<SUBMISSION>
<ACCESSION-NUMBER>0000720672-05-000067
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20050630
<FILING-DATE>20050809
<DATE-OF-FILING-DATE-CHANGE>20050809
<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>051010196
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ATTN: JAMES G. LASCHOBER
<STREET2>501 N. BROADWAY
<CITY>ST. LOUIS
<STATE>MO
<ZIP>63102-2102
<PHONE>314-342-2000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ATTN: JAMES G. LASCHOBER
<STREET2>501 N. BROADWAY
<CITY>ST. LOUIS
<STATE>MO
<ZIP>63102-2102
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>r10q_0506q.htm
<DESCRIPTION>10-Q FOR THE PERIOD ENDED 6/30/05
<TEXT>
<HTML>
<HEAD>

<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

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

<FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY"><FONT FACE="Wingdings">&#120;</FONT>
</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;June 30, 2005&#9;</P>
</U><FONT SIZE=4><P ALIGN="CENTER">OR</P>
<P ALIGN="JUSTIFY">&#61551;&#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>
<P ALIGN="CENTER">&nbsp;</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>
<P ALIGN="CENTER"><CENTER><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 or organization)</P>
</FONT><P ALIGN="CENTER"></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">
<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>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="CENTER"><CENTER><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>
</CENTER></P>

<FONT SIZE=2><P ALIGN="JUSTIFY"></P>
</FONT><P ALIGN="CENTER">__________________________________________________________________</P>
<P ALIGN="CENTER">(Former name, former address, and former fiscal year, if changed since last report)</P>
<P ALIGN="CENTER">&nbsp;</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">Indicate by check mark whether the Registrant is an accelerated filer as defined in Exchange Act Rule 12b-2.  Yes <FONT FACE="Wingdings">&#120;</FONT>
  No <FONT FACE="Wingdings">&#168;</FONT>
</P>
<P ALIGN="JUSTIFY">As of July 31, 2005, there were 9,915,371 shares of Stifel Financial Corp. common stock, par value $0.15, outstanding.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 1 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>
<P ALIGN="JUSTIFY"></P>
<B><FONT SIZE=5><P ALIGN="CENTER"><A NAME="Index"></A>Stifel Financial Corp.<BR>
</FONT><FONT SIZE=4>Form 10-Q Index</B><BR>
<B>June 30, 2005<BR>
</FONT>&#9;</P>
<U><P ALIGN="CENTER"></P>
</U><FONT SIZE=4><P ALIGN="CENTER">PART I.  FINANCIAL INFORMATION</P>
</B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="89%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="BOTTOM">
<B><U><P ALIGN="CENTER">PAGE</B></U></TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 1. Financial Statements</P>

<P STYLE="margin-left:1.00em; text-indent:-1.00em">Condensed Consolidated Statements of Financial Condition --<BR>
June 30, 2005 (Unaudited) and December 31, 2004 (Audited)
</TD>
<TD WIDTH="11%" VALIGN="BOTTOM">
<P ALIGN="CENTER">3</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P STYLE="margin-left:1.00em; text-indent:-1.00em">Condensed Consolidated Statements of Operations (Unaudited) --<BR>
Three and Six Months Ended June 30, 2005 and 2004
</TD>
<TD WIDTH="11%" VALIGN="BOTTOM">
<P ALIGN="CENTER">4</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P STYLE="margin-left:1.00em; text-indent:-1.00em">Condensed Consolidated Statements of Cash Flows (Unaudited) --<BR>
Six Months Ended June 30, 2005 and 2004
</TD>
<TD WIDTH="11%" VALIGN="BOTTOM">

<P ALIGN="CENTER">5
</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Notes to Condensed Consolidated Financial Statements (Unaudited)</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">6 - 11</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P STYLE="margin-left:1.00em; text-indent:-1.00em">Item 2. Management's Discussion and Analysis of Financial Condition and <BR>
Results of Operations
</TD>
<TD WIDTH="11%" VALIGN="BOTTOM">
<P ALIGN="CENTER">12 -25</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 3. Quantitative and Qualitative Disclosures about Market Risk</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">26</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">
<P>Item 4. Controls and Procedures</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">26</TD>
</TR>
</TABLE>
</CENTER></P>


<P>&nbsp;</P>
<B><FONT SIZE=4><P ALIGN="CENTER">PART II. OTHER INFORMATION</P>
</B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P>Item 1.&#9;Legal Proceedings
</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">27</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P>Item 2.&#9;Changes in Securities, Use of Proceeds, and <BR>
Issuer Repurchases of Equity Securities
</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">27</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P>Item 4.  Submissions of Matters to a Vote of Securities Holders
</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">28</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P>Item 6.&#9;Exhibits
</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">29</TD>
</TR>
<TR><TD WIDTH="89%" VALIGN="TOP">

<P>Signatures
</TD>
<TD WIDTH="11%" VALIGN="TOP">
<P ALIGN="CENTER">30</TD>
</TR>
</TABLE>
</CENTER></P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 2</I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>


<B><FONT SIZE=2><P><A NAME="Part_I"></A>PART I.  FINANCIAL INFORMATION</B><BR>
<B><U>Item 1. Financial Statements </P>
</U><P ALIGN="CENTER"><A NAME="Statements_of_Financial_Condition_1"><A NAME="Statements_of_Financial_Condition"></A>STIFEL FINANCIAL CORP. <BR>
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION</FONT><BR>
</A></B><FONT SIZE=2> (In thousands, except par values and share amounts)</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=691>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=18>
<B><U><FONT SIZE=2><P ALIGN="CENTER">June 30, 2005</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=18>
<B><U><FONT SIZE=2><P ALIGN="CENTER">December 31, 2004</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="CENTER">(Unaudited)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="CENTER">(Audited)</B></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>ASSETS</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Cash and cash equivalents</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$  26,151</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$   21,145</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Cash segregated under federal and other regulations </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Receivables from brokers and dealers:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>       Securities failed to deliver</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">1,592</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">977</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P><DIR>       Deposits paid for securities borrowed</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">20,510</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">15,887</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>      Clearing organizations </FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">         8,079</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">    21,559</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">30,181</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">38,423</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Receivables from customers, net of allowance for doubtful <BR>
receivables of $98 and $47, respectively
</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">242,033</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">201,303</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">42,320</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">28,020</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Securities owned and pledged, at fair value</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">           314</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">           - -</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">42,634</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">28,020</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">34,100</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">34,824</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Membership in exchanges</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">275</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">300</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Office equipment and leasehold improvements, at cost, net of allowances for <BR>
depreciation and amortization of $23,731 and $22,894, respectively
</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">10,011</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">9,116</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">

<FONT SIZE=2><P>Goodwill
</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">3,310</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">3,310</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Loans and advances to investment executives and other employees, net of <BR>
allowance for doubtful receivables from former employees of $899 and $782, respectively
</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">19,367</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">16,455</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Deferred tax asset</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">8,791</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">7,637</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>    22,638</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>    21,775</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P>&#9;&#9;</B>Total Assets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>$439,497</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>$382,314</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><U><FONT SIZE=2><P>LIABILITIES AND STOCKHOLDERS' EQUITY</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Liabilities</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Drafts payable</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$  22,141</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$  21,963</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Short-term borrowings from banks</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">&#9;&#9;16,750</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">&#9;         - -</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Payables to brokers and dealers:</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><DIR>      Securities failed to receive</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,829</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,842</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>      Deposits received from securities loaned</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">27,725</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">33,225</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P><DIR>      Clearing organizations</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">         - -</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">    6,873</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">30,554</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">41,940</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Payables to customers</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">83,684</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">61,368</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Securities sold, but not yet purchased, at fair value</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">42,795</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">12,318</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">20,783</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">28,599</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Obligations under capital leases</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">2</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">41</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">22,648</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">23,047</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Debenture to Stifel Financial Capital Trust I</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">34,500</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">34,500</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" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P>&#9;</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">   <U> 298,455</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>248,374</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>Liabilities subordinated to claims of general creditors</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">     2,506</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">    2,628</U></FONT></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" BGCOLOR="#00ffff">


<FONT SIZE=2><P>Preferred stock -- $1 par value; authorized 3,000,000 shares; none issued

</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">- -  </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">- -</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Common stock -- $0.15 par value; authorized 30,000,000 shares;<BR>
 issued 10,234,200 shares
</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">1,152</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">1,152</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Additional paid-in capital</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">67,544</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">64,419</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>   78,522</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">  73,525</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">147,218</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">139,096</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><DIR>&#9;Treasury stock, at cost, 340,571 and 342,202 shares, respectively</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7,015</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,012</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">&#9;Unearned employee stock ownership plan shares, at cost, 173,527 and 184,371 shares, respectively

</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">      1,667</U></FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="JUSTIFY"></P>
<P ALIGN="RIGHT">      1,772</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Total Stockholders' Equity</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">         <U>  138,536</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  <U>  131,312</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>&#9;&#9;Total Liabilities and Stockholders' Equity</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>$439,497</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">      <U>$382,314</U></FONT></TD>
</TR>
</TABLE>
</CENTER></P>
<DIR>
<DIR>
<DIR>

<I><FONT SIZE=2><P>See Notes to Condensed Consolidated Financial Statements (unaudited).</P>

