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Executives

Bill Dunaway - CFO

Pete Anderson - President and CEO

Analysts

Mark Lane - William Blair & Company

Mike Vinciquerra - BMO Capital Markets

Chris Donat – Sandler O’Neill

Patrick O'Shaughnessy – Raymond James

Richard Todaro – Kennedy Capital

Brian Gibson – Edward Jones

FCStone Group, Inc. (FCSX) F1Q09 Earnings Call January 8, 2009 9:00 AM ET

Operator

(Operator Instructions) Welcome to the FCStone Group 2008 Fiscal First Quarter Earnings Presentation. I will now hand the conference over to Bill Dunaway, CFO.

Bill Dunaway

I’d like to welcome you to FCStone’s fiscal first quarter 2009 earnings conference call. Shortly before the market opened today, FCStone issued a press release reporting its earnings for the fiscal first quarter of 2009. The press release is available on our web site at www.FCStone.com. Additionally, we are conducting a live web cast of this call which will also be available on our web site after the call’s conclusion.

During today’s call, Pete Anderson, our President and CEO, will first provide an overview of our results and commentary on our business in the current market environment. I will then provide details on the financial performance for the first quarter. Pete will then conclude our presentation with some closing remarks before we open the question up the call for some Q&A.

Please note that today’s conference call is copyrighted material of FCStone and cannot be rebroadcast without the company’s express written consent. I would also like to remind you that during the course of this call management will make projections or other forward looking remarks regarding future events or the future financial performance of the company. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs.

It is important to note that such statements about FCStone’s estimated or anticipated future results, prospects, or other non-historical facts, are forward looking statements and reflect FCStone’s current prospective of the existing trends and information as of today’s date. FCStone disclaims any intent or obligation to update these forward looking statements except as expressly required by law. Actual results can be affected by inaccurate assumptions, including the risks, uncertainties, and assumptions described in the company’s filings with the Securities and Exchange Commission.

In light of these, risks, uncertainties, and assumptions, the forward looking statements in this earnings call may not occur and actual results could differ materially from those anticipated or implied in the forward looking statements. When you consider these forward looking statements you should keep in mind these risk factors and other cautionary statements during the earnings call.

I’d now like to turn the call over to Pete Anderson, our President and CEO.

Pete Anderson

I’d first like to welcome and thank everyone for joining our call this morning. I’m happy to be representing FCStone for its fiscal 2009 first quarter results conference call. As you can see from this morning’s release our first quarter numbers continue to show strong revenue growth which we believe stands out in today’s economic environment. FCStone just completed the first quarter fiscal 2009 during a period of extraordinary global economic turmoil with credit and leverage capacity in gridlock in many industries and regions and a significant collapse and de-leveraging of the commodity markets.

Despite these conditions FCStone’s revenues increased over 16% to $85.6 million in the first quarter of 2009 from $73.6 million in the first quarter of 2008. Commission and clearing fee revenues increased despite a decline in exchange traded contract trading volumes and consulting revenues increased from the prior year quarter and OTC brokerage remained relatively confident despite the decrease in volume.

You will recall that FCStone announced on November 3, 2008, that it expected to incur up to a $25 million pre-tax bad debt provision for the first quarter. Our first quarter results include this item and as a result earnings for the first quarter fiscal 2009 reflect a loss of $3 million or $0.11 per diluted share versus a $13.1 million profit or $0.45 per diluted share in 2008.

As previously announced the bad debt provision for the first quarter of fiscal 2009 included the result of two accounts in the commodity risk management segment and one account in the clearing and execution segment. The reserve established for these three accounts totaled approximately $25 million pre-tax or $15.6 million after tax representing a loss of $0.56 per diluted share.

Also included in the first quarter fiscal 2009 results is the after tax write off of $711,000 of goodwill on the balance sheet representing value of historical acquisitions. Under GAAP this write down was triggered because our market value fell below our book value. Recognition of this loss negatively impacted earnings by approximately $.03 per diluted share.

