##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the fiscal year ended December 31, 2006
  Commission file number 001-33138
  KBW, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

13-4055775(State or other jurisdiction of
    
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   787 Seventh Avenue, New York, New York 10019
 (Address of principal executive
    offices)
  Registrants telephone number, including area code:
 212-887-7777
  Securities registered pursuant to Section 12(b) of the
    Act:
   (Title of Each Class)

(Name of Each Exchange on Which Registered)Common Stock, par value
    $0.01 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
      Documents incorporated by reference: Form 10-K.




---



##### 



TABLE OF
    CONTENTS
  PART IItem 1.


Business


1Item 1A.


Risk
    Factors


10Item 1B.


Unresolved Staff
    Comments


21Item 2.


Properties


21Item 3.


Legal
    Proceedings


22Item 4.


Submission of
    Matters to a Vote of Security Holders


23PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


24Item 6.


Selected Financial
    Data


25Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


27Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


42Item 8.


Financial
    Statements and Supplementary Data


44Item 9.


Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


63Item 9A.


Controls and
    Procedures


63Item 9B.


Other
    Information


63PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


63Item 11.


Executive
    Compensation


63Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


63Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


63Item 14.


Principal
    Accountant Fees and Services


63PART IVItem 15.


Exhibits and
    Financial Statement Schedules


64Signatures


65Exhibit Index


E-1EX-10.8: FORM OF RESTRICTED STOCK AWARD AGREEMENTEX-10.9: FORM OF RESTRICTED STOCK AWARD AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   i




---



##### Table of Contents



CAUTIONARY
    STATEMENT REGARDING FORWARD LOOKING STATEMENTS
  Form 10-K Form 10-K Form 10-K.
   ii




---



##### Table of Contents



PART I  When we use the terms KBW, KBW, Inc.,
    the Company, we, us and
    our, we mean the combined business of KBW, Inc., a
    Delaware corporation, and of its consolidated subsidiaries,
    unless the context otherwise indicates. KBW, Inc. became the
    holding company for all other subsidiary operating companies in
    August 2005. Prior to August 2005, Keefe, Bruyette &
    Woods, Inc., now an operating subsidiary, was the parent company
    and references to KBW or the Company or
    we, us and our prior to
    August 2005 refer to the consolidated company structure prior to
    that date. All data provided herein is as of or for the period
    ended December 31, 2006 unless otherwise expressly
    noted.
  Item 1.
    Business. Overview    
    Investment banking.  We provide a full range of
    investment banking services, including mergers and acquisitions
    (M&A) and other strategic advisory services,
    equity and fixed income securities offerings, structured finance
    and mutual thrift conversions.
    Equity and fixed income sales and trading.  We
    trade a broad array of financial services stocks, with an
    emphasis on the small and mid cap segment, and a wide range of
    fixed income securities. Our sales force is trained in the
    analysis of financial services companies and has strong
    relationships with many of the worlds largest
    institutional investors.
    Research.  We provide fundamental, objective
    analysis that identifies investment opportunities and helps our
    investor customers make better investment decisions. As of
    December 31, 2006, our research department covered an
    aggregate of 505 financial services companies, including
    364 companies in the United States and 141 in Europe.       1




---



##### Table of Contents



Our
    History       Our
    Principal Businesses  Investment
    Banking
    
    M&A and other strategic advisory services;
    Equity capital markets;
    Fixed income capital markets;
    Structured finance; and
    Mutual thrift and insurance company conversions.       2




---



##### Table of Contents



M&A and Strategic Advisory Services.
  
    Evaluating potential acquisition targets;
    Providing valuation analyses;
    Evaluating and proposing financial and strategic alternatives;
    Rendering, if appropriate, fairness opinions;
    Providing advice regarding the timing, structure and pricing of
    a proposed acquisition; and
    Assisting in negotiating and closing the acquisition.    
    Evaluating and recommending financial and strategic alternatives
    with respect to a sale;
    Advising on the appropriate sale process;
    Providing valuation analyses;
    Assisting in preparing an offering memorandum or other
    appropriate sales materials;
    Rendering, if appropriate, fairness opinions;
    Identifying and contacting selected qualified acquirors; and
    Assisting in negotiating and closing the proposed sale.   3




---



##### Table of Contents



Capital Raising Services.
      2006


2005


2004


2003


2002Offerings(1)


40



26



25



11



11Aggregate Value of Offerings
    (in millions)

$
16,650.5


$
7,794.6


$
7,513.2


$
2,334.2


$
862.9League Table Ranking


1



1



1



4



1     (1)
    
    All transactions in which we acted as lead or co-manager.  Source:
    Sales
    and Trading
  Equity Sales and Trading.
 4




---



##### Table of Contents



Fixed Income Sales and Trading.
    sub-performing,
  Research
   5




---



##### Table of Contents



Number ofSector

CompaniesRegional Banks and Thrifts


180Large Cap Banks and Thrifts


23Trust and Custody


5Total Depositary Financial
    Services Companies


208Property Casualty Insurance


36Broker-Dealers


29Life Insurance


24Insurance Other


21Specialty Finance


15Mortgage REITs


11Processing/Business Information


10Asset Managers


10Total Other Financial Services
    Companies


156Total Companies under coverage


364     Up to $1.5


$1.5 to $5


$5 BillionCoverage by Market Capitalization

Billion


Billion


and up


TotalDepository Financial Services
    Companies(1)


134



40



34



208Insurance Companies


24



26



31



81Diversified Financial Services
    Companies(2)