</I></FONT><P ALIGN="CENTER"></P></DIR>
</DIR>
</DIR>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 3 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><P ALIGN="CENTER"><A NAME="Statements_of_Operations"></A>STIFEL FINANCIAL CORP. <BR>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS <BR>
</B><FONT SIZE=3>(UNAUDITED)<BR>
 (In thousands, except per share amounts)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0  WIDTH=692>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="31%" VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">Three Months Ended <BR>
<U>June 30,</B></U></TD>
<TD WIDTH="30%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">Six Months Ended <BR>
<U>June 30,</B></U></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2005</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2004</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><U><P ALIGN="RIGHT">2005</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2004</B></U></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>
<U><P>REVENUES</U></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Commissions</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    $  23,557</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    $  22,087</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    $  47,892</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    $  49,180</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Investment banking</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;  15,656</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">&#9;  13,333</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;  29,397</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;  30,303</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Principal transactions</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    10,761</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    11,707</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    21,742</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    24,170</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Asset management and service fees</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">10,146</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">9,058</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">19,597</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">17,688</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Interest</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    4,318</TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    3,099</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    7,758</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    6,113</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Other</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>         773</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">     <U>     1,186</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>           118</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>       1,551</U></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<B><P><DIR>&#9;&#9;Total revenues</B></TD></DIR>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>    65,211</U></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>   60,470</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>    126,504</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>   129,005</U></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Less: Interest expense</TD>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>      1,240</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">     <U>     1,059</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>        2,345</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">     <U>       2,144</U></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<B><P><DIR>&#9;&#9;Net revenues</B></TD></DIR>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>    63,971</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>   59,411</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>    124,159</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">     <U>   126,861</U></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<U><P>NON-INTEREST EXPENSES</U></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Employee compensation and benefits</TD>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">        41,593</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">        38,241</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">        82,282</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">        83,365</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Occupancy and equipment rental</TD>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    5,117</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    5,230</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    10,622</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;    10,203</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Communications and office supplies</TD>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;          2,891</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">&#9;          2,368</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;          5,452</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;          4,915</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Commissions and floor brokerage</TD>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;       994</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;       918</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;       1,838</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;       1,722</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Other operating expenses</TD>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>      4,071</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">&#9;<U>     4,332</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>       7,396</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>      8,534</U></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<B><P><DIR>&#9;&#9;Total non-interest expenses</B></TD></DIR>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;<U>    54,666</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;<U>   51,089</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;<U>   107,590</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;<U>  108,739</U></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<B><P><DIR>&#9;&#9;Income before income taxes</B></TD></DIR>
<TD WIDTH="17%" VALIGN="BOTTOM">
<P ALIGN="RIGHT">&#9;   9,305</TD>
<TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=2>
<P ALIGN="RIGHT">&#9;   8,322</TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<P ALIGN="RIGHT">&#9;   16,569</TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<P ALIGN="RIGHT">&#9;   18,122</TD>
</TR>

<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P>&#9;Provision for income taxes</TD>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">   <U>      3,685</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    <U>      3,287</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">   <U>      6,591</U></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">    <U>      6,213</U></TD>
</TR>

<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<B><P><DIR>&#9;&#9;Net income </B></TD></DIR>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>$    5,620</U></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">&#9;<U>$    5,035</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>$    9,978</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">&#9;<U>$  11,909</U></TD>
</TR>

<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P>&#9;Earnings per share*:</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P><DIR>&#9;Basic</TD></DIR>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;$    0.58</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;$       0.51</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;$    1.02</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">&#9;$       1.23</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P><DIR>&#9;Diluted</TD></DIR>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">$    0.46</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT"> $       0.41</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">$    0.81</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT"> $       0.97</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>

<P>&#9;Weighted average common<BR>
equivalent shares outstanding*:
</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P><DIR>&#9;Basic</TD></DIR>
<TD WIDTH="17%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">          9,720</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<P ALIGN="RIGHT">          9,805</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">          9,775</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">          9,708</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P><DIR>&#9;Diluted</TD></DIR>
<TD WIDTH="17%" VALIGN="TOP">
<P ALIGN="RIGHT">          12,350</TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=2>
<P ALIGN="RIGHT">          12,402</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">          12,353</TD>
<TD WIDTH="15%" VALIGN="TOP">
<P ALIGN="RIGHT">          12,234</TD>
</TR>
</TABLE>
</CENTER></P>


<I><FONT SIZE=1><P>*All shares and earnings per share amounts reflect the four-for-three stock split distributed in September 2004. </P>
</FONT><FONT SIZE=2><P>See Notes to Condensed Consolidated Financial Statements (unaudited).</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 4 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

</I></FONT><B><FONT SIZE=3><P ALIGN="CENTER"></P>
</FONT><FONT SIZE=2><P ALIGN="CENTER"><A NAME="Cash_Flow">STIFEL FINANCIAL CORP. <BR>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
</A></B>(UNAUDITED)(In thousands)</P>
<CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=647>
<TR><TD WIDTH="65%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="Center"><U>Six Months Ended</U></B></U></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT"></B></U></FONT></TD>
</TR>
</TABLE>
<CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=647>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">June 30, 2005</B></U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">June 30, 2004</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><FONT SIZE=2><P>CASH FLOWS FROM OPERATING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Net income </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;9,978</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;11,909</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<I><FONT SIZE=2><P>Noncash items included in net income:</I></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Depreciation and amortization

</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,457</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,433</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P>Amortization of notes receivable
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">3,730</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">3,023</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Loss (gains) on investments
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">966</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(909)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P>Deferred items
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(446)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">171</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Amortization of stock units and stock benefits
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">         4,351</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">         3,726</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">21,036</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">19,353</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Decrease (increase) in assets:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Operating receivables
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(28,266)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">17,078</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P>Cash segregated under federal and other regulations
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">-  -</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(1)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Securities owned, including those pledged
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(14,614)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(8,269)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Loans and advances to investment executives and other employees
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(6,642)</FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(3,154)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=20><DIR>


<FONT SIZE=2><P>Other assets
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">(948)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">1,412</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;Increase (decrease) in liabilities:</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P>Operating payables
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">16,831</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">7,813</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Securities sold, but not yet purchased
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">30,477</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">334</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Drafts payable, accrued employee compensation, and accounts payable and accrued expenses
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="Bottom" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">        (6,858)</U></FONT></TD>
<TD WIDTH="23%" VALIGN="Bottom" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">     (12,244)</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash Flows From Operating Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">         11,016</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">        22,322</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><FONT SIZE=2>
<P>CASH FLOWS FROM INVESTING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>

<FONT SIZE=2><P>Proceeds from sale of investments
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">1,028</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">2,583</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>

<FONT SIZE=2><P>Payments for:
</FONT></TD></DIR>

<TR><TD WIDTH="57%" VALIGN="TOP"><DIR><DIR>

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">    Acquisition of office equipment and leasehold improvements
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(2,756)</FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">          (1,325)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR><DIR>

<FONT SIZE=2><P>    Acquisition of investments
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">      (1,270)</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">      (1,980)</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash Flows From Investing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">        (2,998)</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">         (722)</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<U><FONT SIZE=2>
<P>CASH FLOWS FROM FINANCING ACTIVITIES</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>&#9;Short-term borrowings, net</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">16,750</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">31,000</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>


<FONT SIZE=2><P>Securities loaned, net of securities borrowed</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=3>
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(10,123)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(16,032)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>


<FONT SIZE=2><P>Reissuance of treasury stock
</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">424</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">6,837</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT SIZE=2><P><DIR>&#9;Payments for:</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>
<DIR>

<FONT SIZE=2><P>Purchase of stock for treasury
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(9,391)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">(3,124)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>
<DIR>


<FONT SIZE=2><P>Reduction of subordinated debt
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(633)</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">(698)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP"><DIR>
<DIR>


<FONT SIZE=2><P>Principal payments under capital lease obligation
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">           (39)</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">            (94)</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P>Cash Flows From Financing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">       (3,012)</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">        17,889</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><DIR>
<DIR>


<FONT SIZE=2><P>Increase in cash and cash equivalents
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5,006</FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">39,489</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>
<DIR>


<FONT SIZE=2><P>Cash and cash equivalents - beginning of period
</FONT></TD></DIR></DIR>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">        21,145</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">        12,236</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash and Cash Equivalents - end of period</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;26,151</U></FONT></TD>
<TD WIDTH="23%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;51,725</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" 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="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>&#9;Income tax payments</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="MIDDLE" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$          9,795</FONT></TD>
<TD WIDTH="23%" VALIGN="MIDDLE" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$          7,494</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT SIZE=2><P><DIR>&#9;Interest payments</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$          2,381</FONT></TD>
<TD WIDTH="23%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$          2,944</FONT></TD>
</TR>
<TR><TD WIDTH="57%" 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="23%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P><DIR>       Employee stock ownership plan</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="MIDDLE" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$             105</FONT></TD>
<TD WIDTH="23%" VALIGN="MIDDLE" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$             103</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT SIZE=2><P> <DIR>      Stock units, net of forfeitures</FONT></TD></DIR>
<TD WIDTH="20%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$          6,874</FONT></TD>
<TD WIDTH="23%" VALIGN="MIDDLE">
<FONT SIZE=2><P ALIGN="RIGHT">$          4,697</FONT></TD>
</TR>
</TABLE>
</CENTER></CENTER>

</FONT><FONT SIZE=2><P><I>See Notes to Condensed Consolidated Financial Statements (unaudited).</I></P>

<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 5 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

</I></FONT><B><FONT SIZE=4><P ALIGN="CENTER"><A NAME="Notes">STIFEL FINANCIAL CORP. <BR>
</FONT>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</P>

