UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended December 31, 1995

                                        OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

      For the transition period from _______________ to _______________

         Commission file number 1-8952

                          INTERSTATE/JOHNSON LANE, INC.
             (Exact name of Registrant as specified in its charter)

                                    Delaware
        (State or other jurisdiction of incorporation or organization)

                                   56-1470946
                      (I.R.S. Employer Identification No.)

      Interstate Tower, P.O. Box 1012, Charlotte, North Carolina 28201-1012
               (Address of principal executive offices, zip code)

                                 (704) 379-9000
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

Yes      X          No

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

            Class                             Outstanding at January 31, 1996
            -----                             --------------------------------
(Common stock, $.20 par value)                            6,146,052

                           Page 1 of 14
<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES


                                      Index


                                                                     Page Number

Part I.  Financial Information

         Item 1.  Financial Statements

                  Condensed Consolidated Statements of
                  Financial Condition--December 31, 1995 and
                  September 30, 1995                                         3

                  Condensed Consolidated Statements of
                  Operations--Three Months Ended
                  December, 1995 and 1994                                    4

                  Condensed Consolidated Statements of
                  Cash Flows--Three Months Ended
                  December 31, 1995 and 1994                                5

                  Notes to Condensed Consolidated Financial
                  Statements                                                6

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations             9


Part II. Other Information

         Item 1.  Legal Proceedings                                        12

         Item 6.  Exhibits and Reports on Form 8-K                         12

                                   -2-

<PAGE>

                   INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                    (Unaudited)


<TABLE>
<CAPTION>
                                                                        (All dollars in thousands)
                                                                     December                September
                                                                        31,                     30,
                                                                       1995                    1995
                                                                    ------------            ------------
<S>                                                               <C>                     <C>
Assets
Cash and cash equivalents                                         $      19,543           $      26,537
Cash and securities segregated for
   regulatory purposes                                                  124,029                 117,616
Loans under matched securities resale agreements                        202,420                 129,623
Receivables:
  Financing resale agreements                                             9,624                  23,848
  Customers                                                             195,372                 175,328
  Brokers, dealers and clearing                                          15,488                  18,048
agencies
  Other                                                                   6,514                   4,722
Trading securities owned                                                 68,363                  75,749
Land, buildings, and improvements,                                        6,286                   7,285
net
Office facilities and equipment, net                                      8,844                   8,865
Goodwill and intangible assets                                           13,528                  13,678
Other assets                                                             17,523                  15,213
                                                                    ------------            ------------
                                                                  $     687,534           $     616,512
                                                                    ============            ============

Liabilities and Shareholders' Equity
Short-term borrowings:
  Checks payable                                                  $      20,190           $      11,872
  Bank loans                                                              3,000
                                                                                                 -
  Financing repurchase agreements                                        16,123                  38,561
Borrowings under matched securities repurchase agreements               203,960                 130,453
Payables:
  Customers                                                             280,942                 267,714
  Brokers and dealers                                                    15,416                   6,619
  Other                                                                   8,338                   7,322
Accrued compensation and benefits                                        11,878                  14,460
Securities sold but not yet purchased                                    12,896                  25,305
Notes payable                                                             6,910                   7,772
Other liabilities and accrued expenses                                   14,198                  15,864
                                                                    ------------            ------------
                                                                        593,851                 525,942
                                                                    ------------            ------------
Minority interests                                                          200                     200
                                                                    ------------            ------------
Long-term subordinated debt                                              20,999                  20,999
                                                                    ------------            ------------
Shareholders' equity:
      Common stock                                                        1,377                   1,377
      Additional paid-in-capital                                         31,278                  31,510
      Retained earnings                                                  47,033                  45,043
                                                                    ------------            ------------
                                                                         79,688                  77,930
      Less:  treasury stock, at cost                                    (7,204)                 (8,559)
                                                                    ------------            ------------
            Total shareholders' equity                                   72,484                  69,371
                                                                    ------------            ------------
                                                                  $     687,534           $     616,512
                                                                    ============            ============

</TABLE>

    The  accompanying  notes are an integral part of the condensed  consolidated
financial statements.

