                                            =============
============
</TABLE>
The   accompanying   notes   are   an  integral   part   of   the   consolidated
financial                                                            statements.

                METROPOLITAN MORTGAGE & SECURITIES CO., INC.
              NOTES   TO   CONSOLIDATED  CONDENSED  FINANCIAL
STATEMENTS



1.   In   the   opinion  of  the  Company,  the  accompanying
     unaudited  consolidated condensed  financial  statements
     contain all adjustments necessary to present fairly  the
     Company's  financial position as of March 31, 1997,  and
     the  results of operations for the three and six  months
     ended  March 31, 1997 and 1996 and the changes  in  cash
     flows  for the six months ended March 31, 1997 and 1996.
     The results of operations for the six month period ended
     March  31,  1997 and 1996 are not necessarily indicative
     of  the  results to be expected for the full  year.   As
     provided   for   in  regulations  promulgated   by   the
     Securities   and  Exchange  Commission,  all   financial
     statements  included herein are unaudited; however,  the
     condensed  consolidated balance sheet at  September  30,
     1996  has  been  derived from the  audited  consolidated
     balance  sheet.   These financial statements  should  be
     read  in  conjunction  with the  consolidated  financial
     statements  including  notes  thereto  included  in  the
     Company's fiscal 1996 Form 10-K.

2.   The principal amount of receivables as to which payments
     were  in  arrears more than three months was $29,000,000
     at March 31, 1997 and $26,500,000 at September 30, 1996.

3.   The  Company had no outstanding legal proceedings  other
     than   normal  proceedings  associated  with  receivable
     foreclosures, and/or the general business activities  of
     the Company.

4.   Certain   amounts  in  the  prior  year's   consolidated
     condensed financial statements have been reclassified to
     conform  with the current year's   presentation.   These
     reclassifications  had  no  effect  on  net  income   or
     retained earnings as previously reported.

5.   In  November  1996, Metropolitan Mortgage  &  Securities
     Co.,   Inc.  (Metropolitan  or  the  Company)  and   its
     subsidiary Western United Life Assurance Company  (WULA)
     participated  as  two  of  the  four  co-sellers  in   a
     receivable   securitization  sponsored  by  Metropolitan
     Asset    Funding,    Inc.,   an   affiliated    company.
     Approximately $126.7 million of receivables, with $115.5
     million provided by Metropolitan and WULA, were sold  in
     a securitization transaction with proceeds, after costs,
     of approximately $121.1 million, of which $110.4 million
     was  allocated  to  Metropolitan  and  WULA.   With   an
     amortized carrying value of approximately $101.5 million
     in   the   receivables   sold  in  the   securitization,
     Metropolitan  and  WULA   recorded  approximately   $8.9
     million in pre-tax gains from their portion of the sale.
     Metropolitan  Asset  Funding,  Inc.  sold  approximately
     $113.4  million  in  varying classes of  mortgage  pass-
     through  certificates.  In addition to the  certificates
     sold  to  the   public, approximately $13.3  million  in
     subordinate   class  certificates  and  residual   class
     certificates were returned to the various co-sellers  of
     the   receivables   included  in   the   securitization.
     Metropolitan  and  WULA  received  approximately  $101.6
     million,  after  costs,  from  the  securitization   and
     received  approximately  $12.0 million  (estimated  fair
     value)   in   subordinate  class  and   residual   class
     certificates.  As an economic hedge for this  receivable
     securitization  sale, the Company  had  previously  sold
     short   approximately  $128  million  of  U.S.  Treasury
     securities of varying maturities.  Concurrent  with  the
     completion   of  the  securitization  transaction,   the
     Company purchased and delivered the borrowed securities.
     The  Company  lost approximately $2.5  million  on  this
     short  sale.  Thereby from an economic  standpoint,  the
     Company  realized an approximate $6.4 million in pre-tax
     gains on the securitization sale.

6.   In   December   1995,   the   Company   reassessed   the
     appropriateness of the classifications of its securities
     investments.   Based on this reassessment,  the  Company
     transferred $72,572,322 of securities from the  Held-to-
     Maturity   classification  to   the   Available-for-Sale
     classification.   This transfer was  based  on  guidance
     included  in the special report issued by the  Financial
     Accounting  Standards Board, "A Guide to  Implementation
     of  Statement 115 on Accounting for Certain  Investments
     in Debt and Equity Securities".

