ANNUAL REPORT

INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of Ryan, Beck & 
Co., 
Inc. and subsidiaries:

We have audited the accompanying consolidates statement of 
financial condition of Ryan, Beck & Co., Inc. and subsidiaries 
as 
of December 31, 1996, and the related consolidated statements 
of 
income, stockholders' equity, and cash flows for the year then 
ended.  These consolidated financial statements are the 
responsibility of the Company's management.  Our responsibility 
is to express an opinion on these consolidated financial 
statements 
based on our audit. 

We conducted our audit in accordance with generally accepted 
auditing standards.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether 
the financial statements are free of material misstatement.  An 
audit includes examining, on a test basis, evidence supporting 
the 
amounts and disclosures in the financial statements.  An audit 
also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating 
the overall financial statement presentation.  We believe our 
audit 
provides a reasonable basis for our opinion.

In our opinion, the 1996 consolidated financial statements 
present 
fairly, in all material respects, the financial position of Ryan, 
Beck 
& Co., Inc. and subsidiaries at December 31, 1996, and the 
results 
of their operations and their cash flows for the year then ended 
in 
conformity with generally accepted accounting principles.

/s/ Deloitte & Touche, LLP
February 14, 1997
New York, New York

Ryan, Beck & Co. and Subsidiaries

We hereby consent to the incorporation by reference of our 
report 
dated February 5, 1996, on our audits of the consolidated 
statements of financial condition of the Company and its 
Subsidiaries as of December 31, 1995 and 1994 and the related 
consolidated statements of cash flows for the two years then 
ended 
listed in Item 14(a) of the Company's Annual Report on Form 
10-
K for the fiscal year ended December 31, 1995.

Trien, Rosenberg, Rosenberg, Weinberg, Ciullo & Fazzari, LLP
Morristown, New Jersey
March 26, 1997

<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL 
CONDITION
(IN THOUSANDS EXCEPT SHARE AND PER SHARE 
DATA)
<CAPTION>
		December 31,
	1996		1995		
<S>	<C>	<C>
ASSETS
Cash 		$         13	$      71
Cash segregated under federal and other regulations		17
	11
Receivable from:
Brokers and dealers		25	909
Accrued revenues		225	110	
Other		371	302
Securities owned, at market value 		33,789	34,698
Prepaid income taxes		950	228
Deferred income taxes		830	634
Property and equipment, at cost, less 
accumulated depreciation and amortization		371	703
Other assets                                                                         	
	         356	        460

Total assets 		$  36,947	$  38,126

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Payable to clearing broker		$   15,375	$   16,180
Securities sold, but not yet purchased, at market value	
	5,424	5,809
Accrued employee compensation and benefits	
	2,249	1,698
Accounts payable and other accrued expenses 	
	2,192	1,678
ESOP loan obligation		          538	         675
Total liabilities	   	      25,778	    26,040

Stockholders' equity
Preferred stock - $.10 par value
Authorized:  2,000,000 shares
Issued: 397,948 and 410,855 in 1996 and 1995, respectively	
	40	41
Common stock - $.10 par value
Authorized:  30,000,000 shares
Issued:  3,253,695 and 3,270,092 shares 
in 1996 and 1995, respectively			325	327
Additional paid-in capital			11,875	12,049
Retained earnings			246	818
Treasury stock, at cost, 88,000 and 13,618 common shares 	
	 	         
in 1996 and 1995, respectively			(624)
	(91)
Unearned compensation - restricted stock grants	
	(173)	(401)
Unearned ESOP compensation		 	         
(520)	        (657)
Total stockholders' equity	  		      11,169	       
12,086
        
Total liabilities and stockholders' equity 		   $    
36,947	$   38,126

See notes to consolidated financial statements.
</TABLE>

<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
	Year Ended December 31,       
                                     	1996	1995	1994
<S>	<C>	<C>	<C>
Revenues
Principal transactions          	$   9,846	$  13,224	$   
11,770
Investment banking                   	12,822	7,840	14,092
Commissions                          	4,291	2,802	2,362
Interest and dividends               	1,329	894	641
Other                                  	        222	        228	         
235
Total revenues                   	   28,510	   24,988	    
29,100
	
Operating expenses
Compensation and benefits 	18,831	15,235	15,526
Floor brokerage, exchange and clearance fees               
	2,085	1,730	1,131
Communications                       	1,408	1,288	1,074
Occupancy, equipment rental and depreciation             
	1,316	991	822
Professional fees	1,098	774	1,020
Interest                               	1,096	473	200
Advertising and market development	907	615	437
Other	     1,412	     1,016	       1,010
Total operating expenses         	   28,153	   22,122
	     21,220

Income before provision for income taxes             	357
	2,866	7,880

Provision for income taxes	         97	      1,078	      
3,114

Net income                                    	$     260	$    1,788
	 $    4,766

Earnings per common share:
Primary	$      .02	$        .50	$      1.37
Fully diluted 	$      .02	$        .50	$      1.32

Weighted average number of  shares:
Primary	3,202	3,250	3,296
Fully diluted	3,521	     3,574	  3,609

