SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended September 30, 1996.

OR

/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

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 AVENUE, SPOKANE, WASHINGTON   99204
(Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code: (509)838-3111
Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

Preferred Stock Series: 

	C	438,343 shares	E-3	107,874	shares
	D	673,915 shares	E-4	62,978	shares
	E-1	728,698 shares	E-5	13,744	shares
	E-2	45,579 shares	E-6	80,689	shares

______________________________________________________________________
	(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 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 reference in Part III of this Form 10-K or any amendment to this 
Form 10-K. /x/

Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of September 30, 1996.

	Class A Common Stock: 130

Documents incorporated by reference:  None
PART I

ITEM 1.	BUSINESS:

		Terms:

For ease of reading, the following is a compilation of several of the 
defined terms which appear regularly within this document.  Also, See 
"Business".

Consolidated Group:  This term refers to the combined businesses 
consisting of Metropolitan and all of its subsidiaries.

Debentures:	Where this term is capitalized, it refers to the 
Installment and Investment Debentures being offered herein.  Where not 
capitalized, it refers to debentures of Metropolitan generally.

Metropolitan:	This term refers to the parent company, Metropolitan 
Mortgage & Securities, Co., Inc., exclusive of its subsidiaries.

Metwest:	Metwest Mortgage Services, Inc., a subsidiary of 
Metropolitan.

Preferred Stock:	Where this term is capitalized, it refers to the 
Series E-6 Preferred Stock being offered herein. Where it is not 
capitalized, it refers to preferred stock of Metropolitan generally.

Receivables:	Investments in cash flows, consisting of obligations 
collateralized by real estate (both pre existing obligations purchased 
in the secondary market, and obligations originated by Metwest), 
structured settlements, annuities, lottery prizes and other 
investments.

Western United: Western United Life Assurance Company, a subsidiary of 
Metropolitan.

Affiliated Companies:  The following companies are affiliated with 
Metropolitan through the common control of C. Paul Sandifur, Jr.  
Metropolitan and its subsidiaries provide services to these companies 
for a fee and engage in various business transactions with these 
companies: 

Arizona Life:  Arizona Life Insurance Company

Summit:  Summit Securities, Inc.

MIS:  Metropolitan Investment Securities, Inc.

Summit PD:  Summit Property Development, Inc.

Old Standard:  Old Standard Life Insurance Company. 

ORGANIZATIONAL CHART
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
(as of December 31, 1996)
____________________________________|______________________________
	|			|	|
	100%			|	96.5%
	Metwest			|	Consumers
	Mortgage			|	Group	
	Services, Inc.			|	Holding
				|	Co., Inc.
				|	|
				|	|
				|	100%
				|	Consumers Insurance
				|	Co., Inc.
				|	|
				|	75.5%
				   24.5% ->	Western United
					Life Assurance 
					Company

Metropolitan Mortgage & Securities Co., Inc. - Parent organization, 
invests in Receivables and other investments, including real estate 
development, with proceeds from investments and securities 
offerings.
Consumers Group Holding Co., Inc. - A holding company, its sole  
business activity currently being that of a shareholder of 
Consumers Insurance Co., Inc.
Consumers Insurance Co., Inc. -  Property and casualty insurer, its 
principal business activity currently being that of a shareholder 
of Western United Life Assurance Company.
Western United Life Assurance Company - Metropolitan's largest 
subsidiary and largest company within the Consolidated Group, is 
engaged in investing in Receivables and other investments 
principally funded by life insurance policy and annuity contract 
sales. Western United is domiciled in the State of Washington.
Metwest Mortgage Services, Inc. - Performs loan origination, 
collection and servicing functions and is an FHA/HUD licensed 
servicer and lender.


Metropolitan is the sole owner of several additional subsidiaries 
which own certain individual development properties.  See "Business 
- Real Estate Development".


BUSINESS

OVERVIEW

	Metropolitan was established in 1953.  Through growth and 
acquisitions, it has developed into a diversified institution, with 
assets exceeding one billion dollars.  Its subsidiaries include an 
annuity and life insurance company, Western United, and a Receivable 
servicer and loan originator, Metwest.

	The Consolidated Group's principal business activity is investing 
in Receivables.  The Receivables primarily consist of real estate 
contracts and promissory notes collateralized by liens on real estate. 
The Consolidated Group predominantly invests in Receivables where the 
borrower or the collateral does not qualify for conventional 
financing.  This market is commonly referred to as the non 
conventional or "B/C" market.  Because borrowers in this market 
generally have blemished credit records, underwriting practices focus 
more strongly on the collateral value as the ultimate source for 
repayment.  This contrasts to the conventional or "A" credit market 
which focuses on borrowers with stronger credit records.  See 
"BUSINESS-Receivable Investments.  In addition to investing in 
existing Receivables, the Consolidated Group began originating "B/C" 
loans during late fiscal 1996 through Metwest. See "BUSINESS-
Receivable Investments-Loan Originations".  Metropolitan and its 
subsidiaries also acquire other types of Receivables, including but 
not limited to lottery prizes, structured settlements and annuities.  
See "BUSINESS-Receivable Investments-Lotteries, Structured Settlements 
& Annuities"

	All Receivables are purchased at prices calculated to provide a 
desired yield.  Often, in order to obtain the desired yield, the 
Receivables will be purchased at a discount from their face amount, or 
at a discount from their present value.  See "BUSINESS-Yield and 
Discount Considerations ".  The Consolidated Group strives to achieve 
a positive spread between its investments and its cost of funds.

	In addition to the Consolidated Group's Receivable investments, 
Western United and to a lesser extent Metropolitan invest funds in 
securities which predominantly consist of investment grade corporate 
bonds, U.S. Treasury, and government agency obligations, mortgage 
backed securities, and other securities including security hedging 
investments, and the subordinate certificate and residual interests 
created out Receivable securitizations.  See "BUSINESS-SECURITIES 
INVESTMENTS" & "BUSINESS-Receivable Sales and Securitizations."

	The Consolidated group has developed several funding sources.  
These sources include Receivable investment income; the issuance of 
annuity and life insurance policies; the sale of assets including 
sales through securitizations; the sale of debentures, and preferred 
stock; collateralized borrowing; the sale of real estate and 
securities portfolio earnings.  See "BUSINESS-Method of Financing".

	Metropolitan also sells and develops real estate primarily as the 
result of repossessions of Receivables.  In addition, Metropolitan is 
the developer of a timeshare resort, Lawai Beach Resort, located on 
Kauai, Hawaii.  See "BUSINESS-REAL ESTATE DEVELOPMENT".

RECEIVABLE INVESTMENTS

Introduction

	Metropolitan has been investing in Receivables for its own 
account for over forty years.  Metropolitan also provides Receivable 
acquisition and underwriting services to its subsidiary, Western 
United, and to Old Standard, Summit and Arizona Life.  See "BUSINESS-
Receivable Investments-Management & Acquisition Services" & "CERTAIN 
TRANSACTIONS". The evaluation, underwriting, and closing is performed 
at Metropolitan's headquarters in Spokane, Washington.  The following 
information describes the Consolidated Group's Receivable acquisition 
and underwriting procedures as of the date of this prospectus.  These 
practices may be amended, supplemented and changed at any time at the 
discretion of the Consolidated Group.

	Types of Receivables:

	The Consolidated Group's Receivable acquisitions include two 
principal types of Receivables: 1)Receivables collateralized by real 
estate (both the acquisition of existing loans and the origination of 
loans), and 2)lotteries, structured settlements and annuities.  The 
majority of the real estate Receivables are collateralized by first 
position liens on single family residences, including land with mobile 
homes, and condominiums.  To a lesser extent, the Consolidated Group 
acquires Receivables collateralized by commercial real estate and 
undeveloped land.  In addition, it acquires Receivables collateralized 
by second and lower lien positions.

	Secondary Mortgage Markets:

	The market for the acquisition of existing real estate 
Receivables is commonly referred to as the secondary mortgage market. 
 The private secondary mortgage market consists of individual 
Receivables or small pools of Receivables which are held and sold by 
individual investors.  These Receivables are typically the result of 
seller financed sales of real estate.  The institutional secondary 
mortgage market consists of the sale and resale of Receivables which 
were originated or acquired by a financial institution and which are 
sold in groups, commonly called pools.  The Consolidated Group 
acquires Receivables through both the private and the institutional 
secondary mortgage markets.

	Loan Originations:

	During late 1996, Metwest began originating loans collateralized 
by real estate.  See "BUSINESS-Receivable Investments-loan 
originations".  

	Receivable servicing and collections:

	Metwest performs all Receivable servicing and collections for 
itself, Metropolitan, Western United, the aforementioned affiliates 
and for others.  See "BUSINESS-Receivable Investments-Servicing & 
Collection" & "CERTAIN TRANSACTIONS".

Receivable Acquisition Volume:

Metropolitan's Receivable acquisition activities (total 
activities for itself and for others), grew from approximately $142.5 
million in 1994, and $259.8 million in 1995, to $382.1 million in 
1996.  During 1996, the average monthly acquisition volume was 
approximately $31.8 million.  At the same time, Metropolitan's median 
closing time has improved to 20 days in 1996, in comparison to 23 days 
in 1995, and 24 days in 1994.  Management considers closing time to be 
an important factor in a seller's decision to sell a Receivable to 
Metropolitan.

Receivables Acquisitions: Sources, Strategies and Underwriting

	Metropolitan has developed marketing techniques and sources, and 
underwriting practices for each of the different types of Receivables. 
 In general, the real estate Receivables acquired or originated by the 
Consolidated Group consist of non conventional, "B/C" credit loans.  
These types of Receivables possess characteristics which differ from 
the conventional lending market in that either the borrower or the 
property would not qualify for "A" credit grade lending.  This type of 
lending requires that the lender focus not only on the borrowers' 
ability to pay, but also the quality of the collateral as the ultimate 
recourse in the event of the borrower's default.

Private Secondary Mortgage Market Sources

	Currently, the majority of the Consolidated Group's Receivables 
are acquired through the private secondary mortgage market.  See 
"BUSINESS-Current Mix of Receivable Investment"  This market 
principally consists of loans which were originated through the seller 
of a property financing the purchaser's acquisition.  Metropolitan's 
principal source for private market Receivables are independent 
brokers located throughout the United States.  These independent 
brokers typically deal directly with private individuals or 
organizations who own and wish to sell a Receivable.

Private Market Acquisition Strategies

	Metropolitan's private secondary market acquisition strategy is 
designed to provide flexible structuring and pricing alternatives to 
the Receivable seller, and quick closing times.  Metropolitan believes 
these are key factors to Metropolitan's ability to attract and 
purchase quality Receivables.  In order to enhance its position in 
this market, Metropolitan is implementing the following acquisition 
strategies: 1)centralizing acquisition activities, 2) expanding the 
use of Metropolitan's Receivable submission software, BrokerNet, 3) 
designing and implementing flexible Receivable acquisition pricing 
options, 4) designing and implementing fast closing programs, and 5) 
designing and implementing broker incentive programs.

1)  Centralization of acquisition activities:

	Currently, the Receivable brokers contact one of Metropolitan's 
branch offices to submit the Receivable for evaluation.  During the 
first two quarters of fiscal 1997, Metropolitan plans to close all of 
its branch offices and in turn plans to expand the Receivable 
acquisition staff at its home office in Spokane, which will be called 
the Contract Negotiation Center.  This change is intended to increase 
the closing speed, and decrease acquisitions costs through, among 
other things, the use of technological advances including the newly 
developed BrokerNet software.

	2) BrokerNet software:

	BrokerNet was developed by Metropolitan to enhance its position 
in the private secondary mortgage market, principally through 
streamlining submissions, underwriting and the closing process.  It is 
a menu driven software program which assists brokers in preparing 
accurate and complete Receivable submissions.  It is designed to meet 
Metropolitan's submission requirements.  In addition, the program 
assists in analyzing the characteristics of the Receivable, and 
provides online purchase price quotes based upon the Receivable's 
characteristics and Metropolitan's yield requirements.

This software was first available for online use by brokers in 
March 1996.  Current plans for enhancing the software include: 
preparing the legal documents used to purchase a Receivable, providing 
internet compatibility, providing submission status tracking (expected 
to be available mid 1997), assist in monitoring the closing of a 
Receivable purchase and ultimately, transfer the Receivable data 
directly into the Receivable servicing and collection system.

Currently, approximately 35% of the privately purchased 
Receivables are submitted to Metropolitan through BrokerNet.  It is 
currently used by approximately 15% of the Metropolitan's brokers.  
Management believes that this system is more cost effective than paper 
submissions.  Metropolitan plans to encourage broker use of BrokerNet 
through various financial incentive programs.  The current goal is to 
have 50% of the brokers submitting through BrokerNet by the end of 
fiscal 1997.

3)  Development of flexible sales options:

	Occasionally, a Receivable seller desires a flexible pricing 
structure, does not wish to sell the entire Receivable, or the 
purchase of the entire Receivable exceeds Metropolitan's investment to 
collateral value underwriting standards.  In these circumstances, 
Metropolitan has developed several options.  Currently, the principal 
options include 1)"partial" acquisitions, 2) multiple stage payouts, 
and 3) the short life yield programs.

	Partial purchases are purchases of the right to receive a portion 
of the Receivable's balance where the seller's right to the unsold 
portion of the Receivable is subordinated to the interest of 
Metropolitan or the company for which Metropolitan negotiated the 
purchase.  Partials include the purchase of the next series of 
payments (an immediate partial), the purchase of future payments or a 
balloon payment (a reverse partial) or the purchase of a portion of 
each payment (a split).  Partials generally result in a reduced level 
of investment and commensurate reduction in the risk to the purchaser 
than if the entire Receivable cash flow is purchased.

	The multiple stage payout and short yield life programs are 
pricing programs designed to satisfy variations in seller needs.  The 
Multiple stage payout involves the payment of the Receivable purchase 
price through installment payments over time.  The short life yield 
program is available for "A" credit quality Receivables collateralized 
by owner occupied single family residences.  This program prices 
Metropolitan's yield requirement assuming that the loan will balloon 
with a full payoff in ten years.

	4) Development of faster closing programs:

	Metropolitan has developed several submission programs which are 
designed to reduce closing times.  The principal program consists of 
the Fast Track submission program which requires that the broker 
obtain and submit a Receivable with a current appraisal, title policy, 
and all other documents and verifications required to analyze, 
evaluate and close the transaction.  Metropolitan attempts to close 
all accepted Fast Track submissions within seven days.

	5) Broker Incentive Programs:

	In order to maintain strong professional ties with its 
independent brokers, Metropolitan held its first annual Broker's 
Convention during the summer of 1994.  The second such convention is 
currently planned for late 1997.  In addition, various bonus 
commission and incentive programs as well as streamlined Receivable 
submission procedures have been developed and continue to be developed 
in order to reduce closing times.

	Currently, the principal incentive programs are the wholesale 
pricing program and the Premier Broker Program.  The wholesale pricing 
program requires that brokers pay the cost of the Receivable's title 
policy and appraisal.  In return, Metropolitan reduces its yield 
requirement (currently by .25%).  Through the Premier Broker program, 
Metropolitan pays volume brokers a bonus for every $250,000 in closed 
Receivable acquisitions.  For Brokers whose volume exceeds one million 
annually, Metropolitan reduces its yield requirement (currently by 
 .25%) for all future acquisitions from the qualifying premier broker. 
 Both of these programs are designed to provide an incentive to the 
volume broker to submit their Recievables to Metropolitan.  Volume 
brokers are often efficient in the Receivable packaging and 
submission, which can result in a lower acquisition processing cost.

	Private Secondary Mortgage Market Underwriting

	Because Receivables in the private market are generally seller 
financed transactions, these Receivables are typically subject to 
terms and conditions which were negotiated to satisfy the unique needs 
of the particular private buyer and seller.  Therefore, the 
underwriting of these loans requires careful evaluation of the loan 
documentation and terms. Metropolitan's acquisition of these 
Receivables should be distinguished from the conventional mortgage 
lending business which involves standardized documentation and terms, 
substantial first-hand contact by lenders with each borrower and the 
ability to obtain an interior inspection appraisal prior to granting a 
loan.  Management believes that the underwriting functions that are 
employed in its private secondary mortgage market acquisitions are as 
thorough as reasonably possible considering the characteristics of the 
Receivables, and considering the volume of Receivables submitted for 
review.

	When Metropolitan is offered a Receivable through the private 
secondary mortgage market, the Receivable information is transmitted 
to one of Metropolitan's contract buyers either through an online 
BrokerNet submission or a traditional paper submission.  Paper 
submissions are input by the contract buyers into the BrokerNet 
system.  The contract buyer makes an initial evaluation of the 
Receivable's characteristics to verify that it satisfies the 
requirements for the particular type of submission.

	If the Receivable appears acceptable, it is entered into 
Metropolitan's submissions tracking system, and forwarded to the 
demography department.  The demography department uses a national 
computerized database to identify local trends in property values, 
personal income, population and other economic indicators.

	The Receivable is then forwarded to the Underwriting Committee.  
Metropolitan's underwriting team currently consists of six individuals 
with a combined experience of 90 years evaluating seller financed 
Receivables.  Receivables of $100,000 or less are evaluated by 
individual underwriters.  Loans exceeding that amount are reviewed by 
a committee of at least three underwriters.  Additionally, 
underwriters may obtain a team review of any Receivable.

	The underwriters evaluate the proposed investment to collateral 
value, the payor's credit and payment history, the interest rate, the 
demographics of the region where the collateral is located, and the 
potential for environmental risks.  Currently, the ratio of the 
investment in a Receivable compared to the value of the property which 
collateralizes the Receivable generally does not exceed 70%-80% 
(depending upon acquiring company, collateral type and collateral 
quality) on Receivables collateralized by single family residences; 
30-70% on Receivables collateralized by other types of improved 
property such as commercial property; and 55% on unimproved land.  
Management believes these collateral ratio requirements generally 
provide higher than conventional levels of collateral to protect the 
purchasing company's investment in the event of a default on a 
Receivable.

	Receivable investments which the Underwriting Committee 
identifies for legal review are referred to Metropolitan's in-house 
legal department which currently includes a staff of five attorneys.  
Receivables which exceed specified amounts are submitted to an 
additional special risk evaluation review.  The investment amount 
which gives rise to special risk evaluation is dependent upon the type 
and quality of collateral, ranging from $250,000 for conventionally 
financable residential property to $100,000 for residential property 
which is not owner occupied, and $150,000 for Receivables 
collateralized by commercial property.

	Based upon Metropolitan's underwriting guidelines, the 
underwriters may approve the acquisition or change the terms of the 
acquisition, such as limiting the acquisition to a partial purchase in 
order to decrease the acquiring company's investment risk.  If the 
terms are changed, the contract buyer is notified, who in turn 
contacts the broker to renegotiate the purchase terms.  The 
underwriters may also approve the loan subject to certain closing 
criteria.  If the broker and/or seller accepts the proposed 
transaction, a written agreement to purchase is executed, which is 
subject to Metropolitan's full underwriting requirements.

	Once the Receivable has been approved in principle, a current 
market valuation of the collateral is obtained in order to verify the 
investment to collateral value.  These valuations can consist of 1)a 
valuation from a statistical valuation service, 2) an appraisal by a 
licensed independent appraiser or 3) an appraisal by one of 
Metropolitan's licensed staff appraisers.  

	Statistical valuations are available in the majority of counties 
in the United States.  They are based upon property characteristics 
and sales trends which can be analyzed through computer modeling.  The 
cost of statistical valuations average approximately $35 and are 
available virtually instantly, compared to a cost of approximately 
$250 for standard appraisals and generally a one week processing time. 
 Metropolitan began using statistical valuations in 1996.  
Metropolitan limits its use of statistical valuations to properties 
with low investment to value ratios and single family residential 
properties.  Currently, Metropolitan is monitoring the quality of the 
statistical services through obtaining post closing traditional 
appraisals on a minimum of 10% of the acquisitions.

	When traditional appraisals are obtained, they are generally 
based on a drive-by inspection of the collateral and comparative sales 
analysis.  The appraiser generally does not have access to the 
property for an interior inspection.  Each statistical valuation and 
independent appraisal is also subject to review by  a staff appraiser.

	The approved Receivable is provided to Metropolitan's closing 
department where the property title is evaluated, the legal documents 
are reviewed and the appraisal is reviewed.  If the closer discovers 
any material discrepancies during the closing review, or if the 
Receivable does not satisfy any specified closing contingencies, then 
the Receivable is re-submitted to the underwriting committee for re-
evaluation.  Upon completion of the underwriting process and the 
closer's review, appropriate closing and transfer documents are 
executed by the seller and/or broker, transfer documents are recorded, 
and the transaction is funded.

Institutional Secondary Mortgage Market Sources

	During fiscal 1996, approximately $73.6 million in Receivables 
were institutional acquisitions.  These portfolios of real estate 
Receivables are acquired from banks, savings and loan organizations, 
the Resolution Trust Corporation and the Federal Deposit Insurance 
Corporation and other financial institutions.  

	An institutional seller typically offers a loan pool for sale in 
order provide liquidity, to meet regulatory requirements, to liquidate 
assets, or other business reasons.  Over the years, Metropolitan has 
built relationships with several brokers and lenders who provide a 
regular flow of potential acquisitions to the institutional secondary 
department.  In addition, other brokers learn about Metropolitan 
through word of mouth and contact Metropolitan directly.  Finally, 
some leads on loan pools are generated by cold calling lending 
institutions or brokers.  

	These acquisitions are typically negotiated through direct 
contact with the portfolio departments at the various selling 
institutions, or acquired through bidding at an auction. The closing 
costs per loan for institutional acquisitions is generally lower than 
private secondary mortgage market acquisitions.  However, the 
investment yield is also generally lower than yields available in the 
private market.  During fiscal 1996, approximately 25% of the 
institutional purchases were acquired from FSB Mortgage Company (a 
subsidiary of Federal Savings Bank of Rogers, Arkansas).

	Institutional Secondary Mortgage Market Underwriting

	Receivables acquired through the institutional mortgage market 
differ from those acquired in the private market in that these 
Receivables were generally originated by a financial institution, 
applying standard underwriting practices and standardized 
documentation.  Generally, the seller provides an initial summary of 
the pool which typically includes the pool balance, the number of 
loans, the weighted average interest rate, the weighted average 
maturity, weighted average loan-to-value ratio, delinquency status, 
collateral addresses, collateral types, and lien positions.  
Receivable pools are initially reviewed by the institutional secondary 
market staff who determine whether the pool yield and characteristics 
are within the current acquisition guidelines and yield requirements.

	The pool characteristics and yield are then reviewed by the 
Underwriting Committee.  If approved by the Underwriting Committee, a 
letter of intent is executed and the institutional secondary marketing 
staff perform a due diligence review of the loan pool which generally 
includes: 1) review of the documentation in each individual loan file, 
2) determination of the payment history and delinquency pattern of the 
loans, 3) determination of the individual and pool loan-to-value 
ratios, and maturity characteristics, and 4) determination of the 
economics and demography for the geographic area where the collateral 
is located. If the appraisal is over one year old, a new statistical 
valuation or traditional appraisal of the collateral is generally 
obtained.  Any exceptions in the documentation or Receivable 
characteristics are noted during the due diligence review.  A summary 
of exceptions, as determined from the due diligence, is provided to 
the seller to resolve prior to closing.  If the exception(s) cannot be 
resolved, the corresponding loan(s) may be removed from the pool, the 
terms of the acquisition renegotiated, or the transaction canceled.  
Following completion of its due diligence, and acceptable resolution 
of any exceptions, a purchase and sale agreement is executed and the 
acquisition is funded and closed.  Generally, these acquisitions are 
acquired with servicing released.

Loan Originations Sources

	During the last quarter of fiscal 1996, Metropolitan's 
subsidiary, Metwest, began originating residential loans and small 
commercial loans.  The commercial lending focuses on loans of 
$1,500,000 or smaller.  Metwest is currently licensed as a lender in 
twenty six states.  Metwest plans to expand its activities throughout 
the United States during fiscal 1997.  Metwest originates loans 
through licensed mortgage brokers who submit loan applications on 
behalf of the borrower.  Before Metwest will enter into a broker 
agreement, the mortgage broker must demonstrate that it is properly 
licensed, experienced and knowledgeable in lending.  The volume of 
Metwest's lending activities were immaterial to the Consolidated Group 
in 1996.  Actual growth of this new venture cannot be predicted with 
certainty; however, it is currently projected that Metwest could 
originate as much as approximately $8-$10 million in residential loans 
per month by fiscal year end, which could amount to as much as 
approximately 30% of the Consolidated Group's Receivable investing by 
the end of fiscal 1997.  Metwest's commercial lending activities are 
currently in the initial phases, and management is unable to predict 
with any level of certainty the volume of commercial loans which may 
be originated during fiscal 1997.

	Loan Originations Underwriting

	Loans originated by Metwest are underwritten applying criteria 
which include the following: evaluation of the borrower's credit, 
obtaining a current appraisal of the collateral, and obtaining title 
insurance.  The borrower's credit determines the down payment and 
interest rate which Metwest will require.  A lower credit rating would 
result in a higher required down payment and higher interest rate.  
Metwest will lend up to 90% of the collateral's value on "A" credit 
borrowers, which decreases to 70% for "D" credit borrowers.  Unlike 
the Receivables purchased in the private secondary mortgage market, 
the loans originated by Metwest have standard documentation and terms. 
 Currently, Metwest originates fixed rate loans.  Residential loans up 
to $207,000 are evaluated by an individual loan underwriter.  Loans in 
excess of $207,000 require the approval of two approved underwriters.

	Lotteries, Structured Settlements and Annuities Sources

	Metropolitan also negotiates the purchase of Receivables which 
are not collateralized by real estate, such as structured settlements, 
annuities and lottery prizes.  The lottery prizes generally arise out 
of state operated lottery games which are typically paid in annual 
installments to the prize winner.  The structured settlements 
generally arise out of the settlement of legal disputes where the 
prevailing party is awarded a sum of money, payable over a period of 
time, generally through the creation of an annuity.  Other annuities 
generally consist of investments which cannot be cashed in directly 
with the issuing insurance company.  Metropolitan's source for these 
investments is generally private brokers who specialize in these types 
of Receivables.

	Lottery, Structured Settlement and Annuity Underwriting

	In the case of structured settlement annuity purchases, the 
underwriting guidelines of Metropolitan generally include a review of 
the settlement agreement.  In the case of all annuity purchases, 
Metropolitan's underwriting guidelines generally include a review of 
the annuity policy, related documents, the credit rating of the 
annuity seller, the credit rating of the annuity payor (generally an 
insurance company), and a review of other factors relevant to the risk 
of purchasing a particular annuity as deemed appropriate by management 
in each circumstance.  Typically, Metropolitan limits its acquisition 
of structured settlements and annuities to the purchase of a maximum 
of the next seven year's payments.

	In the case of lottery prizes, the underwriting guidelines 
generally include a review of the documents providing proof of the 
prize, and a review of the credit rating of the insurance company, or 
other entity, making the lottery prize payments.  Where the lottery 
prize is from a state run lottery, the underwriting guidelines 
generally include a confirmation with the respective lottery 
commission of the prize winner's right to sell the prize, and 
acknowledgment from the lottery commission of their receipt of notice 
of the sale.  In many states, in order to sell a state lottery prize, 
the winner must obtain a court order permitting the sale.  In those 
states, Metropolitan requires a certified copy of the court order.

Yield and Discount Considerations

	Metropolitan negotiates all Receivable acquisitions at prices 
calculated to provide a desired yield.  Often this results in a 
purchase price less than the Receivable's unpaid balance, or less than 
its present value (assuming a fixed discount rate).  The difference 
between the unpaid balance and the purchase price is the "discount". 
The amount of the discount will vary in any given transaction 
depending upon the purchasing company's yield requirements at the time 
of the purchase. Yield requirements are established in light of 
capital costs, market conditions, the characteristics of particular 
classes or types of Receivables and the risk of default by the 
Receivable payor.  See "BUSINESS-Receivable Investments-Underwriting"

	For Receivables of all types, the discounts originating at the 
time of purchase, net of capitalized acquisition costs, are amortized 
using the level yield (interest) method over the remaining contractual 
term of the Receivable.  For Receivables which were acquired after 
September 30, 1992, these net purchase discounts are amortized on an 
individual basis using the level yield method over the remaining life 
of the Receivable.  For those Receivables acquired before October 1, 
1992, these net purchase discounts were pooled by the fiscal year of 
purchase and by similar contract types, and amortized on a pool basis 
using the level yield method over the expected remaining life of the 
pool.  For these Receivables, the amortization period, which is 
approximately 78 months, is based on an estimated constant prepayment 
rate of 10-12 percent per year on scheduled payments, which is 
consistent with the Consolidated Group's prior experience with similar 
loans and the Consolidated Group's expectations.

	Management establishes the yield requirements for Receivable 
investments by assuming that all payments on the Receivables will be 
paid as scheduled.

	A greater effective yield can also be achieved through 
negotiating amendments to the Receivable agreements. These amendments 
may involve adjusting the interest rate and/or monthly payments, 
extension of financing in lieu of a required balloon payment or other 
adjustments in cases of delinquencies where the payor appears able to 
resolve the delinquency.  As a result of these amendments, the cash 
flow may be maintained or accelerated, the latter of which increases 
the yield realized on a Receivable purchased at a discount.

Current Mix of Receivable Investment Holdings

	The Consolidated Group's investments in Receivables is 
concentrated in Receivables collateralized by first liens on single 
family residential property.  Management believes that this 
concentration in residential real estate presents a lower credit risk 
than would a portfolio predominantly collateralized by commercial 
property or unimproved land, and that much of the risk in the 
portfolio is further dissipated by the large numbers of relatively 
small Receivables, the geographic dispersion of the collateral, and 
the collateral value to investment amount requirements.

	At the time of acquisition, the face value of all Receivables 
collateralized by real estate generally range in size from 
approximately $15,000 to $300,000.  During fiscal 1996, the average 
Receivable balance at the time of acquisition by the Consolidated 
Group was approximately $52,000.  See Note 2 to Consolidated Financial 
Statements.  

	Management continually monitors economic and demographic 
conditions throughout the country in an effort to avoid a 
concentration of its real estate Receivables in those areas 
experiencing economic decline, which could result in higher than 
anticipated default rates and subsequent investment losses.

 	The following charts present information on the Consolidated 
Group's portfolio of outstanding Receivables as of September 30, 1996 
regarding geographical distribution, type of real estate collateral 
and lien position:

	PIE CHARTS SHOWING BREAKDOWNS OF RECEIVABLES BY TYPE, SECURITY 
	POSITION AND PIE CHART SHOWING BREAKDOWN OF THE CONSOLIDATED 
GROUPS' ASSETS

1.	This page contains three pie charts with the following headings 
and breakdowns in the charts:

	a.	Distribution of Receivable By Collateral Type (September 30, 
1996)

		Residential		69%
		Commercial			19%
		Farms, land 
		Other				12%

	b.	Distribution of Receivables (collateralized by real estate) 
By Security Position (September 30, 1996)

		First Lien Position			99%
		Second Lien or Lower 
			Position				1%
		
	c.	Distribution of Assets

		Cash and Cash
			Equivalents			3%
		Investments				21%
		Receivables Collateralized 
		 by real estate				54%
		Other Receivables (structured
		 settlements, lotteries and
		 annuities)				4%
		Real Estate Held			8%
		Deferred Costs				7%
		Other						3%




	GRAPH SHOWING MAP OF THE UNITED STATES AND DISTRIBUTION OF RECEIVABLE 
INVESTMENTS BY STATE:

2.	This graph contains a map of the United States and indicates the 
branch and headquarter offices and identifies the percent of 
distribution of the principal amount of Receivable investments 
(collateralized by real estate) as of September 30, 1996 by state, for 
the states with 1% or more invested.

