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 June 30, 1997
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
(State or other jurisdiction of incorporation or organization)
22-1773796
(I.R.S. Employer 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 July 22, 1997 there were 3,205,604 shares of Common
Stock, par value $. 10 per share, outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated financial statements of Ryan, Beck
& Co., Inc. (the "Company") as of June 30, 1997
and for the three and six months ended June 30, 1997 and 1996
reflect all material 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, 1996 as filed with the Securities and Exchange
Commission.
The results of operations for the three and six month periods
ended June 30, 1997 are not necessarily indicative
of the results to be expected for the entire fiscal year or any
other period.
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
(In thousands, except per share data)
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
ASSETS
Cash $ 291 $ 13
Cash segregated under federal and other regulations
23 17
Receivable from:
Brokers and dealers 417 25
Accrued revenues 1,037 225
Other 221 371
Securities owned, at market value 25,587 33,789
Prepaid income taxes 51 950
Deferred income taxes 710 830
Property and equipment, at cost, less accumulated
depreciation and amortization 1,146
371
Other assets 373 356
Total assets $ 29,856 $ 36,947
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to clearing broker $ 8,583 $
15,375
Securities sold, but not yet purchased, at market value
3,574 5,424
Accrued employee compensation and benefits
2,833 2,249
Accounts payable and other accrued expenses
2,054 2,192
ESOP loan obligation 469
538
Total liabilities 17,513 25,778
Stockholders' equity:
Preferred stock - $.10 par value
Authorized: 2,000,000 shares
Issued: 396,073 shares at June 30, 1997
and 397,948 shares at December 31, 1996
40 40
Common stock - $. 10 par value
Authorized: 30,000,000 shares
Issued: 3,282,515 shares at June 30, 1997
and 3,253,695 shares at December 31,
1996 328 325
Additional paid-in capital 11,948 11,875
Retained earnings 1,319 246
Treasury stock, at cost, 88,000 common shares at
June 30, 1997 and December 31, 1996
(624) (624)
Unearned compensation - restricted stock grants
(200) (173)
Unearned ESOP compensation (468)
(520)
Total stockholders' equity 12,343
11,169
Total liabilities and stockholders' equity $
29,856 $ 36,947
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Principal transactions $3,564 $2,559 $7,438
$4,776
Investment banking 3,648 3,254 5,507
8,362
Commissions 1,110 1,133 2,264 2,226
Interest and dividends 310 247 659
604
Other 58 5 88 5
Total revenues 8,690 7,198 15,956 15,973
Interest expense 143 209 347
450
Net revenues 8,547 6,989 15,609 15,523
Non-interest expenses:
Compensation and benefits 4,704 4,223 9,291
9,065
Communications 479 380 849 735
Occupancy and equipment rental and depreciation
310 294 545 534
Floor brokerage, exchange and clearance fees
504 525 1,051 1,072
Marketing and development expense 196
234 360 490
Professional fees 441 340 757 578
Other 341 302 658 561
Total non-interest expenses 6,975 6,298 13,511
13,035
Earnings before income taxes 1,572 691 2,098
2,488
Income tax expense 644 259 739 958
Net earnings $ 928 $ 432 $1,359 $1,530
Earnings per common share:
Primary $ .28 $ .12 $ .40 $ .45
Fully diluted $ .27 $ .12 $ .39 $ .43
Cash dividends declared $ .01 $ .05 $ .06 $ .10
Weighted average number of shares:
Primary 3,172 3,199 3,169 3,230
Fully diluted 3,499 3,521 3,503 3,553
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN
STOCKHOLDERS' EQUITY
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Unearned Unearned
Total
Additional Compensation
ESOP Stock-
Common Preferred Paid-in Retained
Restricted Compen- Treasury holders'
Stock Stock Capital Earnings Stock Grants
sation Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six months ended June 30, 1996
Balance at January 1, 1996 $327 $41 $12,049 $818
$(401) $(657) $(91) $12,086
Retirement of 19,393 shares of
common stock (2) - (127) - - -
129 -
Unearned compensation -
restricted stock grants (17,857) - - - -
(125) - - (125)
Amortization of restricted stock grants -
unearned compensation - - - - 123
- - 123
Amortization of ESOP
unearned compensation - - 11 - -
84 - 95
Conversion of Preferred stock
to Common stock (5,925 shares) 1 (1) - -
- - - -
Purchase of Treasury stock
(93,475 shares) - - - - - -
(662) (662)
Net Income - - - 1,530 - - -
1,530
Dividends declared: Common stock - - -
(324) - - - (324)
Preferred stock - -
- - (100) - - - (100)
Balance at June 30, 1996 $ 326 $ 40 $11,933 $ 1,924
$ (403) $ (573) $(624) $12,623
Six months ended June 30, 1997
Balance at January 1, 1997 $325 $40 $11,875 $246
$(173) $(520) $(624) $11,169
Cancellation of restricted stock grants
(20,648 shares) (2) - (109) - 111 -
- -
Unearned compensation -
restricted stock grants (30,350 shares) 3 - 98
- (159) - - (58)
Amortization of restricted stock grants -
unearned compensation - - - - 45
- - 45
Forfeiture of restricted stock grants - - -
- (24) - - (24)
Amortization of ESOP
unearned compensation - - - - -
52 - 52
Issuance of 21,500 shares through 2 - 84 -
- - - 86
exercised stock options
Net Income - - - 1,359 - - -
1,359
Dividends declared: Common stock - - -
(190) - - - (190)
