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, 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 1-8952
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.)
IJL Financial Center, 201 North Tryon Street, Charlotte, North Carolina 28202
- -----------------------------------------------------------------------------
(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 No X
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
<S> <C>
Class Outstanding at April 30, 1998
----- ------------------------------
(Common stock, $.20 par value) 6,166,546
</TABLE>
PAGE 1 OF 15
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
Index
-----
<TABLE>
<CAPTION>
<S> <C>
Page Number
-----------
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition--March 31, 1998 and
September 30, 1997 3
Condensed Consolidated Statements of
Operations--Six Months Ended
March 31, 1998 and 1997 4
Condensed Consolidated Statements of
Cash Flows--Six Months Ended
March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
Page 2
<PAGE>
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
(All dollars in thousands)
March 31, September 30,
1998 1997
---------------- ----------------
ASSETS
Cash and cash equivalents $ 34,059 $ 24,685
Cash and securities segregated for
regulatory purposes 65,501 90,001
Loans under matched securities resale agreements 6,413 12,385
Receivables:
Securities resale agreements 21,032 64,644
Customers 321,706 271,102
Brokers, dealers and clearing agencies 27,771 19,798
Other 8,231 7,889
Trading securities owned 132,087 79,120
Secured demand note collateralized by marketable securities 15,000 -
Land, buildings, and improvements, net 3,643 4,185
Office facilities and equipment, net 7,937 7,391
Goodwill and intangible assets 12,582 12,910
Other assets 39,760 32,598
---------------- ----------------
$ 695,722 $ 626,708
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings:
Checks payable $ 24,775 $ 23,330
Securities repurchase agreements 80,319 20,568
Borrowings under matched securities repurchase agreements 6,498 12,535
Payables:
Customers 340,474 321,457
Brokers and dealers 19,645 6,793
Other 5,772 11,058
Accrued compensation and benefits 28,697 29,970
Securities sold but not yet purchased 32,277 67,330
Notes payable 3,381 5,270
Other liabilities and accrued expenses 26,338 23,376
---------------- ----------------
568,176 521,687
---------------- ----------------
Minority interests 10 208
---------------- ----------------
Long-term debt:
Senior secured note 16,000 16,000
Secured demand note 15,000 -
---------------- ----------------
31,000 16,000
---------------- ----------------
Common stock 1,433 1,433
Additional paid-in-capital 37,394 36,549
Retained earnings 70,159 63,595
---------------- ----------------
108,986 101,577
Less: treasury stock, at cost (12,450) (12,764)
---------------- ----------------
Total shareholders' equity 96,536 88,813
---------------- ----------------
$ 695,722 $ 626,708
================ ================
</TABLE>
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>
<CAPTION>
<S> <C>
For the Six Months For the Three Months
Ended March 31, Ended March 31,
(All dollars in thousands except (All dollars in thousands except
per share amounts per share amounts)
1998 1997 1998 1997
------------------- ------------------- ------------------- -------------
REVENUES:
Agency commissions $ 58,686 $ 48,346 $ 30,688 $ 26,089
Principal transactions:
Sales credits 36,856 26,856 19,069 13,464
Trading gains, net 3,587 4,529 1,917 2,553
Investment banking and underwriting 4,286 3,283 2,049 1,994
Asset management and advisory 9,063 5,838 4,705 3,039
Interest 18,952 16,634 9,819 8,521
Other 5,454 4,069 3,254 1,894
------------------- ------------------- ------------- ---------------
Total revenues 136,884 109,555 71,501 57,554
Interest expense 11,094 9,638 5,776 4,912
------------------- ------------------- ------------- ---------------
Net revenues 125,790 99,917 65,725 52,642
------------------- ------------------- ------------- ---------------
EXPENSES:
Compensation and benefits 86,230 65,547 45,455 35,428
Technology and telephone 9,341 8,754 4,597 4,281
Occupancy 4,802 4,662 2,358 2,352
Execution, clearance and depository 2,300 2,009 1,158 1,012
Promotion and development 4,281 3,858 2,051 1,846
Professional services 2,506 2,059 1,202 1,043
Printing, postage and supplies 2,470 1,998 1,189 1,037
Other operating expenses 2,900 2,805 1,434 1,528
------------------- ------------------- ------------- ---------------
Total expenses 114,830 91,692 59,444 48,527
------------------- ------------------- ------------- ---------------
Income before income taxes 10,960 8,225 6,281 4,115
Income tax expense 4,055 3,208 2,324 1,605
------------------- ------------------- ------------- ---------------
NET INCOME $ 6,905 $ 5,017 $ 3,957 $ 2,510
=================== =================== ============= ===============
Earnings per share:
Basic $ 1.16 $ 0.88 $ 0.66 $ 0.44
=================== =================== ============= ===============
Diluted $ 1.04 $ 0.76 $ 0.59 $ 0.38
=================== =================== ============= ===============
Weighted average shares:
Basic 5,957,590 5,723,598 5,977,098 5,715,938
=================== =================== ============= ===============
Diluted 6,619,967 7,261,838 6,689,829 7,295,301
=================== =================== ============= ===============
</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>
<S> <C>
(All dollars in thousands)
1998 1997