7.   In  1995,  the Company sold its wholly owned subsidiary,
     Old  Standard  Life Insurance Company  (OSL)  to  Summit
     Securities, Inc. (Summit), an affiliated company through
     common control.  In connection with the purchase, Summit
     agreed  to pay a contingent purchase price consideration
     to  Metropolitan based upon the future earnings of  OSL.
     During  the  quarter ended March 31, 1997,  the  Company
     received  approximately $250,000 of contingent  purchase
     price  from  Summit.   Due to the affiliated  nature  of
     these  companies, payment was recorded  an  increase  in
     retained earnings.

8.   The  preparation of financial statements  in  conformity
     with  generally accepted accounting principles  requires
     management to make estimates and assumptions that affect
     the  reported  amounts  of assets  and  liabilities  and
     disclosure of contingent assets and liabilities  at  the
     dates  of  the  financial statements  and  the  reported
     amounts  of  revenues and expenses during the  reporting
     periods.    Actual  results  could  differ  from   those
     estimates.


Item 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

       The   discussions  may  contain  some  forward-looking
statements.   A  forward-looking statement may contain  words
such  as  "will  continue to be," "will be,"  "continue  to,"
"expect  to,"  "anticipates that," "to be," or "can  impact."
Management  cautions  that  forward-looking  statements   are
subject  to  risks  and uncertainties that  could  cause  the
Company's  actual  results to differ  materially  from  those
projected in forward-looking statements.

Significant Transactions:

      In  November  1996, Metropolitan Mortgage &  Securities
Co.,  Inc.  (Metropolitan or the Company) and its  subsidiary
Western United Life Assurance Company (WULA) participated  as
two  of  the  four co-sellers in a receivable  securitization
sponsored  by Metropolitan Asset Funding, Inc., an affiliated
company.   Approximately $126.7 million of receivables,  with
$115.5  million provided by Metropolitan and WULA, were  sold
in  a  securitization transaction with proceeds, after costs,
of  approximately  $121.1 million, which $110.4  million  was
allocated  to  Metropolitan  and  WULA.   With  an  amortized
carrying  value  of  approximately  $101.5  million  in   the
receivables sold in the securitization, Metropolitan and WULA
recorded  approximately $8.9 million in  pre-tax  gains  from
their portion of the sale.  Metropolitan Asset Funding,  Inc.
sold  approximately  $113.4 million  in  varying  classes  of
mortgage  pass-through  certificates.   In  addition  to  the
certificates sold to the  public, approximately $13.3 million
in support class certificates and residual class certificates
were  returned  to the various co-sellers of the  receivables
included  in  the  securitization.   Metropolitan  and   WULA
received approximately $101.6 million, after costs, from  the
securitization  and  received  approximately  $12.0   million
(estimated  fair value) in support class and  residual  class
certificates.   As  an  economic hedge  for  this  receivable
securitization  sale, the Company had previously  sold  short
approximately  $128  million of U.S. Treasury  securities  of
varying  maturities.  Concurrent with the completion  of  the
securitization   transaction,  the  Company   purchased   and
delivered   the  borrowed  securities.   The   Company   lost
approximately $2.5 million on this short sale.  Thereby  from
an  economic  standpoint, the Company realized an approximate
$6.4 million in pre-tax gains on the securitization sale.

      On January 31, 1995, the Company concluded an agreement
with  Summit  Securities,  Inc.  (Summit),  whereby  it  sold
Metropolitan Investment Securities, Inc. (MIS) to Summit,  at
a sale price of $288,950, which approximated the current book
value  of MIS at date of sale.  On May 31, 1995, the  Company
concluded  an  agreement with Summit,  whereby  it  sold  Old
Standard Life Insurance Company (OSL) to Summit effective May
31,  1995,  at a sale price of $2,722,000, which approximated
the  current  book value of OSL at date of sale, with  future
contingency  payments based on earnings of  OSL.   The  sales
price plus estimated future contingency payments approximates
the  actuarial appraised valuation of OSL.  During the  three
months   ended   March   31,  1997,  the   Company   received
approximately  $250,000  of  contingent  consideration   from
Summit.

