(UNAUDITED)

(In thousands, except par values and share amounts)

See Notes to Consolidated Financial Statements.

(UNAUDITED)(In thousands)

The consolidated financial statements include the accounts of Stifel Financial Corp. and its subsidiaries (collectively referred to as the "Company"). The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the financial stateme nts and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

Where appropriate, prior year's financial information has been reclassified to conform to the current year presentation.

The Company has no components of other comprehensive income, therefore comprehensive income equals net income.

The Company's principal subsidiary, Stifel, Nicolaus & Company, Incorporated ("SN & 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 & 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 The Rule also provides that equity capital may not be withdrawn and cash dividends may not be paid if resulting net capital would be less than 5 percent of aggregate debit items.

At June 30, 2002, SN & Co. had net capital of $38,589,919, which was 11.79% of its aggregate debit items, and $32,044,551 in excess of the minimum required net capital.

The Company receives collateral in connection with securities borrowed transactions, customer margin loans and other loans. Under many agreements, the Company is permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or deliver to counterparties to cover short positions. At June 30, 2002, the fair value of securities received as collateral where the Company is permitted to sell or repledge the securities was $382,513,000 and the fair value of the collateral that had been sold or repledged was $268,719,000.

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During the first quarter, the Company entered into a $4.0 million sale-leaseback arrangement for certain office furniture and equipment. The lease expires on February 2005 with an option to purchase the equipment at the higher of market value or 15% of the original purchase price. The Company makes quarterly payments of $320,000. At the time of the sale, the Company's recorded net book value for the equipment was $2.9 million resulting in a deferred gain of $1.1 million, which will be amortized ratably over the life of the lease. The transaction will be accounted for as an operating lease.

On April 25, 2002 the Company completed the offering of 1,380,000 shares of 9% cumulative Trust Preferred Securities ("preferred securities") for $34.5 million (net proceeds of approximately $32.8 million after offering expenses of approximately $275,000 and underwriting commissions). The preferred securities represent an indirect interest in junior subordinated debentures purchased from the Company by Stifel Financial Capital Trust I, a Delaware Trust and wholly owned subsidiary of the Company. The preferred securities may be redeemed no earlier than June 30, 2007 but no later than June 30, 2032. Distributions of the cumulative cash distributions will be made quarterly. Undistributed payments will accumulate interest of 9% per annum compounded quarterly.

On April 30, 2002 the Company extinguished the $10.0 million principal amount, as allowed by the agreement, of long term debt to Western and Southern Life Insurance Company, a significant shareholder, due June 30, 2004 bearing interest of 8.0% per annum.

The Company is a defendant in Robert M. Cochran v. Stifel Financial Corp, a Delaware corporation, Civil Action No. 19271-NC and Robert M. Cochran v. Stifel Financial Corp., a Delaware corporation, Civil Action No. 19750-NC, both recently filed in the Court of Chancery of the State of Delaware. These matters were filed by a former officer and director of the Company's subsidiary, Stifel, Nicolaus & Company, Incorporated. The litigation seeks indemnification under Delaware Law and the Company's by-laws for legal fees and expenses incurred by the former officer in defense of certain matters brought against him in his capacity as an officer and director of the subsidiary. Due to the unspecified amount of these claim, the Company can not reasonably estimate the amount sought for indemnification.

The Company has made no provision or allowance for any exposure it might have in these two lawsuits. Based on information currently available, management does not believe the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial condition. However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.

The Company is also a defendant in other lawsuits arising in the normal course of the securities business. Although the outcome of litigation is always uncertain, based on its understanding of the facts, management does not believe the ultimate resolution of any of these matters will have a material adverse effect on the Company's consolidated financial condition and results of operations. However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period. It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year, and management does not believe such resolutions will result in losses materially in excess of the amounts previously provided.

The Company's reportable segments include Private Client Group, Equity Capital Markets, Fixed Income Capital Markets and Other. Prior years' financial information has been reclassified to conform with the current year presentation. The Private Client Group segment includes branch offices and independent contractor offices of the Company's broker-dealer subsidiaries located throughout the U.S., primarily in the Midwest. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, to their private clients. The Equity Capital Markets segment includes corporate finance management and participation in underwritings (exclusive of sales credits, which are included in the Private Client Group segment), mergers and acquisitions, institutional sales, trading, research, and market making. Fixed Income Capital Markets segment includes public finance, institutional sales, and competitive underwriting and trading. Investmen t advisory fees, clearing income and venture capital activities are included in Other.