	The following amounts are shown for the following states:

		Washington			17.1%
		Oregon			5.4%
		California			10.3%
		Arizona			8.4%
		Idaho				2.5%
		New Mexico			3.2%
		Texas				11.3%
		Colorado			1.1%
		Michigan			2.1%
		Georgia			1.6%
		Florida			5.6%
		New York			3.2%
		Hawaii			4.8%
		Minnesota			1.1%
		Nevada			1.1%


	<TABLE>
<CAPTION>

	The following tables present certain statistical information about the 
Consolidated Group's Receivable investment activity during the three fiscal years 
ended September 30, 1996.
	Year Ended or at September 30
	-----------------------------
	1996	1995	1994
	-----------------------------
	 (Dollars in thousands)
<S>		<C>     	<C>     	<C>     
DISCOUNTED REAL ESTATE RECEIVABLES
PURCHASED DURING PERIOD
		Number.....................	4,969	4,130	2,906
		Average Face Amount........	$     52	$     45	$     52
					--------	--------	--------
		Face Amount................	$256,486	$187,305	$150,709
		Unrealized Discounts, Net of
			Acquisition Costs.......	(24,718)	(15,338)	(21,186)
		Underlying Obligations
			Assumed (1).............	(3,634)	(527)	(191)
					--------	--------	--------
					$228,134	$171,440	$129,332
					========	========	========
DISCOUNTED REAL ESTATE RECEIVABLES
	OUTSTANDING AT END OF PERIOD
		Number.....................	13,358	13,436	13,994
					--------	--------	--------
		Face Amount................	$548,538	$505,441	$502,314
		Unrealized Discounts, Net 
		of Unamortized Acquisition	
		Costs...................	(38,607)	(37,354)	(46,989)
					--------	--------	--------
		Net Balance................	$509,931	$468,087	$455,325
					========	========	========
TOTAL REAL ESTATE RECEIVABLES
	OUTSTANDING AT END OF PERIOD (2)
		Number.....................	20,573	19,608	18,820
					--------	--------	--------
		Face Amount Discounted
			Receivables.............	$548,538	$505,441	$502,314
		Face Amount Non-Discounted
			Receivables.............	132,641	112,072	104,011
					--------	--------	--------
		Total Outstanding Receivables	681,179	617,513	606,325

		Unrealized Discounts, Net of
	  	Unamortized Acquisition Costs	(38,607)	(37,354)	(46,989)
		Accrued Interest Receivable	8,361	7,335	7,920
					--------	--------	--------
		Net Balance................	$650,933	$587,494	$567,256
					========	========	========
Average Net Balance per
	Receivable (Excluding
	Accrued Interest)	$31.2	$29.6	$   29.7	
Average Annual Yield on
	Discounted Receivables (3)	11.9%		12.8%	13.6%	
<FN>

 (1)	Consisting of pre-existing first lien position contracts or 
mortgages which remain when the Consolidated Group invests in second 
lien position Receivables.

(2)	Approximately 19% of the portfolio at September 30, 1996, 18% of 
the portfolio at September 30, 1995 and 17% of the portfolio at 
September 30, 1994 represented financing for resales of repossessed 
properties and other non-discounted Receivables.

(3)	Yield on Receivables represent gross interest and earned discount 
revenues, net of amortized acquisition costs, prior to any overhead 
allocation and losses recorded following foreclosure.  The reasons for 
changes in yield are (i) fluctuations in the rate of actual 
prepayments; (ii) securitization and sale of Receivables; (iii) the 
changing mix of Receivable purchases between those originated from 
Metropolitan's network of offices and those purchased in bulk; (iv) 
the amortization of the existing portfolio; and (v) the amount of 
discount on Receivables purchased.
</TABLE>
	At September 30, 1996, the average contractual interest rate on 
Receivables collateralized by real estate (weighted by principal 
balances) was approximately 9.4%.

Servicing and Collection Procedures, and Delinquency Experience

	The servicing and collection of Receivables of all types owned by 
the Consolidated Group is performed by Metwest.  Metwest also services 
the Receivables of Summit, Old Standard, and Arizona Life, and the 
Receivables sold through securitizations.  Metwest uses a flexible 
computer software program, Sanchez, to monitor and service the 
Receivables.  The Consolidated Group considers consistent and timely 
collection activity to be critical to successful servicing and 
minimization of foreclosure losses, for its predominantly "B/C" 
Receivables portfolio.

	Fees for providing servicing and collection services to 
Metropolitan and Western United had no impact on the results of 
operations of the Consolidated Group.  Fees for providing servicing 
and collection services to Summit, Old Standard and Arizona Life were 
approximately $290,000 during 1996.  These charges to parties outside 
the Consolidated Group provide income to the Consolidated Group.

	The principal amount of Receivables collateralized by real 
estate, held by the Consolidated Group (as a percentage of the total 
outstanding principal amount of Receivables) which was in arrears for 
more than ninety days at the end of the following fiscal years was:

	1996	---	3.9%
	1995	---	2.8%
	1994	---	3.1%
	

	The real estate collateralized Receivables purchased by the 
Consolidated Group are predominantly "B/C" credit Receivables.  
Accordingly, higher delinquency rates are expected which Management 
believes are generally offset by the value of the underlying 
collateral.  In addition, the Consolidated Group maintains an 
allowance for losses on delinquent real estate Receivables as 
described below.  As a result, management believes losses from resales 
of repossessed properties are generally lower than might otherwise be 
expected given the delinquency rates. In addition, the Consolidated 
Group is compensated for the risk associated with delinquencies 
through Receivable yields that are greater than typically available 
through the conventional, "A", credit lending markets.

	When a Receivable becomes delinquent, the payor is initially 
contacted by letter approximately seven days after the delinquency 
date.  If the delinquency is not cured, the payor is contacted by 
telephone (generally on the 17th day following the payment due date). 
If the default is still not cured (generally within three to six days 
after the initial call), additional collection activity, including 
further written correspondence and further telephone contact, is 
pursued.  If these collection procedures are unsuccessful, the account 
is referred to a committee who analyzes the basis for default, the 
economics of the Receivable and the potential for environmental risks. 
 When appropriate, a Phase I environmental study is obtained prior to 
foreclosure.  Based upon this analysis, the Receivable is considered 
for a workout arrangement, further collection activity, or foreclosure 
of any property providing collateral for the Receivable.  Collection 
activity may also involve the initiation of legal proceedings against 
the Receivable obligor.  Legal proceedings, when necessary, are 
generally initiated within approximately ninety days after the initial 
default.  If accounts are reinstated prior to completion of the legal 
action, then attorney fees, costs, expenses and late charges are 
generally collected from the payor, or added to the Receivable 
balance, as a condition of reinstatement.

Allowance for Losses on Real Estate Assets

	The Consolidated Group establishes an allowance for expected 
losses on real estate assets (both Receivables and repossessed real 
estate). This allowance is based upon a statistical valuation or 
traditional appraisal of the Consolidated Group's real estate holdings 
for each delinquent Receivable having a principal balance greater than 
$100,000.  In addition, the Consolidated Group calculates an allowance 
for losses on delinquent Receivables having a principal balance below 
the $100,000 threshold based upon its historical loss experience.  The 
Consolidated Group reviews the results of its resales of repossessed 
real estate, both before and after year end, to identify any market 
trends and to document the Group's historical experience on such 
sales.  The Consolidated Group adjusts its allowance for losses 
requirement as appropriate, based upon such observed trends in 
delinquencies and resales.

	The Consolidated Group's current real estate valuation policy 
requires annual statistical valuations or traditional appraisals on 
real estate and delinquent Receivables when their values exceed a 
threshold equal to 1/2% of total assets of the Consolidated Group or, 
in the case of the insurance subsidiary, 5% of statutory capital and 
surplus.  Biannual appraisals are required for all other real estate 
holdings where an investment exceeds $50,000.

<TABLE>
<CAPTION>

	The following table outlines the Consolidated Group's changes in the allowance 
for losses on real estate assets:
	1996	1995	1994
	------------	-------------	------------
<S>	<C>        	<C>       	<C>       
Beginning Balance	$ 8,116,065	$9,108,383	$10,598,491
Provisions	6,360,072	4,174,644	5,533,193
Charge-Offs	(4,283,553)	(5,166,962)	(7,023,301)
	----------	----------	----------
Ending Balance	$10,192,584	$8,116,065	$ 9,108,383
	===========	==========	==========
Percentage of Ending
Balance of Allowances
to Outstanding
Real Estate Assets	1.4%	1.2%	1.4%
	====	====	====
</TABLE>
Repossessions

	In the course of its Receivable investment activity, the 
Consolidated Group acquires various parcels of real estate as a result 
of foreclosures and/or voluntary repossessions.  It is the 
Consolidated Group's general policy to attempt to resell such 
properties at the earliest possible time following its acquisition.  
Improvements are made to certain properties for the purposes of 
preservation or restoration to maximize the resale price.  The 
marketing status of all properties is reviewed at least monthly by a 
committee which includes both sales personnel and management.

	The carrying value of a repossessed property is determined as of 
the date of repossession of the property and is based on a statistical 
valuation, an appraisal by a licensed independent appraiser or by one 
of Metropolitan's licensed staff appraisers either at the time the 
Receivable was purchased or at the time the property was repossessed 
in accordance with the Consolidated Group's appraisal policy.  In 
addition, a new appraisal is obtained not less frequently than every 
two years on all real estate holdings previously valued at $50,000 or 
more.  Internal valuation reviews on all repossessed properties are 
performed at least annually based on management's knowledge of market 
conditions and  comparable property sales.

<TABLE>
<CAPTION>

	The following table presents specific information about the Consolidated 
Group's repossessed properties with carrying values of $100,000 or more which were 
held at September 30, 1996 and/or September 30, 1995.  The carrying values of 
certain properties may reflect additional costs incurred, such as taxes and 
improvements, when such costs  are estimated to be recoverable in the sale of the 
repossessed property.
	Carrying	Carrying	Market	Year of	Gross
Property Type/	Value	Value	Value	Fore-	Monthly
State Location	9/30/95	9/30/96	9/30/96	closure	Income
-----------------	------------	------------		------------	------		-----------
<S>		<C>      	<C>        <C>	<C>       		<C>		<C>		<C>    

26.73 Commercial Acres	$  252,875	$  238,036			$  238,036	1983 (1)
Farm/Ranch 1,927 Acres,
	Washington			285,690	285,690			329,500	1988 (2) $3,879
50,000 sq. Ft Commercial 
	Building, Washington	850,000	   Sold	A				1989
34 Acres, Washington		3,071,006	  3,145,113			3,350,000	1991 (3)
Land, California		225,360	225,360			250,400	1994
K-5 Grade School,
	California			202,500	202,500			225,000	1994
House, California		117,000		 90,000			100,000	1994
Duplex, New Jersey		103,500	   Sold	B				1994
House, California		103,500	Sold	C				1994
House, New Jersey		121,500	Sold	D				1995
House, Michigan		116,100	Sold	E				1995
House, New York		138,600	Sold	F				1995
House, New York		189,000	Sold 	G				1995
House, California		162,000	Sold	H				1995
House, California		127,800	Sold 	I				1995
House, Arizona			146,700	Sold	J				1995
House, California		256,500	Sold	K				1995
House, California		130,500	110,700			123,000	1995
House, Connecticut		187,200	114,750			127,500	1995
House, Washington		135,900	Sold	L				1995
House, New York		140,400	Sold	M				1995
14 Unit Apartment
	Bldg., Washington				108,000			120,000	1996
House, Maryland				108,000			120,000	1996
Condo, California				137,105			152,339	1996
Multi Unit Professional
	Bldg., New Jersey				162,000			180,000	1996
House, California				261,000			290,000	1996
House, Washington				126,000			140,000	1996
House, Washington				115,885			128,761	1996
House, Florida					120,706			134,118	1996
House, New York				100,800			112,000	1996
House, California				113,207			125,786	1996
House, Massachusetts				124,200			138,000	1996
					----------	----------			----------		------
					$7,063,631	$5,889,052			$6,384,440		$3,879
					==========	==========			==========		======
The sales prices of the referenced properties were as follows:


$930,000	A
  55,000	B
  90,000	C
 120,000	D
 122,500	E
 120,000	F
 210,000	G
 180,000	H
 105,000	I
 163,000	J
 270,000	K
 115,000	L
 135,000	M
---------
$2,615,500

The following are descriptions of the marketing status of all properties listed 
above which were acquired by the Consolidated Group prior to fiscal 1993:

(1) Located in Pasco, Washington, the commercial property is in the area of a 
planned freeway interchange.

(2)  Located in Grant County, Washington.  A portion of the property is 
currently leased. Approximately 940 acres of the property is in the federal 
government's Crop Reduction Program.

(3)  See discussion regarding "Renton" in "Real Estate Development-Other 
Development Properties".

	For further information regarding the Consolidated Group's 
activity in properties held for development, See "REAL ESTATE 
DEVELOPMENT". 
</TABLE>

Management & Receivable Acquisition Services

		Metropolitan provides management, and Receivable acquisition 
services for a fee to its subsidiaries and to  Summit, Old Standard 
and Arizona Life.  The Receivable acquisition fees are based upon a 
yield requirement established by the purchasing company.  Metropolitan 
collects as its fee, the difference between the yield requirement and 
the yield which Metropolitan actually negotiates.  

		In the case of Western United, beginning in 1994, the yield 
requirement established by Western United is guaranteed by 
Metropolitan, and an intercompany reserve is established to support 
the guarantee.  Because of the guarantee, and the corresponding 
decrease in risk, Western United's stated yield requirement is 
relatively lower than the other companies.  The reserve established in 
1996 on purchases of $327.6 million, including origination expenses, 
net of purchase discount was $12.54 million.  Metropolitan remains 
liable to Western United for any losses in excess of the reserve.   
While this charge has the effect of reducing the Receivable yield of 
the insurance subsidiary, there is a corresponding positive effect on 
Metropolitan.  

		The acquisition fees are amortized into Metropolitan's income, 
over the same period and in the same amount as they are amortized into 
expenses by the insurance subsidiary.  During 1996, 1995 and 1994, 
Metropolitan charged Western United fees of approximately $29.4 
million, $14.6 million and $12.8 million, respectively.  The 1996, 
1995 and 1994 charge was before loss reserves of $12.54 million, $6.95 
million and $4.75 million, respectively.  Underwriting fees charged to 
Summit, Old Standard and Arizona Life are recognized as revenues when 
the related fees are charged to those companies. During 1996, 
Metropolitan charged charged Summit, Old Standard and Arizona Life 
fees of $310,000, $1,032,000 and $22,000, respectively.  The service 
agreements with Western United has no effect upon the consolidated 
financial results of the Consolidated Group.  The service agreement 
with companies outside the Consolidated Group, including Summit, Old 
Standard and Arizona Life provided fee income to Metropolitan.  See 
"Certain Transactions"

Receivable Sales

	The Consolidated Group sells pools of Receivables when it 
considers it profitable to do so.  Such sales generally occur through 
one of two methods: (1) securitization or (2) direct sales. Management 
believes that the sale of Receivables provides a number of benefits 
including allowing the Consolidated Group to diversify its funding 
base, provide liquidity and lower its cost of funds.  In addition to 
providing liquidity and profits, the sale of Receivables is a source 
of cash which can be reinvested into additional Receivables.  The sale 
of Receivables allows the Consolidated Group to continue to expand its 
investing activities without increasing its asset size.

	During May 1996, Metropolitan and Western United participated 
with Old Standard and Summit as sellers in the securitization of 
approximately $ 122.9 million in Receivables collateralized by real 
estate, principally consisting of seller financed first lien 
residential Receivables.  The second such securitization of 
approximately $ 126.7 million of first lien residential and 
commercial real estate lien Receivables, of which approximately 54% 
were seller financed Receivables, occurred in November 1996.  
Currently, it is proposed that the next securitization of Receivables 
collateralized by real estate will not occur until the second half of 
fiscal 1997. The Consolidated Group is also evaluating the market, 
economic and legal implications of selling  its non real estate 
Receivables through securitizations.  There can be no assurance that 
such securitizations will be pursued, or if pursued, that they will 
be profitable.

Generally, a securitization involves the transfer of certain 
specified Receivables to a single purpose trust.  The trust issues 
certificates which represent an undivided ownership interest in the 
Receivables transferred to the trust. The certificates consist of 
different classes, which include classes of senior certificates, and 
a residual interest and may also include intermediate classes of 
subordinated certificates.  The rights of the senior certificate 
holders can be enhanced through several methods which include 
subordination of the rights of the subordinate certificate holders to 
receive distributions, or the establishment of a reserve fund. In 
connection with securitizations, the senior certificates are sold to 
investors, generally institutional investors.  The companies which 
sold their Receivables to the trust receive a cash payment 
representing their respective interest in the sales price for the 
senior certificates and any subordinate certificates sold.  The 
selling companies receive an interest in any unsold subordinate 
certificates, and also typically receive an interest in the residual 
interest.  Such interests are generally apportioned based upon the 
respective companies contribution of Receivables to the pool of 
Receivables sold to the trust.

In the typical securitization structure, the Receivable payments 
are distributed first to the senior certificates, next to the 
subordinated certificates, if any, and last to the residual 
interests.  As a result, the residual interest is the interest first 
affected by any loss due to the failure of the Receivables to pay as 
scheduled.  The holders of the residual interest values such interest 
on their respective financial statements based upon certain 
assumptions regarding the anticipated losses and prepayments.  To the 
extent actual prepayments and losses are greater or less than the 
assumptions, the companies holding the residual interests will 
experience a loss or gain.

	In the securitizations which occurred in May and November 1996, 
the rights of the senior certificate holders were enhanced through 
subordinating the rights of subordinate certificate holders to 
receive distributions with respect to the mortgage loans to such 
rights of senior certificate holders.  The selling companies retained 
their respective residual interests.  At September 30, 1996, the 
residual interests held by the Consolidated Group for the May 1996 
securitization aggregated approximately $3.6 million.  At the close 
of the November 1996, securitization the Consolidated Group held 
residual interests aggregating approximately $7.1 million.

	In addition to sales through securitizations, the Consolidated 
Group sells pools of Receivables directly to purchasers.  These sales 
are typically without recourse, except that for a period of time the 
selling company is generally required to repurchase or replace any 
Receivables which do not conform to the representations and warranties 
made at the time of sale.  During 1996, the Consolidated Group sold 
portfolios of real estate Receivables through securitizations with 
proceeds of approximately $108.4 million, and gains of $8.6 million.  
During that same period, the Consolidated Group sold other Receivables 
with proceeds of approximately $73.8 million and gains of $4.1 
million.

LIFE INSURANCE AND ANNUITY OPERATIONS

Introduction

		The Consolidated Group raises the majority of its new funds 
through its insurance subsidiary, Western United.  Western United was 
incorporated in Washington State in 1963.  Since 1979, the assets of 
the Western United have grown from $600,000 to over $1.1 billion and 
the number of policyholders and annuitants have increased from 200 to 
about 45,000.  Based on its assets, Western United ranks sixth in size 
among the life insurance companies domiciled in the State of 
Washington.

		Western United markets its annuity and life insurance products 
through approximately  1,400 independent sales representatives under 
contract.  These representatives may also sell life insurance and/or 
annuity products for other companies.  Western United is licensed as 
an insurer in the states of Alaska, Arizona, Hawaii, Idaho, Montana, 
Nebraska, Nevada, North Dakota, Oregon, South Dakota, Texas, Utah, 
Washington, and Wyoming.  During 1995, the most recent year for which 
statistical information is available, Western United's annuity market 
share was 5.8% (ranking it third in production) in the six states in 
which approximately 81% of its annuity business was produced: 
Washington, Oregon, Idaho, Montana, North Dakota and Utah.

		Management intends to expand the operations of Western United 
into other states as opportunities arise, which may include the 
acquisition of other existing insurance companies.  Western United 
currently has insurance license applications pending in the states of 
Kansas, Minnesota, New Mexico, Oklahoma and Wisconsin.  The 
application process generally extends over several years.  
Accordingly, Western United does not presently anticipate expanding 
its sales into these markets during fiscal 1997.

		Metropolitan provides management and Receivable acquisition 
services for a fee to Western United.  See "BUSINESS-RECEIVABLE 
INVESTMENTS-Management & Receivable Acquisition Services".

	Western United may invest up to 65% of its statutory assets in 
real estate related Receivables.  The balance of Western United's 
investments are principally invested in corporate and government 
securities, but may be invested into a variety of other areas as 
permitted by applicable insurance regulations. See "BUSINESS-
Securities Investments" and "BUSINESS-Regulation".

	Generally, loans which are acquired through the institutional 
secondary mortgage market qualify as "mortgage related securities" 
pursuant to the Secondary Mortgage Market Enhancement Act (SMMEA).  
SMMEA generally provides that qualifying loans may be acquired to the 
same extent that obligations of which are issued by or guaranteed as 
to principal and interest by the United States Government, its 
agencies and instrumentalities can be acquired.  As a result, Western 
United can acquire qualifying Receivables in amounts which exceed the 
above referenced 65% limitation.  Such acquisitions are also exempt 
from other state insurance regulations including loan to value and 
appraisal regulations.

Annuities

	Western United has actively marketed single and flexible premium 
deferred annuities since 1980.  During the past three years, over 97% 
of premiums for Western United were derived from annuity sales. 
Management believes that annuity balances have continued to grow due 
to market acceptance of the products (due largely to a competitive 
rate and a reputation for superior service), and changes in tax laws 
that removed the attractiveness of competing tax-advantaged products. 
 Western United is currently developing several new annuity product 
types.  One of new products is an equity indexed annuity.  The 
interest which is credited on this product will vary as a selected 
equity index (currently expected to be the S & P 500) performs.  This 
product type is designed to meet the needs of investors who are 
reluctant to make a long term fixed interest annuity investment during 
the current economic period of relatively lower interest rates.

	Western United's annuities also qualify for use as either 
Individual Retirement Annuities, Simplified Employee Pensions, 
Qualified Corporate Pension Plans or Tax-Sheltered Annuities for 
teachers and certain other nonprofit organizations' retirement plans. 
 Under these qualified plans, the interest is tax deferred and the 
principal contributions, within limits specifically established by the 
Internal Revenue Service, are tax deductible during the accumulation 
period.  These annuities are subject to income tax only upon actual 
receipt of proceeds, usually at retirement when an individual's tax 
rate is anticipated to be lower.

	Western United prices its new products and renewals in order to 
achieve a spread between its available Receivable investments, while 
considering current annuity market rates of interest and competitive 
pressures. Flexible and single premium annuities are offered with 
surrender periods varying from one year to ten years.

	At September 30, 1996, deferred policy acquisition costs were 
approximately 8.1% of life and annuity reserves.  Since surrender 
charges typically do not exceed 9%, increasing termination rates may 
have an adverse impact on the insurance subsidiary earnings, requiring 
faster amortization of these costs.  Management believes that this 
potentially adverse impact is mitigated by higher annuity interest 
spreads, which are estimated to be about 250 basis points in future 
years. This spread analysis, net of management fees paid to 
Metropolitan, is shown in the following table, which applies to the 
results of Western United during the past three calendar years, based 
on insurance regulatory report filings:
<TABLE>
<CAPTION>
	1995	1994	1993	Three Year
				Average
	--------	---------	---------	----------
<S>	<C>  	<C>  	<C>  	<C>  
Net Investment
Earnings Rate	8.30%	8.49%	9.11%	8.63%

Average Credited
Interest Rate	6.06%	5.59%	6.38%	6.01%

Spread	2.24%	2.90%	2.73%	2.62%
</TABLE>

	During 1996, 1995 and 1994, amortization of deferred policy 
acquisition costs was $9.1 million, $10.3 million and $7.0 million, 
respectively.  All calculations have been reviewed by an independent 
actuary.

	Annuity lapse rates are calculated by dividing cash outflows 
related to benefits and payments by average annuity reserves.  For the 
calendar years 1995, 1994 and 1993, lapse rates were 18.9%, 21.5%, and 
15.3%, respectively.  Based upon results for the nine months ended 
September 30, 1996, lapse rates were 16.6%.

Life Insurance

	Approximately 1.8% of Western United's statutory premiums are 
derived from the sale of interest sensitive whole life insurance and 
term life insurance policies.  As of September 30, 1996, life 
insurance in force totaled $295,692,000, net of amounts ceded to 
reinsurers. As with annuities, gross profits are determined by the 
difference between interest rates credited on outstanding policies and 
interest earned on investment of premiums.  In addition, profitability 
is affected by mortality experience (i.e. the frequency of claims 
resulting from deaths of policyholders).  Although Western United's 
mortality rates to date have been substantially lower than expected, 
higher credited interest rates and higher issuing expenses combined 
with low volume have resulted in lower profits than those experienced 
with its annuity products.

	The following table sets forth certain key financial information 
about Western United including information about Old Standard (a 
former subsidiary) through May 31, 1995 when Old Standard was sold.
<TABLE>
<CAPTION>
		Year Ended at September 30,
		---------------------------
	1996	1995	1994
	--------	--------	--------
		(Dollars in thousands)
<S>		<C>     	<C>     	<C>     
Insurance In Force
	Individual Life	$  354,371	$373,573	$398,837
	Less Ceded to other
		Companies	(58,679)	(62,906)	(69,311)
			----------	--------	--------
			$  295,692	$310,667	$326,526
			==========	========	========
Life Insurance Premiums	$    3,355	$  3,365	$  3,346
Less Ceded Premiums	(355)	(365)	(388)
			----------	--------	--------
			$    3,000	$  3,000	$  2,958
			==========	========	========
Net Investment Income	$   65,561	$ 64,970	$ 65,944
			==========	========	========
Benefits, Claim Losses and
	Settlement Expenses	$   48,301	$ 45,484	$ 41,919
			==========	========	========
Deferred Policy Acquisition
	Costs	$   71,933	$ 71,131	$ 71,075
			==========	========	========
Reserves for Future Policy
	Benefits, Losses,
	Claims and Loss Expenses	$  837,366	$781,716	$744,645
			==========	========	========
Total Assets	$1,128,237	$922,556	$924,822
			==========	========	========
Capital and Surplus	$   81,606	$ 78,827	$ 77,142
			==========	========	========
</TABLE>
Reinsurance

	Reinsurance is the practice whereby an insurance company enters 
into agreements (termed "treaties") with other insurance companies in 
order to assign some of its insured risk, for which a premium is paid, 
while retaining the remaining risk. Although reinsurance treaties 
provide a contractual basis for shifting a portion of the insured risk 
to other insurers, the primary liability for payment of claims remains 
with the original insurer. Most life insurers obtain reinsurance on a 
portion of their risks in the ordinary course of business.  The amount 
of mortality risk that a company is willing to retain is based 
primarily on considerations of the amount of insurance it has in force 
and upon its ability to sustain unusual mortality fluctuations.

Annuity Reinsurance

	Western United has negotiated a reinsurance agreement with Old 
Standard whereby 75% of the risk on six different annuity products 
will be reinsured through Old Standard.  It is presently anticipated 
that this will result in reinsurance of approximately five million in 
premiums per month.  This procedure will allow Western United to 
continue its market presence and relationship with its insurance 
agents, while moderating its rate of growth.  The agreement is pending 
regulatory approval and is expected be become effective during January 
1997.

Life Policy Reinsurance

	Western United reinsured $58,679,000 of life insurance risk at 
September 30, 1996 which equaled all risk in excess of $100,000 on 
each whole life policy and all risk in excess of $50,000 on each term 
life policy.  Life insurance in force at that time was $354,371,000.  
Western United is a party to seventeen separate reinsurance treaties 
with seven reinsurance companies, the largest treaty (with Lincoln 
National Life Insurance Company) providing, at September 30, 1996, 
approximately $30,652,000 of reinsurance coverage.  The majority of 
the remaining coverage is with Business Mens Assurance Company of 
America and Phoenix Home Life Mutual Insurance Company.  Total 
reinsurance premiums paid by Western United during the fiscal year 
ended September 30, 1996 were $354,830.

Reserves

	Western United's reserves for both annuities and life insurance 
are actuarially determined and prescribed by its state of domicile and 
other states in which it does business through laws which are designed 
to protect annuity contract owners and policy owners. Western United 
utilizes the services of a consulting actuary  to review the amount of 
these reserves for compliance with state law. These reserves are 
amounts which, at certain assumed rates, are calculated to be 
sufficient to meet Western United's future obligations under annuity 
contacts and life insurance policies currently in force. At September 
30, 1996 such reserves were $837,366,000.  Reserves are recalculated 
each year to reflect amounts of reinsurance in force, issue ages of 
new policy holders, duration of policies and variations in policy 
terms.  Since such reserves are based on actuarial assumptions, no 
representation is made that ultimate liability will not exceed these 
reserves.

SECURITIES INVESTMENTS

	At September 30, 1996, 1995 and 1994, 94.3%, 96.8% and 99.3% of 
the Consolidated Group's securities investments were held by Western 
United.

	The following table outlines the nature and carrying value of 
securities investments held by Western United at September 30, 1996:

<TABLE>
	Available	Held To	Total	
	For Sale	Maturity
	Portfolio	Portfolio	
	----------	----------	----------	--------
		(Dollars in Thousands)
<S>		<C>     	<C>     	<C>     	<C>   
Total Amount	$   31,209	$122,768	$153,997	100.0%
			==========	========	========	======
%Invested in:
	Fixed Income	$   31,205	$122,768	$153,973	100.0%
	Equities	4	--	4	0.0%
			----------	--------	--------	------
			$   31,209	$122,768	$153,977	100.0%
			==========	========	========	======
% Fixed Income:
	Taxable	$   31,205	$122,768	$153,973	100.0%
	Non-taxable	 -  	-  	-  	0.0%
			----------	--------	--------	------
			$   31,205	$122,768	$153,973	100.0%
			==========	========	========	======
% Taxable:
	Government/
	Agency	$    8,480	$ 58,025	$ 66,505	43.2%
	Corporate 	22,725	64,743	87,468	56.8%
			----------	--------	--------	------
			$   31,205	$122,768	$153,973	100.0%
			==========	========	========	=====
% Corporate Bonds:
		AAA	$      709	$ 39,700	$ 40,409	46.2%
		AA	1,989	4,030	6,019	6.9%
		A	13,817	7,494	21,311	24.4%
		BBB	1,925	997	2,922	3.3%
		Below Investment Grade	4,285	12,522	16,807	19.2%
			----------	--------	--------	------
			$   22,725	$ 64,743	$ 87,468	100.0%
			==========	========	========	======
% Corporate:
	Mortgage-backed	$    4,285	$ 44,688	$ 48,973	56.0%
	Asset-backed	--	3,009	3,009	3.4%
	Finance	8,560	9,543	18,103	20.7%
	Industrial	6,913	2,514	9,427	10.8%
	Utility	2,967	4,989	7,956	9.1%
			----------	--------	--------	------
			$   22,725	$ 64,743	$ 87,468	100.0%
			==========	========	========	======
</TABLE>

	Investments of Western United are subject to the direction and 
control of an investment committee appointed by its Board of 
Directors.  All such investments must comply with applicable state 
insurance laws and regulations.  See "BUSINESS-Regulation".  Western 
United's securities investments are principally in investment grade 
corporate, government agency, or direct government obligations, in 
order to substantially limit the credit risk in the portfolio.

	Metropolitan is authorized by its Board of Directors to use 
financial futures instruments for the purpose of hedging interest rate 
risk relative to the securities portfolio or potential trading 
situations.  In both cases, the futures transaction is intended to 
reduce the risk associated with price movements for a balance sheet 
asset.  Securities are also sold "short" (the sale of securities which 
are not currently in the portfolio and therefore must be purchased to 
close out the sale agreement) as another means of hedging interest 
rate risk, to benefit from an anticipated movement in the financial 
markets.  At September 30, 1996 there were seven open short sale 
positions with a carrying value of $132,652,000.

	During the twelve month period ended September 30, 1995, the 
consolidated group engaged in hedging activities to protect a portion 
of its held-to-maturity securities portfolio from a potential increase 
in interest rates.  The portfolio being protected by the hedge 
position generally improved in value due to a decrease in interest 
rates while the position in financial futures contracts declined in 
value by approximately $1.6 million.  This loss is being amortized 
using the interest method over the remaining life of the securities 
which were being covered by the financial futures position, a term of 
approximately eight years.  There were no significant hedging 
transactions 1994.