      On  February 21, 1997, WULA entered into a  reinsurance
agreement  with OSL, whereby WULA agreed to reinsure  75%  of
certain  single  premium  deferred  annuity  contracts.   The
amount  of  deferred  annuity contracts  coinsured  with  OSL
totaled approximately $8.2 million at March 31, 1997.
Financial Condition and Liquidity:

      As  of  March  31, 1997, the Company had cash  or  cash
equivalents of $20.1 million and liquid investments  (trading
or  available-for-sale securities) of $76.0 million  compared
to  $63.2  million  in  cash and cash equivalents  and  $56.7
million in liquid investments at December 31, 1996 and  $35.2
million  in  cash and cash equivalents and $38.6  million  in
liquid   investments  at  September  30,  1996.    Management
believes  that cash, cash equivalents and liquidity  provided
by  other  investments  are adequate to  meet  planned  asset
additions,  debt  retirements or other  business  operational
requirements  during the next twelve months.  At   March  31,
1997,  total cash and investments, including restricted  cash
and  held-to-maturity  securities,  were  $218.9  million  as
compared to $332.7 million at September 30, 1996.  During the
six  month  period  ended March 31, 1997,  the  Company  used
approximately  $108.2  million in  its  operating  activities
including  $132.7  million to close the previously  described
short  sale  of U.S. Treasury securities.  Funds provided  by
investing  activities  of $144.7 million  resulted  primarily
from  changes  in  restricted cash of  $132.7  million,  sale
proceeds  and  collections of receivables of $240.0  million,
investment  maturities of $11.1 million,  real  estate  sales
proceeds   of  $3.1  million  and  proceeds  from  investment
securities  of  $1.3 million being offset by  new  receivable
acquisitions  of  $185.3  million,  purchase  of   investment
securities of $46.1 million, addition to real estate held  of
$10.9 million and other capital expenditures of $1.1 million.
Funds  used  in financing activities of $51.6 million,  which
included a $1.0 million net cash inflow from preferred  stock
sales  less redemptions, were used primarily to payoff short-
term  borrowings of $25.5 million, finance a net cash outflow
of  $18.2 million in life and annuity products, finance a net
cash  outflow of $5.1 million in debenture bonds,  repayments
to  banks and others of $2.0 million and payment of preferred
stock dividends of $2.0 million.

     The receivable portfolio totaled $720.7 million at March
31,  1997  compared to $703.2 million December 31,  1996  and
$758.4  million at September 30, 1996.  During the six months
ended  March  31, 1997, the decrease primarily resulted  from
the  acquisition of receivables totaling $185.3 million  plus
an  additional $11.0 million in loans to facilitate the  sale
of  real estate being totally offset by principal collections
on receivables of $67.8 million, reduction for the cost basis
of  receivables sold of $160.7 million and reductions due  to
foreclosed receivables of approximately $5.4 million.

      Real estate held for sale and development decreased  to
$82.2  million  at  March  31, 1997  from  $84.2  million  at
December  31, 1996 and $84.3 million at September  30,  1996.
For  the  six  months  ended  March  31,  1997,  real  estate
additions  of   $16.8  million,  including  $5.9  million  of
foreclosed  receivables, which were offset by costs  of  real
estate  sold  of $15.1 million, depreciation of $2.2  million
and charge-offs to the allowance for losses of $1.5 million.

      Life  insurance  and annuity policy reserves  increased
$4.9  million during the six months ended March 31,  1997  to
approximately $842.3 million from $837.4 million at September
30,  1996.  This increase resulted from credited earnings  of
$23.2  million offset by a $18.2 million of cash  outflow  as
receipts from sales of new life and annuity products of $36.3
million  were  exceeded by withdrawals of $54.5 million  from
existing policies.  Net debenture bonds outstanding decreased
by  $8.7  million to $183.5 million at March  31,  1997  from
$192.2  million at September 30, 1996.  Net cash inflow  from
issuance less maturities of debentures was approximately $5.1
million  plus an additional $3.6 million decrease in credited
interest held.  Additionally, the Company had cash flow,  net
of  redemptions, of approximately $1.0 million from the  sale
of  preferred  stock  and  reinvestment  of  preferred  stock
dividends during the six months ended March 31, 1997.  During
the  six  month  period  ended March 31,  1997,  the  Company
decreased  the portion of its other debt payable  represented
by  short  term borrowings by $25.5 million to an approximate
outstanding amount of $10.0 million on March 31, 1997.

      Total  assets decreased by $149.9 million  to  $1,132.8
million  at March 31, 1997 from $1,282.7 million at September
30,  1996.  At March 31, 1997, the Company had net unrealized
losses  on  securities available-for-sale in  the  amount  of
$543,000 as compared to unrealized losses of $1.0 million  at
September  30,  1996.   Net unrealized losses  on  securities
available-for-sale  is presented as a separate  component  of
stockholders' equity.