Preferred stock - -
- - (96) - - - (96)
Balance at June 30, 1997 $ 328 $ 40 $11,948 $ 1,319
$ (200) $ (468) $(624) $12,343
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $1,359 $1,530
Non-cash items included in net income:
Depreciation and amortization 149
168
Amortization of restricted stock grants
45 123
Forfeiture of restricted stock grants
(24) -
Amortization of ESOP unearned compensation
52 95
Deferred income taxes 120 (161)
(Increase) decrease in operating assets
Cash segregated under federal and other
regulations (6) 3
Receivables -
Brokers and dealers (392)
908
Accrued revenues (812)
(291)
Other 150 128
Securities owned, at market value 8,202
10,139
Prepaid income taxes 899 228
Other assets (17) (187)
Increase (decrease) in liabilities:
Payables -
Payable to clearing broker
(6,792) (10,108)
Securities sold, but not yet
purchased -
at market value (1,850)
(1,620)
Accrued employee compensation
and benefits 584 859
Accounts payable and other
accrued expenses (138) (92)
Income taxes payable
- - 216
Net cash provided by operating activities 1,529 1,938
Cash flows from investing activities -
Capital expenditures $(924) $(115)
Cash flows from financing activities:
Common stock repurchased for restricted stock grants
(58) (125)
Principal payments of ESOP obligation (69)
(69)
Proceeds from the exercise of stock options
86 -
Purchase of Treasury Stock - (662)
Dividends paid: common (190) (324)
preferred (96) (100)
Net cash used in financing activities (327)
(1,280)
Net increase in cash 278 543
Cash at beginning of period 13 71
Cash at end of period $ 291 $ 614
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 392 $ 449
Income taxes 5 660
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 June 30,
1997, and the results of its operations and cash flows for the
three and six month periods ended June 30,
1997 and 1996. 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,
1996. Certain reclassifications have been made to prior years'
financial statements to conform to the current
year's presentation.
The results of operations for the three months
and six months periods ended June 30, 1997 are not
necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
2. Securities owned are stated at market value. Securities
in the Company's trading accounts consist of the
following:
<TABLE>
SECURITIES OWNED
<CAPTION>
June 30, 1997 December 31, 1996
(unaudited)
(In thousands)
<S> <C> <C>
Debt Obligations
State and municipalities $12,591
$17,962
Corporations 1,045 5,195
U.S. Government and agencies 881 2,035
Corporate equity 11,045 8,572
Other 25 25
Total $25,587 $33,789
</TABLE>
3. 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 June 30, 1997 and
December 31, 1996, the Company's net capital was
approximately $5,480,000 and $3,534,000, respectively,
which exceeded minimum net capital requirements by
$4,480,000 and $2,534, 000, respectively.
4. Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued SFAS
No. 128, "Earnings per Share" ("EPS"),
effective for periods ending after December 15, 1997, with
restatement required for all prior periods. SFAS
No. 128 replaces the current EPS categories of primary and
fully diluted with "basic", which reflects no
dilution from common stock equivalents, and "diluted", which
reflects dilution from common stock
equivalents based on the average price per share of the
Company's common stock during the period. For
the three and six months ended June 30, 1997, basic EPS and
diluted EPS would have been $.28 and $.27
and $.40 and $.39 respectively. For the three months ended
June 30, 1996, both basic and diluted EPS
would have been $.12, and for the six months ended June 30,
1996 basic EPS would have been $.45 while
diluted EPS would have been $.43.
Cautionary Statement Regarding Forward Looking Statements
This report contains "forward-looking" statements. The
Company is including this statement for the express
purpose of availing itself of the protections of the safe harbor
provided by the Private Securities Litigation
Reform Act of 1995 with respect to all of such forward-looking
statements. Examples of forward-looking
statements include, but are not limited to (a) projections of
revenues, income or loss, earnings or loss per share,
capital expenditures, growth prospects, dividends, capital
structure and other financial items, (b) statements of
plans and objectives of the Company or its management or
Board of Directors, (c) statements of future
economic performance and (d) statements of assumptions
underlying other statements and statements about the
Company or its business.
The Company's ability to predict projected results or to
predict the effect of certain events on the Company's
operating results is inherently uncertain. Therefore, the
Company wishes to caution each reader of this report to
carefully consider certain factors, including competition for
clients; market conditions regarding buyers and
sellers of securities; and market conditions relating to public
offerings, underwritings, mergers and acquisitions
and municipal bonds and other factors discussed herein,
because such factors in some cases have affected and in
the future (together with other factors) could affect, the ability
of the Company to achieve its anticipated results
and may cause actual results to differ materially from those
expressed herein.
