(1) Potential Common Shares are anti-dilutive. For the three months ended September 30, 2002, there were 1,158,000 options that were considered anti-dilutive and thus not included in the above calculation.

In November 2002, FASB issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN No. 45"). For financial statements issued after December 15, 2002, FIN No. 45 requires that a guarantor make certain disclosures regarding guarantees or indemnification agreements. Starting January 1, 2003, FIN No. 45 required that a liability be recognized at the inception of the guarantee at fair value. The Company adopted the disclosure provisions of FIN No. 45 in the Company's annual report on Form 10-K for the year ended December 31, 2002 and adopted the remainder of the provisions on January 1, 2003. The statement did not have an impact on the Company's consolidated financial statements.

In January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN No. 46"). FIN No. 46 attempts to improve financial reporting by enterprises involved with variable interest entities. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the interim or annual period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company is currently evaluating the impact of FIN No. 46 on its interest in Stifel Financial Capital Trust I ("SFCT"), which is currently consolidated. Exclusive of SFCT, the Company has determined that it is not the primary beneficiary of any variable interest entity that would need to be consolidated under FIN No. 46.

Page 9

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of this statement did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. In accordance with the standard, a financial instrument that embodies an obligation for the issuer is required to be classified as a liability (or an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and for all other instruments for interim periods beginning after June 15, 2003. On November 7, 2003, the FASB staff issued FASB Staff Position No. 150-3 ("FSP No. 150-3"), which defers certain provisions of SFAS No. 150. The Company has adopted the effective provisions of SFAS No. 150. The adoption of these provisions did not have a material impact on the Company's cons olidated financial position, results of operations, or cash flows. For the deferred provisions, the Company is currently evaluating the impact of this statement.

The board of directors of the Company authorized a tender offer to purchase up to 850,000 shares of Stifel Financial Corp., or approximately 12%, of its outstanding common stock (including associated preferred stock purchase rights) at a price of $13.25 per share. The tender offer commenced on September 5, 2003, and expired on October 10, 2003. On September 4, 2003, the last trading day prior to the commencement of the offer, the closing price per share reported on the New York Stock Exchange was $12.54. Based on the final count by the depositary for the tender offer, the Company purchased 87,471 shares, representing approximately 1.2% of outstanding shares, at a purchase price of $13.25 per share. The aggregate purchase price of the shares purchased by the Company through the tender offer, including fees and expenses associated with the tender offer, was approximately $1.2 million.

******

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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 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, 2002. 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, 2002 for a more comprehensive listing of significant accounting policies.

Investors showed more confidence in the equity markets as evidenced by the increase in the major market indices. At September 30, 2003, the Dow Jones Industrial Average ("Dow") closed at 9,275, up 22.2% from the close at September 30, 2002; and up 11.2% from the December 31, 2002 close. The Standard and Poors 500 Index ("S&P") rose 22.2% from September 30, 2002, and 13.2% from the December 31, 2002 close. The NASDAQ Composite closed at 1,787, climbing 52.5% from a year earlier and increasing 33.8% from the December 31, 2002 close.

The Federal reserve board lowered the federal funds rate 75 basis points since September 30, 2002 to a 45 year low of 1 percent.

The Company continued its expansion during the first nine months of 2003. SN & Co. opened four branch offices for a total of 83, compared to 76 at September 30, 2002.

In the discussion to follow, results for the three and nine months ended September 30, 2003 will be compared to the results for the three and nine months ended September 30, 2002. Certain reclassifications have been made to prior period amounts to conform to the current period's presentation.

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The following table summarizes the changes in the major categories of revenues and expenses for the three and nine months ended September 30, 2003 as compared to the three and nine months ended September 30, 2002.