	The Consolidated Group purchases collateralized mortgage 
obligations (CMO's) for its investment portfolio.  Such purchases have 
been limited to tranches that perform in concert with the underlying 
mortgages, i.e., improving in value with falling interest rates and 
declining in value with rising interest rates.  The Consolidated Group 
has not invested in "derivative products" that have been structured to 
perform in a way that magnifies the normal impact of changes in 
interest rates or in a way dissimilar to the movement in value of the 
underlying securities.  At September 30, 1996, the Consolidated Group 
was not a party to any derivative financial instruments.

	At September 30, 1996, 1995 and 1994, amounts in the available 
for sale portfolio on a consolidated basis were $38.6 million, $31.8 
million, and $89.1 million, respectively.  The available for sale 
portfolio had net unrealized losses of approximately $946,000 at 
September 30, 1996,  $423,000 at September 30, 1995 and $3,351,000 at 
September 30, 1994, respectively.  In the held to maturity portfolio, 
net unrealized losses were approximately $5,548,000 at September 30, 
1996, $6,010,000 at September 30, 1995, and $15,440,000 at September 
30, 1994, respectively.  See Note 8 to Consolidated Financial 
Statements.

METHOD OF FINANCING

	The Consolidated Group finances its business operations and 
growth with the proceeds of Receivable cash flows, the sale of life 
insurance and annuity products, the sale and securitization of 
Receivables, the sale of debentures and preferred stock, 
collateralized borrowing, sale of real estate and securities portfolio 
earnings.  Metropolitan engages in a substantially continuous public 
offering of debt securities (debentures) and preferred stock.   
Western United  markets life insurance policies and annuities.  See 
"BUSINESS-Life Insurance and Annuities"

	The following table presents information about the debt 
securities issued by the Consolidated Group:
<TABLE>
<CAPTION>

		As of September 30
	1996	1995	1994	
	--------	--------	--------
		(Dollars in Thousands)
<S>		<C>     	<C>     	<C>     
Principal Amount
	Outstanding	$163,034	$176,815	$172,666

Compound and Accrued
	Interest	29,140	24,497	26,711
		--------	---------	--------
TOTAL	$192,174	$201,312	$199,377
		========	=========	========
Weighted Average
	Interest Rate	8.18%	8.24%	8.43%
		========	=========	========
Range of Interest
	Rates	5% - 11%	5% - 11%	5% - 11%
		========	=========	========
</TABLE>
	Substantially all of the debt securities outstanding at September 
30, 1996 will mature during the five-year period ending September 30, 
2001.  Management expects to fund net retirements of debentures 
maturing during that period with cash flow generated by Receivable 
investments, sales of real estate and issuances of securities.  During 
the year ended September 30, 1996, approximately 30%  of 
Metropolitan's debentures were reinvested at maturity.  Principal 
payments received from the Consolidated Group's Receivable portfolio 
and proceeds from sales of real estate and Receivables were as follows 
for the periods indicated:

	Fiscal 1996:	$296,425,000
	Fiscal 1995:	$197,069,000
	Fiscal 1994:	$134,010,000

	Proceeds of preferred stock issuances less redemptions were 
$1,765,000 in 1996, $4,250,000 in 1995 and $1,274,000 in 1994.  The 
liquidation preference of outstanding preferred stock at September 30, 
1996 was $49,496,000. Preferred shareholders are entitled to monthly 
distributions at a variable rate based on U.S. Treasury obligations.  
The average monthly distribution rate during fiscal 1996 was 7.91%.  
Preferred stock distributions paid by Metropolitan were $3,868,000 in 
1996, $4,038,000 in 1995 and $3,423,000, in 1994. See Note 1 to the 
Consolidated Financial Statements.

	The following table summarizes Metropolitan's anticipated annual 
cash principal and interest obligations on debentures, other debt 
payable and anticipated annual cash dividend requirements on preferred 
stock for the indicated periods based on outstanding debt and 
securities at September 30, 1996, assuming no reinvestments of 
maturing debentures:
<TABLE>
<CAPTION>
	Debenture	Other		Preferred
Fiscal Year Ending	Bonds	Debt		Stock
September 30,		Payable		Dividends	Total
------------------	----------	-----------		-----------	---------
			(In Thousands of Dollars)
	<S>	<C>     	<C>   	<C>    	<C>     
	1997	$ 50,030	$37,023	$4,207	$ 91,260
	1998	52,163	710	4,207	57,080
	1999	41,335	242	4,207	45,784
	2000	40,408	137	4,207	44,752
	2001	5,877	187	4,207	10,271
		-------	-------	-------	--------
		$189,813	$38,299	$21,035	$249,147
		=======	=======	=======	========
</TABLE>

		In addition to these contractual cash flow requirements, a 
certain amount of the insurance subsidiary's annuities may reprice 
annually which could cause termination of such annuities subject to a 
surrender charge.  See "MANAGEMENT'S DISCUSSION AND ANALYSIS-Asset 
Liability Management".  Management believes that cash flows will 
remain adequate during the next year to satisfy all obligations 
Metropolitan owes to holders of its securities. 

REAL ESTATE DEVELOPMENT

Lawai Beach Resort

Description

		Metropolitan is the owner and developer of Lawai Beach Resort on 
the island of Kauai, Hawaii.  Metropolitan also owns other condominium 
units adjoining the resort and another subsidiary, the Southshore 
Corporation, owns a restaurant operating company.

		Lawai Beach Resort is located on 8.7 acres of deeded ocean-front 
property on the south shore of Kauai near the area known as Poipu 
Beach. It consists of three four-story buildings containing a total of 
170 residential condominium units.  Related amenities include swimming 
pools, tennis courts, a 180 car parking garage, modern exercise 
facilities and a sewage treatment plant.  Construction costs were 
financed entirely with Metropolitan's internally generated funds and 
the property remains unencumbered by external debt.  Metropolitan's 
total investment (carrying value) in Lawai Beach Resort as of 
September 30, 1996 was $17,636,000.

		Additional properties, all of which adjoin the Lawai Beach 
Resort, include 11 condominium units in the Prince Kuhio Condominiums 
with an aggregate carrying value of $1,059,000, a four-plex 
condominium timeshare building with 4 weekly intervals remaining and a 
carrying value of approximately $21,000; and a restaurant site with a 
carrying value (land and building) of approximately $3,826,000 as of 
September 30, 1996.  The restaurant is currently operated by Pacific 
Cafe.  The restaurant rental income was $69,000 in fiscal 1996.

Marketing

		Metropolitan engaged an affiliate of the Shell Group, Chicago, 
Illinois, Shell-Lawai ("Shell"), to provide management services and 
sell timeshare units at Lawai Beach.  In 1994, timeshare sales totaled 
approximately $17.6 million for monthly average sales of approximately 
$1.5 million.  In 1995, timeshare sales totaled approximately $23.1 
million for monthly average sales of over $1.9 million.  In 1996, 
timeshare sales totaled approximately $22.8 million for monthly 
average sales of $1.9 million.  Management believes that sales 
decreased in 1996 due to increased competition, principally due to the 
addition of several new time share resorts within the Poipu area of 
Kauai.  Although there can be no assurance that sales will continue at 
the present pace, if the present pace does continue, the remaining 
timeshares units would be completely sold by approximately early 1998.

Additional Information

		The tables below set forth additional historical information 
about the timeshare sales and revenue of Lawai Beach Resort.  It is 
Metropolitan's intention to sell the timeshares at favorable prices in 
order to convert the inventory into cash or other interest earning 
assets.



<TABLE>
<CAPTION>
			FOR THE YEARS ENDED
			SEPTEMBER 30,
		----------------------------------------------
		1996	1995	1994
	
		-------------	-------------	-------------
	<S>	<C>        	<C>        	<C>        
TIMESHARE SALES
	Number of Sales	1,441	1,485	1,500
	Amount of Sales	$22,799,107	$23,120,888	$17,642,544
	Costs	(8,051,102)	(7,353,510)	(7,171,159)
	Expenses	(15,480,230)	(14,996,260)	(10,737,591)
		------------	-----------	-----------
	Profit(Loss)	$  (732,225)	$   771,118	$  (266,206)
		============	===========	===========
WHOLE-UNIT CONDOMINIUM
SALES
	Number of Units	-	1	-
	Amount of Sales	-	$   500,000	-
	Costs	-	(321,855)	-
	Expenses	-	(1,787)	-
		------------	-----------	-----------
	Operating Profit	--	$   176,358	--
		============	===========	===========
</TABLE>

Receivable Financing

		Most purchasers of timeshare weeks at Lawai Beach Resort finance 
a portion of the purchase price through Metropolitan, subject to 
approved credit.  As of September 30, 1996, Metropolitan's outstanding 
Lawai Beach Resort timeshare Receivables balance was approximately 
$36.4 million.  The loan delinquency rate (based on the principal 
balances of loans more than ninety days in arrears) on that date was 
approximately 4.6%.

Skier's Edge Resort

		Metropolitan, owns approximately 376 timeshare use periods at 
Skier's Edge, a timeshare condominium located near Breckenridge, 
Colorado, together with approximately eighteen acres of undeveloped 
land adjoining the resort.  The carrying value at September 30, 1996 
was $972,500.  The total timeshare use periods in the project were 
approximately 1,200 at September 30, 1996.  Unsold timeshares, while 
being held for sale, are included in a rental pool operated by the 
resort owner's association.  Net rental revenue was $6,629 in 1996, 
$21,956 in 1995 and $31,454 in fiscal 1994. The market value of the 
property is estimated at $1,100,000 at September 30, 1996 based upon 
Metropolitan's review of the assessed valuation of the property for 
tax purposes and an analysis of prior timeshare sales.

Other Development Properties

		In addition to the resort properties described above, 
Metropolitan, is engaged in the development of various other 
properties.  These development properties were generally acquired in 
the ordinary course of Metropolitan's business, generally through 
repossessions.  In addition, Metropolitan may acquire property for 
development.  These acquisitions may include properties adjoining one 
already owned in order to enhance the value of the original parcel, or 
the acquisition of properties unrelated to existing holdings.  The 
development or improvement of properties is undertaken for the 
purposes of enhancing values, to increase salability and to maximize 
profit potential.  

	Substantially all of the Development activity is performed for 
Metropolitan by Summit Property Development, a subsidiary of Summit.  
During 1996, Metropolitan paid Summit Property Development fees of 
approximately $2.0 million.

		Significant development properties, sales activities for 1996 
and plans for 1997 are described below.  There can be no assurance 
that Metropolitan will be successful in its 1997 development and sales 
plans and Metropolitan may modify its plans at its sole discretion.

* The MeadowWood Properties
	Located just east of Spokane, Washington near Liberty Lake, this 
land was acquired by Metropolitan between 1989 and 1991 primarily 
utilizing repossessed properties held for sale as consideration.  
During fiscal 1996, the property included one residential development 
parcel and two business parcels, each of which is described more fully 
below.  The area where these parcels are located includes residential, 
commercial and industrial properties including a business park.

	MeadowWood Business Park Phase I:  This site consisted of 24.7 
acres.  The sale of the last property in this phase was "Madsen 
Court".  This property consisted of a 46,351 square foot commercial 
building which was built and leased by Metropolitan and sold for 
$3,350,000 in March 1996.

	MeadowWood Business Park Phase II:  This phase of the business 
park includes 9.86 acres owned and 62.1 acres under option by 
Metropolitan at $10,500 per acre.  A preliminary binding site plan for 
Meadowwood Business Park - Phase II has been approved by the County of 
Spokane.  It is currently planned to finalize engineering and proceed 
with the development of a portion of this property during 1997.  At 
September 30, 1996, Metropolitan's carrying value in the property was 
$3,641,261.

	MeadowWood Residential:  This residential parcel, The Glen, 
consisted of 37 acres of which 32 acres were sold in February 1996 for 
$755,000.  At September 30, 1996, Metropolitan's carrying value for 
the remaining five acres was $80,571.

* The Summit Property
	This property consists of approximately 88 acres in downtown 
Spokane adjacent to the central business district and is located along 
the north bank of the Spokane River.  It contains several parcels 
which were purchased between 1982 and 1996.  The property is zoned for 
mixed use from medium density residential to office and retail.  A 
final Environmental Impact Statement on the proposed project was 
published in 1993.  The master plan and Shoreline Substantial 
Development Use Permit were approved by the City of Spokane in 1995.  
There are several warehouse buildings located on the property, which 
are vacant and slated for demolition in 1997.  At September 30, 1996, 
the carrying value of the property was $11,553,466.

* Airway Business Centre
	As of September 30, 1996, this property includes a 110 acre 
portion of an original tract of 440 acres which was purchased in 1979. 
 It is located in the City of Airway Heights, Washington, 
approximately ten miles west of Spokane.  The property is zoned 
commercial/industrial and fronts a four-lane highway.  Phase I of the 
business park has a binding site plan, recorded in 1993, for thirteen 
lots on 47 acres.  Two lots sold in 1996 for $63,000 and $225,000.  At 
September 30, 1996, the carrying value was $2,047,828.  The site was 
appraised at $2,800,000 as of September 30, 1996.

* Airway Heights Residential
	This site is 33 acres located adjacent to Airway Business Centre 
in the City of Airway Heights.  This property is zoned residential and 
has a carrying value at September 30, 1996 of $135,267.  During 1995, 
Metropolitan sold an option to purchase the property.  The purchase 
price of the property escalates at 7% annually from a base price of 
$250,000.  The option must be exercised in part by 1997 and in full by 
1999. 

* Spokane Valley Plaza
	The property is located near the Sullivan Road and Interstate 90 
freeway interchange just east of Spokane and consists of 33 acres of 
commercially zoned land.  County approval for a 348,000 square foot 
shopping center was received in 1991.  The property was acquired in 
1990 using repossessed property as consideration.  During 1996, 
Metropolitan sold a 12.65 acre portion of this parcel to Wal-Mart for 
$2,798,351.  As part of the consideration for the sale, Metropolitan 
entered into a codevelopment agreement to develop on-site 
infrastructure at a cost to Metropolitan of approximately $900,000.  
At September 30, 1996, the carrying value was $7,380,000.  The 
appraised value is $7,580,000 .

* Broadmoor Park (Pasco)
	This property, acquired through repossession in 1988, consists of 
368 acres of land, at a freeway interchange in Pasco, Washington.  The 
property was zoned in 1994 for mixed residential and commercial use.  
Water and sewer have been extended to the property.  Access to the 
property has been improved by construction of a new interior road.

	Broadmoor Factory Outlet Mall:  The Broadmoor Factory Outlet Mall 
is 24.5 acres located on the north side of the freeway.  The Mall is 
107,000 square feet, and over 81% leased as of September 30, 1996.  
The carrying value of the property as of September 30, 1996 is 
$10,525,471.  The appraised value was $13,325,000 as of December 15, 
1995.  Lease payments from the initial tenants commenced August, 1995. 
The mall generated approximately $24,000 of rental income in fiscal 
1995 and approximately $695,000 during fiscal 1996.

	Broadmoor Park General:  The remaining 344 acres is platted for 
development as a business park; hotels, motels, fast food restaurants, 
gas stations, a variety of stores; land for development of both single 
and multi-family residential housing; and civic uses.  Two parcels 
were sold during fiscal 1996 for $569,765.  The carrying value as of 
September 30, 1996 is $3,195,813.  The appraised value was $10,800,000 
as of September 30, 1996.  The appraised value of substantially 
unimproved land is subject to a number of assumptions.  Actual results 
may differ substantially from such appraisals.

* Puyallup
	This property is approximately 20 acres of land zoned for 
commercial and multi-family development in Puyallup, Pierce County, 
Washington and is located adjacent to a major shopping area.  Sewer 
capacity issues are currently impacting the marketability of this 
property.  At September 30, 1996, the carrying value was $1,448,929.  
Its appraised value was $1,740,000 as of September 30, 1996.

* Everett
	This property is a 98 acre parcel of industrial-zoned property 
located adjacent to Boeing's Paine Field plant at Everett, Washington. 
 Studies of utility services, access requirements and environmental 
issues are ongoing as are discussions with several parties to sell 
and/or jointly  develop the property.  At September 30, 1996, the 
carrying value in the property was $4,908,806.  The appraised value is 
$7,635,000 as of September 30, 1996.  The appraised value of 
unimproved land is subject to a number of assumptions.  Actual results 
may differ substantially from such appraisals.

* Renton
	This property is approximately 35 acres.  It is characterized by 
heavily vegetated terrain and is zoned residential.  The City of 
Renton has annexed and rezoned the property increasing its density 
from just over 100 residential units to over 200 residential units.  
At September 30, 1996, the carrying value in the property was 
$3,145,113.  The appraised value was $3,425,000 as of September 30, 
1996.

		Risks associated with holding these properties for development 
include possible adverse changes in zoning and land use regulations 
and local economic changes each of which could preclude development or 
resale. Because most of the properties are located in Washington 
State, which is currently experiencing relatively stable economic 
conditions, a regional economic downturn could have a material 
negative impact on Metropolitan's ability to timely develop and sell a 
significant portion of them.

	The appraised value of substantially unimproved land is subject 
to a number of assumptions.  Actual sales results may differ 
substantially from such appraisals.  There can be no assurance that 
the sales prices as indicated by the appraisals will be realized.

	The total development property sales were $9,535,068 during fiscal 
1996.

		The following table presents additional information about the 
Consolidated Group's investments in and sales of real estate held for 
sale and development:
<TABLE>
<CAPTION>
		
		                          Year Ended or at September 30,
		-----------------------------
REAL ESTATE HELD FOR 	1996	1995	1994
SALE AND DEVELOPMENT	---------	---------	--------
			(Dollars in Thousands)
	<S>		<C>     	<C>     	<C>     
	Investment Property Held For
		Sale and Development	$48,175	$53,101	$37,729
	Real Estate Acquired in
		Satisfaction of Debt and
		Foreclosures in Process	36,158	38,004	39,037
				--------	--------	--------
	Net Balance	$84,333	$91,105	$76,766
				========	========	========
SUMMARY OF CHANGES
	Balance at Beginning of Year	$91,105	$76,766	$76,269
	Additions and Improvements:
		Condominiums	18,795	26,276	19,563
		Repossessed & Development
			Real Estate	21,392	24,644	19,950
		Transfer from Fixed and Other
			Assets	--	1,599	259
		Depreciation	(3,048)	(1,731)	(778)
	Cost of Real Estate Sold:
		Condominium Units	(23,531)	(22,674)	(17,909)
		Real Estate	(20,380)	(13,775)	(20,588)
				--------	-------	--------
	Balance at End of Year	$84,333	$91,105	$76,766
				========	=======	========
GAIN (LOSS) ON SALE OF REAL ESTATE
	Condominiums:
		Sales	$22,799	$23,621	$17,643
		Unit Costs	(8,051)	(7,676)	(7,171)
		Associated Selling Costs	(15,480)	(14,998)	(10,738)
				--------	-------	--------
	Condominium - Gain (Loss)	(732)	947	(266)
				--------	-------	--------
	Real Estate:
		Sales	22,849	15,767	22,381
		Equity Basis	(20,380)	(13,775)	(20,588)
				--------	-------	--------
	Real Estate - Gain 	2,469	1,992	1,793
				--------	-------	--------
	Total Gain on Sale of Real Estate	$ 1,737	$ 2,939	$ 1,527
				========	=======	========
</TABLE>
COMPETITION

		The Consolidated Group competes with other financial institutions 
including various real estate financing firms, real estate brokers, 
banks and individual investors for the Receivables it acquires.  In 
the private secondary mortgage market the largest single competitors 
are subsidiaries of much larger companies while the largest number of 
competitors are a multitude of individual investors.  In all areas of 
Receivable acquisitions, the Consolidated Group competes with 
financial institutions many of which are larger, have access to more 
resources, and greater name recognition.  The primary competitive 
factors are the amounts offered and paid to Receivable sellers and the 
speed with which the processing and funding of the transaction can be 
completed.  Competitive advantages enjoyed by the Consolidated Group 
includes Metropolitan's BrokerNet software; its ability to purchase 
long-term Receivables; its availability of funds; its flexibility in 
structuring Receivable acquisitions; its reputation for reliability 
established by its long history in the business; and its in-house 
capabilities for processing and funding transactions. To the extent 
other competing Receivable investors may develop faster closing 
procedures or more flexible investment policies, they may experience a 
competitive advantage.

		Management is unaware of any competitors with acquisition 
networks and private secondary market Receivables portfolios 
comparable to the Consolidated Group's and believes the Consolidated 
Group to be one of the largest investors in such Receivables in the 
United States.

	Metropolitan, Western and Metwest compete in the secondary market 
as seller's of pools of receivables (both direct sales and sales 
through securitization).  This market is a multi-billion dollar market 
and includes competitors with access to greater resources, greater 
volumes and economics of sales and better name recognition.

	Metropolitan's securities products face competition for investors 
from other securities issuers many of which are much larger, and have 
greater name recognition. 

		The life insurance and annuity business is highly competitive.  
Western United competes with other financial institutions including 
ones with greater resources and greater name recognition.  Premium 
rates, annuity yields and commissions to agents are particularly 
sensitive to competitive forces.  Western United's management believes 
that it is in an advantageous position in this regard because of its 
earning capability through investments in Receivables compared to that 
of most other life insurance companies. From June, 1986 until June, 
1995, Western United had been assigned a "B+ (Very Good)" rating by A. 
M. Best Co., a nationally recognized insurance company rating 
organization.  During June, 1995, Western United's Best rating was 
revised to B.  Best bases its rating on a number of complex financial 
ratios, the length of time a company has been in business, the nature, 
quality, and liquidity of investments in its portfolio, depth and 
experience of management and various other factors.  Best's ratings 
are supplied primarily for the benefit of policyholders and insurance 
agents.

REGULATION

		The Consolidated Group is subject to laws of the State of 
Washington which regulate "debenture companies" in part because it 
obtains capital for its activities through offerings of  debt 
securities to residents of the State of Washington.  These laws, known 
as the Debenture Company Act (the "Act"), are administered by the 
Securities Division of the State Department of Financial Institutions 
(the Department).  Designed to protect the interests of investors,  
the Act limits the amount of debt securities Metropolitan may issue by 
requiring the maintenance of certain ratios of net worth to 
outstanding debt securities.  The required ratio depends on the amount 
of debt securities outstanding, declining from 20% for amounts of 
$1,000,000 or less, to 10% for amounts between $1,000,000 and 
$100,000,000, and to 5% for amounts in excess of $100,000,000.  At 
September 30, 1996, Metropolitan's required net worth for this purpose 
was approximately $14,709,000 while its actual net worth 
(stockholders' equity) was approximately $46,343,000.  The Act 
requires that 50% of the required net worth amount be maintained in 
cash or other liquid assets. In addition, the Act limits equity 
investments by Metropolitan in a single project or subsidiary to the 
greater of net worth or 10% of assets; aggregate equity investments, 
with certain exceptions, to 20% of assets; loans to any single 
borrower to 2.5% of assets; and investments in unsecured loans to 20% 
of assets. Other provisions of the Act prohibit Metropolitan from 
issuing more than 50% of its debentures for terms of two years or 
less; prohibit transfer of control of Metropolitan without regulatory 
approval; prohibit common control of another debenture company, bank 
or trust company; and prohibit officers, directors and controlling 
shareholders from directly or indirectly borrowing funds of 
Metropolitan and from participating in certain other preferential 
transactions with it.  Metropolitan is required to notify its 
debentureholders in writing fifteen to forty-five days in advance of 
the maturity dates of their investments and to provide all 
debentureholders with copies of its annual financial statements.  The 
Act also provides for periodic examinations of the accounts, books and 
records of debenture companies such as Metropolitan to ascertain 
compliance with the law.  Finally, the Act and other applicable laws 
and regulations provide the Department with authority to take 
regulatory enforcement actions in the event of a violation of such 
laws and regulations.

		Throughout the securities offering which expired January 31, 
1997, Metropolitan's aggregate principal amount of outstanding 
debentures, including accrued and compound interest, and its aggregate 
amount of preferred stock outstanding were limited to $251,300,000, by 
the terms of the securities sales permits issued by the State of 
Washington pending improvement in Metropolitan's ratio of earnings to 
its fixed charges and preferred stock dividends.  For the purposes of 
this calculation, the earnings of subsidiaries are excluded unless 
actually paid to Metropolitan as dividends.  These limitations 
restricted Metropolitan's ability to sell debentures and preferred 
stock during the 12 month offering period ending January 31, 1997. See 
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS".

	All areas of the Consolidated Group's Receivable acquisition and 
servicing activities are highly regulated by Federal and State laws 
designed principally to protect the payor.  Metwest's lending and 
servicing activities must comply with, among other regulations, Truth 
in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), 
Regulation X, and Z.  Metwest is licensed with FHA and HUD as a lender 
and servicer, as such it must comply with applicable FHA and HUD 
regulations and guidelines.

		Metropolitan is subject to certain federal and Hawaii state laws 
and regulations governing timeshare marketing procedures, licensing 
requirements and interest rates.  Hawaii also requires the 
registration and periodic renewal of timeshare condominium projects 
prior to the commencement or continuation of sales in the state. The 
law also provides timeshare purchasers with a seven-day right of 
rescission following execution of an agreement to purchase.

		Western United and Metropolitan are subject to the Insurance 
Holding Company Act as administered by the Office of the State 
Insurance Commissioner of the State of Washington. The act regulates 
transactions between insurance companies and their affiliates.  It 
requires that Metropolitan provide notification to the Insurance 
Commissioner of certain transactions between the insurance company and 
affiliates.  In certain instances, the Commissioner's approval is 
required before a transaction with an affiliate can be consummated.

		Western United is subject to extensive regulation and supervision 
by the Office of the State Insurance Commissioner of the State of 
Washington as a Washington domiciled insurer, and to a lesser extent 
by all of the other states in which it operates.  These regulations 
are directed toward supervision of such things as granting and 
revoking licenses to transact business on both the insurance company 
and agency levels, approving policy forms, prescribing the nature and 
amount of permitted investments, establishing solvency standards and 
conducting extensive periodic examinations of insurance company 
records.  Such regulation is intended to protect annuity 
contractholders and policy owners, rather than investors in an 
insurance company.  Certain of these regulations may be subject to 
additional federal regulation, such as the Secondary Mortgage Market 
Enhancement Act, which is designed to enhance the movement of funds in 
the national secondary mortgage market.

		All states in which Western United operates have laws requiring 
solvent life insurance companies to pay assessments to protect the 
interests of policyholders of insolvent life insurance companies.  
Assessments are levied on all member insurers in each state based on a 
proportionate share of premiums written by member insurers in the 
lines of business in which the insolvent insurer engaged.  A portion 
of these assessments can be offset against the payment of future 
premium taxes.  However, future changes in state laws could decrease 
the amount available for offset.  The economy and other factors have 
caused failures of substantially larger companies which have and will 
continue to result in substantially increased future assessments.

		The net amounts expensed by Western United, and the amount 
expensed prior to May 31, 1995 for Old Standard for guaranty fund 
assessments and charged to operations for the years ended September 
30, 1996, 1995 and 1994 were $900,000, $782,000 and $192,000, 
respectively.  These estimates were based on information provided by 
the National Organization of Life and Health Insurance Guaranty 
Associations regarding insolvencies occurring during 1988 through 
1994.  Management does not believe that the amount of future 
assessments associated with known insolvencies after 1994 will be 
material to its financial condition or results of operations.  During 
the year ended September 30, 1994, the insurance subsidiaries (Western 
United and Old Standard) reduced their estimate of these losses by 
$588,000 based upon updated information from the National Organization 
of Life and Health Guaranty Associations.  During the years ended 
September 30, 1996 and 1995, Western United did not make an adjustment 
based on updated information.  These estimates are subject to future 
revisions based upon the ultimate  resolution of the insolvencies and 
resultant losses.  Management cannot reasonably estimate the 
additional effects, if any, upon its future assessments pending the 
resolution of the above described insolvencies. The amount of guaranty 
fund assessment that was originally accrued in 1993 has been recorded 
net of a 8.25% discount rate applied to the estimated payment term of 
approximately seven years.  The remaining unamortized discount 
associated with this accrual was approximately $832,000 at September 
30, 1996.

		Dividend restrictions are imposed by regulatory authorities on 
Western United.  The unrestricted statutory surplus of Western United 
totaled approximately $5,567,000 as of September 30, 1996, $1,986,000 
as of September 30, 1995 and $5,499,000 as of September 30, 1994. The 
principal reason for the decrease during fiscal 1995 was the payment 
of dividends to Metropolitan.

		For statutory purposes, Western United's capital and surplus and 
its ratio of capital and surplus to admitted assets were as follows 
for the dates indicated:
<TABLE>
<CAPTION>
	As of		As of December 31,
	September 30, 1996 	1995 	1994	1993
	-------------------	------	--------------	------
	<S>	<C>  	<C>  	<C>  	<C>  
	Capital and Surplus
	(Millions)	$48.7	$46.2	$43.8	$43.0
	Ratio of Capital and
	Surplus to Admitted
	Assets	5.2%	5.3%	5.5%	5.7%
</TABLE>
		Although the State of Washington requires only $4,000,000 in 
capital and surplus to conduct insurance business, Western United has 
attempted to maintain a capital and surplus ratio of at least 5% which 
management considers adequate for regulatory and rating purposes.

		In 1993, Washington State enacted the Risk Based Capital Model 
law which requires an insurance company to maintain minimum amounts of 
capital and surplus based on complex calculations of risk factors that 
encompass the invested assets and business activities.  Western 
United's capital and surplus levels exceed the calculated minimum 
requirements at September 30, 1996.


MANAGEMENT

	Directors, Executive Officers and Certain Employees
	(Age Information Current as of December 31, 1996)

	Name	Age	Position

C. Paul Sandifur, Jr. *	55	President, CEO and 
			Chairman of the Board
Bruce J. Blohowiak *	43	Executive Vice President, Corporate
			Counsel and Director
Michael Kirk	45	Senior Vice President/Production
Jay Caferro*	49	Senior Vice President/Underwriting
Steven Crooks* 	50	Vice President, Controller and
			Acting Chief Financial Officer
Susan Thomson*	36	Vice President and Assistant
			Corporate Counsel
Tracy Z *	30	Vice President-Production
Doug Greybill	47	Vice President
John McCreary	28	Acting Treasurer
Reuel Swanson 	58	Secretary and Director
John Van Engelen	44	President, Western United
Irv Marcus 	72	Director
Charles H. Stolz	87	Director
________________________

Neil Fosseen	78	Honorary Director

* Member of Executive Committee

	Directors and officers are elected to one-year terms.

	C. Paul Sandifur, Jr. became Executive Vice President in 1980, 
was elected President in 1981, succeeded his father as Chief Executive 
Officer in 1991 and became Chairman of the Board in 1995.  He has been 
a Director since 1975.  Mr. Sandifur was a real estate salesman with 
Diversified Properties in Kennewick, Washington during 1977 and 1978 
and then with Century 21 Real Estate in Kennewick.  In June 1979, he 
became an associate broker with Red Carpet Realty in Kennewick before 
rejoining Metropolitan in 1980.  He is a director and officer of most 
of the subsidiary companies.  He is the sole shareholder of National 
Summit Corp., which in turn is the sole shareholder of former 
subsidiaries of Metropolitan, Summit and Old Standard.

	Bruce J. Blohowiak joined Metropolitan's legal staff in 1979 and 
became its Corporate Counsel in 1986.  In 1987, he became an Assistant 
Vice President and was appointed a Vice President in 1990.  In 1995 he 
was named Executive Vice President and Chief Operating Officer.  He is 
also a Vice President of Western United.  A member of the Washington 
State bar, Mr. Blohowiak received his J. D. degree from Gonzaga 
University School of Law in 1979.

	Michael Kirk joined Metropolitan as a Receivable Contract Buyer 
in 1982.  He later became a member of the underwriting committee and 
is currently the Receivable Production Team Manager.  He was elected 
Assistant Vice President in 1990, Vice President in 1992 and became 
Senior Vice President in 1995. 

	Jay Caferro joined Metropolitan in 1990 as a member of its 
Underwriting Committee.  He was promoted to Underwriting Manager, and 
to Senior Vice President during 1995.  From 1986 to 1990, he was 
employed by Seattle First National Bank as Vice President of 
Commercial Real Estate Lending for Eastern Washington.  Prior to 1986, 
he had worked 15 years in residential lending.  He has a BA and MBA 
from Gonzaga University.  