                                     -3-

<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    For the Three Months
                                                                                     Ended December 31,
                                                                                 (All dollars in thousands)
                                                                                   1995              1994
                                                                               -------------     -------------
<S>                                                                          <C>               <C>
Revenues:
      Commissions and sales credits                                          $       34,317    $       24,247
      Trading gains, net                                                              2,039             1,111
      Investment banking and underwriting                                             1,739               955
      Asset management and advisory                                                   2,144             1,722
      Interest                                                                        8,462            10,208
      Other                                                                           1,833             1,424
                                                                               -------------     -------------
Total revenues                                                                       50,534            39,667
      Interest expense                                                                5,558             7,775
                                                                               -------------     -------------
Net revenues                                                                         44,976            31,892
                                                                               -------------     -------------
Expenses:
      Compensation and benefits                                                      28,356            20,328
      Technology and telephone                                                        4,149             3,345
      Occupancy                                                                       2,092             2,092
      Execution, clearance and depository                                             1,080               875
      Promotion and development                                                       1,489             1,199
      Professional services                                                             795               810
      Printing, postage and supplies                                                    856               712
      Other operating expenses                                                        2,474               978
                                                                               -------------     -------------
Total expenses                                                                       41,291            30,339
                                                                               -------------     -------------

Income before income taxes                                                            3,685             1,553

Income tax expense                                                                    1,511               621
                                                                               -------------     -------------

Net Income                                                                   $        2,174    $          932
                                                                               =============     =============

Earnings per
share:
      Primary                                                                $         0.36    $         0.15
                                                                               =============     =============

      Fully diluted                                                          $         0.33    $         0.15
                                                                               =============     =============
Weighted average shares:
      Primary                                                                     6,110,606         6,389,920
                                                                               =============     =============

      Fully diluted                                                               7,362,021         7,657,172
                                                                               =============     =============

</TABLE>

       The accompanying notes are an integral part of the condensed consolidated
financial statements.

                                   -4-

<PAGE>

                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the three months ended December 31,
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                            (All dollars in thousands)
                                                                              1995             1994
                                                                           ------------     ------------
<S>                                                                      <C>              <C>
Cash flows from operating activities:
-----------------------------------------
Net income                                                               $       2,174    $         932
                                                                           ------------     ------------
Adjustments  to  reconcile  net  income to cash  provided  (used)  by  operating
  activities:
Depreciation and amortization                                                    1,111              794
Deferred income taxes                                                            (950)                -
Provision for real estate charges                                                  850              250
Other non-cash items                                                               657            (108)
                                                                           ------------     ------------
                                                                                 1,668              936
                                                                           ------------     ------------
Changes in operating assets and
liabilities:
Cash and  securities segregated for
    regulatory purposes                                                        (6,413)          (2,945)
Loans under matched securities resale and repurchase agreements, net               710            1,749
Net payables to customers                                                      (6,816)            4,935
Net receivables from brokers, dealers and clearing agencies                     11,357          (4,218)
Other receivables                                                              (1,792)            1,742
Trading securities owned, net                                                  (5,023)         (28,840)
Other assets                                                                   (1,371)            (117)
Accrued compensation and benefits                                              (2,582)          (5,778)
Other liabilities and accrued expenses                                             430            (105)
                                                                           ------------     ------------
                                                                              (11,500)         (33,577)
                                                                           ------------     ------------
             Cash used by operating activities                                 (7,658)         (31,709)
                                                                           ------------     ------------

Cash flows from financing activities:
-----------------------------------------
Proceeds from (repayment of ):
   Short-term bank borrowings                                                   11,318          (2,246)
   Borrowings under financing repurchase and resale agreements, net            (8,214)           18,136
   Notes payable                                                                 (862)             (45)
Purchase of stock for treasury                                                   (692)            (840)
Dividends paid                                                                   (185)            (192)
                                                                           ------------     ------------