The following discussion and analysis should be read in
conjunction with the Company's consolidated financial
statements and the notes related thereto presented elsewhere
herein. The discussion of results, causes and trends
should not be construed to imply any conclusion that such
results, causes or trends will necessarily continue in
the future.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
a. Financial Condition
Total assets decreased by $7,091,000, or 19.2%, to $29,856,000
at June 30, 1997 from $36,947,000 at
December 31, 1996. The decrease in assets is primarily due to
a decrease in securities owned of $8,202,000
which was partially offset by an increase in property and
equipment of $775,000. The securities inventory
decreased due to a decrease in municipal and taxable fixed
income securities of $5,372,000 and $5,304,000
respectively, which was partially offset by an increase of
$2,474,000 in equity securities. The decrease in the
municipal securities portfolio is attributed to larger positions
held at year end because of reinvestment money
coming due from bond maturities and redemptions in the
month of January. The proceeds from the sale of the
securities inventory were largely used to reduce the payable to
the clearing broker and the securities sold
position. The increase in property and equipment is due to
leasehold improvements and equipment for the new
corporate headquarters in Livingston, New Jersey and to a
lesser extent, leasehold improvements and equipment
for the Shrewsbury, New Jersey office. The Company opened
the Shrewsbury office in March 1997 and
anticipates moving its corporate headquarters in the third
quarter of 1997.
b. Results of Operations
Three Months Ended June 30, 1997 Compared With Three
Months Ended June 30, 1996
Net income for the three months ended June 30, 1997 was
$928,000 compared to $432,000 during the same
period ending June 30, 1996. On a fully diluted basis, earnings
per share increased to $.27 per share for the
three months ending June 30, 1997 from $.12 per share during
the same period in 1996.
Total revenues increased $1,492,000 or 20.7% to $8,690,000 in
the three months ended June 30, 1997 from
$7,198,000 in the three months ended June 30, 1996.
Revenues from principal transactions increased $1,005,000 or
39.3% to $3,564,000 in the 1997 period from
$2,559,000 for the 1996 period. This increase can be attributed
to an increase of $905,000 from trading equity
securities and an increase of $174,000 from trading corporate
debt securities. The increase in revenue
attributable to trading equity securities reflected a strong bank
and thrift market as well as an increase in trading
activity.
Revenues from investment banking increased $394,000 or
12.1% to $3,648,000 in the 1997 period from
$3,254,000 for the 1996 period. This increase was primarily
due to an increase in revenue from underwriting
securities, financial institutions and municipal issues of
$1,346,000 and $233,000 respectively. This increase
was partially offset by a decrease of $1,185,000 in revenue from
consulting, placement and valuation fees. The
increase in revenue from underwriting securities reflects the
closing of a number of trust preferred issues for
financial institutions seeking capital which closed in the three
months ended June 30, 1997. The increase in
revenue from underwriting tax-exempt debt securities reflects
increased levels of issuance of new municipal
securities. The decrease in consulting, placement and valuation
fees during the second quarter of 1997 was due
primarily to a reduction in revenues from thrift conversions
and mutual holding company formations as well as
a modest decline in revenues from merger and acquisition
activities.
Commission revenue decreased $23,000 or 2.0 % to $1,110,000
in the three months ended June 30, 1997 from
$1,133,000 for the comparable period in 1996. The decrease in
revenue is due to a decrease in equity security
commissions of $37,000 which was partially offset by an
increase in mutual fund commissions of $11,000.
Revenue from interest and dividends increased $63,000 or
25.5% to $310,000 in the three months ended June,
1997 from $247,000 for the comparable period in 1996. The
increase in revenue from interest and dividends is
partially due to dividends earned on trust preferreds held in
inventory during the three months ended June 30,
1997.
Total operating expenses increased $677,000 or 10.8% to
$6,975,000 in 1997 from $6,298,000 in 1996. This
increase is primarily attributed to an increase in compensation
and benefits of $481,000, an increase in
communication expenses of $99,000 and an increase in
professional fees of $101,000. The increase in
compensation and benefits is mainly attributable to an increase
in commission expense attributed to increased
trading volume and the sale of the trust preferred securities.
The increase in communication expense is primarily
attributed to increased telephone usage and quotation expense
associated with the opening of the Shrewsbury
office and an increase in the number of account executives.
The increase in professional fees is mainly
attributable to various costs associated with the Company's
plan to move its headquarters and recruitment fees.
Income tax expense increased to $385,000 or 148.7% to
$644,000 from $259,000 due to an increase in pretax
income of $881,000 or 127.5%.
b. Results of Operations
Six Months Ended June 30, 1997 Compared With Six Months
Ended June 30, 1996
Net income for the six months ended June 30, 1997 was
$1,359,000 compared to $1,530,000 during the same
period ending June 30, 1996. On a fully diluted basis, earnings
per share decreased to $.39 per share for the six
months ending June 30, 1997 from $.43 per share during the
same period in 1996.
Total revenues remained relatively stable at $15,956,000 for
the six months ended June 30, 1997 as compared to
$15,973,000 in the prior year period.
Revenues from principal transactions increased $2,662,000 or
55.7% to $ 7,438,000 in the 1997 period from
$4,776,000 for the six months ended June 30, 1996. This
increase can be attributed to an increase of $2,348,000
from trading equity securities and an increase of $174,000
from trading corporate debt securities and an increase
of $140,000 from trading tax-exempt securities. The increase
in revenues from trading equity securities
reflected a strong bank and thrift market as many securities
hit new highs during the first half of 1997. The
increase in revenue from trading tax-exempt and corporate
securities was due to favorable market conditions
and less volatility during the six months ended June 30, 1997.