20



28



27



75Total


178



94



92



364     (1)
    
    Depository Financial Services Companies include banks and
    thrifts.(2)
    
    Diversified Financial Services Companies include broker-dealers,
    mortgage banks, asset management companies, mortgage REITs,
    consumer and specialty finance firms, financial processing
    companies and securities exchanges. 6




---



##### Table of Contents



sub-sector
  one-on-one
  Asset
    Management
     Competition         7




---



##### Table of Contents



Regulation  non-U.S. governmental
  Rule 15c3-1. Rule 15c3-1
   8




---



##### Table of Contents



non-U.S. governments, and/or and/or
    non-U.S. government cease-and-desist
  Available
    Information
  1-800-SEC-0330.
  Form 10-K, Form 10-Q, Form 8-K,
 9




---



##### Table of Contents



(212) 887-7777.
  Executive
    Officers
    John G. Duffy (57).
  Andrew M. Senchak (60).
  Thomas B. Michaud (42).
  Robert Giambrone (52).
  Mitchell B. Kleinman (53).
  Item 1A.
    Risk
    Factors.  Risks
    Related to Our Business
  We
    focus on the financial services industry, and a deterioration in
    the business environment in this industry generally or a decline
    in the market for securities of companies within this industry
    could materially adversely affect our businesses
   10




---



##### Table of Contents



Our
    ability to retain our professionals is critical to the success
    of our business, and our failure to do so may materially
    adversely affect our reputation, business and results of
    operations
    We
    face strong competition, including from entities with
    significantly more financial and other resources
       11




---



##### Table of Contents



Pricing
    and other competitive pressures may impair the revenues and
    profitability of our sales and trading business
        Our
    capital markets and strategic advisory engagements are singular
    in nature and do not generally provide for subsequent
    engagements
  engagement-by-engagement
 12




---



##### Table of Contents



A
    significant portion of our sales commissions are generated from
    a relatively small number of institutional
    customers
    Committing
    our own capital in our underwriting, trading and other
    businesses increases the potential for significant
    losses
      Limitations
    on our access to funding could impair our liquidity and our
    ability to conduct our businesses
       13




---



##### Table of Contents



Our
    risk management policies and procedures may leave us exposed to
    unidentified or unanticipated risk
    Failure
    to achieve and maintain effective internal control over
    financial reporting in accordance with Section 404 of the
    Sarbanes-Oxley Act of 2002 could have a material adverse effect
    on our business and stock price
   14




---



##### Table of Contents



Our
    operations and infrastructure may malfunction or
    fail
         15




---



##### Table of Contents



We may
    be adversely affected by changes in services and products
    provided by third parties and increases in related
    costs
    Difficult
    market conditions could adversely affect our business in many
    ways
    Our
    financial results may fluctuate substantially from period to
    period, which may impair our stock price
    Poor
    investment performance may reduce revenues and profitability of
    our asset management operations
  and/or
   16




---



##### Table of Contents



Strategic
    investments, acquisitions, entry into new businesses and joint
    ventures may result in additional risks and uncertainties in our
    business
        Growth
    of our business could result in increased costs
      Investments
    by our directors, officers, employees and our employee profit
    sharing retirement plan may conflict with the interests of our
    stockholders
   17




---



##### Table of Contents



Our
    policies and procedures may limit the investment opportunities
    for our company
    Risks
    Related to Our Industry
  Risks
    associated with regulatory impact on capital
    markets
    Financial
    services firms have been subject to increased scrutiny over the
    last several years, increasing the risk of financial liability
    and reputational harm resulting from adverse regulatory
    actions
   18




---



##### Table of Contents



19




---



##### Table of Contents



Our
    exposure to legal liability is significant, and damages that we
    may be required to pay and the reputational harm that could
    result from legal action against us could materially adversely
    affect our businesses
      We may
    incur significant costs associated with responses to regulatory
    inquiries or litigation
    Employee
    misconduct could harm us and is difficult to detect and
    deter
    Risks
    Related to Our Shares
  We are
    controlled by our employee stockholders whose interests may
    differ from those of other stockholders
   20




---



##### Table of Contents



Provisions
    of our organizational documents may discourage an acquisition of
    our company
    Future
    sales of our common stock could cause our stock price to
    decline
  lock-up lock-up
  We do
    not expect to pay any cash dividends in the foreseeable
    future
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.     21




---



##### Table of Contents



Item 3.
    Legal
    Proceedings.          Direct
    General Litigation
  Jeffrey H.
    Winokur v. Direct General, et al.
  Regulatory
    Inquiries and Investigations
     22




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders.  Form 10-Q
 23




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Form S-1 number 333-136509)
    Sales PriceHigh


LowFourth quarter (since
    November 8, 2006)

$
30.40


$
25.51          24




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.  Set forth below is selected consolidated financial and other
    data of KBW, Inc. as of and for the years ended
    December 31, 2006, 2005, 2004, 2003 and 2002.
  Year Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands, except per share information)Consolidated Statements of
    Income Data:Revenues:Investment banking

$
210,026


$
149,332


$
163,114


$
156,869


$
111,067Commissions


116,625



96,301



66,081



50,408



50,279Principal transactions, net


33,146



31,004



41,566



37,090



16,994Net gain (loss) on investments


12,627
(1)


5,564



3,071



7,118



(429
)Interest and dividend income


26,920



17,984



8,629



8,656



3,557Investment advisory fees


5,036



3,843



4,896



5,597



2,001Other


2,206



3,838
(2)


