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

   
                            AMENDMENT #1 TO 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 June 30, 1996

                                        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 July 31, 1996
              -----                              -----------------------------
(Common stock, $.20 par value)                             5,948,827



                                  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--June 30, 1996 and
                  September 30, 1995                                   3

                  Condensed Consolidated Statements of
                  Operations--Nine Months Ended
                  June 30, 1996 and 1995                               4

                  Condensed Consolidated Statements of
                  Cash Flows--Nine Months Ended
                  June 30, 1996 and 1995                               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





                                     Page 2




<PAGE>
<TABLE>
<CAPTION>

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

                                                                       (All dollars in thousands)
                                                                    June 30,               September 30,
                                                                      1996                    1995
                                                                  -------------            ------------
<S>                                                             <C>                     <C>       
Assets
Cash and cash equivalents                                       $        6,241           $      26,537
Cash and securities segregated for
   regulatory purposes                                                  97,599                 117,616
Loans under matched securities resale agreements                        58,269                 129,623
Receivables:
  Financing resale agreements                                           79,421                  23,848
  Customers                                                            226,505                 175,328
  Brokers, dealers and clearing agencies                                18,856                  18,048
  Other                                                                  4,962                   4,722
Trading securities owned                                               103,202                  75,749
Land, buildings, and improvements, net                                   5,968                   7,285
Office facilities and equipment, net                                     9,248                   8,865
Goodwill and intangible assets                                          13,226                  13,678
Other assets                                                            20,520                  15,213
                                                                  -------------            ------------
                                                                $      644,017           $     616,512
                                                                  =============            ============
   
Liabilities and Shareholders' Equity
Short-term borrowings:
  Checks payable                                                $       15,292           $      11,872
  Financing repurchase agreements                                       52,644                  38,561
Borrowings under matched securities repurchase agreements               58,685                 130,453
Payables:
  Customers                                                            288,079                 267,714
  Brokers and dealers                                                    1,544                   6,619
  Other                                                                  6,881                   7,322
Accrued compensation and benefits                                       17,810                  14,460
Securities sold but not yet purchased                                   83,154                  25,305
Notes payable                                                            6,463                   7,772
Other liabilities and accrued expenses                                  16,918                  15,864
                                                                  -------------            ------------
                                                                       547,470                 525,942
                                                                  -------------            ------------
Minority interest                                                          200                     200
                                                                  -------------            ------------
Long-term subordinated debt                                             20,999                  20,999
                                                                  -------------            ------------
Shareholders' equity:
      Common stock                                                       1,377                   1,377
      Additional paid-in-capital                                        31,141                  31,510
      Retained earnings                                                 51,664                  45,043
                                                                  -------------            ------------
                                                                        84,182                  77,930
      Less:  treasury stock, at cost                                    (8,834)                 (8,559)
                                                                  -------------            ------------
            Total shareholders' equity                                  75,348                  69,371
                                                                  -------------            ------------
                                                                $      644,017           $     616,512
                                                                  =============            ============
    

          The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>


                                     Page 3

<PAGE>


<TABLE>
<CAPTION>


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


                                                         For the Nine Months              For the Three Months
                                                            Ended June 30,                   Ended June 30,
                                                      (All dollars in thousands)       (All dollars in thousands)
                                                         1996            1995             1996             1995
                                                     -------------   -------------    -------------    -------------

<S>                                                <C>             <C>              <C>              <C>  
 Revenues:
      Commissions and sales credits                $      111,219  $       82,209   $       37,176   $       30,528
      Trading gains, net                                    5,709           5,049            1,800            1,572
      Investment banking and underwriting                   3,718           2,931              782            1,107
      Asset management and advisory                         6,823           5,270            2,433            1,753
      Interest                                             25,162          33,199            8,353           11,771
      Other                                                 5,948           4,829            2,038            1,510
                                                     -------------   -------------    -------------    -------------
 Total revenues                                           158,579         133,487           52,582           48,241
      Interest expense                                     16,067          25,577            5,305            9,217
                                                     -------------   -------------    -------------    -------------
 Net Revenues                                             142,512         107,910           47,277           39,024
                                                     -------------   -------------    -------------    -------------
    