Revenues from investment banking decreased $2,855,000 or
34.1 % to $5,507,000 in the 1997 period from
$8,362,000 for the comparable 1996 period. This was due to a
$4,017,000 decrease in revenues related to
consulting, placement and valuation fees, which was partially
offset by an increase in revenue from
underwriting securities of $1,027,000 and an increase in
revenue from underwriting tax-exempt debt securities
of $189,000. The decrease in consulting, placement and
valuation fees resulted from a decrease in both
revenues related to thrift conversions and merger and
acquisition advisory fees. The decrease in consulting,
placement and valuation fees during the first half of 1997 was
primarily due to a reduction in revenues related to
thrift conversions and mutual holding company formations, as
well as a reduction of revenues related to merger
and acquisition activities. The increase in underwriting
securities is due to revenues earned from a number of
trust preferred underwritings for financial institutions seeking
additional capital as well as the closing of the
fourth Ryan Beck Banking Opportunity Trust during the first
half of 1997. The Company expects greater
uncertainty in the future with respect to revenues resulting
from thrift conversions and mutual holding company
formations because of increased competition and a smaller
universe of mutual institutions. The increase in
revenue from underwriting tax-exempt debt securities reflects
increased levels of issuance of new municipal
securities.
Commission revenue increased $38,000 or 1.7% to $2,264,000
in 1997 from $2,226,000 in 1996. The increase
in revenue includes an increase in mutual fund commissions of
$62,000 which was partially offset by a decrease
in equity security commissions of $24,000.
Revenue from interest and dividends increased $55,000 or
9.1% to $ 659,000 in 1997 from $604,000 in 1996.
The increase in revenue from interest and dividends is
partially due to dividends earned on trust preferred
securities held in inventory during the six months ended June
30, 1997.
Total operating expenses increased $476,000 or 3.7% to
$13,511,000 in 1997 from $13,035,000 in 1996. This
increase is primarily attributable to increases in compensation
and benefits of $226,000, communication
expenses of $114,000, professional fees of $179,000 and other
operating expense of $97,000. Partially offsetting
these increases was a decrease in marketing and development
expenses of $130,000. The increase in
compensation and benefits is primarily due to an increase in
commission expenses associated with the sales of
the trust preferred underwritings and the sale of the fourth
Ryan Beck Banking Opportunity Trust. The increase
in communication expense is primarily associated with
increased quotation and telephone usage due to the
operating of the Shrewsbury location and additional account
executives. The increase in professional fees is due
to various costs associated with the Company's plan to move its
headquarters, fees associated with amending
prior year's tax returns and recruitment fees.
Income tax expense decreased by $219,000 or 22.9% due to a
decrease of pretax income of $390,000 and
$111,000 of tax refunds from amending prior year's tax
returns.
Liquidity and Capital Funds
As of June 30, 1997, 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 from its clearing broker at prevailing
federal funds rate plus 62.5 basis points. 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. At June 30, 1997, the
balance due to the clearing broker was approximately
$8,583,000.
On June 11, 1997, the Company secured a commitment for a
$2,000,000 loan facility to finance construction,
leasehold improvements, furniture, and telephone and
computer equipment for the Livingston and Shrewsbury
offices. From the date of the loan through October 1, 1997, the
Company may borrow at the prime rate of
interest with repayment of interest only during this period.
Subsequent to October 1, 1997, the then outstanding
balance will be payable in 54 equal and consecutive monthly
payments of principal together with interest fixed
at a rate equal to the five-year treasury rate of interest plus 150
basis points. At June 30, 1997, there were no
borrowings under this loan facility.
On June 11, 1997, the Company also secured a commitment for
a $2,000,000 revolving credit facility to finance
the Company's working capital needs. The facility is secured
by the Company's certificate of deposit inventory
maintained with the Pershing division of Donaldson, Lufkin
and Jenrette Corp. in an amount which is at least
105% of the outstanding loan amount. Loans under this
facility accrue interest at a rate equal to the LIBOR rate
plus 100 basis points (30, 60 and 90 day interest periods are
available). At June 30, 1997, there were no
borrowings under this facility.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Set forth below is information concerning certain litigation
matters to which the Company is a party and in
which there have been developments of a material nature
during the quarter ended June 30, 1997. For
information concerning other possible legal proceedings
involving the Company, please see the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
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
alleged 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 alleged 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 alleged
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 statements contained within the Offering
Circular not misleading, including false statements
representing 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 alleged 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 sought 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 offerings. Pursuant to the Agency
Agreement, Northwest agreed to indemnify the
Company and to advance reasonable expenses incurred by the
Company in connection with the lawsuit.
On March 13, 1995, the plaintiffs filed a Motion for Class
Certification. On March 24, 1995, the Company, as
well as all other defendants, filed a Motion to Dismiss the
plaintiff's complaint. By order dated November 17,
1995, the Court dismissed all federal law claims in the
complaint with prejudice against all defendants on the
ground that plaintiff failed to identify affirmative
misrepresentations and material omissions of fact in the
Offering Circular. The court relinquished jurisdiction over
the remaining state law claims. On December 14,
1995, plaintiff filed an appeal with the United States Court of
Appeals for the Third Circuit (the "Court of
Appeals"). Oral arguments were conducted on January 21,
1997. On February 2, 1997, the Court of Appeals
affirmed the decision of the District Court. On February 26,
1997, the plaintiff filed a motion for rehearing,
which motion was denied on April 7, 1997. This effectively
ended the proceedings and, to the Company's
knowledge, the plaintiffs have taken no further action to
pursue their claim since the denial of the rehearing.
