<SUBMISSION>
<ACCESSION-NUMBER>0000720672-02-000023
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020930
<FILING-DATE>20021115
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>STIFEL FINANCIAL CORP
<CIK>0000720672
<ASSIGNED-SIC>6211
<IRS-NUMBER>431273600
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-09305
<FILM-NUMBER>02826954
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE FINANCIAL PLAZA
<STREET2>501 N BROADWAY
<CITY>ST. LOUIS
<STATE>MO
<ZIP>63102-2102
<PHONE>314-342-2000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE FINANCIAL PLAZA
<STREET2>501 N BROADWAY
<CITY>ST. LOUIS
<STATE>MO
<ZIP>63102-2102
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>r10q_0209.htm
<DESCRIPTION>10-Q FOR THE PERIOD ENDED 9/30/2002
<TEXT>
<HTML>
<HEAD>
<TITLE>Stifel Financial Corp-Form 10-Q, Sept.30, 2002</TITLE>
</HEAD>
<BODY LINK="#0000ff">

<B><FONT SIZE=4><P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</P>
<P ALIGN="CENTER">WASHINGTON, D.C.  20549</P>
<P ALIGN="CENTER">FORM 10-Q</P>
</B></FONT>
<P>(Mark One)</P><DIR>
<DIR>

<FONT FACE="Wingdings" SIZE=4><P ALIGN="JUSTIFY">x</FONT><FONT SIZE=4>&#9;QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
</FONT><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For the quarterly period ended <U>&#9;September 30, 2002&#9;</P>
</U><FONT SIZE=4><P ALIGN="CENTER">OR</P>
</FONT><FONT FACE="Wingdings" SIZE=4><P ALIGN="JUSTIFY">o</FONT><FONT SIZE=4>&#9;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
</FONT><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For the transition period from <U>&#9;</U> to <U>&#9;</P>
<P ALIGN="JUSTIFY"></P>
</U><P ALIGN="CENTER">Commission file number <U>&#9;1-9305&#9;</P>
<P ALIGN="CENTER"></P></DIR>
</DIR>
</U>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=384>
<TR><TD VALIGN="TOP">
<B><U><FONT SIZE=4><P ALIGN="CENTER">STIFEL FINANCIAL CORP.</B></U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Exact name of registrant as specified in its charter)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<U><P ALIGN="CENTER"></P></U>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="CENTER">DELAWARE</U></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="CENTER">43-1273600</U></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(State or other jurisdiction of incorporation</P>
<P ALIGN="CENTER">or organization</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="CENTER">501 N. Broadway, St. Louis, Missouri</U></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="CENTER">63102-2188</U></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Address of principal executive offices)</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Zip Code)</FONT></TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY"></P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="58%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Registrant's telephone number, including area code</TD>
<TD WIDTH="42%" VALIGN="TOP">
<U><P ALIGN="CENTER">314-342-2000</U></TD>
</TR>
</TABLE>

<FONT SIZE=2><P ALIGN="JUSTIFY"></P>
</FONT><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&#9;</P>
<P>&#9;<U>&#9;</P>
</U><P ALIGN="CENTER">(Former name, former address, and former fiscal year,</P>
<P ALIGN="CENTER">if changed since last report)</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">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 such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes <FONT FACE="Wingdings">&#120;</FONT>
  No <FONT FACE="Wingdings">&#168;</FONT>
</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Shares of common stock outstanding at November 1, 2002: 6,997,350, par value $0.15.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 1</FONT></P>
<HR NOSHADE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<B><FONT SIZE=5><P ALIGN="CENTER"><A NAME="Index"></A>Stifel Financial Corp. And Subsidiaries</P>
</FONT><FONT SIZE=4><P ALIGN="CENTER">Form 10-Q Index</P>
<P ALIGN="CENTER">September 30, 2002</P>
<P ALIGN="CENTER"></P>
</B></FONT><P>&nbsp;</P>
<B><P>&#9;</P>
<FONT SIZE=4><P>PART I.  FINANCIAL INFORMATION                                                 </FONT><U>PAGE</P>
</U><FONT SIZE=4>
</B></FONT><P>Item 1. Financial Statements (Unaudited)</P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Consolidated Statements of Financial Condition --</P>
<P ALIGN="JUSTIFY"><dir>September 30, 2002 and December 31, 2001</dir></TD>
<TD WIDTH="11%" VALIGN="Middle">
<P ALIGN="CENTER">3</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Consolidated Statements of Operations --</P>
<P ALIGN="JUSTIFY"><dir>Three and Nine Months Ended September 30, 2002 and September 30, 2001</dir></TD>
<TD WIDTH="11%" VALIGN="MIDDLE">
<P ALIGN="CENTER">4</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Consolidated Statements of Cash Flows--</P>
<P ALIGN="JUSTIFY"><dir>Nine Months Ended September 30, 2002 and September 30, 2001</dir></TD>
<TD WIDTH="11%" VALIGN="MIDDLE">
<P ALIGN="CENTER">5</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Notes to Consolidated Financial Statements</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">6 - 10</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 2. Management's Discussion and Analysis of Financial Condition and </P>
<P><dir>Results of Operations<dir></TD>
<TD WIDTH="11%" VALIGN="BOTTOM">
<P ALIGN="CENTER">11 -16</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 3. Quantitative and Qualitative Disclosure about Market Risk</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">16</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 4. Evaluation of Disclosure Controls and Procedures</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">16</TD>
</TR>
</TABLE>


<P>&nbsp;</P>
<B><FONT SIZE=4><P>PART II. OTHER INFORMATION</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 1.  Legal Proceedings</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">17</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 6.  Exhibit(s) and Report(s) on Form 8-K</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">17</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Signatures and Certifications</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">18-20</TD>
</TR>
</TABLE>
<P ALIGN="CENTER"><FONT SIZE=2> Page 2</FONT></P>
<HR NOSHADE>
</P>

<P></P>
<P>&#9;</P>

<B><P><A NAME="Part_I"></A>PART I.  FINANCIAL INFORMATION</P><DIR>
<DIR>

<U><P ALIGN="JUSTIFY">Item 1. Financial Statements (Unaudited<FONT SIZE=4>)</P></DIR>
</DIR>