Expenses:
      Compensation and benefits                            92,738          68,524           31,038           24,987
      Technology and telephone                             13,166          11,163            4,524            4,237
      Occupancy                                             6,454           6,286            2,205            2,109
      Execution, clearance and depository                   3,017           2,841              956              955
      Promotion and development                             4,909           4,440            1,742            1,499
      Professional services                                 2,315           2,533              802            1,005
      Printing, postage and supplies                        2,702           2,587              911              968
      Other operating expenses                              5,191           3,154            1,343            1,025
                                                     -------------   -------------    -------------    -------------
 Total expenses                                           130,492         101,528           43,521           36,785
                                                     -------------   -------------    -------------    -------------

 Income before income taxes                                12,020           6,382            3,756            2,239

 Income tax expense                                         4,850           2,488            1,463              879
                                                     -------------   -------------    -------------    -------------

 Net Income                                        $        7,170  $        3,894   $        2,293   $        1,360
                                                     =============   =============    =============    =============

 Earnings per share:
      Primary                                      $         1.18  $         0.61   $         0.38   $         0.22
                                                     =============   =============    =============    =============

      Fully diluted                                $         1.04  $         0.61   $         0.34   $         0.21
                                                     =============   =============    =============    =============

 Weighted average shares:
      Primary                                           6,076,846       6,363,871        6,005,992        6,281,891
                                                     =============   =============    =============    =============

      Fully diluted                                     7,600,951       7,642,047        7,530,097        7,560,067
                                                     =============   =============    =============    =============
    


           The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>

                                     Page 4
<PAGE>
<TABLE>
<CAPTION>
                                 INTERSTATE/JOHNSON LANE, INC. AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED  STATEMENTS OF CASH FLOWS For
                                  the nine months ended June 30,
                                              (Unaudited)
                                                                           (All dollars in thousands)
                                                                              1996             1995
                                                                          -------------     ------------
<S>                                                                     <C>               <C> 
   
Cash flows from operating activities:
-----------------------------------------
Net income                                                              $        7,170    $       3,894
                                                                          -------------     ------------
Adjustments  to  reconcile  net  income to cash  provided
  (used)  by  operating activities:
Depreciation and amortization                                                    3,653            2,674
Deferred income taxes                                                             (410)               -
Provision for real estate charges                                                  850              750
Other non-cash items                                                             1,091             (198)
                                                                          -------------     ------------
                                                                                 5,184            3,226
                                                                          -------------     ------------
Changes in operating assets and liabilities:
Cash and  securities segregated for
    regulatory purposes                                                         20,018          (18,627)
Loans under matched securities resale and repurchase agreements, net              (414)           2,074
Net payables to customers                                                      (30,811)          14,541
Net receivables from brokers, dealers and clearing agencies                     (5,884)            (356)
Other receivables                                                                 (241)           3,961
Trading securities owned, net                                                   30,397            4,629
Other assets                                                                    (4,976)          (5,113)
Accrued compensation and benefits                                                3,349           (1,950)
Other liabilities and accrued expenses                                           1,293           (1,155)
                                                                          -------------     ------------
                                                                                12,731           (1,996)
                                                                          -------------     ------------
             Cash provided (used) by operating activities                       25,085            5,124
                                                                          -------------     ------------
    
Cash flows from financing activities:
-----------------------------------------
Proceeds from (repayment of ):
   Short-term bank borrowings                                                    3,420           (6,307)
   Borrowings under financing repurchase and resale agreements, net            (41,490)           1,511
   Notes payable                                                                (1,309)            (696)
Proceeds from stock options exercised                                              126              164
Purchase of stock for treasury                                                  (2,765)          (2,575)
Dividends paid                                                                    (549)            (572)
                                                                          -------------     ------------

             Cash used by financing activities                                 (42,567)          (8,475)
                                                                          -------------     ------------