12,941
(2)


5,859



5,216Total revenues


406,586



307,866



300,298



271,597



188,685Expenses:Compensation and benefits


216,518



187,428



170,484



145,668



102,471Occupancy and equipment


17,728



16,877



14,545



10,108



7,576Communications and data processing


19,465



18,526



15,462



11,600



7,509Brokerage and clearance


19,728



17,390



15,289



10,857



10,915Interest


11,023



8,105



872



875



273Other


30,475



28,398



28,506



24,251



17,707Total non-compensation expense


98,419



89,296



74,674



57,691



43,980Total expenses


314,937



276,724



245,158



203,359



146,451Income before income tax expense


91,649



31,142



55,140



68,238



42,234Income tax expense


38,365



13,735



23,867



30,073



19,005Net income(3)

$
53,284


$
17,407


$
31,273


$
38,165


$
23,229Earnings per share(3)(4):Basic

$
1.94


$
0.64


$
1.24


$
1.70



(5
)Diluted

$
1.93


$
0.64


$
1.24


$
1.70



(5
)Weighted average number of common
    shares outstanding(4):Basic


27,512,023



27,194,404



25,253,771



22,393,454



(5
)Diluted


27,565,453



27,215,001



25,296,556



22,427,295



(5
)Consolidated Statements of
    Financial Condition Data:Total assets

$
804,211


$
661,546


$
574,131


$
436,819


$
289,479Stockholders equity(3)

$
396,760


$
266,094


$
268,689


$
206,536


$
149,137Other Data
    (Unaudited):Book value per share of common
    stock

$
13.59


$
10.13


$
10.81


$
9.65


$
8.07  25




---



##### Table of Contents



(1)
    
    Net gain (loss) on investments for the year ended
    December 31, 2006 includes a gain of $5.4 million with
    respect to the exchange of our New York Stock Exchange seat for
    cash and shares of the merged NYSE Group, Inc.(2)
    
    Other revenues in 2004 include $10.1 million in insurance
    recoveries and government grants relating to the World Trade
    Center attacks in 2001. In 2005, we received $0.4 million
    of additional government grants relating to the same World Trade
    Center attacks.(3)
    
    Prior to the date of the IPO and the termination of the 2005
    amended and restated stockholders agreement, common stock
    was classified as a liability. See Note 8 to our audited
    Consolidated Financial Statements included elsewhere in this
    report.(4)
    
    In calculating shares of common stock outstanding, we give
    retroactive effect to a 43 for 1 stock split that we effected on
    November 1, 2006.(5)
    
    As a result of stockholder redemptions by the estates of
    employees who were lost in the World Trade Center attacks,
    earnings per share data and number of common shares outstanding
    data for 2002 are not meaningful. 26




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The following discussion should be read in conjunction with
    our audited consolidated financial statements and the related
    notes included elsewhere in this report. In addition to
    historical information, this discussion includes forward-looking
    information that involves risks and assumptions, which could
    cause actual results to differ materially from managements
    expectations. See Cautionary Statement Regarding
    Forward-Looking Statements included elsewhere in this
    report.
  Overview
    
    Investment banking.  We provide a full range of
    investment banking services, including M&A and other
    strategic advisory services, equity and fixed income securities
    offerings and structured finance.
    Equity and fixed income sales and trading.  We
    trade a broad array of financial services stocks, with an
    emphasis on the small and mid cap segment, and a wide range of
    fixed income securities. Our sales force is trained in the
    analysis of financial services companies and has strong
    relationships with many of the worlds largest
    institutional investors.
    Research.  We provide fundamental, objective
    analysis that identifies investment opportunities and assists
    our investor customers in making investment decisions. As of
    December 31, 2006, our research analysis covers 505
    financial services companies in the United States and Europe.           27




---



##### Table of Contents



Revenues
    Investment
    Banking
    
    Underwriting revenues.  We earn underwriting
    revenues in securities offerings in which we act as an
    underwriter, such as initial public offerings, follow-on equity
    offerings and fixed income offerings. Underwriting revenues
    include management fees, underwriting fees and selling
    concessions, including fees related to mutual thrift
    conversions. We record underwriting revenues, net of related
    syndicate expenses, at the time the underwriting is completed.
    In syndicated underwritten transactions, management estimates
    our share of transaction-related expenses incurred by the
    syndicate, and we recognize revenue net of such expense. On
    final settlement, we adjust these amounts to reflect the actual
    transaction-related expenses and our resulting underwriting fee.
    We receive a higher proportion of total fees in underwritten
    transactions in which we act as a lead manager.
    Strategic advisory revenues.  Our strategic
    advisory revenues primarily include success fees, as well as
    retainer fees, earned in connection with advising companies,
    both buyers and sellers, principally in M&A. We also earn
    fees for related advisory work and other services such as
    providing fairness and valuation opinions. We record strategic
    advisory revenues when the transactions or the services (or, if
    applicable, separate components thereof) to be performed are
    substantially complete, the fees are determinable and collection
    is reasonably assured.
    Private placement revenues.  We earn agency
    placement fees in non-underwritten transactions such as private
    placements, including securitized debt offerings collateralized
    by financial services issuers securities. We record
    private placement revenues on the closing date of the
    transaction.    Sales
    and Trading
  over-the-counter
  