</U></FONT><FONT SIZE=2><P ALIGN="CENTER"><A NAME="Statements_of_Financial_Condition_1"></A>STIFEL FINANCIAL CORP. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION</P>
</B></FONT><FONT SIZE=3><P ALIGN="CENTER">(UNAUDITED)</P>
</FONT><FONT SIZE=2><P ALIGN="CENTER"> (In thousands, except par values and share amounts)</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=4 WIDTH=691>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><FONT SIZE=1><P ALIGN="RIGHT">September 30, 2002</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=1><P ALIGN="RIGHT">December 31, 2001</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<U><FONT SIZE=2><P>ASSETS</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Cash and cash equivalents</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$         15,100</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$         16,314</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Cash segregated for the exclusive benefit of customers</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">30</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">191</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Receivable from brokers and dealers</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">31,085</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">49,800</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Receivable from customers, net of allowance for doubtful receivables of $229
</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">260,256</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">264,155</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Securities owned, at fair value</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">17,427</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7,530</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Securities owned and pledged, at fair value</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">15,985</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">17,816</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Investments</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">29,824</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">31,183</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Membership in exchanges, at cost</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">463</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">463</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Office equipment and leasehold improvements, at cost, net of allowances for
</p></FONT></TD>
<TR><TD WIDTH="66%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>depreciation and amortization of $19,623 and $18,661, respectively</DIR>
</FONT></TD>
<TD WIDTH="16%" VALIGN="Top">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">7,326</FONT></TD>
<TD WIDTH="18%" VALIGN="Top">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">10,479</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Goodwill, net of accumulated amortization of $1,127 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,807</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,807</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Loans and advances to investment executives and other employees, net of
</p></FONT></TD>
<TR><TD WIDTH="66%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>allowance for doubtful receivables from former employees of $626 and $526, respectively</DIR>
</p></FONT></TD>
<TD WIDTH="16%" VALIGN="Middle">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">20,641</FONT></TD>
<TD WIDTH="18%" VALIGN="Middle">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">21,733</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Deferred tax asset</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,757</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,062</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Other assets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>    12,469</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>    11,026</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P>&#9;&#9;Total Assets</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      <U>$421,170</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      <U>$440,559</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<U><FONT SIZE=2><P>LIABILITIES AND STOCKHOLDERS' EQUITY</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Liabilities</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Short-term borrowings from banks </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$ 41,900</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$      66,800</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Payable to brokers and dealers</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">143,859</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">149,739</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Payable to customers</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">37,716</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">44,077</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Securities sold, but not yet purchased, at fair value</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">4,539</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,552</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Drafts payable</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">11,551</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">20,968</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Accrued employee compensation</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">15,496</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">16,645</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Obligations under capital leases</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">645</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,285</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Accounts payable and accrued expenses</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">23,699</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">22,644</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Long-term debt</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">- -</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">10,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Guaranteed Preferred Beneficial Interest in Subordinated Debt Securities</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">34,500</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">- -</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Other</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">   24,598</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">   24,598</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P>&#9;</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   <U> 338,503</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      <U>359,308</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P>Liabilities subordinated to claims of general creditors</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">3,623</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">2,629</B></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Stockholders' Equity</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Preferred stock -- $1 par value; authorized 3,000,000 shares;
</p></FONT></TD>
<TR><TD WIDTH="66%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>none issued</dir>
</p></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">- -  </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">- -</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Common stock -- $0.15 par value; authorized 30,000,000 shares;
</p></FONT></TD>
<TR><TD WIDTH="66%" VALIGN="TOP">
<dir>
<FONT SIZE=2><P>issued 7,675,781 shares</dir>
</p></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">1,152</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">1,152</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Additional paid-in capital</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">52,153</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">49,595</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Retained earnings</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>   34,588</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">33,929</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">87,893</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">84,676</B></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Less:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Treasury stock, at cost, 576,731 and 357,962 shares, respectively</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,600</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,628</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Unamortized expense of restricted stock awards </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">   9</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  29</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Unearned employee stock ownership plan shares, at cost, 174,875 and
</p></FONT></TD>
<TR><TD WIDTH="66%" VALIGN="TOP">
<DIR>
<FONT SIZE=2><P>187,073 shares, respectively</DIR>
</p></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">       2,240</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="JUSTIFY"></P>
<P ALIGN="RIGHT">      2,397</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P>&#9;Total Stockholders' Equity</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">         <U>    79,044</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">  <U>    78,622</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P>&#9;&#9;Total Liabilities and Stockholders' Equity</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      <U>$421,170</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      <U>$440,559</B></U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2>
<P>See Notes to Consolidated Financial Statements.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 3</FONT></P>
<HR NOSHADE>
</FONT><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="CENTER"></P>
</FONT><B><P ALIGN="CENTER"><A NAME="Statements_of_Operations"></A>STIFEL FINANCIAL CORP. AND SUBSIDIARIES</P>
<P ALIGN="CENTER"> CONSOLIDATED STATEMENTS OF OPERATIONS</P>
</B><FONT SIZE=3><P ALIGN="CENTER">(UNAUDITED)</P>
<P ALIGN="CENTER"> (In thousands, except per share amounts)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"></P></FONT>
<TABLE CELLSPACING=0 BORDER=0 WIDTH=684>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="29%" VALIGN="TOP" COLSPAN=3>
<B><P ALIGN="CENTER">   Three Months Ended</P>
<P ALIGN="CENTER">   <U>September 30,</B></U></TD>
<TD WIDTH="29%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">   Nine Months Ended</P>
<P ALIGN="CENTER">   <U>September 30, </B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT"> 2002</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT"> 2001</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><U><P ALIGN="RIGHT">2002</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2001</B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><P>REVENUES</U></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Commissions</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">    $  16,836</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">    $  16,257</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">    $  54,279</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">    $  55,039</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Principal transactions</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;    8,305</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    6,884</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    25,739</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    22,696</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Investment banking</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;  11,830</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;  10,995</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    36,421</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    26,879</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Interest</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;    3,676</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    5,442</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    11,202</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    17,951</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Other</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>     6,154</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>     6,795</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>     19,599</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>     19,753</U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<B><P>&#9;&#9;Total revenues</dir></B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   46,801</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   46,373</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>   147,240</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   142,318</B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Less: Interest expense</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>     1,801</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>     2,947</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>       4,889</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>     10,031</U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<B><P>&#9;&#9;Net revenues</dir></B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   45,000</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   43,426</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>   142,351</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>   132,287</B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><P>NON-INTEREST EXPENSES</U></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Employee compensation and benefits</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">        30,646</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">        30,077</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">        96,813</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">        89,849</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Occupancy and equipment rental</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;    4,654</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    4,531</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    13,826</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    13,058</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Communications and office supplies</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;          2,604</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;          2,585</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    8,010</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;    8,265</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Commissions and floor brokerage</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;       873</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;       810</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;       2,551</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;       2,402</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Other operating expenses</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>  10,519</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>    7,946</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>&#9;    19,182</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>&#9;    17,326</U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<DIR>

<B><P>Total non-interest expenses</DIR>
</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>  49,296</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>  45,949</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>&#9;  140,382</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">     <U>&#9;  130,900</B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><DIR>
<B><P>Income (loss) before income taxes</DIR>
</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;   (4,296)</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;   (2,523)</B></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;    1,969</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;    1,387</B></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP"></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP"></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>Provision (benefit) for income taxes</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">   <U>   (1,672)</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>       (995)</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">     <U>     847</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>     547</U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<B><P>&#9;&#9;Net income (loss)</dir></B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>$  (2,624)</B></U></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>$  (1,528)</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;<U>$  1,122</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;<U>$      840</B></U></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Earnings (loss) per share:</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<P>&#9;Basic</dir></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">&#9;$    (0.38)</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;$    (0.21)</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;$    0.16</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;$    0.12</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<P>&#9;Diluted</dir></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">$    (0.38)</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;$    (0.21)</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;$    0.14</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;$    0.10</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>&#9;Dividends declared per share</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">- -&#9;</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">$      0.03</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">&#9;$    0.03</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;$    0.09</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<P>Average common equivalent <BR>
Shares outstanding:
</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<P>&#9;Basic</dir></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">          6,960</B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">          7,175</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">          7,103</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">          7,168</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"><dir>
<P>&#9;Diluted</dir></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="RIGHT">          6,960 </B></TD>
<TD WIDTH="14%" VALIGN="TOP">
<P ALIGN="RIGHT">          7,175 </TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="RIGHT">          8,230 </B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">          8,032 </TD>
</TR>
</TABLE>