The Company, Ryan Beck Financial Corp., a wholly-owned
subsidiary of the Company, and a former account
executive of the Company have been named as third-party
defendants in Inrevco Associates v. BDO Seidman, et
al., v. Ryan, Beck & Co., et al., Superior Court of New Jersey,
Law Division, No. MRS-L-2961-94. Inrevco is a
New Jersey limited partnership. Ryan, Beck Financial Corp.
("RBFC") is a special limited partner in the
partnership and such former account executive is a limited
partner. The third-party complaint alleges that
certain duties were owed to the partnership by the Company
and RBFC. The third-party plaintiffs allege that the
Company and RBFC breached these duties and are liable to
the third-party plaintiffs for contribution in the
event the plaintiff prevails at trial.
On February 17, 1995, a motion to dismiss filed by the
defendants was granted in favor of RBFC and the former
account executive. On March 9, 1995, RBFC and the
Company's former account executive were dismissed by
order of the Court. On September 5, 1995, certain defendants
filed a new third-party complaint seeking
contribution from the Company, RBFC and certain present
and former employees and officers of the Company
as additional third-party defendants. All of the claims asserted
against the Company are for contribution. On
October 15, 1995, the Company, RBFC and all individual
defendants named as third-party defendants in the
litigation entered into a settlement agreement with Inrevco.
The terms of the settlement agreement include a
provision for an automatic judgment reduction in the event
any liability is apportioned against the Company,
RBFC or any individual third-party defendant on the
contribution claims. Pursuant to the settlement agreement,
Inrevco has released the Company and RBFC from any
liability in the suit. The Company is still named a third-
party defendant in this action and, as such, will be required to
participate in discovery and other pre-trial
procedures with respect to the ongoing litigation. Discovery in
this case is proceeding. A case management
conference was held before the Court on April 30, 1997. Trial
is scheduled for September 1997. On July 25,
1997, the Company and the individual third party defendants
filed a motion for summary judgment based on the
existence of the settlement agreement with Inrevco.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
At the Company's Annual Meeting, held on May 14, 1997, the
following directors were elected:
<TABLE>
ELECTION OF DIRECTORS
<CAPTION>
Authority Abstentions/
In Favor
Withheld Broker Non-Votes
<S> <C> <C> <C>
Michael M. Horn 2,459,880
663,781 --
Matthew R. Naula 2,467,944
648,826 --
Ben A. Plotkin 2,467,944
648,826 --
</TABLE>
The following directors are continuing:
Peter W. Rodino, Jr.
Richard B. Neff
Jack R. Rosenthal
Fenwick H. Garvey
Fenwick Garvey subsequently resigned as a director on June 3,
1997.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(ii) - Amended and Restated By-Laws of Ryan, Beck
& Co., Inc.
Exhibit 27 - Financial Data Schedule
(b) Reports of Form 8-K
The Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 4,
1997 is incorporated by reference herein.
The Company's Current Report on Form S-8 filed with the
Securities and Exchange Commission on June 30,
1997 is incorporated by reference herein.
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/ Ben A. Plotkin
Ben A. Plotkin
President & CEO
(Principal Executive Officer)
/s/ Leonard J. Stanley
Leonard J. Stanley
Senior Vice President, Chief Financial
and Administrative Officer
(Principal Financial and Accounting Officer)
Dated:
August 14, 1997
EXHIBIT 3(ii)
AMENDED AND RESTATED
BY-LAWS
OF
RYAN, BECK & CO., INC.
As amended and restated June 18, 1997
ARTICLE I
OFFICES
1. Registered Office. -- The registered office of the
Corporation shall be at such location within the State of
New Jersey as shall be designated from time to time by the
Board of Directors.
2. Principal Place and Other Places of Business. -- The
principal place of business of the Corporation shall
be at such locations as shall be determined by the Board of
Directors. Branch or subordinate places of business
or offices may be established at any time by the Board at any
place or places where the Corporation is qualified
to do business.
ARTICLE II
SHAREHOLDERS
1. Annual Meeting. -- The annual meeting of shareholders
shall be held upon not less than ten nor more
than sixty days written notice of the time, place, and purposes
of the meeting at such time and place as shall be
fixed by the board of directors and designated in the notice of
meeting. At such annual meeting, the
shareholders shall elect directors and transact such other
business as may be brought before the meeting.
2. Special Meetings. -- Except as otherwise provided by
applicable law, a special meeting of shareholders
may be called for any purpose only by the Chairman of the
Board, the Vice Chairman, the President or the
Board. A special meeting shall be held upon not less than ten
nor more than sixty days written notice of the
time, place, and purposes of the meeting.
3. Action Without Meeting. -- The shareholders may act
without a meeting by written consent or consents
pursuant to N.J.S. 14A:5-6. The written consent or consents
shall be filed in the minute book.