See notes to consolidated financial statements.
</TABLE>

<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN 
STOCKHOLDERS' 
EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)
<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>
Balance at January 1, 1994
  as previously reported	$   352	$      -	$  10,896	 $  
1,068      	$   (122)   	$   -	   $       -	 $12,194
Conversion of common stock
  to preferred stock (635,789 shares)	(63)	63	-	-
	-	-	-	-
Exchange offering costs	-	-	-	(110)	-
	-	-	(110)
Unearned compensation -
  restricted stock grants	-	-	-	-
	(466)	-	-	(466)
Unearned compensation related to
  preferred stock purchased by ESOP	-	-	-	-
	-	(994)	-	(994)
Amortization of restricted
  stock grants - unearned compensation	-	-	-
	-	100	-	-	100
Amortization of ESOP unearned	
  compensation	-	-	9	-	-	157
	-	166
Conversion of preferred stock	
  to common stock (191,609 shares)	19	(19)	-	-
	-	-	-	-
Issuance of 625 shares 
  through exercised stock options	         -	         -	         2	         
-	           -	          -	         -	2
Net income	-	-	-	4,766	-	-	-
	4,766
Cash dividends declared: common	-	-	-
	(2,916)	-	-	-	(2,916)
	       preferred	        -	        -	            -	      (261)
	          -	          -	         -	      (261)
 Balance at December 31, 1994	   308	     44	   10,907
	    2,547	    (488) 	    (837)	         -	  
12,481
Tax related benefit from stock 
  transactions with employees	-	-	16	-	-
	-	-	16
Unearned compensation -
  restricted stock grants	-	-	-	-
	(167)	-	-	(167)
Amortization of restricted
  stock grants - unearned compensation	-	-	-
	-	254	-	-	254
Amortization of ESOP unearned	
  compensation	-	-	30	-	-	180
	-	210
Conversion of preferred stock	
  to common stock (33,325 shares)	3	(3)	-	-
	-	-	-	-
Treasury stock purchases 
(13,618 shares)	-	-	-	-	-	-
	(91)	(91)
Net income	-	-	-	1,788	-	-	-
	1,788
Cash dividends declared: common	-	-	-
	(2,226)	-	-	-	(2,226)
	       preferred	         -	         -	           -	      (179)
	         -	  -	           -	       (179)
5% stock dividend declared on 
      January 26, 1996	      16	-	     1,096	   (1,112)     
		-          -	        - 	           -
Balance at December 31, 1995	    327	     41	   12,049
	       818	    (401) 	    (657)	     (91)
	  12,086
Retirement of 19,393 shares of
    common stock	(2)	-	(127)	-	-	-
	129	-
Forfeiture of restricted stock grants
     (10,347 shares)	(1)	-	(58)	-	59	-
	-	-
Unearned compensation -
   restricted stock grants	-	-	-	-
	(175)	-	-	(175)
Amortization of restricted stock
   grants - unearned compensation	-	-	-	-
	344	-	-	344
Amortization of ESOP 
   unearned compensation	-	-	11	-	-
	137	-	148
Conversion of preferred stock
   to common stock (12,907 shares)	1	(1)	-	-
	-	-	-	-
Treasury stock purchases 
(93,475 shares)	-	-	-	-	-	-
	(662)	(662)
Net Income	-	-	-	260	-	-	-
	260
Cash dividends declared: common 	-	-	-
	(642)	-	-	-	(642)
	    preferred	        -	        -	            -	     (190)
	          -	          -	         -	      (190)
Balance at December 31, 1996	$  325	$   40	$ 11,875
	$     246	$  (173)	$  (520)	$ (624)
	$11,169
See notes to consolidated financial statements.
</TABLE>

<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>	Year Ended December 31,       
	1996	1995	1994
<S>	<C>	<C>	<C>
Cash flows from operating activities:
  Net income                                     	$     260	$   1,788
	$  4,766
  Noncash items included in net income:
   Depreciation and amortization           	575	289	165
   Amortization of restricted stock grants	344	254	100
   Amortization of ESOP unearned compensation	148	210
	166
   Deferred income taxes	(196)	(201)	(433)
   Increase (decrease) in allowance for doubtful accounts 	-
	(10)	15

   (Increase) decrease in operating assets:
     Cash segregated under federal and other regulations	(6)
	-	(1)
     Receivables:
       Brokers and dealers	884	(867)	33
       Accrued revenues	(115)	(59)	38
       Other 	(69)	66	(64)
     Securities owned, at market value 	909	(16,010)
	(974)
     Prepaid income taxes 	(722)	(228)	-
     Other assets 	104	(219)	72
	
Increase (decrease) in operating liabilities:
    Payable to clearing broker	(805)	14,896	(3,334)
    Securities sold, but not yet purchased - at market value 
	(385)	4,918	(49)
    Accrued employee compensation and benefits	551
	(465)	1,153
    Accounts payable and other accrued expenses	514	218
	759
    Income taxes payable 	            -	   (1,271)	    
1,226

     Net cash provided by operating activities	 $  1,991	$  
3,309	$  3,638

Cash flows from investing activities - 
  Capital expenditures 	       (243)	       (484)	     (206)

Cash flows from financing activities:
  Common stock repurchased for restricted stock grants 
	(175)	(167)	(466)
  Principal payments of ESOP obligation  	(137)	(171)
	(126)
  Proceeds from the exercise of stock options	-	-	2
  Exchange offering costs	-	-	(110)
  Purchase of Treasury Stock	(662)	(91)	-
  Tax related benefit from stock transactions with employees	-
	16	-
  Dividends paid:  Common	(642)	  (2,226)	 (2,916) 
 	Preferred	      (190)	      (179)	      (217)
  Net cash used in financing activities 	    (1,806)	   (2,818)
	   (3,833)
Net increase (decrease) in cash 	(58)	7	(401)

Cash at beginning of year	         71	         64	       
465
  
Cash at end of year	$       13	$       71	 $       64

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
   Interest	$  1,043	$    462	$    228
   Income taxes	1,001	2,976	2,322

Supplemental disclosure of noncash financing activity:

During the year ended December 31, 1994, the Company's 
Employee 
Stock Ownership Plan borrowed $994,000.  The Company 
recorded 
the ESOP obligation as a Company liability offset with an equal 
value 
contra-equity account (unearned ESOP compensation) in the 
Company's consolidated statements of financial condition.

See notes to consolidated financial statements.
</TABLE>

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 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; legal and regulatory 
developments 
and market and regulatory 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.

Ryan, Beck is principally engaged in the underwriting, 
distribution and trading 
of tax-exempt, bank equity and debt securities. The Company 
provides 
investment banking, research and financial advisory services to 
the financial 
services industry, with a focus on corporate finance and merger 
related services. 
The Company also offers a general securities brokerage 
business with 
investment and insurance products for retail and institutional 
clients. All 
aspects of the Company's business are highly competitive and 
impacted by 
regulatory, economic and other factors outside of its control, 
including the 
volatility and price levels of securities markets, the demand for 
investment 
banking services and interest rate changes. In addition, a 
significant portion of 
the Company's expenses, including salaries and benefits, 
occupancy and 
communications, are relatively fixed and do not vary with 
market activity. 
Consequently, operating results of the Company fluctuate, and 
therefore the 
results of any individual period should not be considered 
representative of 
future performance.