<P>&nbsp;</P>
<FONT SIZE=2><P>See Notes to Consolidated Financial Statements.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 4</FONT></P>
<HR NOSHADE>
</FONT><B><FONT SIZE=3><P ALIGN="CENTER"><A NAME="Statements_of_Operations_2"><A NAME="Cash_Flow_1"></A></P>
<P ALIGN="CENTER">STIFEL FINANCIAL CORP. AND SUBSIDIARIES</P>
<P ALIGN="CENTER"></A>CONSOLIDATED STATEMENTS OF CASH FLOWS</P>
</B><P ALIGN="CENTER">(UNAUDITED)(In thousands)</P>
</FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=5 WIDTH=643>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">Nine Months Ended
</B></U></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">September 30, 2002</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">September 30, 2001</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<U><FONT SIZE=2><P>CASH FLOWS FROM OPERATING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>Net income </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;1,122</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;840</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<I><FONT SIZE=2><P>Noncash and nonoperating items included in earnings:</I></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<DIR>
<FONT SIZE=2><P>Depreciation and amortization</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">2,509</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,107</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Bonus notes amortization</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">4,066</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,961</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Losses on investments</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">914</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,357</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Deferred items</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">69</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">84</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Amortization of restricted stock awards, units,
and stock
</p></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR><dir>
<FONT SIZE=2><P>benefits</DIR></dir>
</p></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">            1,841</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">            1,329</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">10,521</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">10,678</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=2><P>&#9;Decrease (increase) in assets:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Operating receivables</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">22,614</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">27,754</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Cash segregated for the exclusive benefit of customers</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">161</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(4)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Securities owned</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(8,066)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(7,346)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Notes receivable from officers and employees</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(2,974)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(8,733)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=20><DIR>
<FONT SIZE=2><P>Other assets</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=2><P ALIGN="RIGHT">(291)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">(1,031)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Increase (decrease) in liabilities:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Operating payables</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(12,241)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(31,102)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Securities sold, but not yet purchased</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,987</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8,339</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Drafts payable, accrued employee compensation, and </P></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR><DIR>
<FONT SIZE=2><P>accounts payable and accrued expenses</DIR></DIR>
</P></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">        (9,601)</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">      (12,043)</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash Flows From Operating Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           2,110</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">      (13,488)</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<U><FONT SIZE=2><P><A NAME="Cash_Flow_2"></A>CASH FLOWS FROM INVESTING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Proceeds from sale of investments</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">905</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">344</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Payments for:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Acquisition of office equipment and leasehold</p></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR><DIR>
<FONT SIZE=2><P>improvements</DIR></DIR>
</p></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(2,334)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(3,768)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Acquisition of investments</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">               (35)</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">          (170)</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash Flows From Investing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">          (1,464)</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       (3,594)</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<U><FONT SIZE=2><P>CASH FLOWS FROM FINANCING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Short-term borrowings, net</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(24,900)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">17,200</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Proceeds from:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Issuance of stock  </DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">2,125</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,737</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Sale/leaseback of office equipment</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">3,951</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-  -</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>

<FONT SIZE=2><P>Issuance of Guaranteed Preferred Beneficial Interest in </p></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR><DIR>
<FONT SIZE=2><P>Subordinated Debt Securities</DIR></DIR>
</p></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">34,500</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-  -</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Payments for:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Purchase of stock for treasury</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(4,856)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(743)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Settlement of long-term debt</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(10,000)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-  -</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Offering cost associated with issuing Preferred Securities</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(1,577)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-  -</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Principal payments under capital lease obligation</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(640)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(602)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>
<FONT SIZE=2><P>Cash dividends</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           (463)</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">           (684)</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash Flows From Financing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (1,860)</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        16,908</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=16><DIR>
<FONT SIZE=2><P>Decrease in cash and cash equivalents</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">(1,214)</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">(174)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><DIR>