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------
Net income $ 6,905 $ 5,017
---------------- ----------------
Adjustments to reconcile net income to cash provided (used) by operating
activities:
Depreciation and amortization 2,779 3,276
Other non-cash items (114) 126
---------------- ----------------
2,665 3,402
---------------- ----------------
Changes in operating assets and liabilities:
Cash and securities segregated for
regulatory purposes 24,500 (23,500)
Loans under matched securities resale and repurchase agreements, net (65) (31)
Net payables to customers (31,586) 11,105
Net receivables from brokers, dealers and clearing agencies 4,879 19,974
Other receivables (342) (2,057)
Trading securities owned, net (88,020) (97,828)
Other assets (10,704) (3,786)
Accrued compensation and benefits (1,272) (899)
Other liabilities and accrued expenses (949) 449
---------------- ----------------
(103,559) (96,573)
---------------- ----------------
Cash used by operating activities (93,989) (88,154)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------
Proceeds from (repayment of ):
Short-term bank borrowings 1,445 1,581
Borrowings under securities repurchase and resale agreements, net 103,362 70,105
Notes payable 2,039 (483)
Purchase of stock for treasury (685) (1,102)
Dividends paid (613) (479)
---------------- ----------------
Cash provided by financing activities 105,548 69,622
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------
Capital expenditures (2,185) (1,303)
---------------- ----------------
Cash used by investing activities (2,185) (1,303)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 9,374 (19,835)
Cash and cash equivalents at beginning of period 24,685 37,285
---------------- ----------------
Cash and cash equivalents at end of period $ 34,059 $ 17,450
================ ================
Cash paid during the period for:
Interest $ 10,667 $ 16,783
Income taxes $ 9,937 $ 3,878
Non-cash financing activity:
Secured demand note (see note 6) $ 15,000 -
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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
("NYSE"), 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 NYSE 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's minimum net capital requirement.
As of March 31, 1998, IJL's net capital was 15% of its aggregate debit
balances and approximately $46.6 million in excess of its minimum
regulatory requirements.
Page 6
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 1998 $5.2
For the fiscal year ended September 30,
1999 7.6
2000 6.9
2001 4.5
2002 4.2
2003 4.0
Thereafter 33.5
-------
$ 65.9
=======
4. LEGAL PROCEEDINGS:
The Company is involved in certain litigation arising in the ordinary
course of business. While some actions seek substantial damages, management
believes, based upon discussion with counsel, that the outcome of this
litigation will not have a material effect on the Company's financial
position. The materiality of these legal matters to the Company's future
operating results depends on the level of future results of operations as
well as the timing and ultimate resolution of such legal matters.
Page 7
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 client 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 in periods of
stable interest rates.
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 1998, IJL's commitments included forward purchase and sale
contracts involving mortgage-backed securities with long market values of
approximately $115.2 million and short market values of approximately
$115.3 million, and futures purchase and sale contracts with long markets
values of $1.2 million and short market values of $13.8 million used
primarily to hedge municipal bond trading inventories. While the Company
may from time to time participate in the trading of some derivative
securities for its clients, this trading is not a significant portion of
the Company's business.
IJL enters into resale agreements, whereby it lends money by purchasing
U.S. government/agency or mortgage-backed securities from clients or
dealers with an agreement to resell them to the same clients 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 96% of all loans under securities resale agreements
at March 31, 1998 were made to five 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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. SECURED DEMAND NOTE:
During March 1998, the Company entered into a $15.0 million secured demand
note with a related party. The 3.5% fixed rate note provides for quarterly
interest payments and matures April 2, 2001. The note is collateralized by
marketable equity securities, which as of March 31, 1998, had a market
value of $28.5 million.
Page 9
<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. Acquisitions of investment firms by
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 both of
which can be cyclical and volatile. As a result, revenues and earnings may vary
significantly from quarter to quarter.
At March 31, 1998, approximately 19% of the Company's retail financial
consultants had fewer than three years' industry experience. Notwithstanding the
energized securities markets of recent years, a prolonged slowdown in individual
investor activity could more severely reduce the revenue production of a less
seasoned sales force. In addition, the continuing trend of increased regulation
of the securities industry could create significant incremental costs and
indirectly stifle certain revenue streams.