Results of Operations:

       The  Company  recorded  net  income  before  preferred
dividends  for  the  six  months  ended  March  31,  1997  of
$5,001,000 compared to $1,437,000 in the prior year's period.
Comparing the current year's six month period with the  prior
year's  similar  period, increases in  gains  from  sales  of
receivables, increases in other fees and commission revenues,
a reduction in the provision for losses on real estate assets
and  a  reduction in commission expense were  only  partially
offset  by  a reduction in the net interest spread, increased
losses  from  the sale of real estate, increased losses  from
the  sale  of  investment securities, increases in  salaries,
benefits  and other operating expenses and related  provision
for income taxes.

      For  the  six  month period ended March 31,  1997,  the
Company  reported a positive spread on its interest sensitive
assets and liabilities of $13.5 million as compared to  $14.3
million  in  the  prior  year's period.   The  reduction  was
primarily  the  result  of  a  reduction  in  the  receivable
portfolio  due  to the securitization sale in November  1996.
While there has been some contraction in portfolio investment
earnings rates in the current year's period as new investment
yields  are  slightly  lower than previous  investments,  the
Company has also experienced reduced renewal rates on some of
its  life  and  annuity  policies.   Currently,  the  Company
continues  to  control life and annuity policy surrenders  by
maintaining  current  market credited rates.   Normally,  the
Company's  investment earnings rates are not as sensitive  to
market conditions as is its life and annuity policy rates and
thus a sustained rise in interest rates could have a negative
impact  on its net interest spread as its liabilities reprice
faster than its assets.

      During the six months ended March 31, 1997, the Company
realized  net  losses  from the sale of investments  of  $2.1
million compared to net gains of $24,000 in the prior  year's
period.  The current period loss was primarily the result  of
a short sale of U.S. Treasury securities.  The short sale was
used  by  the Company as an economic hedge of its  receivable
securitization  in  November  1996.   Additionally,  in   the
current  year's period, the Company realized gains  of  $11.5
million  from  the  sale of approximately $160.7  million  of
receivable  investments, while in the prior  year,  sales  of
approximately   $17.2   million  of  receivable   investments
produced  realized  gains  of  $1.1  million.   The   Company
realized losses of $1.0 million on sales of $14.2 million  of
real  estate  in  the current year's period compared  to  net
gains  of  $762,000 on sales of  $23.3 million in  the  prior
year.   Significant in the current year compared to the prior
year had been the result of the Company's timeshare sales  at
its  resort in Hawaii.  In the current year, the Company  has
recorded  timeshare sales of approximately $7.0 million  with
losses  of $1.6 million as compared to sales of $11.9 million
and  losses  of $.7 million in the prior year.   The  Company
expects future timeshare operations to improve as an off-site
sales  office  has been closed which should reduce  operating
expenses  and  the Company's selling agent has  replaced  the
project  and  sales managers.  The Company  anticipates  that
these   changes  will  improve  the  results  from  timeshare
operations  in  the  future.   It  has  been  the  policy  of
management  to  actively sell its real  estate  in  order  to
return  the  investment to an earning asset.  In addition  to
returning  these  assets to earning status, the  Company  has
been  able to reduce other operating expenses associated with
its  real  estate, such as insurance, taxes, maintenance  and
amenities.

      In  the  six  months ended March 31, 1997, the  Company
recorded  other fees and commission revenues of $2.4  million
as  compared to $1.5 million in the prior year.  The increase
in  the current year is primarily the result of net servicing
revenues related to the receivable securitizations.

     In the six months ended March 31, 1997, the Company made
provisions  for losses on receivables and real estate  assets
of  approximately $2.0 million as compared to $2.3 million in
the  prior  year's  period.  The decreased provision  in  the
current  year is the result of the decrease in the receivable
portfolio  and the real estate asset portfolio.  The  Company
has  experienced a slight increase in receivable  delinquency
rates, however, a stable to improving real estate market  has
offset the effects of the delinquency rate increases.

      In comparing the three months ended March 31, 1997 with
the  prior year's similar period, net income was $1.1 million
on  revenues  of $33.8 million as compared to net  income  of
$1.1 million on revenues of $38.0 million.  The reduction  in
revenues was primarily the result of a $5.4 million reduction
in  real estate sales, with sales of $7.3 million in 1997  as
compared to $12.7 million in 1996, being partially offset  by
increased  gains on the sale of receivables of  approximately
$661,000  and  increased  revenues  from  fees,  commissions,
service and other income of approximately $416,000.