Results of Operations
The following table sets forth certain information regarding the 
revenues of the 
Company by source:
<TABLE>
<CAPTION>
Year Ended December 31,
	1996	1995	1994
	Amount	Percent	Amount 	Percent 
	Amount	Percent 	
	(Dollars In Thousands)
<S>	<C>	<C>	<C>
	<C>	<C>	<C>
Principal transactions:
Tax-Exempt debt securities		$ 2,829	9.9%	$ 
4,940	19.8%	$ 5,046	17.3%	
Taxable debt securities		775	2.7	2,302	9.2
	1,729	5.9	
Equity securities		  6,242	21.9	  5,982	23.9
	4,995	17.2

Total		  9,846	34.5	13,224	52.9	11,770	40.4

Investment banking <F1>
Tax-Exempt debt securities		1,047	3.7	913	3.7
	1,258	4.3	
Taxable debt securities		1,540	5.4	456	1.8
	309	1.2	
Equity securities		2,811	9.9	1,977	7.9	623
	2.1
Consulting, placement and valuation fees	7,424	26.0
	4,494	18.0	11,902	40.9

Total		12,822	45.0	7,840	31.4	14,092	48.5

Commissions:
Equity securities		2,514	8.8	1,395	5.6
	1,281	4.4
Mutual funds		  1,777	  6.2	1,407	  5.6	1,081	3.7

Total		  4,291	15.0	2,802	11.2	2,362	8.1	

Interest and dividends		1,329	4.7	894	3.6	641
	2.2
Other		      222	     0.8	      228	     .9	     
235	0.8

Total		$28,510	100.0%	$24,988
	100.0%	$29,100	100.0%

<FN>
<F1>Investment banking revenue includes management fees 
and underwriting 
fees earned in connection with all underwriting participations 
and selling 
concessions earned in connection with the Company's 
participation in tax-
exempt debt, corporate debt and equity underwritings.
</FN>
</TABLE>

Since the various activities of the Company are interdependent 
and 
substantially the same sales personnel and office facilities are 
engaged 
in the generation of the above revenues, the Company does not 
believe 
that a meaningful allocation of expenses can be made among 
these 
operations.

The following tables set forth, for the periods indicated, items in 
the 
Company's Consolidated Statements of Income as percentages 
of total 
revenue and the increase (or decrease) by item as a percentage 
of the 
amount for the previous period:



<TABLE>
<CAPTION>
	Percentage of Total Revenues
	Year Ended December 31,
	1996	1995	1994	
<S>	<C>	<C>	<C>
Revenues
Principal transactions		34.5%	52.9%	40.4%
Investment banking		45.0	31.4	48.5
Commissions		15.0	11.2	8.1
Interest and dividends		4.7	3.6	2.2
Other		      .8	     .9	     .8
Total revenues		100.0	100.0	100.0

Operating expenses
Compensation and benefits		66.1	61.0	53.3
Floor brokerage, exchange and clearing fees		7.3	6.9
	3.9
Communications		4.9	5.1	3.7
Occupancy, equipment rental and depreciation		4.6
	4.0	2.8
Professional fees		3.8	3.1	3.5
Interest		3.8	1.9	.7
Advertising and market development		3.2	2.4	1.5
Other operating expenses		 5.0	  4.1	  3.5
Total operating expenses		98.7	88.5	72.9

Income before provision for income taxes		1.3
	11.5	27.1
Provision for income taxes		   .3	  4.3	10.7

Net income		  1.0%	  7.2%	16.4%

</TABLE>

<TABLE>
<CAPTION>	Period to Period Change
	1996	1995
	Compared with	Compared with
	1995	1994
<S>	<C>	<C>	
Revenues:
Principal transactions		(25.5)%	12.4%
Investment banking		63.5	(44.4)
Commissions		53.1	18.6
Interest and dividends		48.7	39.5
Other		(2.6)	(3.0)
Total revenues		14.1	(14.1)

Operating expenses:
Compensation and benefits		23.6	(1.9)
Communications		9.3	20.0
Occupancy and equipment rental and depreciation	32.8
	20.6
Floor brokerage, exchange and clearing fees	20.5	53.0
Interest		131.7	136.5
Marketing and development expense		47.5	40.7
Professional fees		41.9	(24.1)
Other operating expenses		39.0	0.6
Total operating expenses		27.3	4.3
Income before provision for income taxes		(87.5)
	(63.6)
Provision for income taxes		(91)	(65.4)
Net income		(85.5)%	(62.5)%
</TABLE>

1996 Compared with 1995

Including one-time after-tax charges of $1,081,000, net income 
for the year 
ended December 31, 1996 was $260,000. On a fully diluted 
basis, earnings per 
common share decreased to $.02 per share in 1996 compared to 
$.50 per share 
in 1995. Net income for the year ended December 31, 1996, 
exclusive of one-
time after-tax charges, was $1,341,000, or $.36 per share. This 
compares to net 
income of $1,788,000, or $.50 per share, during the same 
period in 1995.

Total revenues during 1996 increased $3,522,000, or 14.1%, to 
$28,510,000 
from $24,988,000 in 1995, but were more than offset by an 
increase in 
operating expenses of $6,031,000 in 1996. 

Revenues from principal transactions decreased $3,378,000, or 
25.5%, to 
$9,846,000 in 1996 from $13,224,000 in 1995. This decrease 
can he attributed 
to decreases of $2,111,000 from trading tax-exempt securities 
and $1,527,000 
from trading taxable debt securities, which were partially offset 
by an increase 
of $260,000 from trading equity securities. The decrease in 
trading revenues 
attributable to tax exempt and taxable debt securities reflected 
an 
extraordinarily volatile bond market and the continued 
compression of 
underwriting spreads in municipal securities. In addition, trading 
revenues 
were adversely affected by costs associated with implementing 
an interest rate 
risk management strategy.

Recently, the Securities and Exchange Commission and NASD 
agreed to 
changes which could impact the way stocks are traded. A new 
order display 
system is to be implemented, which will allow investors to place 
limit orders to 
buy or sell a NASDAQ stock at a certain price and be matched 
with another 
order. The proposed system is designed to ensure that no 
market maker would 
be able to execute trades at better prices before a specific limit 
order was filled. 
The proposed system may produce a new source of competition 
but could also 
lead to the Company making markets in fewer NASDAQ 
stocks, particularly 
smaller ones, because of a perceived lack of liquidity. 
Consequently, there is 
potential for delisting of companies which trade infrequently 
due to lack of 
market maker support. The Company, therefore, may reduce 
the number of 
companies that it makes markets in and also realize lower 
trading spreads, 
which could adversely affect the Company.