	Steven Crooks has been employed in Metropolitan's accounting 
department since 1972.  He became Controller and Assistant Vice 
President in 1990, Vice President in 1994, and Acting Chief Financial 
Officer in 1996.  Mr. Crooks has been a Washington licensed Certified 
Public Accountant since 1974.

	Susan Thomson joined Metropolitan's legal staff in 1989.  In 
1993, she was appointed Assistant Secretary for Metropolitan and in 
1995 was appointed Vice President. From 1992 through 1996, she was 
Vice President and Compliance Officer with MIS, the underwriter for 
Metropolitan's securities offerings.  She is a member of the 
Washington State Bar Association and received her J.D. from Gonzaga 
University School of Law in 1989.

	Tracy Z joined Metropolitan in 1988 as a member of the closing 
staff.  She was later promoted to the underwriting committee and is 
now a member of the Receivable Production Team.  She was appointed 
Vice President during 1995.  For approximately three months during 
1994, she was employed by English Mortgage, a subsidiary of Citicorp 
as a mortgage originator.

	Doug Greybill joined Metropolitan in 1992.  From 1990 to 1992, he 
was self employed as a Banking Consultant and Mortgage Trader.  From 
1983 to 1990, he was Chief Operating Officer for Willamette Savings 
and Loan.  He was elected Assistant Vice President in 1994, and Vice 
President in 1995.

	Reuel Swanson has worked for Metropolitan since 1960 and has been 
a Director since 1969.  From 1972 to 1975, Mr. Swanson was 
Metropolitan's Treasurer.  In 1976, he became Secretary.  He is also a 
director and officer of most of the subsidiary companies.

	John McCreary joined Metropolitan in 1993 as a Treasury Analyst 
and is currently the Acting Treasurer.  Mr. McCreary has six years 
experience in portfolio management, financial analysis and accounting. 
 He has previously been employed by Electronic Data Systems as a 
Financial Analyst and Public Utility District No. 2 of Grant County as 
an Accountant.  Mr. McCreary is a CFA, CPA and CMA and holds a BS in 
Finance from Central Washington University.

	John Van Engelen joined Metropolitan's insurance subsidiary, 
Western United in 1984 as its underwriting manager, and shortly 
thereafter was appointed Vice President-Underwriting.  From 1987-1994, 
he was the marketing manager.  During 1994, he was appointed 
President.  Prior to working for Summit, he had worked in the 
insurance industry and in corporate and public accounting.  He holds 
the following certifications CPA,CFP,CLU,CHFC,FLMI.

	Irv Marcus had been an officer of Metropolitan from 1974 until 
his retirement in 1995.  At retirement, he was Senior Vice President, 
a title which he had held since 1990, and during which time he 
supervised Metropolitan's Receivable investing operations.  He had  
previously been a loan officer with Metropolitan and has over 25 years 
experience in the consumer finance business.  He continues as a 
director following his retirement.

	Charles H. Stolz has been a Director of Metropolitan since 1953. 
Mr. Stolz was one of the founders of Metropolitan.  He is a licensed 
public accountant and has been a realtor for over 25 years.  He is a 
former Chairman of the Washington State Real Estate Commission and 
President of the Spokane Board of Realtors.

	Neil Fosseen was elected honorary director of Metropolitan in 
1995.  As an honorary director, he is not entitled to vote at board 
meetings.  Mr. Fosseen was mayor of Spokane from 1960-1967.  He has 
over 30 years of experience in banking and finance.



INDEMNIFICATION

	Metropolitan's Articles of Incorporation provide for 
indemnification of Metropolitan's directors, officers and employees 
for expenses and other amounts reasonably required to be paid in 
connection with any civil or criminal proceedings brought against such 
persons by reason of their service of or position with Metropolitan 
unless it is adjudged in such proceedings that the person or persons 
are liable due to willful malfeasance, bad faith, gross negligence or 
reckless disregard of his or her duties in the conduct of his or her 
office.  Such right of indemnification is not exclusive of any other 
rights that may be provided by contract or other agreement or 
provision of law.  Such indemnification is not currently covered by 
insurance.

	As of the date of this Prospectus, no contractual or other 
agreements providing for indemnification of officers, directors or 
employees were in existence other than as set forth above.  Pursuant 
to Washington State law, Metropolitan is required to indemnify any 
director for his reasonable expenses incurred in the successful 
defense of any proceeding in which such director was a party because 
he was a director of Metropolitan.

	Insofar as indemnification for liabilities arising under the 
Securities Act of 1933 may be permitted to Metropolitan's officers, 
directors or controlling persons pursuant to the foregoing provisions, 
Metropolitan has been informed that in the opinion of the Securities 
and Exchange Commission such indemnification is against public policy 
as expressed in the Act and is therefore unenforceable.

OWNERSHIP OF MANAGEMENT

	The following table sets forth certain information as to each 
class of equity securities of Metropolitan and its subsidiaries 
beneficially owned by Metropolitan officers and directors as of 
September 30, 1996.
<TABLE>
<CAPTION>
				Number of
				Shares
				Beneficially
Name		Title of Class	Owned 		%of Class
<S>	<C>	<C>  	 <C>  
C. Paul Sandifur, Jr.	Metropolitan Preferred 
929 West Sprague	Stock All Series	236	0.05%
Spokane, WA....	Metropolitan Class A
	Common Stock	11.5258	8.84%

C. Paul Sandifur, Jr.
Trustee.................	Metropolitan Class A
929 West Sprague	Common Stock	82.4667(1) 	63.24%
Spokane, WA

Summit Securities, Inc..	Metropolitan Preferred
929 West Sprague Avenue	Stock, All Series	247,622(2)	5.26%
Spokane, WA 99204	Metropolitan Class A
	Common Stock	9.2483(2)		7.09%

Irv Marcus..............	Metropolitan
929 West Sprague	Preferred Stock,
Spokane, WA	All Series	406	0.01%	
	Metropolitan Class A
	Common Stock	1.0000	0.77%

Bruce J. Blohowiak......	Metropolitan Class A
929 West Sprague	Common Stock	2.0000	1.53%
Spokane, WA 99208	

Charles H. Stolz........	Metropolitan Preferred
929 West Sprague	Stock, All Series	19,477		0.39%
Spokane, WA

All officers and
directors as a
group ..	Metropolitan
	Preferred Stock, All Series	267,741	5.71%
	Metropolitan Class A	106.2408	81.47%
<FN>
(1)	C. Paul Sandifur, Jr., is trustee of the C. Paul Sandifur and J. Evelyn 
Sandifur irrevocable trust and has voting and investment control over these 
shares of stock. The trust beneficiaries are C. Paul Sandifur, Jr., Mary L. 
Sandifur and William F. Sandifur.

(2)	Summit Securities, Inc. is a wholly owned subsidiary of National Summit 
Corp., a Delaware corporation, which is wholly owned by C. Paul Sandifur, Jr.
</TABLE>

Executive Compensation

		The following table sets forth the aggregate compensation paid by 
Metropolitan during the fiscal years specified to its Chief Executive 
Officer and other highly compensated executives. All other officers 
and executives of Metropolitan received less than $100,000 in 
compensation during the year ended September 30, 1996.  No executive 
officer is a party to, or a participant in, any pension plan, contract 
or other arrangement providing for cash or non-cash forms of 
remuneration except Metropolitan's 401(k) qualified retirement plan 
adopted as of January 1, 1992, which is available generally to all 
employees of Metropolitan.  The 401(k) Plan provides for maximum 
annual contributions equal to 1.5% of each participant's salary.  
Approximately $84,000 was paid by Metropolitan pursuant to the 401(k) 
plan during the year ended September 30, 1996.  As of September 30, 
1996, Metropolitan had no compensation plans or stock option plans in 
effect. Directors of  Metropolitan are paid $500 per meeting.
<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------
---------(a)---------------------(b)----------------(c)---------------(d)
 Name and Principal             Year              Salary ($)      Bonus/
	Position											Commissions
------------------------------------------------------------------------

	<S>	<C> 	<C>    
	C. Paul Sandifur, Jr.	1996	$147,145
	Chief Executive Officer	1995	$128,869	$1,004
		1994	$107,063
	
	
	Bruce Blohowiak	1996	$105,000
	Executive Vice President	
	General Counsel

	Michael Kirk	1996	$85,000	$91,867
	Senior Vice President	1995	$65,813	$38,050
	-Production	

	Tracy Z	1996	$80,000	$78,743
	Vice President-Underwriting

	John Van Engelen	1996	$105,500	$19,747
	President, Western United



</TABLE>

<TABLE>
<CAPTION>

PRINCIPAL SHAREHOLDERS

	The following table sets forth information with respect to the beneficial 
owners of more than five percent of Metropolitan's voting stock as of September 30, 
1996.

		Shares of Class A
	Name and Address	Common Stock	% of Class
<S>		<C>    	<C>   
C. Paul Sandifur, Jr.
929 West Sprague
Spokane, Washington.............	11.5258	8.84%

C. Paul Sandifur, Jr.
	Trustee......................	82.4667	63.24%

Mary L. Sandifur
West 601 Main, Suite 714
Spokane, Washington 99201.............	8.7156	6.68%

William F. Sandifur
West 601 Main, Suite 714
Spokane, Washington 99201............	8.9391	6.85%

Estate of 
C. Paul Sandifur, Sr. and J. Evelyn Sandifur
West 601 Main, Suite 714
Spokane, Washington 99201......................	6.5120	5.00%

Summit Securities, Inc.
929 West Sprague Avenue
Spokane, Washington.......................	9.2483	7.09%

</TABLE>




CERTAIN TRANSACTIONS

Transactions with and between Metropolitan and Subsidiaries.

		In the normal course of business, Metropolitan and its 
subsidiaries engage in intercompany transactions.

		During the three year period ended September 30, 1996, Western 
United purchased some of its Receivables from Metropolitan at 
Metropolitan's cost.  In these transactions, Western United paid 
Metropolitan $9,351,600 for Receivables with aggregate outstanding 
principal balances of $9,550,915.  The difference represents 
unrealized discounts net of acquisition costs.  

		Metropolitan charges Western United for Receivable acquisition 
services. In 1996, 1995 and 1994, respectively, Metropolitan charged 
Receivable acquisition fees of $29.4 million, $14.6 million and $12.8 
million to Western United.  The charge to Western United for 1996, 
1995 and 1994 is a gross amount before a loss reserve of $12.54 
million in 1996, $6.95 million in 1995 and $4.75 million in 1994 which 
was provided by Metropolitan. The amounts of the Receivable 
acquisition fees were determined based on the adjustment necessary to 
convert Receivables purchased by Western United utilizing 
Metropolitan's services to a defined fair market yield.  The effect of 
the fees charged was to reduce Western United's effective yields on 
the purchased Receivables to approximately 8.2% in 1996, 9.3% in 1995 
and 8.3%, in 1994. The estimated value of the loss guarantee reserve, 
increases the effective yield to Western United to approximately 9.6% 
in 1996, 10.7% in 1995 and 9.7% in 1994.  Management believes the 
adjusted yields represent the yields which Western United could 
achieve by purchasing similar Receivables in arms-length transactions 
with unrelated vendors. In addition, Metropolitan charges Western 
United for management services, Receivable collection services and 
rental of offices and equipment.  These charges have no effect on the 
Consolidated Financial Statement, but create fee income for 
Metropolitan when presented alone.  See Note 19 to the Consolidated 
Financial Statements.

		Metwest provides Receivable servicing and collection for 
Metropolitan and Western. See "BUSINESS-Receivable Investments-
Servicing and Collection Procedure and Delinquency Experience."


		In the normal course of its business, Western United loans cash 
to Metropolitan and Metwest.  These loans, when made, are generally 
collateralized by Receivables or real property.  At September 30, 
1996, there were $9.7 million in loans outstanding.
	
		From time to time, since December of 1979, Metropolitan has made 
loans to Consumers Group Holding Co. for purposes of increasing the 
capital and surplus of Consumers and Western United.  These loans are 
in the form of surplus certificates and are repayable on demand 
provided total capital and surplus meets statutory requirements.  As 
of September 30, 1996, these loans outstanding totaled $3,800,000 and 
currently bear no interest.

		In the three years ended September 30, 1996, Consumers sold 
credit guaranty insurance to Metropolitan for $540,000 in total 
premiums.

Transactions with affiliates.

		Metropolitan Investment Securities (MIS), a broker-dealer and 
former subsidiary of Metropolitan, sells the publicly registered 
securities of Metropolitan and Summit.  Metropolitan pays commissions 
to MIS for the sale of its  securities pursuant to the terms of 
written Selling Agreements.  During the fiscal years ended September 
30, 1996, 1995, and 1994, Metropolitan paid commissions to MIS in the 
amounts of $203,946, $1,461,033, and $1,111,044, on sales of debt 
securities in the amounts of $9,125,303, $53,120,179, and $46,414,738, 
 respectively.  During the fiscal years ended September 30, 1996, 
1995, and 1994, Metropolitan paid commissions to MIS in the amounts of 
$8,216, $152,427, and $17,451 on sales of preferred stock in the 
amounts of $2,143,930, $4,665,720, and $1,790,100, respectively.  
Additionally, in 1996, 1995, and 1994, Metropolitan paid commissions 
to MIS in the amounts of $156,918, $140,555, and $198,180 on sales of 
preferred stock through an in-house trading list.

		Metropolitan provides Management and Receivable Acquisition 
Services for a fee to Summit, Old Standard and Arizona Life.  See 
"BUSINESS-Receivable Investments-Management & Receivable Acquisition 
Services".

		Metwest provides Receivable Collection services for a fee to 
Summit, Old Standard and Arizona Life.  See "BUSINESS-Receivable 
Investments-Servicing and Collection Procedure and Delinquency 
Experience."

		Management believes that the terms of the service agreements are 
at least as favorable as could have been obtained from non-affiliated 
parties.

		Western has negotiated a Reinsurance Agreement with Old Standard 
which is expected to become effective January 1997.  See "BUSINESS-
Life Insurance and Annuity Operations-Reinsurance".

		Metropolitan's property development activities are provided by 
Summit Property Development.  See "REAL ESTATE DEVELOPMENT".

Sale of Subsidiary to affiliates.

		On September 9, 1994, the controlling interest in Summit was 
acquired by National Summit Corp., a Delaware corporation (National 
Summit) which is wholly owned by C. Paul Sandifur, Jr.  The change in 
control was made pursuant to a reorganization wherein Summit redeemed 
all the common shares held by its former parent company, Metropolitan 
which consisted of 100% of the outstanding common stock of Summit.  
Contemporaneous with this redemption, Summit issued 10,000 shares of 
common stock to National Summit, for $100,000.  In addition, various 
investors in Metropolitan's common and preferred stock, including 
members of Mr. Sandifur's immediate family acquired 30,224 shares of 
Summit's Preferred Stock Series S-1 for $100 per share in exchange for 
preferred and common shares of Metropolitan with a value of 
approximately $3 million dollars.  Following this sale, Metropolitan 
and its subsidiaries have continued to provide, for a fee, principally 
all the management services to Summit.

		On January 31, 1995, Metropolitan sold Metropolitan Investment 
Securities (MIS) to Summit Securities, Inc.  This sale was made 
pursuant to a restructuring of the Consolidated Group and Summit.  The 
sale price of $288,950 was determined by the net book value for MIS at 
December 31, 1994.  Following this sale, MIS has continued its prior 
business activities as the broker/dealer selling the securities of 
Metropolitan and Summit.

		On January 31, 1995, Metropolitan 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 division employing 
those same individuals who had previously been employed by 
Metropolitan.  Metropolitan has negotiated an agreement with Summit 
Property Development to provide property development services to 
Metropolitan.

		On May 31, 1995, Metropolitan sold Old Standard to Summit. The 
sale price was $2,722,000 plus future contingency payments equal to 
20% of statutory income prior to the accrual of income tax for the 
fiscal years ending December 31, 1995, 1996 and 1997.  The price was 
based upon an independent appraisal of Old Standard.  See Note 1 to 
the Consolidated Financial Statements.

		The sale of MIS and Old Standard and transfer of Metropolitan's 
property development division, are all part of the continuation of a 
general reorganization which was commenced in 1994, with the sale of 
Summit.  Metropolitan considers this reorganization to be in its best 
interest as it becomes a national financial company as opposed to only 
regional, and due to regulatory considerations principally arising 
within Metropolitan's state of domicile.  It is the opinion of 
management that these regulations hampered Metropolitan in its 
previous corporate structure and limited its growth potential.  These 
regulations include excluding subsidiary earnings from an earnings to 
fixed charges ratio requirement unless those subsidiary earnings are 
actually paid to Metropolitan.  This effectively made these 
subsidiaries non-earning assets of Metropolitan unless the dividends 
were actually paid.  In light of these regulations and the expansion 
of Metropolitan and its subsidiaries beyond the Northwestern United 
States, it is the opinion of Metropolitan's management that this 
reorganization may provide it with greater flexibility for future 
growth.

		During fiscal 1994, the Boards of Directors for Metropolitan and 
certain subsidiaries authorized a reverse split of their stock.  The 
effect of these reverse stock splits was to obtain the business 
efficiencies available with fewer minority shareholders.  There was no 
change in control or significant impact on stockholders' equity as a 
result of these transactions.



PART I (cont.)

ITEM 2.	PROPERTIES.

	See "Business - General; Business - Receivable Investments; 
Business - Real Estate Development" under Item 1 and Notes 2 and 
3, Consolidated Financial Statements.

ITEM 3.	LEGAL PROCEEDINGS.

	There are no material pending legal proceedings.

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

	N/A

PART II

ITEM 5.	MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 	
	STOCKHOLDER MATTERS.

	(a)	There is no market for the registrant's common stock.

(b)	There were 8 Class A Common stockholders

	(c)	See "Item 6. Selected Financial Data."



ITEM 6.	SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
 	The consolidated financial data shown below as of September 30, 1996 and 1995 and for the years ended September 30, 
1996, 1995, and 1994 (other than the Ratio of Earnings to Fixed Charges and preferred stock dividends) have been derived 
from, and should be read in conjunction with, Metropolitan's consolidated financial statements, related notes, and 
Management's Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere herein. The 
consolidated financial data shown as of September 30, 1994, 1993 and 1992 and for the years ended September 30, 1993 and 
1992 have been derived from audited financial statements not included herein. The consolidated financial statements as of 
and for the years ended September 30, 1996, 1995, 1994 and 1993 have been audited by Coopers & Lybrand L.L.P.  The 
consolidated financial statements as of and for the year ended September 30, 1992 has been audited by BDO Seidman.
		Year Ended September 30,
			------------------------------------------------
		1996	1995	1994	1993	1992	
		----	----	----	----	----	
		(Dollars in Thousands
		Except Per Share Amounts)
	<S>	<C>	<C>	<C>	<C>	<C>
CONSOLIDATED STATEMENTS OF
INCOME DATA
Revenues	$156,672	$138,107	$138,186	$133,113	$121,221
	========	========	========	========	========
Income before minority
interest, extraordinary
item and cumulative effect
of change in accounting
principle	$  8,146	$  6,376	$  5,702	$  8,558	$  3,290
Income allocated to
minority interests	(108)	(73)	(224)	(255)	(363)
	--------	--------	--------	--------	--------
Income before extraordinary
item and cumulative effect
of change in accounting
for income taxes	8,038	6,303	5,478	8,303	2,927
Extraordinary item (1)		-	-	-	651
Cumulative effect of change
in accounting
for income taxes (2)	-	-	-	(4,300)	-
	--------	--------	--------	--------	--------
Net income	8,038	  6,303	  5,478	  4,003	  3,578

Preferred stock dividends	(3,868)	 (4,038)	 (3,423)	 (3,313)	 (3,399)
	--------	---------	--------	--------	--------

Income (loss)
applicable to common
stockholders	$  4,170	$  2,265	$  2,055	$    690	$    179
	========	========	========	========	========
Ratio of Earnings
to Fixed Charges and
Preferred Stock Dividends(4)	1.14	1.03	1.04	1.17

PER COMMON SHARE DATA (3):

Income (loss) before 
extraordinary item 
and cumulative effect
of change in
accounting principle	$32,073	$ 17,288	$ 14,996	$ 37,239	$ (3,579)
Extraordinary item (1) 	-	-	-	-	4,932

Cumulative effect of change
in accounting principle (2) 	-	-	-	(32,089)	-
	--------	--------	--------	--------	--------
Income (loss)
applicable to common
stockholders (5)	$32,073	$ 17,288	$ 14,996	$  5,150	$  1,353
	========	========	========	========	========

Weighted Average Number of
Common Shares
Outstanding (3)	130	131	137	134	132
	========	========	========	========	========
Cash Dividends Per
Common Share	$    --	$  3,800	$    675	$    675	$      -
	========	========	========	========	========

CONSOLIDATED BALANCE SHEET
DATA:

Total Assets	$1,282,659	$1,078,468	$1,063,290	$1,031,958	$982,259
Debt Securities, Other
Debt Payable and Securities
Sold, Not Owned	363,427	226,864	261,500	234,497	230,814
Stockholders' Equity	46,343	40,570	32,625	32,781	28,260



	(1)  Benefit from utilization of net operating loss carry forwards.

	(2)	Change in accounting principles reflects the adoption of Statement of 
Financial Accounting Standards No. 109 - "Accounting for Income Taxes."

	(3)	All information retroactively reflects the reverse common stock split 
of 2,250:1 which occurred during the fiscal year ended September 30, 1994.

	(4)  The consolidated ratio of earnings to fixed charges and preferred 
dividends was 1.14, 1.03, 1.04 and 1.17 for the years ended September 30, 1996, 
1995, 1994 and 1993, respectively.  Earnings were insufficient to meet fixed charges 
and preferred dividends for the year ended September 30, 1992, by approximately 
$783,000.

	Assuming no benefit from the earnings of its subsidiaries with the exception 
of direct dividend payments, the ratio of earnings to fixed charges and preferred 
dividends for Metropolitan alone was 1.11, 1.05, 1.34 and 1.06 for the years ended 
September 30, 1996, 1995, 1994 and 1993, respectively. Earnings were insufficient to 
meet fixed charges and preferred dividends for the year ended September 30, 1992, by 
approximately $13,012,000.

	The consolidated ratio of earnings to fixed charges excluding preferred stock 
dividends was as follows for the years ended September 30, 1996 - 1.46; 1995 - 1.35; 
1994 - 1.29; 1993 - 1.43; and 1992 - 1.21.  The ratio of earnings to fixed charges, 
excluding preferred stock dividends, for Metropolitan, assuming no benefit from the 
earnings of its subsidiaries with the exception of direct dividend payments was 
1.48, 1.40, 1.36 and 1.31 for the years ended September 30, 1996, 1995, 1994 and 
1993, respectively. Such "parent only" earnings of Metropolitan were insufficient to 
meet fixed charges for the year ended September 30, 1992 by approximately 
$7,701,000.

	(5) Earnings per common share are computed by deducting preferred stock 
dividends from net income and dividing the result by the weighted average number of 
shares of common stock outstanding.  There were no common stock equivalents or 
potentially dilutive securities outstanding during any year presented.

</TABLE>


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

Introduction

	Consolidated Group income before income taxes and minority 
interest was approximately $12.4 million for the fiscal year ended 
September 30, 1996 as compared to $9.5 million for the comparable 1995 
period and $8.7 million for the comparable 1994 period.  The increase 
in 1996 over 1995 was primarily attributable to a net increase of $7.4 
million in realized gains from the sales of investments and 
Receivables, an increase of $1.3 million in net interest sensitive 
income and expense, being offset by a $1.2 million decrease in gains 
from real estate sales, a decrease of $1.5 million in fees, 
commissions, service and other income, an increase of $2.2 million in 
the provision for losses on real estate assets and a $.8 million 
increase in other operating expenses, including salaries and benefits, 
commissions to agents, general operating expenses and capitalized 
costs, net of amortization.  The slight increase in income before 
income taxes and minority interest in 1995 over 1994 was primarily 
attributable to a net increase of $1.4 million in net gains from real 
estate sales, a decrease of $1.4 million in the provision for losses 
on real estate assets, an increase of $1.3 million in realized net 
gains from the sales of investments and Receivables, an increase of 
$1.6 million in expenses capitalized as deferred costs, net of 
amortization, and an improvement of $.8 million in fees, commissions, 
service and other income, offset by a decline of $1.6 million in net 
interest sensitive income and expense, and an increase of $4.2 million 
in commissions to agents.

	During the three year period ended September 30, 1996, the 
Consolidated Group operated in an environment of somewhat narrow 
fluctuations in interest rate levels with rates trending up in 1996 
after declining in late 1995 and with a generally increasing trend in 
late 1994.  Over the three year period, the general decrease in 
interest rate levels positively impacted earnings and increased the 
fair value of the portfolio of predominantly fixed rate investments.  
A portion of this improvement in value was recognized with the 
realization of gains from the sale of investment securities and 
Receivables of $11.9 million, $4.4 million and $3.1 million in 1996, 
1995 and 1994, respectively.  The net effect of the sales was to 
recognize the present value of future income from the Receivables sold 
and to reduce future income to the extent that the proceeds from sales 
were invested at lower rates of return.  For further information 
concerning the investment portfolio, See "BUSINESS-Life Insurance and 
Annuity Operations" & "BUSINESS-Securities Investments".  The 
Receivable portfolio also experienced higher than normal prepayments 
during the periods of declining rates which increased income by 
triggering the recognition of unamortized discounts at an accelerated 
rate.

	Although the national economy has experienced moderate growth 
over the past three years, the Consolidated Group's financial results 
were not adversely impacted in any material way because of: (1) the 
wide geographic dispersion of its Receivables; (2) the relatively 
small average size of each Receivable; (3) the primary concentration 
of investments in residential Receivables where market values have 
been more stable than in commercial properties; and (4) a continuing 
strong demand for tax-advantaged products, such as annuities.

	During 1995, the Consolidated Group sold two of its subsidiary 
operating companies and discontinued its property development 
division.  In January 1995, the Consolidated Group sold its 
broker/dealer subsidiary, MIS, to Summit and discontinued its property 
development activities.  Old Standard was sold to Summit in May, 1995. 
 The financial results of these transactions were not material to the 
Consolidated Group.  Also, See "Certain Transactions".

	During 1996, construction on a major timeshare development 
project in Kauai, Hawaii was completed.  At completion, approximately 
$21.4 million had been invested.  The sales price of each timeshare 
week is projected to range between $14,000 and $18,000 with an 
expected sellout in approximately early 1998.  See "Business-Real 
Estate Development-Lawai Beach Resort".     

	Net income in 1996, 1995, 1994 and 1993 was sufficient to cover 
fixed charges including preferred stock dividend requirements, in 
contrast to shortfalls in 1992 and prior years.  After considering the 
effects of potentially non-recurring income items such as gains from 
insurance settlements and the gains from sales of investments, 
Receivables and real estate, the 1996 income would have been 
insufficient to cover fixed charges by approximately $9.7 million.  
Additionally, the elimination of similar items in 1995 and 1994 would 
have resulted in insufficient earnings to cover fixed charges by 
approximately $6.8 million and $4.2 million, respectively.  See 
"CERTAIN INVESTMENT CONSIDERATIONS-RISK FACTORS" & "SELECTED 
CONSOLIDATED FINANCIAL DATA". 

Revenues and Expenses

	Revenue for the Consolidated Group of $156.7 million for 1996 
showed a substantial increase from the $138.1 million reported in the 
prior year.  Revenues of $138.1 million for the fiscal year ended 
September 30, 1995 was relatively unchanged from the $138.2 million 
reported for the same period in 1994. The $18.6 million increase in 
1996 was primarily attributable to an increase of $6.5 million from 
interest related revenues, a $6.3 million increase in real estate 
sales and a $8.3 million increase in realized gains on sales of 
Receivables. The modest decline in 1995 included a reduction of $1.7 
million in other investment interest and a decrease of $1.1 million in 
realized net gains on sales of investments, offset by an increase of 
$2.4 million in net gains from the sale of Receivables.

	Expenses of operation for the Consolidated Group were $144.3 
million, $128.6 million and $129.5 million for fiscal years ended 
September 30, 1996, 1995 and 1994, respectively.  The increase in 
expenses in 1996 over 1995 included an increase of $2.8 million in the 
cost of insurance policy and annuity benefits, an increase of $2.4 
million in interest expense, an increase of $2.2 million in the 
provision for losses on real estate assets and a $.8 million increase 
in other operating expenses, including salaries and benefits, 
commissions to agents, general operating expenses and capitalized 
costs, net of amortization.  The slight decline in expenses in 1995 as 
compared to 1994 included an increase of $3.6 million in the cost of 
insurance policy and annuity benefits and an increase of $4.2 million 
in recognized commissions to agents due to an increase in volume.  
These increases were offset by a $3.5 million decrease in interest 
expense, a $2.0 million decrease in the cost of real estate sold, a 
$1.4 million decrease in the provision for losses on real estate, and 
an increase of $1.6 million in the amount of expenses capitalized as 
deferred costs, net of amortization.

Interest Sensitive Income and Expense

	Management monitors interest sensitive income and expense as it 
manages objectives for the financial results of operations.  Interest 
sensitive income consists of interest on Receivables, earned discount 
on Receivables, insurance revenues and other investment interest.  
Interest sensitive expense consists of interest expense on borrowed 
money and insurance policy and annuity benefits.

	The Consolidated Group is in a "liability sensitive" position in 
that its interest sensitive liabilities reprice or mature more quickly 
than do its interest sensitive assets.  Consequently, in a rising 
interest rate environment, the net return from interest sensitive 
assets and liabilities will tend to decrease.  Conversely, in a 
falling interest rate environment, the net return from interest 
sensitive assets and liabilities will tend to improve.  See 
"Asset/Liability Management".  Net interest sensitive income was $27.8 
million for the fiscal year ended September, 30, 1996.  The comparable 
results for 1995 and 1994 were $26.5 million and $28.1 million, 
respectively.  Interest rates in 1996 remained relatively stable with 
slightly increasing rates as the fiscal year closed.  Interest rates 
were generally increasing over 1995 before declining later in the year 
which contributed to the decrease of $1.6 million in net interest 
sensitive income. Also contributing to the changes in net interest 
sensitive income was the capitalization of approximately $2.5 million, 
$2.7 million and $2.2 million for the years 1996, 1995, and 1994, 
respectively, of interest associated with various real estate 
development projects owned by the Consolidated Group.

Real Estate Sales

	The Consolidated Group is in the real estate market due primarily 
to its repossession of properties following Receivable defaults and 
its investment in a major timeshare development project in Kauai, 
Hawaii.  See "BUSINESS-Real Estate Development."

	At September 30, 1996, excluding timeshare development property, 
approximately 80% of real estate owned by the Consolidated Group is 
located in the Pacific Northwest (Alaska, Washington, Oregon, Idaho, 
Montana), which has experienced a stronger more stable economy than 
many areas of the nation in the past several years. Consequently, 
management believes that the sale of these assets will be largely 
dependent on the attractiveness of the Pacific Northwest marketplace. 
Of the property owned in the Pacific Northwest, approximately $13 
million is invested in commercial developments with approximately $35 
million in undeveloped land.   

	The Consolidated Group is engaged in the development of various 
properties acquired in the course of business through repossession and 
as investment property.  The development or improvement of properties 
is undertaken for the purpose of enhancing values to increase 
salability and to maximize profit potential.

	Real estate sales exceeded cost of those sales by $1.7 million in 
1996, $2.9 million in 1995, and $1.5 million in 1994.  Included in 
these results are sales of timeshare units with a net loss of $.7 
million and $.3 million in 1996 and 1994, respectively, and a net gain 
of $.9 million 1995.  Metropolitan has engaged an affiliate of the 
Shell Group, Chicago, Illinois, Shell-Lawai ("Shell") to provide 
management services and sell timeshare units at Lawai Beach.  See 
"BUSINESS-Real Estate Development-Lawai Beach Resort".   This 
agreement provides for a fixed fee to Shell plus an incentive fee 
based upon future sales after a base amount of cash flow is generated 
by the property.  Sales of timeshare units in 1996, 1995 and 1994 were 
approximately $22.8 million, $23.6 million and $17.6 million, 
respectively.