    Commissions.  Our sales and trading business
    generates revenue from equity securities trading commissions
    paid by institutional investor customers. Commissions are
    recognized on a trade date basis.
    Principal transactions.  Fixed
    Income  Our sales and trading revenues include net
    trading gains and losses from acting as a principal in the
    facilitation of customer orders. Our fixed income sales and
    trading includes secondary market trading in mortgage backed
    securities, U.S. government and agency 28




---



##### Table of Contents



securities and corporate debt securities. We also maintain a
    financial strategies group that advises customers on the
    structure of their investment portfolios. Our loan portfolio
    sales group also performs similar services arranging for the
    purchase or sale of performing or non-performing loans.  over-the-counter
  Net
    Gain on Investments
    Interest
    and Dividend Income
    Investment
    Advisory Fees
    Other
    Expenses
    Compensation
    and Benefits
     29




---



##### Table of Contents



Non-Compensation
    Expense
  Occupancy
    and Equipment
    Communications
    and Data Processing
    Brokerage
    and Clearance
    Interest
    Other
    Income
    Tax Expense
  Accounting for Income Taxes.
  Results
    of Operations
  Year
    Ended December 31, 2006 Compared with Year Ended
    December 31, 2005
  Overview
     30




---



##### Table of Contents



Year EndedDecember 31,


Period-to-Period2006


2005


$ Change


% Change(dollars in thousands)Revenues:Investment banking

$
210,026


$
149,332


$
60,694



40.6
%Commissions


116,625



96,301



20,324



21.1Principal transactions, net


33,146



31,004



2,142



6.9Net gain on investments


12,627



5,564



7,063



126.9Interest and dividend income


26,920



17,984



8,936



49.7Investment advisory fees


5,036



3,843



1,193



31.0Other


2,206



3,838



(1,632
)


(42.5
)Total revenues


406,586



307,866



98,720



32.1Expenses:Compensation and benefits


216,518



187,428



29,090



15.5Occupancy and equipment


17,728



16,877



851



5.0Communications and data processing


19,465



18,526



939



5.1Brokerage and clearance


19,728



17,390



2,338



13.4Interest


11,023



8,105



2,918



36.0Other


30,475



28,398



2,077



7.3Total non-compensation expense


98,419



89,296



9,123



10.2Total expenses


314,937



276,724



38,213



13.8Income before income tax expense


91,649



31,142



60,507



194.3Income tax expense


38,365



13,735



24,630



179.3Net income

$
53,284


$
17,407


$
35,877



206.1
%   Non-GAAP Financial
    Measures
      31




---



##### Table of Contents



ReconciliationGAAP


Amount


Non-GAAP(dollars in thousands, except per share information)Year ended December 31,
    2006:Compensation and benefits expense

$
216,518


$
(1,882
)(a)

$
214,636Income tax expense

$
38,365


$
821
(b)

$
39,186Net income

$
53,284


$
1,061
(c)

$
54,345Earnings per share:Basic

$
1.94


$
0.04


$
1.98Diluted

$
1.93


$
0.04


$
1.97Weighted average number of common
    shares outstanding:Basic


27,512,023




(d)


27,512,023Diluted


27,565,453




(d)


27,565,453     (a)
    
    The non-GAAP adjustment represents the pre-tax expense with
    respect to the amortization of the IPO restricted stock awards
    granted to employees on November 8, 2006. The amortization
    period with respect to this stock compensation expense was from
    November 8, 2006 to December 31, 2006.(b)
    
    The non-GAAP adjustment with respect to income tax expense
    represents the elimination of the tax benefit resulting from the
    amortization of the IPO restricted stock awards in the period.(c)
    
    The non-GAAP adjustment with respect to net income was the
    after-tax amortization of the IPO restricted stock awards in the
    period.(d)
    
    Both the basic and diluted weighted average common shares
    outstanding were not adjusted.       32




---



##### Table of Contents



Revenues
  Investment
    Banking
    Commissions
    Principal
    Transactions, Net
    
    Higher realized and unrealized gains from proprietary trading in
    equity securities.
    Decreased volume in transactions with customers in fixed-income
    securities, leading to lower aggregate markups and markdowns.
    Lower realized and unrealized losses from market-making
    positions in equity securities.  Net
    Gain on Investments
    Interest
    and Dividend Income
    Investment
    Advisory Fees
    Other
   33




---



##### Table of Contents



Expenses
  Compensation
    and Benefits
      Occupancy
    and Equipment
    Communications
    and Data Processing
    Brokerage
    and Clearance
    Interest
    Other
    Income
    Tax Expense
    Year
    Ended December 31, 2005 Compared with Year Ended
    December 31, 2004
  Overview
   34




---



##### Table of Contents



Year EndedDecember 31,


Period-to-Period2005


2004


$ Change


% Change(dollars in thousands)Revenues:Investment banking

$
149,332


$
163,114


$
(13,782
)


(8.4
)%Commissions


96,301



66,081



30,220



45.7Principal transactions, net


31,004



41,566



(10,562
)


(25.4
)Net gain on investments


5,564



3,071



2,493



81.2Interest and dividend income


17,984



8,629



9,355



108.4Investment advisory fees


3,843



4,896



(1,053
)


(21.5
)Other


3,838



12,941



(9,103
)


(70.3
)Total revenues


307,866



300,298



7,568



2.5Expenses:Compensation and benefits


187,428



170,484



16,944



9.9Occupancy and equipment


16,877



14,545



2,332



16.0Communications and data processing


18,526



15,462



3,064



19.8Brokerage and clearance


17,390



15,289



2,101



13.7Interest


8,105



872



7,233



829.5Other


28,398



28,506



(108
)