4. Quorum. -- Except as otherwise provided in the
certificate of incorporation, the presence in person or by
proxy of the holders of a majority of any class or series voting
separately at a meeting and a majority of any two
or more classes voting together as a class at such meeting shall
constitute a quorum for the transaction of
business; if any matter to come before the meeting requires a
vote of less than all the outstanding classes, then
the presence in person or by proxy of the holders of a majority
of the class or classes or series having the right to
vote on such matter or matters shall constitute a quorum for
the transaction of such business. The shareholders
present at a duly called or held meeting at which a quorum is
present may continue to do business until
adjournment notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
ARTICLE III
BOARD OF DIRECTORS
1. Number and Term of Office. -- The Board shall consist
of not less than 5 nor more than 15 directors.
The precise number of directors may be fixed by the Board of
Directors at any time. The Board shall be divided
into three classes (Class 1, Class 2 and Class 3), the respective
terms of office of which shall end in successive
years. Unless they are elected to fill vacancies, the directors in
each class shall be elected to hold office until the
third successive annual meeting of shareholders after their
election and until their successors shall have been
elected and shall have qualified. At each annual meeting of
shareholders, the directors of only one class shall be
elected, except directors who may be elected to fill vacancies.
2. Regular Meetings. -- A regular meeting of the Board
shall be held immediately following the annual
shareholders' meeting for the purposes of electing officers and
conducting such other business as may come
before the meeting. The Board, by resolution, may provide for
additional regular meetings which may be held
upon twenty-four hours' prior notice (which notice may be
written or oral). Such notice shall specify the time
and place of the meeting.
3. Special Meetings. -- A special meeting of the Board may
be called at any time by the Chairman of the
Board, the Vice Chairman of the Board, the President or by
three directors for any purpose. Such meeting shall
be held upon twenty-four hours' prior notice (which notice
may be written or oral). Such notice shall specify the
time and place of the meeting.
4. Action Without Meeting. -- The Board may act without
a meeting if, prior or subsequent to such action,
each member of the Board shall consent in writing to such
action. Such written consent or consents shall be
filed in the minute book.
5. Quorum. -- A majority of the entire Board shall
constitute a quorum for the transaction of business. All
persons participating in any meeting telephonically or through
other appropriate communications facilities shall
be deemed present for purposes of determining whether a
quorum is present for the transaction of business.
6. Vacancies in Board of Directors.. -- Any vacancy in the
Board, including a vacancy caused by an
increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining
directors, even though less than a quorum of the board, or by a
sole remaining director. As to any directorship
to be filled by reason of an increase in the number of directors,
the Board of Directors shall specify the class in
which a director so elected shall serve. Any director so elected
by the Board of Directors shall hold office only
until the next annual meeting of the shareholders and until his
successor shall have been elected and qualified,
notwithstanding that the term of office of the other directors in
the class of which he is a member does not
expire at the time of such meeting. His successor shall be
elected by the shareholders to a term of office which
shall expire at the same time as the term of office of the other
directors in the class to which he is elected.
7. Establishment of Committees. -- At any meeting of the
Board of Directors, an executive committee or
such other committees as the Board may deem necessary,
consisting of one or more directors, may be appointed
by the Board, and such committees shall possess and exercise
such powers and authority as the directors shall
specify in the resolution appointing them. The Board shall
have the power, with respect to established
committees, to
(a) fill any vacancy in any such committee;
(b) appoint one or more directors to serve as alternate
members of such committee to act in the absence or
disability of members of any such committee with all the
powers of such absent or disabled members;
(c) abolish any such committee at its pleasure, and
(d) remove any director from membership on such
committee at any time, with or without cause.
In no event shall any committee established by the Board of
Directors have the power to
(b) make, alter or repeal any by-law of the Corporation;
(c) elect or appoint any director, or remove any officer or
director;
(d) submit to shareholders any action that requires
shareholders' approval; or
(e) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is
amendable or repealable only by the Board of Directors.
8. Presiding Officer and Secretary of Committees. -- The
Board shall choose the chairman of each
committee. The person chosen to act as chairman may, at his
option, appoint another member of the committee
to act as chairman. The Chairman and President shall serve as
chairman of each committee on which each of
them serves in the absence of any other person chosen as the
chairman of such committee. If the Chairman and
the President serve on the same committee, the Chairman shall
serve as the chairman of such committee unless
another member of such committee is appointed to act as
chairman. Each other committee on which the
Chairman or the President does not serve may, subject to the
Board's right to make such selection, choose one of
its members to act as chairman. Each committee shall from
time to time designate a secretary of the Committee,
who shall either be a member of the committee or the secretary
or an assistant secretary of the Corporation, to
keep a record of its proceedings.
9. Meetings of Committees. -- Each committee shall adopt
its own rules of procedure and shall meet at
such stated times as it may, by resolution, appoint, and
whenever called together by the Chairman of each such
committee. If the committee establishes regular meeting dates,
it shall not be necessary to give notice of any
such regular meeting. Notice of every special meeting shall be
given in the manner and within the time periods
specified in Section 3 of this Article III with respect to notices
of special meetings of the Board of Directors.
Notice of any special meeting may be waived in writing by all
of the absent members of the committee either
before or after the meeting.
10. Quorum for Committee Meeting. -- A quorum at any
meeting of any committee shall be a majority of the
entire committee. Every act or decision done or made by a
majority of the directors present at a committee
meeting duly held at which a quorum is present shall be
regarded as the act of the committee. All persons
participating in any meeting telephonically or through other
appropriate communications facilities shall be
deemed present for purposes of determining whether a
quorum is present for the transaction of business.