Excluding the items for the three questionable accounts and the goodwill write off earnings for the first quarter of fiscal 2009 would have been $13.3 million or $0.48 per diluted share up slightly versus $0.45 in the first quarter of fiscal 2008.

As we previously discussed we’ve taken considerable steps to mitigate exposure to the three accounts that have been reserved. The two commodity risk management segment accounts have been totally liquidated with notes signed by the customers totaling $5 million. In the case of the large clearing and execution customer FCStone is in control of the orderly liquidation of the account and has taken prudent measures to minimize the risk and provide for the orderly liquidation of the remaining positions.

FCStone also has a note in the amount of $10 million signed by the introducing broker or IB through which the clearing and execution customer originated. This note and earnings from the IB are expected to add to future earnings by eliminating a 50% profit share otherwise payable to the IB.

We recognize that the bad debt reserves are substantial but we want to make it very clear that this situation is not systemic to the business in either the commodity risk management segment or the clearing and execution segment of FCStone. FCStone has taken steps to review all segments of the company and is making every effort to strengthen our controls, oversight and systems. The company has taken steps to ensure that the situation that develops in this account will not occur again.

All of the commodity risk management and the clearing and execution segment accounts are continually being reviewed for credit worthiness, credit capacity, position limits, and volumes. FCStone has also engaged a national consulting and accounting firm to review all the company’s procedures, processes, controls, and systems. We recently hired a new Vice President of Risk Systems whose initial focus will be leading the evaluation of all risks, system design, implementation, reporting requirements to be utilized throughout the organization.

During these unprecedented volatile times we are placing an extremely high priority on implementing initiatives to expand risk control and provide additional oversight to all platforms, processes, credit and risk exposure. After reviewing our customer accounts we are confident in saying at this time that no substantial customer accounts are in a position similar to the account involved in the bad debt provisions discussed today.

Despite this bad debt reserve the company is as financially sound as it has ever been. The company has credit lines for its core operations totaling $511 million. These credit lines consist of $56 million of sub-debt loans and commitments, $270 million of revolving margin lines and $185 million of available repo financing. Currently the credit outstanding or borrowed against these credit lines consists of $16 million of sub-debt, zero from the margin line and $17.3 million from the repo lines that are collateralized by warehouse receipts on physical grain.

FCStone Group Inc. had a total of $222 million in equity as of November 30, 2008, and FCStone LLC our futures commission merchant subsidiary had a minimum regulatory capital requirement as of November 30, 2008, totaling $47.3 million. The company currently has capital in excess of the regulatory requirement of $42.6 million and access to additional capital from investments of $14.5 million and sub-debt of $40 million bringing the total available excess capital on November 30, 2008, to $97.1 million. We believe we are in a very strong financial position and can continue to execute on our strategic initiatives and grow the business.

The contraction of the credit markets created by the current economic crisis has precipitated two significant challenges for our customer base. First, the lack of credit availability has reduced the ability of our customers to procure financing in order to carry adequate inventories after profit and merchandising and manufacturing processes.

Second, the ability to adequately finance margin requirements to lock in the structured financial instruments needed to mitigate potential expense items or maximize merchandizing and manufacturing profits has also been reduced. Virtually every industry that FCStone services has experienced unparalleled volatility and every commodity market and region around the world. Consequently we expect that this lack of liquidity will impact FCStone over the remainder of fiscal 2009 until the credit markets begin to loosen up.

Noteworthy affect of current market conditions are compression and profit margins in the renewable energy industry, international credit restrictions that have reduced credit capacity in the Latin American markets and fear of run away commodity markets that have inhibited commercial participation.

Another current headwind that FCStone faces is the interest rate environment which is not only at historical lows but in some instruments is even trading at negative values to par. FCStone continues to utilize approved money market accounts with investment funds capturing the best available return for investments while meeting our liquidity and safety requirements.

Despite all of these challenges we continue to see our core customer base volumes in production agriculture and grain handling mirror traditional supply and demands seasonality. If commodity prices decline with accelerated de-leveraging the open interest and positions held by our customers declined at a similar pace. Once those positions were liquidated we began to see open interest begin to increase as the physical grain production of the second largest crop in history was harvested.