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.

Information concerning operations in these segments of business is as follows (in thousands):

The Company has not disclosed asset information by segment, as the information is not produced internally and its preparation is impracticable.

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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.

The components of the basic and diluted earnings per share calculation for the three and six months ended June 30, are as follows (in thousands, except per share amounts):

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and in August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 141 discontinues the use of pooling of interests method of accounting for business combinations and requires that the purchase method be used. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of a Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions, for the Disposal of a Segment of a Business." The Statements were effective for the Company's consolidated financial statements on January 1, 2002. The adoption of the provisions of these statements did not have any impact on the Company's consolidated financial statements.

In June 2001, FASB issued SFAS No. 142 "Goodwill and Other Intangible Asset." SFAS No. 142, effective for fiscal years beginning after December 15, 2001, requires discontinuing the amortization of goodwill and other intangible assets with indefinite useful lives. Instead, these assets will be tested periodically for impairment and written down to their value as necessary. The following is unaudited pro forma financial data for the combined operations, assuming that goodwill was not amortized in 2001.

(in thousands, except per share amounts)	Three Months Ended June 30, 2001	Six Months Ended June 30, 2001
Goodwill Amortization, net of tax	$ 34	$ 68
Net Income	$ 828	$ 2,436
Basic Earnings Per Share	$ 0.11	$ 0.34
Diluted Earnings Per Share	$ 0.10	$ 0.30

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The Company has performed the transitional impairment analysis, required upon adoption of SFAS No. 142, and has determined that there is no impairment of the carrying value of goodwill. Goodwill will be tested annually for impairment. Additionally, the Company does not have any other intangible assets.

The amount of goodwill allocated to each segment is as follows:

In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The adoption of the provisions of these statements is not expected to have a material impact on the Company's consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB statement No.4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 addresses financial accounting and reporting for the early retirement of debt. The Company does not believe that the adoption of SFAS No. 145 will have a significant impact on its financial statements. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after May 1, 2002 with early application encouraged.

******

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The Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to the Company and those specific to the industry which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, general economic conditions, actions of competitors, regulatory actions, changes in legislation and technology changes. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this Quarterly Report. The Company does not undertake any obligation to publicly update any forward-looking statements.

For a description of critical accounting policies, including those which involve varying degrees of judgment, see Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. In addition, see Note A of Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001 for a more comprehensive listing of significant accounting policies.

The financial markets began the first half of 2002 on a languid note as investor confidence continued to be shaken on news of questionable accounting practices, mixed signals on the economic recovery, and weak corporate earnings. The major market indices, the Dow Jones Industrial Average ("Dow"), the NASDAQ composite and the Standard and Poors 500 Index ("S&P"), reflected the lack of investor confidence and the effects of the news. The Dow fell 7.8% from the December 31, 2001 mark of 10,022 to 9,243 at June 30, 2002 driven by economically sensitive stocks. The NASDAQ composite was off 25.0% to 1,463 at June 30, 2002 from 1,950 at December 31, 2001 mainly due to continued weakness of the technology sector. The S&P was down 14% to 990 at June 30, 2002 from 1,148 at December 31 2001.

In the discussion to follow, results for the three and six months ended June 30, 2002 will be compared to the results for the three and six months ended June 30, 2001. Certain reclassifications have been made to prior period amounts to conform to the current period's presentation. See Note A of Notes to Consolidated Financial Statements.

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The following table summarizes the changes in the major categories of revenue and expense for the three and six months ended June 30, 2002 as compared to June 30, 2001.

The Company recorded net income of $3.7 million or $0.45 per diluted share on net revenues of $97.4 million for the six months ended June 30, 2002 compared to net income of $2.4 million or $0.30 per diluted share on net revenues of $89.1 million for the same period one year earlier.

Net revenues increased $8.3 million (9%) resulting from increases in principal transactions, investment banking and other revenues which increased $1.0 million (6%), $8.7 million (55%), and $487,000 (4%) respectively, offset by decreases in commissions and net interest of $933,000 (2%), and $988,000 (18%).

Revenues from principal transactions increased $1.0 million as a result of increased trading activity in corporate and municipal bonds as investors sought alternatives to equity based products.

