[LIVE]
[DOCUMENT-COUNT] 1
[SROS] NASD
[FILER]
[CIK] 0000793280
[CCC] 4ipjysq@
[FILER]
[PERIOD] 03/31/95
[TEXT]
6
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[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
[ ] TRANSMISSION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period
from_______________________to_________________________
Commission file number: 0-14684
RYAN, BECK & CO., INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1773796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Main Street, West Orange, New Jersey 07052
(Address of principal executive offices)
201-325-3000 (Issuer's telephone number)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check (X) whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No_________
APPLICABLE ONLY TO CORPORATE ISSUERS:
At May 8, 1995 there were 3,090,774 shares of Common Stock, par
value $. 10 per share, outstanding.
RYAN, BECK & CO., INC.
INDEX
Page Number
Part 1. Financial Information 3
Item 1. Financial Statements
Consolidated Statements of Financial
Condition as of March 31, 1995 (unaudited)
and December 31, 1994 4-5
Consolidated Statements of Income for
the Three Months Ended March 31, 1995
and March 31, 1994 6
Consolidated Statements of Changes in Stockholders'
Equity for the Three Months Ended March 31, 1995
and March 31, 1994 7
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995
and March 31, 1994 8-9
Notes to Interim Consolidated Financial
Statements 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11-12
Part II. Other Information 12-13
Signatures 14
Part 1. Financial Information
Item 1. Financial Statements
The following consolidated financial statements of Ryan,
Beck & Co., Inc. (the "Company") as of March 31, 1995 and for the
three months ended March 31, 1995 and March 31, 1994 reflect all
adjustments and disclosures which, in the opinion of management,
are necessary for a fair statement of results for the interim
period. Certain information and footnote disclosures required
under generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, although the Company believes
that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial
statements be read in conjunction with the year-end financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 as filed
with the Securities and Exchange Commission.
The results of operations for the three month period ended
March 31, 1995 are not necessarily indicative of the results to
be expected for the entire fiscal year or any other period.
<TABLE>
<CAPTION>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except per share data)
March 31, December 31,
1995 1994
(unaudited)
<S> <C> <C>
ASSETS
Cash $ 279 $ 64
Cash segregated under federal
and other regulations 11 11
Receivable from:
Customers - 20
Brokers, dealers and clearing
organizations 210 42
Accrued revenues 185 51
Other 76 338
Securities owned, at market value 15,476 18,688
Deferred income taxes 497 433
Property and equipment at cost less accumulated
depreciation and amortization 704 508
Other assets 260 241
Total assets $ 17,698 $ 20,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to clearing broker $ 1,119 $ 1,284
Securities sold, but not yet
purchased, at market value 1,039 891
Accrued employee compensation
and benefits 1,845 2,163
Accounts payable and other
accrued expenses 1,557 1,460
Income taxes payable 122 1,495
ESOP loan obligation 759 846
Total liabilities 6,441 8,139
Stockholders' equity:
Preferred stock - $.10 par value
Authorized - 2,000,000 shares
Issued and outstanding - 437,080 shares March 31, 1995
444,180 shares December 31, 1994 44 44
Common stock - $. 10 par value
Authorized - 30,000,000 shares
Issued and outstanding - 3,088,149 shares March 31, 1995
3,081,049 shares December 31, 1994 309 308
Additional paid-in capital 10,911 10,907
Retained earnings 1,323 2,323
Unearned compensation -
restricted stock grants (552) (488)
Unearned ESOP compensation (778) (837)
Total stockholders' equity 11,257 12,257
Total liabilities and
stockholders' equity $ 17,698 $ 20,396
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(UNAUDITED)
Three months ended
March 31, March 31,
1995 1994
<S> <C> <C>
Revenues:
Principal transactions $ 3,278 $ 3,102
Commissions 533 846
Investment banking 1,433 3,217
Interest and dividends 239 123
Other 50 55
Total revenues 5,533 7,343
Operating expenses:
Compensation and benefits 3,678 3,820
Communications 295 279
Occupancy and equipment rental
and depreciation 231 215
Floor brokerage, exchange and
clearance fees 382 105
Interest 58 25
Other 602 539
Total operating expenses 5,246 4,983
Income before provision for
income taxes 287 2,360
Provision for income taxes 100 957
Net income $ 187 $ 1,403
Earnings per common share
Primary $ 0.05 $ 0.40
Fully Diluted $ 0.05 $ 0.40
Weighted average number of shares
Primary 3,090 3,525
Fully Diluted 3,404 3,525
See accompanying notes to consolidated financial
statements.