	Real estate sales, including timeshare unit sales, totaled $45.6 
million for 1996, $39.4 million for 1995 and $40.0 million for 1994.  
Sales of repossessed properties have more than kept pace with yearly 
additions resulting in a total investment in repossessed real estate 
of $36.2 million at September 30, 1996, $38.0 million at September 30, 
1995 and $39.0 million at September 30, 1994.  The aggregate 
investment in real estate held for sale and development decreased to 
$84.3 million at September 30, 1996, from $91.1 million at September 
30, 1995, which increased from $76.8 million at September 30, 1994.  
The decrease from 1995 to 1996 is attributable to the final completion 
of the timeshare project in Kauai, Hawaii in October 1995 and the sale 
of several large commercial properties throughout 1996.  The increase 
of $14.3 million in 1995 over 1994 is primarily attributable to the 
continuing development of the timeshare project and the development of 
a factory outlet mall in Pasco, Washington.   In addition to timeshare 
unit development, the Consolidated Group is in the general business of 
holding and developing property for sale.  The largest investments in 
such activities at September 30, 1996 were a $11.6 million development 
located in downtown Spokane adjacent to the central business district 
and a $10.5 million factory outlet mall development located in Pasco, 
Washington.  See "BUSINESS-Other Development Properties".  

	Gains or losses on real estate sold (excluding timeshare units) 
are a function of several factors.  Management's experience with the 
most significant of these factors during the last three fiscal years 
is set forth below:

<TABLE>
<CAPTION>
                                 	For the Fiscal Year Ended
                                           September 30,
                                     1996	  1995  	 1994
                                      (Dollars in Thousands)
<S>	<C>	<C>	<C>
  Amount of delinquencies over
    three months at fiscal year end   $26,500		$17,500	$19,000	

  Amount of foreclosures during
    the fiscal year                   $14,271		$13,834	$19,117	

  Amount of foreclosed real estate
    held for sale at fiscal year end  $36,158		$38,004	$39,037	

  Gain (loss) on sale of the property 
    during the fiscal year             $2,469		$1,992	$ 1,793	
</TABLE>

	The principal amount of Receivables in arrears for more than 
ninety days as of September 30, 1996, 1995 and 1994 was 3.9%, 2.8% and 
3.1%, respectively, stated as a percentage of the total outstanding 
principal amount of Receivables.  See Note 2 to the Consolidated 
Financial Statements.  Improving the Consolidated Group's collection 
procedures, reducing delinquencies and reducing real estate held for 
sale and development, including repossessed property, continue to be 
ongoing goals of management.

	The increase in three month delinquencies from 1995 to 1996 of 
approximately $9 million was primarily the result of an increase in 
the outstanding principal amount of Receivables, a higher delinquency 
rate on timeshare Receivable and an overall increase in the general 
delinquency rate for all Receivables.  Additionally, as only current 
Receivables could be sold in the securitizations, the Consolidated 
Group focused more closely on the Receivables to be included in the 
Receivable securitizations.  Subsequent to the second securitization, 
which closed in November 1996, the Consolidated Group has renewed its 
efforts on controlling the delinquency in its Receivables portfolio.  
Also, effective February 1997, the Consolidated Group will bring in-
house the servicing of timeshare Receivables which were previously 
serviced by a third party in Hawaii.  The Consolidated Group believes 
the increased delinquency rates were adequately reserved as the 
Consolidated Group has increased the allowance for loss on real states 
assets associated with Receivables from $6.3 million in 1995 to $7.9 
million 1996.

Provision for Losses on Real Estate Assets

	During the years ended September 30, 1996, 1995 and 1994, the 
Consolidated Group provided $6.4 million, $4.2 million and $5.5 
million, respectively, for losses on real estate assets.  At September 
30, 1996, 1995 and 1994, the Consolidated Group had aggregate 
allowances for losses on real estate assets of $10.2 million, $8.1 
million and $9.1 million, respectively, on real estate assets of $735 
million, $679 million and $644 million, respectively.  See Notes 3 and 
6 to the Consolidated Financial Statements.

Non-Interest Income and Expense

	Non-interest income, composed of "Fees, Commissions, Services, 
and Other Income" on the income statement, was $4.3 million for the 
fiscal year ended September 30, 1996, $5.8 million for the fiscal year 
ended September 30, 1995, and $5.0 million for the comparable period 
in 1994.  Income sources include service fees and late charges in 
connection with Receivables, charges for loan servicing and other 
services provided to outside affiliated companies, and rents, 
commissions and other revenues primarily associated with the Lawai 
Beach Resort, Kauai, Hawaii.  The decrease of $1.5 million in 1996 
from 1995 was primarily the result of ceasing the operations of a 
restaurant at Lawai Beach Resort and converting it to a leased 
operation, thereby reducing both revenues and related expenses, while 
the increase of $.8 million in 1995 over 1994 was primarily 
attributable to charges for services rendered to three former 
subsidiary companies which were sold in September of 1994, and in 
January and May of 1995.

	Non-interest expense consists of all non-interest expenses except 
the cost of real estate sold and the provision for losses on real 
estate assets.  Non-interest expense was $26.9 million for the year 
ended September 30, 1996 compared to $26.1 million for the fiscal year 
ended September 30, 1995 and $23.6 million for the comparable period 
in 1994.  The increase in cost of $.8 million in 1996 over 1995 was 
primarily attributable to an increase of $1.4 million in salaries and 
benefits and a decrease of $1.9 million in capitalized costs, net of 
amortization being only partially offset by a $2.0 million reduction 
in commissions to agents and a $.5 million decrease in other operating 
expenses. The increase in cost of $2.5 million in 1995 over 1994 was 
primarily attributable to an increase of $4.2 million in the 
recognition of commissions paid to insurance agents and other agents 
which were offset only partially by an increase in the amount 
capitalized as deferred costs, net of amortization.  See Note 13 to 
the Consolidated Financial Statements.

Realized Net Gains (Losses) on Sales of Investments and Receivables

	The Consolidated Group invests in securities and  Receivables as 
well as real estate investment properties.  The Consolidated Group 
adopted SFAS No. 115 on September 30, 1993 and since that time has 
classified its investments in debt and equity securities as either 
"trading", "available-for-sale" or "held-to-maturity".  From time to 
time, gains or losses are recognized on trading positions and 
securities classified as "available-for-sale" may be sold at a gain or 
a loss.  Net losses from the sale of investments was $.8 million in 
1996 with net gains of $.03 million and $1.1 million for the fiscal 
years ended September 30, 1995 and 1994, respectively.  See "BUSINESS-
Securities Investments".   The Consolidated Group purchases 
Receivables collateralized by real estate, lottery prizes structured 
settlements, and annuities.  See "BUSINESS-Receivable Investments" and 
Notes 2 and 4 to the Consolidated Financial Statements.   Such assets 
are generated through the ongoing production operations of the 
Consolidated Group.  At times, Receivables which have increased in 
value, primarily from a decreasing interest rate environment, or which 
exceed internal demand, may be remarketed either through whole loan 
sales or securitizations.  See "BUSINESS-Receivable Sales" and 
"CERTAIN INVESTMENT CONSIDERATIONS-RISK FACTORS".  Net gains from the 
sale of Receivables were $12.7 million, $4.4 million and $2.0 million 
for the fiscal years ended September 30, 1996, 1995 and 1994, 
respectively.

Asset/Liability Management

	The Consolidated Group is subject to interest rate risk because 
most of its assets and liabilities are financial in nature.  
Generally, the Consolidated Group's financial assets (primarily cash 
and cash equivalents, Receivables and fixed income investments) 
reprice more slowly than the Consolidated Group's financial 
liabilities (primarily securities sold, not owned, debentures and 
annuities).  In a rising rate environment, this mismatch will tend to 
reduce earnings, while in a falling rate environment, earnings will 
tend to increase.   During fiscal 1997, approximately $331 million of 
interest sensitive assets are expected to reprice or mature.  These 
assets consist of approximately $117 million of Receivables, $46 
million of fixed income investments and $168 million of cash and cash 
equivalents.  For liabilities, most of the balance of life insurance 
and annuity contracts may be repriced during 1997.  Management 
estimates this amount at $628 million.  In addition, approximately $50 
million of debentures, $37 million of other debt and $133 million of 
securities sold, not owned, will mature or reprice during that period. 
 At September 30, 1996, these estimates result in interest sensitive 
liabilities in excess of interest sensitive assets of approximately 
$517 million, or a ratio of interest sensitive assets to interest 
sensitive liabilities of approximately 256%.

	The Consolidated Group is able to manage this liability to asset 
mismatch of approximately 2.6:1 by the fact that approximately 74% of 
the interest sensitive liabilities are life insurance and annuity 
contracts which are subject to surrender charges.  These contracts 
have maturities which extend for as long as nine years with surrender 
charges of decreasing amounts during their term.  At the option of the 
Consolidated Group, these contracts are subject to annual repricing.  
In periods of declining interest rates, this feature is beneficial as 
it allows the Consolidated Group to reprice its liabilities at lower 
market rates of interest.  In periods of increasing interest rates, 
such liabilities were protected by surrender charges of approximately 
$20 million at September 30, 1996.  Depending on the remaining 
surrender charges, the Consolidated Group has the option to extend any 
interest rate increase over a two to three year period, thereby making 
it not generally economical for an annuitant to pay the surrender 
charge in order to receive payment in lieu of accepting a rate of 
interest that is lower than current market rates of interest.  As a 
result, the Consolidated Group may respond more slowly to increases in 
market interest rate levels thereby diminishing the impact of the 
current mismatch in the interest sensitivity ratio.  Additionally, 
through Receivable securitizations, the Consolidated Group has 
increased its ability to raise necessary liquidity to manage the 
liability to asset mismatch.  If necessary, the proceeds from the 
securitization could be used to payoff maturing liabilities.

Effect of Inflation

	During the three year period ended September 30, 1996, inflation 
has had a generally positive impact on the Consolidated Group's 
operations.  This impact has primarily been indirect in that the level 
of inflation tends to impact interest rates on both the Consolidated 
Group's assets and liabilities.  See "Interest Sensitive Income and 
Expense".  However, both interest rate levels in general and the cost 
of the Consolidated Group's funds and the return on its investments 
are influenced by additional factors such as the level of economic 
activity and competitive or strategic product pricing issues.  The net 
effect of the combined factors on the earnings of the Consolidated 
Group has been a slight improvement over the three year period in the 
positive spread between the rate of return on interest earning assets 
less the cost of interest paying liabilities.  Inflation has not had a 
material effect on the Consolidated Group's operating expenses.  
Increases in operating expenses have resulted principally from 
increased product volumes or other business considerations.

	Revenues from real estate sold are influenced in part by 
inflation, as, historically, real estate values have fluctuated with 
the rate of inflation.  However, management is unable to quantify the 
effect of inflation in this respect with any degree of accuracy.

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 or the fair value of the 
collateral.  The Consolidated Group adopted this new standard on 
October 1, 1995. The adoption of SFAS No. 114 did not have a material 
effect on the consolidated financial statements.  See Note 1 to the 
Consolidated Financial Statements.

	In March 1995, Statement of Financial Accounting Standards No. 
121 (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 Consolidated 
Group'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 Consolidated Group is required to adopt this new 
standard on October 1, 1996.  The Consolidated Group does not 
anticipate that the adoption of SFAS No. 121 will have a material 
effect on the consolidated financial statements.

	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 asset 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.

Liquidity and Capital Resources

	The Consolidated Group's sources of liquidity are tied to its 
ability to renew, maintain or obtain existing and additional sources 
of cash.  The Consolidated Group has successfully met these 
requirements during the past three years and has continued to invest 
funds generated by operations, financing activities, Receivables and 
investments.

	Cash provided from operating activities was $185.9 million in 
1996, $40.8 million in 1995 and $46.0 million in 1994. Cash utilized 
by the Consolidated Group in its investing activities was $54.1 
million in 1996, $43.6 million in 1995 and $106.8 million in 1994. 
Cash provided to the Consolidated Group from its financing activities 
was $3.3 million in 1996, $6.3 million in 1995 and $17.2 million in 
1994. These cash flows have resulted in year end cash and cash 
equivalent balances of $167.9 million in 1996, $32.8 million in 1995 
and $29.3 million in 1994.  The increase in cash and cash equalivents 
of $137.1 million in 1996 over 1995 was almost entirely the result of 
the proceeds from the sale of securities, not owned of $132.7 million. 
 These securities were sold "short" as an economic hedge to protect 
the profits in the Receivable securitization which closed in November 
1996.  In 1996, Receivable acquisitions of $382.1 million and $28.5 
million in acquisition and costs associated with real estate held for 
sale and development were financed by proceeds from Receivable sales, 
securitizations and principal payments of $245.9 million, $55.5 
million in proceeds from maturities and sales less purchases of 
investments and other cash proceeds of $53.2 million from operating 
activities.  Proceeds from operating activities were primarily from 
net income of $8.0 million and $45.8 million from increases in life 
insurance and annuity reserves.  At September 30, 1996, management 
considers its cash and cash equivalent funds combined with its other 
sources of funds to be adequate to finance any required debt 
retirements or planned asset additions.

	The State of Washington imposed certain temporary limitations on 
the total amount of debentures and preferred stock that Metropolitan 
could have outstanding during 1994, 1995 and 1996.  At September 30, 
1996, Metropolitan could not have more than an aggregate total of 
approximately $202.3 million in outstanding debentures (including 
accrued and compound interest) and aggregate outstanding preferred 
stock (based on original sales price) of approximately $49.5 million. 
 Outstanding preferred stock is limited to the amount outstanding as 
of June 30, 1996 ($49.0 million) plus reinvested dividends ($.5 
million) after that date. At September 30, 1996, Metropolitan had 
total outstanding debentures of approximately $192.2 million and total 
outstanding preferred stock of approximately $49.5 million. These 
limitations did not have any material adverse impact on liquidity 
during 1993 through 1995, but did limit sales of securities and 
resulting liquidity in 1996.  Should the same or a lower limitation be 
imposed during 1997, it, could have a material negative effect on 
liquidity.

	During 1997, anticipated principal, interest and dividend 
payments on outstanding debentures, other debt payments and preferred 
stock distributions are expected to be approximately $97.5 million.  
During 1996, the principal portion of the payments received on the 
Consolidated Group's Receivables and proceeds from sales of real 
estate and Receivables was $302.5 million.  A decrease in the 
prepayment rate on these Receivables or the ability to sell or 
securitize Receivables would reduce future cash flows from Receivables 
and might adversely affect the Consolidated Group's ability to meet 
its principal, interest and dividend payments.

	The Consolidated Group expects to maintain high levels of 
liquidity in the  foreseeable future by continuing its securities 
offerings, annuity sales and the sale and securitization of 
Receivables. At September 30, 1996, cash or cash equivalents were $168 
million, or 13.1% of assets.  Of the $168 million of cash and cash 
equivalents, approximately $131 million was restricted from general 
use by the Consolidated Group until such time as the obligation for 
securities sold, not owned, was satisfied.  Including securities that 
are available for sale and excluding restricted cash equivalents, 
total liquidity was $75 million, $65 million and $118 million as of 
September 30, 1996, 1995 and 1994, respectively, or 5.9%, 6.0% and 
11.1% of total assets, respectively.

	Access to new "capital markets" through Receivable 
securitizations has allowed the Consolidated Group to both increase 
liquidity and accelerate earnings through the gains recorded on the 
securitizations.  The increased ability to raise liquidity will enable 
the Consolidated Group to accept certain asset/liability mismatches 
which have historically been beneficial to the Consolidated Group  
when they have been able to finance higher earning longer term assets 
with lower cost of funds associated with shorter term liabilities.

	For statutory purposes, Western United performs cash flow testing 
under seven different rate scenarios.  The results of these tests are 
filed annually with the Insurance Commissioner of the State of 
Washington.  At the end of calendar year 1995, the results of this 
cash flow testing process were satisfactory.

	Metropolitan alone generated approximately $20.8 million in cash 
from operations in 1996.  Net cash of approximately $23.5 million was 
used in investing activities.  Funds used included $32.2 million for 
the purchase of Receivables, $11.7 million for the purchase of 
investments and $17.2 million in additions to real estate held.  An 
additional $16.3 million was used for investment in and advances to 
subsidiaries.  Funds provided from investing activities included $24.3 
from the sale of Receivables and $12.5 million of principal payments 
on such Receivables.  Additional funds of $9.2 million from proceeds 
on sales of real estate and $9.1 million from the sale and maturities 
of investments were received.  Net cash used in financing activities 
in 1996 of $8.4 million included $22.9 million repayment of debentures 
and $3.9 million in preferred dividend payments, which were offset by 
new debenture sales of $9.1 million, issuance of preferred stock, net 
of redemption, of $1.8 million.  	

	Metropolitan alone generated approximately $2.4 million in cash 
from operations in 1995. Net cash of approximately $3.9 million was 
used in investing activities.  Funds used included $18.4 million, 
$12.1 million, and $12.5 million for the purchase of Receivables, 
investments, and additions to real estate held, respectively.  An 
additional $9.6 million was used for investment in and advances to 
subsidiaries.  Funds provided from investing activities included $34.9 
million from the sale of Receivables collateralized by real estate and 
$5.1 million of principal payments on such Receivables.  Additional 
funds of $1.9 million and $7.6 were provided from the sale of real 
estate and investments, respectively. Net cash of $8.0 million 
provided from financing activities in 1995 included $53.1 million in 
proceeds from the sale of debentures which was partially offset by 
$49.0 million in repayment of debentures.  Additionally, $4.5 million 
was obtained from the issuance of preferred stock and $4.2 million was 
obtained in net borrowings while $4.5 million was distributed in cash 
dividends.

	Metropolitan alone generated approximately $1.8 million in cash 
from operations in 1994.  Investing activities, which provided 
approximately $4.8 million, were primarily: (1) investments in and 
advances to subsidiaries which provided $6.3 million; (2) changes in 
investments and Receivables, which provided $4.0 million; less (3) 
capital expenditures and the net change in real estate held of $5.5 
million.  Cash used in financing activities of $11.0 million were 
primarily used for: (1) net redemption of debenture bonds of $5.2 
million; (2) repayment of borrowings from banks and others of $3.3 
million; (3) cash dividends of $3.5 million: which were offset by (4) 
net issuance of preferred stock less redemption and retirement of 
common stock of approximately $1.0 million.  For 1994, Metropolitan 
had a decrease in cash and cash equivalents of approximately $4.4 
million resulting in a year end balance of approximately $9.4 million.

	Management believes that cash flow generated from the 
Consolidated Group's operating activities and financing activities 
will be sufficient to conduct its business and meet its anticipated 
obligations as they mature during the next fiscal year.  Metropolitan 
has never defaulted on any of its obligations since its founding in 
1953.


		

ITEM 8. Financial Statements and Supplementary Data

METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 1996, 1995 and 1994



Report of Independent Accountants	

Consolidated Balance Sheets	

Consolidated Statements of Income

Consolidated Statements of Stockholders' Equity	

Consolidated Statements of Cash Flows	


Notes to Consolidated Financial Statements	




REPORT OF INDEPENDENT ACCOUNTANTS



The Directors and Stockholders
Metropolitan Mortgage & Securities Co., Inc.


We have audited the accompanying consolidated balance sheets of 
Metropolitan Mortgage & Securities Co., Inc. and subsidiaries as of 
September 30, 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 September 30, 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. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement. An audit includes 
examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates 
made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the consolidated financial position 
of Metropolitan Mortgage & Securities Co., Inc. and subsidiaries as 
of September 30, 1996 and 1995, and the consolidated results of their 
operations and their cash flows for each of the three years in the 
period ended September 30, 1996 in conformity with generally accepted 
accounting principles.

As discussed in Note 1, the Company changed its method of accounting 
for impaired loans in 1996.




        

Spokane, Washington
December 6, 1996




METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and 1995



				         ASSETS	     1996		     1995
					--------------	--------------
Cash and cash equivalents	$	167,879,080	$	32,798,627
Investments:
	Available-for-sale securities, 
		at market		38,554,498		31,829,980
	Held-to-maturity securities, at 
		amortized cost		124,748,490		188,073,542
	Accrued interest on investments		1,516,390		2,372,891
					--------------	--------------
			Total cash and investments		332,698,458		255,075,040
					--------------	--------------
Real estate contracts and mortgage 
	notes receivable, net, including 
	real estate contracts and mortgage 
	notes receivable held for sale of 
	approximately $106,575,000 in 1996		650,933,330		587,493,614
Real estate held for sale and 
	development, including foreclosed 
	real estate received in satis-
	faction of debt of $36,158,099 
	and $38,004,011		84,333,288		91,105,003
					--------------	--------------
			Total real estate assets		735,266,618		678,598,617

Less allowance for losses on real 
	estate assets		(10,192,584)		(8,116,065)
					--------------	--------------
			Net real estate assets		725,074,034		670,482,552
					--------------	--------------
Other receivable investments		107,494,150		41,591,415
					--------------	--------------
Other assets:
	Deferred costs		74,530,361		74,521,803
	Land, buildings and equipment, 
		net of accumulated depreciation		8,516,598		8,148,850
	Other assets including receivables 
		from affiliates, net of allow-
		ances of $180,954 and $77,039		34,345,227		28,648,340
					--------------	--------------
			Total other assets		117,392,186		111,318,993
					--------------	--------------
			Total assets	$	1,282,658,828	$	1,078,468,000
					==============	==============





METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
September 30, 1996 and 1995




         LIABILITIES AND
      STOCKHOLDERS' EQUITY	     1996		     1995
					--------------	--------------
Liabilities:
	Life insurance and annuity 
		reserves	$	837,366,108	$	781,716,153
	Debenture bonds and accrued 
		interest		192,173,751		201,311,873
	Debt payable		38,601,146		25,552,451
	Securities sold, not owned, at 
		market		132,652,334
	Accounts payable and accrued 
		expenses		18,082,782		15,558,818
	Deferred income taxes		15,894,831		12,254,475
	Minority interest in consolidated 
		subsidiaries		1,544,544		1,503,788
					--------------	--------------
			Total liabilities		1,236,315,496		1,037,897,558
					--------------	--------------
Commitments and contingencies 
	(Notes 5 and 14)

Stockholders' equity:
	Preferred stock, (liquidation 
		preference $49,495,906 and 
		$47,825,310)		21,518,198		21,627,106
	Subordinate preferred stock, no par		--		--
	Common stock, $2,250 par		293,417		293,417
	Additional paid-in capital		16,791,670		14,917,782
	Retained earnings		8,731,070		4,561,554
	Net unrealized losses on invest-
		ments, net of income taxes of 
		$510,530 and $427,283		(991,023)		(829,417)
					--------------	--------------
			Total stockholders' equity		46,343,332		40,570,442
					--------------	--------------
			Total liabilities and stock-
				holders' equity	$	1,282,658,828	$	1,078,468,000
					==============	==============


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




METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the years ended September 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>
								   1996		   1995		   1994
								-----------	-----------	-----------
<S>							<C>		<C>		<C>
Revenues:
	Insurance premiums	$	3,000,000	$	3,000,000	$	2,958,000
	Interest on receivables		58,529,828		56,553,869		56,420,184
	Earned discount on receivables		18,036,075		13,786,977		13,790,211
	Other investment interest		15,291,496		15,039,706		16,715,517
	Real estate sales		45,648,264		39,388,086		40,023,974
	Gain on insurance settlement 				50,922		203,691
	Fees, commissions, service and other 
		income					4,300,381		5,847,020		4,992,505
	Realized net gains (losses) on sales
		of investments		(821,481)		34,565		1,111,974
	Realized net gains on sales of 
		receivables			12,687,616		4,406,338		1,969,907
								-----------	-----------	-----------
			Total revenues		156,672,179		138,107,483		138,185,963
								-----------	-----------	-----------
Expenses:
	Insurance policy and annuity benefits		48,301,010		45,483,802		41,918,907
	Interest, net			18,787,655		16,381,004		19,895,252
	Cost of real estate sold		43,910,654		36,449,309		38,496,776
	Provision for losses on real estate 
		assets					6,360,072		4,174,644		5,533,193
	Salaries and employee benefits		10,199,812		8,803,131		8,846,677
	Commissions to agents		10,574,049		12,588,546		8,430,654
	Other operating and underwriting		6,958,938		7,414,502		7,420,022
	Less amount capitalized as deferred 
		costs, net of amortization		(801,825)		(2,671,195)		(1,050,279)
								-----------	-----------	-----------
			Total expenses		144,290,365		128,623,743		129,491,202
								-----------	-----------	-----------
Income before income taxes and minority 
	interest					12,381,814		9,483,740		8,694,761
Provision for income taxes		(4,235,469)		(3,107,897)		(2,992,476)
								-----------	-----------	-----------
Income before minority interest		8,146,345		6,375,843		5,702,285

Income of consolidated subsidiaries 
	allocated to minority stockholders		(108,681)		(73,197)		(224,529)
								-----------	-----------	-----------
Net income					8,037,664		6,302,646		5,477,756
Preferred stock dividends		(3,868,148)		(4,037,921)		(3,423,326)
								-----------	-----------	-----------
Income applicable to common stockholders	$	4,169,516	$	2,264,725	$	2,054,430
								===========	===========	===========
Income per share applicable to common 
	stockholders		$	32,073	$	17,288	$	14,996
								===========	===========	===========


Weighted average number of shares of 
	common stock outstanding		130		131		137
								===========	===========	===========
</TABLE>

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




METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended September 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>
							Additional		Net Unrealized
			Preferred		Common		Paid-in		Gains (Losses)	Retained
			Stock		Stock		Capital		on Investments	Earnings	
			-----------	-----------	-----------	--------------	-----------
<S>		<C>		<C>		<C>		<C>		<C>
Balance, September 30, 1993	$	21,402,599	$	310,485	$	9,754,510	$	535,635	$	778,260
Net income										5,477,756
Net change in unrealized (losses) on
	available-for-sale securities, net 
	of income taxes of $1,721,435								(3,371,012)
Cash dividends, common ($675 per share)										(87,012)
Cash dividends, preferred (variable rate)										(3,423,326)
Redemption and retirement of stock
	(14,470 shares)		(144,699)				(353,743)
Redemption and retirement of stock
	(6 shares) and change in minority
	interest				(13,864)		(12,914)
Sale of variable rate preferred stock,
	net (17,901 shares)		179,010				1,593,639
			-----------	-----------	-----------	-----------	-----------
Balance, September 30, 1994		21,436,910		296,621		10,981,492		(2,835,377)		2,745,678
Net income										6,302,646
Net change in unrealized gains on 
	available-for-sale securities, net 
	of income taxes of $1,018,219								2,005,960
Cash dividends, common ($3,800 per share)										(501,582)
Cash dividends, preferred (variable rate)										(4,037,921)
Redemption and retirement of stock (2 
	shares) and change in minority interest			(3,204)		(123,551)
Redemption and retirement of stock
	(27,637 shares)		(276,376)				13,120
Sale of variable rate preferred stock, 
	net (46,657 shares)		466,572				4,046,721
Excess sales price over historical cost
	basis of subsidiaries sold to related 
	parties										52,733
			-----------	-----------	-----------	-----------	-----------
Balance, September 30, 1995		21,627,106		293,417		14,917,782		(829,417)		4,561,554
</TABLE>




METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY, CONTINUED
for the years ended September 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>
							Additional		Net Unrealized
			Preferred		Common		Paid-in		Gains (Losses)	Retained
			Stock		Stock		Capital		on Investments	Earnings	
			-----------	-----------	-----------	--------------	-----------
<S>		<C>		<C>		<C>		<C>		<C>
Balance, September 30, 1995		21,627,106		293,417		14,917,782		(829,417)		4,561,554
Net income										8,037,664
Net change in unrealized (losses) on
	available-for-sale securities, net 
	of income taxes of $83,247								(161,606)
Cash dividends, preferred (variable rate)										(3,868,148)
Redemption and retirement of stock
	(32,330 shares)		(323,301)				(47,433)
Sale of variable rate preferred
	stock, net (21,439 shares)		214,393				1,921,321
			-----------	-----------	-----------	-----------	-----------
Balance, September 30, 1996	$	21,518,198	$	293,417	$	16,791,670	$	(991,023)	$	8,731,070
			===========	===========	===========	===========	===========
</TABLE>
The accompanying notes are an integral part of the consolidated
  financial statements.



METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended September 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>
			    1996		    1995		    1994
			-------------	-------------	-------------
<S>							<C>		<C>		<C>
Cash flows from operating activities:
	Net income		$	8,037,664	$	6,302,646	$	5,477,756
	Adjustments to reconcile net income 
		to net cash provided by operating 
		activities:
			Proceeds from sale of trading 
				securities		67,093,831		515,677,468		1,064,997,088
			Purchase of trading securities		(67,448,595)		(515,570,230)		(1,064,712,932)
			Realized net gains on sales of 
				investments and receivables		(11,866,135)		(4,440,903)		(3,081,881)
			Gain on sales of real estate		(1,737,610)		(2,938,777)		(1,527,198)
			Gain on insurance settlement				(50,922)		(203,691)
			Provision for losses on real 
				estate assets		6,360,072		4,174,644		5,533,193
			Provision for losses (recover-
				ies) on other assets		70,500		(35,657)		204,650
			Depreciation and amortization		4,617,664		3,023,233		2,066,365
			Minority interests		108,681		73,197		224,529
			Deferred income tax provision		3,640,356		2,747,990		2,644,170
			Changes in assets and liabili-
				ties, net of effects from 
				sale of subsidiaries:
					Life insurance and annuity 
						reserves		45,782,339		42,033,038		39,322,517
					Deferred costs, net		(8,558)		(3,034,857)		(1,349,405)
					Compound and accrued 
						interest on bonds		4,642,760		(2,214,261)		(2,096,810)
					Securities sold, not owned		132,652,334
					Other		(6,089,670)		(4,910,909)		(1,537,118)
								-------------	-------------	-------------
							Net cash provided by 
							  operating activities		185,855,633		40,835,700		45,961,233
								-------------	-------------	-------------

Cash flows from investing activities:
	Proceeds from sale of subsidiaries, 
		net of cash				(1,406,873)
	Principal payments on real estate 
		contracts and mortgage notes 
		receivable		107,702,333		118,869,137		107,040,612
	Principal payments on other 
		receivable investments		6,049,097		1,664,132
	Proceeds from sales of real estate 
		contracts and mortgage notes 
		receivable and other receivable
		investments		182,177,259		72,914,006		20,407,270
	Acquisition of real estate contracts 
		and mortgage notes receivable		(282,313,300)		(203,525,666)		(142,479,298)
	Acquisition of other receivable 
		investments		(99,804,805)		(56,229,758)
	Proceeds from insurance settlement				50,922		203,691
	Proceeds from sales of real estate		6,545,323		5,285,839		6,562,008
	Proceeds from maturities of held-
		to-maturity investments		2,598,081		4,696,003		8,875,268
</TABLE>




METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended September 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>

			    1996		    1995		    1994
			-------------	-------------	-------------
<S>		<C>		<C>		<C>
Cash flows from investing activities,
	Continued:
		Proceeds from maturities of 
			available-for-sale investments		37,496,910				
		Purchases of held-to-maturity 
			investments		(12,181,445)		(1,557,219)		(5,263,021)
		Proceeds from sales of available-
			for-sale investments		31,686,315		92,779,569		367,846,050
		Purchases of available-for-sale 
			investments		(4,138,391)		(34,387,059)		(441,965,194)
		Purchases of and costs associated 
			with real estate held for sale 
			and development		(28,499,006)		(41,841,982)		(27,544,340)
		Capital expenditures		(1,369,802)		(894,673)		(471,097)
								-------------	-------------	-------------
							Net cash used in 
							  investing activities		(54,051,431)		(43,583,622)		(106,788,051)
								-------------	-------------	-------------
Cash flows from financing activities:
	Increase (decrease) in short-term 
		borrowings		11,353,125		(36,598,375)		59,730,000
	Repayments of debt payable		(2,060,440)		(524,046)		(2,468,655)
	Receipts from life and annuity 
		products			112,894,347		145,066,891		85,332,591
	Withdrawals of life and annuity 
		products			(103,026,731)		(105,469,442)		(124,642,366)
	Issuance of debenture bonds		9,125,303		53,120,179		56,954,423
	Repayment of debenture bonds		(22,906,185)		(48,970,828)		(55,193,403)
	Issuance of preferred stock		2,135,714		4,513,293		1,772,649
	Redemption and retirement of stock		(370,734)		(327,336)		(775,742)
	Cash dividends		(3,868,148)		(4,539,503)		(3,510,338)
								-------------	-------------	-------------
							Net cash provided by 
							  financing activities		3,276,251		6,270,833		17,199,159
								-------------	-------------	-------------
Net increase (decrease) in cash and 
	cash equivalents		135,080,453		3,522,911		(43,627,659)

Cash and cash equivalents:
	Beginning of year		32,798,627		29,275,716		72,903,375
								-------------	-------------	-------------
	End of year	$	167,879,080	$	32,798,627	$	29,275,716
								=============	=============	=============

</TABLE>
See Note 16 for supplemental cash flow information.