Cash flows from investing activities:
-----------------------------------------
Capital expenditures                                                            (2,814)          (3,270)
                                                                          -------------     ------------
             Cash used by investing activities                                  (2,814)          (3,270)
                                                                          -------------     ------------

Net decrease in cash and cash equivalents                                      (20,296)          (6,621)
Cash and cash equivalents at beginning of period                                26,537           30,193
                                                                          -------------     ------------
Cash and cash equivalents at end of period                              $        6,241    $      23,572
                                                                          =============     ============
Cash paid during the quarter for:
   Interest                                                             $        5,060    $       9,029
   Income taxes                                                         $        3,674    $         593


      The  accompanying  notes are an integral part of the condensed  consolidated financial statements.
</TABLE>

                                     Page 5

<PAGE>







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


1.   Basis of Presentation:

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


2.   Net Capital Requirements:

     As a registered  broker-dealer  and member of the New York Stock  Exchange,
     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 June 30, 1996, IJL's net capital was 17% of its aggregate debit balances
     and  approximately  $36.0  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 three months ended September 30, 1996              $2.7

          For the fiscal year ended September 30,
                     1997                                             7.7
                     1998                                             5.4
                     1999                                             3.5
                     2000                                             1.4
                     Thereafter                                       5.0
                                                                 --------
                                                                   $ 25.7
                                                                 ========

                              
                                     Page 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  June  30,  1996,  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 June 30, 1996 under this facility was $4.5 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  on 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.


                                     Page 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 June 30, 1996,  IJL's  commitments  included  forward  purchase and sale
     contracts involving  mortgage-backed  securities with long market values of
     approximately  $26.0 million and short market values of approximately $26.4
     million  and  futures  sale  contracts  with short  market  values of $15.9
     million used primarily to hedge municipal bonds. While IJL may from time to
     time  participate  in the  trading of some  derivative  securities  for its
     customers, this is not a significant portion of IJL's business.

     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  93% of all loans  under
     securities   resale   agreements  at  June  30,  1996  were  made  to  five
     counterparties.

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

   
6.   Long-Term Incentive Compensation Plan:


     The  Company's   Board  of  Directors   approved  a  three-year   incentive
     compensation plan ("the Plan") for selected  executive officers at its July
     1996 meeting.  The Plan was approved  retroactively to the beginning of the
     Company's 1996 fiscal year;  accordingly,  quarterly financial  information
     has been  restated to reflect  adoption of the Plan.  Compensation  expense
     recognized under the Plan totaled $255,000 and $919,000,  respectively, for
     the  quarter and nine months  ended June 30, 1996 and is  reflected  in the
     accompanying restated financial statements. Maximum imputed shares issuable
     under the Plan as of June 30, 1996  totaled  300,000,  and are  included as
     common stock  equivalents in the computation of fully diluted  earnings per
     share.
    

                                     Page 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  June  30,  1996,  approximately  20%  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  $20.3 million for the nine months
ended June 30, 1996.  Changes in net operating  assets provided $12.7 million of
cash,  augmented by $12.4 million of net income  adjusted for  depreciation  and
other  non-cash  charges.  Financing  activities  consumed $42.6 million of cash
while capital expenditures totaled $2.8 million.
    
The Company's asset base consists primarily of cash, cash equivalents, and other
assets which can be converted to cash within one year;  at June 30, 1996,  these
assets comprised  approximately 92% 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 $3
million over the next several  years in  conjunction  with a planned  program of
technology improvements.


                                     Page 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 June 30,  1996,  the Company had $155  million of unused call loan  financing
available.  In addition,  the Company  maintains credit lines of several hundred
million dollars for  collateralized  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 June 30, 1996, IJL had net capital of $40.7  million,  "excess
net capital" of approximately $36.0 million, and a net capital ratio of 17%.
    