Revenues from investment banking services increased 
$4,982,000, or 63.5%, to 
$12,822,000 in 1996 from $7,840,000 in 1995. This was due to 
a $2,930,000 
increase in revenues related to consulting, placement and 
valuation fees, an 
increase in revenue from underwriting equity securities of 
$834,000 and an 
increase in revenue from underwriting taxable and tax-exempt 
debt securities of 
$1,084,000 and $134,000, respectively.

The increase in consulting, placement and valuation fees 
resulted from an 
increase in revenues related to thrift conversions and merger 
and acquisition 
advisory fees. The increase in revenues during 1996 from thrift 
conversions, 
including mutual holding company formations, is a result of the 
greater size of 
the transactions which closed during 1996 as compared to the 
same period in 
1995. Additionally, fee income from merger and acquisition 
advisory services 
was significantly higher during 1996 as compared to 1995. This 
was a result of 
a larger number of merger and acquisition transactions during 
the 1996 period 
and the greater size of the transactions versus 1995. The 
Company expects 
there to be a reduction in future revenues resulting from thrift 
conversions and 
mutual holding company formations because of increased 
competition and a 
smaller universe of mutual institutions. Although there can be 
no assurances 
that it will be successful, the Company is attempting to diversify 
its revenue 
sources into related financial services and expand its current 
services in order 
to offset the potential decline in future revenues from thrift 
conversions. The 
increase in revenue from underwriting equity securities is due to 
the 
consummation of two underwritings for financial institutions 
seeking additional 
capital for growth purposes, as well as the closing of the third 
Ryan Beck 
Banking Opportunity Trust. The increase in revenue from 
underwriting tax-
exempt debt securities reflects increased levels of issuance of 
new municipal 
securities.

Commission revenue increased $1,489,000, or 53.1%, to 
$4,291,000 in 1996 
from $2,802,000 in 1995. The increase in revenues is primarily 
due to an 
increase in equity commissions of $1,119,000 and in mutual 
fund commissions 
of $370,000. These increases are mainly attributable to 
increased retail trading 
activity and higher mutual fund sales due to greater investor 
demand and 
selection of mutual funds.

Revenue from interest and dividends increased $435,000, or 
48.7%, to 
$1,329,000 in 1996 from $894,000 in 1995. The increase in 
revenue from 
interest and dividends is a result of higher average inventory 
levels during 1996 
as compared to 1995, partially offset by lower interest rates 
during 1996.

Total operating expenses increased $6,031,000, or 27.3%, to 
$28,153,000 in 
1996 from $22,122,000 in 1995. This increase is primarily 
attributed to an 
increase in compensation and benefits of $3,596,000, an 
increase in interest 
expense of $623,000, an increase of $355,000 in floor 
brokerage and clearing 
fees and an increase of $325,000 in occupancy and equipment 
expense. In 
addition, increases in advertising and market development, 
professional fees 
and other expenses of $292,000, $324,000 and $396,000, 
respectively, 
contributed to the overall increase in total operating expenses. 
The increase in 
compensation and benefits is partially attributable to one-time 
pre-tax charges 
of $1,327,000 as a result of severance payments related to the 
resignation of 
two senior executives and Board members. In addition, 
increases in 
commission expense and salary and bonus expense are 
consistent with higher 
investment banking and commission revenues as well as an 
increase in the 
number of employees. The increase in advertising and market 
development is 
primarily due to an increase in printing and promotional 
expenses. The 
increase in professional fees is due to expenses associated with 
a pre-tax charge 
of $83,000 for an abandoned debt offering as well as additional 
legal expenses 
and consulting fees associated with the Company's relocation of 
its 
headquarters in 1997. The increase in other operating expenses 
is primarily a 
result of a one-time pre-tax charge of $200,000 for incidental 
expenses related 
to the relocation of the Company's headquarters and an increase 
in other 
expenses. The increase in interest expense is due to higher 
average borrowing 
levels, partially offset by lower interest rates. The increase in 
floor brokerage, 
exchange and clearance fees is a result of an increase in trade 
volume. The 
increase in occupancy and equipment expense is mainly 
attributed to a pre-tax 
charge of $192,000 to write off leasehold improvements and 
equipment as part 
of the Company's plan to relocate its headquarters.

1995 Compared with 1994

All share and per share data set forth in the following discussion 
have been 
adjusted to reflect a 5% stock dividend declared on January 26, 
1996 and paid 
on February 13,1996.

Net income for the year ended December 31,1995 was 
$1,788,000, compared to 
$4,766,000 during the same period in 1994. On a fully diluted 
basis, earnings 
per common share decreased 62.1% to $.50 per share in 1995, 
compared to 
$1.32 per share in 1994. Income tax expense and net income for 
the year ended 
December 31,1994 has been restated to reflect a $92,000 
income tax refund 
(equal to $.03 per share) resulting from amending that year's 
income tax 
return.

Total revenues during 1995 decreased $4,112,000, or 14.1%, to 
$24,988,000 
from $29,100,000 in 1994.

Revenues from principal transactions increased $1,454,000, or 
12.4%, to 
$13,224,000 in 1995 from $11,770,000 in 1994. This increase 
can be attributed 
to an increase of $987,000 from trading equity securities and an 
increase of 
$573,000 from trading taxable debt securities, which was 
partially offset by a 
decrease of $106,000 from trading tax exempt securities. The 
increase in 
trading revenues attributable to equity and taxable debt 
securities reflected 
greater demand during 1995 for exchanging securities in a 
lower interest rate 
environment as compared with 1994. The decrease in trading 
revenues 
attributable to trading tax-exempt securities primarily reflects 
reduced product 
availability and lower yields.

Revenues from investment banking services decreased 
$6,252,000, or 44.4%, to 
$7,840,000 in 1995 from $14,092,000 in the comparable 1994 
period. This 
decrease was due to decreases of $7,408,000 in revenues 
related to consulting, 
placement and valuation fees and $345,000 from underwriting 
tax-exempt debt 
securities, which were partially offset by an increase of 
$1,354,000 in revenue 
from underwriting equity securities and $147,000 in revenue 
from underwriting 
taxable debt securities.