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




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


 1.	SUMMARY OF ACCOUNTING POLICIES:

			BUSINESS AND ORGANIZATION

			Metropolitan Mortgage & Securities Co., Inc. (the Company and 
Metropolitan) invests in real estate contracts and mortgage 
notes receivable and other investments, including real estate 
development, with proceeds from investments and securities 
offerings.

			On September 9, 1994, the Company sold its entire interest in 
one of its subsidiaries, Summit Securities, Inc. (Summit), to 
National Summit Corp., a Delaware corporation which is wholly 
owned by C. Paul Sandifur, Jr., the Company's Chief Executive 
Officer. The change in control was made pursuant to a 
reorganization wherein Summit redeemed all the common shares 
held by its former parent company. Summit redeemed the common 
shares for $3,600,000 paid in cash to the Company. The sales 
price approximated the net book value of Summit at the date of 
acquisition. The results of operations of Summit are included 
in the consolidated financial statements for the period prior 
to September 9, 1994. Also, during the year ended September 30, 
1994, some of the Company's majority-owned subsidiaries had 
reverse stock splits and fractional shares were redeemed and 
retired for cash.

			On January 31, 1995, Metropolitan and Summit consummated a 
transaction whereby 100% of the common stock of Metropolitan 
Investment Securities, Inc. (MIS) was sold to Summit. The cash 
price was $288,950, the approximate historical cost basis of 
MIS at closing. MIS is a broker/dealer and the exclusive 
broker/dealer for the securities sold by Metropolitan and 
Summit. This sale did not materially affect the business 
operations of MIS. The results of operations of MIS are 
included in the consolidated financial statements for periods 
prior to January 31, 1995.

			Additionally, by agreement, effective January 31, 1995, 
Metropolitan 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 
Metropolitan. Summit Property Development Corporation, a 100% 
owned subsidiary of Summit, has negotiated an agreement with 
Metropolitan to provide future property development services. 




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			BUSINESS AND ORGANIZATION, CONTINUED

			On May 31, 1995, Metropolitan and Summit consummated a 
transaction whereby 100% of the common stock of Old Standard 
Life Insurance Company (OSL) was sold to Summit. The cash price 
was $2,722,000, the approximate historical cost basis of OSL at 
closing, with future contingency payments equal to 20% of 
statutory income prior to the accrual of income taxes for the 
fiscal years ending December 31, 1995, 1996 and 1997. The cash 
sales price plus estimated future contingency payments 
approximated the appraised valuation of OSL. OSL is engaged in 
the business of acquiring receivables using funds derived from 
the sale of annuities, investment income and receivable cash 
flows. The sale of OSL decreased total assets and liabilities 
by approximately $46.2 million. The results of operations of 
OSL are included in the consolidated financial statements for 
periods prior to May 31, 1995.

			The total purchase price of MIS and OSL exceeded the historical 
cost bases of the net assets of the companies by approximately 
$53,000. Due to the common control of Metropolitan and Summit, 
this excess purchase price was recorded as an increase to 
retained earnings in the periods in which the sales occurred.

			Metropolitan is effectively controlled by C. Paul Sandifur, Jr. 
through his common stock ownership and voting control.

			PRINCIPLES OF CONSOLIDATION

			The consolidated financial statements include the accounts of 
Metropolitan Mortgage & Securities Co., Inc. and its majority-
owned subsidiaries. All significant intercompany transactions 
and balances have been eliminated in consolidation.

			CASH AND CASH EQUIVALENTS

			The Company considers all highly-liquid debt instruments 
purchased with a remaining maturity of three months or less to 
be cash equivalents. Cash includes all balances on hand and on 
deposit in banks and financial institutions. The Company 
periodically evaluates the credit quality of its depository 
financial institutions. Substantially all cash and cash 
equivalents are on deposit with one financial institution and 
balances periodically exceed the FDIC insurance limit.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			INVESTMENTS

			The Company has classified its investments in debt and equity 
securities as "available-for-sale," "held-to-maturity" or 
"trading." The accounting policies related to these investment 
classifications are as follows:

				AVAILABLE-FOR-SALE SECURITIES:  Available-for-sale 
securities, consisting primarily of government-backed 
securities, public utility and corporate bonds, are carried 
at market value. Unrealized gains and losses on these 
securities are presented as a separate component of 
stockholders' equity, net of related deferred income taxes. 

				HELD-TO-MATURITY SECURITIES:  Held-to-maturity securities, 
consisting primarily of public utility and corporate bonds 
and mortgage- and government-backed securities having fixed 
maturities, are carried at amortized cost. The Company has 
the ability and intent to hold these investments until 
maturity.

				TRADING SECURITIES:  Trading securities, consisting primarily 
of government-backed securities and corporate bonds, are 
bought and held principally for the purpose of selling them 
in the near term and are recorded at market value. Realized 
and unrealized gains and losses are included in the 
consolidated statements of income.

			Realized gains and losses on investments are calculated on the 
specific-identification method and are recognized in the 
consolidated statements of income in the period in which the 
investment is sold.

			For other than a temporary decline in the value of a common 
stock, preferred stock or publicly traded bond below cost or 
amortized cost, the investment is reduced to its net realizable 
value, which becomes the new cost basis of the investment. The 
amount of the reduction is reported as a loss. Any recovery of 
market value in excess of the investment's new cost basis is 
recognized as a realized gain only upon sale, maturity or other 
disposition of the investment. Factors which the Company 
evaluates in determining the existence of an other than 
temporary decline in value include the length of time and 
extent to which market value has been less than cost; the 
financial condition and near-term prospects of the issuer; and 
the intent and ability of the Company to retain its investment 
for the anticipated period of recovery in market value.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE

			Real estate contracts and mortgage notes receivable held for 
investment purposes are carried at amortized cost. Discounts 
originating at the time of purchase, net of capitalized 
acquisition costs, are amortized using the level yield 
(interest) method. For receivables acquired after September 30, 
1992, net purchase discounts are amortized on an individual 
contract basis using the level yield (interest) method over the 
remaining contractual term of the receivables. For receivables 
acquired before October 1, 1992, the Company accounts for its 
portfolio of discounted receivables using anticipated 
prepayment patterns to apply the level yield (interest) method 
of amortizing discounts. Discounted receivables are pooled by 
the fiscal year of purchase and by similar receivable types. 
The amortization period, which is approximately 78 months, 
estimates a constant prepayment rate of 10-12 percent per year 
and scheduled payments, which is consistent with the Company's 
prior experience with similar receivables and the Company's 
expectations.

			REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD 
			FOR SALE

			Real estate contracts and mortgage notes receivable held for 
sale are carried at the lower of cost (outstanding principal 
adjusted for net discounts and capitalized acquisition costs) 
or market value, determined on an aggregate basis. Gains or 
losses on such sales are recognized utilizing the aggregation 
method for financial reporting and income tax purposes at the 
time of sale. Interest on these receivables is included in 
interest income. Deferred net discounts and capitalized 
acquisition costs are recognized at the time the related 
receivables are sold to third-party investors or securitized 
through transfer to a real estate investment trust.

			OTHER RECEIVABLE INVESTMENTS

			Other receivables held for investment purposes are carried at 
amortized cost. Discounts originating at the time of purchase, 
net of capitalized acquisition costs, are amortized using the 
level yield (interest) method on an individual receivable basis 
over the remaining contractual term of the receivable.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			REAL ESTATE HELD FOR SALE AND DEVELOPMENT

			The Company holds real estate, stated at the lower of cost or 
fair value less costs to sell, for purposes of development and 
resale. The Company acquires real estate through direct 
purchase and foreclosure. Cost is determined by the purchase 
price of the real estate or, for real estate acquired by 
foreclosure, at the lower of (a) the fair value of the property 
at the date of foreclosure less estimated selling costs, or (b) 
cost (unpaid receivable carrying value). Periodically, the 
Company reviews its carrying values of real estate held for 
sale and development by obtaining new or updated appraisals and 
adjusts its carrying values to the lower of cost or net 
realizable value, as necessary. As a result of changes in the 
real estate markets in which these properties are located, it 
is reasonably possible that these carrying values could change 
in the near term.

			Occasionally, these real estate properties are rented, with the 
revenue being included in other income and related costs are 
charged to expense.

			In March 1995, SFAS No. 121 (SFAS 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 on October 1, 1996. The Company does not anticipate 
that the adoption of SFAS No. 121 will have a material effect 
on the consolidated financial statements.

			Profit on sales of real estate is recognized when the buyers' 
initial and continuing investment is adequate to demonstrate 
(1) a commitment to fulfill the terms of the transaction, (2) 
that collectibility of the remaining sales price due is 
reasonably assured, and (3) the Company maintains no continuing 
involvement or obligation in relation to the property sold and 
has transferred all the risks and rewards of ownership to the 
buyer.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			ALLOWANCE FOR LOSSES ON REAL ESTATE ASSETS

			The established allowances for losses on real estate assets 
include amounts for estimated probable losses on both real 
estate held for sale and development and real estate contracts 
and mortgages receivable. Specific allowances are established, 
as necessary, for delinquent receivables with net carrying 
values in excess of $100,000. Additionally, the Company 
establishes allowances, based on historic delinquency and loss 
experience, for currently performing receivables and smaller 
delinquent receivables. Allowances for losses are determined 
based upon the net carrying values of the receivables, 
including accrued interest, determined in accordance with the 
provisions of Statement of Financial Accounting Standards 
(SFAS) No. 114, "Accounting by Creditors for Impairment of a 
Loan." The Company adopted this new standard on October 1, 
1995, which did not have a material effect on the consolidated 
financial statements. 

			The Company continues to accrue interest on delinquent loans 
until foreclosure, unless the principal and accrued interest on 
the receivable exceeds the fair value of the collateral, net of 
the estimated selling costs. The Company obtains new or updated 
appraisals on collateral for appropriate delinquent 
receivables, and adjusts the allowance for losses as necessary, 
such that the net carrying value does not exceed net realizable 
value.

			DEFERRED COSTS

			Commission expense and other insurance policy, annuity and 
debenture issuance costs are deferred. For debenture issuance 
costs, amortization is computed over the expected term which 
ranges from 6 months to 5 years, using the level yield 
(interest) method. For annuities and life insurance costs, the 
portion of the deferred policy acquisition cost that is 
estimated not to be recoverable from surrender charges is 
amortized as a constant percentage of the estimated gross 
profits (both realized and unrealized) associated with the 
policies in force.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			LAND, BUILDINGS AND EQUIPMENT

			Land, buildings and equipment are stated at cost. Buildings, 
improvements, furniture and equipment are depreciated using 
both straight-line and accelerated methods over their estimated 
useful lives which, for buildings and improvements, range from 
5 to 40 years, and for furniture and equipment, range from 3 to 
10 years. Repairs, maintenance and minor renewals are charged 
to expense as incurred. Upon sale or retirement, the costs and 
related accumulated depreciation are eliminated from the 
accounts and any resulting gain or loss is reflected in 
operations.

			COMPUTER SOFTWARE COSTS

			The Company capitalizes direct costs of enhancements to 
computer software operating systems acquired and developed for 
internal use. At September 30, 1996, total enhancement costs of 
approximately $6,566,000 have been capitalized. These costs are 
being amortized over 5- and 10-year periods, depending on the 
estimated useful life of the enhancement, using the straight-
line method. It is reasonably possible that the remaining 
estimated useful lives could change in the near term. As a 
result, the carrying value of these enhancements may be 
reduced.

			The Company will be required to make further enhancements to 
its computer software operating systems to enable recognition 
of the new century. The program codes within the operating 
systems currently store only a two digit character for the year 
in which transactions occur. The modification of these program 
codes to store four digit years will occur in the near term. 
The Company expects that the costs of these modifications will 
be material and will be charged to operations as incurred.

			INSURANCE AND ANNUITY RESERVES

			Premiums for universal life contracts and annuities are 
reported as life insurance and annuity reserves under the 
deposit method. Reserves for life insurance and annuities are 
equal to the sum of the account balances including deferred 
service charges. Based on past experience, consideration is 
given in actuarial calculations to the number of policyholder 
and annuitant deaths that might be expected, policy lapses, 
surrenders and terminations. As a result in changes in the 
factors considered in the actuarial calculations, it is 
reasonably possible that the reserves for insurance and 
annuities could change in the near term.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			RECOGNITION OF INSURANCE AND ANNUITY REVENUES

			Revenues for universal life contracts and annuities are 
recognized either upon assessment or over the estimated policy 
term. These revenues consist primarily of mortality expenses 
and surrender charges. Annuity revenues consist of the charges 
assessed against the annuity account balance for services and 
surrender charges. Charges for future services are assessed; 
however, the related revenue is deferred and recognized in 
income over the period benefitted using the same assumptions as 
are used to amortize deferred policy acquisition costs.

			GUARANTY FUND ASSESSMENTS

			The Company's life insurance subsidiary is subject to insurance 
guaranty laws in the states in which it writes business. These 
laws provide for assessments against insurance companies for 
the benefit of policyholders and claimants in the event of 
insolvency of other life insurance companies. A portion of 
these assessments can be offset against the payment of future 
premium taxes. However, future changes in state laws could 
decrease the amount available for offset. As of September 30, 
1996 and 1995, the Company has accrued an estimated liability 
for guaranty fund assessments for known insolvencies net of 
estimated recoveries through premium tax offsets.

			INTEREST COSTS

			Interest costs associated with the development of real estate 
projects are capitalized. During the years ended September 30, 
1996, 1995 and 1994, the Company capitalized interest of 
$2,468,411, $2,730,373 and $2,151,651, respectively. 

			INCOME TAXES

			The Company accounts for income taxes using the liability 
method, which requires that deferred tax assets and liabilities 
be determined based on the temporary differences between the 
financial statement carrying amounts and tax bases of assets 
and liabilities and tax attributes using enacted tax rates in 
effect in the years in which the temporary differences are 
expected to reverse.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			INCOME TAXES, CONTINUED

			The Company files a consolidated federal income tax return with 
its includable affiliates. The consolidating companies have 
executed a tax allocation agreement. Under the agreement, the 
Companies' income tax provisions are computed on a separate 
return basis and consolidated affiliates receive a reim-
bursement to the extent that their losses and other credits 
result in a reduction of the consolidated tax liability.

			EARNINGS PER COMMON SHARE

			Earnings per common share are computed by deducting preferred 
stock dividends from net income and dividing the result by the 
weighted average number of shares of common stock outstanding. 
All weighted average common shares outstanding and per share 
amounts have been retroactively restated to reflect the reverse 
stock split which occurred in fiscal 1994 (see Note 11). There 
were no common stock equivalents or potentially dilutive 
securities outstanding during any of the three years in the 
period ended September 30, 1996.

			HEDGING ACTIVITIES

			The Company is authorized by its Board of Directors, subject to 
certain limitations, to use financial futures instruments for 
the purpose of hedging interest rate risk relative to the 
securities portfolio and in anticipation of sales and 
securitizations of real estate contracts and other receivable 
investments. The insurance subsidiary sells securities "short" 
(the sale of securities which are not currently in the 
portfolio and therefore must be purchased to close out the sale 
agreement) as another means of managing interest rate risk or 
to benefit from an anticipated movement in the financial 
markets.

			The Company also purchases collateralized mortgage obligations 
(CMOs), pass-through certificates and other asset-backed 
securities for its investment portfolio. Such purchases have 
been limited to tranches that perform in concert with the 
underlying mortgages or assets; i.e., improving in value with 
falling interest rates and declining in value with rising 
interest rates. The Company has not invested in "derivative 




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


 1.	SUMMARY OF ACCOUNTING POLICIES, CONTINUED:

			HEDGING ACTIVITIES, CONTINUED

			products" that have been structured to perform in a way that 
magnifies the normal impact of changes in interest rates or in 
a way dissimilar to the movement in value of the underlying 
securities.

			Unrealized gains or losses associated with financial future 
contracts that meet the hedge criteria prescribed in Statement 
of Financial Standards No. 80 (SFAS No. 80), "Accounting for 
Futures Contracts" are deferred and recognized when the effects 
of changes in interest rate on the hedged asset are recognized. 
Sales of securities, not owned, are recognized as liabilities 
and are adjusted to market value with the unrealized gain or 
loss recognized currently in operations.

			In fiscal 1996, the Company sold U.S. Treasury securities, 
which it did not own, to provide an economic hedge for the 
anticipated securitization of real estate contracts and 
mortgage notes receivable which was completed in November 1996. 
At September 30, 1996, the Company was obligated to deliver 
U.S. Treasury securities with a market value of approximately 
$132,652,000. During the year ended September 30, 1996, the 
Company recognized a loss of approximately $820,000 associated 
with this obligation. At September 30, 1996, approximately 
$131,091,000 of the Company's cash and cash equivalents were 
restricted until such time as these obligations are repaid.

			ESTIMATES

			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.

			RECLASSIFICATIONS

			Certain amounts in the 1995 and 1994 consolidated 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.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	2.	REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE:

		Real estate contracts and mortgage notes receivable include 
mortgages collateralized by property located throughout the 
United States. At September 30, 1996, the Company held first 
position liens associated with real estate contracts and mortgage 
notes receivable with a face value of approximately $675,000,000 
(99%) and second or lower position liens of approximately 
$6,000,000 (1%). The Company's real estate contracts and mortgage 
notes receivable at September 30, 1996 are collateralized by 
property concentrated in the following geographic areas:


			Pacific Northwest (Alaska, Idaho, Montana, Oregon 
				and Washington)		23%
			Pacific Southwest (Arizona, California and Nevada)		20
			Southwest (New Mexico and Texas)		16
			Atlantic Northeast (Connecticut, Maryland, New Jersey, 
				New York and Pennsylvania)		10
			Southeast (Florida, Georgia, North Carolina and South 
				Carolina)		10
			Other		21
						---
						100%
						===

		The value of real estate properties in these geographic regions 
will be affected by changes in the economic environment of that 
region. It is reasonably possible that these values could change 
in the near term, which would affect the Company's estimate of 
its allowance for losses associated with these receivables.

		The face value of the real estate contracts and mortgage notes 
receivable range principally from $15,000 to $300,000. At 
September 30, 1996, the Company had 52 receivables aggregating 
approximately $29,400,000 which had face values in excess of 
$300,000. No individual receivable is in excess of 0.4% of the 
total carrying value of real estate contracts and mortgage notes 
receivable, and less than 3% of the receivables are subject to 
variable interest rates. Contractual interest rates for 91% of 
the face value of receivables fall within a range from 6% to 13% 
per annum. The weighted average contractual interest rate on 
these receivables at September 30, 1996 is approximately 9.4%. 
Maturity dates range from 1996 to 2026.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	2.	REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, CONTINUED:

		The following is a reconciliation of the face value of real 
estate contracts and mortgage notes receivable to the Company's 
carrying value at September 30, 1996 and 1995.

					    1996		    1995
					------------	------------


			Face value of discounted 
				receivables	$	548,537,547	$	505,440,872
			Face value of originated 
				receivables		132,640,600		112,072,081
			Unrealized discounts, net of 
				unamortized acquisition costs		(38,607,376)		(37,354,378)
			Accrued interest receivable		8,362,559		7,335,039
					------------	------------
			Carrying value 	$	650,933,330	$	587,493,614
					============	============



		The originated receivables are collateralized primarily by first 
position liens and result from loans made by the Company to 
facilitate the sale of its repossessed property. No unrealized 
discounts are attributable to originated receivables.

		The principal amount of receivables with required principal or 
interest payments being in arrears for more than three months was 
approximately $26,500,000 and $17,500,000 at September 30, 1996 
and 1995, respectively.

		Real estate contracts and mortgage notes receivable with net 
carrying values of approximately $38,212,000 were sold, resulting 
in gains of approximately $1,255,000, by the Company's life 
insurance subsidiary to affiliated entities in fiscal 1996. Sales 
of receivables with net carrying values of approximately 
$54,388,000 and $18,437,000 were sold without recourse to various 
financial institutions resulting in gains of approximately 
$2,645,000 and $1,970,000 in fiscal 1995 and 1994, respectively.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	2.	REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, CONTINUED:

		Aggregate amounts of receivables (face value) expected to be 
received, based upon estimated prepayment patterns, are as 
follows:

			Fiscal Year Ending
			   September 30,   
			------------------
				     1997	$	100,939,000
				     1998		89,216,000
				     1999		79,191,000
				     2000		70,664,000
				     2001		63,464,000
				  Thereafter		277,704,147
					------------
					$	681,178,147
					============

	3.	REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD FOR 
SALE:

		Real estate contracts and mortgage notes receivable, held for 
sale consist of a pool of receivables which are intended to be 
securitized and sold without recourse in a private placement. On 
November 26, 1996, the Company securitized and sold all real 
estate contracts and mortgage notes receivable held for sale at 
September 30, 1996, which resulted in a pretax gain of 
approximately $8.9 million.

		The Company entered into a securitization transaction during the 
year ended September 30, 1996. The Company participates in these 
securitization transactions with its subsidiaries and affiliates. 
These receivables are structured in classes by credit rating and 
transferred to a real estate trust, which sells pass-through 
certificates to third parties. These securitizations are recorded 
as sales of receivables and gains, net of transaction expenses, 
are recognized in the consolidated statements of income as each 
class is sold.

		During the year ended September 30, 1996, proceeds from 
securitization transactions were approximately $112,975,000 and 
resulted in gains of approximately $7,798,000. The gain realized 
included approximately $2,290,000 associated with the estimated 
fair value of the mortgage servicing rights retained on the pool. 
The fair value of these rights was determined based on the 
estimated present value of future net servicing cash flows, 
including float interest and late fees, adjusted for anticipated 
prepayments. It is reasonably possible that actual prepayment 
experience  could exceed the estimated prepayment factor in the 
near term, which would result in a reduction in the carrying 
value of retained mortgage servicing rights.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	3.	REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE, HELD FOR 
SALE, CONTINUED:

		Of the receivables securitized, the Company has retained an 
investment in certain classes of the securities having a fair 
value of approximately $4,333,000 at September 30, 1996. These 
securities were transferred to the Company's investment portfolio 
and classified as available-for-sale. These certificates are the 
B-4 and residual certificate classes and are subordinate to the 
other offered classes of certificates. These classes receive the 
lowest priority of principal and interest distributions and thus 
bear the highest credit risk. The Company provides for this risk 
by reducing the interest yield on these securities and by 
providing a reserve for the principal distributions due on these 
subordinate classes which may not be received due to default or 
loss. The weighted average constant effective yield recognized by 
the Company on these securities was 13.2% at September 30, 1996.

		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.


	4.	OTHER RECEIVABLE INVESTMENTS:

		Other receivable investments include various cash flow 
investments, primarily annuities and lottery prizes. Annuities 
are general obligations of the payor, which is generally an 
insurance company. Lottery prizes are general obligations of the 
insurance company or other entity making the lottery prize 
payments. Additionally, when the lottery prizes are from a state-
run lottery, the lottery prizes are often backed by the general 
credit of the state.

		These investments normally are non-interest bearing and are 
purchased at a discount sufficient to meet the Company's 
investment yield requirements. The weighted average constant 
yield on these receivables at September 30, 1996 is approximately 
8.71%. Maturity dates range from 1996 to 2035.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	4.	OTHER RECEIVABLE INVESTMENTS, CONTINUED:

		The following is a reconciliation of the face value of the other 
receivable investments to the Company's carrying value at 
September 30, 1996 and 1995.


					    1996		    1995
					------------	------------

			Face value of receivables	$	173,280,414	$	70,965,501
			Unrealized discounts, net of 
				unamortized acquisition costs		(65,786,264)		(29,374,086)
					------------	------------
			Carrying value	$	107,494,150	$	41,591,415
					============	============


		All such receivables at September 30, 1996 were performing in 
accordance with their contractual terms.

		During the years ended September 30, 1996 and 1995, the Company 
sold approximately $27,853,000 and $14,120,000, respectively, of 
these receivables without recourse and recognized gains of 
approximately $1,882,000 and $1,761,000, respectively.

		The following other receivable investments, by obligor, were in 
excess of ten percent of stockholders' equity at September 30, 
1996 and 1995.

							Aggregate
							Carrying
			Issuer			Amount
			---------------------------------------------	-	------------

			1996:
				California State Agency			$	24,718,527
				New York State Agency				15,511,891
				New Jersey State Agency				10,975,661
				Oregon State Agency				10,532,006
				Arizona State Agency				10,223,076
				Michigan State Agency				8,518,973
				Colorado State Agency				4,903,971

			1995:
				California State Agency				8,934,296
				Arizona State Agency				6,630,281
				New Jersey State Agency				4,931,025
				New York State Agency				4,758,062





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	4.	OTHER RECEIVABLE INVESTMENTS, CONTINUED:

		Aggregate amounts of contractual maturities of other receivable 
investments (face amounts) are as follows:

			Fiscal Year Ending
			   September 30,
			------------------
				     1997	$	15,880,000
				     1998		15,364,000
				     1999		16,177,000
				     2000		16,973,000
				     2001		15,399,000
				  Thereafter		93,487,414
					------------
					$	173,280,414
					============




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	5.	REAL ESTATE HELD FOR SALE AND DEVELOPMENT:

		A detail of the Company's real estate held for sale and development 
		by state as of September 30, 1996 is as follows:



<TABLE>
<CAPTION>
							Single-		Multi-
							Family		Family
			State	Land		Dwelling		Dwelling		Commercial		Condominium	Total
			----------------	-----------	-----------	-----------	-----------	-----------	-----------
			<S>	<C>		<C>		<C>		<C>		<C>		<C>
			Alabama			$	74,500							$	74,500
			Alaska	$	51,710							$	80,790		132,500
			Arizona		550,142		410,472			$	80,000				1,040,614
			Arkansas				81,000								81,000
			California		1,100,363		1,999,116	$	14,543		370,450		546,285		4,030,757
			Colorado		160,000								812,471		972,471
			Connecticut				301,113								301,113
			Florida		28,642		868,778		20,000				125,422		1,042,842
			Georgia				47,821								47,821
			Hawaii								3,825,791		18,829,598		22,655,389
			Idaho				61,564								61,564
			Illinois				69,082								69,082
			Indiana				16,000								16,000
			Iowa				110,309								110,309
			Kansas				72,870								72,870
			Louisiana				17,796								17,796
			Maine				204,896								204,896
			Maryland				307,165								307,165
			Massachusetts				138,000								138,000
			Michigan				259,230				90,000				349,230
			Minnesota				195,085								195,085
			Mississippi		28,106		58,782								86,888
			Missouri		40,500		169,181						119,811		329,492
			Montana		27,083										27,083
			Nebraska				38,231								38,231
			Nevada				62,000								62,000
			New Hampshire				171,114		50,000						221,114
			New Jersey				84,937				180,000				264,937
			New Mexico		10,500		39,449								49,949
			New York		7,633		455,070								462,703
			North Carolina		10,907										10,907
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	5.	REAL ESTATE HELD FOR SALE AND DEVELOPMENT, CONTINUED:

<TABLE>
<CAPTION>
							Single-		Multi-
							Family		Family
			State	Land		Dwelling		Dwelling		Commercial		Condominium	Total
			----------------	-----------	-----------	-----------	-----------	-----------	-----------
			<S>	<C>		<C>		<C>		<C>		<C>		<C>
			Ohio				82,400								82,400
			Oklahoma		51,045		140,992								192,037
			Oregon				75,659								75,659
			Pennsylvania		32,400		195,715								228,115
			South Carolina				71,400				91,506		30,000		192,906
			Tennessee				77,650								77,650
			Texas		48,649		910,960				65,000				1,024,609
			Utah				26,000								26,000
			Virginia				26,500						72,000		98,500
			Washington		34,736,817		855,044				13,126,130		57,500		48,775,491
			Wyoming				85,613								85,613
					-----------	-----------	-----------	-----------	-----------	-----------
			Balances at
				September 30, 
				1996	$	36,884,497	$	8,861,494	$	84,543	$	17,828,877	$	20,673,877	$	84,333,288
					===========	===========	===========	===========	===========	===========
			Balances at
				September 30,
				1995	$	39,084,721	$	7,124,907	$	0	$	16,312,303	$	28,583,072	$	91,105,003
					===========	===========	===========	===========	===========	===========
</TABLE>


		At September 30, 1996, the Company had approximately $68,930,000 
invested in real estate development projects and approximately 
$1,600,000 in commitments for construction associated with these 
projects.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	6.	ALLOWANCE FOR LOSSES ON REAL ESTATE ASSETS:

		The following is a summary of the changes in the allowance for 
losses on real estate assets for the years ended September 30, 
1996, 1995 and 1994:

					   1996		   1995		   1994
					-----------	-----------	-----------
			Beginning balance	$	8,116,065	$	9,108,383	$	10,598,491
			Provisions		6,360,072		4,174,644		5,533,193
			Charge-offs		(4,283,553)		(5,166,962)		(7,023,301)
					-----------	-----------	-----------
			Ending balance	$	10,192,584	$	8,116,065	$	9,108,383
					===========	===========	===========


	7.	LAND, BUILDINGS AND EQUIPMENT:

		Land, buildings, equipment and related accumulated depreciation 
at September 30, 1996 and 1995 consisted of the following:

							   1996		   1995
							-----------	-----------

			Land			$	561,794	$	561,794
			Buildings and improvements			6,850,175		6,486,193
			Furniture and equipment			10,365,201		9,415,754
							-----------	-----------
								17,777,170		16,463,741
			Less accumulated depreciation			(9,260,572)		(8,314,891)
							-----------	-----------
			Totals			$	8,516,598	$	8,148,850
							===========	===========






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	8.	INVESTMENTS:

		A summary of carrying and estimated market values of investments 
at September 30, 1996 and 1995 is as follows:



<TABLE>
<CAPTION>
					                           1996
					--------------------------------------------------------------
							Gross		Gross		Estimated
					Amortized		Unrealized		Unrealized		Market Values
			Available-for-Sale	Costs		Gains		Losses		(Carrying Values)
			-----------------------------	------------	------------	------------	-----------------
			<S>	<C>		<C>		<C>		<C>
			Government-backed bonds	$	11,932,337	$	--	$	(477,670)	$	11,454,667
			Corporate bonds		20,230,518		1,897		(437,009)		19,795,406
			Utility bonds		3,003,075		--		(35,897)		2,967,178
			Pass-through certificates		4,333,481		--		--		4,333,481
					------------	------------	------------	------------
			Total fixed maturities		39,499,411		1,897		(950,576)		38,550,732
			Equity securities		1,592		2,174		--		3,766
					------------	------------	------------	------------
			Totals	$	39,501,003	$	4,071	$	(950,576)	$	38,554,498
					============	============	============	============
<CAPTION>
					                           1996
					--------------------------------------------------------------
					Amortized
					Costs		Gross		Gross
					(Carrying		Unrealized		Unrealized		Estimated
			Held-to-Maturity	Values)		Gains		Losses		Market Values
			-----------------------------	------------	------------	------------	-----------------
			<S>	<C>		<C>		<C>		<C>
			Government-backed bonds	$	60,005,894	$	11,775	$	(4,006,114)	$	56,011,555
			Corporate bonds		12,056,534		--		(202,717)		11,853,817
			Utility bonds		4,989,311		--		(189,652)		4,799,659
			Mortgage- and asset-backed 
			    securities		47,696,751		38,062		(1,199,760)		46,535,053
					------------	------------	------------	------------
			Totals	$	124,748,490	$	49,837	$	(5,598,243)	$	119,200,084
					============	============	============	============
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	8.	INVESTMENTS, CONTINUED:

<TABLE>
<CAPTION>
					                           1995
					--------------------------------------------------------------
							Gross		Gross		Estimated
					Amortized		Unrealized		Unrealized		Market Values
			Available-for-Sale	Costs		Gains		Losses		(Carrying Values)
			-----------------------------	------------	------------	------------	-----------------
			<S>	<C>		<C>		<C>		<C>
			Government-backed bonds	$	15,626,072	$	--	$	(275,286)	$	15,350,786
			Corporate bonds		15,627,468		12,621		(143,083)		15,497,006
			Utility bonds		999,346		--		(17,158)		982,188
					------------	------------	------------	------------
			Totals	$	32,252,886	$	12,621	$	(435,527)	$	31,829,980
					============	============	============	============
<CAPTION>
					                           1995
					--------------------------------------------------------------
					Amortized
					Costs		Gross		Gross
					(Carrying		Unrealized		Unrealized		Estimated
			Held-to-Maturity	Values)		Gains		Losses		Market Values
			-----------------------------	------------	------------	------------	-----------------
			<S>	<C>		<C>		<C>		<C>
			Government-backed bonds	$	71,323,272	$	46,942	$	(3,901,292)	$	67,468,922
			Corporate bonds		68,659,432		6,337		(1,084,387)		67,581,382
			Utility bonds		10,653,392		--		(261,680)		10,391,712
			Mortgage- and asset-backed 
			    securities		37,437,446		--		(815,577)		36,621,869
					------------	------------	------------	------------
			Totals	$	188,073,542	$	53,279	$	(6,062,936)	$	182,063,885
					============	============	============	============
</TABLE>



		All bonds and mortgage- and asset-backed securities held at 
September 30, 1996 and 1995 were performing in accordance with 
their terms.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	8.	INVESTMENTS, CONTINUED:

		During the year ended September 30, 1995, the Company entered 
into financial futures contracts to hedge its interest rate risk 
on certain held-to-maturity debt securities with remaining 
contractual terms of approximately eight years against a 
potential increase in interest rates. Interest rates declined, 
resulting in a realized loss of $1,600,000 associated with such 
contracts. The hedging loss has been deferred and is being 
amortized over the contractual term of the hedged debt securities 
using the interest method. The remaining unamortized hedging 
		loss at September 30, 1996 was approximately $1,398,000. At 
September 30, 1996 and 1995, the Company was not a party to any 
derivative financial instruments relative to its investments in 
debt or equity securities.