11. Action Without Committee Meeting. -- Any committee
may act without a meeting if, prior or subsequent
to such action, each member of the committee shall consent in
writing to such action. Such written consent or
consents shall be filed in the minute book of the Corporation.
12. Reports of Committee Actions. -- Actions taken by any
committee, whether at a committee meeting or
by written consent, shall be reported to the Board at the next
Board meeting following such action.
ARTICLE IV
NOMINATIONS AND PROPOSALS
Nominations for the election of directors ("Nominations") or
proposals for consideration by shareholders
("Proposals") may be made by the Board of Directors or by
any shareholder entitled to vote for the election of
directors. Such Nominations or Proposals, other than those
made by the Board of Directors, shall be made by
notice in writing, delivered or mailed by first class United
States mail, postage prepaid, to the secretary of the
Corporation not less than 120 days prior to the first
anniversary of the date of the notice of meeting sent to
shareholders of the Corporation in connection with the last
meeting of shareholders called for the election of
directors.
Such notice shall contain the (i) name and address of the
shareholder who intends to make the Nomination or
the Proposal, and (ii) a representation that the shareholder is a
beneficial or record holder of stock entitled to
vote at the meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons
specified in the notice, or to present such proposal.
With respect to any Nomination, each notice shall also set forth
(i) the name, age, business address and, if
known, residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment
of each such nominee, (iii) the number of shares of stock of the
Corporation which are beneficially owned by
each such nominee, and (iv) such other information as would
be required by the federal securities laws and the
rules and regulations promulgated thereunder in respect of an
individual nominated as a director of the
Corporation and for whom proxies are solicited by the Board
of Directors of the Corporation. Each such notice
shall be accompanied by a letter to the Corporation, signed by
each such nominee, consenting to be named as a
nominee in the Corporation's proxy statement and to serve as a
director if elected.
The form and content of any Proposals must conform in all
respects with the requirements of Rule 14a-8 of the
Securities and Exchange Act of 1934, as amended, or any
successor rule thereto.
The Chairman of any meeting of shareholders may, if the facts
warrant, determine and declare to the meeting
that a Nomination or Proposal was not made in accordance
with the foregoing procedures, and if he should so
determine, he shall so declare to the meeting and the defective
Nomination or Proposal shall be disregarded.
ARTICLE V
WAIVERS OF NOTICE
Any notice required by these by-laws, by the certificate of
incorporation or by the New Jersey Business Corpora-
tion Act may be waived in writing by any person entitled to
notice. The waiver or waivers may be executed
either before or after the event with respect to which notice is
waived. Each director or shareholder attending a
meeting without protesting, prior to its conclusion, the lack of
proper notice shall be deemed conclusively to
have waived notice of the meeting.
ARTICLE VI
OFFICERS
1. Election. -- At its regular meeting following the annual
meeting of shareholders, the Board shall elect a
President, a Treasurer, a Secretary, and may elect such other
officers, including a Chairman of the Board, a Vice
Chairman of the Board, a Chief Executive Officer, a Chief
Administrative Officer, a Chief Operating Officer
and one or more Vice Presidents, as it shall deem necessary.
The Board may, from time to time, designate a
committee or committees who shall have such powers and
duties as are delegated to it by the Board of
Directors. Any number of offices may be held by the same
person. Officers may, but need not, be directors.
2. Duties and Authority of the Chairman of the Board. --
The Chairman of the Board shall preside at all
meetings of the Board of Directors. The Chairman of the
Board shall have such other powers and perform such
further duties as may be delegated, from time to time, to such
officer by the Board of Directors. The Chairman
of the Board shall not be deemed to be an officer of the
corporation for serving solely in such capacity unless so
designated by resolution duly adopted by the Board of
Directors.
3. Duties and Authority of Vice Chairman of the Board. --
The Vice Chairman of the Board shall, in the
absence of the Chairman of the Board, preside at all meetings
of the Board of Directors. The Board may have
one or more persons designated as Vice Chairman. The Vice
Chairman of the Board shall have such other
powers and perform such further duties as may be delegated,
from time to time, to such person by the Board of
Directors. If there is more than one person serving as Vice
Chairman, the Board of Directors or the Chairman
shall assign the specific duties to be performed by each person
serving as Vice Chairman. The Vice Chairman
of the Board shall not be deemed to be an officer of the
corporation for serving solely in such capacity unless so
designated by resolution duly adopted by the Board of
Directors.
4. Duties and Authority of the President. -- The President
shall have the usual duties and powers of such an
executive officer and, in such capacity, shall serve as the chief
executive officer of the corporation and shall be
charged with general supervision over and direction of the
day-to-day affairs of the corporation. The President
shall have such additional powers and duties as from time to
time may be assigned to him by the Board of
Directors and may enter into and execute, in the name of and
on behalf of the Corporation, contracts or other
instruments in the regular course of business or such other
contracts or instruments, not in the regular course of
business, which are authorized, either generally or specifically,
by the Board. In the absence of the Chairman of
the Board, or the Vice Chairman of the Board, or if no
Chairman or Vice Chairman is elected by the Board, the
President shall preside at all meetings of the stockholders.