(0.4
)Total non-compensation expense


89,296



74,674



14,622



19.6Total expenses


276,724



245,158



31,566



12.9Income before income taxes


31,142



55,140



(23,998
)


(43.5
)Income tax expense


13,735



23,867



(10,132
)


(42.5
)Net income

$
17,407


$
31,273


$
(13,866
)


(44.3
)%   Revenues
  Investment
    Banking
   35




---



##### Table of Contents



Commissions
    Principal
    Transactions, Net
    
    Decreased volume in transactions with customers in fixed-income
    securities, leading to lower aggregate markups and markdowns.
    Higher realized and unrealized losses from market-making
    positions in equity securities.
    Lower realized and unrealized gains from proprietary trading in
    equity securities.  Net
    Gain on Investments
    Interest
    and Dividend Income
    Investment
    Advisory Fees
    Other
    Expenses
  Compensation
    and Benefits
   36




---



##### Table of Contents



Occupancy
    and Equipment
    Communications
    and Data Processing
    Brokerage
    and Clearance
    Interest
    Other
    Income
    Tax Expense
    Liquidity
    and Capital Resources
       37




---



##### Table of Contents



Cash
    Flows
  Year ended December 31, 2006.
      Year ended December 31, 2005.
   38




---



##### Table of Contents



Year ended December 31, 2004.
      Critical
    Accounting Policies and Estimates
      
    The nature of the estimate or assumption is material due to the
    level of subjectivity and judgment necessary to account for
    highly uncertain matters or the susceptibility of such matters
    to change; and
    The impact of the estimate or assumption on our financial
    condition or operating performance is material. 39




---



##### Table of Contents



Fair
    Value of Financial Instruments
  Disclosure About Fair Value of Financial
    Instruments
    Contractual
    Obligations
    Payments due by PeriodTotal


2007


2008-2009


2010-2011


2012 and thereafterOperating lease obligations

$
101,253


$
10,570


$
20,755


$
20,309


$
49,619     Off-Balance
    Sheet Arrangements
     40




---



##### Table of Contents



Recently
    Issued Accounting Standards, Not Yet Adopted
  FASB Interpretation No. 48, Accounting for Uncertainty
    in Income Taxes  An Interpretation of FASB Statement
    No. 109
  SFAS No. 157, Fair Value Measurements
 41




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Qualitative
    and Quantitative Disclosures About Market Risk
  Market
    Risk
  and/or
        High


Low


Average(dollars in thousands)Long Value:Equities

$
112,635


$
80,590


$
99,435Corporate bonds


245,806



116,144



177,191U.S. Government and agency
    securities


21,763



1,924



10,149Mortgage backed securities


14,645



0



2,007Short Value:Equities

$
45,667


$
27,498


$
35,956Corporate bonds


18,066



176



6,212U.S. Government and agency
    securities


103,874



39,429



65,280   Interest
    Rate Risk
    Credit
    Risk
   42




---



##### Table of Contents



Inflation
    Risk
    Operational
    Risk
   43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data. Report of
    Independent Registered Public Accounting Firm           
    44




---



##### Table of Contents



KBW, INC.
    AND SUBSIDIARIES
  Consolidated
    Statements of Financial Condition
 December 31,
    2006 and 2005
 (Dollars in thousands)
  2006


2005ASSETSCash and cash equivalents

$
165,647


$
75,642Securities owned, at fair value:Equities


101,649



81,018Corporate bonds


116,144



221,261U.S. Government and agency
    securities


15,905



11,345Mortgage backed securities


14,645



248,343



313,624Securities not readily marketable,
    at fair value


82,394



73,012Securities purchased under resale
    agreements


62,319



43,881Receivables from clearing brokers


185,712



91,630Accounts receivable


25,740



25,787Furniture, equipment and leasehold
    improvements, at cost, less accumulated depreciation and
    amortization of $18,297 in 2006 and $14,348 in 2005


22,151



24,615Other assets


11,905



13,355Total assets

$
804,211


$
661,546LIABILITIES AND
    STOCKHOLDERS EQUITYLiabilities:Payable to clearing broker

$



$
91,977Securities sold under repurchase
    agreements


84,536



2,275Short-term borrowings


28,500



63,750Securities sold, not yet
    purchased, at fair value:Equities


29,528



21,187Corporate bonds


5,082



12,191U.S. Government and agency
    securities


76,362



63,621110,972



96,999Accounts payable, accrued
    expenses, and other liabilities


166,671



130,386Income taxes payable


16,772



10,065Total liabilities


407,451



395,452Stockholders equity
    (Note 8):Preferred stock






Common stock


292



6Paid-in capital


94,419



27,410Retained earnings


310,076



256,792Notes receivable from stockholders


(8,843
)


(17,644
)Accumulated other comprehensive
    income (loss)


816



(470
)Total stockholders equity


396,760



266,094Total liabilities and
    stockholders equity

$
804,211


$
661,546    45




---



##### Table of Contents



KBW, INC.
    AND SUBSIDIARIES
  Consolidated
    Statements of Income
 Years
    ended December 31, 2006, 2005 and 2004
 (Dollars in thousands, except per share information)
  2006