</TABLE>
<TABLE>
<CAPTION>RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS' EQUITY
(In thousands, except per share data)
Unearned
Compen- Un-
Re- sation earned Total
Pre- Add'l tained Restricted ESOP Stock
Common ferred Paid in Earn- Stock Compen- holders'
Stock Stock Capital ings Grants sation Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1994
Balance at
January 1, 1994 $352 $ - $10,896 $936 ($122) $ - $12,063
Unearned compensation:
restricted
stock grants - - - - (116) - (116)
Amortization of
restricted stock grants:
unearned compensation - - - - 20 - 20
Issuance of 625 shares
through exercised
stock options - - 2 - - - 2
Net income - - - 1,403 - - 1,403
Dividends declared:
Common stock - - - (670) - - (670)
Balance at March
31, 1994 $352 $ - $10,898 $1,669 ($218) $ - $12,702
Three months ended March 31, 1995
Balance at January
1, 1995 $308 $44 $10,907 $2,323 ($488) ($837) $12,257
Unearned compensation:
restricted stock
grants - - - - (116) - (116)
Amortization of
restricted stock grants:
unearned compensation- - - - 52 - 52
Amortization of ESOP
unearned compensation- - 4 - - 60 64
Conversion of preferred stock
to common stock
(7,100 shares) 1 - - - - (1) 0
Net Income - - - 187 - - 187
Dividends declared:
Common stock - - - (1,140) - - (1,140)
Preferred stock - - - (47) - - (47)
Balance at March
31, 1995 $ 309 $ 44 $10,911 $ 1,323 $ (552) $ (778) $11,257
</TABLE>
<TABLE>
<CAPTION>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
Three months ended
March 31, March 31,
1995 1994
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $187 $1,403
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 59 33
Amortization of restricted
stock grants 52 21
Amortization of ESOP unearned
compensation 60 -
Deferred income taxes (64) -
(Increase) decrease in assets:
Receivables -
Customers 20 (215)
Brokers, dealers and
clearing organizations (168) (1,549)
Accrued revenues (134) (568)
Other 262 217
Securities owned, at market value 3,212 4,513
Other assets (19) 74
Increase (decrease) in liabilities:
Payables -
Payable to clearing broker (165) (4,618)
Securities sold, but not yet purchased -
at market value 148 156
Accrued employee compensation
and benefits (318) 609
Accounts payable and other
accrued expenses 97 60
Income taxes payable (1,373) 470
Total adjustments 1,669 (797)
Net cash provided by operating
activities 1,856 606
Cash flows from investing activities:
Capital expenditures (255) (8)
Net cash (used) by investing
activities (255) (8)
Cash flows from financing activities:
Dividends paid
Common (1,140) (670)
Preferred (43) -
Principal payments of ESOP
obligation (87) -
Proceeds from exercised stock options - 2
Common stock repurchased for
restricted stock grants (116) (116)
Net cash (used) in financing
activities (1,386) (784)
Net increase (decrease) in cash 215 (186)
Cash at beginning of period 75 475
Cash at end of period $ 290 $ 289
Supplemental disclosures of cash flow information:
Cash paid during quarter for:
Interest $ 58 $ 25
Income taxes 1,582 488
Disclosure of accounting policy:
For purposes of the consolidated statements of cash flows, the
Company includes in cash all cash and securities segregated in
compliance with federal and other regulations.
See accompanying notes to consolidated financial statements.
</TABLE>
RYAN, BECK & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.In the opinion of management, the accompanying consolidated
financial statements contain all adjustments necessary to
present fairly the financial position of Ryan, Beck & Co.,
Inc. (the "Company") as of March 31, 1995, and the results of
its operations and cash flows for the three months ended March
31, 1995 and March 31, 1994. All such adjustments are of a
normal and recurring nature.