Liquidity and Capital Resources
The Company's net cash position increased $9.4 million for the six months ended
March 31, 1998. Operating activities consumed $94.0 million of cash, partly
funded by $9.6 million of net income adjusted for depreciation and other
non-cash charges. Financing activities provided $105.5 million of cash while
capital expenditures used $2.2 million.
The Company's asset base consists primarily of cash, cash equivalents, and other
assets which can be converted to cash within one year; at March 31, 1998 these
assets comprised approximately 89% of the statement of financial condition.
Day-to-day financing requirements generally are influenced by the level of
securities inventories, net receivables from customers and broker-dealers, and
net receivables under resale agreements. Significant incremental cash
requirements also may occur from time to time in connection with payments under
deferred compensation plans, repurchase of the Company's common stock, funding
of new business unit activities, payment of dividends, and litigation
settlements arising from normal business operations.
Page 10
<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
At March 31 1998, the Company had $155 million of unused call loan financing
available. In addition, the Company maintains credit lines of several hundred
million dollars for collateralizing repurchase agreements with other financial
institutions, and has financed its customer receivables with customer payables
for many years. Management believes that these resources, funds provided by
operations, and permanent capital of shareholders' equity and long-term debt,
will satisfy normal financing needs for the foreseeable future.
The Company's principal 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 consistently has operated well in excess of the
minimum requirements. At March 31, 1998, IJL had net capital of $53.6 million,
"excess net capital" of approximately $46.6 million, and a net capital ratio of
15%.
Results of Operations
For the six months ended March 31 1998, net revenues increased $26.9 million
($14.3 million for the quarter), from the previous year, while expenses, other
than interest, increased $24.1 million ($12.2 million for the quarter). Net
income of $6.9 million was up $1.9 million or 38% from the results of the period
of a year ago. Net income of $4.0 million for the current quarter was up $1.4
million or 58% from the results of the quarter ended March 31, 1997.
Overall, agency commissions increased $10.3 million, or 21% from the same
six-month period of a year ago and $4.6 million, or 18% for the quarter.
Increases in listed and over-the counter ("OTC") equity transactions, coupled
with increased sales of mutual funds, contributed to the majority of the
increase in the retail sector for both the six and three-month periods.
Increased listed volume was the principal contributor to the growth in the
institutional sector for the same periods.
In principal business, sales credits increased $10.0 million, or 37%, over the
same six month period of a year ago and $5.6 million, or 42% for the quarter,
due to strong growth in institutional fixed income products, primarily
mortgage-backed securities and corporate bonds. Increases in sales of unit
trusts and new debt and equity issues helped spur sales credits in the retail
sector for the same period. Net trading gains decreased $942,000, or 21%, over
the same six month period last year ($636,000, or 25%, for the quarter)
primarily from a decline in OTC trading and government fixed income trading,
offset by increases in corporate bond trading.
Page 11
<PAGE>
INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Results of Operations, continued
Investment banking fees and underwriting profits increased $1.0 million, or 31%,
for the same six month period due to an increased level of corporate finance
fees. Asset management and advisory fees were up $3.2 million and $1.7 million
for the comparable six and three month periods due to the continued growth of
asset-based fees charged retail clients in lieu of transaction-based commissions
and to management and performance fees associated with two "hedge" funds. Other
income increased $1.4 million for both the six-month and three-month periods
primarily as the result of the disposition of the Company's interest in a real
estate venture and income earned from various partnership interests.
Interest revenues were up about $2.3 million, while interest expense increased
$1.5 million, for the six months ended March 31, 1998 compared to the
corresponding period a year ago. For the quarter, interest revenues were up $1.3
million while interest expenses increased $864,000. The resultant increase of
$862,000 and $434,000 in net interest income for the six and three month periods
respectively is due primarily to an increase in net interest earned on higher
levels of client margin loans.
Compensation and benefits costs increased $20.7 million, or 32% ($10.0 million
for the quarter), for the six-month period ended March 31, 1998, due primarily
to an increase in both revenue-based commissions and profit-driven incentives,
and to significant personnel investments in several revenue-producing areas.
Execution, clearance and depository costs increased $291,000, and $146,000, for
the six and three-month periods respectively due primarily to the increase in
listed transactions. Promotion and development costs increased $423,000, or 11%
($205,000 for the quarter), due to the continuing effort to build revenue.
Professional services increased $447,000, for the six month period and $159,000
for the quarter, due primarily to an increase in portfolio supervision expenses
paid to outside money managers. Printing, postage and supplies costs increased
$472,000 and $152,000 for the six and three month periods respectively due to
increases in transaction volume and expenses for promotional literature.