<FONT SIZE=2><P>Cash and cash equivalents -beginning of period</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        16,314</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">        14,589</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash and Cash Equivalents -end of period</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;15,100</B></U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;14,415</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<U><FONT SIZE=2><P>Supplemental disclosure of cash flow information:</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>&#9;Income tax payments</dir></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9; 2,994</B></FONT></TD>
<TD WIDTH="22%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">   $&#9;     2,896</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>&#9;Interest payments</dir></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9; 3,673</B></FONT></TD>
<TD WIDTH="22%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;10,817</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<U><FONT SIZE=2><P>Schedule of noncash investing and financing activities:</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="22%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>&#9;Employee stock ownership plan </dir></FONT></TD>
<TD WIDTH="20%" VALIGN="MIDDLE">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;    145</B></FONT></TD>
<TD WIDTH="22%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;     145</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>&#9;Restricted stock awards and stock units, net of forfeitures</dir></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9; 2,973</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">   $&#9;     2,439</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir>
<FONT SIZE=2><P>Deferred Compensation converted to subordinated </p></FONT></TD>
<TR><TD WIDTH="58%" VALIGN="TOP"><dir><dir>
<FONT SIZE=2><P>borrowings</dir></dir></p></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;    994</B></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">    $&#9;      2,629</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=2><P>See Notes to Consolidated Financial Statements.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 5</FONT></P>
<HR NOSHADE>
</FONT><B><P ALIGN="CENTER"><A NAME="Notes"></A></P>
<P ALIGN="CENTER">STIFEL FINANCIAL CORP. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</P>
<P ALIGN="JUSTIFY">NOTE A - REPORTING POLICIES</P>
<U><P ALIGN="JUSTIFY">Basis of Presentation</P>
</B></U><P ALIGN="JUSTIFY">The consolidated financial statements include the accounts of Stifel Financial Corp. and its subsidiaries (collectively referred to as the "Company").  The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine months ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.  For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.</P>
<P ALIGN="JUSTIFY">Where appropriate, prior year's financial information has been reclassified to conform to the current year presentation.</P>
<B><U><P ALIGN="JUSTIFY">Comprehensive Income</P>
</B></U><P ALIGN="JUSTIFY">The Company has no components of other comprehensive income, therefore comprehensive income equals net income.</P>
<B><P ALIGN="JUSTIFY">NOTE B - NET CAPITAL REQUIREMENT</P>
</B><P ALIGN="JUSTIFY">The Company's principal subsidiary, Stifel, Nicolaus &amp; Company, Incorporated ("SN &amp; Co."), is subject to the Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934, as amended (the "Rule"), which requires the maintenance of minimum net capital, as defined. SN &amp; Co. has elected to use the alternative method permitted by the Rule which requires maintenance of minimum net capital equal to the greater of $250,000 or 2 percent of aggregate debit items arising from customer transactions, as defined. The Rule also provides that equity capital may not be withdrawn and cash dividends may not be paid if resulting net capital would be less than 5 percent of aggregate debit items.</P>
<P ALIGN="JUSTIFY">At September 30, 2002, SN &amp; Co. had net capital of $40,114,724, which was 11.24% of its aggregate debit items, and $32,975,890 in excess of the minimum required net capital.</P>
<B><P ALIGN="JUSTIFY">NOTE C - FINANCIAL INSTRUMENTS</P>
</B><P ALIGN="JUSTIFY">The Company receives collateral in connection with securities borrowed transactions, customer margin loans and other loans. Under many agreements, the Company is permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or deliver to counterparties to cover short positions. At September 30, 2002, the fair value of securities received as collateral where the Company is permitted to sell or repledge the securities was $357,181,000 and the fair value of the collateral that had been sold or repledged was $289,269,000. </P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 6</FONT></P>
<HR NOSHADE>
<B><P>&nbsp;</P>
<P>NOTE D - SALE-LEASEBACK TRANSACTION</P>
</B><P ALIGN="JUSTIFY">During the first quarter, the Company entered into a $4.0 million sale-leaseback arrangement for certain office furniture and equipment. The lease expires on February 2005 with an option to purchase the equipment at the higher of market value or 15% of the original purchase price. The Company makes quarterly payments of $320,000. At the time of the sale, the Company's recorded net book value for the equipment was $2.9 million resulting in a deferred gain of $1.1 million, which will be amortized ratably over the life of the lease. The transaction will be accounted for as an operating lease.</P>
<B><P ALIGN="JUSTIFY">NOTE E - GUARANTEED PREFERRED BENEFICIAL INTEREST IN SUBORDINATED DEBT SECURITIES</P>
</B><P ALIGN="JUSTIFY">On April 25, 2002 the Company completed the offering of 1,380,000 shares of 9% cumulative Trust Preferred Securities ("preferred securities") for $34.5 million (net proceeds of approximately $32.9 million after offering expenses of approximately $275,000 and underwriting commissions). The preferred securities represent an indirect interest in junior subordinated debentures purchased from the Company by Stifel Financial Capital Trust I, a Delaware Trust and wholly owned subsidiary of the Company. The preferred securities may be redeemed no earlier than June 30, 2007 but no later than June 30, 2032. Distributions of the cumulative cash distributions will be made quarterly. Undistributed payments will accumulate interest of 9% per annum compounded quarterly. </P>
<B><P ALIGN="JUSTIFY">NOTE F - LONG-TERM DEBT</P>
</B><P ALIGN="JUSTIFY"> On April 30, 2002 the Company extinguished the $10.0 million principal amount, as allowed by the agreement, of long term debt to Western and Southern Life Insurance Company, a significant shareholder, due June 30, 2004 bearing interest of 8.0% per annum.</P>
<B><P ALIGN="JUSTIFY">NOTE G - LEGAL PROCEEDINGS</P>
</B><P ALIGN="JUSTIFY">The Company is a defendant in <I>Robert M. Cochran v. Stifel Financial Corp, a Delaware corporation,</I> Civil Action No. 19271-NC and <I>Robert M. Cochran v. Stifel Financial Corp., a Delaware corporation, </I>Civil Action No. 19750-NC, both pending in the Court of Chancery of the State of Delaware.  These matters were filed by a former officer and director of the Company's subsidiary, <FONT FACE="Tms Rmn,Times New Roman">SN &amp; Co.</FONT> The litigation seeks indemnification under Delaware Law and the Company's by-laws for legal fees and expenses incurred by the former officer in defense of certain matters brought against him in his capacity as an officer and director of the subsidiary. Due to the unspecified amount of these claims, the Company cannot reasonably estimate the amount sought for indemnification.</P>
<P ALIGN="JUSTIFY">The Company has made no provision or allowance for any exposure it might have in these two lawsuits. Based on information currently available, management does not believe the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial condition.  However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.<FONT FACE="Tms Rmn,Times New Roman">  </P>
<P ALIGN="JUSTIFY">A NASD Arbitration panel awarded $4.5 million in compensatory damages to two customers of SN &amp; Co. The award was issued in connection with the activities of a former Stifel Nicolaus broker in its Pikeville, Kentucky office. The Company believes the award was in disregard of the applicable law, and intends to ask the federal court to set aside the decision. In the third quarter, the Company recorded a $3.5 million after tax charge for this case and other matters.</P>
</FONT><P ALIGN="JUSTIFY">The Company is also a defendant in other lawsuits arising in the normal course of the securities business.  Although the outcome of litigation is always uncertain, based on its understanding of the facts, management does not believe the ultimate resolution of any of these matters will have a material adverse effect on the Company's consolidated financial condition and results of operations.  However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.  It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year, and other than the matters mentioned above, management does not believe such resolutions will result in losses materially in excess of the amounts previously provided.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 7</FONT></P>
<HR NOSHADE>
<B><P ALIGN="JUSTIFY">NOTE H - SEGMENT REPORTING</P>
</B><P ALIGN="JUSTIFY">The Company's reportable segments include Private Client Group, Equity Capital Markets, Fixed Income Capital Markets and Other. Prior years' financial information has been reclassified to conform with the current year presentation. The Private Client Group segment includes branch offices and independent contractor offices of the Company's broker-dealer subsidiaries located throughout the U.S., primarily in the Midwest. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, to their private clients. The Equity Capital Markets segment includes corporate finance management and participation in underwritings (exclusive of sales credits, which are included in the Private Client Group segment), mergers and acquisitions, institutional sales, trading, research, and market making. Fixed Income Capital Markets segment includes public finance, institutional sales, and competitive underwriting and trading. Investment advisory fees, clearing income and venture capital activities are included in Other.</P>
<P ALIGN="JUSTIFY">Intersegment net revenues and charges are eliminated between segments. The Company evaluates the performance of its segments and allocates resources to them based on various factors, including prospects for growth, return on investment, and return on revenues.</P>
<P ALIGN="JUSTIFY">Information concerning operations in these segments of business is as follows (in thousands):</P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=676>
<TR><TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="38%" VALIGN="TOP">
<B><P ALIGN="CENTER">Three Months Ended</P>
<U><P ALIGN="CENTER">September 30,</B></U></TD>
<TD WIDTH="30%" VALIGN="TOP">
<B><P ALIGN="CENTER">Nine Months Ended</P>
<U><P ALIGN="CENTER">September 30,</B></U></TD>
</TR>
</TABLE>

<FONT FACE="Tms Rmn,Times New Roman" SIZE=1></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=676>
<TR><TD WIDTH="32%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="JUSTIFY">Net Revenues</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2002</B></U></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2001</B></U></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2002</B></U></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2001</B></U></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;31,644</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;30,633</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;101,278</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;94,684</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">7,319</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7,294</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">25,145</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">18,382</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">5,254</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,836</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">12,427</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">13,494</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">              783</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">          1,662</U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           3,501</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">          5,726</U></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">&#9;Total Net Revenues</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;45,000</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;43,425</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;142,351</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;132,286</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="JUSTIFY">Operating Contribution</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;(1,753)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;   3,325</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;   8,316</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;11,104</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,476</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,211</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">6,335</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,670</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,520</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">674</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">2,715</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,794</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other/ Unallocated Overhead</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (5,539)</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">        (7,733)</U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">      (15,397)</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">       (16,181)</U></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">        Pre-Tax Income (loss)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$       (4,296)</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;(2,523)</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$         1,969</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;   1,387</B></U></FONT></TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY">The Company has not disclosed asset information by segment, as the information is not produced internally and its preparation is impracticable.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 8</FONT></P>
<HR NOSHADE>
<B><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">NOTE I - EARNINGS PER SHARE ("EPS")</P>
</B><P ALIGN="JUSTIFY">Basic EPS is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted EPS is similar to basic EPS but adjusts for the effect of potential common shares.</P>
<P ALIGN="JUSTIFY">The components of the basic and diluted earnings per share calculation for the three and nine months ended September 30, are as follows (in thousands, except per share amounts): </P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=676>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="28%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">Three Months Ended</P>
<U><P ALIGN="CENTER">September 30, </B></U></TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">Nine Months Ended</P>
<U><P ALIGN="CENTER">September 30, </B></U></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2002</B></U></TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2001</B></U></TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2002</B></U></TD>
<TD WIDTH="11%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2001</B></U></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><I><U><P ALIGN="JUSTIFY">Income Available to Common Stockholders</B></I></U></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Net Income (loss) </B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="CENTER">$ (2,624)</B></TD>
<TD WIDTH="13%" VALIGN="TOP">
<P ALIGN="CENTER">$ (1,528)</TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><P ALIGN="RIGHT">$ 1,122</B></TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="RIGHT">$ 840</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><I><U><P ALIGN="JUSTIFY">Weighted Average Shares Outstanding</B></I></U></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<B><P>Basic Weighted Average Shares Outstanding:</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="CENTER">   6,960</B></TD>
<TD WIDTH="13%" VALIGN="TOP">
<P ALIGN="CENTER">   7,175</TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><P ALIGN="RIGHT">7,103</B></TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="RIGHT">7,168</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<P>Potential Common Shares From Employee
</p></TD>
<TR><TD WIDTH="47%" VALIGN="TOP"><dir>
<P>Benefit Plans</dir>
</p></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><P ALIGN="CENTER">      -  -</U></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><P ALIGN="CENTER">      -  -</U></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><P ALIGN="RIGHT">    1,127</U></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><P ALIGN="RIGHT">    864</U></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><P>  Diluted Weighted Average Shares
</B></p></TD>
<TR><TD WIDTH="47%" VALIGN="TOP"><dir>
<B><P> Outstanding</dir>
</B></p></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="CENTER">      6,960</B><SUP>(1)</SUP></TD>
<TD WIDTH="13%" VALIGN="TOP">
<P ALIGN="CENTER">      7,175<SUP>(1)</SUP></TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><P ALIGN="RIGHT">8,230</B></TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="RIGHT">8,032</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><P>Basic Earnings (loss) Per Share
</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="CENTER">$   (0.38)</B></TD>
<TD WIDTH="13%" VALIGN="TOP">
<P ALIGN="CENTER">$   (0.21)</TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><P ALIGN="RIGHT">$ 0.16</B></TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="RIGHT">$ 0.12</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP">
<B><P>Diluted Earnings (loss) Per Share
</B></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><P ALIGN="CENTER">$   (0.38)</B></TD>
<TD WIDTH="13%" VALIGN="TOP">
<P ALIGN="CENTER">$   (0.21)</TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><P ALIGN="RIGHT">$ 0.14</B></TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="RIGHT">$ 0.10</TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP"><DIR>
<DIR>