5. Duties and Authority of the Vice-Presidents. -- A Vice
President shall perform such duties and have such
authority as from time to time may be delegated to him by the
President or by the Board. In the absence of the
President or in the event of his death, inability, or refusal to
act, an Executive Vice President designated from
time to time by the Board of Directors shall perform the duties
and be vested the authority of the President.
6. Duties and Authority of the Treasurer. -- The Treasurer
shall have custody of the funds and securities of
the corporation and shall keep or cause to be kept books of
account for the corporation. Whenever required by
the Board of Directors, the Treasurer shall render a statement
of the financial condition of the corporation. The
Treasurer shall have such other powers and shall perform such
other duties as may be assigned to him from time
to time by the Board of Directors.
7. Duties and Authority of the Secretary. -- The Secretary
shall record all proceedings of the meetings of
the corporation, the Board of Directors and all committees,
and shall attend to the giving and serving of all
notices for the corporation. The Secretary shall have charge of
the corporate seal, the certificate books, transfer
books and stock ledgers, and such other books and papers as
the Board of Directors may direct. The Secretary
shall perform all other duties ordinarily incident to the office
of Secretary and shall have such other powers and
perform such other duties as may be assigned to him by the
Board of Directors.
8. Assistant Secretaries. -- Assistant Secretaries
shall perform all of the duties and responsibilities
of the Secretary on such occasions on which the Secretary shall
be unavailable to perform the duties of the
office, and shall perform all other duties and exercise all other
powers as shall be assigned to them by the Board
of Directors or by the President with the approval of the Board
of Directors.
9. Assistant Treasurers. -- Assistant Treasurers shall
perform all of the duties and responsibilities of the
Treasurer on such occasions on which the Treasurer shall be
unavailable to perform the duties of the office, and
shall perform all other duties and exercise all other powers as
shall be assigned to them by the Board of
Directors or by the President with the approval of the Board of
Directors.
ARTICLE VII
AMENDMENTS TO AND EFFECT OF BY-LAWS
FISCAL YEAR
1. Force and Effect of By-Laws. -- These by-laws are
subject to the provisions of the New Jersey Business
Corporation Act and the Corporation's certificate of
incorporation, as it may be amended from time to time. If
any provision in these by-laws is inconsistent with a provision
in that Act or the certificate of incorporation, the
provision of that Act or the certificate of incorporation shall
govern.
2. Amendments to By-laws. -- These by-laws may be
amended by the affirmative vote of a majority of the
Board of Directors. The by-laws of the Corporation may also
be amended by the shareholders, but only by an
affirmative vote of the holders of at least two-thirds of the
shares entitled to vote thereon.
3. Fiscal Year. -- The fiscal year of the Corporation shall
begin on the first day of January of each year.
ARTICLE VIII
SHARE CERTIFICATES
1. Form of Signature. -- The certificates for shares of the
capital stock of the Corporation shall be in such
form as shall be determined by the Board of Directors and
shall be numbered consecutively and entered in the
books of the Corporation as they are issued. Each certificate
shall exhibit the registered holder's name and the
number of shares, and shall be signed by the president or a
vice president and the treasurer or an assistant
treasurer or the secretary or an assistant secretary, and shall
bear the seal of the Corporation or a facsimile
thereof. Where any such certificate is countersigned by a
transfer agent, or registered by a registrar, the
signature of any corporate officer may be a facsimile signature.
In case any officer who signed, or whose
facsimile signature or signatures were placed on, any such
certificate shall have ceased to be such officer before
such certificate is delivered by the Corporation, it may
nevertheless be issued and delivered by the Corporation
with the same effect as if such person had not ceased to be such
officer of the Corporation.
2. Lost Certificates. -- The Board of Directors may direct a
new share certificate or certificates to be issued
in place of any certificate or certificates previously issued by
the Corporation and alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged
to have been lost or destroyed.
3. Registration of Transfer. -- The stock of the
Corporation shall be assignable and transferable on the
books of the Corporation only by the person in whose name it
appears on said books or his legal representative.
Upon surrender to the Corporation or any transfer agent of
the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the
duty of the Corporation or such transfer agent to issue a new
certificate to the person entitled thereto, to cancel
the old certificate and record the transaction upon its books.
Except as provided herein or by the laws of the
State of New Jersey, the Corporation shall be entitled to
recognize the exclusive rights of a person registered on
its books as the owner of shares to receive dividends and to
vote as such owner.
ARTICLE IX
LOANS TO OFFICERS OR EMPLOYEES
The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist, any. officer or other
employee of the Corporation or of any subsidiary, including
any employee who is also a director of the
Corporation, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the Corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the June 30, 1997 10-Q
and is qualified in it's entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 197
<SECURITIES> 18269
<RECEIVABLES> 2005
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 298
<PP&E> 4324
<DEPRECIATION> 2856
<TOTAL-ASSETS> 22237
<CURRENT-LIABILITIES> 9576
<BONDS> 0
<COMMON> 329
0
40
<OTHER-SE> 12292
<TOTAL-LIABILITY-AND-EQUITY> 22237
<SALES> 19055
<TOTAL-REVENUES> 19055
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402
<INCOME-PRETAX> 2641
<INCOME-TAX> 957
<INCOME-CONTINUING> 1684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1684
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
