<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 
DECEMBER 31, 1995

/ / 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 January 31, 1996
0 SHARES - Common "B" at January 31, 1996


<PAGE>
                METROPOLITAN MORTGAGE & SECURITIES CO., INC.



Part I - Financial Information: Index

Item 1.	Financial Statements

   Consolidated Condensed Balance Sheets --				
     December 31, 1995  (Unaudited) and
     September 30, 1995								

   Consolidated Condensed Statements of Income
     Three Months Ended December 31, 1995
     and 1994 (Unaudited)          					

   Consolidated Condensed Statements of Cash Flows
     Three Months Ended December 31, 1995 and 1994
     (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>
                                             December 31,   September 30,
                                                1995            1995    
                                             (Unaudited)
<S>                                     <C>              <C>
ASSETS
  Cash and Cash Equivalents	$ 6,561,219	$32,798,627
  Investments:
    Trading Securities, at market	1,545,797
    Available-for-Sale Securities, 
	at market 	76,281,626	31,829,980
    Held-to-Maturity Securities, 
     at amortized cost (market value 
	$113,372,348 and $182,063,885) 	115,201,507	188,073,542
  Accrued Interest on Investments	3,038,502	2,372,891
			--------------	------------
      Total Cash and Investments	202,628,651	255,075,040
			--------------	------------
  Real Estate Contracts and Mortgage
    Notes and Other Receivables	687,563,251	629,085,029
  Real Estate for Sale and
    Development - Including 
    Foreclosed Real Estate  	90,950,608	91,105,003
                        	 --------------	------------
  Total Receivables and 
    Real Estate Assets	778,513,859	720,190,032
  Less Allowance for Losses	(8,088,895)	(8,116,065)
                 	 --------------	------------
      Net Receivables and 
      Real Estate Assets  	770,424,964	712,073,967
                         	--------------	------------
  Deferred Acquisition Costs      	74,339,422	74,521,803

  Land, Building and Equipment - net 
    of accumulated depreciation	8,242,245	8,148,850

  Other Assets, net of allowance	29,107,804	28,648,340
                               	 --------------	--------------
    TOTAL ASSETS           	$1,084,743,086	$1,078,468,000
                           	 ==============	==============
</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>
                                                December 31,   September 30,
                                                    1995          1995     
                                                (Unaudited)

<S>                                        <C>             <C>
LIABILITIES
 Life Insurance and Annuity Reserves	$797,438,743	$781,716,153
 Debenture Bonds             	199,424,351	201,311,873
 Other Debt Payable                	14,971,371	25,552,451
 Securities Sold, Not Yet Purchased	1,571,810	
 Accounts Payable and Accrued
   Expenses                         	16,778,782	15,558,818
 Deferred Income Taxes Payable        	12,614,723	12,254,475
 Minority Interest in Consolidated
   Subsidiaries                       	1,445,173	1,503,788
                           	--------------	--------------
   TOTAL LIABILITIES           	1,044,244,953	1,037,897,558
                           	    --------------	--------------
STOCKHOLDERS' EQUITY
 Preferred Stock, Series A, B, C, D, 
   E Cumulative with Variable Rate,
   $10 Par Value, Authorized 8,325,000
   Issued 2,162,544 Shares and 
   2,162,711 Shares (Liquidation 
   Preference $48,225,751 and 
   $47,825,310, respectively)	21,625,440	21,627,106
 Class A Common Stock - Voting, 
   $2,250 Par Value, Authorized 
   222 Shares, Issued 130 Shares, 
   respectively        	293,417	293,417
 Additional Paid-In Capital	15,416,641	14,917,782
 Retained Earnings                    	3,941,493	4,561,554
 Net Unrealized Gains (Losses) on
    Investments	(778,858)	(829,417)
                        	 --------------	--------------
    TOTAL STOCKHOLDERS' EQUITY	40,498,133	40,570,442
                                	 --------------	--------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY   	$1,084,743,086	$1,078,468,000
                          	==============	=============
</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
			December 31,
			1995            1994
<S>                                   <C>           <C>
REVENUES:
 Insurance Premiums Earned	$   750,000	$   750,000
 Interest and Earned Discounts	21,919,875	21,733,852
 Real Estate Sales           	10,608,025	9,338,789
 Fees, Commissions, Service
  and Other Income            	691,557	975,630
 Realized Investment Gains (Losses)	2,800	(165,598)
  Receivables                  	84,490
                           	----------	----------
   TOTAL REVENUES           	34,056,747	32,632,673
                           	----------	----------
EXPENSES:
 Insurance Policy and Annuity
   Benefits                	12,061,640	10,878,406
 Interest Expense          	3,778,835	4,571,765
 Cost of Real Estate Sold  	10,466,642	9,445,463
 Provision for Losses on Real
   Estate Assets           	934,543	700,396
 Salaries and Employee
   Benefits                  	2,280,868	2,339,306
 Commissions to Agents     	2,431,199	2,695,546
 Other Operating and 
   Underwriting Expenses     	1,628,563	1,408,912
 Less Increase in Deferred
   Acquisition Costs       	(9,132)	(189,933)
                           	----------	----------
   TOTAL EXPENSES          	33,573,158	31,849,861
                           	----------	----------
Income Before Income Taxes and
   Minority Interest 	483,589	782,812