The decrease in consulting, placement and valuation income 
resulted from a 
reduced number of mutual to stock thrift conversions, including 
mutual holding 
companies which closed in 1995 as compared to 1994, the 
smaller size of the 
transactions which closed in 1995, and decreased fee income 
from merger and 
acquisition advisory services. The reduced fee income from 
merger and 
acquisition advisory work is primarily due to the smaller size of 
many of the 
Company's merger and acquisition transactions in 1995. The 
increase in 
revenues from underwriting equity securities resulted primarily 
from the 
closing of several underwritings for financial institutions seeking 
additional 
capital for growth purposes as well as the closing of the Ryan 
Beck Banking 
Opportunity Trust, Series 2.

Commission revenue increased $440,000, or 18.6%, to 
$2,802,000 in 1995 
from $2,362,000 in 1994. The increase in revenues is primarily 
due to an 
increase in mutual fund commissions of $326,000 and in equity 
commissions of 
$114,000. which reflected increased activity in the general stock 
market.

Revenue from interest and dividends increased $253,000, or 
39.5%, to 
$894,000 in 1995 from $641,000 in 1994. This increase is a 
result of increased 
levels of inventory carried during 1995, partially offset by a 
lower interest rate 
environment in 1995.

Total operating expenses increased $902,000, or 4.3%, to 
$22,122,000 in 1995 
from $21,220,000 in 1994. This increase is primarily attributed 
to an increase 
in floor brokerage, exchange and clearance fees of $599,000 
and interest 
expense of $273,000. The increase in floor brokerage, exchange 
and clearance 
fees reflects both increased activity and a rebate of certain 
clearance costs 
incurred in connection with transferring to a new clearing agent 
in 1994. The 
increase in interest expense reflects the cost of carrying higher 
levels of 
inventory during 1995.

Liquidity and Capital Funds

As of December 31,1996, the Company's Consolidated 
Statement of Financial 
Condition reflects an essentially liquid financial position, with 
most of the 
Company's assets consisting of assets readily convertible into 
cash. The 
Company s securities positions in its trading accounts (both 
long and short) are, 
in large part, readily marketable.

The Company finances its business through the use of available 
capital 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. 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 December 31,1996, the interest rate 
for such funds was 
7.625%.

The Company is subject to net capital requirements for brokers 
and dealers 
regulated under the Securities Exchange Act of 1934. The 
Company's 
regulatory net capital has consistently exceeded such minimum 
net capital 
requirements. As of December 31,1996, the Company had 
aggregate net 
capital, after required adjustments, of $3,535,000 which 
exceeded the minimum 
net capital requirements by $2,535,000. Management believes 
that the funds 
provided by operations and its borrowing capacity will provide 
sufficient 
resources to meet present and reasonably foreseeable short-term 
financial 
needs.

Effects of Inflation

Because the Company's assets are largely liquid, and securities 
inventories are 
carried at current market values, the impact of inflation is 
reflected in its 
consolidated financial statements. However, the rate of inflation 
also affects 
expenses such as employee compensation, rent and 
communications, and such 
effects may not be readily recoverable through increased 
commission rates, 
trading profits or fees. To the extent that inflation has other 
adverse effects on 
prices and activities in the securities markets and, in particular, 
on interest rate 
conditions in the credit markets, it may adversely affect the 
Company s 
financial position and results of operations.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Nature of Business

Ryan, Beck & Co., Inc. (the "Company") is a boutique 
investment firm that is 
principally engaged in the underwriting, distribution and trading 
of tax-
exempt, bank equity and debt securities.  The Company 
provides investment 
banking, research and financial advisory services to the financial 
services 
industry, with a focus on corporate finance and merger related 
services. The 
Company also offers a general securities brokerage business 
with investment 
and insurance products for retail and institutional clients.  The 
Company 
operates on a fully-disclosed basis through a clearing broker.  

The Company, like other securities firms, is affected by 
economic and political 
conditions.  Additionally, a substantial portion of the operations 
of the 
Company is subject to developments affecting municipal finance 
and financial 
institutions.

Principles of Consolidation

The consolidated financial statements include the accounts of 
the Company and 
its wholly-owned subsidiaries.  All intercompany transactions 
and accounts 
have been eliminated.

Recognition of Revenues

Securities transactions (and related revenues and expenses) are 
recorded on a 
trade date basis.  Selling concessions, consulting fees, 
management fees and 
underwriting fees, less related expenses, are recorded in income 
as earned.  All 
securities owned and sold, but not yet purchased by the 
Company are valued at 
market, which results in unrealized gains and losses being 
reflected in current 
earnings.

Investment banking revenues include gains, losses and fees, net 
of syndicate 
expense, arising from securities offerings in which the Company 
acts as an 
underwriter or agent.  Investment banking revenues also include 
fees earned 
from providing merger and acquisition and financial 
restructuring advisory 
services.

Income Taxes

The Company uses the asset and liability method in providing 
income taxes on 
all transactions that have been recognized in the consolidated 
financial 
statements.  The asset and liability method requires that 
deferred taxes be 
adjusted to reflect the tax rates at which future taxable amounts 
will be settled 
or realized.

Reclassifications

Certain reclassifications have been made to prior years' financial 
statements to 
conform with the current year's presentation.

Property and Equipment

Depreciation of office furniture and equipment is provided for 
either on a 
straight-line or declining balance basis using estimated useful 
lives of three to 
seven years for financial statement purposes.  Accelerated 
depreciation methods 
are generally used for federal income tax purposes.  Leasehold 
improvements 
are amortized over the lesser of the economic useful life of the 
improvement or 
the term of the lease.

Use of Estimates

The preparation of financial statements in conformity with 
generally accepted 
accounting principles requires management to make estimates 
and assumptions 
that affect the reported amounts of assets and liabilities and 
disclosure of 
contingent assets and liabilities at the date of the financial 
statements and the 
reported amounts of revenues and expenses during the 
reporting period.  Actual 
results could differ from those estimates.