The accounting policies followed by the Company are set forth
in the notes to the Company's financial statements as set
forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994. Certain reclassifications have been
made to prior years' financial statements to conform to the
current year's presentation.
2.The results of operations for the three months ended March 31,
1995 are not necessarily indicative of the results to be
expected for the entire fiscal year or any other period.
3.Securities owned are reflected at market value. Securities in
the Company's trading account consisted of the following:
March 31, December 31
1995 1994
(unaudited)
(in thousands)
State and municipal debt $7,618 $13,604
Corporate debt 3,566 1,913
Corporate equity 3,961 2,956
U.S. Government and Agency debt 331 215
Other - -
Total $15,476 $18,688
4. The Company is subject to the net capital provision of Rule
15c3-1 under the Securities Exchange Act of 1934 which
requires that the Company's aggregate indebtedness shall not
exceed 15 times net capital as defined under such provision.
Additionally, the Company, as a market maker, is subject to
supplemental requirements of Rule 15c3-1(a)4 which provides
for a minimum net capital based on the number and price of
issues in which markets are made by the Company, not to
exceed $1,000,000. At March 31, 1995 and December 31, 1994,
the Company's net capital was approximately $7,562,000 and
$9,106,000 respectively, which exceeded minimum net capital
requirements by $6,562,000 and $8,106,000 respectively.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
a. Results of Operations
Three Months Ended March 31, 1995
Compared With Three Months Ended March 31, 1994
Net income for the three months ended March 31, 1995 was
$187,000 compared to $1,403,000 during the same period ending
March 31, 1994. On a fully diluted basis, earnings per share
decreased to $.05 per share for the three months ending March 31,
1995 from $.40 per share during the same period in 1994.
Total revenues decreased $1,780,000 or 23.7% to $5,745,000 in
the three months ended March 31, 1995 from $7,525,000 in the
prior year period.
Revenues from principal transactions increased $176,000 or
5.7% to $3,278,000 in 1995 from $3,102,000 in 1994. This
increase can be attributed to an increase of $274,000 from
trading corporate debt securities, and an increase of $235,000
from trading tax-exempt securities. These increases are
partially offset by a decrease of $333,000 from trading equity
securities. The increase in revenues attributable to trading
corporate debt securities reflected increased research coverage
and purchase recommendations and favorable market conditions. The
increase in revenues attributable to trading tax-exempt
securities reflected favorable market conditions and larger
inventory positions. The decrease in revenues attributable to
trading equity securities reflected narrower spreads and reduced
retail activity.
Revenues from investment banking services decreased $1,784,000
or 55.5% to $1,433,000 in the 1995 period from $3,217,000 in the
comparable 1994 period. This was due to a $1,575,000 decrease in
revenues related to consulting, placement and valuation fees, a
decrease in revenue from underwriting tax-exempt debt securities
of $189,000 and a decrease in revenue from underwriting equity
securities of $20,000. The decrease in consulting, placement and
valuation fees resulted in part from the timing of the closing of
certain thrift conversions, including mutual holding company
formations. During the first quarter of 1994, a significant
number of conversion transactions closed, while during the first
quarter of 1995 fewer transactions closed. Additionally, fee
income from merger and acquisition advisory services was
significantly lower during the first quarter of 1995. This
decline resulted primarily from the decline in financial
institution stock prices during the late third and fourth
quarters of 1994 which reduced merger and acquisition activity.
There is expected to be greater uncertainty in the future with
respect to revenues resulting from thrift conversions and mutual
holding company formations because of changes in federal
regulatory policy regarding thrift conversions. The decrease in
revenue from underwriting tax-exempt debt securities reflects
reduced levels of issuance of new municipal securities and
reduced spreads.
Commission revenue decreased $313,000 or 37.0% to $533,000 in
1995 from $846,000 in 1994. The decrease in revenue includes a
decrease in equity security commissions of $198,000 and a
decrease in mutual fund commissions of $115,000 and is mainly
attributable to reduced retail trading activity and lower mutual
fund sales.
Revenue from interest and dividends increased $116,000 or
94.3% to $239,000 in 1995 from $123,000 in 1994. This income is
a result of increased levels of inventory carried during 1995 as
well as a higher interest rate environment in 1995.
