<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9305
STIFEL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1273600
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
500 N. Broadway, St. Louis, Missouri 63102-2188
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,including area code 314-342-2000
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes [x] No
Shares of common stock outstanding at September 30, 1998:
6,782,809, par value $0.15.
Exhibit Index is on page 15.
<PAGE>2
Stifel Financial Corp. And Subsidiaries
Form 10-Q Index
September 30, 1998
PAGE
PART I. FINANCIAL CONDITION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition --
September 30, 1998 and December 31, 1997 3-4
Consolidated Statements of Operations --
Three Months Ended September 30, 1998 and September 26, 1997 5
Consolidated Statements of Operations --
Nine Months Ended September 30, 1998 and September 26, 1997 6
Consolidated Statements of Cash Flows--
Nine Months Ended September 30, 1998 and September 26, 1997 7-8
Notes to Consolidated Financial Statements 9-11
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 12-15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibit(s) and Report(s) on Form 8-K 16
Signatures 17
<PAGE>3
PART I. FINANCIAL CONDITION
Item 1. Financial Statements (Unaudited)
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) (In thousands, except par values and share amounts)
September 30, December 31,
1998 1997
------------- ------------
ASSETS
Cash and cash equivalents $ 15,511 $ 15,366
Cash segregated for the exclusive benefit
of customers 176 177
Receivable from brokers and dealers 5,421 35,223
Receivable from customers, net of
allowance for doubtful accounts of
$556 and $556, respectively 199,911 218,301
Securities owned, at fair value 26,413 19,212
Membership in exchanges, at cost 513 513
Office equipment and leasehold
improvements, at cost, net of
allowances for depreciation and
amortization of $11,997 and 10,890
respectively 4,616 2,227
Goodwill, net of accumulated amortization
of $1,645 and $1,414, respectively 4,113 4,181
Notes receivable from and advances to
officers and employees, net of
allowance for doubtful receivables of
$1,221 and $2,376, respectively 7,311 4,249
Deferred tax asset 3,078 4,577
Other assets 20,248 11,458
------------ ------------
$ 287,311 $ 315,484
============ ============
<PAGE>4
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
(UNAUDITED) (In thousands, except par values and share amounts)
September 30, December 31,
1998 1998
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Short-term borrowings from banks $ 24,375 $ 89,150
Payable to brokers and dealers 111,100 73,708
Payable to customers 38,562 39,239
Securities sold, but not yet purchased, at
fair value 1,462 4,264
Drafts payable 8,980 13,966
Accrued employee compensation 15,220 19,247
Obligations under capital leases 633 522
Accounts payable and accrued expenses 11,182 15,707
Long-term debt 20,570 9,600
------------ ------------
Total Liabilities 232,084 265,403
Stockholders' Equity
Preferred stock -- $1 par value; authorized
3,000,000 shares; none issued -- --
Common stock -- $0.15 par value; authorized
10,000,000 shares; issued 6,808,102
and 6,678,223 shares, respectively 1,021 1,002
Additional paid-in capital 37,802 37,006
Retained earnings 21,032 17,425
------------ ------------
59,855 55,433
Less:
Treasury stock, at cost, 25,293 and
168,648 shares, respectively 281 1,989
Unamortized expense of restricted
stock awards 1,169 185
Unearned employee stock ownership plan
shares, at cost, 236,250 shares 3,178 3,178
------------ ------------
Total Stockholders' Equity 55,227 50,081
------------ ------------
$ 287,311 $ 315,484
============ ============
See Notes to Consolidated Financial Statements.
<PAGE>5
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
September 30, September 26,
1998 1997
------------- -------------
REVENUES
Commissions $ 14,231 $ 13,505
Principal transactions 4,235 4,625
Investment banking 6,557 8,406
Interest 4,765 5,957
Other 4,471 4,152
------------ ------------
34,259 36,645
EXPENSES
Employee compensation and benefits 22,108 22,030
Communications and office supplies 2,065 1,669
Occupancy and equipment rental 2,344 2,048
Interest 2,439 3,931
Commissions and floor brokerage 726 774
Other operating expenses 3,016 2,829
------------ ------------
32,698 33,281
------------ ------------
INCOME BEFORE INCOME TAXES 1,561 3,364
Provision for income taxes 594 1,352
------------ ------------
NET INCOME $ 967 $ 2,012
Net income per share:
Basic $ 0.15 $ 0.40
Diluted $ 0.14 $ 0.31
Dividends declared per share $ 0.03 $ 0.03
Average common equivalent shares
outstanding:
Basic 6,544 5,076
Diluted 6,856 6,830
See Notes to Consolidated Financial Statements.