<P ALIGN="JUSTIFY"></A>NOTE A - REPORTING POLICIES</P>

<U><P ALIGN="JUSTIFY">Basis of Presentation</P>
</B></U><P ALIGN="JUSTIFY">The condensed consolidated financial statements include the accounts of Stifel Financial Corp. and its subsidiaries (collectively referred to as the "Company").  The accompanying unaudited condensed 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. 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 three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.  For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.</P>
<P ALIGN="JUSTIFY">The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management considers its significant estimates, which are most susceptible to change, to be the fair value of investments, the accrual for litigation, the reserve for uncollectibility of broker notes, and interim incentive compensation accruals. Actual results could differ from those estimates.</P>
<P ALIGN="JUSTIFY">Where appropriate, prior periods' financial information has been reclassified to conform to the current period presentation. The most significant reclassification relates to certain fees recorded in other revenues and are now reflected in principal transactions.</P>
<B><U><P ALIGN="JUSTIFY">Common Stock Split</P>
</B></U><P ALIGN="JUSTIFY">On August 23, 2004, Stifel Financial Corp. announced a four-for-three stock split in the form of a stock dividend. The additional shares were distributed on September 15, 2004, to shareholders on record as of September 1, 2004.  Each shareholder received one additional share for every three shares owned. Cash was distributed in lieu of fractional shares. The number of shares outstanding and amounts per share in the prior period's condensed consolidated statement of operations and the prior period's information in the notes to condensed consolidated financial statements have been restated to give retroactive effect to the stock split.</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>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 6 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><P ALIGN="JUSTIFY"><U>Stock-Based Compensation Plans</P>
</B></U><P ALIGN="JUSTIFY">The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans. As a result, no stock-based employee compensation cost is reflected in net income, as all options grants under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant.  Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under the Fixed Stock Option and the Employee Stock Purchase Plans consistent with the method of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):  </P>
<FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="JUSTIFY"></P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=667>
<TR><TD WIDTH="36%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30,</B></U></FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30,</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<I><FONT SIZE=1><P>(in thousands, except per share amounts)</I></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="RIGHT">2005</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="RIGHT">2004</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="RIGHT">2005</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="RIGHT">2004</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<B><U><P>Net Income:</B></U></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>As reported</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$       5,620</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$       5,035</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$       9,978</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$       11,909</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Stock-based employee compensation expense determined under a fair value method for all awards, net of income taxes
</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">&nbsp;</P>
<P ALIGN="RIGHT">         (296)</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">&nbsp;</P>
<P ALIGN="RIGHT">        (140)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">&nbsp;</P>
<P ALIGN="RIGHT">         (416)</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<U><P ALIGN="RIGHT">&nbsp;</P>
<P ALIGN="RIGHT">           (282)</U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Pro forma</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;5,324</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;4,895</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;9,562</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;11,627</U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<B><U><P>Basic earnings per share</U>:</B></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>As reported</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.58</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$0.51</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$1.02</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$1.23</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Pro forma</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.55</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$0.50</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.98</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$1.20</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<B><U><P>Diluted earnings per share</U>:</B></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>As reported</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.46</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$0.41</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.81</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$0.97</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P>Pro forma</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.43</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$0.39</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$0.77</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$0.95</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><U><P ALIGN="JUSTIFY">Recent Accounting Pronouncements</P>
</B></U><P ALIGN="JUSTIFY">In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of SFAS No. 143, Accounting for Asset Retirement Obligations ("FIN 47")."  FIN 47 clarifies the term <I>conditional asset retirement obligation</I> as used in SFAS No. 143. FIN 47 refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company is currently evaluating FIN 47 and had not determined the impact the adoption will have on the Company's condensed consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In December 2004, the FASB issued SFAS No. 123 (revised 2004) ("SFAS No. 123R"), "Share-Based Payment," which requires companies to expense the estimated fair value of employee stock options and similar awards. The accounting provisions of SFAS No. 123R, as amended by the United States Securities and Exchange Commission on April 21, 2005, will be effective for the Company for fiscal years beginning after June 15, 2005. The Company will adopt the provisions of SFAS No. 123R, effective January 1, 2006, using a modified prospective application. Under the modified prospective application, SFAS No. 123R, which provides certain changes to the method for valuing stock-based compensation among other changes, will apply to new awards and to awards that are outstanding on the effective date and are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123. For option grants outstanding at June 30, 2005, the Company expects compensation expense, as determined in accordance with SFAS No. 123R, to be approximately $509,000 before income taxes during 2006. The Company will incur additional expense during 2006 related to future awards granted that cannot yet be quantified. The Company is in the process of determining how the new method of valuing stock-based compensation as prescribed in SFAS No. 123R will be applied to valuing stock-based awards granted after the effective date and the related impact on the condensed consolidated financial statements.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 7 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") in Issue 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights," on the guidance on how general partners in a limited partnership should determine whether they control a limited partnership. This consensus is effective for general partners of all new limited partnerships formed and for existing limited partnerships for which the partnership agreements are modified subsequent to the date of the ratification of this consensus (June 29, 2005). The guidance in this Issue is effective for existing partnerships no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005.&nbsp; The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3," ("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS No. 154 to have a material impact on the Company's condensed consolidated financial statements.</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 June 30, 2005, SN &amp; Co. had net capital of $88,579,278, which was 33.09% of its aggregate debit items, and $83,226,059 in excess of the minimum required net capital.</P>

<B><P ALIGN="JUSTIFY">NOTE C - SHORT-TERM BORROWINGS FROM BANKS</P>

</B><P ALIGN="JUSTIFY">On June 30, 2005, the Company increased it borrowings from banks by $16,750,000 to finance underwriting transactions on July 1, 2005. All transactions were settled on July 1, 2005 and the short-term borrowings were repaid.</P>

<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 8 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><P ALIGN="JUSTIFY">NOTE D - LEGAL PROCEEDINGS</P></B>

</B><P ALIGN="JUSTIFY">The Company is named in and subject to various proceedings and claims incidental to its securities business activities, including lawsuits, arbitration claims and regulatory matters. While the ultimate outcome of pending litigation, claims and regulatory matters cannot be predicted with certainty, based upon information currently known, management does not believe that the resolution of such litigation and claims will have a material adverse effect on the Company's condensed consolidated financial statements. It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year and management does not believe such resolutions will result in losses materially in excess of the amounts previously provided. </P>
<P ALIGN="JUSTIFY">As a result of the extensive regulation of the securities industry, the Company's broker-dealer subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations, which can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censure to fines and, in serious cases, temporary or permanent suspension from business. In addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry practices, which can also result in the imposition of such sanctions.</P>
<P ALIGN="JUSTIFY">The Company has responded to several industry-wide and specific inquiries from regulatory and self-regulatory organizations and while the ultimate outcome of these inquiries cannot be determined with certainty, management does not believe that the resolution of these inquiries will have a material adverse affect on the Company's condensed consolidated financial statements.</P>

<B><P ALIGN="JUSTIFY">NOTE E - 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 periods' financial information has been reclassified to conform with the current period 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. The "Other" segment includes clearing revenue, interest income from stock borrowing activities, unallocated interest expense, interest income and gains and losses from investments held, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; and general administration.</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. The Company has not disclosed asset information by segment, as the information is not produced internally on a regular basis.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 9 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">Information concerning operations in these segments of business is as follows:</P>
<FONT SIZE=1></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=650>
<TR><TD WIDTH="34%" VALIGN="BOTTOM">
<I><FONT SIZE=3><P>(in thousands)</I></FONT></TD>
<TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=3><P ALIGN="RIGHT">Three Months Ended  June 30,</B></U></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=3><P ALIGN="RIGHT">Six Months Ended June 30,</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="JUSTIFY">Net Revenues</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2005</B></U></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><P ALIGN="RIGHT">2004</U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="RIGHT">2005</B></U></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><P ALIGN="RIGHT">2004</U></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;48,262</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;44,794</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;95,420</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;97,086</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">9,354</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">9,199</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">17,968</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">20,053</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">4,594</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">4,200</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">8,689</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">8,084</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           1,761</B></U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">            1,218</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">             2,082</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="RIGHT">              1,638</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">&#9;Total Net Revenues</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;63,971</B></U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;59,411</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;124,159</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$&#9;126,861</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="JUSTIFY">Operating Contribution</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Private Client Group</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;11,571</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;   11,495</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$&#9;22,759</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$&#9;   25,833</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="JUSTIFY">Equity Capital Markets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">3,322</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">2,764</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">6,052</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">6,331</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fixed Income Capital Markets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">885</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">593</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,427</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">946</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="JUSTIFY">Other/ Unallocated Overhead</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       (6,473)</B></U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">        (6,530)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       (13,669)</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">        (14,988)</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">Income before income taxes </B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$        9,305</B></U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   <U>$       &#9;8,322</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$        16,569</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   <U>$       &#9;18,122</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</CENTER></P>


<B><P ALIGN="JUSTIFY">NOTE F - STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE ("EPS")</P>

</B><P ALIGN="JUSTIFY">The Company has an ongoing authorization, as amended, from the Board of Directors to repurchase its common stock in the open market or in negotiated transactions in order to meet obligations under the Company's employee benefit plans and for general corporate purposes. In May 2005, the Company's Board of Directors authorized the repurchase of an additional 2,000,000 shares, for a total authorization to repurchase up to 3,000,000 shares. During the first six months of 2005, the Company repurchased 453,592 shares of its common stock, under these board authorizations, at an average price of $20.70 per share. The Company's remaining authorization is for 2,086,204 shares. The Company reissued 455,222 shares of common stock for its employee benefit plans at an average share price of $18.45.</P>
<P ALIGN="JUSTIFY">Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding. Diluted EPS is similar to basic EPS but adjusts for the effect of potential common shares.</P>
<P ALIGN="JUSTIFY">The components of the basic and diluted EPS calculations for the three and six months ended June 30 are as follows: </P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=744>
<TR><TD WIDTH="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=28><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" COLSPAN=2 HEIGHT=28>
<B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended</P>
</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=2><P ALIGN="CENTER"> <U>June</FONT><FONT SIZE=2> 30,</B></U></FONT></TD>
<TD WIDTH="28%" VALIGN="TOP" COLSPAN=3 HEIGHT=28>
<B><FONT SIZE=2><P ALIGN="CENTER">Six Months Ended</P>
</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=2><P ALIGN="CENTER"> <U>June</FONT><FONT SIZE=2> 30,</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<I><FONT FACE="Tms Rmn,Times New Roman" SIZE=2><P>(in thousands, except per share amounts)</I></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><U><P ALIGN="CENTER">2005</B></U></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>
<B><U><P ALIGN="CENTER">2004</B></U></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2005</B></U></TD>
<TD WIDTH="13%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">2004</B></U></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<B><I><U><FONT SIZE=2><P ALIGN="JUSTIFY">Income Available to Common Stockholders</B></I></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">Net Income  </B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 5,620</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">$     5,035</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 9,978</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">$     11,909</U></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<B><I><U><FONT SIZE=2><P ALIGN="JUSTIFY">Weighted Average Shares Outstanding</B></I></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">Basic Weighted Average Shares Outstanding</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P ALIGN="RIGHT">   9,720</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="RIGHT">   9,805</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   9,775</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">   9,708</FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" BGCOLOR="#00ffff">

<FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">Effect of dilutive securities from employee benefit plans
</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">   2,630</U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">   2,597       </U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">   2,578</U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<U><FONT SIZE=2><P ALIGN="RIGHT">   2,526       </U></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP"><DIR>


<B><FONT SIZE=2><P STYLE="margin-left:1.00em; text-indent:-1.00em">  Diluted Weighted Average Shares Outstanding</DIR>