             Cash provided by financing activities                               1,365           14,813
                                                                           ------------     ------------

Cash flows from investing activities:
-----------------------------------------
Capital expenditures                                                             (701)            (678)
                                                                           ------------     ------------
             Cash used by investing activities                                   (701)            (678)
                                                                           ------------     ------------

Net decrease (increase) in cash and cash equivalents                           (6,994)         (17,574)
Cash and cash equivalents at beginning of period                                26,537           30,193
                                                                           ------------     ------------
Cash and cash equivalents at end of                                      $      19,543    $      12,619
period
                                                                           ============     ============
Cash paid during the quarter for:
   Interest                                                              $       5,835    $       7,736
   Income taxes                                                          $       1,336    $         151

</TABLE>

    The  accompanying  notes are an integral part of the condensed  consolidated
financial statements.

                                  -5-

<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   Basis of Presentation:

     The interim financial statements are unaudited;  however,  such information
     reflects  all  normal  recurring  adjustments  which,  in  the  opinion  of
     management,  are necessary for a fair  presentation  of the results for the
     period.  The nature of the  Company's  business is such that the results of
     any interim  period are not  necessarily  indicative  of results for a full
     fiscal year.


2.   Net Capital Requirements:

     As a registered  broker-dealer  and member of the New York Stock  Exchange,
     Interstate/Johnson   Lane  Corporation  ("IJL"),  the  principal  operating
     subsidiary  of the  Company,  is subject  to the  Securities  and  Exchange
     Commission's uniform net capital rule. IJL has elected to operate under the
     alternative  method of the  rule,  which  prohibits  a  broker-dealer  from
     engaging in any transactions  when its "net capital" is less than 2% of its
     "aggregate  debit balances"  arising from customer  transactions,  as these
     terms are  defined  in the rule.  The  Exchange  may also  impose  business
     restrictions  on a member  firm if its net  capital  falls  below 5% of its
     aggregate  debit  balances.  IJL is also subject to the  Commodity  Futures
     Trading Commission minimum net capital requirement.

     At December  31,  1995,  IJL's net capital was 20% of its  aggregate  debit
     balances  and  approximately   $36.5  million  in  excess  of  its  minimum
     regulatory requirements.


3.   Commitments and Contingencies:

     Leases  for office  space and  equipment  are  accounted  for as  operating
     leases.  Approximate minimum rental commitments under noncancelable leases,
     some of which  contain  escalation  clauses  and  renewal  options,  are as
     follows:

                                                                       Millions

                  For the nine months ended September 30, 1996            $7.9

                  For the fiscal year ended September 30,
                                    1997                                   7.2
                                    1998                                   5.0
                                    1999                                   3.2
                                    2000                                   1.3
                                    Thereafter                             4.9
                                                                        ------
                                                                        $ 29.5
                                                                        ======
                                     -6-

<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


3.   Commitments and Contingencies, continued:

     In connection with its  involvement as a general  partner and/or  placement
     agent  of  various  real  estate  limited  partnerships,  the  Company  has
     guaranteed  certain  obligations of limited partners and, with others,  has
     jointly or severally  guaranteed  mortgage loan  obligations of some of the
     partnerships.  At December 31,  1995,  contingent  liabilities  under these
     obligations amounted to approximately $2.1 million in the aggregate.

     Of a $20  million  irrevocable  letter  of  credit  available,  the  amount
     outstanding at December 31, 1995 under this facility was $2.5 million.


4.   Legal Proceedings:

     The  Company is  involved  in certain  litigation  arising in the  ordinary
     course  of  business.  Management  believes,  based  upon  discussion  with
     counsel,  that the  outcome  of this  litigation  will not have a  material
     effect  in the  Company's  financial  position.  The  materiality  of legal
     matters on the Company's future  operating  results depends on the level of
     future results of operations as well as the timing and ultimate  outcome of
     such legal matters.


