Stifel - 10-Q quarterly report FY

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2003

For the transition period from to

Commission file number 1-9305

(Former name, former address, and former fiscal year,

if changed since last report)

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 xNo ¨

Shares of common stock outstanding at May 1, 2003: 7,088,577, par value $0.15.

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Item 1. Financial Statements (Unaudited)

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

STIFEL FINANCIAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)(In thousands)

STIFEL FINANCIAL CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

NOTE A - REPORTING POLICIES

Basis of Presentation

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 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 three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer t o the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002.

The preparation of 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 and the accrual for litigation. Actual results could differ from those estimates.

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

Comprehensive Income

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

Stock-Based Compensation Plans

The Company applies APB Opinion 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 Financial Accounting Standards Board ("FASB") Statement 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):

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Fixed Stock Option Plans

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants during the three months ended March 31, 2003 and 2002, respectively: no dividend yield, expected volatility of 31.8% and 32.6%; risk-free interest rates of 2.78% and 3.82%; and expected lives of 5.00 years and 4.86 years. The weighted-average fair value of those options granted, in the three months ended March 31, 2003 and 2002, was $3.81 and $3.48, respectively.

Employee Stock Purchase Plan

The fair value of each employee's purchase rights is estimated using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants during the three months ended March 31, 2003 and 2002, respectively: no dividend yield, expected volatility of 17.5% and 22.6%; risk-free interest rates of 1.30% and 2.32%; and expected lives of one year. The weighted-average fair value of those purchase rights granted, in the three months ended March 31, 2003 and 2002, was $2.36 and $2.45, respectively.

NOTE B - NET CAPITAL REQUIREMENT

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 March 31, 2003, SN & Co. had net capital of $41,705,764, which was 13.37% of its aggregate debit items, and $35,465,170 in excess of the minimum required net capital.

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NOTE C - LEGAL PROCEEDINGS

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.

Further, 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 pending in the Court of Chancery of the State of Delaware. These matters were filed by a former officer and director of the Company's subsidiary, SN & Co. 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. During the quarter, the Company was presented with a claim of approximately $1,500,000 for these indemnification claims and additional legal fees incurred in furtherance thereof. The Company is aggressively contesting these matters and has provided an amount reasonably believed by management to substantially reserve for the resolution of these claims. However, depending upon the period of resolution, such effects could be material to the financial results of an individual operating period.

NOTE D - SEGMENT REPORTING

The Company's reportable segments include Private Client Group, Equity Capital Markets, Fixed Income Capital Markets and Other. The Private Client Group segment includes branch offices and independent contractor offices of the Company's broker-dealer subsidiaries located throughout the U.S., primarily in the Midwest. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, to their private clients. The Equity Capital Markets segment includes corporate finance management and participation in underwritings (exclusive of sales credits, which are included in the Private Client Group segment), mergers and acquisitions, institutional sales, trading, research, and market making. Fixed Income Capital Markets segment includes public finance, institutional sales, and competitive underwriting and trading. Investment advisory fees, clearing income and venture capital activities are included in Other.

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.

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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 on a regular basis.

NOTE E - EARNINGS PER SHARE ("EPS")

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 EPS calculations for the three months ended March 31, are as follows (in thousands, except per share amounts):

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NOTE F - RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, FASB issued FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45"). For financial statements issued after December 15, 2002, FIN 45 requires that a guarantor make certain disclosures regarding guarantees or indemnification agreements. Starting January 1, 2003, FIN 45 will require that a liability be recognized at the fair value of the guarantee. The Company adopted the disclosure provisions of FIN 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 and it did not have a material impact on the Company's financial statements.

In January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 attempts to improve financial reporting by enterprises involved with variable interest entities. FIN 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 first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Although the Company has not finalized its analysis of FIN 46, the Company does not believe it will be required to consolidate any information related to variable interest entities.

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Forward-Looking Statements

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, 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.

Investor confidence in the equity markets remained weak, a reflection of intensified worries about the fragile economic recovery, anemic corporate profits, terrorism and the war with Iraq.

