SWS Reports Second Quarter Results;

       Net Income Totaled $849,000 on Revenues of $66.4 Million 
  DALLAS, Jan. 23 /PRNewswire-FirstCall/ -- SWS Group, Inc. (NYSE: SWS)
today reported net income of $849,000, or diluted earnings per share (EPS) of
5 cents, on revenues of $66.4 million for the company's second quarter ended
Dec. 31, 2002, compared with net income of $822,000, or diluted EPS of
5 cents, on revenues of $91 million in the prior year's second quarter. 
Prior year figures include a loss of $2.6 million for Westwood Holdings
Group, a subsidiary that was spun-off to shareholders, and a non-cash gain of
$3 million, net of tax, on the sale of common stock held in
Knight Trading Group, Inc. (Nasdaq: NITE).  Prior year results were also
restated as a result of converting the firm's investment in a software company
to the equity method of accounting. 
For the first half of fiscal 2003, SWS recorded revenues of
$132.1 million, net income of $539,000 and diluted EPS of 3 cents, compared
with revenues of $178.4 million, net income of $2.8 million and diluted EPS of
16 cents in the same period of the prior fiscal year. 
"We continue to face a soft economy, volatile markets and lackluster
trading volumes," said Chief Executive Officer Donald W. Hultgren.  "However,
by the actions we have taken to streamline the company and make it more
efficient, we believe we have positioned SWS for success when conditions
Mr. Hultgren said results for SWS' fixed income and equity capital markets
operations improved over those of the prior year, as the company was
successful in recruiting new professionals.  "The clearing business remained
soft as volumes and margin balances continued to decline," he said.  "Below
the revenue line, we were able to produce ongoing reductions of almost
$9 million by controlling operating expenses." 
SWS' banking segment produced favorable year-over-year results.
Mr. Hultgren said that after a thorough review, the company has concluded that
the $3.4 million pre-tax reserve announced in the September quarter will be
sufficient to cover the suspect loans that its banking subsidiary had
purchased from a New York mortgage bank and that no additional suspect loans
were found.  "As previously announced, we have implemented additional
safeguards to protect against future mortgage purchase losses," he added. 
Fiscal-year-to-date transactions processed by SWS Securities, Inc. totaled
14.1 million compared with 27.1 million in the prior year period.  During the
quarter, the company repurchased 94,100 shares of its common stock at an
average price of $12.72 per share.  The company has 336,200 shares of
authorization remaining under the stock buy-back program.  Book value per
share was $14.71 compared with $16.93 a year ago.  Last year's book value
figure includes Westwood. 
SWS Group, Inc. is a Dallas-based holding company that offers a broad
range of investment and financial services through its subsidiaries.  The
company's common stock is listed and traded on the New York Stock Exchange
under the symbol SWS.  SWS Group, Inc. subsidiaries include SWS Securities,
Inc., First Savings Bank, SWS Financial Services, Inc., SWS Capital
Corporation, and Mydiscountbroker. 
  This release contains forward-looking statements regarding the company's
future overall performance.  Readers are cautioned that any forward-looking
statements, including those predicting or forecasting future events or
results, which depend on future events for their accuracy, embody projections
or assumptions, or express the intent, belief or current expectations of the
company or management, are not guarantees of future performance and involve
risks and uncertainties.  Actual results may differ materially as a result of
various factors, some of which are out of our control, including, but not
limited to those factors discussed in our Annual Report on Form 10-K and in
our other reports filed with and available from the Securities and Exchange