Investment banking revenues increased principally due to an increase in corporate finance revenue of $10.5 million (120%) offset by a decrease in municipal finance revenue of $1.8 million (25%). Corporate finance fee income increased due to an increase in the number of managed equity offerings from eight in the first six months of 2001 to 25 in the first six months of 2002. Municipal finance revenue decreased due to a decrease in the number of senior or co-managed underwritings from 88 during the first six months of 2001 to 64 during the first six months of 2002 resulting from declining economic conditions and a decrease in the number of refinancings as municipalities and institutions took advantage of the reduced interest rates in 2001.

Net interest income declined $988,000 (18%) due to a $5.0 million decrease in interest income, principally resulting from decreased borrowings by customers and decreased rates charged to those customers. The decrease in interest income was offset by a $4.0 million decrease in interest expense, resulting from decreased short term borrowings, along with decreased rates on those borrowings, and decreased stock loan activity by the Company to finance customer borrowings on margin accounts.

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Revenues from commissions on agency transactions decreased due to the decline in demand for equity based products resulting from poor market conditions.

Other revenues increased due principally to increased money market account fees.

Total non-interest expenses increased $5.9 million (7%), primarily resulting from an increase in the employee compensation and benefits. Non-interest expenses excluding employee compensation and benefits decreased $452,000 (2%) as commission and floor brokerage, communication and office supplies and other operating expenses decreased $106,000 (6%), $274,000 (5%) and $718,000 (8%) respectively, offset by an increase in occupancy and equipment rental of $646,000 (8%).

Communication and office supplies decreased due primarily to a decrease in office supplies expense resulting from the Company's cost containment program.

Employee compensation and benefits, a significant portion of the Company's expenses, increased $6.4 million (11%) primarily resulting from an increase in variable employee compensation of $7.2 million (17%), principally investment executive compensation and incentive based compensation which increased in conjunction with increased production and profitability, offset by a decrease of fixed compensation and benefits of $841,000 (5%).

Other operating expenses decreased $718,000 (8%) principally due to decreased travel and entertainment costs resulting from the Company's cost containment program.

The Company recorded net income of $2.0 million or $0.25 per diluted share on net revenues of $49.5 million for the quarter ended June 30, 2002 compared to net income of $794,000 or $0.10 per diluted share on total revenues of $44.2 million for the comparable quarter of 2001.

Net revenues increased $5.3 million (12%) resulting from increases in commissions, investment banking and other income of $103,000 (1%), $6.0 million (79%) and $246,000 (4%) respectively, offset by decreases in principal transactions and net interest of $509,000 (6%) and $579,000 (22%) respectively.

Commissions increased $103,000 (1%) to 18.6 million from 18.5 million for the same quarter of 2001 reflecting a slight improvement in market conditions. Principal transactions decreased $509,000 (6%) to $8.3 million from $8.8 million from the comparable quarter of 2001 due to trading losses in market making activity.

Communication and office supplies increased $85,000 due to an increase in telephone and communication system expenses which increased due to the Company's continued expansion efforts offset by a decrease in office supplies expense resulting from the Company's cost containment program.

Other operating expenses decreased $805,000 (14%) as the prior years comparable quarter was adversely impacted by $1.3 million charge due to legal related expenses incurred primarily in connection with historical litigation arising out of the Company's former Oklahoma operations.

The explanation of revenue and expenses fluctuations for the remaining categories presented for the six month period are generally applicable to the three month operations.

The Private Client Group ("PCG") recorded an increase in net revenues of $5.4 million (8%) to $69.6 million from $64.2 million and PCG operating contribution increased $2.3 million (29%) to $10.1 million from $7.8 million from the same period one year earlier principally as a result of commissions generated from underwriting activities of the Equity Capital Markets ("ECM") offset by decreased margin interest income.

ECM recorded an increase in net revenues of $6.7 million (61%) and ECM operating contribution increased $3.4 million (233%) form the same period one year earlier due to significant management and advisory fees and an increase in the number of lead or co-managed underwritings from eight in the first half of 2001 to 25 in the first half of 2002.

Fixed Income Capital Markets ("FICM") recorded a decrease in net revenues of $ 2.5 million (26%) to $7.2 million from $9.7 million and a decrease in operating contributions of $1.9 million (62%) to $1.2 million from $3.1 million from the first half of 2001 The decrease resulted principally from a reduction in the number of senior or co managed municipal underwritings resulting from slowed economic conditions and a decrease in the number of refinancings as municipalities and institutions took advantage of the reduced interest rates during 2001.