<SUP><P>(1)</SUP><B> </B><FONT SIZE=1>Potential Common Shares are anti-dilutive</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<B><P ALIGN="JUSTIFY">NOTE J - RECENT ACCOUNTING PRONOUNCEMENTS</P>
</B><P ALIGN="JUSTIFY">In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and in August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 141 discontinues the use of pooling of interests method of accounting for business combinations and requires that the purchase method be used. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of a Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions, for the Disposal of a Segment of a Business." The Statements were effective for the Company's consolidated financial statements on January 1, 2002. The adoption of the provisions of these statements did not have any impact on the Company's consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In June 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible Asset." SFAS No. 142, effective for fiscal years beginning after December 15, 2001, requires discontinuing the amortization of goodwill and other intangible assets with indefinite useful lives. Instead, these assets will be tested periodically for impairment and written down to their value as necessary. The following is unaudited pro forma financial data for the combined operations, assuming that goodwill was not amortized in 2001.</P>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=612>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">(in thousands, except per share amounts)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended</P>
<U><P ALIGN="CENTER">September 30, 2001</B></U></FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended</P>
<U><P ALIGN="CENTER">September 30, 2001</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Goodwill amortization, net of tax</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;16</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;84</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Net income (loss)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;(1,512)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;924</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P>Basic earnings (loss) per share
</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$(0.21)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;0.13</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P>Diluted earnings (loss) per share
</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$(0.21)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;0.11</FONT></TD>
</TR>
</TABLE>
</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 9</FONT></P>
<HR NOSHADE>
<P ALIGN="JUSTIFY">The Company has performed the transitional impairment analysis, required upon adoption of SFAS No. 142, and has determined that there is no impairment of the carrying value of goodwill. Goodwill will be tested annually for impairment. Additionally, the Company does not have any other intangible assets.</P>
<P ALIGN="JUSTIFY">The amount of goodwill allocated to each segment is as follows:</P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH=355>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=13>
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&#9;$&#9;951</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,180</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,180</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">               496</U></FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">&#9;Total Goodwill</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">&#9;<U>$&#9;3,807</B></U></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY">In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The adoption of the provisions of this statement is not expected to have a material impact on the Company's consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB statement No.4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 addresses financial accounting and reporting for the early retirement of debt. The Company does not believe that the adoption of SFAS No. 145 will have a significant impact on its financial statements. The provisions of this statement are effective for financial statements issued for fiscal years beginning after May 1, 2002 with early application encouraged.</P>
<P ALIGN="JUSTIFY">In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. The Company does not believe that the adoption of SFAS No. 146 will have a significant impact on its financial statements. The provisions of this statement are to be applied prospectively to exit or disposal activities initiated after December 31, 2002. </P>
<P ALIGN="CENTER">******</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 10</FONT></P>
<HR NOSHADE>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"><A NAME="MDA"></A></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</P>
</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY"></P>