<PAGE>6
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
Nine Months Ended
September 30, September 26,
1998 1997
------------- -------------
REVENUES
Commissions $ 41,822 $ 36,804
Principal transactions 19,792 14,743
Investment banking 13,787 20,130
Interest 14,634 16,004
Other 14,135 11,468
------------ ------------
104,170 99,149
EXPENSES
Employee compensation and benefits 65,991 59,625
Communications and office supplies 6,151 5,121
Occupancy and equipment rental 6,672 5,969
Interest 7,861 10,414
Commissions and floor brokerage 2,076 2,208
Other operating expenses 8,340 8,132
------------ ------------
97,091 91,469
------------ ------------
INCOME BEFORE INCOME TAXES 7,079 7,680
Provision for income taxes 2,836 3,100
------------ ------------
NET INCOME $ 4,243 $ 4,580
Net income per share:
Basic $ 0.65 $ 0.92
Diluted $ 0.62 $ 0.73
Dividends declared per share $ 0.09 $ 0.09
Average common equivalent shares
outstanding:
Basic 6,513 4,989
Diluted 6,887 6,682
See Notes to Consolidated Financial Statements.
<PAGE>7
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands)
Nine Months Ended
September 30, September 26,
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,243 $ 4,580
Noncash items included in earnings:
Depreciation and amortization 1,337 1,150
Bonus notes amortization 1,157 906
Deferred items 1,936 1,358
Restricted stock awards amortization 351 96
------------ ------------
9,024 8,090
Decrease (increase) in assets:
Operating receivables 48,192 15,846
Cash segregated for the exclusive
benefit of customers 1 242
Securities owned (7,201) 1,679
Notes receivable from officers and
employees (4,219) (575)
Other assets (3,196) 534
Increase (decrease) in liabilities:
Operating payables 36,715 46,464
Securities sold, but not yet purchased (2,802) 108
Drafts payable, accounts payable and
accrued expenses, and accrued
employee compensation (13,975) (490)
------------ ------------
Cash Flows From Operating Activities $ 62,539 $ 71,898
See Notes to Consolidated Financial Statements.
<PAGE>8
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)(In thousands)
Nine Months Ended
September 30, September 26,
1998 1997
------------- -------------
Cash Flows From Operating Activities -
from previous page $ 62,539 $ 71,898
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Sale of investments 72 57
Payments for:
Acquisition of office equipment and
leasehold improvements (3,021) (882)
Acquisition of investments (5,808) (900)
------------ ------------
Cash Flows From Investing Activities (8,757) (1,725)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net (64,775) (70,725)
Proceeds from:
Issuance of stock 1,441 791
Temporary subordinated debt - - 8,000
Issuance of Long-term debt 10,970 - -
Payments for:
Repurchase of stock (283) (1,315)
Temporary subordinated debt - - (8,000)
Principal payments under capital
lease obligation (384) (308)
Cash dividends (606) (425)
------------ ------------
Cash Flows From Financing Activities (53,637) (71,982)
------------ ------------
Increase (decrease) in cash and
cash equivalents 145 (1,809)
Cash and cash equivalents -
beginning of period 15,366 7,960
------------ ------------
Cash and Cash Equivalents - end of period $ 15,511 $ 6,151
============ ============
Supplemental disclosure of cash flow
information:
Income tax payments $ 3,935 $ 1,964
Interest payments $ 7,864 $ 10,315
Schedule of noncash investing and
financing activities:
Fixed assets acquired under
capital lease $ 495 $ 357
Employee stock ownership plan - - $ 287
Restricted stock awards, net of
forfeitures $ 1,264 $ 1,607
Debt Converted into Stock - - $ 2,500
Stock Dividend Distributable $ 30 - -
See Notes to Consolidated Financial Statements.
<PAGE>9
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Stifel Financial Corp. and its subsidiaries (collectively
referred to as "the Company"). The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the three and nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1998. For further information,
refer to the financial statements and notes thereto included in
the Company's annual report on Form 10-K for the year ended
December 31, 1997.
Where appropriate, prior years' financial information has been
reclassified to conform with the current year presentation.
