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.

Page 5

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 2003 was $26,937.

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

Investment Valuation and Income Recognition -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. 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. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Payment of Benefits -Benefits are recorded when paid.

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 which, 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. The common stock of Stifel Financial Corp., the parent of the Company, is also an investment option. Plan wide administrative expenses are paid by the Company. Fees specific to participants' accounts are paid by the participant to CIGNA. In 2003, these fees totaled $42,638.

Page 6

5. INVESTMENTS

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 2003, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:

The Internal Revenue Service has ruled, as of the most recent opinion letter dated February 6, 2002, 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.

On April 1, 2004, CIGNA Corporation completed the sale of its retirement benefits business to Prudential Financial, Inc. As a result of the sale, Prudential Financial, Inc. established Prudential Retirement ("Prudential") to provide retirement services to customers and serve as the Plan administrator. The transition of administrators from CIGNA to Prudential did not affect the net assets or administration of the Plan.