5.   Financial Instruments with Off-Balance-Sheet Risk:

     IJL's business  activities involve the execution,  settlement and financing
     of securities  transactions  generating accounts  receivable,  and thus may
     expose IJL to financial risk in the event a customer or other  counterparty
     is unable to fulfill its  contractual  obligations.  IJL  controls the risk
     associated  with  collateralized  loans by revaluing  collateral at current
     prices,  monitoring  compliance with applicable  credit limits and industry
     regulations,  and  requiring  the  posting of  additional  collateral  when
     appropriate.

     Obligations  arising from  financial  instruments  sold short in connection
     with its normal trading  activities  expose IJL to risk in the event market
     prices increase, since it may be obligated to repurchase those positions at
     a greater price.  IJL's short selling  primarily  involves debt securities,
     which are typically less volatile than equities or options.

                                      -7-

<PAGE>



                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


5.   Financial Instruments with Off-Balance-Sheet Risk, continued:


     Forward  and  futures  contracts  provide  for the seller  agreeing to make
     delivery of securities or other  instruments at a specified future date and
     price. Risk arises from the potential  inability of counterparties to honor
     contract terms,  and from changes in values of the underlying  instruments.
     At December 31, 1995, IJL's commitments  included forward purchase and sale
     contracts involving  mortgage-backed  securities with long market values of
     approximately  $27.9 million and short market values of approximately $23.9
     million and futures  purchase and sale contracts with long market values of
     $600,000 and short market values of $11.1 million.

     IJL enters into  resale  agreements,  whereby it lends money by  purchasing
     U.S.  government/agency  or  mortgage-backed  securities  from customers or
     dealers with an  agreement to resell them to the same  customers or dealers
     at  a  later  date.  Such  loans  are   collateralized  by  the  underlying
     securities, which are held in custody by IJL and may be converted into cash
     at  IJL's  option.  In  addition,  IJL  monitors  the  market  value of the
     collateral,   and  issues  margin  calls  as  necessary  according  to  the
     creditworthiness  of the  borrower.  Approximately  98% of all loans  under
     securities  resale  agreements  at  December  31,  1995  were  made  to two
     counterparties.

     IJL incurs risk in underwriting  public securities  offerings to the extent
     that  prospective  buyers  fail to  purchase  the  securities.  The Company
     attempts to mitigate this risk through due  diligence  carried out prior to
     undertaking the contractual obligation.

                                   -8-

<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General Business Environment

The  Company's  principal  activities --  securities  brokerage  for  individual
(retail) and institutional  investors,  market-making in equity and fixed-income
securities,  investment banking and underwriting,  and investment management and
advisory  services  --  are  highly  competitive.  Strategic  alliances  between
investment firms and commercial banks, insurance companies,  and other financial
services  entities  have  intensified  this  competition.  Many of the Company's
revenue  sources are sensitive to  marketplace  trading  volumes and to interest
rate conditions  which can be volatile.  As a result,  revenues and earnings may
vary significantly from quarter to quarter.


In recent years, the Company's retail sales force has grown in large part due to
the  recruitment  and  training  of  individuals   without  securities  industry
experience.  At December 31, 1995,  approximately  22% of the  Company's  retail
financial  consultants  had fewer than three years' industry  experience.  While
this strategy may be rewarding in the future,  near-term slowdowns in individual
investor  activity  could  negatively  impact the revenue  production  of a less
seasoned  sales force.  Implementation  of  prospective  Securities and Exchange
Commission  disclosure  requirements for  broker-dealers  regarding  payment for
order flow, and for money managers  regarding  "soft dollar"  arrangements  with
broker-dealers,  could also  indirectly  stifle certain  revenue  streams in the
future.


Liquidity and Capital Resources

The  Company's  net cash  position  decreased  $7.0 million for the three months
ended December 31, 1995.  Operating  activities  consumed $11.5 million of cash,
offset  by $3.8  million  of net  income  adjusted  for  depreciation  and other
non-cash  charges.  Financing  activities  provided  $1.4  million of cash while
capital expenditures totaled $700,000.