</B></FONT></TD>
<TD WIDTH="15%" VALIGN="MIDDLE" COLSPAN=2>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">   12,350</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="MIDDLE" COLSPAN=2>
<U><FONT SIZE=2><P ALIGN="RIGHT">   12,402</U></FONT></TD>
<TD WIDTH="15%" VALIGN="MIDDLE">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">   12,353</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="MIDDLE">
<U><FONT SIZE=2><P ALIGN="RIGHT">   12,234</U></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" BGCOLOR="#00ffff">

<B><FONT SIZE=2><P>Basic Earnings per share
</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$   0.58</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2 BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$   0.51</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#00ffff">
<B><FONT SIZE=2><P ALIGN="RIGHT">$   1.02</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$   1.23</FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">

<B><FONT SIZE=2><P>Diluted Earnings per share
</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P ALIGN="RIGHT">$   0.46</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="RIGHT">$   0.41</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$   0.81</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">$   0.97</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 10 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>


<B><P ALIGN="JUSTIFY">NOTE G - INCOME TAXES</P></B>

</B><P ALIGN="JUSTIFY">The effective tax rate for the three- and six-months ended June 30, 2005 was 40%, compared with 40% for the three- and 34% for the six-months ended June 30, 2004. The change is due to a $1,000,000 tax benefit recorded in the 2004 first quarter resulting from the settlement of a state tax matter covering a number of years. Excluding the $1,000,000 tax benefit, the Company's effective tax rate for the three- and six-month period ending June 30, 2004 was 40%.</P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="CENTER">******</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 11 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>

<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"><A NAME="PartI_Item2"><A NAME="MDA">Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</P>
<P ALIGN="JUSTIFY"></A></A>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.  Words such as "anticipates," "estimates," "believes," "expects" and similar expressions or words are intended to identify forward-looking statements made on behalf of the Company.  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 and other risks and uncertainties set forth in reports and other documents filed with the <FONT FACE="Tms Rmn,Times New Roman">United States </FONT>Securities and Exchange Commission <FONT FACE="Tms Rmn,Times New Roman">("SEC")</FONT> from time to time. 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 SIZE=4><P ALIGN="JUSTIFY">Critical Accounting Policies and Estimates</P>
</B></U></FONT><P ALIGN="JUSTIFY">For a description of critical accounting policies and estimates, including those that involve varying degrees of judgment, see "Item 7. 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, 2004. 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, 2004 for a more comprehensive listing of significant accounting policies.</P>
<P ALIGN="JUSTIFY">In addition to those estimates referred to above, the Company's employee compensation and benefit expense for interim periods is impacted by estimates and assumptions. A substantial portion of the Company's employee compensation and benefits expense represents discretionary bonuses, generally determined and paid at year-end. The Company estimates the interim periods' discretionary bonus expenses based upon individual departmental profitability and total Company pre-tax profits and accrues accordingly.</P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY">Business &amp; Economic Environment</P>
</B></U></FONT><P ALIGN="JUSTIFY">The securities markets have been beset with uncertainty and volatility during the first six months of 2005. Retail investor's confidence, particularly in the equity markets, continues to wane with increases in oil prices and the Federal Reserve Board's increases in the federal funds rate. </P>
<P ALIGN="JUSTIFY">The June 30, 2005 closing prices of the major market indices, the Dow Jones Industrial Average ("DJIA"), the NASDAQ, and Standard and Poor's 500 Index ("S&amp;P 500") were down 4.7 %, 5.4%, and 1.7%, respectively, from their December 31, 2004 closing prices. The S&amp;P 500 closed up 4.4% over the June 30, 2004 closing while the DJIA closed down 1.5% and the NASDAQ remained relatively unchanged from their respective June 30, 2004 closing. </P>
<P ALIGN="JUSTIFY">The Federal Reserve Board continued its monetary policy of increasing the federal funds rate. During the first six months of 2005, the federal funds rate was increased 75 basis points to 3.0% compared to a 1.0% rate in effect during the first six months of 2004. On June 30, 2005 and 2004, the Federal Reserve Board raised the federal funds rate an additional 25 basis points, adjusting the federal funds rate to 3.25% and 1.25%, respectively. </P>
<P ALIGN="JUSTIFY">The Company continued its expansion increasing the number of offices from 86 at June 30, 2004 to 90 at June 30, 2005.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 12 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY"></P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY">Results of Operations for the Company</B></U></FONT><I><FONT FACE="Tms Rmn,Times New Roman"> </P>
</FONT><B><P ALIGN="JUSTIFY">Six months ended June 2005 as compared to six months ended June 2004</P></B></I>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P STYLE="margin-left:1.00em; text-indent:-1.00em">Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  69,634 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">56.1%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-5%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         73,350 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">57.8%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P><DIR>Investment banking</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            29,397 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">23.7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-3%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            30,303 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">23.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P><DIR>Asset management and service fees</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            19,597 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">15.8%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            17,688 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">13.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P><DIR>Interest </FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              7,758 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">6.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">27%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              6,113</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">4.8%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P><DIR>Other </FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              118</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.1%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-92%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 1,551 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.3%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           126,504 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-2%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            129,005 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.7%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P><DIR>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,345 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,144</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.7%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           124,159 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-2%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            126,861</B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P STYLE="margin-left:1.00em; text-indent:-1.00em">Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            82,282 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">66.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-1%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            83,365 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">65.7%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P><DIR>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            10,622 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              10,203 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P><DIR>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">              5,452 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">4.4%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">              4,915 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">3.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P><DIR>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,838 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,722 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.4%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P><DIR>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              7,396 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-13%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              8,534 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.7%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          107,590 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">86.7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-1%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            108,739 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">85.7%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            16,569 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">13.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-9%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">              18,122 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">14.3%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P>Provision for Income Taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">              6,591 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">5.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">              6,213 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">4.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P><DIR>Net Income</B></FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> $  9,978 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-16%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> $           11,909 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">9.4%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><P ALIGN="JUSTIFY"></P>
</B><P ALIGN="JUSTIFY">The Company recorded net income of $10.0 million, or $0.81 per diluted share on net revenues of $124.2 million for the six months ended June 30, 2005 compared to net income of $11.9 million, or $0.97 per diluted share, on net revenues of $126.9 million for the same period one year earlier. Net income for the six-month period ended June 30, 2004 included a $1.0 million tax benefit, or $0.08 per diluted share, resulting from the settlement in the first quarter of a state tax matter covering a number of years. All prior year share and earnings per share amounts have been retroactively restated to reflect the four-for-three stock split distributed in September 2004.</P>
<P ALIGN="JUSTIFY">The Company's results for the first six months of 2005 as compared to the same period in 2004 were attributed to the weakened equity markets for both the Private Client Group and Equity Capital Markets segments as evidenced by a 5% decrease in revenues from commissions and principal transactions which decreased to $69.6 million. As stated previously the DJIA, the NASDAQ and the S&amp;P 500 were down 4.7%, 5.4% and 1.7%, respectively, over their December 31, 2004 closes.</P>
<P ALIGN="JUSTIFY">Investment banking revenues decreased 3% to $29.4 million due principally to a decrease in the amount of underwriting participation fees earned.</P>
<P ALIGN="JUSTIFY">Asset management and service fees increased 11% to $19.6 million primarily as a result of increased wrap fees on managed accounts.</P>
<P ALIGN="JUSTIFY">Other revenues decreased principally as a result of a decrease in gains on investments.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 13 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net interest revenue increased 36% to $5.4 million principally as a result of increased interest revenue on customer margin accounts which increased 30% to $6.2 million, resulting from a 44% increase in the weighted average rates charged to those customers offset by lower average margin borrowings. Interest expense increased 9% as a result of increased rates charged for bank borrowings and stock loans to finance customer borrowings. Weighted average effective external rates increased 125% to 2.50% from 1.11% in the prior year.</P>
<P ALIGN="JUSTIFY">Total non-interest expenses decreased 1% to $107.6 million resulting from decreased employee compensation and benefits and decreased other operating expenses offset by increases in commissions and floor brokerage, communication and office supplies and occupancy and equipment rental.</P>
<P ALIGN="JUSTIFY">Employee compensation and benefits, which is primarily variable, decreased as expected, due to lower production and decreased profitability, offset by increased fixed compensation resulting from increased staffing and normal year over year salary increases, in conjunction with increased benefit expense resulting from the reversal of previously accrued health benefits as the first six months of 2004 included a credit due to lower than expected utilization.</P>
<P ALIGN="JUSTIFY">Communication and office supplies, which increased 11% to $5.5 million, and occupancy and equipment rental, which increased 4% to $10.6 million, increased principally due to the Company's increase in the number of our Private Client Group branch offices. </P>
<P ALIGN="JUSTIFY">Commission and floor brokerage increased 7% to $1.8 million due to increased floor execution costs.</P>
<P ALIGN="JUSTIFY">Other operating expenses decreased 13% to $7.4 million principally due to decreased settlement charges for claims and decreased litigation cost in connection with the resolution of those and other claims.</P>
<P ALIGN="JUSTIFY">As a result of the 2% decrease in net revenues and a 1% decrease in operating expenses, income before income taxes decreased 9% to $16.6 million.  </P>
<P ALIGN="JUSTIFY">The effective tax rate for the six-months ended June 30, 2005 was 40%, compared with 34% for the six-months ended June 30, 2004. The change is due to a $1.0 million tax benefit recorded in the 2004 first quarter resulting from the settlement of a state tax matter covering a number of years. Excluding the $1.0 million tax benefit, the Company's effective tax rate for the six-month period ending June 30, 2004 was 40%. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 14 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><I><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Three months ended June 2005 as compared to three months ended June 2004</B></I><FONT SIZE=4> </P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE  WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P STYLE="margin-left:1.00em; text-indent:-1.00em">Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  34,318 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">53.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         33,794 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">56.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            15,656 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">24.4%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">17%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            13,333 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">22.5%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><DIR><P>Asset management and service fees</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            10,146 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">15.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            9,058 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">15.3%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Interest </FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              4,318 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">6.7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">39%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              3,099</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5.2%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              773</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-35%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 1,186 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.9%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           65,211 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            60,470 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.8%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,240 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">17%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,059</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.8%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           63,971 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            59,411 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P STYLE="margin-left:1.00em; text-indent:-1.00em">Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            41,593 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">65.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            38,241 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">64.4%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            5,117 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-2%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              5,230 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8.8%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,891 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">22%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,368 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              994 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              918 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.5%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              4,071 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.4%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-6%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              4,332 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">7.3%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          54,666 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">85.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            51,089 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">86.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            9,305 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">14.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">              8,322 </B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">14.0%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P>Provision for Income Taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">              3,685 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">5.7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">              3,287 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=26>
<FONT SIZE=2><P ALIGN="RIGHT">5.5%</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><DIR><P>Net Income</B></FONT></TD></DIR>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> $  5,620 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8.8%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> $           5,035 </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8.5%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><P ALIGN="JUSTIFY"></P>
</B><P ALIGN="JUSTIFY">Except as noted in the following discussion of variances for the total Company and the ensuing segment results, the underlying reasons for the three month variances to the prior period are substantially the same as the comparative six month discussion and the statements contained in that discussion also apply for the three month discussion.</P>
<P ALIGN="JUSTIFY">For the second quarter of 2005, the Company recorded net income of $5.6 million, or $0.46 per diluted share on net revenues of $64.0 million compared to net income of $5.0 million, or $0.41 per diluted share, on net revenues of $59.4 million for the comparable quarter of 2004. </P>
<P ALIGN="JUSTIFY">Investment banking revenues increased 17% to $15.7 million, resulting principally from an increase in corporate finance advisory fees and an increase in lead and co-managed equity, debt, closed-end funds, and trust<B><I> </B></I>preferred offerings.        </P>
<P ALIGN="JUSTIFY">Total non-interest expenses increased 7% to $54.7 million principally due to increased employee compensation and benefits, increased commission and floor brokerage and increased communication and office supplies offset by decreased occupancy and equipment rental and decreased other operating expenses.</P>
<P ALIGN="JUSTIFY">Employee compensation and benefits, which is principally variable, increased as expected, due to increased production and profitability for the quarter along with increased fixed compensation and benefits. </P>
<P ALIGN="JUSTIFY">Occupancy and equipment rental decreased 2% to $5.1 million principally resulting from expired equipment lease agreements which were replaced with purchased equipment, offset by increased office lease expense.</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">Other operating expenses decreased 6% to $4.1 million primarily as a result of decreased litigation expense, decreased insurance expense due to improved pricing on insurance renewals, offset by increased provision for doubtful accounts due to recovery of previously reserved or written off accounts in the second quarter of 2004.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 15 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">As a result of the 8% increase in net revenues and a 7% increase in non-interest expenses, income before income taxes increased 12% to $9.3 million.  </P>
<B><P ALIGN="JUSTIFY">Segments Analysis</P>
</B><P ALIGN="JUSTIFY">The Company's reportable segments include the Private Client Group, Equity Capital Markets, Fixed Income Capital Markets, and Other. Prior periods' financial information has been reclassified to conform with the current period presentation.<B><I><FONT SIZE=4> </B></I></FONT>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. The Fixed Income Capital Markets segment includes public finance, institutional sales and competitive underwriting, and trading. The "Other" segment includes clearing revenue, interest income from stock borrowing activities, unallocated interest expense, interest income and gains and losses from investments held, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; and general administration. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 16 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY"></P>
<B><I><FONT SIZE=4><P ALIGN="JUSTIFY">Results of Operations for Private Client Group - Six Months</P>
</B></I></FONT><P>The following table presents consolidated information for the Private Client Group segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         64,270 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">67.3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         67,801 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">69.8%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              7,893 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">8.3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">n/a</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              7,923 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">8.2%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><DIR><P>Asset management and service fees</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              19,583 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">20.5%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              17,678 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">18.1%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P><DIR>Interest </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              6,266 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">6.6%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">30%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              4,818 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                  60 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-64%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                   168   </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.2%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            98,072 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">102.8%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">n/a</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            98,388 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.3%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 2,652 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.8%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">104%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,302 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.3%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            95,420 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            97,086 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            57,953 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">60.7%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">n/a</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            57,790 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">59.5%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              6,133 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.4%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              5,796 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              3,249 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.4%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">15%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,834 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.9%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 1,271 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 1,206 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.2%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              4,055 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              3,627 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.8%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            72,661 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">76.1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            71,253 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">73.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">   $         22,759 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">23.9%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-12%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">    $         25,833 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">26.6%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>