FCStone’s expertise in agricultural commodities and energy will be the key drivers to maintaining volumes and profitability as we focus on these core traditional market segments both domestically and internationally. Other areas of growth and expansion around the world include agricultural products, natural gas and energy producers and consumers, food service, meats and dairy product consumption and manufacturing, cotton and textile and foreign exchange.

Internationally, European market has been a market segment that had been traditionally serviced by manufacturers and physical suppliers. With the extreme volatility in all products and commodities these suppliers have ceased to provide risk management structures in physical transactions. This in turn has lead a number of new clients to utilize FCStone leveraging our consultant network including their expertise and experience to build instruments and structures to manage the risks that they had traditionally offset in the physical market.

Consumption or demand side of our customer base has also seen a significant increase in interest as well as volume. In fact, our food service division has been one of the company’s leaders in volume as well as generating the most new accounts throughout our first quarter.

As FCStone navigates the current economic environment we’ll look to reduce costs by consolidating as many internal functions, processes and personnel as possible across all of our operating segments. We will continue to evaluate our consultant training programs and we’ll focus our efforts to ramp up additional consultant capacity in the product lines, regions and markets that warrant it. We’ll initiate a concerted concentrated effort to increase the productivity and utilize the capacity of our current consultant network.

That said, we will maintain the capacity to fully service the growth we are experiencing and expect to continue to see. Since our last report the NASDAQ OMX Group has completed the final piece of its initially subscribed investment in AGORX giving it 20% equity interest. Following the initial launch of the AGORX electronics communications network platform with an initial test rate in ethanol.

FCStone is committed to trading on the platform and AGORX is currently in the process of signing up other qualified participants. FCStone will also continue to be optimistic on the M&A front as we seek to accelerate growth in the markets we currently serve as well as the niche markets where we don’t have the consultant expertise in house.

We would not expect to make any major purchases given the uncertain macro economic environment. Instead, staying very disciplined with the acquisition opportunities we’d evaluate and potentially complete. We believe that the current tightness and lack of liquidity in the credit markets will be with us through the next two quarters and will slowly relax as we see stabilization of the world economy and commodity markets in general.

With FCStone’s expertise in the agricultural and energy complexes we also believe that we are well positioned to assist both producers and consumers of commodities around the world. With the de-leveraging and deflation of commodity prices we have seen increased interest and growth potential in all the commodity areas we serve as FCStone’s risk management consultants continue to identify new products, structured and solutions to maintain their client’s commodity risk.

At some point we expect interest rates to rise from their historical lows which will provide us with another avenue for revenue growth. We believe that the traditional commitment to our clients best interest, the strength of the FCStone consultants expertise and experience and alternative platforms to manage our clients risk will continue to drive the growth and development of FCStone over the long term.

FCStone intends to leverage the industry dynamics and momentum but are in place to drive our volumes and the growth of the company in the future. We remain confident that the company is well positioned for long term success and to drive shareholder value.

With that I’d like to turn the call over to Bill Dunaway for a financial review of the first quarter.

Bill Dunaway

We’re pleased to report continued growth across our core operating segments during the first fiscal quarter of 2009, as revenues reached $85.6 million. Compared to the prior year period of $75.6 million, the first quarter revenues increased 16%. Average customer segregated and over the counter deposits increased $357 million over the first quarter of 2008 while overall exchange traded contract volumes declined year over year to 21.3 million contracts from 23.3 million.

Exchange traded volume in our core commodity risk management segment increased and we realized an overall increase in our rate per contract which drove higher commission and clearing fee revenues. First quarter over the counter contract trading volume was 257,000 in the fiscal quarter ended 2009 versus 301,000 contracts in the first quarter of 2008. Going forward we will be releasing our contract trading volumes as well as customer segregated assets on a monthly basis. These metrics will hopefully give a bit more transparency into the ongoing dynamics of our current operating environment.