2005


2004Revenues:Investment banking

$
210,026


$
149,332


$
163,114Commissions


116,625



96,301



66,081Principal transactions, net


33,146



31,004



41,566Net gain on investments


12,627



5,564



3,071Interest and dividend income


26,920



17,984



8,629Investment advisory fees


5,036



3,843



4,896Other


2,206



3,838



12,941Total revenues


406,586



307,866



300,298Expenses:Compensation and benefits


216,518



187,428



170,484Occupancy and equipment


17,728



16,877



14,545Communications and data processing


19,465



18,526



15,462Brokerage and clearance


19,728



17,390



15,289Interest


11,023



8,105



872Other


30,475



28,398



28,506Total expenses


314,937



276,724



245,158Income before income tax expense


91,649



31,142



55,140Income tax expense


38,365



13,735



23,867Net income (Note 8)

$
53,284


$
17,407


$
31,273Earnings per share (Note 8):Basic

$
1.94


$
0.64


$
1.24Diluted

$
1.93


$
0.64


$
1.24Weighted average number of common
    shares outstanding:Basic


27,512,023



27,194,404



25,253,771Diluted


27,565,453



27,215,001



25,296,556    46




---



##### Table of Contents



KBW, INC.
    AND SUBSIDIARIESConsolidated Statements of Changes in
    Stockholders Equity
    Years ended December 31, 2006, 2005 and 2004
    (Dollars in thousands, except per share information)
  Notes


Accumulated


TotalCommon


Receivable


Other


StockholdersPreferred


Common


Paid-in


Retained


Treasury


from


Comprehensive


EquityStock


Stock


Capital


Earnings


Stock


Stockholders


Income (loss)


(Note 8)Balance at December 31, 2003

$



$
38


$
158,561


$
309,599


$
(244,271
)

$
(17,389
)

$



$
206,538Net income (Note 8)














31,273















31,273Other comprehensive income,
    currency translation adjustment, net of tax $433


























527



527Total comprehensive income






























31,800Purchase of 1,042,277 shares
    of common stock for treasury


















(13,120
)










(13,120
)Issuance of 4,479,568 shares
    of common stock from treasury










42,944







2,833











45,777Amortization of stock-based
    compensation










1,967



















1,967Restricted stock units converted










(2,500
)


















(2,500
)Excess net tax benefit related to
    delivery of restricted stock units










737



















737Issuance of notes receivable from
    stockholders






















(7,548
)






(7,548
)Repayment of notes receivable from
    stockholders






















5,038







5,038Balance at December 31, 2004






38



201,709



340,872



(254,558
)


(19,899
)


527



268,689Net income (Note 8)














17,407















17,407Other comprehensive loss, currency
    translation adjustment, net of tax benefit of ($815)


























(997
)


(997
)Total comprehensive income






























16,410Purchase of 242,520 shares of
    common stock for treasury


















(2,564
)










(2,564
)Issuance of 6,794 shares of
    common stock from treasury










75











(75
)






Amortization of stock-based
    compensation










1,741



















1,741Retirement of
    24,613,802 shares of common stock from treasury






(32
)


(192,328
)


(64,762
)


257,122











Purchase of 215,301 shares of
    common stock










(2,103
)










621







(1,482
)Issuance of 1,866,286 shares
    of common stock










18,285











(3,897
)






14,388Excess net tax benefit related to
    delivery of restricted stock units










31



















31Repayment of notes receivable from
    stockholders






















5,606







5,606Payment to common stockholders














(36,725
)














(36,725
)Balance at December 31, 2005






6



27,410



256,792







(17,644
)


(470
)


266,094Net income (Note 8)














53,284















53,284Other comprehensive income,
    currency translation adjustment, net of tax $1,039


























1,286



1,286Total comprehensive income






























54,570Purchase of 1,182,328 shares
    of common stock






(12
)


(12,206
)










1,218







(11,000
)Issuance of 4,122,482 shares
    of common stock






41



76,808



















76,849Forty-three for one stock split
    effective November 1, 2006






257



(257
)


















Amortization of stock-based
    compensation










3,476



















3,476Restricted stock units converted










(1,175
)


















(1,175
)Excess net tax benefit related to
    delivery of restricted stock units










363



















363Repayment of notes receivable from
    stockholders






















7,583







7,583Balance at December 31, 2006

$



$
292


$
94,419


$
310,076


$



$
(8,843
)

$
816


$
396,760     Number of SharesPar Value

December 31,


Authorized


Issued


In Treasury


Outstanding$0.01


2006



140,000,000



29,204,941







29,204,941$0.01


2005



387,000,000



26,264,787







26,264,787$0.01


2004



215,000,000



161,436,405



136,586,877



24,849,528     Number of SharesPar Value

December 31,


Authorized


Issued


Outstanding$0.01


2006



10,000,000







$0.01


2005



1,000,000







-


2004











    47




---



##### Table of Contents



KBW, INC.
    AND SUBSIDIARIESConsolidated Statements of Cash Flows
    Years ended December 31, 2006, 2005 and 2004
    (Dollars in thousands)
  2006


2005


2004Cash flows from operating
    activities:Net income

$
53,284


$
17,407


$
31,273Adjustments to reconcile net income
    to net cash provided by operating activities:Deferred income taxes


330



(2,845
)


2,244Depreciation and amortization


5,906



5,737



3,934Amortization of stock-based
    compensation


3,476



1,741



1,967(Increase) decrease in operating
    assets:Securities owned, at fair value


65,281



(103,199
)


10,581Securities not readily marketable,
    at fair value


(9,382
)


(18,054
)


6,882Securities purchased under resale
    agreements


(18,438
)


21,851



(17,466
)Receivable from clearing brokers


(94,082
)


40,353



(89,035
)Accounts receivable


47



(14,315
)