<P ALIGN="JUSTIFY">Forward-Looking Statements</P>
</B></U></FONT><P ALIGN="JUSTIFY">The Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to the Company and those specific to the industry which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, general economic conditions, actions of competitors, regulatory actions, changes in legislation and technology changes. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this Quarterly Report. The Company does not undertake any obligation to publicly update any forward-looking statements.</P>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY">Critical Accounting Policies</P>
</B></U></FONT><P ALIGN="JUSTIFY">For a description of critical accounting policies, including those which involve varying degrees of judgment, see Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. In addition, see Note A of Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001 for a more comprehensive listing of significant accounting policies.</P>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY">Business Environment</P>
</B></U></FONT><P ALIGN="JUSTIFY">Investor confidence in the equity markets continued to slide, a reflection of intensified worries about the fragile economic recovery, anemic corporate profits, corporate governance scandals, terrorism and the prospect of war with Iraq. </P>
<P ALIGN="JUSTIFY">For the third quarter overall, the Dow Jones Industrial Average ("Dow") was down 17.9%, its worst quarterly showing since it lost 25.3 % in the fourth quarter of 1987. The Standard and Poors 500 Index ("S&amp;P") fell 17.6% for the quarter, also the biggest drop since 1987. Stocks in the Nasdaq Composite slid 19.9%, just short of its 20.7% loss in the prior quarter. </P>
<P ALIGN="JUSTIFY">As a result, all the major market indexes registered double-digit losses through the first nine months of the year. The Nasdaq Composite Index has tumbled 39.9% and was off 76.8% off its March 2000 peak. Meanwhile the S&amp;P sank 29.0% through September and stood 46.6% below its all time high set two and one-half years ago. The Dow lost 24.2% since the start of the year, and was down 35.2% from its January 2000 level.</P>
<P ALIGN="JUSTIFY">In the discussion to follow, results for the three and nine months ended September 30, 2002 will be compared to the results for the three and nine months ended September 30, 2001. See Note A of Notes to Consolidated Financial Statements.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 11</FONT></P>
<HR NOSHADE>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Results of Operations</P>
</B></U></FONT><P ALIGN="JUSTIFY">The following table summarizes the changes in the major categories of revenue and expense for the three and nine months ended September 30, 2002 as compared to September 30, 2001.</P>
<P ALIGN="JUSTIFY"></P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=676>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">Increase (Decrease)</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P ALIGN="Right">&#9;Three Months Ended</B></FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P ALIGN="Right">&#9;Nine Months Ended</B></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Dollars in thousands)</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">Amount</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">Percentage</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">Amount</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">Percentage</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>REVENUES:</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Commissions</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$      579</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">4%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$      (760)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(1)%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Principal transactions</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,421</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">21%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,043</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">13%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Investment banking</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">835</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">9,542</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">35%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Interest</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(1,766)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(32)%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(6,750)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(38)%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Other</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">     (641)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(9)%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">     (153)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(1)%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP"><dir>
<B><FONT SIZE=2><P>&#9;Total Revenues</dir></B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">428</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">4,923</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Less: Interest expense</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">(1,146)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(39)%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">(5,142)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(51)%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP"><dir>
<B><FONT SIZE=2><P>&#9;&#9;Net Revenues</dir></B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,574</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">4%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">10,065</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>NON-INTEREST EXPENSES:</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Employee compensation and benefits</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">569</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,964</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Occupancy and equipment rental</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">123</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">768</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Communications and office supplies</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">19</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(255)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(3)%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Commissions and floor brokerage</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">63</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">149</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=2><P>Other operating expenses</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">      2,573</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">32%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">      1,856</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP"><DIR>
<B><P>Total non-interest expenses</DIR>
</B></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">3,347</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">9,482</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2>
</FONT><I><P ALIGN="JUSTIFY">Nine months ended September 2002 as compared to nine months ended September 2001</P>
</B></I><P ALIGN="JUSTIFY">The Company recorded net income of $1.1 million or $0.14 per diluted share on net revenues of $142.4 million for the nine months ended September 30, 2002 compared to net income of $840,000 or $0.10 per diluted share on net revenues of $132.3 million for the same period one year earlier. The current year nine months net income was adversely impacted by $3.5 million for litigation matters (see Note G). The prior year nine months net income was negatively impacted $2.7 million, net of tax, due to legal related expenses incurred primarily in connection with historical litigation arising out of the Company's former Oklahoma operations. </P>
<P ALIGN="JUSTIFY">Net revenues increased $10.1 million (8%) resulting from increases in principal transactions and investment banking which increased $3.0 million (13%) and $9.5 million (36%) respectively, offset by decreases in net interest of $1.6 million (20%).</P>
<P ALIGN="JUSTIFY">Revenues from principal transactions increased $3.0 million (13%) as a result of increased trading activity in corporate and municipal bonds as investors sought alternatives to equity-based products. </P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 12</FONT></P>
<HR NOSHADE>
<P ALIGN="JUSTIFY">Investment banking revenues increased principally due to an increase in corporate finance revenue of $9.8 million (58%) offset by a decrease in municipal finance revenue of $266,000 (3%). Corporate finance fee revenue increased due to an increase in the number of managed equity offerings from 14 in the first nine months of 2001 to 32 in the first nine months of 2002. Municipal finance revenue decreased due to a decrease in the number of senior or co-managed underwritings from 125 during the first nine months of 2001 to 101 during the first nine months of 2002 resulting from declining economic conditions. </P>
<P ALIGN="JUSTIFY">Net interest revenue declined $1.6 million (20%) due to a $6.7 million (38%) decrease in interest revenue, principally resulting from decreased borrowings by customers and decreased rates charged to those customers. Interest expense decreased by $5.1 million (51%) resulting from decreased short-term borrowings and decreased stock loan activity by the Company to finance customer borrowings on margin accounts along with lower rates charged on these borrowings. This decrease was partially offset by an increase in interest paid on long-term debt as a result of the issuance of $34.5 million 9% cumulative Trust Preferred Securities.  The proceeds of this issue were used to pay down the $10.0 million principal amount of long-term debt to Western &amp; Southern Life Insurance Company, a significant shareholder, bearing interest of 8% per annum. Average short-term borrowings decreased $61.7 million primarily for customer collaterized bank borrowings and stock loan activity, with a 56% decrease in rates.</P>
<P ALIGN="JUSTIFY">Revenues from commissions on agency transactions for the first nine months decreased $760,000 (1%) resulting from the declining markets for equity-based products. </P>
<P ALIGN="JUSTIFY">Other revenues decreased due principally to the third quarter write down of cash surrender value of life insurance policies, decreases in investment advisory fees due to the second quarter sale of Pin Oak Capital Ltd, and reduced fee billings on managed accounts due to declining portfolio values.</P>
<P ALIGN="JUSTIFY">Total non-interest expenses increased $9.5 million (7%), resulting from an increase in the employee compensation and benefits, commissions and floor brokerage, occupancy and equipment rental, and other operating expenses of $7.0 million (8%), $149,000 (6%), $768,000 (6%), and $1.9 million (11%) respectively, offset by a decrease in communication and office supplies of $255,000 (3%).</P>
<P ALIGN="JUSTIFY">Employee compensation and benefits, a significant portion of the Company's expenses, increased $7.0 million (8%) primarily resulting from an increase in variable employee compensation of $7.5 million (12%), principally investment executive compensation and incentive based compensation which increased in conjunction with increased production, offset by a decrease of fixed compensation of $576,000 (2%). </P>
<P ALIGN="JUSTIFY">Commissions and floor brokerage increased due to an increase in trades on listed exchanges. </P>
<P ALIGN="JUSTIFY">Occupancy and equipment rental increased $768,000 (6%) due to the Company's expansion efforts.</P>
<P ALIGN="JUSTIFY">Other operating expenses increased $1.9 million (11%) principally due to litigation matters (see Note G) incurred in the 3rd quarter of 2002.</P>
<P ALIGN="JUSTIFY">Communication and office supplies decreased due primarily to the Company's cost containment program.</P>
<P ALIGN="JUSTIFY">The effective tax rate for the nine months ended September 2002 is approximately 43% due to the effects of a write down of cash surrender value of life insurance policies.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 13</FONT></P>
<HR NOSHADE>
<B><I><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY">Three months ended September 2002 as compared to three months ended September 2001</P>
</B></I></FONT><P ALIGN="JUSTIFY">The Company recorded a net loss of $2.6 million or $0.38 per diluted share on net revenues of $45.0 million for the quarter ended September 30, 2002 compared to a net loss of $1.5 million or $0.21 per diluted share on net revenues of $43.4 million for the comparable quarter of 2001. The current quarter net income was adversely impacted by $3.5 million for litigation matters (see Note G). The prior year comparable quarter was similarly impacted by $2.1 million, due to legal related expenses incurred primarily in connection with historical litigation arising out of the Company's former Oklahoma operations.</P>
<P ALIGN="JUSTIFY">Net revenues increased $1.6 million (4%). Commissions increased $579,000 (4%) over the prior year third quarter commissions which were negatively impacted by the tragic events of September 11 and the subsequent four-day closure of the major markets.</P>
<P ALIGN="JUSTIFY">The explanation of revenue and expenses fluctuations for the remaining categories presented for the nine month period are generally applicable to the three month operations.</P>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Business Segment Results </P>
</U></FONT><I><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY">Nine months ended September 2002 as compared to nine months ended September 2001</P>
</B></I></FONT><P ALIGN="JUSTIFY">The Private Client Group ("PCG") recorded an increase in net revenues of $6.6 million (7%) to $101.3 million from $94.7 million.  PCG operating contribution decreased $2.8 million (25%) to $8.3 million from $11.1 million from the same period one year earlier principally due to the current year third quarter charge <FONT FACE="Tms Rmn,Times New Roman">for litigation matters (see Note G)</FONT>. </P>
<P ALIGN="JUSTIFY">Equity Capital Markets ("ECM") recorded an increase in net revenues of $6.8 million (37%) and ECM operating contribution increased $3.7 million (137%) from the same period one year earlier due to increased institutional sales commissions and management fees resulting from an increase in the number of lead or co-managed underwritings from 14 in the first nine months of 2001 to 32 in the same period of 2002.</P>
<P ALIGN="JUSTIFY">Fixed Income Capital Markets ("FICM") recorded a decrease in net revenues of $1.1 million (8%) to $12.4 million from $13.5 million and a decrease in operating contribution of $1.1 million (28%) to $2.7 million from $3.8 million from the same period one year earlier. The decrease resulted principally from a reduction in the number of senior or co managed municipal underwritings resulting from sluggish economic conditions. During the first nine months of 2002, FICM senior or co-managed 101 offerings, down from the prior year first nine months of 125 offerings.</P>
<B><I><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY">Three months ended September 2002 as compared to three months ended September 2001</P>
</B></I></FONT><P ALIGN="JUSTIFY">PCG recorded an increase in net revenues of $1.0 million (3%) to $31.6 million from $30.6 million.  PCG recorded an operating loss of $1.8 million, a $5.1 million decrease from the third quarter of 2001 primarily attributed to the current year third quarter charge <FONT FACE="Tms Rmn,Times New Roman">for litigation matters (see Note G)</FONT>.</P>
<P ALIGN="JUSTIFY">ECM posted net revenues of $7.3 million, relatively unchanged from the same quarter last year. ECM operating contribution increased $266,000 (22%) from the same period one year earlier. The Company lead or co-managed 7 equity or trust preferred offerings during the third quarter 2002, compared to 6 in the same period one year earlier.</P>
<P ALIGN="JUSTIFY">FICM recorded an increase in net revenues of $1.4 million (37%) to $5.3 million from $3.8 million and an increase in operating contribution of $846,000 (126%) to $1.5 million from $674,000 in the third quarter 2001 due principally to improved profit margins on offerings, increased commissions on institutional sales, and increased trading profits.</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 14</FONT></P>
<HR NOSHADE>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
</B></U></FONT><P ALIGN="JUSTIFY">The majority of the Company's assets are highly liquid, consisting mainly of cash or assets readily convertible into cash. These assets are financed primarily by the Company's equity capital, preferred securities, customer credit balances, short-term bank loans, proceeds from securities lending, and other payables. Changes in securities market volumes, related customer borrowing demands, underwriting activity, and levels of securities inventory affect the amount of the Company's financing requirements. </P>
<P ALIGN="JUSTIFY">Management believes the funds from operations, available informal short-term credit arrangements, and issuance of $34.5 million of preferred securities will provide sufficient resources to meet the present and anticipated financing needs. </P>
<P ALIGN="JUSTIFY">On April 25, 2002 the Company completed the offering of 1,380,000 shares of its 9% cumulative Trust Preferred Securities for net proceeds of approximately $32.9 million after offering expenses of approximately $275,000 and underwriting commissions. In addition, the Company repaid $10.0 million principal amount of long-term indebtedness, due to June 30, 2004, payable to Western &amp; Southern Life Insurance Company, a significant shareholder, bearing interest of 8.0% per annum. In addition the Company will utilize proceeds from the offering for general corporate purposes, to repurchase shares of the Company's common stock and to finance future expansion activities. </P>
<P ALIGN="JUSTIFY">On May 9, 2002, the Company's board of directors authorized the repurchase of up to 750,000 additional shares. These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under the Company's employee benefit plans and for general corporate purposes. This authorization is in addition to Stifel's previously announced stock repurchase plan. Further, the Company announced the elimination of future dividends on its common stock. </P>
<P ALIGN="JUSTIFY">During the first nine months of 2002, the Company repurchased 401,888 shares, using existing board authorizations, at an average price of $12.08 per share, to meet obligations under the Company's employee benefit plans and for general corporate purposes<B>.</B>  Under existing board authorizations, the company is permitted to buy an additional 1,007,339 shares.</P>
<P ALIGN="JUSTIFY">Stifel, Nicolaus &amp; Company, Incorporated, the Company's principal broker-dealer subsidiary, is subject to certain requirements of the Securities and Exchange Commission with regard to liquidity and capital requirements. At September 30, 2002, Stifel, Nicolaus had net capital of approximately $40.1 million which exceeded the minimum net capital requirements by approximately $33.0 million.</P>
<B><U><FONT FACE="Tms Rmn,Times New Roman" SIZE=4><P ALIGN="JUSTIFY">Recent Accounting Pronouncements</P>
</B></U></FONT><P ALIGN="JUSTIFY"><A NAME="PartI_Item3">In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and in August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 141 discontinues the use of pooling of interests method of accounting for business combinations and requires that the purchase method be used. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of a Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions, for the Disposal of a Segment of a Business." The Statements were effective for the Company's consolidated financial statements on January 1, 2002. The adoption of the provisions of these statements did not have any impact on the Company's consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In June 2001, FASB issued SFAS No. 142 "Goodwill and Other Intangible Asset." SFAS No. 142, effective for fiscal years beginning after December 15, 2001, requires discontinuing the amortization of goodwill and other intangible assets with indefinite useful lives. Instead, these assets will be tested periodically for impairment and written down to their value as necessary. The following is unaudited pro forma financial data for the combined operations, assuming that goodwill was not amortized in 2001.</P>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=612>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">(in thousands, except per share amounts)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended</P>
<U><P ALIGN="CENTER">September 30, 2001</B></U></FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended</P>
<U><P ALIGN="CENTER">September 30, 2001</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Goodwill amortization, net of tax</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;16</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;84</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Net income (loss)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;(1,512)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;923</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P>Basic earnings (loss) per share
</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$(0.21)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;0.13</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P>Diluted earnings (loss) per share
</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$(0.21)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$&#9;0.11</FONT></TD>
</TR>
</TABLE>
</P>