<P ALIGN="CENTER"><CENTER><TABLE BORDER CELLSPACING=1 CELLPADDING=0 WIDTH=427>
<TR><TD WIDTH="47%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">June 30, 2005</B></U></FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">June 30, 2004</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="JUSTIFY">Branch Offices</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="CENTER">88</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="CENTER">84</FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP"><FONT SIZE=2><P ALIGN="JUSTIFY">Investment Executives</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">434</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">416</FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="TOP" BGCOLOR="#00ffff"><FONT SIZE=2><P ALIGN="JUSTIFY">Independent Contractors</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="CENTER">177</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="CENTER">170</FONT></TD>
</TR>
</TABLE>
</CENTER></P>


<P ALIGN="JUSTIFY">Despite the firm's continued expansion of its Private Client Group, the Private Client Group net revenues decreased 2% to $95.4 million, principally due to decreased commissions and principal transactions reflecting the industry wide diminished demand for equity based products. In addition, commissions from investment banking decreased slightly due to decreased selling concession for lead or co-managed transactions. (See Equity Capital Markets)</P>
<P ALIGN="JUSTIFY">Asset management and service fees increased principally due to increased wrap fees, as a result of an increase in the number and value of managed accounts. </P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER CELLSPACING=1 CELLPADDING=0 WIDTH=670>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Assets Under Management</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">June 30, 2005</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">March 31, 2005</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">June 30, 2004</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">March 31, 2004</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" BGCOLOR="#00ffff"><DIR>

<FONT SIZE=2><P ALIGN="JUSTIFY">Value
</FONT></TD></DIR>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$1,597,657,000</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$1,584,550,000</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$1,384,060,000</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" BGCOLOR="#00ffff">
<FONT SIZE=2><P ALIGN="RIGHT">$1,171,716,000</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP"><DIR>

<FONT SIZE=2><P ALIGN="JUSTIFY">Number of accounts
</FONT></TD></DIR>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8,153</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7,907</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">7,599</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">6,816</FONT></TD>
</TR>
</TABLE>
</CENTER></P>


<P ALIGN="JUSTIFY">Interest revenues for the Private Client Group increased as a result of increased rates charged to customers for margin borrowings to finance trading activity. Interest expense increased as a result of increased rates from banks to finance those customer borrowings. (See net interest discussion in Results of Operations- Total Company) </P>
<P ALIGN="JUSTIFY">Non-interest expenses increased 2% to $72.7 million. Employee compensation and benefits remained relatively unchanged as variable compensation decreased in conjunction with decreased revenue production, offset by increased fixed compensation relating to the firm's continued expansion of the Private Client Group. Employee compensation and benefits includes transition pay, principally upfront notes and accelerated payouts in connection with the Company's expansion efforts. Excluding transition pay of $4.3 million and $4.2 million from 2005 and 2004, respectively, compensation as a percentage of net revenues was 56.2% and 55.2% respectively. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 17 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">Occupancy and equipment rental increased 6% to $6.1 million principally as a result of an increase in the number of branch offices and increased depreciation expense primarily for computer equipment resulting from a company wide upgrade of PC desk top units.</P>
<P ALIGN="JUSTIFY">Other operating expenses increased 12% to $4.1 million principally as a result of increased settlement expense resulting from increased customer claim activity. </P>
<P ALIGN="JUSTIFY">As a result of the 2% decrease in net revenues and a 2% increase in non-interest expenses, income before income taxes for the Private Client Group decreased 12% to $22.8 million.</P>
<B><I><P ALIGN="JUSTIFY">Results of Operations for Private Client Group - Three Months</P>
</B></I><P>The following table presents consolidated information for the Private Client Group segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         31,273 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">64.8%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">n/a</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $         31,236 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">69.7%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              4,754 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">9.9%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">84%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              2,589 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5.8%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><DIR><P>Asset management and service fees</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              10,139 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">21.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              9,053 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">20.2%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Interest </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              3,465 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">7.2%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">45%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">              2,388 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5.3%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                  57 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-64%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                   156   </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            49,688 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">103.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            45,422 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 1,426 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">127%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              628 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            48,262 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            44,794 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            28,951 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">60.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            26,665 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">59.5%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,958 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,871 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,743 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.6%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">29%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,356 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 674 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.4%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 630 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.4%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,365 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.9%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">33%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              1,777 </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.0%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            36,691 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">76.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">10%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            33,299 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">74.3%</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">   $         11,571 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">24.0%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">    $         11,495 </B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">25.7%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>


<P>&nbsp;</P>
<P ALIGN="JUSTIFY">The Private Client Group net revenues increased 8% to $48.3 million, principally due to increased commissions from investment banking due to the increased number of lead or co-managed transactions. (See Equity Capital Markets)</P>
<P ALIGN="JUSTIFY">Non-interest expenses, increased in conjunction with increased revenue production and the company's continued expansion efforts. Employee compensation and benefits, principally variable compensation, increased due to increased production and profitability. Employee compensation and benefits includes transition pay, principally upfront notes and accelerated payouts in connection with the Company's expansion efforts. Excluding transition pay of $2.2 million and $2.1 million from 2005 and 2004, respectively, compensation as a percentage of net revenues was 55.5% and 54.9% respectively. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 18 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">As a result of the 8% increase in net revenues and a 10% increase in non-interest expenses, income before income taxes for the Private Client Group increased 1% to $11.6 million.</P>
<B><I><P ALIGN="JUSTIFY">Results of Operations for Equity Capital Markets - Six Months </P>
</B></I><P>The following table presents consolidated information for the Equity Capital Markets segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P STYLE="margin-left:1.00em; text-indent:-1.00em">Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  3,990 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">22.2%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-19%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  4,918 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">24.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">           13,991 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">77.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-6%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">           14,847 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">74.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              230 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.3%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-41%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              391 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          18,211 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">101.4%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-10%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         20,156 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                243 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.4%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">136%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                103 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          17,968 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-10%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">        20,053 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            9,003 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">50.1%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-13%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          10,333 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">51.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              505 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.8%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-11%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              565 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.8%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              868 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.8%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              897 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              492 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.7%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              452 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             1,048</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-29%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            1,475</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">7.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           11,916 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">66.3%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-13%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">           13,722 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">68.4%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$  6,052 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">33.7%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-4%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$  6,331 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">31.6%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net revenues decreased 10% to $18.0 million. During the first half of 2005, the Equity Capital Markets group led or co-managed 44 equity, debt, closed end funds or trust preferred offerings compared to 40 in the 2004 first half. Despite the increase in the number of lead or co-managed offerings, the amount of the selling concession earned on those offerings diminished along with decreased underwriting participation fees. As a result, commission and principle transactions and investment banking revenue declined.</P>
<P ALIGN="JUSTIFY"> Employee compensation and benefits, which is primarily variable, decreased as expected, in conjunction with decreased production. As a result employee compensation and benefits as a percentage of net revenues decreased to 50.1%. </P>
<P ALIGN="JUSTIFY">Occupancy and equipment rental decreased 11% to $505,000 due to decreased leased equipment charges.</P>
<P ALIGN="JUSTIFY">Commission and floor brokerage increased due to increased cost of floor execution.</P>
<P ALIGN="JUSTIFY">Other operating expenses decreased 29% primarily due to decreased professional fees for legal expenses and decreased travel and promotion. </P>
<P ALIGN="JUSTIFY">As a result of the 10% decrease in net revenues and a 13% decrease in non-interest expenses, income before income taxes decreased 4% to $6.1 million. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 19 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>