Provision For Income Taxes	(170,933)	(265,468)
                           	----------	---------
Income Before Minority
   Interest		312,656	517,344

Income of Consolidated
   Subsidiaries Allocated to     
   Minority Stockholders 	(9,311)	6,041
 			----------	---------
NET INCOME       	$  303,345	$  523,385
			==========	==========

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> 
                                                   Three Months Ended
                                                       December 31,
                                                1995             1994 

<S>                                             <C>           <C>
Net Cash Provided By 
  Operating Activities	$12,326,474	$ 9,217,627
			-----------	-----------
Cash Flows From Investing Activities:
  Principal Payments on Real Estate
    Contracts and Mortgage Notes
    and Other Receivables	27,684,554	26,842,758
  Proceeds From Real Estate Sales     	921,950	609,834
  Proceeds From Investment Maturities	226,100	1,316,195
  Proceeds from Sale of Available
    for Sale Securities	28,121,115	25,299,803
  Purchase of Available for Sale
    Securities		(17,380,831)
  Proceeds From Sale Real Estate Contracts		
    and Mortgage Notes and Other
    Receivables	2,335,415
  Acquisition of Real Estate Contracts and
     Mortgage Notes and Other Receivables	(77,570,084)	(38,870,490)
  Additions to Real Estate Held 	(8,938,063)	(8,016,640)
  Capital Expenditures          	(336,713)	(80,772)
                                 	-----------	------------
Net Cash Used In Investing Activities	(27,555,726)	(10,280,143)
			------------	------------
Cash Flows From Financing Activities:
Net Change Short Term Borrowings from
  Brokers and Banks	(12,646,875)	(30,052,500)
Receipts From Life and Annuity Products 	25,261,674	30,498,734
Withdrawals on Life and Annuity Products	(20,748,194)	(26,095,706)
Repayment to Banks and Others           	(33,496)	(211,310)
Issuance of Debenture Bonds           	4,791,350	10,897,221
Issuance of Preferred Stock       	554,336	1,529,959
Repayment of Debenture Bonds      	(7,206,402)	(8,411,669)
Cash Dividends   	(923,406)	(1,025,411)
Redemption of Capital Stock	(57,143)	(64,080)
                                  	-----------	-----------
Net Cash Used In Financing Activities	(11,008,156)	(22,934,762)
                                 	-----------	-----------
Net Increase (Decrease) in Cash and
  Cash Equivalents        	(26,237,408)	(23,997,278)
Cash and Cash Equivalents at Beginning
of Period                	32,798,627	29,275,716
                                    	-----------	-----------
Cash and Cash Equivalents at End
  of Period                	$ 6,561,219	$5,278,438
			===========	===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial 
statements.



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



1.	In the opinion of the Company, the accompanying unaudited 
consolidated condensed financial statements contain all 
adjustments necessary to present fairly the financial position 
as of December 31, 1995, and the results of operations for the 
three months ended December 31, 1995 and 1994 and changes in 
cash flows for the three months ended December 31, 1995 and 
1994. The results of operations for the three month period ended 
December 31, 1995 and 1994 are not necessarily indicative of the 
results to be expected for the full year.

2.	The principal amount of receivables as to which payments were in 
arrears more than three months was $22,800,000 at December 31, 
1995 and $17,500,000 at September 30, 1995.

3.	Metropolitan Mortgage & Securities Co., Inc. 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.	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 the 
earnings of OSL.  The sales price plus estimated future 
contingency payments approximates the actuarial appraised 
valuation of OSL.

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".



<PAGE>

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

Completed Transactions:

	On January 31, 1995, Metropolitan Mortgage & Securities Co., Inc. 
(Metro or the Company) and Summit Securities, Inc. (Summit) 
consummated a sale/purchase transaction whereby 100% of the common 
stock of Metropolitan Investment Securities, Inc. (MIS) was sold to 
Summit.  The cash sale/purchase price was $288,950, the approximate 
net book value of MIS at closing.  MIS is a limited-purpose broker 
dealer and the exclusive broker/dealer for the securities sold by 
Metro and Summit.  It is anticipated that this sale will not 
materially affect the future business operations of MIS.  
Additionally, by agreement, effective January 31, 1995, Metro 
discontinued its property development division, which consisted of a 
group of employees experienced in real estate development.  On the 
same date, Summit commenced the operation of a property development 
subsidiary employing those same individuals who had previously been 
employed by Metro.  Summit Property Development Corporation, a 100% 
owned subsidiary of Summit, has negotiated an agreement with Metro to 
provide future property development services.