NOTE B - NET CAPITAL REQUIREMENT
The Company's principal subsidiary, Stifel, Nicolaus &
Company, Incorporated ("SN & Co."), is subject to the Uniform Net
Capital Rule 15c3-1 under the Securities Exchange Act of 1934
(the "rule"), which requires the maintenance of minimum net
capital, as defined. SN & Co. has elected to use the alternative
method permitted by the rule which requires maintenance of
minimum net capital equal to the greater of $250,000 or 2 percent
of aggregate debit items arising from customer transactions, as
defined. The rule also provides that equity capital may not be
withdrawn or cash dividends paid if resulting net capital would
be less than 5 percent of aggregate debit items.
At September 30, 1998, SN & Co. had net capital of $28,819,000
which was 11.80% of its aggregate debit items and $23,934,000 in
excess of the minimum required net capital.
NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS
As of January 1, 1997, the Company adopted the original
provisions of, Statements of Financial Accounting Standards
("SFAS") No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," which was
effective for transfers of financial assets made after December
31, 1996, except for transfers of certain financial assets for
which the effective date had been delayed for one year. The
Company adopted the delayed provisions in 1998. SFAS No. 125
provides financial reporting standards for the derecognition and
recognition of financial assets, including the distinction
between transfers of financial assets which should be recorded as
sales and those which should be recorded as secured borrowings.
The adoption of the provisions of SFAS No. 125 had no material
effect on the Company's financial condition or results of
operations.
<PAGE>10
SFAS No. 130 "Reporting Comprehensive Income" became effective
for companies whose fiscal year began after December 15, 1997.
SFAS No. 130 establishes standards for the display of
comprehensive income. The Company has no reportable items to be
included in comprehensive income and therefore comprehensive
income and net income are the same.
On June 16, 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," Effective for fiscal years beginning after
June 15, 1999, with earlier adoption recommended. The Company
does not expect the impact of the adoption of the provisions to
be material to the Company's financial condition or results of
operations.
NOTE D - EARNINGS PER SHARE ("EPS")
During 1997, the Company adopted SFAS 128. The following table
reflects a reconciliation between Basic EPS and Diluted EPS.
<TABLE>
<CAPTION>
Three Months Ended September 30, 1998 September 26, 1997
- ------------------------------------------------------------------------------------------------------
(In thousands,except Income Shares Per Income Shares Per
per share amount) (Numerator) (Denominator) Share (Numerator) (Denominator) Share
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share
Income available to
shareholders $967 6,544 $0.15 $2,012 5,076 $0.40
- ------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share
Effect of Dilutive Securities:
Options, ESPP, and
deferred compensation - - 312 - - - - 292 - -
Convertible debt - - - - - - 97 1,462 - -
Income available to
common stockholders
and assumed conversions $967 6,856 $0.14 $2,109 6,830 $0.31
- ------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1998 September 26, 1997
(In thousands,except Income Shares Per Income Shares Per
per share amounts) (Numerator) (Denominator) Share (Numerator) (Denominator) Share
- ------------------------------------------------------------------------------------------------------
Basic Earnings Per Share
Income available to
shareholders $4,243 6,513 $0.65 $4,580 4,989 $0.92
- ------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share
Effect of Dilutive Securities:
Options, ESPP, and
deferred compensation - - 374 - - - - 214 - -
Convertible debt - - - - - - 290 1,479 - -
Income available to
common stockholders
and assumed conversions $4,243 6,887 $0.62 $4,870 6,682 $0.73
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>11
NOTE E - SUBSEQUENT EVENT
On October 23, 1998, the Company's Board of Directors declared
a regular quarterly cash dividend of $0.03 per share, payable on
November 19, 1998 to stockholders of record November 5, 1998.
<PAGE>12
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
Three months ended September 1998 and September 1997
The Company recorded net earnings of $967,000 or $0.14 per
diluted share on total revenues of $34.3 million for the third
quarter ended September 30, 1998 compared to net earnings of $2
million or $0.31 per diluted share on revenues of $36.6 million
recorded for the same period one year earlier.
Revenues from commissions increased $726,000 (5%) to $14.2
million, principally due to increased investment executive
production. Main components of the increase were from sales of
listed equity securities - up $379,000 (12%); insurance - up
$398,000 (37%); and mutual funds up $316,000 (10%); offset by a
decrease in sales of over the counter stocks of $297,000 (5%).
Revenues from principal transactions decreased $390,000 (8%)
to $4.2 million. The decrease resulted primarily from realized
and unrealized trading losses on over the counter stocks.