		Net unrealized losses, net of deferred federal income taxes, of 
approximately $625,000 and $279,000, respectively, on the 
available-for-sale portfolio at September 30, 1996 and 1995 are 
reported as a separate component of stockholders' equity. During 
the year ended September 30, 1994, the Company transferred 
approximately $79,000,000 of investments from the available-for-
sale portfolio to the held-to-maturity portfolio. At the date of 
transfer, these investments had net unrealized losses of 
approximately $1,060,000 before income taxes. These unrealized 
losses are being amortized over the term of the investments 
transferred using the interest method. At September 30, 1996, the 
remaining unamortized loss of approximately $507,000, net of 
deferred income taxes, is reported as a reduction of 
stockholders' equity.

		During the year ended September 30, 1996, in accordance with a 
Special Report issued by the Financial Accounting Standards 
Board, the Company reassessed and reclassified held-to-maturity 
debt securities with a carrying value of approximately 
$72,500,000 to the available-for-sale classification. At the date 
of the transfer, the debt securities were valued at fair value of 
approximately $72,000,000. The difference between the carrying 
value and fair value of the reclassified debt securities at the 
date of transfer of approximately $500,000 is being recognized 
over the remaining contractual term of the securities using the 
interest method.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	8.	INVESTMENTS, CONTINUED:

		The following individual investments (excluding  U.S. government 
bonds) held by the Company at September 30, 1996 and 1995, were 
in excess of ten percent of stockholders' equity.

									Carrying
			Issuer			Amount
			----------------------------------------------	------------
			1996:
				Mortgage-backed securities:
				  Residential Funding Mortgage Securities
					  (four issues)			$	16,142,719
					Chase Mortgage Finance Corp. 
						(seven issues)				10,620,875
					Prudential Home Mortgage Securities 
						(three issues)				7,160,855
					Countrywide Funding Corp.				4,852,322

			1995:
				Mortgage-backed securities:
					Residential Funding Mortgage Securities 
						(three issues)				14,450,307
					Chase Mortgage Finance Corp.				4,992,835
					Prudential Home Mortgage Securities 
						(two issues)				7,350,343
					Countrywide Funding Corp.				4,821,305

		The amortized costs and estimated market values of held-to-
maturity and available-for-sale debt securities at September 30, 
1996, by contractual maturity, are shown below. Expected 
maturities will differ from contractual maturities because 
issuers may have the right to call or prepay obligations with or 
without call or prepayment penalties.

							Amortized		Estimated
							Cost		Market Value
							------------	------------
			Available-for-sale debt 
				securities:
					Due in one year or less	$	10,541,669	$	10,522,470
					Due after one year through 
						five years		13,552,416		13,284,073
					Due after five years through 
						ten years		11,071,845		10,410,708
							------------	------------
								35,165,930		34,217,251
					Pass-through certificates		4,333,481		4,333,481
							------------	------------
							$	39,499,411	$	38,550,732
							============	============




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	8.	INVESTMENTS, CONTINUED:

							Amortized		Estimated
							Cost		Market Value
							------------	------------
			Held-to-maturity debt securities:
				Due in one year or less	$	7,654,667	$	7,612,538
				Due after one year through 
					five years		18,557,157		18,137,785
				Due after five years through 
					ten years		50,591,766		46,658,714
				Due after ten years		248,149		255,994
							------------	------------
								77,051,739		72,665,031
				Mortgage- and asset-backed 
					bonds		47,696,751		46,535,053
							------------	------------
							$	124,748,490	$	119,200,084
							============	============

		The Company intends to maintain an available-for-sale portfolio 
which may be shifted between investments of differing types and 
maturities to attempt to maximize market returns without assuming 
unacceptable levels of credit risk. Future purchases assigned to 
the held-to-maturity portfolio will be to replace maturing 
investments, or increase the overall size of the portfolio (while 
maintaining its overall composition).


	9.	DEBT PAYABLE, CONTINUED:

		At September 30, 1996 and 1995, debt payable consisted of the 
following:
<TABLE>
<CAPTION>
							   1996		   1995
							-----------	-----------
			<S>			<C>		<C>
			Reverse repurchase agreements with various 
				securities brokers, interest at 5.0% to 
				5.8% per annum; due on October 1, 1996; 
				collateralized by $17,700,000 in U.S. 
				government-backed bonds	$	16,834,750

			Reverse repurchase agreements with Paine-
				Webber, interest at 5.38% per annum; due 
				on October 4, 1996; collateralized by 
				$20,000,000 in U.S. Treasury bonds		18,650,000

			Reverse repurchase agreements with various 
				securities brokers, interest at 6.1% to 
				6.75% per annum; due on October 2, 1995; 
				collateralized by $25,000,000 in U.S. 
				Treasury bonds			$	24,131,625
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	9.	DEBT PAYABLE, CONTINUED:
<TABLE>
<CAPTION>
							   1996		   1995
							-----------	-----------
			<S>			<C>		<C>
			Real estate contracts and mortgage notes 
				payable, interest rates ranging from 3.0% 
				to 10.9%, due in installments through 
				2016; collateralized by senior liens on 
				certain of the Company's real estate 
				contracts, mortgage notes and real estate 
				held for sale		2,965,107		1,385,568

			Accrued interest payable		151,289		35,258
							-----------	-----------
							$	38,601,146	$	25,552,451
							===========	===========
</TABLE>

		Aggregate amounts of principal and accrued interest payments due 
on debt payable at September 30, 1996 are as follows:

			Fiscal Year Ending
			   September 30,   
			------------------
						 1997	$37,023,000
						 1998		710,000
						 1999		242,000
						 2000		137,000
						 2001		187,000
				  Thereafter		302,146
							-----------
							$	38,601,146
							===========

	10.	DEBENTURE BONDS:

		At September 30, 1996 and 1995, debenture bonds consisted of the 
following:
<TABLE>
<CAPTION>
							Principally
			Annual Interest Rates	Maturing in	    1996		    1995
			---------------------	-------------------	------------	------------			<S>			<C>	<C>		<C>
			5% to 6%	1997	$	537,000	$	2,486,000
			6% to 7%	1997, 1998 and 1999		4,979,000		6,911,000
			7% to 8%	1999 and 2000		51,261,000		50,165,000
			8% to 9%	1997, 1998 and 2000		84,372,000		85,258,000
			9% to 10%	1997		20,136,000		30,044,000
			10% to 11%	1998 and 1999		1,749,000		1,951,000
								------------	------------
									163,034,000		176,815,000
			Compound and accrued interest		29,139,751		24,496,873
								------------	------------
								$	192,173,751	$	201,311,873
								============	============
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	10.	DEBENTURE BONDS, CONTINUED:

		Unamortized debenture issuance costs incurred in connection with 
the sale of debentures aggregated $2,597,477 and $3,390,744 at 
September 30, 1996 and 1995, respectively, and are included in 
deferred costs on the consolidated balance sheets.

		Debenture bonds at September 30, 1996 mature as follow:

			Fiscal Year Ending
				September 30,
			------------------           
						 1997	$	50,030,000
						 1998		52,163,000
						 1999		41,335,000
						 2000		40,408,000
						 2001		5,877,000
					Thereafter		2,360,751
							------------
							$	192,173,751
							============

		At September 30, 1996, as required by Washington State 
regulation, the parent company could not have more than an 
aggregate total of $202,300,000 in outstanding debentures 
(including accrued and compound interest) and outstanding 
preferred stock (based on original sales price) of $49,540,000. 
Outstanding preferred stock is limited to the amount outstanding 
June 30, 1996 ($49,000,000) plus reinvested dividends ($540,000) 
after that date. At September 30, 1996, the Company had total 
outstanding debentures of approximately $192,174,000 and total 
outstanding preferred stock of approximately $49,496,000.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	11.	STOCKHOLDERS' EQUITY:

		A summary of preferred and common shares at September 30, 1996 
and 1995 is as follows:


<TABLE>
<CAPTION>
									          Issued and Outstanding Shares
									-------------------------------------------------
									         1996		         1995
									-----------------------	-----------------------
							Authorized
							Shares		Shares		Amount		Shares		Amount
							----------	---------	-----------	---------	-----------
			<S>			<C>		<C>		<C>		<C>		<C>
			Preferred Stock
				Series A		750,000		-- 	$	 --		-- 	$	-- 
				Series B		200,000		-- 		 --		-- 		-- 
				Series C		1,000,000		438,343		4,383,432		441,794		4,417,943
				Series D		1,375,000		673,915		6,739,150		682,359		6,823,587
				Series E		5,000,000		1,039,562		10,395,616		1,038,558		10,385,576
							----------	---------	-----------	---------	-----------
								8,325,000		2,151,820	$	21,518,198		2,162,711	$	21,627,376
							==========	=========	===========	=========	===========
			Common Stock
				Class A		222		130	$	293,417		130	$	293,417
				Class B		222		--		--		--		--
							----------	---------	-----------	---------	-----------
								444		130	$	293,417		130	$	293,417
							==========	=========	===========	=========	===========
			Subordinate 
				Preferred
				Stock		1,000,000		--	$	--		--	$	--
							==========	=========	===========	=========	===========
</TABLE>

The Series E preferred stock has been issued in the following 
		sub-series:
<TABLE>
<CAPTION>
									          Issued and Outstanding Shares
									-------------------------------------------------
									         1996		         1995
									-----------------------	-----------------------
									Shares		Amount		Shares		Amount
									---	---------	-----------	---------	-----------
			<S>					<C>		<C>		<C>		<C>
			Series E-1				728,698	$	7,286,982		748,578	$	7,485,783
			Series E-2				45,579		455,790		45,621		456,208
			Series E-3				107,874		1,078,736		108,369		1,083,685
			Series E-4				62,978		629,776		62,993		629,929
			Series E-5				13,744		137,443		13,747		137,475
			Series E-6				80,689		806,889		59,250		592,496
									---------	-----------	---------	-----------
										1,039,562	$	10,395,616		1,038,558	$	10,385,576
									=========	===========	=========	===========
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	11.	STOCKHOLDERS' EQUITY, CONTINUED:

			PREFERRED STOCK

			Series A preferred stock has a par value of $1 per share, is 
cumulative and the holders thereof are entitled to receive 
dividends at the annual rate of 8.5%. Series B preferred stock 
is cumulative and the holders thereof are entitled to receive 
monthly dividends at the annual rate of two percentage points 
over the rate payable on six-month U.S. Treasury Bills as 
determined by the Treasury Bill auction last preceding the 
monthly dividend declaration. Series C, D and E-1 preferred 
stock are also cumulative and the holders thereof are entitled 
to receive monthly dividends at an annual rate equal to the 
highest of the "Treasury Bill Rate," the "Ten Year Constant 
Maturity Rate" or the "Twenty Year Constant Maturity Rate" 
determined immediately prior to the declaration date. The Board 
of Directors may, at its sole option, declare a higher dividend 
rate; however, dividends shall be no less than 6% or greater 
than 14% per annum. Series E-2, E-3, E-4, E-5 and E-6 preferred 
stock are also cumulative and the holders thereof are entitled 
to receive monthly dividends at an annual rate of one-half of 
one percent more than the rate in effect for the E-1 series; 
however, dividends shall be no less than 6% or greater than 14% 
per annum.

			Series B, C, D and E-1 preferred stock have a par value of $10, 
were sold to the public for $10 and are callable at the sole 
option of the Board of Directors at $10.50 per share reduced 
proratably to $10.20 per share as of the date five years from 
the date of issuance. Series E-2, E-3, E-4, E-5 and E-6 
preferred stock have a par value of $10 per share, were sold to 
the public at $100 per share and are callable at the sole 
option of the Board of Directors at $100 per share.

			All preferred stock series have liquidation preferences equal 
to their issue price, are non-voting and are senior to the 
common shares as to dividends. All preferred stock dividends 
are based upon the original issue price.

			At September 30, 1996, as required by state regulation, the 
amount of the Company's aggregate total outstanding preferred 
stock and debentures was limited (see Note 10).





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	11.	STOCKHOLDERS' EQUITY, CONTINUED:

			SUBORDINATE PREFERRED STOCK

			Subordinate preferred shares, no par value, shall be entitled 
to receive dividends as authorized by the Board of Directors, 
provided that such dividend rights are subordinate and junior 
to all series of preferred stock. Subordinate preferred shares 
shall be entitled to distributions in liquidation in such 
priority as established by the Board of Directors prior to the 
issuance of any such shares. These liquidation rights shall at 
all times be subordinate and junior to all series of preferred 
stock. At September 30, 1996 and 1995, no subordinate preferred 
stock had been issued.

			COMMON STOCK

			Prior to September 30, 1994, Class A and B common stock had a 
par value of $1 per share. On September 30, 1994, the Company's 
Board of Directors authorized a 2,250:1 reverse stock split and 
changed the par value from $1 per share to $2,250 per share. 
All common shares reflect the reverse stock split. Class B is 
senior to Class A common stock as to liquidation up to the 
amount of the original investment. Any remaining amounts are 
then distributed pro rata to Class A and Class B common 
stockholders. Class B common stock has no voting rights. All 
series of common stock are subordinate in liquidation to all 
series of preferred stock.

			Dividend restrictions are imposed by regulatory authorities on 
the insurance subsidiary in which the Company has a 96.5% or 
greater stock ownership interest. These restrictions are 
limited to the unassigned statutory surplus of the insurance 
subsidiary which totaled approximately $5,567,000 at 
			September 30, 1996 (see Note 15).






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	12.	INCOME TAXES:

		The Company files a consolidated federal income tax return with 
all of its subsidiaries.

		The income tax effects of the temporary differences giving rise 
to the Company's deferred tax assets and liabilities as of 
September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
							          1996
							-------------------------
							Assets		Liabilities
							-----------	-----------
			<S>			<C>		<C>
			Allowance for losses on real estate assets	$	2,678,016
			Reserves on repossessed real estate		707,643
			Deferred contract acquisition costs and 
				discount yield recognition			$	16,715,163
			Office properties and equipment				1,776,499
			Deferred policy acquisition costs				22,964,052
			Life insurance and annuity reserves		9,018,029
			Guaranty fund liability		1,353,320
			Investments				636,939
			Tax credit carryforwards		1,742,000
			Other			959,206
			Net operating loss carryforwards		9,739,608
							-----------	-----------
			Total deferred income taxes	$	26,197,822	$	42,092,653
							===========	===========
<CAPTION>
							          1995
							-------------------------
							Assets		Liabilities
							-----------	-----------
			<S>			<C>		<C>
			Allowance for losses on real estate assets	$	1,325,773		
			Reserves on repossessed real estate		867,550
			Deferred contract acquisition costs and 
				discount yield recognition			$	18,224,880
			Office properties and equipment				1,529,695
			Deferred policy acquisition costs				22,653,678
			Life insurance and annuity reserves		6,395,750
			Guaranty fund liability		1,047,320
			Investments				1,377,602
			Tax credit carryforwards		1,115,000
			Other			863,898
			Net operating loss carryforwards		19,916,089
							-----------	-----------
			Total deferred income taxes	$	31,531,380	$	43,785,855
							===========	===========
</TABLE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	12.	INCOME TAXES, CONTINUED:

		No valuation allowance has been established to reduce deferred 
tax assets as it is more likely than not that these assets will 
be realized due to the future reversals of existing taxable 
temporary differences.  Realization is dependent on the 
generation of sufficient taxable income prior to expiration of 
the net operating loss carryforwards. The amount of the deferred 
tax asset considered realizable, however, could be reduced in the 
near term if estimates of future taxable income during the 
carryforward period are reduced.

		Following is a reconciliation of the provision for income taxes 
to an amount as computed by applying the statutory federal income 
tax rate to income before income taxes:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
							-----------	-----------	-----------
			<S>			<C>		<C>		<C>
			Federal income taxes at statutory 
				rate	$	4,209,817	$	3,224,472	$	2,956,219
			State taxes and other		25,652		(116,575)		36,257
							-----------	-----------	-----------
			Income tax provision	$	4,235,469	$	3,107,897	$	2,992,476
							===========	===========	===========
</TABLE>

		The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
							-----------	-----------	-----------
			<S>			<C>		<C>		<C>
			Current 	$	595,113	$	359,907	$	348,306
			Deferred		3,640,356		2,747,990		2,644,170
							-----------	-----------	-----------
							$	4,235,469	$	3,107,897	$	2,992,476
							===========	===========	===========
</TABLE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	12.	INCOME TAXES, CONTINUED, CONTINUED:

		At September 30, 1996, the Company and its subsidiaries had 
unused net operating loss carryforwards, for income tax purposes, 
as follows:

<TABLE>
<CAPTION>
									Life
							Non-Life		Company
							Group Net		Net		Net
							Operating		Operating		Operating
			Expiring in	Losses		Losses		Losses
			-----------	-----------	-----------	------------
			<S>			<C>		<C>		<C>
				 2004	$	3,766,219			$	3,766,219
				 2005		6,409,762				6,409,762
				 2006		5,612,555				5,612,555
				 2007		945,516				945,516
				 2008			$	11,911,853		11,911,853
							-----------	-----------	-----------							$	16,734,052	$	11,911,853	$	28,645,905
							===========	===========	===========
</TABLE>

		Federal tax regulations require non-life net operating losses to 
be offset first against non-life income for the tax year and then 
against a maximum of 35% of taxable life income for the year, if 
any.

		At September 30, 1996, the Company has alternative minimum tax 
credits of approximately $1,237,000 and general business tax 
credit carryforwards of approximately $505,000 available to 
reduce regular income taxes payable. The general business tax 
credit carryforwards begin to expire in 2004.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


13.	DEFERRED COSTS:

		An analysis of deferred costs related to policy acquisition and 
debenture issuance for the years ended September 30, 1996, 1995 
and 1994 is as follows:

<TABLE>
<CAPTION>

							Policy		Debenture
							Acquisition	Issuance		Total	
							-----------	-----------	-----------
			<S>			<C>		<C>		<C>
			Balance at September 30, 1993	$	70,024,363	$	3,422,308	$	73,446,671
			Deferred during the year:
		   	Commissions		5,572,146		1,381,525		6,953,671
		   	Other expenses		2,493,703		510,588		3,004,291
							-----------	-----------	-----------
			Total deferred		78,090,212		5,314,421		83,404,633
			Amortized during the year		(7,015,570)		(1,592,987)		(8,608,557)
			Reduction upon sale of subsidiary				(688,559)		(688,559)
							-----------	-----------	-----------
			Balance at September 30, 1994		71,074,642		3,032,875		74,107,517
			Deferred during the year:
		   	Commissions		9,383,938		1,461,033		10,844,971
		   	Other expenses		3,587,804		280,196		3,868,000
							-----------	-----------	-----------
			Total deferred		84,046,384		4,774,104		88,820,488
			Amortized during the year		(10,300,547)		(1,383,360)		(11,683,907)
			Reduction upon sale of subsidiary		(2,614,778)				(2,614,778)
							-----------	-----------	-----------
			Balance at September 30, 1995		71,131,059		3,390,744		74,521,803
			Deferred during the year:
				Commissions		6,503,580		191,064		6,694,644
				Other expenses		3,438,804		402,360		3,841,164
							-----------	-----------	-----------
			Total deferred		81,073,443		3,984,168		85,057,611
			Amortized during the year		(9,140,559)		(1,386,691)		(10,527,250)
							-----------	-----------	-----------
			Balance at September 30, 1996	$	71,932,884	$	2,597,477	$	74,530,361
							===========	===========	===========
</TABLE>

		The amortization of deferred policy acquisition costs, which is 
based on the estimated gross profits of the underlying life and 
annuity products, could be changed significantly in the near term 
due to changes in the interest rate environment. As a result, the 
recoverability of these costs may be adversely affected in the 
near term.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	14.	LIFE INSURANCE AND ANNUITY RESERVES:

		Life insurance and annuity reserves are based upon contractual 
amounts due to the annuity holder, including accrued interest. 
Annuity contract interest rates ranged from 4.25% to 10.65% and 
4.45% to 10.65% during the years ended September 30, 1996 and 
1995, respectively. Interest assumptions used to compute life 
insurance reserves ranged from 5.0% to 6.5% and 5.25% to 6.5% 
during the years ended September 30, 1996 and 1995, respectively.

		The Company's subsidiary has ceded a portion of certain life 
insurance risks and the related premiums to other companies. 
These insurance transactions permit the Company to recover 
defined portions of losses from claims on life insurance policies 
issued by the Company. The reinsured risks are treated as though 
they are risks for which the subsidiary is not liable. Life 
insurance reserves, as reported in these financial statements, do 
not include reserves on the ceded business. The face value of 
life insurance policies ceded to other companies was 
approximately $58,679,000 and $62,906,000 at September 30, 1996 
and 1995, respectively. Life insurance premiums ceded were 
$354,830 and $364,553 for fiscal 1996 and 1995, respectively. The 
Company is contingently liable for claims on ceded life insurance 
business in the event the reinsuring companies do not meet their 
obligations under those reinsurance agreements.

		All states in which the Company's life insurance subsidiary 
operates have laws requiring solvent life insurance companies to 
pay assessments to protect the interests of policyholders of 
insolvent life insurance companies. Assessments are levied on all 
member insurers in each state based on a proportionate share of 
premiums written by member insurers in the lines of business in 
which the insolvent insurer engaged. A portion of these 
assessments can be offset against the payment of future premium 
taxes. However, future changes in state laws could decrease the 
amount available for offset. 

		The net amounts expensed by the Company's life insurance 
subsidiary for guaranty fund assessments and amounts estimated to 
be assessed for the years ended September 30, 1996, 1995 and 1994 
were $900,000, $782,000 and $192,000, respectively. The Company's 
estimate of these liabilities is based upon updated information 
from the National Organization of Life and Health Insurance 
Guaranty Associations regarding insolvencies occurring during the 
years 1988 through 1994. These estimates are subject to future 
revisions based upon the ultimate resolution of the insolvencies 
and resultant losses. As a result of these uncertainties, the 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	14.	LIFE INSURANCE AND ANNUITY RESERVES, CONTINUED:

		Company's estimate of future assessments could change in the near 
term. The Company does not believe that the amount of future 
assessments associated with known insolvencies after 1994 will be 
material to its financial condition or results of operations. The 
amount of estimated future guaranty fund assessment has been 
recorded net of a 8.25% discount rate applied to the estimated 
payment term of approximately seven years. The remaining 
unamortized discount associated with this accrual was 
approximately $832,000 at September 30, 1996.


	15.	STATUTORY ACCOUNTING (UNAUDITED):

		The Company's life insurance subsidiary is required to file 
statutory financial statements with state insurance regulatory 
authorities. Accounting principles used to prepare these 
statutory financial statements differ from generally accepted 
accounting principles (GAAP). Selected statutory and the GAAP 
financial statement balances for insurance subsidiaries as of and 
for the years ended September 30, 1996, 1995 and 1994 are as 
follows:

<TABLE>
<CAPTION>
									Statutory		GAAP
									------------	-----------
			<S>					<C>		<C>
			Stockholders' equity:
				1996			$	48,721,922	$	81,605,742
				1995				43,340,817		78,826,654
				1994				48,206,960		77,142,373

			Net income:
				1996			$	7,224,359	$	3,076,252
				1995				2,634,919		2,717,893
				1994				12,544,070		8,449,317

			Unassigned statutory surplus and retained earnings:
				1996			$	5,566,922	$	38,450,742
				1995				1,985,817		38,233,333
				1994				6,826,960		38,559,708
</TABLE>

		Due to the sale of OSL during fiscal 1995, stockholders' equity 
and unassigned statutory surplus and retained earnings amounts 
above do not include OSL at September 30, 1996 and 1995. Also, 
the 1995 net income above only includes OSL operations through 
May 31, 1995.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	15.	STATUTORY ACCOUNTING (UNAUDITED), CONTINUED:

		The National Association of Insurance Commissioners (NAIC) 
currently is in the process of codifying statutory accounting 
practices, the result of which is expected to constitute the only 
source of "prescribed" statutory accounting practices. 
Accordingly, that project, which is expected to be completed in 
1997, will likely change, to some extent, prescribed statutory 
accounting practices that insurance enterprises use to prepare 
their statutory financial statements. Written approval was 
received from the Insurance Department of the state of Washington 
to capitalize the underwriting fees charged to the life insurance 
subsidiary by Metropolitan and to amortize these fees as an 
adjustment of the yield on acquired receivables. Statutory 
accounting practices prescribed by the state of Washington do not 
describe the accounting required for this type of transaction. As 
of September 30, 1996, this permitted accounting practice 
increased statutory surplus by approximately $28,700,000 over 
what it would have been had prescribed practices disallowed this 
accounting treatment.

		The regulatory authorities impose minimum risk-based capital 
requirements on insurance enterprises that were developed by the 
NAIC. The formulas for determining the amount of risk-based 
capital (RBC) specify various weighting factors that are applied 
to financial balances or various levels of activity based on 
perceived degree of risk. Regulatory compliance is determined by 
a ratio of the enterprise's regulatory total adjusted capital, as 
defined by the NAIC, to its authorized control level, RBC, as 
defined by the NAIC. Enterprises below specific trigger points or 
ratios are classified within certain levels, each of which 
requires specified corrective action. The RBC measure of the 
insurance subsidiary at September 30, 1996 and 1995 was above the 
minimum standards.


	16.	SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH FLOWS:

		The following table summarizes interest costs, net of amounts 
capitalized and income taxes paid during the years ended 
September 30, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Interest, net of amounts 
				capitalized	$	12,653,377	$	20,214,329	$	23,541,173
			Income taxes		2,503,482		1,157,155		333,154
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	16.	SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH FLOWS, CONTINUED:

		Non-cash investing and financing activities of the Company during 
the years ended September 30, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Loans to facilitate the sale of 
				real estate held	$	39,102,941	$	34,102,247	$	33,461,966
			Transfers between annuity 
				products		17,051,327		58,012,857		22,248,418
			Transfer of investments from 
				available-for-sale portfolio 
				to held-to-maturity portfolio						79,001,795
			Transfer of investment from 
				held-to-maturity portfolio
				to available-for-sale portfolio		72,572,322
			Transfer of property from land, 
				buildings and equipment 
				to real estate held for sale 
				and development				1,598,999		258,894
			Change in net unrealized (losses) 
				gains on investments, net		(244,853)		2,005,960		(3,371,012)
			Real estate held for sale and 
				development acquired through 
				foreclosure		14,270,520		13,850,388		19,245,977
			Debt assumed upon foreclosure of 
				real estate contracts				16,059		129,062
			Assumption of other debt payable 
				in connection with the acqui-
				sition of real estate contracts 
				and mortgage notes		3,633,657		526,868		191,213
			Reduction in assets and liabili-
				ties associated with sale of 
				subsidiaries:
					Investment securities				9,401,577
					Real estate contracts and 
						mortgage notes receivable				32,391,856		27,267,736
					Real estate held for sale				514,889		503,000
					Allowance for losses on real 
						estate assets				322,548		287,439
					Deferred costs				2,620,571		688,559
					Equipment				13,395
					Other assets				186,316		22,176
					Annuity reserves				44,558,959
					Debenture bonds and accrued 
						interest						30,111,270
					Debt payable						120,953
					Accounts payable and accrued 
						expenses				1,653,970		318,574
</TABLE>






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	17.	FAIR VALUE OF FINANCIAL INSTRUMENTS:

		The following disclosure of the estimated fair value of financial 
instruments is made in accordance with the requirements of 
Statement of Financial Accounting Standards No. 107, "Disclosures 
about Fair Value of Financial Instruments." The estimated fair 
value amounts have been determined using available market 
information and appropriate valuation methodologies. However, 
considerable judgment is necessarily required to interpret market 
data and to develop the estimates of fair value. Accordingly, the 
estimates presented herein are not necessarily indicative of the 
amounts the Company could realize in a current market exchange. 
The use of different market assumptions and/or estimation 
methodologies may have a material effect on the estimated fair 
value amounts.

		The following methods and assumptions were used to estimate the 
fair value of each class of financial instruments for which it is 
practicable to estimate that value. Potential income tax 
ramifications related to the realization of unrealized gains and 
losses that would be incurred in an actual sale and/or settlement 
have not been taken into consideration.

			PUBLICLY TRADED INVESTMENT SECURITIES - Fair value is 
determined by quoted market prices.

			REAL ESTATE CONTRACTS AND MORTGAGE NOTES RECEIVABLE - For 
loans, the discount rate is estimated using rates currently 
offered for loans of similar characteristics that reflect the 
credit and interest rate risk inherent in the loan. For 
residential mortgage loans, fair value is estimated by 
discounting contractual cash flows adjusted for prepayment 
estimates. The prepayment estimates are based upon internal 
historical data. 

			OTHER RECEIVABLE INVESTMENTS - The fair value of other 
receivable investments is based on the discounted value of 
contractual cash flows. The discount rate is estimated using 
the rates currently offered for investments with similar credit 
ratings and similar remaining maturities.

			DEBENTURE BONDS AND DEBT PAYABLE - The fair value of debenture 
bonds and debt payable is based on the discounted value of 
contractual cash flows. The discount rate is estimated using 
the rates currently offered for debt with similar remaining 
maturities.