	On May 31, 1995, Metro and Summit consummated a sale/purchase 
transaction whereby 100% of the common stock of Old Standard Life 
Insurance Company (OSL) was sold to Summit.  The cash sale/purchase 
price was $2,722,000, the approximate net book value of OSL at 
closing, with future contingency payments based on the earnings of 
OSL.  The sale/purchase price plus estimated future contingency 
payments approximates the actuarial appraised valuation of OSL.  OSL 
is engaged in the business of acquiring receivables using funds 
derived from the sale of annuities and funds derived from receivable 
cash flows.  The sale of OSL decreased total assets by approximately 
$46.2 million while total liabilities also decreased by approximately 
$46.2 million.  Significant assets removed from the consolidated 
financial statement included cash and cash equivalents of $1.4 
million, investments of $9.4 million, receivables of $32.1 million, 
real estate of $.5 million, deferred acquisition costs of $2.6 million 
and other assets of $.2 million.  Significant liabilities removed 
included insurance annuity reserves of $44.5 million and accounts 
payable and other liabilities of $1.7 million.



Financial Condition and Liquidity:


	As of December 31, 1995, the Company had cash or cash equivalents 
of $6.6 million and liquid investments (trading or available-for-sale 
securities) of $77.8 million compared to $32.8 million in cash and 
cash equivalents and $31.8 million in liquid investments at September 
30, 1995.  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 December 31, 1995, 
total cash and investments, including held-to-maturity securities, 
were $202.6 million as compared to $255.1 million at September 30, 
1995.  During the three month period ended December 31, 1995 the 
decrease in total cash and investments of approximately $52.4 million 
was primarily offset by a corresponding increase of $58.4 million in 
net receivables and real estate assets.  During the period ended 
December 31, 1995, the Company reassessed its securities 
classifications and transferred approximately $72.6 million from the 
held-to-maturity classification to the available-for-sale 
classification.  This transfer was based on guidance provided by the 
Financial Accounting Standards Board through their special report for 
implementation of SFAS No.115 on accounting for debt securities.

	The receivable portfolio totaled $687.6 million at December 31, 
1995 compared to $629.1 million at September 30, 1995.  The increase 
resulted from the acquisition of receivables of $77.6 million plus an 
additional $9.7 million of loans to facilitate the sale of real estate 
being partially offset by principal collections on receivables of 
$27.7 million, sales of receivables of $2.3 million and reductions due 
to foreclosed receivables of approximately $2.4 million.  Other 
adjustments related to underlying debt assumptions, accrued interest 
and discount amortization resulted in increases of approximately $3.6 
million.  

	Real estate held for sale and development decreased slightly to 
$91.0 million at December 31, 1995 from $91.1 million at September 30, 
1995.  Real estate additions of $11.6 million, including $2.7 million 
of foreclosed receivables, were more than offset by costs of real 
estate sold of $10.5 million, depreciation of $.6 million and 
chargeoffs to the allowance for losses of $.6 million.  

	Life insurance and annuity policy reserves increased $15.7 
million during the three month period ended December 31, 1995 to 
approximately $797.4 million from $781.7 million at September 30, 
1995.  This increase resulted from credited earnings of $11.2 million 
along with $4.5 million of new cash flow as receipts from sales of new 
life and annuity products of $25.2 million exceeded withdrawals of 
$20.7 million from existing policies.  Net debenture bonds outstanding 
decreased by $1.9 million to $199.4 million at December 31, 1995 from 
$201.3 million at September 30, 1995.  Net cash outflow from 
maturities, less issuance of new debentures, was approximately $2.4 
which was offset by $.5 million increase in credited interest held.  
Additionally, the Company had cash flow, net of redemptions, of 
approximately $.5 million from the sale of preferred stock during the 
three months ended December 31, 1995.  During the three month period 
ended December 31, 1995, the Company reduced a portion of its other 
debt payable represented by short term borrowings by $12.6 million to 
an approximate outstanding amount of $11.5 million in short term 
borrowings at December 31, 1995.  In addition, the Company had 
liabilities at December 31, 1995 of approximately $1.6 million from 
securities sold, but not yet purchased.