Investment banking decreased $1.8 million (22%) to $6.6
million primarily as a result of decreased underwritings for
regional financial institutions and Real Estate Investment Trusts
("REITs") due to less favorable market conditions.
Interest revenue decreased $1.2 million (20%) to $4.8 million
as a result of decreased average customer receivables.
Other revenues increased $319,000 (8%) to $4.5 million
principally due to increases in fee revenues from investment
advisory and management services - up $413,000 (23%); customer
service fees - up $358,000 (30%); offset by unrealized losses on
various investments held by the Company of $399,000.
Total expenses remained relatively unchanged from the quarter
ended one year earlier.
Employee compensation and benefits, a significant portion of
the Company's total expense, remained relatively unchanged in the
third quarter of 1998. The variable component of compensation
decreased $1.1 million (7%) compared to last year's third quarter
primarily due to decreases in performance based and profitability
based incentive compensation awards. The fixed component of
compensation, principally salaries, increased $1.2 million (23%)
as a result of normal year-to-year salary increases and the
addition of approximately 80 non-sales associates since September
of 1997. Growth occurred in key areas such as Equity Capital
Markets and Private Client Group, foundations for the Company's
overall growth plans.
Communications and office supplies increased $396,000 (24%) to
$2.1 million, primarily as a result of costs associated with
improvements in communications technology, increased activity in
the printing of sales materials, and the addition of seven branch
offices since September 1997.
<PAGE>13
Occupancy and equipment rental increased $296,000 (15%)
principally due to the addition of seven branch offices mentioned
above.
Interest expense declined $1.5 million (38%) due to decreased
borrowings by the Company to finance customers margin accounts.
Nine months ended September 1998 and September 1997
The Company recorded net earnings of $4.2 million or $0.62 per
diluted share on revenues of $104.2 million for the nine months
ended September 30, 1998 compared to $4.6 million or $0.73 per
diluted share on revenues of $99.1 million for the same period
one year earlier.
Total revenues increased $5 million (5%) as retail investor
activity remained strong coupled with increased investment
executive production.
Commission revenue increased $5 million (14%) principally due
to increased investment executive production. Main components of
the increase were from sales of mutual funds - up $2.4 million
(28%); listed equity securities - up $1.3 million (15%); and
insurance - up $903,000 (31%).
Principal transaction revenues increased $5 million (34%) due
to revenue derived from the underwriting of a unit investment
trust by SN & Co. in the first quarter of 1998 and increased
sales of fixed income products.
Investment banking revenue decreased $6.3 million (32%) for
the first nine months of 1998 compared to the previous year's
first nine months. The decrease can be attributed to fewer
underwritings of Trust Preferred and mortgage REIT transactions.
Last year's first nine months were especially strong as $6.4
million of revenue was generated from these transactions, most of
which occurred in the first quarter.
Interest revenue decreased $1.4 million (8.6%) due to
decreased customer receivables.
Other revenues increased $2.7 million (23%) for the first nine
months of 1998. Main components of the increase resulted from
increases in fee revenues from investment advisory and managed
account services - up $1.6 million (33%) and customer service
fees - up $1 million (31%).
Total expenses increased $5.6 million (6%) for the first nine
months of 1998 over the previous year's first nine months
principally due to increased compensation and benefits.
<PAGE>14
Employee compensation and benefits increased $6.4 million
(11%) in the first nine months of 1998 over the same period one-
year earlier. A majority of the increase resulted from
compensation that is variable in nature and grew in conjunction
with the increases in revenues and profitability. This variable
component increased $3.5 million (8%) compared to last year's
first nine months. The fixed component of compensation,
principally salaries, increased $2.9 million (20%) for the same
reasons described in the three months results.
Communications and supplies increased $1 million (20%) as a
result of costs associated with improvements in communications
technology, increased activity in the printing of sales and
promotional materials and the addition of seven branch offices.
Occupancy and equipment rental increased $703,000 (12%)
principally due to the addition of seven branch offices mentioned
above and a one-time credit recorded in 1997 related to the
renegotiation of a long-term office space lease which had
been previously accrued. Without the effect of the one-time
credit, occupancy and equipment rental would have increased
$385,000 (6%).
Interest expense declined $2.5 million (35%) due to decreased
borrowings by the Company to finance customers margin accounts.