Note 2 - Securities Owned, at Market Value

Securities in the Company's trading account consist of the 
following:

<TABLE>
<CAPTION>
	December 31,      
	1996	1995         
		(In Thousands)
<S>	<C>	<C>
Debt obligations:
States and municipalities	$  17,962	$  19,400
Corporations                             	5,195	1,833
U.S. Government and agencies                	2,035	310	
Corporate equity                        	8,572	13,130	
Other                                    	           25	           25
Total                          	$  33,789	$  34,698
</TABLE>

Note 3 - Property and Equipment

Property and equipment, stated at cost, consist of the following:

<TABLE>
<CAPTION>
	December 31,      
	1996	1995         	
		 (In Thousands)
<S>	<C>	<C>
Office furniture and equipment     	$     2,543	$   2,317
Leasehold improvements                     	          938	        
912	
	 3,481	        3,229
	Less:  Accumulated depreciation
	and amortization             	       3,110	     2,526
	$        371	$      703
</TABLE>

Note 4 - Payable to Clearing Broker

The Company has an agreement with its clearing broker that 
enables the 
Company to borrow by pledging securities owned.  As of 
December 31, 1996 
and 1995 the balances due were approximately $15,375,000 
and $16,180,000, 
respectively. At December 31, 1996, the interest rate paid on 
these borrowings 
was 7.625%.

Note 5 - Securities Sold, But Not Yet Purchased

Securities sold, but not yet purchased consist of the following:

<TABLE>
<CAPTION>
	December 31,      
	1996	1995      	
	(In Thousands)
<S>	<C>	<C>
Debt obligations:
States and municipalities	$      128	$      406
Corporations	274	347
U.S. Government and agencies	       134	          19
Corporate equity	    4,888	     5,037
Total                          	$  5,424	$   5,809	
</TABLE>

Securities sold, but not yet purchased are a part of the 
Company's normal 
activities as a broker and dealer in securities and are subject to 
off-balance-
sheet market risk of loss should the Company be unable to 
acquire the securities 
for delivery to the purchaser at prices equal to or less than the 
current recorded 
amounts.

Note 6 - Income Taxes

The provision (benefit) for income taxes consists of:

<TABLE>
<CAPTION>
		Year Ended December 31,       
	1996 	1995         	1994         	
	(In Thousands)
<S>	<C>	<C>	<C>	
Current Provision:
Federal                 	$    193	$     929	$     2,588
State and local               	      100	       350	         
959 
	     293	    1,279	      3,547	
Deferred Benefit:
Federal                 	(152)	(152)	(329)
State and local               	       (44)	        (49)	        
(104)	
	     (196)	      (201)	        (433)
Total	$       97 	$    1,078	$     3,114
</TABLE>	

Provision (benefit) for income taxes is reconciled to amounts 
computed by 
applying the federal corporate tax rate of 34% to income before 
income taxes as 
follows:

<TABLE>
<CAPTION>
		Year Ended 
December 31,       
	1996	1995         	1994         
	(In Thousands)
<S>	<C>	<C>	<C>
Tax provision at federal  statutory rate	$     121	$     
974	$   2,680
State and local income taxes, 
net of federal income tax benefit 	37	230	564
Net reduction relating to interest income on 
state and municipal government obligations	(118)	(135)
	(134)
Other, net	        57	           9	           4
	$      97	$  1,078	$  3,114
</TABLE>	

The tax effects of the principal temporary differences resulting 
in a deferred tax 
asset are as follows:

<TABLE>
<CAPTION>
	Year Ended December 31,       
	1996	1995         	
	(In Thousands)
<S>	<C>	<C>
Deferred compensation -			
Restricted stock grants	$  (204)	$  (138)	
Postemployment benefits	(251)	(123)	
Accrued expenses	(338)	(335)
Other, net	      (37)	      (38)
	$  (830)	$  (634)
</TABLE>

 Note 7 - Regulatory Requirements

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 the 
computation of net capital to be based on the number and price 
of issues in 
which markets are made by the Company, not to exceed 
$1,000,000.   At 
December 31, 1996 and 1995, the Company's regulatory net 
capital was 
approximately $3,534,000 and $5,663,000, respectively, which 
exceeded net 
capital rule requirements by $2,534,000 and $4,663,000,  
respectively.

The Company operates under the provisions of paragraph 
(K)(2)(ii) of Rule 
15c3-3 of the Securities and Exchange Commission as a fully-
disclosed broker 
and, accordingly, customer accounts are carried on  the books 
of the clearing 
broker.  However, the Company safekeeps and redeems 
municipal bond 
coupons for the benefit of its customers.  Accordingly, the 
Company is subject 
to the provision of SEC Rule 15c3-3 relating to possession or 
control and 
customer reserve requirements and was in compliance with such 
provisions at 
December 31, 1996.
 
Note 8 - Common Stock Dividend and Earnings per Common 
Share 

On January 26, 1996, the Company's Board of Directors 
declared a 5% stock 
dividend for shareholders of record as of February 5, 1996.  
The stock dividend 
was payable on February 13, 1996.  Accordingly, all share and 
per share 
information in the consolidated financial statements have been 
restated to 
reflect this stock dividend.

Primary earnings per share are computed by deducting preferred 
dividends 
from net income in order to determine net income attributable 
to common 
stockholders.  This amount is then divided by the weighted 
average number of 
common shares outstanding and common stock equivalents 
arising from stock 
options.  The weighted average number of common shares 
outstanding for 
computation of primary earnings per share was 3,202,000, 
3,250,000 and 
3,296,000 shares for each of the years ended December 31, 
1996, 1995 and 
1994, respectively.

Fully diluted earnings per share are computed by dividing net 
income by the 
weighted average number of common shares outstanding during 
the year after 
giving effect for common stock equivalents arising from stock 
options and 
preferred stock assumed converted to common stock.  The 
weighted average 
number of common shares outstanding for full dilution was 
3,521,000, 
3,574,000 and 3,609,000 shares for each of the years ended 
December 31, 
1996, 1995 and 1994, respectively.  

Preferred stock shares of 99,263 and 125,851 in 1996 and 
1995, respectively, 
which are unallocated and unreleased issued shares held by the 
ESOP trust (see 
Note 9), were excluded in computing the fully diluted earnings 
per share 
amounts. 
	