Increase (Decrease)	Three Months Ended		Nine Months Ended
(Dollars in thousands)	Amount	Percentage	Amount	Percentage
REVENUES:
Commissions	$ 5,652	34%	$ 6,744	12%
Principal transactions	3,587	43	6,304	24
Investment banking	3,572	30	(1,668)	(5)
Interest	(626)	(17)	(1,963)	(18)
Other	2,198	36	2,169	11
Total Revenues	14,383	31	11,586	8
Less: Interest expense	(542)	(30)	(973)	(20)
Net Revenues	$ 14,925	33%	$ 12,559	9%
NON-INTEREST EXPENSES:
Employee compensation and benefits	$ 8,709	28%	$ 7,456	8%
Occupancy and equipment rental	70	2	463	3
Communications and office supplies	3	- -	5	- -
Commissions and floor brokerage	(21)	(2)	(181)	(7)
Other operating expenses	(6,701)	(64)	(7,177)	(37)
Total non-interest expenses	$ 2,060	4%	$ 566	- -

The Company recorded net income of $8.3 million or $1.02 per diluted share on net revenues of $154.9 million for the nine months ended September 30, 2003 compared to net income of $1.1 million or $0.14 per diluted share on net revenues of $142.4 million for the same period one year earlier. The current year results include a third quarter reversal of a $1.2 million charge, net of tax, or approximately $0.15 per share resulting from the favorable settlement of an arbitration award. The prior year results include a third quarter after-tax charge of $3.5 million related to that arbitration award and other legal matters.

Net revenues increased $12.6 million (9%) resulting principally from increases in commissions of $6.7 million (12%), principal transactions of $6.3 million (24%), and other revenues of $2.2 million (11%), offset by decreases in investment banking of $1.7 million (5%) and net interest of $990,000 (16%).

Revenues from commissions on agency transactions for the first nine months increased $6.7 million (12%) resulting from the improved market conditions for equity-based products primarily in the second and third quarters.

Revenues from principal transactions increased $6.3 million (24%) principally resulting from increased trading activity in corporate bonds as investors sought alternatives to equity-based products and low interest yielding products primarily in the first and second quarters and overall improved market conditions for equity based products in the third quarter.

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Investment banking revenues decreased $1.7 million (5%) principally due to a decrease in municipal finance revenues of $ 2.7 million (28%), offset by an increase in corporate finance revenues of $1.0 million (4%). Municipal finance revenues decreased due to a declined in the number of senior or co-managed underwritings from 101 during the first nine months of 2002 to 93 during the first nine months of 2003 as a result of a decrease in the number of refinancings by municipalities and institutions. Corporate finance fee revenues increased due to an increase in the number of managed equity offerings from 32 in the first nine months of 2002 to 49 in the first nine months of 2003.

Net interest revenue declined $990,000 (16%) due to a $2.0 million (18%) decrease in interest revenue, principally resulting from decreased borrowings by customers and decreased rates charged to those customers. Interest expense decreased by $973,000 (20%) resulting from decreased short-term borrowings and decreased stock loan activity by the Company to finance customer borrowings on margin accounts along with lower rates charged on these borrowings. This decrease was offset by an increase in interest on long-term debt as a result of the outstanding $34.5 million, 9% cumulative Trust Preferred Securities, in contrast to last years $10.0 million long term note to Western & Southern Life Insurance Company, a significant shareholder, bearing interest of 8.0 % per annum. Average short-term borrowings decreased $45.4 million primarily for customer collaterized bank borrowings and stock loan activity, with a 26% decrease in rates.

Total non-interest expenses increased $566,000, resulting principally from increases in employee compensation and benefits of $7.5 million (8%), offset by a decrease in other operating expenses of $7.2 million (37%).

Employee compensation and benefits, a significant portion of the Company's expenses, increased $7.5 million (8%) primarily resulting from an increase in variable employee compensation of $7.0 million (10%). Variable compensation, principally investment executive compensation increased due to increased production. Fixed compensation increased $481,000 (2%), primarily due to increased staffing levels resulting from continued expansion offset by lower health insurance costs.

Occupancy and equipment rental increased $463,000 (3%) due to the Company's expansion efforts.

Commissions and floor brokerage decreased $181,000 (7%) due to decreased costs per trade.

Other operating expenses decreased $7.2 million (37%) principally due to decreases in settlement charges. The current year nine-month period includes a reversal of a $2.0 million charge resulting from a favorable settlement of an arbitration award. The prior nine-month period was adversely impacted by $6.5 million due to the aforementioned arbitration award as well as other matters. This decrease in settlement charges was offset by increased litigation expense due to increased claims activity and increased insurance expense due to increased cost for coverage.

Unless noted below, the explanations of revenue and expenses fluctuations for the categories presented for the nine-month period are generally applicable to the three-month operations.