<B><I><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">Results of Operations for Equity Capital Markets - Three Months </P>
</B></I><P>The following table presents consolidated information for the Equity Capital Markets segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  2,094 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">22.4%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-11%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"> $  2,341 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">25.4%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            7,189 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">76.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            6,725 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">73.1%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              159 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.6%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-16%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              190 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.1%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          9,442 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         9,256 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.6%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                88 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">54%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                57 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.6%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">          9,354 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">        9,199 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            4,483 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">47.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          4,412 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">48.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              243 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.6%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-22%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              310 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">3.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              453 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.8%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-14%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              524 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              273 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.9%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              247 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               580</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.3%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-38%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            942</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">10.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            6,032 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">64.5%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-6%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">            6,435 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">70.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$  3,322 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">35.5%</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">20%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$  2,764 </B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">30.0%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY">Net revenues increased 2% principally due to increased underwriting activity resulting from an increase in lead and co-managed offerings. During the 2005 second quarter, the Equity Capital Markets group led or co-managed 24 equity, debt, closed end funds or trust preferred offerings compared to 17 in the 2004 second quarter. The increase in management, private placement and advisory fees was offset by a decrease in underwriting participation fees.</P>
<P ALIGN="JUSTIFY"> Employee compensation and benefits increased in conjunction with increased production. Employee compensation and benefits as a percentage of net revenues decreased slightly to 47.9%. </P>
<P ALIGN="JUSTIFY">Communication and office supplies decreased 14% due principally to decreased expenses attributable to closed underwriting transactions.</P>
<P ALIGN="JUSTIFY">As a result of the 2% increase in net revenues and a 6% decrease in non-interest expenses, income before income taxes increased 20% to $3.3 million.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 20 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><I><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">Results of Operations for Fixed Income Capital Markets - Six Months</P>
</B></I><P>The following table presents consolidated information for the Fixed Income Capital Markets segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$ 4,133</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">47.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">23%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$ 3,358</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">41.5%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">4,738</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">54.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">4,711</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">58.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><DIR><P>Interest </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">343</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">3.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-25%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">460</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">5.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-20%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">15</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.2%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">9,226</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">106.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">8,544</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">105.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">537</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">17%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">460</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">8,689</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">8,084</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5,320</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">61.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5,475</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">67.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">396</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">16%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">342</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.2%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">387</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.5%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">389</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.8%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">76</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.9%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">17%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">65</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.8%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1,083</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12.4%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">25%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">867</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">10.8%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">7,262</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">83.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">7,138</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">88.3%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$    1,427</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">16.4%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">51%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$    946</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">11.7%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net revenues increased 7% in the 2005 first half as a result of increased financial advisory fees, in addition to increased underwriter's discounts for underwritings, principally for commissions and principal transactions. The number of senior or co-managed offerings decreased to 78 offerings in the first half of 2005 from 80 in the same period one year earlier.</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">Employee compensation and benefits decreased, primarily variable compensation, due to lower payouts on commissions and principal transactions as compared to payouts on investment banking. As a result compensation as a percentage of net revenues decreased to 61.2%.   </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Occupancy and equipment rental increased 16% due principally to increased vendor service fees for syndicate processing.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"> Other operating expenses increased 25% due to increased travel and promotion, advertising, and professional fees due to increased marketing efforts primarily for municipal banking. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As a result of a 7% increase in net revenues and a 2% increase in non-interest expenses, income before income taxes increased 51% to $1.4 million.  </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 21 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">&nbsp;</P>
<B><I><P ALIGN="JUSTIFY">Results of Operations for Fixed Income Capital Markets - Three Months</P>
</B></I><P>The following table presents consolidated information for the Fixed Income Capital Markets segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="40%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=1><P ALIGN="CENTER">% of Net Revenues</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenues:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and principal transactions</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$ 2,280</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">49.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">57%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$ 1,456</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">34.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><DIR><P>Investment banking</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,437</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">53.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-11%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">2,728</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">64.9%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><DIR><P>Interest </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">176</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">3.8%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">-32%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">257</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">6.1%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other </FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.2%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">-22%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">8</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">0.2%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Total Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">4,899</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">106.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">10%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">4,449</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">105.9%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Less: Interest expense</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">305</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">22%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">249</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5.9%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">4,594</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">4,200</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">100.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2,702</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">58.8%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2,680</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">63.8%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Occupancy and equipment rental</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">186</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">5%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">177</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.2%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Communications and office supplies</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">210</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.6%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">199</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">4.7%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Commissions and floor brokerage</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">47</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.0%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">42</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">1.0%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">564</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">509</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">12.2%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">3,709</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">80.7%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">3,607</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">85.9%</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Income before income taxes</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$    885</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">19.3%</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">49%</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">$    593</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">14.1%</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net revenues increased 9% in the 2005 second quarter as a result of increased underwriting participation and financial advisory fees. The number of senior or co-managed offerings increased to 51 offerings in the 2005 second quarter from 37 in the same period one year earlier. A proportionally larger percentage of the underwriters' discount on those underwritings was in sales credits resulting in a  57% increase in commissions and principal transactions and an 11% decrease in investment banking.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"> Employee compensation and benefits decreased, primarily variable compensation, due to lower payouts on commissions and principal transactions versus payouts on investment banking. As a result compensation as a percentage of net revenues decreased to 58.8%.   </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As a result of a 9% increase in net revenues and a 3% increase in non-interest expenses, income before income taxes increased 49% to $885,000.  </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 22 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><I><P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">Results of Operations for Other Segment -Six Months</P>
</B></I><P>The following table presents consolidated information for the Other segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=40><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=40><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">   $       2,082 </B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">27%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">      $      1,638 </B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           10,007 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           9,766 </FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           5,744 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">  -16%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           6,860  </FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         15,751 </B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">-5%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         16,626 </B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Losses before income tax </B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">     $ (13,669)</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">            -8%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">     $ (14,988)</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
</TR>
</TABLE>
</CENTER></P>


<P ALIGN="JUSTIFY">Net revenues for the Other segment increased to $2.1 million principally as a result of increased net interest revenue resulting from increased internal financing charges, principally to the Private Client Group for customer borrowings for margin activity. (See interest revenue and interest expense discussion in Results of Operations for Private Client Group), offset by an increase in loss on investments.</P>
<P ALIGN="JUSTIFY">Employee compensation and benefits increased due to increased staffing and normal year over year salary increases in conjunction with increased employee benefits costs. (See employee compensation and benefit discussion in Results of Operation Total Company)</P>
<P ALIGN="JUSTIFY">Other expenses decreased principally as a result of decreased settlement charges for customer claims, and decreased litigation costs in connection with those claims.</P>
<B><I><P ALIGN="JUSTIFY">Results of Operations for Other Segment -Three Months</P>
</B></I><P>The following table presents consolidated information for the Other segment for the respective periods indicated.</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=1 CELLPADDING=0 WIDTH=675>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-05</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER"> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#ffff00" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="CENTER">June-04</B></FONT></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=40>
<I><FONT SIZE=2><P>(In thousands)</I></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=40><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><I><U><FONT SIZE=2><P ALIGN="CENTER">% Incr. / (Decr.)</B></I></U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=40>
<B><U><FONT SIZE=2><P ALIGN="CENTER">$ Amount</B></U></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=40><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Net Revenues</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">   $       1,761 </B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">45%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">      $      1,218 </B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Non-interest expenses:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><DIR><P>Employee compensation and benefits</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           5,456 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">22%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           4,484 </FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><DIR><P>Other operating expenses</FONT></TD></DIR>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           2,778 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">  -15%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           3,264  </FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Total Non-interest expenses</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         8,234 </B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">         7,748 </B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="47%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P>Losses before income tax </B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">     $ (6,473)</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">            -2%</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT">     $ (6,530)</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=18><P></P></TD>
</TR>
</TABLE>
</CENTER></P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 23 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>