6,274Other assets


1,120



5,153



(7,023
)Increase (decrease) in operating
    liabilities:Securities sold, not yet purchased,
    at fair value


13,973



(41,310
)


66,903Securities sold under repurchase
    agreements


82,261



(25,540
)


(5,993
)Short-term borrowings


(35,250
)


63,750



Payable to clearing broker


(91,977
)


91,977



Accounts payable, accrued expenses,
    and other liabilities


36,285



(1,349
)


17,540Income taxes payable


6,707



2,482



(3,290
)Net cash provided by operating
    activities


19,541



43,839



24,791Cash flows from investing
    activities:Purchases of furniture, equipment
    and leasehold improvements


(3,442
)


(6,136
)


(12,395
)Net cash used in investing
    activities


(3,442
)


(6,136
)


(12,395
)Cash flows from financing
    activities:Issuance of shares of common stock
    from treasury










43,277Purchase of shares of common stock
    for treasury






(2,564
)


(13,120
)Issuance of shares of common stock


75,674



18,285



Purchase of shares of common stock


(11,000
)


(1,482
)


Excess net tax benefit related to
    delivery of restricted stock units


363







Issuance of notes receivable from
    stockholders






(3,897
)


(7,548
)Repayment of notes receivable from
    stockholders


7,583



5,606



5,038Payment to common stockholders






(36,725
)


Net cash provided by (used in)
    financing activities


72,620



(20,777
)


27,647Currency adjustment:Effect of exchange rate changes on
    cash


1,286



(997
)


527Net increase in cash and cash
    equivalents


90,005



15,929



40,570Cash and cash equivalents at
    beginning of year


75,642



59,713



19,143Cash and cash equivalents at end of
    year

$
165,647


$
75,642


$
59,713Supplemental disclosures of cash
    flow information:Cash paid during the year for:Income taxes

$
29,334


$
7,899


$
27,156Interest

$
10,743


$
7,570


$
381    48




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars
    in thousands, except per share information)
  (1)  Organization
  Organization
    and Basis of Presentation
    (2)  Summary
    of Significant Accounting Policies
  (a)
    Principles
    of Consolidation    04-05, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights 04-05). 04-05
  (b)
    Use of
    Estimates    (c)
    Cash
    and Cash Equivalents   49




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
   (d)
    Securities
    Transactions    (e)
    Securities
    Not Readily Marketable    (f)
    Securities
    Purchased Under Resale Agreements and Securities Sold Under
    Repurchase Agreements      (g)
    Receivables
    From and Payable to Clearing Brokers    (h)
    Investment
    Banking    
    Underwriting revenues.  The Company earns
    underwriting revenues in securities offerings in which it acts
    as an underwriter, such as initial public offerings, follow-on
    equity offerings and fixed income offerings. Underwriting
    revenues include management fees, underwriting fees and selling
    concessions, including fees related to mutual thrift
    conversions. Underwriting revenues are recorded, net of related
    syndicate expenses, at the time the underwriting is completed.
    In syndicated underwritten transactions, management estimates
    the Companys share of transaction-related expenses
    incurred by the syndicate, and the Company recognizes revenue
    net of such expense. On final settlement, the Company adjusts
    these amounts to reflect the actual transaction-related expenses
    and resulting underwriting fee.
    Strategic advisory revenues.  The
    Companys strategic advisory revenues primarily include
    success fees, as well as retainer fees, earned in connection
    with advising companies, both buyers and sellers, principally in
    M&A. The Company also earns fees for related advisory work
    and other services such as 50




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
  providing fairness and valuation opinions. Strategic advisory
    revenues are recorded when the transactions or the services (or,
    if applicable, separate components thereof) to be performed are
    substantially complete, the fees are determinable and collection
    is reasonably assured.  
    Private placement revenues.  The Company earns
    agency placement fees in non-underwritten transactions such as
    private placements, including securitized debt offerings
    collateralized by financial services issuers securities.
    Private placement revenues are recorded on the closing date of
    the transaction.    (i)
    Furniture,
    Equipment and Leasehold Improvements    (j)
    Fair
    Value of Financial Instruments  Disclosures About Fair Value of Financial
    Instruments
    (k)
    Income
    Taxes   51




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
   (l)
    Foreign
    Currency Translation    (m)
    Earnings
    Per Share (EPS)      (n)
    Stock-Based
    Compensation  Share-Based Payment
  (o)
    Contributions  Accounting For Contributions Received
    and Contributions Made.
  (p)
    Reclassifications    (3)  Short-Term
    Borrowings
   52




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
   (4)  Commitments
    and Contingencies
  (a)
    Leases      Lease PaymentsYear:2007

$
10,5702008


10,4622009


10,2932010


10,1662011


10,143Thereafter


49,619Total

$
101,253     (b)
    Litigation  Accounting for Contingencies.
  Direct
    General Litigation
  Jeffrey H. Winokur v. Direct General,
    et al.
 53




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
   (c)
    Limited
    Partnership Commitments    (5)  Financial
    Instruments with Off-Balance-Sheet Risk
  and/or
    (a)
    Broker-Dealer
    Activities    (b)
    Derivative
    Financial Instruments        Current


Average


End ofNotional


Fair


PeriodAmount


Value


Fair ValueDecember 31, 2006:Purchased options

$
500


$
92


$
160Written options

$
400


$
87


$
5Short futures contracts

$
2,375


$
1,286


$
3,460December 31, 2005:Purchased options

$
975


$
9


$
23Written options

$



$
20


$
Short futures contracts

$
750


$
501


$
891  54




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
  (6)  Concentrations
    of Credit Risk
    and/or
  (7)  Notes Receivable
    from Stockholders
    (8)  Common
    Stock
    Form S-1
     55