The Company recorded net income of $5.1 million or $0.62 per diluted share on net revenues of $59.9 million for the quarter ended September 30, 2003 compared to net loss of $2.6 million or $0.38 per diluted share on net revenues of $45.0 million for the comparable quarter of 2002. The current year third quarter net income includes a reversal of a charge for the favorable settlement referred to previously. The prior year third quarter was adversely affected by that arbitration award and other matters, as previously discussed.

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Net revenues increased $14.9 million (33%) resulting principally from increases in commissions, principal transactions, investment banking, and other revenues of $5.7 million (34%), $3.6 million (43%), $3.6 million (30%), and $2.2 million (36%), respectively, offset by decreases in net interest of $84,000 (4%).

Revenues from commissions on agency transactions increased $5.7 million (34%) resulting from improved market conditions.

Investment banking revenues increased principally due to an increase in corporate finance revenues of $5.6 million (74%) offset by a decrease in municipal finance revenues of $2.0 million (48%). Corporate finance fee revenues increased due to an increase in merger and acquisition and private placement fees and from an increase in the number of managed equity offerings from 7 in the third quarter of 2002 to 25 in the same time period of 2003. Municipal finance revenues decreased due to a decrease in the number of senior or co-managed underwritings from 37 during the third quarter of 2002 to 31 in the third quarter 2003 resulting from a decrease in refinancings by municipalities and institutions.

Total non-interest expenses increased $2.1 million (4%), resulting principally from an increase in employee compensation and benefits of $8.7 million (28%), offset by a decrease in other operating expenses of $6.7 million (64%). Other operating expenses decreased principally due to the current year reversal and the prior year charge for settlements offset by increased litigation and insurance costs referred to in the nine-month discussion.

Employee compensation and benefits increased $8.7 million (28%) primarily resulting from an increase in variable employee compensation of $9.0 million (42%). Variable compensation, principally investment executive compensation and incentive pay increased in conjunction with increased production and profitability. These increases were offset by a decrease in fixed compensation of $260,000 (3%) resulting from lower employee health insurance costs.

The following table summarizes the changes in the business segments for the three and nine months ended September 30, 2003 as compared to the three and nine months ended September 30, 2002.

Increase (Decrease)	Three Months Ended		Nine Months Ended
(Dollars in thousands)	Amount	Percentage	Amount	Percentage
Net Revenues:
Private Client Group	$ 11,325	36%	$ 14,584	14%
Equity Capital Markets	5,039	69	36	- -
Fixed Income Capital Markets	(2,280)	(43)	(2,329)	(19)
Other	841	107	268	8
Total Net Revenues	$ 14,925	33%	$ 12.559	9%
Operating Contribution:
Private Client Group	$ 12,572	n/m	$ 14,029	169%
Equity Capital Markets	2,541	(172)%	(647)	(10)
Fixed Income Capital Markets	(2,013)	n/m	(1,918)	(71)
Other/ Unallocated Overhead	(235)	n/m	529	n/m
Pre-Tax Income (loss)	$ 12,865	n/m	$ 11,993	609%

The Private Client Group ("PCG") recorded an increase in net revenues of $14.6 million (14%) to $115.9 million from $101.3 million. PCG operating contribution increased $14.0 million (169%) to $22.3 million from $8.3 million from the same period one year earlier principally due to the improved market conditions. The current year operating contribution includes a $2.0 million reversal of a charge due to a favorable settlement of the aforementioned arbitration award. The prior year operating contribution was adversely affected by a $6.5 million charge for that arbitration and other matters.

Equity Capital Markets ("ECM") net revenues for the first nine months of 2003 remained unchanged from the prior year first nine months. The increase in management fees which increased in conjunction with the number of managed underwritings, was offset by a decrease in institutional sales commissions and trading losses. ECM operating contribution decreased $647,000 (10%) due to the increase in fixed costs resulting from the opening of a new investment banking office in Chicago and increased research costs. Managed underwritings increased from 32 in the first nine months of 2002 to 49 for the same period of 2003.

Fixed Income Capital Markets ("FICM") recorded a decreased in net revenues of $2.3 million (19%) and FICM operating contribution decreased $1.9 million (71%) from the same period one year earlier. During the first nine months of 2003, FICM senior or co-managed 93 offerings, down from the prior year first nine months of 101 offerings.

