KBW, Inc. Announces Third Quarter and Nine Month Results for 2006.

NEW YORK -- KBW, Inc. (NYSE: KBW) today announced financial results for the quarter and nine months ended September 30, 2006.

Highlights for the third quarter ended September 30, 2006 include the following:

* Total revenues increased 19.5% to $93.2 million compared to $78.0 million for the third quarter of 2005.

* Investment banking revenues were up 27.0% to $49.2 million compared to $38.7 million for the third quarter of 2005.

* Commission revenue was up 5.7% to $25.5 million compared to $24.1 million for the third quarter of 2005.

* Interest and dividend income were up 125.8% to $7.6 million compared to $3.4 million for the third quarter of 2005.

* Income before income taxes increased 101.5% to $14.6 million compared to $7.3 million for the third quarter of 2005.

* The effective tax rate declined to 36.4% from 45.6% for the third quarter of 2005 as a result of an adjustment to the 2005 state tax accrual based on the completed 2005 state tax returns filed in the third quarter 2006.

* Net earnings were up 135.3% to $9.3 million compared to $4.0 million for the third quarter of 2005. Basic and diluted earnings per share (giving effect to a 43:1 stock split completed immediately prior to the Company's initial public offering on November 8, 2006) were up 150.0 % to $0.35 compared to $0.14 for the third quarter of 2005.

Highlights for the nine months ended September 30, 2006 include the following:

* Total revenues increased 32.1 % to $286.4 million compared to $216.7 million for the nine months ended September 30, 2005.

* Investment banking revenues were up 30.2% to $142.8 million compared to $109.7 million for the nine months ended September 30, 2005.

* Commission revenue was up 23.8% to $86.0 million compared to $69.5 million for the nine months ended September 30, 2005.

* Income before income taxes increased 165.9% to $48.1 million compared to $18.1 million for the nine months ended September 30, 2005.

* The effective tax rate declined to 42.0% from 44.3% for the nine months ended September 30, 2005 as a result of an adjustment to the 2005 state tax provision based on the completed 2005 state tax returns filed in the third quarter 2006.

* Net earnings were up 176.6% to $27.9 million compared to $10.1 million for the nine months ended September 30, 2005.

* Basic and diluted earnings per share (giving effect to a 43:1 stock split completed immediately prior to the Company's initial public offering on November 8, 2006) were up approximately 171.1% to $1.03 compared to $0.38 for the nine months ended September 30, 2005.

"We are extremely pleased to issue our first quarterly report since becoming a public company," said John G. Duffy, Chairman and Chief Executive Officer of KBW. "Our focus on the financial services industry is producing solid results, with significant year to date gains in investment banking and commissions. We believe there are additional growth opportunities in investment banking domestically in the US and in Europe as our newly-constituted team in London participates in transactions for European issuers in both developed and emerging markets."

"Since mid-2004 our European equity sales, trading and research has gained significant traction, reaching our run rate expectations in the latter part of 2005 and continuing to grow at double digit rates during the first nine months of 2006 as we continued to open new accounts," Mr. Duffy said. "We believe the growth in commission revenue in the third quarter of 2006 compared to the same period last year to be a more sustainable rate as we continue to build out our European equity platform."

"Looking forward, we see opportunities to grow our business, both domestically and in Europe, by leveraging our competitive strengths and by maintaining our commitment to our investment banking clients and investor customers. We believe our entrepreneurial and resilient corporate culture, with its unwavering focus on meeting client needs, will be a critically important driver of our future success as an investor-owned company."

KBW expects to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 with the U.S. Securities and Exchange Commission on or about December 15, 2006.

About KBW

KBW, Inc. through its subsidiaries Keefe, Bruyette & Woods, Inc., Keefe, Bruyette & Woods Limited and KBW Asset Management, is a full service investment bank specializing in the financial services industry.

Statements in this press release that are not statements of historical or current fact constitute forward-looking statements. In some cases, you can identify these statements by words such as "may", "might", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", or "continue", the negative of these terms and other comparable terminology. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events, and there are or may be important factors that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, those discussed under the caption "Risk Factors" in our Registration Statement on Form S-1 (File No. 333-136509), which is available at the Securities and Exchange Commission website at www.sec.gov. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.

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