	Total assets increased $6.2 million to $1,084.7 million at 
December 31, 1995 from $1,078.5 million at September 30, 1995.  During 
the three month period, the Company primarily used cash flow from life 
insurance and annuity products along with existing cash and 
investments to increase its receivable portfolio and pay down short 
term borrowings.  At December 31, 1995 and at September 30, 1995, the 
Company had net unrealized losses on securities available-for-sale in 
the amount of $.8 million.  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 three months ended December 31, 1995 of $303,000 compared to 
$523,000 in the prior year's period.  Comparing the current year's 
three month period with the prior year's similar period, decreases in 
the net interest spread, decreases in fees, commissions and other 
income, increases in the provision for losses on receivables and real 
estate assets, were only partially offset by increased gains from the 
sale of real estate, sale of investment securities and the sale of 
receivables.  

	For the three month period ended December 31, 1995, the Company 
reported a positive spread on its interest sensitive assets and 
liabilities of $6.8 million as compared to $7.0 million in the prior 
year's period.  The total interest spread has remained relatively flat 
in the current stable to lower interest rate environment.  This has 
been the result of managements decision to control life and annuity 
policy surrenders by maintaining stable credited rates while there has 
been some contraction in available investment earnings rates.  Any 
effect on the net interest spread by controlling surrenders is 
normally offset by improvement in the amortization of insurance and 
annuity related acquisition costs.  In the current year's period ended 
December 31, 1995, the amortization of deferred policy acquisition 
costs is approximately $297,000 less than in the prior year's similar 
period.  

	During the three months ended December 31, 1995, the Company 
realized net gains from the sale of investments of $3,000 compared to 
net losses of $166,000 in the prior year period.  In the prior year 
management had made the decision to take losses on certain investments 
in order to take advantage of reinvesting in higher yielding 
investment opportunities.  Additionally, in the current year's period 
the Company realized gains of $85,000 from the sale of approximately 
$2.3 million of receivable investments.      

	The Company realized net gains of $141,000 on sales of $10.6 
million of real estate in the current year's period compared to net 
losses of $107,000 on sales of $9.3 million in the prior year's 
period.  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.  


New Accounting Rules:


	In May 1993, Statement of Financial Accounting Standards No.114 
(SFAS No.114) "Accounting by Creditors for Impairment of a Loan" was 
issued.  SFAS No.114 requires that certain impaired loans be measured 
based on the present value of expected future cash flows discounted at 
the loans' effective interest rate of the fair value of the 
collateral.  The Company was required to adopt this new standard as of 
October 1, 1995.  The adoption of SFAS No.114 had no material effect 
on the Company's consolidated financial statements.  

	The Company adopted the provisions of SFAS No.115 "Accounting for 
Certain Investments in Debt and Equity Securities", on September 30, 
1993.  Additionally, under guidance issued by the Financial Accounting 
Standards Board for the implementation of SFAS No.115, the Company 
transferred approximately $72.6 million from the Held-to-maturity 
classification to Available-for-Sale classification during the three 
month period ended December 31, 1995.

	In March 1995, SFAS No.121, "Accounting for the Impairment of 
Long-Lived Assets and for Long-Lived Assets to be Disposed of", was 
issued.  SFAS No.121 requires certain long-lived assets, such as the 
Company's real estate assets, be reviewed for impairment in value 
whenever events or circumstances indicate that the carrying value of 
an asset may not be recoverable.  In performing the review, if 
expected future undiscounted cash flows from the use of the asset or 
the fair value, less selling costs, from the disposition of the asset 
is less than its carrying value, an impairment loss is to be 
recognized.  The Company is required to adopt this new standard by 
October 1, 1996.  The Company does not anticipate that the adoption of 
SFAS No.121 will have a material effect on the Company's consolidated 
financial statements. 


<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

		N/A

Item 3.	Defaults Upon Senior Securities

		N/A

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

		N/A

Item 5.	Other Information

		N/A

Item 6.	Exhibits and Reports on Form 8-K

		N/


<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/ BRUCE J. BLOHOWIAK

Date 2/20/96
     ---------------    ---------------------------------------------
                        Bruce J. Blohowiak
                        Executive Vice President, Chief Operating    
                        Officer and Director

                          /s/ ERNEST JURDANA

Date 2/20/96
     ---------------    ---------------------------------------------
                            Ernest Jurdana
                            Vice President
                           (Principal Accounting Officer)

                          /s/ REUEL SWANSON

Date 2/20/96
     ----------------    --------------------------------------------
                          Reuel Swanson
                          Secretary and Director

                          /s/ STEVEN CROOKS

Date 2/20/96
     ---------------    ---------------------------------------------
                            Steven Crooks
                            Vice President