We recorded a net loss from continuing operations of $2.8 million for the first quarter compared to net income of $13.1 million for the same period last year. Our earnings this fiscal quarter were affected by a few special items of note. We recognized bad debt provisions during the quarter totaling $15.6 million net of tax or $0.56 per diluted share, primarily related to the shortfall in the third party energy trading account for which we clear transactions and to a lesser extent the renewal fuels accounts and foreign exchange account.

We also recorded an impairment loss in goodwill of $700,000 or $0.03 per diluted share during the first quarter of 2009. This impairment loss is a non-cash item and represents a write off of all previously recorded goodwill on the balance sheet. These items were partially offset by a gain on the sale of excess exchange stock and trading rights net of tax in the amount of $3.9 million or $0.14 per diluted share.

Despite these market related events we believe that operationally we had another strong fiscal quarter. I’d now like to take a few minutes to walk you through the main components of the quarter’s revenues starting with the $12 million increase in total revenue.

First, commission and clearing fees were up more than $5 million or 13% with approximately $4.7 million of this increase coming from exchange trade and the other $400,000 of this increase comes from our Forex commissions. As I mentioned before a decline in exchange traded volume of 2 million contracts was offset by a $0.50 increase in our commission rate per contract.

Next our service consulting and brokerage fees which are primarily our over the counter brokerage fees were up about $3.2 million for the quarter over last year which is nearly 20% more than last years first quarter. The increase was primarily attributable to increased consultant services primarily related to acquisition in our dairy and textile divisions as well as Forex trade transactions. Our over the counter revenues remained relatively constant despite a decrease in over the counter contract volume.

Interest income increased slightly from the same period last year coming in higher by approximately $186,000. This increase is primarily attributable to higher customer account balances in our clearing and execution segment which resulted in a $3.7 million increase in interest income. This interest was partially offset by a decline in interest income in our commodity risk management and financial services segments of $2.7 million and $606,000 respectively.

The decrease in CRM and financial services segments was the result of significantly lower short term interest rates and the decline in financing activity in our financial services segment. As we look at our total expenses net of the cost of commodity sold increased approximately $37.8 million for the quarter over the same period last year to $90.4 million.

Upon a closer examination of the expenses revenue volume related variable expenses of broker commissions, pit brokerage and clearing fees and introducing broker commissions contributed $9 million to the increase in expenses. This increase was partially offset by lower employee benefit and payroll taxes of $1.2 million primarily related to the freezing of our defined benefit pension plan and the implementation of a profit sharing agreement in our Brazilian operation.

A majority of this increase in expenses is due to the previously announced bad debt provision of $25.7 million and the impairment of goodwill of $1.2 million. Taking a closer look at the performance within our two main business segments our CRM full service segment revenues were $38 million in the first quarter ended November 30, 2008, compared to $37.3 million in the prior year quarter or an increase of 1.9%.

The core revenues of this segment commission and clearing fees and service consulting and brokerage fees increased $5.8 million or 20.7% over the prior year first quarter which was offset by a $2.7 million decline in interest income. In addition, the prior year first quarter segment revenues include gains on sales of excess exchange stock and trading rights of $2.9 million.

Segment income before minority interest and income tax for the first quarter 2009 in this segment decreased $4.6 million compared to $17.2 million in the prior year quarter. This segment income was for minority interest and income tax declined from the prior year first quarter primarily due to $5.5 million bad debt expense related to account deficits with the renewable fuels account and foreign exchange customer.

The decline in interest income and the absence of any gains related to the sale of exchange stock and trading rights in the first quarter ended November 30, 2008. Excluding the exchange stock and trading right gains first quarter 2008 segment revenues were $34.4 million and segment income was $14.3 million.

For the clearing and execution services segment revenues were $44.4 million in the quarter ended November 30, 2008, compared to $33 million in the prior year quarter for an increase of 34.5%. The segment lost $7.6 million in the first quarter compared to net income of $5.2 million in the prior year quarter.

This segment loss is primarily due to the $20 million bad debt loss related to the shortfall in the third party energy trading accounts partially offset by $3.7 million increase in interest income due to higher customer deposits and one time gains related to the sale of excess exchange stock and trading rights of $4.9 million.