<P ALIGN="JUSTIFY">The amount of goodwill allocated to each segment is as follows:</P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH=355>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=13>
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&#9;$&#9;951</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,180</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,180</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">               496</U></FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">&#9;Total Goodwill</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">&#9;<U>$&#9;3,807</B></U></FONT></TD>
</TR>
</TABLE>
</CENTER></P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 15</FONT></P>
<HR NOSHADE>
<P ALIGN="JUSTIFY">The Company has performed the transitional impairment analysis, required upon adoption of SFAS No. 142, and has determined that there is no impairment of the carrying value of goodwill. Goodwill will be tested annually for impairment. Additionally, the Company does not have any other intangible assets.</P>
<P ALIGN="JUSTIFY">In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The adoption of the provisions of this statement is not expected to have a material impact on the Company's consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB statement No.4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 addresses financial accounting and reporting for the early retirement of debt. The Company does not believe that the adoption of SFAS No. 145 will have a significant impact on its financial statements. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after May 1, 2002 with early application encouraged.</P>
<P ALIGN="JUSTIFY">In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. The Company does not believe that the adoption of SFAS No. 146 will have a significant impact on its financial statements. The provisions of this statement are to be applied prospectively to exit or disposal activities initiated after December 31, 2002. </P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Item 3. Quantitative and Qualitative Disclosure about Market Risk</P>
</B></U></FONT><P ALIGN="JUSTIFY"></A>&#9;There have been no material changes from the information provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.</P>
<B><FONT SIZE=4>
<U><P ALIGN="JUSTIFY">Item 4. Evaluation of Disclosure Controls and Procedures</P>
</B></U></FONT><P ALIGN="JUSTIFY">The management of the Company including Mr. Ronald J. Kruszewski as Chief Executive Officer and Mr. James M. Zemlyak as Chief Financial Officer have evaluated the Company's disclosure controls and procedures. Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms." Based on the evaluation of the Company's disclosure controls and procedures, it was determined that such controls and procedures were effective as of November 8, 2002, the date of the conclusion of the evaluation.</P>
<P ALIGN="JUSTIFY">Further, there were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls after November 8, 2002, the date of the conclusion of the evaluation of disclosure controls and procedures.</P>
<B><FONT SIZE=4>
<P ALIGN="CENTER"><FONT SIZE=2> Page 16</FONT></P>
<HR NOSHADE>