<P ALIGN="JUSTIFY">&nbsp;</P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
</B></U></FONT><P ALIGN="JUSTIFY">The Company's assets are principally highly liquid, consisting mainly of cash or assets readily convertible into cash. These assets are financed primarily by the Company's equity capital, debenture to Stifel Financial Capital Trust I, 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 its ability to raise additional capital will provide sufficient resources to meet the present and anticipated financing needs. </P>
<P ALIGN="JUSTIFY">In the first six months of 2005, the Company purchased $2.8 million in fixed assets, consisting primarily of information technology equipment, leasehold improvements and furniture and fixtures.</P>
<P ALIGN="JUSTIFY">The Company has an ongoing authorization, as amended, from the Board of Directors to repurchase its common stock in the open market or in negotiated transactions in order to meet obligations under the Company's employee benefit plans and for general corporate purposes<B>.</B> In May 2005, the Company's Board of Directors authorized the repurchase of an additional 2,000,000 shares, for a total authorization to repurchase up to 3,000,000 shares. During the first six months of 2005, the Company repurchased 453,592 shares of its common stock, under these board authorizations, at an average price of $20.70 per share<B>. </B>The Company's remaining authorization is for 2,086,204 shares. The Company reissued 455,222 shares of common stock for its employee benefit plans at an average share price of $18.45.</P>
<P ALIGN="JUSTIFY">SN &amp; Co., the Company's principal broker-dealer subsidiary, is subject to certain requirements of the SEC with regard to liquidity and capital requirements. At June 30, 2005, SN &amp; Co. had net capital of $88.6 million, which was 33.09% of its aggregate debit items, and $83.2 million in excess of the minimum required net capital.</P>
<P ALIGN="JUSTIFY">On June 30, 2005, the Company increased it borrowings from banks by $16.8 million to finance underwriting transactions on July 1, 2005. All transactions were settled on July 1, 2005 and the short-term borrowings were repaid.</P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Recent Accounting Pronouncements</P>
</B></U></FONT><P ALIGN="JUSTIFY">In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of Statement of Financial Accounting Standards ("SFAS") No. 143, Accounting for Asset Retirement Obligations" ("FIN 47").  FIN 47 clarifies the term <I>conditional asset retirement obligation</I> as used in SFAS No. 143. FIN 47 refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company is currently evaluating FIN 47 and had not determined the impact the adoption will have on the Company's condensed consolidated financial statements.</P>
<P ALIGN="JUSTIFY">In December 2004, the FASB issued SFAS No. 123 (revised 2004) (<FONT FACE="Tms Rmn,Times New Roman">"</FONT>SFAS No. 123R<FONT FACE="Tms Rmn,Times New Roman">"</FONT>), "Share-Based Payment," which requires companies to expense the estimated fair value of employee stock options and similar awards. The accounting provisions of SFAS No. 123R, as amended by the SEC on April 21, 2005, will be effective for the Company for fiscal years beginning after June 15, 2005. The Company will adopt the provisions of SFAS No. 123R, effective January 1, 2006, using a modified prospective application. Under the modified prospective application, SFAS No. 123R, which provides certain changes to the method for valuing stock-based compensation among other changes, will apply to new awards and to awards that are outstanding on the effective date and are subsequently modified or cancelled. Compensation expense for outstanding awards for<FONT FACE="Tms Rmn,Times New Roman" SIZE=3> </FONT>which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123. For option grants outstanding at June 30, 2005, the Company expects compensation expense, as determined in accordance with SFAS No. 123R, to be approximately $509,000 before income taxes during 2006. The Company will incur additional expense during 2006 related to future awards granted that cannot yet be quantified. The Company is in the process of determining how the new method of valuing stock-based compensation as prescribed in SFAS No. 123R will be applied to valuing stock-based awards granted after the effective date and the related impact on the <FONT FACE="Tms Rmn,Times New Roman">condensed </FONT>consolidated financial statements.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 24 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") in Issue 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights," on the guidance on how general partners in a limited partnership should determine whether they control a limited partnership. This consensus is effective for general partners of all new limited partnerships formed and for existing limited partnerships for which the partnership agreements are modified subsequent to the date of the ratification of this consensus (June 29, 2005). The guidance in this Issue is effective for existing partnerships no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005.&nbsp; The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3," ("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS No. 154 to have a material impact on the Company's condensed consolidated financial statements.</P>
<P ALIGN="JUSTIFY"></P>
<B><U><FONT SIZE=4><P ALIGN="JUSTIFY">Contractual Obligations</P>
</B></U></FONT><P ALIGN="JUSTIFY">The Company's contractual obligations are detailed in the Company's Annual Report on Form 10-K for the year-end December 31, 2004. As of June 30, 2005, the Company's contractual obligations have not materially changed from December 31, 2004.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 25 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"><A NAME="PartI_Item3">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 under "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.</P>
<P ALIGN="JUSTIFY"></P>

<B><U><FONT SIZE=4><P ALIGN="JUSTIFY"><A NAME="PartI_Item4">Item 4. Controls and Procedures</P>

</B></U></FONT><P ALIGN="JUSTIFY"></A>As specified in the SEC's rules and forms, the Company's management, including Mr. Ronald J. Kruszewski as Chief Executive Officer and Mr. James M. Zemlyak as Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report.  Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits 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, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of June 30, 2005. </P>
<P ALIGN="JUSTIFY">Further, as required by the SEC's rules and forms, the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the Company's internal control over financial reporting to determine whether any changes occurred during the quarter ended June 30, 2005 that have materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Based on that evaluation, there have been no such changes during the quarter ended June 30, 2005.</P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 26 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><FONT SIZE=4>
<P>PART II. OTHER INFORMATION</P>
</B></FONT>
<B><U><P><A NAME="PartII_Item1">Item 1. Legal Proceedings</P>
</B></U><P ALIGN="JUSTIFY"></A>The Company is named in and subject to various proceedings and claims incidental to its securities business activities, including lawsuits, arbitration claims and regulatory matters. While the ultimate outcome of pending litigation, claims and regulatory matters cannot be predicted with certainty, based upon information currently known, management does not believe that the resolution of such litigation and claims will have a material adverse effect on the Company's condensed consolidated financial statements. It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year and management does not believe such resolutions will result in losses materially in excess of the amounts previously provided. </P>
<P ALIGN="JUSTIFY">As a result of the extensive regulation of the securities industry, the Company's broker-dealer subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations, which can result in the imposition of sanctions for regulatory violations, ranging from non-monetary censure to fines and, in serious cases, temporary or permanent suspension from business. In addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry practices, which can also result in the imposition of such sanctions.</P>
<P ALIGN="JUSTIFY">The Company has responded to several industry-wide and specific inquiries from regulatory and self-regulatory organizations and while the ultimate outcome of these inquiries cannot be determined with certainty, management does not believe that the resolution of these inquiries will have a material adverse affect on the Company's condensed consolidated financial statements.</P>
<B><U>
<P><A NAME="PartII_Item2">Item 2. Changes in Securities, Use of Proceeds, and Issuer Repurchases of Equity Securities</P>
</U><P ALIGN="JUSTIFY"></A></P>
<P ALIGN="JUSTIFY">Issuer Purchases of Equity Securities </P>
</B><P ALIGN="JUSTIFY">The following table summarizes the Company's repurchase activity of its common stock during the second quarter ended June 30, 2005:</P>
<P ALIGN="CENTER"><CENTER><TABLE  WIDTH=675>
<TR><TD WIDTH="38%" VALIGN="MIDDLE">&nbsp;</TD>
<TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="MIDDLE">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="MIDDLE">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="MIDDLE" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="MIDDLE">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="MIDDLE">&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="BOTTOM">
<B><FONT SIZE=1><P ALIGN="CENTER">(Periods)</B></FONT></TD>
<TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<B><FONT SIZE=1><P ALIGN="CENTER">Total&nbsp;Number<BR>
of Shares<BR>
Purchased</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=3>
<B><FONT SIZE=1><P ALIGN="CENTER">Average</B></FONT><BR>
<B><FONT SIZE=1>Price&nbsp;Paid</B></FONT><BR>
<B><FONT SIZE=1>per&nbsp;Share</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<B><FONT SIZE=1><P ALIGN="CENTER">Total&nbsp;Number</B></FONT><BR>
<B><FONT SIZE=1>of Shares<BR>
Purchased</B></FONT><BR>
<B><FONT SIZE=1>as Part of<BR>
Publicly<BR>
Announced<BR>
Plans</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<B><FONT SIZE=1><P ALIGN="CENTER">Maximum<BR>
Number&nbsp;of<BR>
Shares&nbsp;that<BR>
May&nbsp;Yet&nbsp;Be<BR>
Purchased<BR>
Under the<BR>
Plans</B></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">April 1, 2005 - April 30, 2005</TD>
<TD WIDTH="0%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">84,626</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">$</TD>
<TD WIDTH="8%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">21.12</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">84,626</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">109,256</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" HEIGHT=19>
<P ALIGN="CENTER">May 1, 2005 - May 31, 2005</TD>
<TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=19>
<P ALIGN="RIGHT">22,134</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=19><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=19>
<P ALIGN="RIGHT">$</TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=19>
<P ALIGN="CENTER">20.24</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=19>
<P ALIGN="RIGHT">22,134</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=19><P></P></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<P ALIGN="CENTER">2,087,122</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">June 1, 2005 - June 30, 2005</TD>
<TD WIDTH="0%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">918</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">$</TD>
<TD WIDTH="8%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">24.74</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="RIGHT">918</TD>
<TD WIDTH="1%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19><P></P></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" BGCOLOR="#00ffff" HEIGHT=19>
<P ALIGN="CENTER">2,086,204</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="0%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>
<P ALIGN="RIGHT">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<B><P>Total</B></TD>
<TD WIDTH="0%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<P ALIGN="RIGHT">107,678</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>
<P ALIGN="RIGHT">$</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<P ALIGN="CENTER">20.97</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<P ALIGN="RIGHT">107,678</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
<TD WIDTH="0%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>
<P ALIGN="RIGHT">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="1%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
</TR>
</TABLE>
</CENTER></P>

<FONT  SIZE=1><P>&nbsp;</P>
</FONT><P ALIGN="JUSTIFY">The Company has an ongoing authorization, as amended, from the Board of Directors to repurchase its common stock in the open market or in negotiated transactions. In May 2005, the Company's Board of Directors authorized the repurchase of an additional 2,000,000 shares, for a total authorization to repurchase up to 3,000,000 shares. </P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 27 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>