For the first quarter overall, the Dow Jones Industrial Average ("Dow") was down 23.2% from the same period one-year earlier, and down 4.2% from the December 31, 2002 close, closing at 7,992. The Standard and Poors 500 Index ("S&P") fell 26.1% from the first quarter 2002, and was down 3.5% from the December 31, 2002 close. Stocks in the Nasdaq Composite closed down 27.3% from the first quarter 2002 but remained relatively unchanged from the December 31, 2002 close, closing at 1,341.

The Company continued its expansion during the first quarter of 2003. SN & Co opened two branch offices for a total of 81, compared to 74 at March 31, 2002.

In the discussion to follow, results for the three months ended March 31, 2003 will be compared to the results for the three months ended March 31, 2002. Certain reclassifications have been made to prior period amounts to conform to the current period's presentation. In addition, see Note A of Notes to Condensed Consolidated Financial Statements.

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The following table summarizes the changes in the major categories of revenues and expenses for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002.

Three months ended March 2003 as compared to three months ended March 2002

The Company recorded net income of $722,000 or $0.09 per diluted share on net revenues of $42.7 million for the three months ended March 31, 2003 compared to net income of $1.7 million or $0.21 per diluted share on net revenues of $47.8 million for the same period one year earlier.

Net revenues decreased $5.1 million (11%) resulting principally from decreases in commissions of $2.8 million (15%), investment banking of $2.3 million (21%), and net interest of $598,000 (25%), offset by an increase in principal transactions of $889,000 (10%).

Revenues from commissions on agency transactions for the first three months decreased $2.8 million (15%) resulting from the declining markets for equity-based products.

Revenues from principal transactions increased $889,000 (10%) as a result of increased trading activity in corporate and municipal bonds as investors sought alternatives to equity-based products.

Investment banking revenues decreased principally due to a decrease in corporate finance revenue of $3.2 million (35%) offset by an increase in municipal finance revenue of $910,000 (53%). Corporate finance fee revenue decreased due to a decrease in the number of managed equity offerings from 10 in the first three months of 2002 to 5 in the first three months of 2003. Municipal finance revenue increased due to an increase in the number of senior or co-managed underwritings from 21 during the first three months of 2002 to 38 during the first three months of 2003.

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Net interest revenue declined $598,000 (25%) due to a $519,000 (14%) decrease in interest revenue, principally resulting from decreased borrowings by customers and decreased rates charged to those customers. Interest expense increased by $79,000 (6%) resulting from an increase in interest paid 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. This increase was offset by 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. Average short-term borrowings decreased $61.7 million primarily for customer collaterized bank borrowings and stock loan activity, with a 75% decrease in rates.

Total non-interest expenses decreased $3.4 million (8%), resulting principally from a decrease in employee compensation and benefits, commissions and floor brokerage, and other operating expenses of $3.4 million (10%), $182,000 (21%) and $264,000 (7%) respectively, offset by an increase in communication and office supplies and occupancy and equipment rental, of $186,000 (7%) and $252,000 (6%) respectively.

Employee compensation and benefits, a significant portion of the Company's expenses, decreased $3.4 million (10%) primarily resulting from a decrease in variable employee compensation of $3.8 million (15%). Variable compensation, principally investment executive compensation decreased due to decreased production. Fixed compensation increased $345,000 (4%) in the first quarter ending March 31, 2003, primarily due to expansion.

Occupancy and equipment rental and communication and office supplies increased due to the Company's expansion efforts.

Commissions and floor brokerage decreased due to a decrease in trades on listed exchanges.

Other operating expenses decreased $264,000 (7%) principally due to a decrease in settlement expense.

The Private Client Group ("PCG") recorded a decrease in net revenues of $2.5 million (7%) to $32.5 million from $35.0 million. PCG operating contribution decreased $1.4 million (27%) to $3.7 million from $5.1 million from the same period one year earlier principally due to the poor economic conditions.

Equity Capital Markets ("ECM") recorded a decrease in net revenues of $3.3 million (37%) and ECM operating contribution decreased $2.1 million (81%) from the same period one year earlier due to decreased institutional sales commissions and management fees resulting from a decrease in the number of managed underwritings from 10 in the first three months of 2002 to 5 in the same period of 2003.