			SECURITIES SOLD, NOT OWNED - Fair value is determined by quoted 
market prices, including accrued interest necessary to settle 
repurchase.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	17.	FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED:

			OTHER FINANCIAL ASSETS AND LIABILITIES - The carrying amount of 
financial instruments in these classifications, including 
insurance policy loans approximates fair value. Policy loans 
are charged interest on a variable rate subject to current 
market conditions, thus carrying amounts approximate fair 
value.

			The estimated fair values of the following financial 
instruments as of September 30, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
							           1996
							---------------------------
							Carrying
							Amounts		Fair Value	
							------------	------------
				<S>		<C>		<C>
				Financial assets:
					Cash and cash equivalents	$	167,879,080	$	167,879,080
					Investments:
						Available-for-sale securities		38,554,498		38,554,498
						Held-to-maturity securities		124,748,490		119,200,084
					Real estate contracts and mortgage 
						notes receivable		642,570,771		668,373,000
					Other receivable investments		107,494,150		109,258,000
				Financial liabilities:
					Debenture bonds - principal and 
						compound interest		189,320,833		191,631,000
					Debt payable - principal		38,449,857		38,486,000
					Securities sold, not owned		132,652,334		132,652,334

<CAPTION>

							           1995
							---------------------------
							Carrying
							Amounts		Fair Value	
							------------	------------
				<S>		<C>		<C>
				Financial assets:
					Cash and cash equivalents	$	32,798,627	$	32,798,627
					Investments:
						Available-for-sale securities		31,829,980		31,829,980
						Held-to-maturity securities		188,073,542		182,063,885
					Real estate contracts and mortgage 
						notes receivable		580,158,575		608,775,000
					Other receivable investments		41,591,415		45,446,000
				Financial liabilities:
					Debenture bonds - principal and 
						compound interest		198,286,390		205,004,000
					Debt payable - principal		25,517,193		25,564,000
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	17.	FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED:

			LIMITATIONS - The fair value estimates are made at a discrete 
point in time based on relevant market information and 
information about the financial instruments. Because no market 
exists for a significant portion of these financial 
instruments, fair value estimates are based on judgments 
regarding future expected loss experience, current economic 
conditions, risk characteristics of various financial 
instruments and other factors. These estimates are subjective 
in nature and involve uncertainties and matters of significant 
judgment and, therefore, cannot be determined with precision. 
Changes in assumptions could significantly affect the 
estimates. Accordingly, the estimates presented herein are not 
necessarily indicative of what the Company could realize in a 
current market exchange. 


18.	RELATED-PARTY TRANSACTIONS:

		During the years ended September 30, 1996 and 1995, the Company 
had the following related-party transactions with Summit and 
other affiliates:

<TABLE>
<CAPTION>

							    1996		    1995
							------------	------------
			<S>			<C>		<C>
			Real estate contracts and mortgage notes 
				receivable and other receivable invest-
				ments sold to Summit and OSL	$	45,137,473	$	59,578,347

			Contract acquisition costs charged to Summit 
				and OSL on sale of real estate contracts 
				and mortgage notes receivable and other 
				receivable investments, including manage-
				ment underwriting fees		1,753,206		1,967,409

			Gains on real estate contract and mortgage 
				notes receivable and other receivable 
				investments purchased from Summit and OSL				335,469

			Service fees paid to Summit Property 
				Development		2,038,202		1,250,017

			Commissions and service fees paid to MIS		369,080		1,124,481

			Dividends paid to Summit on preferred stock		200,256		256,991
</TABLE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


18.	RELATED-PARTY TRANSACTIONS, CONTINUED:

		At September 30, 1996 and 1995, the Company had payables due to 
affiliates of $1,205,920 and $1,962,923, respectively, related 
primarily to advance payments on receivable acquisitions.


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS:

		The condensed balance sheets of Metropolitan Mortgage & 
Securities Co., Inc. ("Metropolitan" or the "parent company") at 
September 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
							    1996		    1995
							------------	------------
			<S>			<C>		<C>
			               ASSETS

			Cash and cash equivalents	$	4,807,147	$	15,965,359
			Investments		8,840,977		6,153,393
			Real estate contracts and mortgage notes 
				receivable and other receivable investments		72,018,452		30,429,638
			Real estate held for sale and development		69,360,885		48,574,018
			Allowance for losses on real estate assets		(6,297,676)		(3,108,597)
			Equity in subsidiary companies		97,302,358		117,281,602
			Land, buildings and equipment, net		9,376,863		9,049,942
			Prepaid expenses and other assets, net		12,620,101		10,243,463
			Accounts and notes receivable, net		5,190,592		893,983
			Receivables from affiliates		24,626,214		43,812,436
							------------	------------
					Total assets	$	297,845,913	$	279,295,237
							============	============
                      LIABILITIES

			Debenture bonds and accrued interest	$	192,173,751	$	201,311,873
			Debt payable		13,155,334		5,645,410
			Accounts payable and accrued expenses		7,463,342		2,917,769
			Deferred underwriting fee income		38,710,154		28,849,743
							------------	------------
					Total liabilities		251,502,581		238,724,795
							------------	------------
			           STOCKHOLDERS' EQUITY

			Preferred stock, $10 par (liquidation 
				preference, $49,495,906 and $47,825,310, 
				respectively)		21,518,198		21,627,106
			Subordinate preferred stock, no par		--		--
			Common stock, $2,250 par		293,417		293,417
			Additional paid-in capital		16,791,670		14,917,782
			Retained earnings		8,731,070		4,561,554
			Net unrealized losses on investments		(991,023)		(829,417)
							------------	------------
					Total stockholders' equity		46,343,332		40,570,442
							------------	------------
					Total liabilities and stockholders' 
						equity	$	297,845,913	$	279,295,237
							============	============
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

		Metropolitan's condensed statements of income for the years 
ended September 30, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Revenues:
				Interest and earned discounts	$	8,303,775	$	8,721,451	$	8,756,861
				Fees, commissions, service and 
					other income		28,567,964		21,788,065		15,056,870
				Real estate sales		23,499,363		4,700,560		7,607,652
				Realized net gains on sales of 
					investments and receivables		2,357,010		1,134,510		366,409
							-----------	-----------	-----------
					   Total revenues		62,728,112		36,344,586		31,787,792
							-----------	-----------	-----------
			Expenses:
				Interest, net		15,630,068		16,205,083		17,616,074
				Cost of real estate sold		22,266,024		3,719,349		7,330,073
				Provision for losses on real 
					estate assets		4,578,315		2,316,354		737,042
				Salaries and employee benefits		12,085,532		10,035,360		9,332,118
				Other operating expenses		1,523,541		816,134		2,142,358
							-----------	-----------	-----------
					   Total expenses		56,083,480		33,092,280		37,157,665
							-----------	-----------	-----------
			Income (loss) from operations 
				before income taxes and equity 
				in net income of subsidiaries		6,644,632		3,252,306		(5,369,873)
			Income tax benefit (provision)		(2,268,916)		(1,105,581)		1,813,051
							-----------	-----------	-----------
			Income (loss) before equity in 
				net income of subsidiaries		4,375,716		2,146,725		(3,556,822)
			Equity in net income of 
				subsidiaries		3,661,948		4,155,921		9,034,578
							-----------	-----------	-----------
			Net income	$	8,037,664	$	6,302,646	$	5,477,756
							===========	===========	===========
</TABLE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

		Metropolitan's condensed statements of cash flows for the years 
ended September 30, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Cash flows from operating 
				activities:
					Net income	$	8,037,664	$	6,302,646	$	5,477,756
					Adjustments to reconcile 
						net income to net cash
						provided by operating 
						activities		12,717,338		(3,909,025)		(3,679,005)
							-----------	-----------	-----------
			Net cash provided by operating 
				activities		20,755,002		2,393,621		1,798,751
							-----------	-----------	-----------
			Cash flows from investing 
				activities:
					Principal payments on real 
						estate contracts and 
						mortgage notes receivable 
						and other receivable 
						investments		12,480,667		5,069,237		10,550,918
					Proceeds from sales of real 
						estate contracts and 
						mortgage notes receivable 
						and other receivable 
						investments		24,297,171		34,946,274
					Acquisition of real estate 
						contracts and mortgage
						notes and other receiv-
						able investments		(32,175,162)		(18,449,630)		(6,520,436)
					Proceeds from real estate 
						sales		9,221,958		1,876,900		2,915,452
					Proceeds from sales of 
						investments		3,294,326		7,647,099		361,132
					Proceeds from maturities of 
						investments		5,800,000
					Purchase of investments		(11,689,836)		(12,108,637)		(399,465)
					Additions to real estate 
						held for sale and develop-
						ment		(17,191,856)		(12,483,117)		(7,945,133)
					Capital expenditures		(1,271,041)		(803,302)		(469,475)
					Net change in investment 
						in and advances to 
						subsidiaries		(16,293,198)		(9,591,121)		6,332,550
							-----------	-----------	-----------

						  Net cash provided by 
						    (used in) investing 
						    activities		(23,526,971)		(3,896,297)		4,825,543
							-----------	-----------	-----------
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Cash flows from financing 
				activities:
					Net borrowings (repayments) 
						from banks and others		7,497,807		4,156,501		(3,324,722)
					Issuance of debenture bonds		9,125,303		53,120,179		46,414,738
					Issuance of preferred stock		2,135,714		4,513,293		1,772,649
					Repayment of debenture bonds		(22,906,185)		(48,970,828)	
	(51,610,174)
					Cash dividends		(3,868,148)		(4,539,503)		(3,510,338)
					Redemption and retirement of 
						stock		(370,734)		(266,460)		(775,742)
							-----------	-----------	-----------
						  Net cash provided by 
						    (used in) financing 
						    activities		(8,386,243)		8,013,182	
	(11,033,589)
							-----------	-----------	-----------
			Net increase (decrease) in cash 
				and cash equivalents		(11,158,212)		6,510,506		(4,409,295)

			Cash and cash equivalents at 
				beginning of year		15,965,359		9,454,853		13,864,148
							-----------	-----------	-----------
			Cash and cash equivalents at 
				end of year	$	4,807,147	$	15,965,359	$	9,454,853
							===========	===========	===========
</TABLE>

		Non-cash investing and financing activities not included in 
Metropolitan's condensed statements of cash flows for the years 
ended September 30, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Loans to facilitate the sale of 
				real estate	$	14,277,405	$	2,823,660	$	4,692,200
			Real estate acquired through 
				foreclosure		198,454		1,219,983		2,166,655
			Debt assumed with acquisition of 
				real estate contracts and 
				mortgage notes and debt assumed 
				upon foreclosure of real estate 
				contracts				113,876		81,530
			Change in net unrealized gains 
				(losses) on investments		(161,606)		2,005,960		(3,371,012)
			Increase in assets and liabili-
				ties associated with liquida-
				tion of subsidiary:
					Real estate contracts and 
						mortgage notes receivable		30,052,954




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:


</TABLE>
<TABLE>
<CAPTION>
							   1996		   1995		   1994
								------------	-----------	-----------
			<S>			<C>		<C>		<C>
			Real estate held for sale		27,915,041
			Allowance for losses on 
				real estate assets		1,107,129
			Land, building and equipment, 
				net			15,518
			Other assets		1,911,314
			Accounts receivable		2,963,966
			Debt payable		13,948
			Accounts payable and accrued 
				expenses		2,759,214
			Investments in and advances to 
				subsidiaries		58,978,502
</TABLE>

		Accounting policies followed in the preparation of the preceding 
condensed financial statements of Metropolitan (parent company 
only) are the same as those policies described in the 
consolidated financial statements except that the equity method 
was used in accounting for the investments in and net income 
from subsidiaries. 

		At September 30, 1996 and 1995, Metropolitan's debt payable 
consists of the following:

<TABLE>
<CAPTION>
									   1996		   1995
									-----------	-----------
			<S>					<C>		<C>
			Reverse repurchase agreement with a securities 
				broker, interest at 5.8% per annum, due 
				October 1, 1996; collateralized by 
				$2,700,000 in U.S. government-backed bonds		$	2,678,500

			Reverse repurchase agreement with a securities 
				broker, interest at 6.75% per annum, due 
				October 2, 1995; collateralized by 
				$5,000,000 in U.S. Treasury bonds				$	4,606,625

			Real estate contracts and mortgage notes 
				payable, interest rates ranging from 3% to 
				10.9%, due in installments through 2016; 
				collateralized by senior liens on certain
				of the Company's real estate contracts, 
				mortgage notes and real estate held for 
				sale				10,456,496		1,016,616

				Accrued interest payable				20,338		22,169
									-----------	-----------
									$	13,155,334	$	5,645,410
									===========	===========
</TABLE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

		Aggregate amounts of principal payments due on the parent 
company's debt payable are expected to be as follows:

			Fiscal Year Ending
				September 30,
			------------------           

					  1997	$	3,040,000
					  1998		364,000
					  1999		393,000
					  2000		356,000
					  2001		374,000
					Thereafter		8,628,334
							------------
							$	13,155,334
							============

		At September 30, 1996 and 1995, Metropolitan's debenture bonds 
payable consisted of the following:

<TABLE>
<CAPTION>
							Principally
			Annual Interest Rates	Maturing in	    1996		    1995
			---------------------	-------------------	------------	------------			<S>			<C>	<C>		<C>
			5% to 6%	1997	$	537,000	$	2,486,000
			6% to 7%	1997, 1998 and 1999		4,979,000		6,911,000
			7% to 8%	1999 and 2000		51,261,000		50,165,000
			8% to 9%	1997, 1998 and 2000		84,372,000		85,258,000
			9% to 10%	1997		20,136,000		30,044,000
			10% to 11%	1998 and 1999		1,749,000		1,951,000
								------------	------------
									163,034,000		176,815,000
			Compound and accrued interest		29,139,751		24,496,873
								------------	------------
								$	192,173,751	$	201,311,873
								============	============
</TABLE>

		Unamortized debenture issuance costs totaled $2,597,477 at 
September 30, 1996 and $3,390,744 at September 30, 1995.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

		Maturities of the parent company's debenture bonds are as 
follows:

			Fiscal Year Ending
				September 30,
			------------------           
						 1997	$	50,030,000
						 1998		52,163,000
						 1999		41,335,000
						 2000		40,408,000
						 2001		5,877,000
					Thereafter		2,360,751
							------------
							$	192,173,751
							============

Metropolitan had the following related party transactions with 
its various subsidiaries and affiliated entities:

<TABLE>
<CAPTION>
							   1996		   1995		   1994
							-----------	-----------	-----------
			<S>			<C>		<C>		<C>
			Dividends received:
				Summit Securities, Inc.					$	1,422,007
				Old Standard Life Insurance 
					Company			$	1,922,000		700,000
				Metropolitan Mortgage & 
					Securities Co. of Alaska	$	1,243,950				225,000
				Spokane Mortgage Co.				125,000		1,800,000
				Western United Life Assurance 
					Company		441,510		288,208		2,604,875
				Beacon Properties, Inc.		185,000		360,000		330,000
				Consumers Group Holding Co., 
					Inc.		1,880,450		723,250		6,791,358
				Metropolitan Mortgage Hawaii, 
					Inc.						1,770,000
				Metropolitan Investment 
					Securities, Inc.				138,950
				Broadmore Park Factory Outlet, 
					Inc.		85,000
							-----------	-----------	-----------
							$	3,835,910	$	3,557,408	$	15,643,240
							===========	===========	===========

			Fees, commissions, service and 
				other income	$	26,969,251	$	18,829,557	$	13,814,334
			Interest income		1,858,521		4,152,257		3,218,813

</TABLE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


	19.	PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED:

		Metropolitan charged various subsidiaries and affiliated 
entities for underwriting fees of $29,362,000 in 1996, 
$14,936,306 in 1995 and $13,248,132 in 1994 related to contracts 
sold to these entities. Amounts charged to subsidiaries are 
deferred and recognized as income over the estimated life of the 
contracts. Amounts amortized into service fee income were 
$18,323,435 in 1996, $10,416,849 in 1995 and $6,596,877 in 1994.

		The underwriting fees are based upon a yield requirement 
established by the purchasing entity. For contracts sold to 
Western United Life Assurance Co. (Western United), one of 
Metropolitan's subsidiaries, the yield is guaranteed by 
Metropolitan. In connection with its guarantee, Metropolitan has 
holdbacks of $12,538,000 and $6,945,473 at September 30, 1996 
and 1995, respectively.

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

	N/A. 

PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

	See "Management" under Item 1.

ITEM 11.	EXECUTIVE COMPENSATION.

	See "Executive Compensation" under Item 1.

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

	See "Ownership of Management" and "Principal
	Shareholders" under Item 1.

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

	See "Certain Transactions" under Item 1.


PART IV

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

	(a)	1.  FINANCIAL STATEMENTS
	Included in Part II, Item 8 of this report:

	Report of Independent Accountants
	Consolidated Balance Sheets at September 30, 1996, and 1995.
	Consolidated Statements of Income for the Years Ended
		September 30, 1996, 1995, and l994
	Consolidated Statements of Stockholders' Equity for the
		Years Ended September 30, 1996, 1995, and 1994.
	Consolidated Statements of Cash Flows for the Years Ended
		September 30, 1996, 1995, and l994.
	Notes to Consolidated Financial Statements

	(b)	2.	FINANCIAL STATEMENT SCHEDULES

	Included in Part IV of this report:

	Report of Independent Accountants on Financial Statement
	Schedules.

	Schedules Required by Article 7.
	Schedule I		--	Summary of Investments other than
					Investments in Related Parties
	Schedule III	--	Supplementary Insurance Information
	Schedule IV	--	Supplementary Reinsurance Information

	Schedules Required by Article 5.
	Schedule II	--	Valuation and Qualifying Accounts and
					Reserves
	Schedule IV	--	Loans on Real Estate

	Other schedules are omitted because of the absence of
	conditions under which they are required or because the
	required information is given in the financial statements
	or notes thereto.

	(c)	3.	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.)

			3.(e).Restated Bylaws as amended to December 26, 1995. 
(Exhibit 3(e) to Form 10-K for Period Ending 
September 30, 1995.		

			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.

			9.	Irrevocable Trust Agreement (Exhibit 9(b) to 
Registration No. 2-81359).

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

			*12.	Statement Re computation of ratios.

			*21.	Subsidiaries of Registrant

			*27.	Financial Data Schedule

(b)	Reports on Form 8-K. 

		No Form 8-K filings were made during the last quarter of the 
period covered by this report.  A Form 8-K was filed December 
10, 1996, subsequent to the period covered by this report 
which disclosed the sale through a securitization of 
approximately 115.47 million in first lien residential 
mortgages, as more fully described in such Form 8-K.	


REPORT OF INDEPENDENT ACCOUNTANTS

ON FINANCIAL STATEMENT SCHEDULES

The Directors and Stockholders
Metropolitan Mortgage & Securities Co., Inc.

Our report on the consolidated financial statements of Metropolitan 
Mortgage & Securities Co., Inc. and subsidiaries is included in Item 8 
herein.  In connection with our audits of such financial statements, 
we have also audited the related financial statement schedules listed 
in Item 14 of this Form 10-K.

In our opinion, the financial statement schedules referred to above, 
when considered in relation to the basic financial statements taken as 
a whole, present fairly, in all material respects, the information 
required to be included therein.


	/s/ COOPERS & LYBRAND L.L.P.


Coopers & Lybrand L.L.P.


Spokane, Washington
December 6, 1996




Schedule I

SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
September 30, 1996
<TABLE>
<CAPTION>
Column A	Column B	Column C	Column D
			Amount At
			Which Shown
	Amortized	Market	On Balance
	Cost	Value	Sheet
TYPE OF INVESTMENTS

<S>			<C>         	<C>         	<C>         
FIXED MATURITIES
Investments:
	U.S. Government and Government
	  Agencies and Authorities	$ 71,938,231	$ 67,466,222	$ 71,460,561
	Corporate Bonds	32,287,052	31,649,223	31,851,940
	Utility Bonds	7,992,386	7,766,837	7,956,489
	Mortgage and Asset Backed Bonds
		and pass through certificates	52,030,232	50,868,534	52,030,232
			------------	------------	------------
TOTAL FIXED MATURITIES	$164,247,901	$157,750,816	$163,299,222
			============	============	============
Equity Securities	$      1,592	$      3,766	$      3,766
			============	============	============
Real Estate Contracts and
	Mortgage Notes
	Receivables	$650,933,330		$650,933,330
Real Estate Held for Sale and
	Development (Including 
	$36,158,099 Acquired in 
	Satisfaction of Debt)	84,333,288		84,333,288
			------------		------------

Total Real Estate Assets	735,266,618		735,266,618

Less Allowances for Losses on
	Real Estate Assets	(10,192,584)		(10,192,584)
			------------		------------
NET REAL ESTATE ASSETS	$725,074,034		$725,074,034
			============		============

OTHER RECEIVABLE INVESTMENTS	$107,494,150		$107,494,150
			===========		===========
OTHER ASSETS - POLICY LOANS	$ 15,379,159		$ 15,379,159
			 ===========		===========

	TOTAL INVESTMENTS	$1,012,196,836		$1,011,250,331
			============		============
</TABLE>




                                                         Schedule III


METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
		Future
		Policy
		Benefits		Other
	Deferred	Losses,		Policy
	Policy	Claims		Claims and
	Acquisition	and Loss	Unearned	Benefits
	Cost	Expenses	Premiums	Payable
<S>		<C>        	<C>         	<C>      	<C>     
September 30, 1996

Life Insurance
and Annuities	$71,932,884	$837,366,108	$      ---	$     ---
		===========	============	=========	========
September 30, 1995

Life Insurance
and Annuities	$71,131,059	$781,716,153	$      ---	$     ---
		===========	============	=========	========
September 30, 1994

Life Insurance 
and Annuities	$71,074,642	$744,644,625	$     ---	$     ---
		===========	============	=========	========
</TABLE>


                                                         Schedule III

METROPOLITAN MORTGAGE & SECURITIES CO., INC AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
			Benefits	Amortization
			Claims	of Deferred
		Net	Losses and	Policy	Other
	Premium	Investment	Settlement	Acquisition	Operating
	Revenue	Income	Expenses	Costs	Expenses
	=========	==========	==========	===========	=========
<S>	<C>       	<C>        	<C>        	<C>       	<C>       
September 30, 1996
	Life Insurance
	and Annuities	$3,000,000	$65,560,704	$48,301,010	$ 9,140,559	$4,352,018
		==========	===========	===========	===========	==========
September 30, 1995
	Life Insurance
	and Annuities	$3,000,000	$64,970,470	$45,483,802	$10,300,547	$3,164,390
		==========	===========	===========	==========	==========
September 30, 1994
	Life Insurance
	and Annuities	$2,958,000	$65,944,437	$41,918,907	$7,015,570	$2,866,794
		==========	===========	===========	==========	==========
</TABLE>


                                                        Schedule IV


METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
SUPPLEMENTARY REINSURANCE INFORMATION
<TABLE>
<CAPTION>
					Percentage
		Ceded to	Assumed		of Amount
	Gross	Other	From Other	Net	Assumed
	Amount	Companies	Companies	Amount	to Net
Year Ended
<S>	<C>         	<C>         	<C>    	<C>         	<C>   


September 30, 1996
	Life Insurance
	in Force.......	$354,371,000	$58,679,000	$    --	$295,692,000	--
		============	============	=======	============	======
Premiums
	Life Insurance..	$  3,354,830	$   354,830	$    --	$  3,000,000	--
		============	============	=======	============	======

September 30, 1995
	Life Insurance
	in Force	$373,573,000	$62,906,000	$   ---	$310,667,000	---
		============	===========	=======	============	=====
	Premiums
	Life Insurance	$  3,364,553	$   364,553	$   ---	$  3,000,000	---
		============	===========	=======	============	=====
September 30, 1994
	Life Insurance
	in Force	$395,837,000	$69,311,000	$   ---	$326,526,000	---
		============	===========	=======	============	=====
	Premiums
	Life Insurance	$  3,345,503	$   387,503	$   ---	$  2,958,000	---
		============	===========	=======	============	=====
</TABLE>


Schedule II
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Years Ended September 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
			Additions
			(Reductions)	Deductions
		Balance at	charged to	and
		beginning	costs and	accounts	Balance at
	Description	of year	expenses	written off	end of year
<S>		<C>       	<C>       	<C>       	<C>       
Allowance for probable
	losses on
	real estate contracts
	and mortgage notes
	deducted from real estate
	assets in balance sheet
		1996	$6,276,183	$3,295,694	$1,626,316	$7,945,561
		1995	7,199,984	(190,470)	 733,331	6,276,183
		1994	5,738,188	1,040,913	(420,883)	7,199,984
		

Allowance for probable
	losses on
	real estate held
	for sale deducted
	from real estate
	assets in balance
	sheet
		1996	$1,839,882	$3,064,378	$2,657,237	$2,247,023
		1995	1,908,399	4,365,114	4,433,631	1,839,882
		1994	4,860,303	4,492,280	7,444,184	1,908,399
		

Allowance for losses
	on accounts and
	notes receivable
	deducted from
	other assets in
	balance sheet
		1996	$   77,039	  $   70,500	$  (33,415)	 $  180,954
		1995	  193,497	  (35,657)	   80,801	   77,039
		1994	172,843	204,650	183,996	193,497
	
</TABLE>
                                                          Schedule IV

METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
LOANS ON REAL ESTATE
September 30, 1996
Real estate contracts and mortgage notes receivable include mortgages 
collateralized by property located throughout the United States.  At 
September 30, 1996, the Consolidated Group held first position liens 
associated with contracts and mortgage notes receivable with a face value 
of approximately $675 million (99%) and second or lower position liens of 
approximately $6 million (1%). Approximately 23% of the face value of the 
Company's real estate contracts and mortgage notes receivable are 
collateralized by property located in the Pacific Northwest (Washington, 
Alaska, Idaho, Montana and Oregon), approximately 20% by property located 
in the Pacific Southwest (California, Arizona and Nevada), approximately 
10% in the Southeast (Florida, Georgia, North Carolina and South Carolina) 
, approximately 10% in Atlantic Northeast (New York, Pennsylvania, New 
Jersey, Connecticut and Maryland) and approximately 16% by property 
located in the Southwest (Texas and New Mexico).  The face value of the 
real estate contracts and mortgage notes receivable range principally from 
$15,000 to $300,000 with 52 receivables, aggregating approximately $29.4 
million in excess of this range.  No individual contract or note is in 
excess of 0.4% of the total carrying value of real estate contracts and 
mortgage notes receivables, and less than 3% of the contracts are subject 
to variable interest rates.  Contractual interest rates principally range 
from 6% to 13% per annum with approximately 91% of the face value of these 
receivables within this range.  The weighted average contractual interest 
rate on these receivables at September 30, 1996 is approximately 9.4%.  
Maturity dates range from 1996 to 2026.

<TABLE>
<CAPTION>
	Number			Carrying	Delinquent
	of	Interest		Amount of	Principal
Description	Receivables	Rates		Receivables	Amount

RESIDENTIAL		Principally
<S>	<C>   	<C>      		<C>          	<C>        
First Mortgage >$100,000	738	6%-13%		$108,873,697	$  5,687,601
First Mortgage > $50,000	2,500	6%-13%		161,285,463	7,443,607	
First Mortgage < $50,000	13,568	6%-13%		261,018,755	9,129,035
Second or Lower>$100,000	1	7.5%		243,213	--
Second or Lower> $50,000	6	9%-10%		384,654	--
Second or Lower< $50,000	358	6%-13%		3,487,974	191,504
COMMERCIAL
First Mortgage >$100,000	248	6%-13%		52,072,095	1,248,896
First Mortgage > $50,000	252	6%-13%		18,218,639	500,571
First Mortgage < $50,000	447	6%-13%		11,837,475	107,111
Second or Lower>$100,000	4	9%-10.5%		1,564,708	--
Second or Lower> $50,000	3	8%-9.5%		204,917	--
Second or Lower< $50,000	9	8%-11%		192,717	--
FARM, LAND AND OTHER
First Mortgage >$100,000	67	8%-12%		14,551,734	1,101,876
First Mortgage > $50,000	151	6%-13%		9,697,972	220,731
First Mortgage < $50,000	2178	6%-13%		36,929,717	841,020
Second or Lower>$100,000	1	14%		100,000	--
Second or Lower> $50,000	2	9%-10%		164,743	--
Second or Lower< $50,000	40	9%-12%		349,674	28,048

Unrealized discounts, net
of unamortized acquisition
costs, on receivables
purchased at a discount				(38,607,376)

Accrued Interest Receivable				8,362,559	
				------------	-----------
CARRYING VALUE				$650,933,330	$26,500,000
				=============	===========
</TABLE>




<TABLE>
<CAPTION>
The contractual maturities of the aggregate amounts of Receivables (face amount) are as follows:

	Residential	Commercial	Farm, Land, other	Total
	Principal	Principal	Principal	Principal
	--------	-------	--------	---------
<S>	<C>        	<C>        	<C>        	<C>         
October 1996 - September 1999	$ 43,589,264	$10,647,400	$10,083,453	$ 64,320,117
October 1999 - September 2001	50,673,223	10,160,940	8,005,953	68,840,116
October 2001 - September 2003	53,408,352	8,270,489	5,145,528	66,824,369
October 2003 - September 2006	62,945,018	15,076,814	10,890,593	88,912,425
October 2006 - September 2011	100,196,799	13,896,939	13,898,207	127,991,945
October 2011 - September 2016	72,017,732	7,719,548	6,273,944	86,011,224
October 2016 - Thereafter	152,463,368	18,318,421	7,496,162	178,277,951
	-----------	-----------	----------	-----------
	$535,293,756	$84,090,551	$61,793,840	$681,178,147
	===========	===========	==========	===========	
</TABLE>



                                                      	 Schedule  IV
	
METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
LOANS ON REAL ESTATE
September 30, 1996

	The principal amounts of Receivables subject to delinquent principal or 
interest is defined as being in arrears for more than three months.
<TABLE>
<CAPTION>
		For the Years Ended September 30,
	1996	1995	1994	
<S>	<C>         	<C>         	<C>         
Balance at beginning of
period:	$587,493,614	$567,256,298	$562,440,005	
	------------	------------	------------
Additions during period:

New Receivables - cash:	282,313,300	203,525,666	142,479,298	

Loans to facilitate the sale of
real estate held - non cash:	 39,102,941	34,102,247	33,461,966	

Assumption of other debt payable
in conjunction with acquisition
of non receivables - non cash:	   3,633,657	526,868	191,213	

Increase in Accrued Interest:	2,109,831	  912,348	--	
	------------	------------	------------

Total Additions:	327,159,729	239,067,129	176,132,477	
	------------	------------	------------
Deductions During Period:

Collections of Principal -
cash:	107,702,333	118,869,137	107,040,612	

Cost of Receivables Sold:	   141,636,670	54,387,414	18,437,363	

Reduction in Net Receivables
Associated with Sale of
Subsidiary - non cash	--	32,391,856	27,267,736
Foreclosures - non cash:	14,381,010	13,181,406	17,720,145

Decrease in Accrued Interest:	--	--	850,328

	------------	------------	------------
Total Deductions	263,720,013	218,829,813	171,316,184	
	------------	------------	------------
Balance at End of Period	$650,933,330	$587,493,614	$567,256,298	
	============	============	============
</TABLE>



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.

				METROPOLITAN MORTGAGE & SECURITIES CO., INC.

				By /s/ C. PAUL SANDIFUR, JR.
				_____________________________________________
				C. Paul Sandifur, Jr., Chief Executive Officer

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

	Signature	Title	Date

/s/ C. PAUL SANDIFUR, JR.	President, Director and
	Chief Executive Officer	January 13, 1997

________________________
C. Paul Sandifur, Jr.

/s/ Bruce J. Blohowiak	Chief Operating Officer
	Executive Vice President,	January 13, 1997
	Director
________________________


/s/ STEVEN CROOKS	Controller and Vice
		President	January 13, 1997
________________________
Steven Crooks


/s/ REUEL SWANSON	Secretary and Director	January 13, 1997


________________________
Reuel Swanson

/S/ Irv Marcus	Director	January 13, 1997

________________________
Irv Marcus

/S/ Charles H. Stolz	Director	January 13, 1997

________________________
Charles H. Stolz