The following description of the Stifel, Nicolaus Profit Sharing 401(k) Plan (the "Plan") (formerly the Stifel, Nicolaus Profit Sharing Fund) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions.

General-The Plan is a defined contribution plan covering all employees of Stifel, Nicolaus & Company, Incorporated (the "Company") and affiliates who meet the eligibility provisions of the Plan. CG Trust Company serves as the Plan trustee and custodian. CIGNA Retirement & Investment Services ("CIGNA") serves as the Plan administrator. The Plan meets the requirements of a 401(k) plan under the Internal Revenue Code of 1954, as amended. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Eligible Participants-Employees are eligible to participate in the Plan the first of the month following 31 days of employment.

Employee Contributions-Employees are eligible to contribute an amount from 1% to 100% of their eligible compensation in increments of 1%. Effective January 1, 2002, the Plan added a catch-up contribution option pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001. The catch-up contribution allowed employees who reach age 50 or more during the calendar year to make a catch-up contribution to the Plan of up to $1,000 in 2002.

Company Contributions-The Plan includes a matching contribution by the Company which is determined at the beginning of each plan year by the Board of Directors of the Company. The matching contribution for the year ended December 31, 2002 is 50% of the first $1,000 contributed by the participant.

In addition, each year the Company may make a discretionary contribution based on profitability. Discretionary contributions are allocated to the participants employed on the last day of the Plan year using a combination of two methods: on a per capita basis and on the basis of participants' contributions. There were no discretionary contributions in 2002.

Loans to Participants-The Plan has a provision to allow loans to participants of the Plan if the Trustees determine a participant qualifies for such loan. The loans are limited to the lesser of $50,000 or 50% of the vested portion of the participant's accounts under the Plan. The repayment period shall not exceed five years, unless such loan is used to acquire a dwelling unit which will be used as the principal residence of the participant, in which case the repayment period shall not exceed ten years, and interest is charged at prime rate plus one percent. The borrowing participants are charged an initial processing fee and a monthly service charge for each month the loan is outstanding.

Investment Options-Upon enrollment in the Plan, a participant may direct contributions in 1% increments to any of the then available investment options.

The investment options as of December 31, 2002 and 2001 are as follows:

For more information regarding the Plan's investment alternatives and fund performance, participants should refer to the Plan agreement and published information provided by such funds.

Participant Accounts-Participants are given the options to change their deferral percentages, change investment elections for future contributions and may transfer any existing balances among the offered funds at any time.

Vesting-Effective January 1, 2002, the vesting period for Company contributions was changed from a four year to a three year cliff vesting schedule. The three year cliff vesting schedule was retroactive for Company contributions to participants who were still actively employed on January 1, 2002. Participants are fully vested in their individual contributions at all times.

Payment of Benefits-Retiring participants, participants leaving the employment of the Company due to disabling illness or injury, and participants whose employment is terminated prior to retirement, disability, or death will receive the vested balance in their individual account in a lump sum, net of any outstanding loan balance. Upon death, a participant's account is paid in a lump sum to the designated beneficiary. Effective January 1, 2002, the Plan added a hardship withdrawal option pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001.

Forfeited Plan Assets-Effective January 1, 2002, if a participant forfeits any unvested balances in their account, these Plan assets are reallocated, on the last day of the Plan year, first to restore forfeited Plan accounts of former participants who are reemployed and become a participant again prior to incurring five consecutive one-year breaks-in-service then to cover Plan expenses and finally to reduce the Company match. The amount of forfeitures used to reduce the Company match in 2002 was $48,163. Prior to 2002, forfeited Plan assets were reallocated, on the last day of the Plan year, first to restore forfeited Plan accounts of former participants who are reemployed and become a participant again prior to incurring five consecutive one-year breaks-in-service then to active participants in equal amounts.

Basis of Accounting-The financial statements of the Plan are prepared on an accrual basis.

Investment Valuation-All investments are stated at fair value based upon quoted market prices except for loans to participants which are valued at cost which approximates fair value.

Other-The Plan presents in the statement of changes in net assets, the net appreciation/(depreciation) in the fair value of its investments, which consist of the realized gains or losses and the unrealized appreciation/(depreciation) on those investments.

Use of Estimates-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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.

The Plan invests in various securities including U.S. Government securities, corporate debt instruments, and corporate stocks. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits.

Although the Company has not expressed any intent to do so, the Company has the right to terminate the Plan at any time, subject to the provisions of ERISA. In the event of Plan termination, all participants become 100% vested in their accounts and the assets are distributed to the participants on the basis of the value of each participant's account as of the date of termination.

Certain Plan investments are shares of mutual funds managed by the Plan administrator. Stifel Financial Corp., the parent of the Company, common stock is also an investment option.

The fair value of individual investments that represent five percent or more of the Plan's net assets available for plan benefits are as follows:

During 2002, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated)/appreciated in value by $(7,561,488) as follows:

The Internal Revenue Service has ruled, as of the most recent determination letter dated August 15, 1995, that the Plan qualifies under Section 401(a) of the Internal Revenue Code and is, therefore, not subject to tax under present income tax laws. The Plan has been amended since receiving the determination letter. However, the Company believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code.

During 2002, employee deferrals of $27,496 were withheld from payroll and not remitted to the Plan on a timely basis as defined by the Department of Labor 29 CFR 2510.3-102. These transactions constitute a prohibited transaction according to Department of Labor provisions. The amounts were subsequently deposited into the Plan.