Note 9 - Employees Benefit Plans

Employee Stock Ownership Plan (ESOP)

Effective June 1, 1994 the Company established a leveraged 
tax-qualified 
Employee Stock Ownership Plan (ESOP) for all nonexcluded 
employees who 
meet the Company's eligibility and participation requirements.  
The ESOP 
purchased 150,000 shares of the Company's preferred stock at a 
cost of 
$994,000 using the proceeds of a loan utilizing the preferred 
shares as 
collateral. All dividends received by the ESOP in 1994, totaling 
$82,000, were 
used to pay debt service.  None of the ESOP dividends received 
were used to 
pay debt service in the years ending December 31, 1996 and 
1995.  The 
Company makes annual contributions to the ESOP equal to the 
ESOP's debt 
service, which totaled $137,000 and $171,000 for the years 
ended December 
31, 1996 and 1995, respectively.  For each plan year during the 
duration of the 
loan, the number of shares committed to be released is based on 
a 
predetermined formula tied to the Company's debt service paid 
during the year.

The debt of the ESOP is recorded as a liability and the shares 
pledged as 
collateral are reported as unearned ESOP shares in the 
statement of financial 
condition.  As shares are committed to be released from 
collateral, the 
Company reports compensation expense equal to the current 
market price of the 
shares, and the shares become outstanding for earnings per 
share computations 
upon actual release and allocation to active employees.  
Dividends on allocated 
ESOP shares are recorded as a reduction of retained earnings. 
ESOP related 
compensation expense for the years ended December 31, 1996, 
1995 and 1994 
was $148,000, $210,000 and 166,000, respectively.  The fair 
value of the 
99,263 unreleased shares at December 31, 1996 was $482,000.  
In 1997, the 
Company is committed to release 22,709 shares related to 1996 
plan activity.

Stock Option Plan

On January 26, 1996, the Board of Directors approved a 
nonqualified Stock 
Option Plan under which 200,000 shares of common stock are 
reserved for 
issuance to officers and other key employees of the Company 
and are 
exercisable beginning one year from date of grant at various 
percentages 
expiring ten years from such date.  The Plan replaced a 
substantially similar 
plan, which terminated on April 28, 1996. The Stock Option 
Plan is 
administered by a Board Committee.

Stock option activity is shown below for all plans:

<TABLE>
<CAPTION>

	1996	1995	1994
<S>	<C>	<C>	<C>	
Shares under options outstanding January 1	137,090
	9,515	10,171
Stock options granted at $4.00 - $7.00 per share	103,500
	-	-
Stock options granted at $7.20 - $7.38 per share	-
	127,575	-
Options exercised at $3.02 per share	           -	           -
	      (656)
Forfeited or canceled options 
at $7.00 - $7.20 per share	(29,825)	            -	            
-
 
Shares under options outstanding and 
exercisable at $3.02 - $7.38 per share 
at December 31	210,765	137,090	    9,515
</TABLE>

	At December 31, 1996, 109,000 shares were available 
for future grants under 
the Plan.  The Company derives a tax deduction measured by 
the excess of the 
market value over the option price at the date nonqualified 
options are 
exercised.  The related tax benefit is credited to additional paid-
in capital.

The Company applies the provisions of Accounting Principles 
Board Opinion 
No. 25, "Accounting for Stock Issued to Employees" (APB No. 
25) in 
accounting for its stock option plans.  Accordingly, as the plans 
provide fixed-
cost stock options at market value on the date of grant, under 
APB No. 25 no 
compensation cost has been recognized for the years ended 
December 31, 1996, 
1995 and 1994.  On a pro-forma basis, if the fair value of 
options granted had 
been charged to earnings, net income as recorded would have 
been reduced by 
$33,000 and $5,000 in 1996 and 1995, respectively.  Both 
primary and fully 
diluted earnings per common share, respectively, as reported 
would have been 
reduced by $.01 in both 1996 and 1995.

The fair value of each option grant was estimated on the date of 
the grant using 
a binomial option-pricing model with the following weighted 
average 
assumptions in 1996 and 1995:  quarterly dividends of $.05; 
expected volatility 
of 10%; risk-free interest rate of 6.10% and 5.84%, 
respectively; and expected 
life of seven years.

Restricted Stock Grant Plan

The Company's Restricted Stock Grant Plan provides for the 
award of up to 
$1,000,000 of the Company's common stock to certain key 
employees pursuant 
to the Plan terms.   Plan participants are entitled to receive 
dividends and to 
vote their respective shares.  Additionally, the Plan was 
amended on September 
25, 1992 to include acceleration of vesting as determined by the 
Plan's 
committee.  Upon issuance of restricted stock, 
unearned compensation, equivalent to the market value of the 
shares awarded 
at the time of the grant, is charged to stockholders' equity and is 
amortized to 
expense over the periods until the restrictions lapse, generally 
over three years.  
The Company derives a tax deduction measured by the excess 
of the market 
value over the original cost of the grants at the time of vesting.  
The related tax 
benefit is credited to additional paid-in capital.  

The Company awarded 23,000, 24,541 and 71,979 shares 
during the years 
ended December 31, 1996, 1995 and 1994, respectively.  
Compensation 
expense relating to this plan charged to operations totaled 
$344,000 (which 
includes a one-time pre-tax charge of $102,000 as a result of 
accelerated 
vesting upon the resignation of a former senior executive and 
Board member), 
$254,000 and $100,000 for the years ending December 31, 
1996, 1995, and 
1994, respectively.

Profit Sharing Plan/Savings Plan

Effective June 1, 1994, the Company amended its qualified 
profit sharing plan 
to include a 401(k) savings plan covering all eligible employees.  
The Company 
makes contributions at its discretion within the allowable limits 
of the Plan.  
The Company's discretionary profit sharing contributions were 
$929,000, 
$629,000 and $792,000 for the years ended December 31, 
1996, 1995 and 
1994, respectively.