                           SWS GROUP, INC. AND SUBSIDIARIES
                Consolidated Statements of Financial Condition
                     December 31, 2002 and June 28, 2002
             (In thousands, except par values and share amounts)
                                                     December          June
    Cash                                             $39,039        $24,777
    Assets segregated for regulatory purposes        490,488        442,707
    Marketable equity securities available
     for sale                                          3,728          3,932
    Receivable from brokers, dealers and
     clearing organizations                        1,932,180      1,770,055
    Receivable from clients, net                     316,370        467,131
    Loans held for sale, net                         200,709        103,124
    Loans, net                                       356,019        345,538
    Securities owned, at market value                 81,275        103,888
    Other assets                                     106,860        102,501
      Total assets                                $3,526,668     $3,363,653
              Liabilities and Stockholders' Equity
    Short-term borrowings                               $---        $37,600
    Payable to brokers, dealers and
     clearing organizations                        1,917,981      1,764,741
    Payable to clients                               669,816        747,534
    Deposits                                         425,615        265,370
    Securities sold, not yet purchased, at
     market value                                     32,049         19,657
    Drafts payable                                    30,069         34,531
    Advances from Federal Home Loan Bank             123,400        160,468
    Other liabilities                                 71,231         69,920
    Exchangeable subordinated notes                    6,624          6,785
      Total liabilities                            3,276,785      3,106,606
      Minority interest in consolidated
     subsidiaries                                      1,806          1,762
      Stockholders' equity:
      Preferred stock of $1.00 par value.
       Authorized 100,000 shares; none issued            ---            ---
      Common stock of $.10 par value.
       Authorized 60,000,000 shares, issued
       17,612,326 and outstanding 16,868,246
       shares at December 31, 2002; issued
       17,601,705 and outstanding 17,240,570
       shares at June 28, 2002                         1,761          1,760
      Additional paid-in capital                     245,017        247,199
      Accumulated deficit                               (533)           ---
      Accumulated other comprehensive income -
       unrealized holding gain (loss), net of tax     11,403         11,472
      Deferred compensation, net                       1,449          1,502
      Treasury stock (744,080 shares at
       December 31, 2002 and 361,135 shares at
       June 28, 2002, at cost)                       (11,020)        (6,648)
        Total stockholders' equity                   248,077        255,285
    Commitments and contingencies
        Total liabilities and stockholders'
         equity                                   $3,526,668     $3,363,653
                           SWS GROUP, INC. AND SUBSIDIARIES
      Consolidated Statements of Income and Comprehensive Income (Loss)
        For the three and six months ended December 31, 2002 and 2001
              (In thousands, except per share and share amounts)
                          For the three months ended   For the six months ended
                                          2001                       2001
                            2002        Restated       2002        Restated
    Net revenues from
     clearing operations    $4,864        $9,443      $10,174       $16,684
    Commissions             22,519        20,035       40,669        36,120
    Interest                24,194        31,904       49,011        71,534
    Investment banking,
     advisory and
     administrative fees     7,025        10,843       13,995        20,299
    Net gains on principal
     transactions            2,804        13,864        9,566        25,079
    Other                    4,950         4,897        8,730         8,639
      Total revenue         66,356        90,986      132,145       178,355
      Commissions and other
     employee compensation  33,184        38,621       64,175        70,919
    Interest                10,348        17,207       21,128        41,751
    Occupancy, equipment
     and computer service
     costs                   7,915        13,317       16,744        23,203
    Communications           3,869         4,886        7,852         9,256
    Floor brokerage and
     clearing organization
     charges                 1,755         2,338        3,537         3,934
    Advertising and
     promotional               961         2,654        1,708         5,684
    Other                    7,034         9,278       15,943        17,584
      Total expense         65,066        88,301      131,087       172,331
      Income before income
     tax expense and
     minority interest
     in consolidated
     subsidiaries            1,290         2,685        1,058         6,024
    Income tax expense         325         2,202           74         3,348
      Income before
     minority interest
     in consolidated
     subsidiaries              965           483          984         2,676
    Minority interest
     in consolidated
     subsidiaries             (116)          339         (445)           76
      Net income                 849           822          539         2,752
    Net income (loss)
     recognized in other
     income (loss), net
     of tax                    310        (2,136)         (70)       (9,629)
      Comprehensive income
     (loss)                 $1,159       $(1,314)        $469       $(6,877)
      Earnings per
     share - basic
      Net income             $0.05         $0.05        $0.03         $0.16
      Weighted average
       shares outstanding
       - basic          16,915,491    17,162,610   17,018,241    17,200,591
      Earnings per share
     - diluted
      Net income             $0.05         $0.05        $0.03         $0.16
      Weighted average
       shares outstanding

   - diluted        16,922,640    17,237,934   17,030,219    17,259,193

SOURCE  SWS Group, Inc. 
-0-                             01/23/2003 
/NOTE TO EDITORS:  A Company background is available upon request.  Please
call the contact./ 
/CONTACT:  Jim Bowman, Vice President - Corporate Communications of SWS
Group, Inc., +1-214-859-9335, or jbowman@swst.com / 

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    /Web site:  http://www.swsgroupinc.com /

CO:  SWS Group, Inc.; Knight Trading Group, Inc.
ST:  Texas
-0- Jan/23/2003 11:59 GMT
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