The Company's asset base consists primarily of cash, cash equivalents, and other
assets  which can be  converted  to cash within one year;  at December 31, 1995,
these  assets  comprised  approximately  93% of the  balance  sheet.  Day-to-day
financing  requirements  generally  are  influenced  by the level of  securities
inventories,  net  receivables  from  customers  and  broker-dealers,   and  net
receivables under resale agreements.  Significant  incremental cash requirements
also may occur from time to time in  connection  with  payments  under  deferred
compensation plans,  repurchase of the Company's common stock and/or convertible
debentures, payment of dividends, and litigation settlements arising from normal
business operations. In addition, the Company anticipates capital spending of up
to $8 million over the next several years in conjunction  with a planned program
of technology improvements.

                                     -9-

<PAGE>


                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued


Liquidity and Capital Resources, continued

At December 31, 1995, the Company had $152 million of unused call loan financing
available.  In addition,  the Company  maintains credit lines of several hundred
million dollars for collateralizing  repurchase  agreements with other financial
institutions,  and has financed its customer  receivables with customer payables
for many years.  Management  believes that these  resources,  funds  provided by
operations,   and  permanent  capital  of  shareholders'  equity  and  long-term
subordinated  debt,  will satisfy  normal  financing  needs for the  foreseeable
future.

The Company's  broker-dealer  subsidiary,  Interstate/Johnson  Lane  Corporation
("IJL"), is subject to liquidity and capital  requirements of the Securities and
Exchange  Commission,  Commodity  Futures Trading  Commission,  and The New York
Stock  Exchange,  and  consistently  has operated  well in excess of the minimum
requirements.  At  December  31,  1995,  IJL had net  capital of $40.6  million,
"excess net capital" of approximately $36.5 million,  and a net capital ratio of
20%.


Results of Operations

For the three months  ended  December 31,  1995,  net revenues  increased  $13.1
million,  or 41%, from the previous year,  while expenses,  other than interest,
increased $11.0 million,  or 36%. Net income of $2.2 million was up $1.3 million
from the results of the period of a year ago.

Overall,  commissions and sales credits increased by about $10.1 million, or 42%
from the same three-month period of a year ago, representing gains of 37% in the
retail sector and 50% in the institutional sector. Increases in secondary market
transactions  in both  exchange  listed  and  OTC  equities  contributed  to the
majority of the increase in both the retail and institutional sectors. Increased
sales of mutual  fund  shares  and  annuity  products  also  contributed  to the
increase in the retail sector,  while improving new issues markets and increased
sale of  mortgage-backed  securities had a positive impact on the  institutional
sector.

Increased  profits  of  $500,000  in most  areas of  fixed-income  trading  were
augmented by a $400,000 improvement in OTC trading results to produce an overall
increase in trading gains of $900,000, or 84%.

Investment banking fees and underwriting profits increased $800,000, or 82%, for
the same three month period due to an improved  capital-raising  market, coupled
with  an  increased  level  of  managed  underwritings  in  the  quarter.  Asset
management  and advisory fees were up $400,000 for the three month period due to
the  continued  growth of  asset-based  fees charged  retail  clients in lieu of
transaction-based commissions.

                                   -10-

<PAGE>



                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued


Results of Operations, continued

Interest  revenues  were down  about $1.7  million  for the three  months  ended
December 31, 1995, while expenses  decreased $2.2 million for the  corresponding
period.  The  resultant  increase  of  $500,000  in net  interest  income is due
primarily to higher rates earned on increased  segregated customer funds, and to
increased  inventories  of  mortgage-backed  securities.  The  majority  of  the
decrease in both revenues and expenses is  attributable to  significantly  lower
levels of matched resale and repurchase agreements.