The PCG recorded an increase in net revenues of $11.3 million (36%) to $43.0 million from $31.7 million. PCG operating contribution increased $12.6 million to $10.8 million from a loss of $1.8 million in the same period one year earlier principally due to the improved market conditions and the current quarter reversal and prior year charge for the aforementioned arbitration award.

ECM recorded an increase in net revenues of $5.0 million (69%) and ECM operating contribution increased $2.5 million (172%) from the same period one year earlier due to increased management advisory fees, private placement fees, and increased commission and fee income associated with a increase in the number of managed underwritings from 7 in the three months September 30, 2002 to 25 in the same period of 2003.

FICM recorded a decrease in net revenues of $2.3 million (43%) and a decrease in operating contribution of $2.0 million from the same period one year earlier. The decrease resulted principally from a decrease in the number of senior or co-managed municipal underwritings. During the three months ended September 30, 2003, FICM senior or co-managed 31 offerings, down from the prior year second quarter of 37 offerings.

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, trust preferred securities, 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.

Management believes the funds from operations and available informal short-term credit arrangements will provide sufficient resources to meet the present and anticipated financing needs.

In the first nine months of 2003, the Company purchased $1.9 million in fixed assets primarily information technology equipment, leasehold improvements and furniture and fixtures.

Page 15

During the first nine months of 2003, the Company repurchased 65,993 shares, using existing board authorizations, at an average price of $11.75 per share, to meet obligations under the Company's employee benefit plans and for general corporate purposes. The Company reissued 269,014 shares for employee benefit plans. Under existing board authorizations, the Company is permitted to buy an additional 773,772 shares.

The board of directors of the Company authorized a tender offer to purchase up to 850,000 shares of Stifel Financial Corp., or approximately 12%, of its outstanding common stock (including associated preferred stock purchase rights) at a price of $13.25 per share. The tender offer commenced on September 5, 2003, and expired on October 10, 2003. On September 4, 2003, the last trading day prior to the commencement of the offer, the closing price per share reported on the New York Stock Exchange was $12.54. Based on the final count by the depositary for the tender offer, the Company purchased 87,471 shares, representing approximately 1.2% of outstanding shares, at a purchase price of $13.25 per share. The aggregate purchase price of the shares purchased by the Company through the tender offer, including fees and expenses associated with the tender offer, was approximately $1.2 million.

SN & Co., the Company's principal broker-dealer subsidiary, is subject to certain requirements of the United States Securities and Exchange Commission ("SEC") with regard to liquidity and capital requirements. At September 30, 2003, SN & Co. had net capital of approximately $49.1 million, which exceeded the minimum net capital requirements by approximately $43.8 million.

In November 2002, FASB issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN No. 45"). For financial statements issued after December 15, 2002, FIN No. 45 requires that a guarantor make certain disclosures regarding guarantees or indemnification agreements. Starting January 1, 2003, FIN No. 45 required that a liability be recognized at the inception of the guarantee at fair value. The Company adopted the disclosure provisions of FIN No. 45 in the Company's annual report on Form 10-K for the year ended December 31, 2002 and adopted the remainder of the provisions on January 1, 2003. The statement did not have an 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, 2002.

The management of the Company including Mr. Ronald J. Kruszewski as Chief Executive Officer and Mr. James M. Zemlyak as Chief Financial Officer have evaluated the Company's disclosure controls and procedures as specified in the SEC's rules and forms. Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms." Based on the evaluation of the Company's disclosure controls and procedures, it was determined that such controls and procedures were effective.

Further, there were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls.

Page 17

PART II. OTHER INFORMATION

The Company is a defendant in several lawsuits and arbitrations which arose from its business activities. Some of these lawsuits and arbitrations claim substantial amounts including punitive damage claims. Although the ultimate outcome of these actions cannot be ascertained at this time and the results of legal proceedings cannot be predicted with certainty, management, based on its understanding of the facts, its consultation with outside counsel and after consideration of amounts provided for in the accompanying financial statements with respect to these matters, does not believe the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial condition and results of operations. 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. However, depen ding upon the period of resolution, such effects could be material to the financial results of an individual operating period.