UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 1-8952
INTERSTATE/JOHNSON LANE, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
56-1470946
(I.R.S. Employer Identification No.)
Interstate Tower, P.O. Box 1012, Charlotte, North Carolina 28201-1012
(Address of principal executive offices, zip code)
(704) 379-9000
(Registrant's telephone number, including area code)
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 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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at April 30, 1995
(Common stock, $.20 par value) 6,306,584
PAGE 1 OF 14
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
Index
Page Number
Part I.Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition--March 31, 1995 and
September 30, 1994 3
Condensed Consolidated Statements of
Operations--Six Months Ended
March 31, 1995 and 1994 4
Condensed Consolidated Statements of
Cash Flows--Six Months Ended
March 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
PAGE 2
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
March 31, September 30
1995 1994
<S> <C> <C>
Assets
Cash and cash equivalents $ 11,362 $ 30,193
Cash and securities segregated for
regulatory purposes 108,130 83,983
Loans under matched securities resale agreements 316,029 339,189
Receivables:
Financing resale agreements 36,353 20,989
Customers 171,916 170,060
Brokers, dealers and clearing agencies 8,928 15,573
Other 5,345 9,418
Securities owned 72,842 57,023
Land, buildings, and improvements, net 8,335 9,135
Office facilities and equipment, net 7,128 6,406
Goodwill and intangible assets 13,979 14,285
Other assets 16,003 11,579
$ 776,350 $ 767,833
Liabilities and Shareholders' Equity
Short-term borrowings:
Checks payable $ 11,986 $ 18,179
Bank loans --- 4,997
Financing repurchase agreements 24,243 11,935
Borrowings under matched securities repurchase agreements 319,783 339,777
Payables:
Customers 248,302 227,431
Brokers and dealers 1,762 6,388
Income taxes 845 297
Other 5,883 8,327
Accrued compensation and benefits 9,767 13,010
Securities sold but not yet purchased 38,647 23,258
Notes payable 7,462 8,143
Other liabilities and accrued expenses 16,526 16,922
685,206 678,664
Minority interest 200 200
Subordinated debt 20,999 20,999
Shareholders' equity:
Common stock 1,377 1,377
Additional paid-in-capital 31,314 31,589
Retained earnings 42,022 39,871
74,713 72,837
Less: treasury stock, at cost (4,768) (4,867)
Total shareholders' equity 69,945 67,970
$ 776,350 $ 767,833
The accompanying notes are an integral part of the
condensed consolidated financial statements.
PAGE 3
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
For the Six Months For the Three Months
Ended March 31, Ended March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Commissions and sales credits $51,681 $61,732 $27,434 $30,638
Trading gains, net 4,314 3,968 2,812 1,836
Investment banking and underwriting 1,824 3,545 869 2,542
Asset management and advisory 3,517 2,927 1,795 1,581
Interest 20,591 11,949 10,773 6,579
Other 3,319 4,027 1,895 2,257
Total revenues 85,246 88,148 45,578 45,433
Interest expense 16,360 7,959 8,585 4,523
Net revenues 68,886 80,189 36,993 40,910
Expenses:
Compensation and benefits 43,698 48,682 23,370 24,967
Occupancy 3,798 3,885 1,860 2,005
Technology & telephone 7,330 6,692 3,831 3,383
Execution, clearance and depository 1,886 1,925 1,011 957
Promotion and development 2,780 2,667 1,581 1,358
Professional services 1,502 2,020 692 1,059
Printing, postage and supplies 1,620 1,626 908 904
Other operating expenses 2,129 3,657 1,150 1,491
Total expenses 64,743 71,154 34,403 36,124
Income before income taxes
and cumulative effect of a change
in accounting principle 4,143 9,035 2,590 4,786
Income tax expense 1,609 3,652 988 1,962
Income before cumulative effect of a
change in accounting principle 2,534 5,383 1,602 2,824
Cumulative effect of a change in
accounting principle --- 3,059 --- ---
Net Income $ 2,534 $ 8,442 $ 1,602 $ 2,824
Primary earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.40 $ 0.81 $ 0.25 $ 0.43
Cumulative effect of a change in
accounting principle --- 0.47 --- ---
Net income $ 0.40 $ 1.28 $ 0.25 $ 0.43
Fully diluted earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.40 $ 0.74 $ 0.24 $ 0.39
Cumulative effect of a change in
accounting principle --- 0.38 --- ---
Net income $ 0.40 $ 1.12 $ 0.24 $ 0.39
Weighted average shares:
Primary 6,369,903 6,618,176 6,349,441 6,597,095
Fully diluted 7,648,482 7,945,401 7,628,020 7,926,571
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
PAGE 4
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
(All dollars in thousands)
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,534 $ 8,442
Adjustments to reconcile net income to cash provided
(used) by operating activities:
Depreciation and amortization 1,581 1,557
Provision for real estate charges 500 500
Other non-cash items (42) 1,145
2,039 3,202