      Net  income for the comparative three months was almost
identical  as  improvements  from  (1)  an  increased  spread
between  interest  sensitive income  and  interest  sensitive
expense,  (2) an increase in overall gains from the  sale  of
receivables  and  investments, and (3) an increase  in  fees,
commissions  and service income were totally  offset  by  (1)
increased losses on the sale of real estate, (2) an  increase
in  the provision for loss on real estate assets, (3)  a  net
increase   in   expenses,  including  salaries,  commissions,
operating expenses and deferred acquisition expenses.

      For  the  three months ended March 31,  1997,  the  net
interest spread was $7.5 million compared to $7.4 million  in
the  prior  year's  similar period.   The  increase  of  only
$100,000  was  primarily the result of   the  timing  of  the
reinvestment   of  the  proceeds  from  its   November   1996
receivable securitization.

      During  the  three  months ended March  31,  1997,  the
Company  recorded gains on the sale of investments of $44,000
and  $1.7  million on the sale of receivables.  In the  prior
year,  the  Company recorded gains on the sale of investments
of   $21,000   and  $761,000  on  the  sale  of  receivables.
Receivable  sales in 1997 were approximately $51  million  as
compared to $15 million in 1996.

      During  the  three  months ended March  31,  1997,  the
Company  generated approximately $1.2 million of fee revenues
as  compared to $761,000 in the prior year.  The increase  is
primarily  service  fee  income  associated  with   the   two
securitizations which the Company participated in during  May
1996 and November 1996.

     The Company realized losses of $400,000 on sales of $7.3
million  of  real  estate in the current year's  three  month
period  as  compared to gains of $600,000 on sales  of  $12.7
million  of  real  estate in the prior  year's  period.   The
Company  continues to actively sell its real estate in  order
to  return  the  investment to an earning  asset  and  reduce
operating  expenses  associated  with  the  holding  of  real
estate.   Included  in  the current year  were  approximately
$800,000 in losses on sales of approximately $3.2 million  in
timeshare  sales,  while the prior year  included  losses  of
$600,000 on sales of $5.6 million.

     In conjunction with the Company's evaluation of its real
estate  assets, the Company provided for loss on these assets
of  $1.4 million in the current year's three month period  as
compared to $1.3 million in the prior year.

New Accounting Rules:

       In   June  1996,  Statement  of  Financial  Accounting
Standards  No. 125 (SFAS 125), "Accounting for Transfers  and
Servicing   of   Financial  Assets  and  Extinguishments   of
Liabilities"  was issued.  SFAS 125 provides  accounting  and
reporting  standards based on a consistent application  of  a
financial-components approach that focuses on control.  Under
this  approach,  after  a transfer of  financial  assets,  an
entity  recognizes  the  financial and  servicing  assets  it
controls  and  the liabilities it has incurred,  derecognizes
financial  assets  when  control  has  been  surrendered  and
derecognizes  liabilities when extinguished.  This  statement
provides consistent standards for distinguishing transfers of
financial  assets  that  are sales from  transfers  that  are
secured borrowings.  SFAS 125 is effective for transfers  and
servicing   of   financial  assets  and  extinguishments   of
liabilities  occurring after December 31, 1996.  The  Company
applied this new statement effective January 1, 1997, and  it
did  not  have  a material effect on the Company's  financial
position, results of operations or cash flows.

      In  February  1997,  Statement of Financial  Accounting
Standards No.128 (SFAS 128), "Earnings per Share" was issued.
SFAS  128  establishes standards for computing and presenting
earnings   per  share  (EPS)  and  simplifies  the   existing
standards.   This  standard  replaces  the  presentation   of
primary  EPS  with  a  presentation of basic  EPS.   It  also
requires  the dual presentation of basic and diluted  EPS  on
the  face  of  the  income statement for  all  entities  with
complex  capital structures and requires a reconciliation  of
the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.
SFAS  128  is effective for financial statements  issued  for
periods  ending  after December 15, 1997,  including  interim
periods and requires restatement of all prior-period EPS data
presented.  The Company does not believe that the application
of   this  standard  will  have  a  material  effect  on  the
presentation of its earnings per share disclosures.

<PAGE>

                        PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

          There are no material legal proceedings or actions
pending or threatened against Metropolitan Mortgage &
Securities Co., Inc. or to which its property is subject.