Postemployment Benefits

	The Company records the costs of postemployment 
benefits paid before 
retirement, principally severance benefits (including health care 
coverage) 
provided under the terms of certain employment contracts with 
key officers, 
over the service lives of such employees.  Compensation 
expense charged to 
operations was $1,270,000, $47,000 and $366,000, for the 
years ended 
December 31, 1996, 1995 and 1994, respectively.  Included in 
the 1996 
compensation expense are one-time pre-tax charges of 
$1,225,000 resulting 
primarily from the resignations of two former executives and 
board members.  
These contracts contain provisions that would entitle individual 
officers to 
receive a minimum of $75,000 to a maximum of $600,000 plus 
certain benefits 
(as applicable), depending on varying events such as, death, 
disability, 
voluntary or involuntary termination, change of control and 
liquidation.  The 
largest potential liability would be in the event of a change of 
control.  In this 
event the Company's contingent liability would not exceed 
$1,338,000 
($1,913,000 liability net of approximately $575,000 of accrued 
postemployment 
benefits, which were provided for in the Company's financial 
statements at 
December 31, 1996).

Note 10 - Commitments and Contingencies

Litigation

The Company is involved in various legal actions, some of 
which involve 
claims for substantial amounts, arising in the normal course of 
its operations.  
Although the ultimate outcome of these actions cannot be 
ascertained at this 
time and the results of legal proceedings cannot be predicted 
with certainty, it 
is the opinion of management that the resolution of these 
matters will not have 
a material adverse effect on the consolidated financial condition 
of the 
Company, but may be material to the Company's operating 
results for any 
particular period, depending upon the level of the Company's 
income for such 
period.

Leases

The Company leases office space in various locations under 
noncancellable 
operating leases.  In 1996, the Company entered into a new 
lease to relocate its 
headquarters in 1997.  In connection therewith, one-time pre-
tax charges of 
$192,000 (included in occupancy expense) and $200,000 
(included in other 
expense), respectively, were recorded for the write-off of 
property and 
equipment and the incidental expenses related to abandonment 
and relocation.

At December 31, 1996, the future minimum rental 
commitments, including the 
new lease agreement referred to above, were as follows:
<TABLE>
<CAPTION>
		Amount  
Year	    (In Thousands)
<S>	<C>
1997  	$      675
1998 	719
1999	         658
2000	    631
2001	631
Thereafter	3,145
		$   6,459
</TABLE>

Certain leases contain renewal or purchase options, or 
escalation clauses 
providing for increased rental payments based upon 
maintenance, utility and 
tax increases.  Total office rental expenses charged to 
operations were 
approximately $642,000, $587,000 and $521,000, for the years 
ended 
December 31, 1996, 1995, and 1994, respectively.

Note 11 - Financial Instruments

Off-Balance-Sheet Risk and Concentration of Credit Risk

The Company's customers' securities transactions are 
introduced on a fully-
disclosed basis to its clearing broker/dealer.  The clearing 
broker/dealer carries 
all of the accounts of the customers of the Company and is 
responsible for 
execution, collection of and payment of funds and, receipt and 
delivery of 
securities relative to customer transactions. Customers' 
securities activities are 
transacted on a cash and margin basis.  These  transactions may 
expose the 
Company to off-balance-sheet-risk, wherein the clearing 
broker/dealer may 
charge the Company for any losses it incurs in the event that 
customers may be 
unable to fulfill their contractual commitments and margin 
requirements are 
not sufficient to fully cover losses.  The Company seeks to 
minimize this risk 
through procedures designed to monitor the creditworthiness of 
its customers 
and that customer transactions are executed properly by the 
clearing 
broker/dealer.

A significant portion of the Company's securities owned at 
market value are 
state and municipal obligations issued by the State of New 
Jersey or 
municipalities within that state.  Substantially all of the 
corporate equity 
securities owned are instruments issued by banking and thrift 
institutions.

Fair Value

The financial instruments of the Company are reported in the 
consolidated 
statement of financial condition at market or fair value, or at 
carrying amounts 
that approximate fair value because of the short maturity of the 
instruments.

Derivatives

Beginning in the third quarter of 1996, the Company began 
implementing a 
hedging strategy in its fixed-income trading activities as part of 
its overall 
interest rate risk management strategy.  The Company uses 
temporary positions 
in U.S. Treasury futures as well as cash positions in U.S. 
Treasury securities 
sold, but not yet purchased in an effort to manage its interest 
rate risk and 
protect the profit margins associated with the trading of its 
fixed-income 
securities owned.  These contracts and short positions expose 
the Company to 
off-balance sheet risk of accounting loss in the event that the 
changes in 
interest rates, and thus the value of the futures contracts and 
short positions, do 
not closely correlate with the changes in the 
value of the Company's fixed-income securities owned.  Gains 
and losses on 
the derivative futures contracts used in trading activities are 
recognized 
currently in principal transaction revenue.  For the four months 
of 1996 in 
which the futures contracts were used, the average asset and 
liability fair value 
of such instruments was $13,000 and $37,000, respectively . At 
December 31, 
1996 the notional value of open commitments under financial 
futures contracts 
was $3,945,000 with a fair value of $34,000.

Note 12 - Preferred Stock

Pursuant to a stock offer consummated on April 29, 1994, there 
were 485,789 
shares of common stock exchanged for a new voting cumulative 
convertible 
preferred stock and 103,641 shares of common stock  were 
purchased at a price 
of $6.75 per share.  Subsequent to April 29, 1994, an additional 
46,359 shares 
of common stock were purchased in the open market.  All the 
common stock 
shares acquired (totaling 150,000) were retired and an equal 
number of shares 
of new voting cumulative convertible preferred stock were 
issued to a newly 
formed Employee Stock Option Plan (ESOP) for cash equal to 
the amount paid 
by the Company for the common stock (see Note 9).

The preferred shares are convertible at any time at the option of 
the holder into 
1.05 shares (as adjusted for the 5% stock dividend) of common 
stock.  In the 
event of liquidation, each preferred share will participate equally 
with each 
share of common stock, plus unpaid dividends. At any time 
after three years 
from the date of issuance, the Company may, upon 20 days 
prior written notice, 
in its sole discretion, redeem all preferred stock at a redemption 
price equal to 
the purchase price.  Dividends, which commenced in May 1994, 
are payable 
quarterly at an annual rate of $.60 per share.  

Additionally, 12,907 and 33,325 shares of preferred stock were 
converted into 
13,552 and 34,991 shares of common stock (as adjusted for the 
5% stock 
dividend) during the years ended December 31, 1996 and 1995, 
respectively.