Compensation  and benefits costs  increased  $8.0 million,  or 40% for the three
month  period  ended   December  31,  1995  due  primarily  to  an  increase  in
transaction-based commissions and other profit-driven incentives. Technology and
telephone expense increased  $800,000,  or 24%, for the quarter primarily due to
expenses  related to the Company's  ongoing program of technology  improvements.
Execution,  clearance and depository costs increased $200,000, or 23%, primarily
from increased  transaction  volume.  Promotion and development  costs increased
$300,000, or 24%, due to the Company's continuing effort to build revenue. Other
operating expenses increased $1.5 million, or 153%, for the quarter largely as a
result of increased provisions for legal and related matters, and of adjustments
to the carrying value of certain assets.

                                   -11-

<PAGE>


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     The  Company is  involved  in certain  litigation  arising in the  ordinary
     course  of  business.  Management  believes,  based  upon  discussion  with
     counsel,  that the  outcome  of this  litigation  will not have a  material
     effect  in the  Company's  financial  position.  The  materiality  of legal
     matters on the Company's future  operating  results depends on the level of
     future results of operations as well as the timing and ultimate  outcome of
     such legal matters.


Item 6. Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  Designation of Exhibit                              Sequential
                       in this Report           Description          Page Number
                              11            Statement Regarding
                                            Computation of Per
                                            Share Earnings                14

         (b)      Reports on Form 8-K

                  There were no  reports on Form 8-K filed for the three  months
ended December 31, 1995.

                                     -12-

<PAGE>


                          INTERSTATE/JOHNSON LANE, INC.
                          AND CONSOLIDATED SUBSIDIARIES


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.



                                                   INTERSTATE/JOHNSON LANE, INC.
         Registrant


         Signature              Title                      Date



_________________________       President and Chief
     James H. Morgan            Executive Officer         February 14, 1996





_________________________       Vice President - Finance
     Edward C. Ruff             and Treasurer (Principal
                                Financial Officer)        February 14, 1996




_________________________       Assistant Vice President
     C. Fred Wagstaff, III      (Principal Accounting
                                Officer)                  February 14, 1996


                                   -13-

<PAGE>

                                                                  Exhibit 11

           STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                            December 31,
                                                                                 -----------------------------------
                                                                                        1995                1994
                                                                                 ---------------     ---------------
<S>                                                                            <C>                 <C>
Net income per share was computed as follows:

Primary:
    Net income                                                                 $      2,174,199    $        931,563
                                                                                 ===============     ===============

1) Weighted average shares outstanding                                                6,110,606           6,389,920

2) Incremental shares under stock options
      computed under the treasury stock method
      using the average market price of
      issuer's stock during the periods                                                  63,465              84,210

                                                                                 ---------------     ---------------
3) Weighted average shares and common
      equivalent shares outstanding                                                   6,174,071           6,474,130
                                                                                 ===============     ===============
4) Weighted average shares outstanding
      which were used for calculation                                       (A)       6,110,606 (A)       6,389,920
                                                                                 ===============     ===============

    Net income per share                                                       $           0.36    $           0.15
                                                                                 ===============     ===============

Fully Diluted:
1) Unadjusted income                                                           $      2,174,199    $        931,563

2) Interest on convertible subordinated                                                 246,148             246,148

                                                                                 ---------------     ---------------

    Adjusted net income                                                        $      2,420,347    $      1,177,711
                                                                                 ===============     ===============

3) Weighted average shares outstanding                                                6,110,606           6,389,920


4) Incremental shares under stock options
      computed under the treasury stock method
      using the higher of the average or ending
      market price of issuer's stock at the end
      of the periods                                                                     68,373              84,210
5) Incremental shares relating to
      convertible subordinated  debentures                                            1,183,042           1,183,042

                                                                                 ---------------     ---------------
6) Weighted average shares and common
      equivalent shares outstanding                                                   7,362,021           7,657,172
                                                                                 ===============     ===============

    Net income per share                                                       $           0.33    $           0.15
                                                                                 ===============     ===============

</TABLE>

(A) Dilutive effect of common  equivalent  shares not included since dilution is
less than 3%.

                                     -14-

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