<P>PART II. OTHER INFORMATION</P>
</B></FONT>
<B><U><P><A NAME="Item1">Item 1. Legal Proceedings</P>
</B></U><P ALIGN="JUSTIFY"><A NAME="Item6"></A>The Company is a defendant in <I>Robert M. Cochran v. Stifel Financial Corp, a Delaware corporation,</I> Civil Action No. 19271-NC and <I>Robert M. Cochran v. Stifel Financial Corp., a Delaware corporation, </I>Civil Action No. 19750-NC, both pending in the Court of Chancery of the State of Delaware.  These matters were filed by a former officer and director of the Company's subsidiary, Stifel, Nicolaus &amp; Company, Incorporated.  The litigation seeks indemnification under Delaware Law and the Company's by-laws for legal<FONT FACE="Tms Rmn,Times New Roman"> </FONT>fees and expenses incurred by the former officer in defense of certain matters brought against him in his capacity as an officer and director of the subsidiary. Due to the unspecified amount of these claim, the Company can not reasonably estimate the amount sought for indemnification.</P>
<P ALIGN="JUSTIFY">The Company has made no provision or allowance for any exposure it might have in these two lawsuits. Based on information currently available, management does not believe the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial condition.  However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.</P>
<FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY">A NASD Arbitration panel awarded $4.5 million in compensatory damages to two customers of SN &amp; Co. The award was issued in connection with the activities of a former Stifel Nicolaus broker in its Pikeville, Kentucky office. The Company believes the award was in disregard of the applicable law, and intends to ask the federal court to set aside the decision. In the third quarter, the Company recorded a $3.5 million after tax charge for this case and other matters.</P>
</FONT><P ALIGN="JUSTIFY">The Company is also a defendant in other lawsuits arising in the normal course of the securities business.  Although the outcome of litigation is always uncertain, based on its understanding of the facts, management does not believe the ultimate resolution of any of these matters will have a material adverse effect on the Company's consolidated financial condition and results of operations.  However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.  It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year, and other than the matters mentioned above, management does not believe such resolutions will result in losses materially in excess of the amounts previously provided.</P>

<B><U><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Item 6. Exhibit(s) and Report(s) on Form 8-K</P>
<OL TYPE="a">

</U><P ALIGN="JUSTIFY"><LI></A></B><U>Exhibits</U>:  None.</LI></P>
<U><P ALIGN="JUSTIFY"><LI>Report(s) on Form 8-K</LI></P></OL>
<DIR>

</U><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY">The Company filed a report on Form 8-K dated October 16, 2002. This Form 8-K contained information under Item 9. Regulation FD Disclosure. The Company announced that an NASD Arbitration panel awarded two customers of its subsidiary, Stifel, Nicolaus &amp; Company, Incorporated, $4.5 million in compensatory damages. The award was issued in connection with the activities of a former Stifel Nicolaus broker in its Pikeville, Kentucky office. The Registrant believes the award was in disregard of the applicable law, and intends to ask the federal court to set aside the decision. </P></DIR>
<P ALIGN="CENTER"><FONT SIZE=2> Page 17</FONT></P>
<HR NOSHADE>
</FONT><B><U><P ALIGN="CENTER"><A NAME="Signatures"></A>SIGNATURES</P>
</B></U>
<P ALIGN="JUSTIFY">Pursuant to the requirement of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="CENTER">STIFEL FINANCIAL CORP.</P>
<P ALIGN="CENTER">(Registrant)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: November 14, 2002</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">By <U>&#9;/s/ Ronald J. Kruszewski&#9;</P>
</U><P>Ronald J. Kruszewski <BR>
(President and Chief Executive Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: November 14, 2002</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">By <U>&#9;/s/ James M. Zemlyak&#9;</P>
</U><P>James M. Zemlyak <BR>
(Principal Financial and Accounting Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
</TABLE>

<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<B><P ALIGN="CENTER">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,</P>
<P ALIGN="CENTER">AS ADOPTED PURSUANT TO </P>
<P ALIGN="CENTER">SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>
<P ALIGN="JUSTIFY">In connection with the Quarterly Report of Registrant on Form 10-Q for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:</P><DIR>
<DIR>

<P ALIGN="JUSTIFY"> (1)&#9;The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and</P>
<P ALIGN="JUSTIFY"> (2)&#9;The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P></DIR>
</DIR>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="CENTER">STIFEL FINANCIAL CORP.</P>
<P ALIGN="CENTER">(Registrant)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: November 14, 2002</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">By <U>&#9;/s/ Ronald J. Kruszewski&#9;</P>
</U><P>Ronald J. Kruszewski <BR>
(President and Chief Executive Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: November 14, 2002</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">By <U>&#9;/s/ James M. Zemlyak&#9;</P>
</U><P>James M. Zemlyak <BR>
(Chief Financial Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
</TABLE>
<P ALIGN="CENTER"><FONT SIZE=2> Page 18</FONT></P>
<HR NOSHADE>
<FONT SIZE=2><P ALIGN="JUSTIFY">&nbsp;</P>
</FONT><B><P ALIGN="CENTER">CERTIFICATION</P>
</B><P ALIGN="JUSTIFY">I, Ronald J. Kruszewski, certify that:</P>
<OL>

<P ALIGN="JUSTIFY"><LI>I have reviewed this quarterly report on Form 10-Q of Stifel Financial Corp.;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;</LI></P>
<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;</LI></P>
<P ALIGN="JUSTIFY"><LI>evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and</LI></P>
<P ALIGN="JUSTIFY"><LI>presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;</LI></P></OL>

<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and</LI></P>
<P ALIGN="JUSTIFY"><LI>any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and</LI></P></OL>

<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.</LI></P></OL>

<P>Date: <U>November 14, 2002</P></U>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=319>
<TR><TD VALIGN="TOP">
<P ALIGN="JUSTIFY">By <U>&#9;/s/ Ronald J. Kruszewski&#9;</P>
</U><FONT FACE="Tms Rmn,Times New Roman"><P>Ronald J. Kruszewski <BR>
(President and Chief Executive Officer)</FONT></TD>
</TR>
</TABLE>
</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 19</FONT></P>
<HR NOSHADE>
<B><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">CERTIFICATION</P>
</B><P ALIGN="JUSTIFY">I, James M. Zemlyak, certify that:</P>
<OL>

<P ALIGN="JUSTIFY"><LI>I have reviewed this quarterly report on Form 10-Q of Stifel Financial Corp.;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;</LI></P>
<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;</LI></P>
<P ALIGN="JUSTIFY"><LI>evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and</LI></P>
<P ALIGN="JUSTIFY"><LI>presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;</LI></P></OL>

<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and</LI></P>
<P ALIGN="JUSTIFY"><LI>any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and</LI></P></OL>

<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.</LI></P></OL>

<P>Date: <U>November 14, 2002</P></U>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=319>
<TR><TD VALIGN="TOP">
<P>By <U>&#9;/s/ James M. Zemlyak&#9;</P>
</U><FONT FACE="Tms Rmn,Times New Roman"><P>James M. Zemlyak <BR>
(Chief Financial Officer)</br></FONT></TD>

</TR>
</TABLE>
</P>
<P ALIGN="CENTER"><FONT SIZE=2> Page 20</FONT></P>
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