Page 12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in certain litigation arising in the ordinary
course of business. While some actions seek substantial damages, management
believes, based upon discussion with counsel, that the outcome of this
litigation will not have a material effect on the Company's financial
position. The materiality of these legal matters to the Company's future
operating results depends on the level of future results of operations as
well as the timing and ultimate resolution of such legal matters.
<TABLE>
<CAPTION>
<S> <C>
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 15
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the six months
ended March 31, 1998.
Page 13
<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.
<TABLE>
<CAPTION>
<S> <C>
INTERSTATE/JOHNSON LANE, INC.
-----------------------------
Registrant
Signature Title Date
--------- ----- ----
/s/ James H. Morgan
- ----------------------- President, Chief
James H. Morgan Executive Officer,
and Chairman of the
Board of Directors May 14, 1998
/s/ Lewis F. Semones, Jr.
- ------------------------- Chief Financial Officer
Lewis F. Semones, Jr. (Principal Financial
Officer) May 14, 1998
/s/ C. Fred Wagstaff, III
- ------------------------- Assistant Vice President
C. Fred Wagstaff, III (Principal Accounting
Officer) May 14, 1998
</TABLE>
Page 14
<PAGE>
Exhibit 11
<TABLE>
<CAPTION>
<S> <C>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Six Months Ended Three Months Ended
March 31, March 31,
--------------------------------------- --------------------------------------
Net income per share was computed as follows: 1998 1997 (A) 1998 1997(A)
---------------- --------------- --------------- ---------------
Basic:
Net income $ 6,904,539 $ 5,016,730 $ 3,957,047 $ 2,509,674
================ =============== =============== ===============
Weighted average shares outstanding 5,957,590 5,723,598 5,977,098 5,715,938
================ =============== =============== ===============
Net income per share $ 1.16 $ 0.88 $ 0.66 $ 0.44
================ =============== =============== ===============
Diluted:
Unadjusted income $ 6,904,539 $ 5,016,730 $ 3,957,047 $ 2,509,674
Interest on convertible subordinated debentures - 481,828 - 233,645
---------------- --------------- --------------- ---------------
Adjusted net income $ 6,904,539 $ 5,498,558 $ 3,957,047 $ 2,743,319
================ =============== =============== ===============
Weighted average shares outstanding 5,957,590 5,723,598 5,977,098 5,715,938
Incremental shares under stock options computed under the treasury stock
method using the average market price of
issuer's stock during the period 288,323 118,984 287,039 162,656
Incremental shares relating to
convertible subordinated debentures - 1,180,457 - 1,177,871
Incremental shares related to long-term
incentive compensation plan 200,000 - 250,000 -
Incremental shares related to issuance
of restricted stock 174,054 238,799 175,692 238,836
---------------- --------------- --------------- ---------------
Weighted average shares and common
equivalent shares outstanding 6,619,967 7,261,838 6,689,829 7,295,301
================ =============== =============== ===============
Net income per share $ 1.04 $ 0.76 $ 0.59 $ 0.38
================ =============== =============== ===============
</TABLE>
(A) Restated in accordance with FASB Statement No. 128, "Earnings Per Share",
implemented October 1, 1997.
Page 15
<TABLE> <S> <C>
<ARTICLE> BD
<CIK> 0000771296
<NAME> INTERSTATE-JOHNSON LANE
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1998
<PERIOD-START> JAN-01-1998 OCT-01-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<CASH> 34,059 34,059
<RECEIVABLES> 343,418 343,418
<SECURITIES-RESALE> 27,445 27,445
<SECURITIES-BORROWED> 14,290 14,290
<INSTRUMENTS-OWNED> 132,087 132,087
<PP&E> 11,579 11,579
<TOTAL-ASSETS> 695,722 695,722
<SHORT-TERM> 24,775 24,775
<PAYABLES> 365,638 365,638
<REPOS-SOLD> 86,816 86,816
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 32,277 32,277
<LONG-TERM> 34,381 34,381
0 0
0 0
<COMMON> 1,433 1,433
<OTHER-SE> 95,103 95,103
<TOTAL-LIABILITY-AND-EQUITY> 695,722 695,722
<TRADING-REVENUE> 1,917 3,587
<INTEREST-DIVIDENDS> 9,819 18,952
<COMMISSIONS> 49,757 95,542
<INVESTMENT-BANKING-REVENUES> 2,049 4,286
<FEE-REVENUE> 4,705 9,063
<INTEREST-EXPENSE> 5,776 11,094
<COMPENSATION> 45,455 86,230
<INCOME-PRETAX> 6,281 10,960
<INCOME-PRE-EXTRAORDINARY> 6,281 10,960
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,957 6,905
<EPS-PRIMARY> 0.66 1.16 <F1>
<EPS-DILUTED> 0.59 1.04
<FN>
<F1> EPS-BASIC
</FN>
</TABLE>