Cash and securities segregated for
regulatory purposes (24,147) (4,087)
Loans under matched securities resale and repurchase agreements, net 3,166 (10,334)
Net payables to customers 19,015 (6,793)
Net receivables from brokers, dealers and clearing agencies 2,019 (1,841)
Other receivables 4,073 (1,635)
Securities owned, net (431) 17,168
Other assets (4,448) (3,054)
Income taxes payable 548 (817)
Accrued compensation and benefits (3,243) (3,252)
Other liabilities and accrued expenses (2,720) (798)
(6,168) (15,443)
Cash (used) by operating activities (1,595) (3,799)
Cash flows from financing activities:
Proceeds from (repayment of ):
Short-term bank borrowings (11,189) (3,538)
Notes payable (680) (681)
Loans under financing repurchase and resale agreements, net (3,056) 12,407
Proceeds from stock discount program 736 ---
Proceeds from stock options exercised 146 192
Purchase of stock for treasury (1,260) (2,097)
Dividends paid (383) (199)
Cash (used) provided by financing activities (15,686) 6,084
Cash flows from investing activities:
Capital expenditures (1,549) (925)
Cash used by investing activities (1,549) (925)
Net increase (decrease) in cash and cash equivalents (18,831) 1,360
Cash and cash equivalents at beginning of period 30,193 20,393
Cash and cash equivalents at end of period $ 11,362 $ 21,753
Cash paid during the quarter for:
Interest $ 8,710 $ 4,207
Income taxes $ 1,073 $ 1,049
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.<PAGE>
PAGE 5
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Basis of Presentation:
The interim financial statements are unaudited; however,
such information reflects all normal recurring adjustments
which, in the opinion of management, are necessary for a
fair presentation of the results for the period. The
nature of the Company's business is such that the results
of any interim period are not necessarily indicative of
results for a full fiscal year.
2.Net Capital Requirements:
As a registered broker-dealer and member of the New York
Stock Exchange, Interstate/Johnson Lane Corporation
("IJL"), the principal operating subsidiary of the
Company, is subject to the Securities and Exchange
Commission's uniform net capital rule. IJL has elected to
operate under the alternative method of the rule, which
prohibits a broker-dealer from engaging in any
transactions when its "net capital" is less than 2% of its
"aggregate debit balances" arising from customer
transactions, as these terms are defined in the rule. The
Exchange may also impose business restrictions on a member
firm if its net capital falls below 5% of its aggregate
debit balances. IJL is also subject to the Commodity
Futures Trading Commission minimum net capital
requirement.
At March 31, 1995, IJL's net capital was 23% of its
aggregate debit balances and approximately $36.9 million
in excess of its minimum regulatory requirements.
3.Commitments and Contingencies:
Leases for office space and equipment are accounted for as
operating leases. Approximate minimum rental commitments
under noncancelable leases, some of which contain
escalation clauses and renewal options, are as follows:
Millions
For the six months ended September 30, 1995 $5.3
For the fiscal year ended September 30,
1996 7.6
1997 5.4
1998 4.6
1999 3.0
Thereafter .7
$26.6
PAGE 6
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3.Commitments and Contingencies, continued:
In connection with its involvement as a general partner
and/or placement agent of various real estate limited
partnerships, the Company has guaranteed certain
obligations of limited partners and, with others, has
jointly or severally guaranteed mortgage loan obligations
of some of the partnerships. At March 31, 1995,
contingent liabilities under these obligations amounted to
approximately $500,000 in the aggregate.
Of a $20 million irrevocable letter of credit available,
the amount outstanding at March 31, 1995 under this
facility was $450,000.
4.Legal Proceedings:
IJL is a defendant, or otherwise has possible exposure, in
various legal actions arising out of its activities as a
broker-dealer, underwriter, or employer. Several of these
actions, including some class actions, claim substantial
or unspecified damages which could be material. While
predicting the outcome of litigation is inherently very
difficult, and the ultimate resolution, range of loss, and
impact on operating results cannot reliably be estimated,
management is of the opinion, based upon its understanding
of the facts and the advice of legal counsel, that
resolution of these actions will not have a material
adverse effect on the Company's consolidated financial
condition.
IJL as managing underwriter for common stock offerings of
Del-Val Financial Corporation, is a defendant in a
consolidated class action seeking damages estimated to
potentially exceed $40 million from all defendants. No
opinion can be formed at this time concerning the outcome
of this litigation.