Exchange traded volumes in the segment declined by 2.1 million contracts primarily due to reduced from high volumes, low margin electronic trade customers which had opened their accounts in the fourth quarter of fiscal 2007. Despite this decline in contract volume commission and clearing fee revenues increased by $2.6 million or an increase of 9%.

Reviewing our balance sheet, our total assets are approximately $2.1 billion as of November 30, 2008, which is down from $2.4 billion as of August 31, 2008. This decrease was impacted during the recent quarter by approximately $345 million in reduced customer segregated funds, approximately $43 million from reduction in notes receivable in advances which was partially offset by a $26 million increase in OTC and Forex customer deposits in open contracts.

During a period of extraordinary global economic turmoil with credit and leverage capacity in gridlock in many industries and de-leveraging of the commodity markets this type of shift was expected. We remain excited about both the core growth of our company and anticipate a continued trajectory of growth moving forward during these uncertain times.

With that I’d like to turn it back over to the operator for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Mark Lane - William Blair & Company

Mark Lane - William Blair & Company

Could you first explain the note from the introducing broker and did that mitigate the loss in the quarter or is that just have an impact on future results?

Bill Dunaway

It is something that we factor into the bad debt provision that we set up. It just affects the payments that would normally go out. If would really more just affect cash that would go out to that introducing broker on a go forward basis it would not affect earnings going forward.

Mark Lane - William Blair & Company

You provided the note?

Bill Dunaway

No, they signed a note basically collateralizing their obligation to us that they’re responsible for 50% of the shortfall on that account.

Mark Lane - William Blair & Company

Since you say that you’re going to start providing monthly numbers can you give us some idea of where customer segregated assets were at the end of December?

Bill Dunaway

We’re probably going to do that all at once when we do that. After we file our certified 1FR with the CFTC regarding segregated funds each month we’ll go ahead and release volumes and segregated client assets. Until we do that we don’t want to get ahead of ourselves and release them prior to finalizing those numbers that we’re going to release shortly.

Mark Lane - William Blair & Company

How long after the quarter would you expect to report that supplemental data?

Bill Dunaway

We file our 1FR with the CFTC 17 business days after the end of a month; anticipate probably the 17th or 18th business day of the month we would release that.

Mark Lane - William Blair & Company

What was the ending total on the number of consultants as of November and what’s the plan now in terms of consultant headcount for this year?

Pete Anderson

At the end of November I think we had about 127 consultants, we’d lost a couple consultants to basically back to the industry. Our year end number, our August 31 number was 130. I don’t know that we’re going to ramp up the training programs we have historically. Our goal is still to add 10 to 20 consultants going forward this year but that’s going to really be through probably to some degree targeted acquisition as well as placing additional capacity in those market segments that are really growing and ramping up or where we want to get really developed additional consultants and educate those consultants. It’s going to be more targeted as we go forward.

Operator

Your next question comes from Mike Vinciquerra - BMO Capital Markets

Mike Vinciquerra - BMO Capital Markets

Thanks also for the new disclosure you’re going to provide. Certainly I think more information in this environment is better than less so I think it will help. Can you talk about what your consulting clients are doing today, in other words, how are they reacting to today’s environment? We obviously saw less OTC contracts and I think you mentioned that they’re turning more to the exchange but how do you see this going forward and are we seeing any impact this quarter of what you talked about where clients can’t go out as far because of their access to capital so they’re going to do more contracts on a short term basis then roll them forward every quarter. Are we seeing any impact from that yet?

Pete Anderson

In the traditional grain handling and production side of the business its really pretty well capitalized to the banks credit there I think they’ve done a great job of providing capital. Where we really see restriction in inhibiting positions being held as well as carried and financed is in renewable fuels. They’re going through real difficult time now as far as compression of margins and credit capacity and availability, in fact.

In Latin America as well as across Asia internationally credit is really difficult as tight as credit is here domestically its even worse across Latin America and across Asia. We’re seeing significantly less volume come out of Latin America and Brazil than we have historically. Over time I think that will ease but a lot of the international banks that were providing financing across Latin America are just not there today.