Item 2.   Changes in Securities

          None

Item 3.   Defaults Upon Senior Securities

          None

Item 4.   Submission of Matters to a Vote of Security Holders

          a).  On February 24, 1997 the annual meeting to the
               stockholders was convened.
          b).  The meeting included the election of the
following
               directors:
               C. Paul Sandifur, Jr.
               Bruce J. Blohowiak
               Harold W. Erfurth
               Irv Marcus
               Charles Stolz
               Reuel Swanson
               John Trimble
               Neal Fosseen, Honoray Director

          c).  There were no other matters voted upon at the
meeting

          d).  N/A

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          a).  Exhibits

                            3(a).      Restated  Articles  of
                Incorporation,  as  amended,  dated  November
                30,  1987.   (Exhibit 3(a) to  Metropolitan's
                Annual Report on Form 10-K for fiscal 1987).

                           3(b).     Amendment to Articles of
                Incorporation   dated   November   5,   1991.
                (Exhibit 3(c) to Registration No. 33-40220.)

                           3(c).     Amendment to Articles of
                Incorporation  dated  September   20,   1992.
                (Exhibit   3(c)   to  Metropolitan's   Annual
                Report on Form 10-K for fiscal 1992.)

                           3(d).      Bylaws  as  amended  to
                October   31,   1988.    (Exhibit   3(b)   to
                Metropolitan's  Annual Report  on  Form  10-K
                for fiscal 1988.)

                           4(a).     Indenture, dated  as  of
                July   6,  1979,  between  Metropolitan   and
                Seattle-First    National    Bank,    Trustee
                (Exhibit  3  to Metropolitan's Annual  Report
                on Form 10-K for fiscal 1979).

                             4(b).       First   Supplemental
                Indenture,  dated  as  of  October  3,  1980,
                between    Metropolitan   and   Seattle-First
                NationalBank,   Trustee   (Exhibit    4    to
                Metropolitan's  Annual Report  on  Form  10-K
                for fiscal 1980).

                            4(c).       Second   Supplemental
                Indenture,  dated  as of November  12,  1984,
                between    Metropolitan   and   Seattle-First
                National  Bank,  Trustee  (Exhibit  4(d)   to
                Registration No. 2-95146).

                            4(d).      Amended  Statement  of
                Rights,   Designations  and  Preferences   of
                Variable  Rate  Preferred  Stock,  Series   C
                (Exhibit 4(g) to Registration No. 33-2699).

                            4(e).      Statement  of  Rights,
                Designations  and  Preferences  of   Variable
                Rate  Preferred Stock, Series D (Exhibit 4(a)
                to Registration No. 33-25702).

                            4(f).      Statement  of  Rights,
                Designations  and  Preferences  of   Variable
                Rate  Preferred Stock, Series  E-1,  (Exhibit
                4(a) to Registration No. 33-19238).

                            4(g).      Amended  Statement  of
                Rights,   Designations  and  Preferences   of
                Variable  Rate  Preferred Stock,  Series  E-2
                (Exhibit 4(a) to Registration No. 33-25702).

                            4(h).      Statement  of  Rights,
                Designations  and  Preferences  of   Variable
                Rate  Preferred  Stock, Series  E-3  (Exhibit
                4(a) to Registration No. 33-32586).

                            4(i).      Statement  of  Rights,
                Designations and Preference of Variable  Rate
                Cumulative   Preferred  Stock,   Series   E-4
                (Exhibit 4(h) to Registration No. 33-40221).

                           4(j).      Form  of  Statement  of
                Rights,   Designations  and  Preferences   of
                Variable  Rate Preferred Stock,  Series  E-5.
                (Exhibit 4(i) to Registration No. 33-57396.)

                           4(k).      Form  of  Statement  of
                Rights,   Designations  and  Preferences   of
                variable  rate  cumulative  Preferred  Stock,
                Series E-6.

                              11.     Statement    Indicating
                Computation  of  Per-Share  Earnings.    (SEE
                "CONSOLIDATED FINANCIAL STATEMENTS".)

                          *27. Financial Data Schedule

          b).  There have been no reports on Form 8-K filed
during the
          quarter which this report is filed.
<PAGE>
                                 SIGNATURES

Pursuant to the requirements 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.

                     METROPOLITAN MORTGAGE & SECURITIES CO.,
INC.
                                   (Registrant)


                          /s/STEVEN CROOKS

Date May 20, 1997
                         ------------------------------------
---------
                            Steven Crooks
                            Vice President
                            Principal Financial Officer