5.Financial Instruments with Off-Balance-Sheet Risk:
IJL's business activities involve the execution,
settlement and financing of securities transactions
generating accounts receivable, and thus may expose IJL to
financial risk in the event a customer or other
counterparty is unable to fulfill its contractual
obligations. IJL controls the risk associated with
collateralized loans by revaluing collateral at current
prices, monitoring compliance with applicable credit
limits and industry regulations, and requiring the posting
of additional collateral when appropriate.
Obligations arising from financial instruments sold short
in connection with its normal trading activities expose
IJL to risk in the event market prices increase, since it
may be obligated to repurchase those positions at a
greater price. IJL's short selling primarily involves
debt securities, which are typically less volatile than
equities or options.
PAGE 7
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.Financial Instruments with Off-Balance-Sheet Risk,
continued:
Forward and futures contracts provide for the seller
agreeing to make delivery of securities or other
instruments at a specified future date and price. Risk
arises from the potential inability of counterparties to
honor contract terms, and from changes in values of the
underlying instruments. At March 31, 1995, IJL's
commitments included forward purchase and sale contracts
involving mortgage-backed securities with long market
values of approximately $89.5 million and short market
values of approximately $91.3 million and futures sale
contracts with short values of $13.6 million.
IJL enters into resale agreements, whereby it lends money
by purchasing U.S. government/agency or mortgage-backed
securities from customers or dealers with an agreement to
resell them to the same customers or dealers at a later
date. Such loans are collateralized by the underlying
securities, which are held in custody by IJL and may be
converted into cash at IJL's option. In addition, IJL
monitors the market value of the collateral, and issues
margin calls as necessary according to the
creditworthiness of the borrower. Approximately 90% of
all loans under securities resale agreements at March 31,
1995 were made to three counterparties.
IJL incurs risk in underwriting public securities
offerings to the extent that prospective buyers fail to
purchase the securities. The Company attempts to mitigate
this risk through due diligence carried out prior to
undertaking the contractual obligation.
PAGE 8
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Business Environment
The Company's principal activities -- securities brokerage
for individual (retail) and institutional investors, market-
making in equity and fixed-income securities, investment
banking and underwriting, and investment management and
advisory services -- are highly competitive. Strategic
alliances between investment firms and commercial banks,
insurance companies, and other financial services entities
have intensified this competition. Many of the Company's
revenue sources are sensitive to marketplace trading volumes
and to interest rate conditions which can be volatile.
During the past four years, the Company has undertaken a
major commitment to build its retail sales force by
recruiting and training individuals without securities
industry experience. As a result, approximately 23% of the
Company's retail financial consultants are individuals with
less than three years' experience. While this condition may
bode well for the future, a continued slowdown in individual
investor activity may negatively impact the revenue
production of a less seasoned sales force. Securities and
Exchange Commission rulings and proposals in 1994 on broker-
dealer practices related to order flow, and on disclosure
requirements for institutions using "soft dollars" to pay for
research services, the latter a significant source of the
Company's profits, could also have a dampening effect on
operating results.
The Company's trading inventories may include, from time to
time, positions in taxable and non-taxable debt securities
which have greater risks than positions in investment grade
securities. While these positions are required to be valued
at "market", there is a thinly traded market for such
securities; quotes are generally available from a limited
number of dealers, and may not represent firm bids or offers.
The average inventory of these securities during the three
months ended March 31, 1995, was $9.2 million. As of that
same date, such holdings represented $6.8 million, or 9.3%,
of all securities owned by the Company.
Liquidity and Capital Resources
The Company's net cash position decreased $18.8 million for
the six months ended March 31, 1995. Operating activities
consumed $6.2 million of cash, offset in part by $4.6 million
of net income adjusted for depreciation and other non-cash
charges. Financing activities consumed an additional $15.7
million of cash while capital expenditures totaled $1.5
million.
PAGE 9
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued
Liquidity and Capital Resources, continued
The Company's permanent capital consists of its shareholders'
equity and subordinated debt. Day-to-day financing
requirements are primarily influenced by the level of
securities inventories, net receivables from customers and
broker-dealers, and net receivables under resale agreements.
Significant cash requirements could occur in connection with
payments under deferred compensation plans, repurchase of the
Company's common stock and/or convertible debentures, payment
of dividends, and litigation settlements arising from normal
business operations. Beginning in fiscal 1995, the Company
anticipates capital expenditures in the $7 to $10 million
range over several years in connection with a major program
of technology improvements.