Results of Operations

For the nine months ended June 30, 1996, net revenues  increased  $34.6 million,
or 32%, from the previous year, while expenses,  other than interest,  increased
$29.0  million,  or 29%. Net income of $7.2 million was up $3.3 million from the
results of the period of a year ago. Net revenues  increased  $8.3  million,  or
21%,  for the three  months ended June 30,  1996,  while  non-interest  expenses
increased  $6.7  million,  or 18%. Net income for the period was $2.3 million or
$.38 per  share,  compared  with  $1.4  million  or $.22 per  share for the same
quarter of a year ago.

Overall, commissions and sales credits increased by about $29.0 million, or 35%,
from the same nine-month period of a year ago,  representing gains of 35% in the
retail sector and 37% in the institutional  sector.  For the three-month  period
ended June 30, 1996,  commissions and sales credits increased about $6.6 million
from the same period of a year ago.  Increases in secondary market  transactions
in both exchange  listed and OTC equities,  and increased  equity  underwritings
contributed to the increase in both the retail and institutional sectors for the
nine and three month periods.  Increased sales of mutual fund shares and annuity
products also  contributed to the increase in the retail sector,  while improved
new issue markets and increased  activity in  mortgage-backed  securities  had a
positive impact on the institutional sector for both periods presented.

Increased  profits of $1.3  million  in OTC  trading  were  offset by a $650,000
decrease in fixed income trading to produce an overall increase in trading gains
of  $650,000,  or 13% for the nine months  ended June 30,  1996.  An increase of
$550,000  in OTC trading for the quarter was offset by a decrease of $300,000 in
fixed  income  trading,  producing a net  increase of $250,000 or 15% in trading
gains.


                                    Page 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

Investment banking fees and underwriting profits increased $800,000, or 27% from
the  same  nine  month  period  of  a  year  ago  due  to  an  improved   equity
capital-raising  environment,   coupled  with  an  increased  level  of  managed
underwritings. However, a decrease in revenue from participation in underwriting
syndicates  contributed to the $300,000 decrease in this sector for the quarter.
Asset  management  and  advisory  fees were up $1.6 million and $700,000 for the
nine and three  month  periods,  respectively,  due to the  continued  growth of
asset-based   fees  charged   retail   clients  in  lieu  of   transaction-based
commissions.  Other  income was up $1.1  million and  $500,000  for the nine and
three month periods, respectively,  largely attributable to an increase in money
fund service fees.

Interest revenues were down about $8.0 million for the nine months ($3.4 million
for the quarter)  ended June 30, 1996 while  interest  expenses  decreased  $9.5
million and $3.9 million for the corresponding  periods. The resultant increases
of $1.5 million and $500,000 in net interest income for the nine and three month
periods,  respectively,  is due  primarily to an increase in interest  earned on
segregated  customer funds offset slightly by increased  levels of net unmatched
repurchase agreements and reduced rate spreads earned on customer balances.  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  $24.2 million,  or 35% ($6.1 million
for the quarter), due primarily to an increase in transaction-based  commissions
and other profit-driven  incentives  including the new management LTIP described
in Note 6 to the Condensed  Consolidated  Financial  Statements.  Technology and
telephone expense increased $2.0 million,  or 18%, for the nine month period and
$300,000  for the quarter  primarily  due to expenses  related to the  Company's
ongoing  program of technology  improvements.  Professional  services  decreased
$200,000  for  both  the nine and  three  month  periods  of a year ago due to a
decrease in legal fees paid. Other operating expenses increased $2.0 million, or
65% ($300,000 for the quarter)  largely as a result of increased  provisions for
legal and related matters.
    

                                    Page 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  on 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

                               27           Financial Data Schedule     15

         (b)      Reports on Form 8-K

                  There were no reports on Form 8-K filed for the three months 
                  ended June 30, 1996.










                                    Page 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          October 21, 1996





_________________________           Vice President - Finance
      Edward C. Ruff                and Treasurer (Principal
                                    Financial Officer)         October 21, 1996




_________________________           Assistant Vice President
      C. Fred Wagstaff, III         (Principal Accounting
                                    Officer)                   October 21, 1996
    


                                    Page 13

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