Year 2000
The Year 2000 issue is the result of computer programs
currently written in a two-digit format rather than four digits
to define the applicable year and therefore affecting the ability
of computer systems to accurately process dates ending after
December 31, 1999. The Company continues to review its computer
systems and programs to prepare for the Year 2000 compliance.
Such review includes internal and third party software: and more
significantly, service providers' computer systems. A significant
portion of the Company's internal programs is already year 2000
compliant.
The Company's brokerage securities processing system is
provided by a leading industry vendor. The Company has contacted
and continues to closely monitor the implementation plans of the
vendor. The vendor has completed a significant portion of its
plans and has begun user testing that will continue through early
1999.
The Company believes that the incremental costs associated
with modifications for internal software and systems will not be
material to the Company's financial statements. However, the
Company could be adversely affected if other organizations,
including the vendor mentioned above, are unsuccessful in
completing the required Year 2000 system modifications.
<PAGE>15
Liquidity and Capital Resources
The Company's assets are highly liquid, consisting mainly of
cash or assets readily convertible into cash. These assets are
financed primarily by the Company's equity capital, customer
credit balances, short-term bank loans, proceeds from securities
lending, long term notes payable, and other payables. Changes in
securities market volumes, related customer borrowing demands,
underwriting activity, and levels of securities inventory affect
the amount of the Company's financing requirements.
Management believes the funds from operations, available
informal short-term credit arrangements, and long-term
borrowings, at September 30, 1998, will provide sufficient
resources to meet the present and anticipated financing needs.
Stifel, Nicolaus & Company, Incorporated, the Company's
principal broker-dealer subsidiary, is subject to certain
requirements of the Securities and Exchange Commission with
regard to liquidity and capital requirements. At September 30,
1998, Stifel, Nicolaus had net capital of approximately $28.8
million which exceeded the minimum net capital requirements by
approximately $23.9 million.
<PAGE>16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On August 7, 1998 the United States Tenth Circuit Court of
Appeals affirmed the previous ruling by the United States
District Court for the Western District of Oklahoma, to dismiss
the State of Oklahoma suit against the Company seeking $7.6
million in compensatory damages and that these damages be
trebled. The State of Oklahoma suit alleged that the Company and
two former executives of the Company committed violations of the
Racketeer Influenced and Corrupt Organizations Act.
There were no other material changes in the legal proceedings
previously reported in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997. Such information is hereby
incorporated by reference.
Item 6. Exhibit(s) and Report(s) on Form 8-K
(a) Exhibit No.
(Reference to Item 601(b)
of Regulation S-K) Description
- --------------------------------------------------------------------------------
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)
(b) Report(s) on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended September 30, 1998.
<PAGE>17
SIGNATURES
Pursuant to the requirement of Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STIFEL FINANCIAL CORP.
(Registrant)
Date: November 13, 1998 By /s/Ronald J. Kruszewski
Ronald J. Kruszewski
(President and
Chief Executive Officer)
Date: November 13, 1998 By /s/Stephen J. Bushmann
Stephen J. Bushmann
(Principal Financial and
Accounting Officer)
<PAGE>18
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
EXHIBIT INDEX
September 30, 1998
Exhibit
Number Description
- --------------------------------------------------------------------------------
27 Financial Data Schedule
(furnished to the Securities and Exchange
Commission for Electronic Data
Gathering, Analysis, and Retrieval
[EDGAR] purposes only)
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DATED
SEPTEMBER 30, 1998 AND THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,687
<RECEIVABLES> 206,543
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 6,100
<INSTRUMENTS-OWNED> 26,413
<PP&E> 4,616
<TOTAL-ASSETS> 287,311
<SHORT-TERM> 24,375
<PAYABLES> 76,560
<REPOS-SOLD> 0
<SECURITIES-LOANED> 109,117
<INSTRUMENTS-SOLD> 1,462
<LONG-TERM> 20,570
<COMMON> 1,021
0
0
<OTHER-SE> 54,206
<TOTAL-LIABILITY-AND-EQUITY> 287,311
<TRADING-REVENUE> 19,792
<INTEREST-DIVIDENDS> 14,634
<COMMISSIONS> 41,822
<INVESTMENT-BANKING-REVENUES> 13,787
<FEE-REVENUE> 2,485
<INTEREST-EXPENSE> 7,861
<COMPENSATION> 65,991
<INCOME-PRETAX> 7,079
<INCOME-PRE-EXTRAORDINARY> 7,079
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,243
<EPS-PRIMARY> .65
<EPS-DILUTED> .62
</TABLE>