At March 31, 1995, the Company had $115 million of unused
call loan financing available. In addition, the Company
maintains significant credit lines for repurchase agreements
with other financial institutions and has financed its
customer receivables with customer payables for many years.
Management believes that these resources, together with the
Company's permanent capital base and funds provided by
operations, will satisfy normal financing needs for the
foreseeable future. The Company's broker-dealer subsidiary,
Interstate/Johnson Lane Corporation ("IJL"), is subject to
liquidity and capital requirements of the Securities and
Exchange Commission, Commodity Futures Trading Commission,
and The New York Stock Exchange, and has consistently
operated well in excess of the minimum requirements. At
March 31, 1995, IJL had net capital of $40.3 million, "excess
net capital" of approximately $36.9 million, and a net
capital ratio of 23%.
Results of Operations
For the six months ended March 31, 1995, net revenues
decreased $11.3 million, or 13%, from the previous year,
while expenses, other than interest, decreased $6.4 million,
or 9%. Net income of $2.5 million was down $5.9 million
from the results of the period of a year ago which were
augmented by a $3.1 million credit from the cumulative effect
of adopting Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes."
Net revenues decreased $3.9 million, or 10% for the three
months ended March 31, 1995, while total expenses decreased
$1.7 million, or 5%. Net income for the period was $1.6
million or $.25 per share compared with $2.8 million or $.43
per share for the same quarter of a year ago.
Overall, commissions and sales credits decreased by about
$10.1 million, or 16% from the same six- month period of a
year ago, representing declines of 10% and 26% for the retail
and institutional sectors, respectively. For the three-month
period ended March 31, 1995, commissions and sales credits
decreased about $3.2 million from the same period of a year
ago. Substantially fewer equity underwritings combined with
lower secondary market transactions in both exchange listed
and OTC equities, and decreases in mutual funds and taxable
debt securities, contributed to the decline in both the
retail and institutional sectors for both periods.
PAGE 10
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued
Results of Operations, continued
Net trading gains increased $350,000, or 8%, and $1 million,
or 35%, from the same six and three month periods of a year
ago. Profits from trading in tax exempt securities and
corporate fixed income securities were up $2.7 million ($3.0
million for the quarter) for the six months ended March 31,
1995. These increases were offset by trading declines in OTC
stocks of $1.4 million ($700,000 for the quarter) and
government and mortgage backed securities of $1.1 million
($1.3 for the quarter).
Investment banking fees and underwriting profits decreased
$1.7 million, or 49% for both the six month period and for
the quarter due to a sluggish new issues market. Asset
management and advisory fees were up $600,000 and $200,000
for the six and three month periods, respectively, due to the
continued growth of "wrap fees" paid by retail clients in
lieu of transaction-based commissions.
Interest revenues were up about $8.6 million for the six
months ended March 31, 1995 ($4.2 million for the quarter)
while expenses increased $8.4 million and $4.1 million for
the corresponding periods. Roughly half of the increase in
both revenues and expenses is attributable to significantly
higher levels of matched resale and repurchase agreements;
the remaining increase is attributable to higher interest
rates than a year ago.
Compensation and benefits costs decreased $5 million, or 10%
($1.6 million for the quarter), due primarily to a decline in
transaction-based commissions and other incentive payments.
Technology and telephone expense increased $640,000, or 10%,
for the six month period and $450,000 for the quarter due to
expenses related to the Company's on-going program of
technology improvements. Professional services decreased
$500,000, or 26%, for the six month period and $470,000 for
the quarter due primarily to a decrease in legal fees. Other
operating expenses decreased $1.5 million, or 42%, for the
year largely as a result of smaller provisions for legal and
related matters.
PAGE 11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
IJL is a defendant, or otherwise has possible exposure, in
various legal actions arising out of its activities as a
broker-dealer, underwriter, or employer. Several of these
actions, including some class actions, claim substantial or
unspecified damages which could be material. While
predicting the outcome of litigation is inherently very
difficult, and the ultimate resolution, range of loss, and
impact on operating results cannot reliably be estimated,
management is of the opinion, based upon its understanding
of the facts and the advice of legal counsel, that
resolution of these actions will not have a material
adverse effect on the Company's consolidated financial
condition.
IJL as managing underwriter for common stock offerings of
Del-Val Financial Corporation, is a defendant in a
consolidated class action seeking damages estimated to
potentially exceed $40 million from all defendants. No
opinion can be formed at this time concerning the outcome
of this litigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Designation of Exhibit Sequential
in this Report Description Page Number
11 Statement Regarding
Computation of Per
Share Earnings 14
27 Financial Data Schedule 15
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
three months ended March 31, 1995.