<P ALIGN="JUSTIFY"></P>

<B><U><P ALIGN="JUSTIFY">Item 4. Submission of Matters to a Vote of Security Holders</P>
</B></U><P ALIGN="JUSTIFY">The Annual Meeting of Stockholders of the Company was held on May 11, 2005. Of the 10,026,652 shares issued, outstanding and eligible to be voted at the meeting, 9,850,085 shares, constituting a quorum, were represented in person or by proxy at the meeting. Two matters were submitted to a vote of security holders at the meeting.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">1.&#9;<U>Election of Four Class I Directors</U>. The first matter submitted was the election of four Class I director nominees to the Board of Directors, each to continue in office until the year 2008. Upon tabulation of the votes cast, it was determined that all four-director nominees had been elected. The voting results are set forth below:</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=414>
<TR><TD WIDTH="42%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">Name</B></U></TD>
<TD WIDTH="29%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">For</B></U></TD>
<TD WIDTH="29%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">Withheld</B></U></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="CENTER">Robert J. Baer</TD>
<TD WIDTH="29%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">9,700,405</TD>
<TD WIDTH="29%" VALIGN="BOTTOM" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">149,680</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<P ALIGN="CENTER">Frederick O. Hanser</TD>
<TD WIDTH="29%" VALIGN="TOP">
<P ALIGN="RIGHT">9,700,273</TD>
<TD WIDTH="29%" VALIGN="TOP">
<P ALIGN="RIGHT">149,812</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="CENTER">Bruce A. Beda</TD>
<TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">9,702,073</TD>
<TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">148,012</TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP">
<P ALIGN="CENTER">Ronald J. Kruszewski</TD>
<TD WIDTH="29%" VALIGN="TOP">
<P ALIGN="RIGHT">9,692,597</TD>
<TD WIDTH="29%" VALIGN="TOP">
<P ALIGN="RIGHT">157,488</TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Because the Company has a staggered Board, the term of office of the following named Class II and III directors, who were not up for election at the 2005 annual meeting, continued after the meeting:</P>
<P ALIGN="JUSTIFY">&#9;</P>
<B><P ALIGN="CENTER">Class II </B>(to continue in office until 2006)</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=174>
<TR><TD VALIGN="TOP">
<P ALIGN="CENTER">Charles A. Dill<BR>
Richard F. Ford<BR>
Walter F. Imhoff<BR>
James M. Zemlyak</TD>
</TR>
</TABLE>
</CENTER></P>

<B><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Class III </B>(to continue in office until 2007)</P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=174>
<TR><TD VALIGN="TOP">
<P ALIGN="CENTER">John P. Dubinsky <BR>
Robert E. Lefton<BR>
Scott B. McCuaig<BR>
James M. Oates</TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"></P>
<OL START=2>

<U><P ALIGN="JUSTIFY"><LI>Proposal to Ratify the Appointment of Deloitte &amp; Touche LLP ("Deloitte").</U> The second matter, a proposal to ratify the appointment of Deloitte as the Company's independent registered public accounting firm for the year ending December 31, 2005, was approved by a majority of the 9,842,070 shares of the Company's common stock that were present and entitled to vote. The voting results on this matter were as follows:</LI></P></OL>

<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=228>
<TR><TD WIDTH="45%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="JUSTIFY">For</TD>
<TD WIDTH="55%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">9,819,790</TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Against</TD>
<TD WIDTH="55%" VALIGN="TOP">
<P ALIGN="RIGHT">22,280</TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="JUSTIFY">Abstain</TD>
<TD WIDTH="55%" VALIGN="TOP" BGCOLOR="#00ffff">
<P ALIGN="RIGHT">8,015</TD>
</TR>
</TABLE>
</CENTER></P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 28 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<B><U><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY"><A NAME="PartII_Item6">Item 6. Exhibits</P><DIR>

</B><P ALIGN="JUSTIFY"></A></P></DIR>

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Exhibits</U>: </LI></P></OL>
<DIR>

<P STYLE="margin-left:1.00em; text-indent:-1.00em"> 11&#9;Statement re computation of per share earnings (set forth in "Note F - Earnings Per Share ("EPS")" of the Notes to Condensed Consolidated Financial Statements (Unaudited))</P>
<P>31.1 &#9;Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</P>
<P>31.2 &#9;Certification by the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.</P>
<P STYLE="margin-left:1.00em; text-indent:-1.00em"> 32 &#9;Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit is furnished to the SEC.</P></DIR>
</DIR>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 29 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">&#9;&#9;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<B><U><P ALIGN="CENTER"><A NAME="Signatures"></A></P>
<FONT SIZE=4><P ALIGN="CENTER">SIGNATURES</P>
</B></U></FONT>
<P ALIGN="JUSTIFY">Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</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">
<B><FONT FACE="Tms Rmn,Times New Roman"><P ALIGN="CENTER">STIFEL FINANCIAL CORP</B>.</FONT><B><BR>
</B><FONT FACE="Tms Rmn,Times New Roman">(Registrant)</P>
</FONT><P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: <U>August 8, 2005</U></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: <U>August 8, 2005</U></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="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 30 </I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P ALIGN="JUSTIFY">&nbsp;</P>

<B><U><FONT SIZE=4><P ALIGN="CENTER"><A NAME="Exhibit_Index">EXHIBIT INDEX</A></P>
</U></FONT><P ALIGN="CENTER"></P></B>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=517>
<TR><TD WIDTH="20%" VALIGN="BOTTOM">
<B><P ALIGN="CENTER"><U>Exhibit&nbsp;No.</U></P>
</B><FONT FACE="Tms Rmn,Times New Roman"></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
<TD WIDTH="79%" VALIGN="BOTTOM">
<B><P ALIGN="CENTER"><U>Description</U></P>
</B><FONT FACE="Tms Rmn,Times New Roman"></FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP">
<P ALIGN="CENTER">31.1</TD>
<TD WIDTH="2%" VALIGN="BOTTOM">
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="79%" VALIGN="BOTTOM">
<P>Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</P>
<FONT FACE="Tms Rmn,Times New Roman"></FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP">
<P ALIGN="CENTER">31.2 </TD>
<TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="79%" VALIGN="BOTTOM">
<P>Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</P>
<FONT FACE="Tms Rmn,Times New Roman"></FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP">
<P ALIGN="CENTER">32</TD>
<TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="79%" VALIGN="BOTTOM">
<P>Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. <I>This exhibit is furnished to the SEC.</P>
<FONT FACE="Tms Rmn,Times New Roman"></FONT>
</I></TD>
</TR>
</TABLE>
</CENTER></P>
<P ALIGN="CENTER" ><FONT SIZE=2 COLOR ="#708090"><I> Page 31</I></FONT><BR>
<HR NOSHADE></P>
<p Style='page-break-before:always'>

<P>&nbsp;</P>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>r10q_0506e311.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>

<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

<B><FONT SIZE=4><P ALIGN="CENTER">Stifel Financial Corp.<BR>
Form 10-Q Exhibit 31.1 </P>
</FONT><P ALIGN="CENTER">CERTIFICATION</P>
</B><FONT SIZE=3><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 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 report;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, the financial statements, and other financial information included in this 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 report;</LI></P>
<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=3> </FONT><FONT SIZE=3>for the registrant and we have:</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;</LI></P>
</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=3><LI>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</LI>
</FONT><FONT SIZE=3><P ALIGN="JUSTIFY"><LI>Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and</LI></P></OL>

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

<P ALIGN="JUSTIFY"><LI>All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; 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 control over financial reporting.</LI></P></OL>
</OL>

<P ALIGN="JUSTIFY"></P></FONT>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=448>
<TR><TD WIDTH="35%" VALIGN="TOP">
<FONT  SIZE=3><P>Date: August 8, 2005</FONT></TD>
<TD WIDTH="65%" VALIGN="TOP">
<FONT  SIZE=3><P>By <U>/s/ Ronald J. Kruszewski</U></FONT></TD>
</TR>
<TR><TD WIDTH="35%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="65%" VALIGN="TOP" ROWSPAN=2>
<FONT  SIZE=3><P>      Ronald J. Kruszewski<BR>
      President and Chief Executive Officer<BR>
      (Principal Executive Officer)</FONT></TD>
</TR>
<TR><TD WIDTH="35%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<B><FONT SIZE=2><P ALIGN="CENTER"></P>
</B></FONT><FONT FACE="Arial Unicode MS" SIZE=2><P ALIGN="CENTER"> </P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>r10q_0506e312.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>

<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

<B><FONT SIZE=4><P ALIGN="CENTER">Stifel Financial Corp.<BR>
Form 10-Q Exhibit 31.2 </P>
</FONT><P ALIGN="CENTER">CERTIFICATION</P>
</B><FONT SIZE=3><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 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 report;</LI></P>
<P ALIGN="JUSTIFY"><LI>Based on my knowledge, the financial statements, and other financial information included in this 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 report;</LI></P>
<P ALIGN="JUSTIFY"><LI>The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:</LI></P>
<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;</LI></P>
<LI>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</LI>
<P ALIGN="JUSTIFY"><LI>Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</LI></P>
<P ALIGN="JUSTIFY"><LI>Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and</LI></P></OL>

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

<P ALIGN="JUSTIFY"><LI>All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; 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 control over financial reporting.</LI></P></OL>
</OL>

</FONT><FONT FACE="Tms Rmn,Times New Roman" SIZE=3></FONT>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=384>
<TR><TD WIDTH="44%" VALIGN="TOP">
<FONT SIZE=3><P>Date: August 8, 2005</FONT></TD>
<TD WIDTH="56%" VALIGN="TOP">
<FONT SIZE=3><P>By <U>/s/ James M. Zemlyak</U></FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP" ROWSPAN=2>
<FONT SIZE=3><P>     James M. Zemlyak<BR>
     Chief Financial Officer<BR>
     (Principal Financial Officer)</FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<FONT SIZE=2><P ALIGN="CENTER"></P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>r10q_0506e32.htm
<DESCRIPTION>EXHIBIT 32
<TEXT>
<HTML>
<HEAD>

<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=384>
<TR><TD WIDTH="44%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<B><FONT SIZE=4><P ALIGN="CENTER">Stifel Financial Corp.<BR>
Form 10-Q Exhibit 32 </P>
</FONT><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO <BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 *</P>
</B>
<P ALIGN="JUSTIFY">In connection with the Quarterly Report of Stifel Financial Corp. and subsidiaries on Form 10-Q for the period ending June 30, 2005, 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>
<OL>

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

<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: <U>August 8, 2005</U></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="JUSTIFY">/s/ Ronald J. Kruszewski&#9;</P>
</U><P>Ronald J. Kruszewski <BR>
President and Chief Executive Officer<BR>
(Principal Executive Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P ALIGN="JUSTIFY">Date: <U>August 8, 2005</U></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><P ALIGN="JUSTIFY">/s/ James M. Zemlyak&#9;</P>
</U><P>James M. Zemlyak <BR>
Chief Financial Officer<BR>
(Principal Financial Officer)</P>
<P ALIGN="JUSTIFY"></TD>
</TR>
</TABLE>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P ALIGN="JUSTIFY">* A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Commission or its staff upon request.</P>
<FONT SIZE=2><P ALIGN="CENTER"></P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SUBMISSION>