A lot of the regional banks across lets say specifically Brazil, are really starting to ramp up and ease some of their credit restrictions. I think we’ll see this probably through the bulk of this fiscal year for us.

Mike Vinciquerra - BMO Capital Markets

Are those Brazilian clients then turning to exchange traded futures as an alternative or not hedging at all?

Pete Anderson

Right now in a lot of cases they just don’t have the credit capacity to carry inventories or margin positions. We’re just seeing a lot of people on the sideline at this point until they really recognize where they’re credit capabilities are.

Mike Vinciquerra - BMO Capital Markets

Understanding that international still relatively small percentage of your total business what else was the key factor in the huge drop sequentially in OTC contract volume. I’m assuming Brazil was a portion of that but a big portion of it had to come from domestic customers, right?

Pete Anderson

Some of it was but the bulk of that decline came from, you’re right, Brazil and a significant part of it came out of renewable fuels then just across the board especially on the AG side of the market or that segment.

Mike Vinciquerra - BMO Capital Markets

I know you gave some detail on the interest income but I didn’t get everything down. Interest was much stronger than we would have anticipated particularly given where your segment assets ended the quarter. Can you give us any detail, did you invest in different funds that were able to give you a better yield or how did you maintain the yield so well?

Bill Dunaway

At the end of the quarter the overall average for the quarter was higher than what the ending balances came out. The average for the quarter was about $1.350 billion for assets for the quarter as opposed to where it ended up at about $1.1 billion. That did help. The other things that help is continuing to maintain investments in the money markets which are yielding a significant premium to short term treasures right now.

In addition, the US Treasuries that we do hold on a mark to market basis they’re with a steep decline at the end of the quarter in short term treasury rates really that’s going to drive the mark to market up on some of those that will drop to the bottom line in interest income at the end of the quarter.

Mike Vinciquerra - BMO Capital Markets

So that was actually a contributor in Q1?

Bill Dunaway

Correct.

Operator

Your next question comes from Chris Donat – Sandler O’Neill

Chris Donat – Sandler O’Neill

As far as where your interest earning assets are can you give us a rough sense of what percentage is in treasuries and what percentage is money markets and other assets?

Bill Dunaway

It will really jump around for us depending kind of on requirements of the different exchanges because they all kind of do have different assets and different things that they will accept. Towards the end of the quarter you were probably looking about 30% to 35% of it was probably in the money markets with 60% to 65% in treasuries.

Chris Donat – Sandler O’Neill

In general sense the bulk is typically in treasuries, right, like around a three month treasury?

Bill Dunaway

Yes, that’s a snapshot at the end of the quarter. I would say it’s probably usually closer to 55% or so in treasuries and 45% in money markets. It was a little higher at the end of the month. Generally it would be about 55%/45%.

Chris Donat – Sandler O’Neill

On your transaction fees as we’re looking at it can you give some sense maybe on the pit brokerage and clearing what’s really the best proxy for what those expenses will be? Is it your exchange traded contracts?

Bill Dunaway

Yes, that’s probably the best driver that you’re going to have is going to be the exchange traded contracts. There will be some of that related to the OTC as well when they’ve got on the exchange. The exchange traded volumes will be the best catalyst for that.

Chris Donat – Sandler O’Neill

Relative to the exchange traded contracts, just using a purely off that is about, it spiked up in the August quarter and dropped off a little bit in November. It looks like a pretty volatile number but there is some OTC in there that with the drop off in OTC contracts maybe affected it?

Bill Dunaway

Also remember in the fourth quarter we had had that accounting error related to clearing fees where we had kind of taken the fourth quarter the affect of previously unrecognized clearing fees. That would have not been there in the first quarter this year.

Chris Donat – Sandler O’Neill

We’re probably at a relatively good run rate right now the pit brokers and clearing fees to the exchange?

Bill Dunaway

In the current quarter, yes I think that’s a better proxy to where we will be going forward.