PAGE 12
<PAGE>
INTERSTATE/JOHNSON LANE, INC.
AND CONSOLIDATED SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
INTERSTATE/JOHNSON LANE, INC.
Registrant
Signature Title Date
_________________________ President and Chief
James H. Morgan Executive Officer May 15, 1995
_________________________ Vice President - Finance
Edward C. Ruff and Treasurer (Principal
Financial Officer) May 15, 1995
_________________________ Assistant Vice President
C. Fred Wagstaff, III (Principal Accounting Officer) May 15, 1995
PAGE 13
<PAGE>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income per share was computed as follows:
Primary:
1) Income before cumulative effect of a
change in accounting principle $2,533,760 $5,382,565 $1,602,197 $2,823,923
Cumulative effect of a change in accounting principle --- 3,059,000 --- ---
Net income $2,533,760 $8,441,565 $1,602,197 $2,823,923
2) Weighted average shares outstanding 6,369,903 6,618,176 6,349,441 6,597,095
3) Incremental shares under stock options
computed under the treasury stock method
using the average market price of
issuer's stock during the period 73,296 144,183 80,008 146,434
4) Weighted average shares and common
equivalent shares outstanding 6,443,199 6,762,359 6,429,449 6,743,529
5) Weighted average shares outstanding
which were used for calculation 6,369,903(A) 6,618,176(A) 6,349,441(A) 6,597,095(A)
6) Income per share before (item 1 divided by
item 5) cumulative effect of a
change in accounting principl $ 0.40 $ 0.81 $ 0.25 $ 0.43
Cumulative effect of a change in accounting principle
per share --- 0.47 --- ---
Net income per share $ 0.40 $ 1.28 $ 0.25 $ 0.43
Fully Diluted:
1) Unadjusted income before cumulative effect
of a change in accounting principle $2,533,760 $5,382,565 $1,602,197 $2,823,923
2) Interest on convertible subordinated
debentures, net of tax effect 492,285 492,295 246,148 246,148
3) Adjusted income before cumulative effect
of a change in accounting principle $3,026,045 $5,874,860 $1,848,345 $3,070,071
Cumulative effect of a change in accounting principle --- 3,059,000 --- ---
Adjusted net income $3,026,045 $8,933,860 $1,848,345 $3,070,071
4) Weighted average shares outstanding 6,369,903 6,618,176 6,349,441 6,597,095
5) Incremental shares under stock options
computed under the treasury stock method
using the higher of the average or ending
market price of issuer's stock at the end
of the periods 95,537 144,183 95,537 146,434
6) Incremental shares relating to
convertible subordinated debentures 1,183,042 1,183,042 1,183,042 1,183,042
7) Weighted average shares and common
equivalent shares outstanding 7,648,482 7,945,401 7,628,020 7,926,571
8) Income per share before (item 3 divided by
item 7) cumulative effect of a change
in accounting principle $ 0.40 $ 0.74 $ 0.24 $ 0.39
Cumulative effect of change in accounting principle --- 0.38 --- ---
Net income per share $ 0.40 $ 1.12 $ 0.24 $ 0.39
</TABLE>
(A) Dilutive effect of common equivalent shares not included since dilution
is less than 3%.
PAGE 14
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1995
<PERIOD-START> JAN-1-1995 OCT-1-1994
<PERIOD-END> MAR-31-1995 MAR-31-1995
<CASH> 11362 11362
<RECEIVABLES> 179710 179710
<SECURITIES-RESALE> 352382 352382
<SECURITIES-BORROWED> 6479 6479
<INSTRUMENTS-OWNED> 72842 72842
<PP&E> 15463 15463
<TOTAL-ASSETS> 776350 776350
<SHORT-TERM> 11986 11986
<PAYABLES> 256792 256792
<REPOS-SOLD> 344026 344026
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 38647 38647
<LONG-TERM> 28461 28461
<COMMON> 1377 1377
0 0
0 0
<OTHER-SE> 68568 68568
<TOTAL-LIABILITY-AND-EQUITY> 776350 776350
<TRADING-REVENUE> 2812 4314
<INTEREST-DIVIDENDS> 10773 20591
<COMMISSIONS> 27434 51681
<INVESTMENT-BANKING-REVENUES> 869 1824
<FEE-REVENUE> 1795 3517
<INTEREST-EXPENSE> 8585 16360
<COMPENSATION> 23370 43698
<INCOME-PRETAX> 2590 4143
<INCOME-PRE-EXTRAORDINARY> 1602 2534
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1602 2534
<EPS-PRIMARY> 0.25 0.40
<EPS-DILUTED> 0.24 0.40
</TABLE>