PCG recorded an increase in net revenues of $2.8 million (9%) to $34.7 million from $31.9 million and an increase in operating contribution of $1.1 million (29%) to $5.0 million from $3.8 million from the second quarter of 2001 principally as a result of commissions generated from underwriting activities of the Equity Capital Markets offset by decreased margin interest income.

ECM posted an increase in net revenues of $3.6 million (69%) and ECM operating contribution increased $2.0 million (671%) form the same period one year earlier. The Company lead or co-managed 15 equity or trust preferred offerings during the second quarter 2002, compared to five in the same period one year earlier.

FICM recorded a decrease in net revenues of $ 411,000 (8%) to $4.8 million from $5.2 million and a decrease in operating contributions of $361,000 (21%) to $1.4 million from $1.8 million from the second quarter 2001 The FICM senior or co-managed 37 offerings during the second quarter 2002, compared to 51 offerings in the same period one year earlier.

The majority of the Company's assets are highly liquid, consisting mainly of cash or assets readily convertible into cash. These assets are financed primarily by the Company's equity capital, preferred securities, customer credit balances, short-term bank loans, proceeds from securities lending, and other payables. Changes in securities market volumes, related customer borrowing demands, underwriting activity, and levels of securities inventory affect the amount of the Company's financing requirements.

During the first six months of 2002, the Company repurchased 262,498 shares, using existing board authorizations, at an average price of $12.08 per share, to meet obligations under the Company's employee benefit plans.

Management believes the funds from operations, available informal short-term credit arrangements, and issuance of $34.5 million of preferred securities will provide sufficient resources to meet the present and anticipated financing needs.

On April 25, 2002 the Company completed the offering of 1,380,000 shares of its 9% cumulative Trust Preferred Securities for net proceeds of approximately $32.8 million after offering

Page 14

On May 9, 2002, the Company's board of directors authorized the repurchase of up to 750,000 additional shares. These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under the Company's employee benefit plans and for general corporate purposes. This authorization is in addition to Stifel's previously announced stock repurchase plan. Further, the Company announced the elimination of future dividends on its common stock.

Stifel, Nicolaus & Company, Incorporated, the Company's principal broker-dealer subsidiary, is subject to certain requirements of the Securities and Exchange Commission with regard to liquidity and capital requirements. At June 30, 2002, Stifel, Nicolaus had net capital of approximately $38.6 million which exceeded the minimum net capital requirements by approximately $32.0 million.

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and in August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 141 discontinues the use of pooling of interests method of accounting for business combinations and requires that the purchase method be used. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of a Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions, for the Disposal of a Segment of a Business." The Statements were effective for the Company's consolidated financial statements on January 1, 2002. The adoption of the provisions of these statements did not have any impact on the Company's consolidated financial statements.

There have been no material changes from the information provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

The Company is a defendant in Robert M. Cochran v. Stifel Financial Corp, a Delaware corporation, Civil Action No. 19271-NC and Robert M. Cochran v. Stifel Financial Corp., a Delaware corporation, Civil Action No. 19750-NC, both recently filed in the Court of Chancery of the State of Delaware. These matters were filed by a former officer and director of the Company's subsidiary, Stifel, Nicolaus & Company, Incorporated. The litigation seeks indemnification under Delaware Law and the Company's by-laws for legal fees and expenses incurred by the former officer in defense of certain matters brought against him in his capacity as an officer and director of the subsidiary. Due to the unspecified amount of these claim, the Company can not reasonably estimate the amount sought for indemnification.

The Company has made no provision or allowance for any exposure it might have in these two lawsuits. Based on information currently available, management does not believe the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial condition. However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.

The Company is also a defendant in other lawsuits arising in the normal course of the securities business. Although the outcome of litigation is always uncertain, based on its understanding of the facts, management does not believe the ultimate resolution of any of these matters will have a material adverse effect on the Company's consolidated financial condition and results of operations. However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period. It is reasonably possible that certain of these lawsuits and arbitrations could be resolved in the next year, and management does not believe such resolutions will result in losses materially in excess of the amounts previously provided.

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Item 6. Exhibit(s) and Report(s) on Form 8-K

1. Exhibits: None.
2. Report(s) on Form 8-K

Page 17

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

In connection with the Quarterly Report of Registrant on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

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