Fixed Income Capital Markets ("FICM") recorded an increase in net revenues of $1.4 million (58%) to $3.8 million from $2.4 million and an increase in operating contribution of $1.1 million to $946,000 from a loss of $196,000 from the same period one year earlier. The increase resulted principally from an increase in the number of senior or co managed municipal underwritings. During the first three months of 2003, FICM senior or co-managed 38 offerings, down from the prior year first three months of 21 offerings.

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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, 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 quarter of 2003, the Company purchased $940,000 in fixed assets primarily leasehold improvements and furniture and fixtures for recent office openings.

During the first three months of 2003, the Company repurchased 17,239 shares, using existing board authorizations, at an average price of $11.56 per share, to meet obligations under the Company's employee benefit plans and for general corporate purposes. The Company reissued 175,503 shares for employee benefit plans. Under existing board authorizations, the Company is permitted to buy an additional 822,526 shares.

Stifel, Nicolaus & Company, Incorporated, the Company's principal broker-dealer subsidiary, is subject to certain requirements of the Securities and Exchange Commission ("SEC") with regard to liquidity and capital requirements. At March 31, 2003, Stifel, Nicolaus had net capital of approximately $41.7 million which exceeded the minimum net capital requirements by approximately $35.5 million.

In November 2002, FASB issued FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45"). For financial statements issued after December 15, 2002, FIN 45 requires that a guarantor make certain disclosures regarding guarantees or indemnification agreements. Starting January 1, 2003, FIN 45 will require that a liability be recognized at the fair value of the guarantee. The Company adopted the disclosure provisions of FIN 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 and it did not have a material impact on the Company's financial statements.

In January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 attempts to improve financial reporting by enterprises involved with variable interest entities. FIN 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 first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Although the Company has not finalized its analysis of FIN 46, the Company does not believe it will be required to consolidate any information related to variable interest entities.

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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.

As of a date ("Evaluation Date") within 90 days prior to the date of this report, the management of the Company including Mr. Ronald J. Kruszewski as Chief Executive Officer and Mr. James M. Zemlyak as Chief Financial Officer have evaluated the Company's disclosure controls and procedures. Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms." Based on the evaluation of the Company's disclosure controls and procedures, it was determined that such controls and procedures were effective as of the Evaluation Date.

Further, there were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date referred to above.

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Item 1. Legal Proceedings

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 pro vided.

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of the Company was held on May 12, 2003. Of 7,101,

577 shares issued, outstanding and eligible to be voted at the meeting, 6,480,811 shares, constituting a quorum, were represented in person or by proxy at the meeting. Three matters were submitted to a vote of security holders at the meeting.

1.Election of Three Class I Directors. The first matter submitted was the election of three Class II director nominees to the Board of Directors, each to continue in office until the year 2006. Upon tabulation of the votes cast, it was determined that all three-director nominees had been elected. The voting results are set forth below:

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Because the Company has a staggered Board, the term of office of the following named Class I and III directors, who were not up for election at the 2003 annual meeting, continued after the meeting:

Class III (to continue in office until 2004)

Class I (to continue in office until 2005)

2. Proposal to Amend and Restate the Company's 2001 Incentive Stock Plan. The second matter, a proposal to approve and adopt the amendment and restatement of the Company's 2001 Incentive Stock Plan, was approved by a majority of the affirmative vote of the 5,236,494 shares of the Company's common stock that were cast. The broker "non-vote" did have an effect on this matter. The voting results on this matter were as follows:

For Against Abstain Non-Vote

4,079,910 1,149,201 7,383 1,244,317

3. Proposal to Ratify the Appointment of Deloitte & Touche LLP ("Deloitte"). The third matter, a proposal to ratify the appointment of Deloitte as the Company's independent auditors for the year ending December 31, 2003, was approved by a majority of the 7,101,577 shares of the Company's common stock that were present and entitled to vote. The voting results on this matter were as follows:

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

1. Exhibits:

99.1 Certification pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

2. Report(s) on Form 8-K : The Company filed a report on Form 8-K dated May 12, 2003. This Form 8-K contained Item 12. Disclosure of Results of Operation and Financial Condition. The exhibit furnished is the press release of the Company's results for the three months ended March 31, 2003.

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SIGNATURES

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.

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CERTIFICATION

I, Ronald J. Kruszewski, certify that:

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

1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
3. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

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CERTIFICATION

I, James M. Zemlyak, certify that:

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

1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
3. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

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