Total operating expenses increased $293,000 or 5.7% to
$5,458,000 in 1995 from $5,165,000 in 1994. This increase is
primarily attributable to an increase in floor brokerage,
exchange and clearance fees of $277,000 or 263.8%, an increase in
interest expense of $63,000 or 30.4%, an increase in other
expenses of $63,000 or 11.7%, partially offset by a decrease in
compensation and benefits of $142,000 or 3.7%. The increase in
floor brokerage, exchange and clearance fees is a result of the
1994 expense being reduced by a rebate of certain clearance costs
incurred in connection with transferring to a new clearing agent.
The increase in interest expense reflects the higher levels of
inventory that the Company maintained in the first quarter of
1995 as compared to 1994. The increase in other operating
expenses is a result of an increase in the legal reserve. The
decrease in compensation and benefits is due to a lower level of
variable commissions paid during the first quarter of 1995.
Liquidity and Capital Funds
As of March 31, 1995, the Company's Consolidated Statement of
Financial Condition reflects an essentially liquid financial
position, with most of the Company's assets consisting of cash or
assets readily convertible into cash. The Company's securities
positions (both long and short) are, in most instances, readily
marketable.
The Company finances its business through a number of sources,
consisting primarily of capital, funds generated by operations
and short-term secured borrowings. The Company maintains a
facility pursuant to which it may borrow additional funds on a
secured short-term basis from its clearing broker at the
prevailing brokers' call rate plus one-half of one percent. The
amount available for borrowing under this facility is related to
the level of securities inventory at the clearing broker which
may be pledged as collateral.
Part II. Other Information
Item 1. Legal Proceedings
On or about December 13, 1994, a complaint under the caption
Robert J. Buckley, et al. v. Northwest Savings Bank
("Northwest"), et al., C.A. No. 94-340-E (U.S.D.C. W.D. Pa.), was
filed in the United States District Court of the Western District
of Pennsylvania. The complaint alleges violations of the
Securities Act of 1933, the Securities Act of 1934, as well as
various state law securities and common law claims in connection
with Northwest Savings Bank's reorganization from a mutual state
savings bank to a stock mutual holding Company.
The complaint alleges that the Company was retained as a
consultant and advisor to Northwest in connection with such
transaction and engaged in the promotion and sale of Northwest
stock. The complaint further alleges that the Offering Circular
prepared in connection with the initial public offering contained
misstatements of material facts and omitted to state material
facts necessary to make the statement contained in the offering
circular not misleading, including false statements representing
that the appraised valuation and number of shares to be issued in
the initial offering would be increased only if market and
economic conditions warranted such increase. The complaint
alleges that after the offering was concluded, the appraised
value of Northwest was increased and the offering was diluted by
the sale of additional shares and that such increase in appraised
value was not warranted by market or economic conditions.
The complaint seeks unspecified monetary damages against the
defendants, including the Company, on behalf of all persons who
subscribed for and purchased shares of common stock in
Northwest's initial public offering. In connection with the
offering, Northwest executed an agency agreement with the Company
whereby Northwest agreed among other things to indemnify and
contribute sums to the Company for losses and legal fees in
connection with the offering. While Northwest has not yet
reached a conclusion as to whether or not it will indemnify the
Company, Northwest has agreed to advance reasonable approved
expenses incurred by the Company in connection with the lawsuit.
On March 13, 1995, the plaintiffs filed a Motion for Class
Certification. By stipulation, the Company must respond to the
Motion for Class Certification no later than June 19, 1995. In
addition, on March 24, 1995, the Company, as well as all other
defendants, filed a Motion to Dismiss the plaintiff's complaint.
By stipulation, the plaintiffs must respond to the Motion to
Dismiss no later than May 8, 1995. This matter remains in a
preliminary stage. Although the outcome of the litigation is
inherently uncertain, the Company believes that it has
meritorious defenses in this action and intends to defend this
matter vigorously.
For information regarding certain other legal proceedings, see
Item 3 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Materially Important Events
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
No current reports on Form 8-K were filed during the three month period
ended March 31, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
RYAN, BECK & CO., INC.
By:/s/Allen S. Greene
Allen S. Greene
President and Chief Executive Officer
/s/Leonard J. Stanley
Leonard J. Stanley
First Vice President
Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated:
May 8, 1995