Chris Donat – Sandler O’Neill

On the expense side looking at compensation as a percentage of your commission and service consulting and brokerage fees it actually came down a bit, any other color there taking less bonus accruals or something now?

Bill Dunaway

Correct, some of that’s just mix. Obviously some of the incentives will be lower but it’s going to be a little bit of a function just of the mix shift. To me it looks like its fairly in line with where we were in the third quarter, it was a little bit up in August and then kind of back down right in line in November.

Chris Donat – Sandler O’Neill

There was nothing related to the bad debt expense that affected compensation in the first quarter?

Bill Dunaway

There was some reversal of some incentives related to that but nothing that is dramatically going to affect the overall percentage of revenue and that type of thing.

Operator

Your next question comes from Patrick O'Shaughnessy – Raymond James

Patrick O'Shaughnessy – Raymond James

If you guys can talk a little bit about some of the feedback that you see from your customers and your counterparties regarding some of the clearing issues that you had during the quarter. Does it look like most of your customers are reasonably comfortable with your capital position with the services that you provide in that the event didn’t really scare them off? Can you say the same thing for your counterparties as well?

Pete Anderson

From a customer perspective I think there was concern but we worked hard to communicate that number one our balance sheet and our capital we’re as strong as we’ve ever been. Like I mentioned I think we’ve got close to $230 million of equity, I think it was $222 million at the end of November after basically setting up the reserve.

At that same point in time with sub debt and taking back in all the haircuts from the investments we have in money market. We had excess capital available of close to $97.1 million something like that. I think on that basis I think our customer basis is comfortable with our capital and capabilities.

As far as the counterparties I think to some degree there is some concern among counterparties in the OTC markets but to a large extent we’ve been margin from dollar one from most of those counterparties from the beginning. That’s still maintained and either through letters of credit or outright cash with most of those counterparties. We saw a great relationship with those and we still carry outright insurance on their performance. That’s not been a real difficulty for us.

Operator

Your next question comes from Richard Todaro – Kennedy Capital

Richard Todaro – Kennedy Capital

The sale of exchange traded stock, do you guys have any more stock that you can sell or how do we think about that asset?

Bill Dunaway

We don’t have any at this point that we can sell. Everything that we have right now is pledged up the exchange for clearing purposes. Really what we did sell in the most recent quarter is really the affect of the NYMEX/CME merger it freed up shares when the two exchanges combined.

Richard Todaro – Kennedy Capital

What’s the value of that stock today?

Bill Dunaway

It’s on the balance sheet at; the cost basis on it is about $3.3 million. That includes some of the trading rights themselves.

Operator

Your next question comes from Brian Gibson – Edward Jones

Brian Gibson – Edward Jones

I was a little unclear on the conference call part of the presentation where this $10 million note from this counterparty. I had the impression that you said that that would come in to future earnings later on once the account got settled but then I was unclear in your explanation in the first question by Mark Lane that it might be there already. What I’m wondering is when the accounts closed out will those people settle up with you based on the loss on the account if there is a loss?

Bill Dunaway

What we’re saying is that we have a note collateralizing the amount of responsibility of that introducing broker and we’re withholding payments that would typically be made to that introducing broker basically collateralizing that note. That’s not something that we would normally be brining into income. That would be a cash payment that we would normally make.

Brian Gibson – Edward Jones

It’s not going to affect future earnings at all?

Bill Dunaway

Correct.

Operator

There appear to be no further questions. Please continue with any other points you wish to raise.

Pete Anderson

I’d like to thank everybody for joining the call today. As Bill said earlier we’re going to be providing additional metrics on a monthly basis. It should be after we file our reports with CFTC about 18 business days after the first of the month. We hope that will provide additional visibility into FCStone. We hope to see everyone on the call at the next quarter. Thank you.

Operator

This concludes the FCStone Group 2009 Fiscal First Quarter Earnings Presentation. Thank you for participating you may now disconnect.

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Source: FCStone Group, Inc. F1Q09 (Qtr End 11/30/08) Earnings Call Transcript
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