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
     (9)  Stock-Based
    Compensation
      WeightedYear Ended


Average GrantDecember 31, 2006


Date Fair ValueFuture


No Future


Future


No FutureService


Service


Service


ServiceRequired


Required


Required


RequiredRestricted stock units:Balance, beginning of year


197,585



1,553,418


$
10.11


$
6.57Grants


3,698






$
9.98


$
Vested


(91,590
)


91,590


$
9.87


$
9.87Converted and redeemed






(205,153
)

$



$
6.70Balance, end of year


109,693



1,439,855


$
10.32


$
6.76   Year Ended December 31,2006


2005


2004Restricted stock units:Balance, beginning of year


1,751,003



1,751,003



1,938,440Grants


3,698







288,659Forfeited










(49,020
)Converted and redeemed


(205,153
)






(427,076
)Balance, end of year


1,549,548



1,751,003



1,751,003    56




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
      WeightedYear Ended


Average GrantDecember 31, 2006


Date Fair ValueRestricted stock awards:Balance, beginning of year





$
Grants


2,592,200


$
21.00Forfeited


(100
)

$
21.00Converted and redeemed





$
Balance, end of year


2,592,100


$
21.00               (10)  Employee
    Profit-Sharing and Retirement Plan
   57




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
    (11)  Other
    Income
    (12)  Earnings
    Per Share
      Year Ended December 31,2006


2005


2004Numerator for basic and diluted
    EPS-net
    income (Note 8)

$
53,284


$
17,407


$
31,273Denominator for basic EPS-weighted
    average number of common shares


27,512,023



27,194,404



25,253,771Effect of dilutive securities
    restricted stock


53,430



20,597



42,795Denominator for diluted
    EPS-weighted average number of common shares and dilutive
    potential common shares


27,565,453



27,215,001



25,296,566Basic EPS (Note 8)

$
1.94


$
0.64


$
1.24Diluted EPS (Note 8)

$
1.93


$
0.64


$
1.24  58




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
  (13)  Income
    Taxes
    Current


Deferred


TotalYear ended December 31, 2006:U.S. Federal

$
26,400


$
590


$
26,990State and local


10,560



260



10,820Non-U.S.


1,075



(520
)


555$
38,035


$
330


$
38,365Year ended December 31, 2005:U.S. Federal

$
10,633


$
(1,646
)

$
8,987State and local


5,019



(731
)


4,288Non-U.S.


928



(468
)


460$
16,580


$
(2,845
)

$
13,735Year ended December 31, 2004:U.S. Federal

$
15,221


$
1,914


$
17,135State and local


6,332



330



6,662Non-U.S.


70







70$
21,623


$
2,244


$
23,867     2006


2005


2004Percentage





Percentage





Percentageof Pretax





of Pretax





of PretaxAmount


Earnings


Amount


Earnings


Amount


EarningsComputed expected tax
    provision

$
32,077



35.0
%

$
10,900



35.0
%

$
19,299



35.0
%Non-U.S. tax
    rate differential


(80
)


(0.1
)


(66
)


(0.2
)


(12
)


State and local taxes, net of
    related Federal income tax benefit


7,033



7.7



2,796



9.0



4,331



7.8Permanent differences


(665
)


(0.7
)


105



0.3



249



0.5$
38,365



41.9
%

$
13,735



44.1
%

$
23,867



43.3
%  59




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
    2006


2005Deferred tax assets:Currency translation adjustment

$



$
385Employee compensation and benefits


5,768



4,674Legal contingencies


484



Securities not readily marketable






472Total deferred tax assets


6,252



5,531Deferred tax liabilities:Accumulated depreciation and
    amortization of furniture, equipment and leasehold improvements


(1,561
)


(4,010
)Currency translation adjustment


(654
)


Securities not readily marketable


(3,785
)


Total deferred tax liabilities


(6,000
)


(4,010
)Net deferred tax assets

$
252


$
1,521       (14)  Industry
    Segment Data
  Disclosures about Segments of an Enterprise and Related
    Information
  (15)  Recent
    Accounting Developments
  Accounting for Uncertainty in
    Income Taxes. Accounting for Income Taxes.
   60




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
    (16)  Net
    Capital Requirement
  Rule 15c3-1
  December 31,2006Net Capital

$
99,747Excess net capital

$
89,239     (17)  Selected
    Quarterly Financial Information (Unaudited)
    2006

First


Second


Third


FourthRevenues

$
101,438


$
91,708


$
93,212


$
120,229Net Income

$
10,156


$
8,394


$
9,310


$
25,424Earnings per
    share(*):Basic

$
0.37


$
0.31


$
0.35


$
0.88Diluted

$
0.37


$
0.31


$
0.35


$
0.87Average shares
    outstanding:Basic


27,386,872



26,917,398



26,749,483



28,991,535Diluted


27,412,199



26,917,398



26,749,483



29,363,999  61




---



##### Table of Contents



KBW, INC.
    and SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in thousands, except per share information)
    2005

First


Second


Third


FourthRevenues

$
67,785


$
70,964


$
77,971


$
91,146Net Income

$
3,264


$
2,852


$
3,956


$
7,335Earnings per
    share(*):Basic

$
0.12


$
0.11


$
0.14


$
0.26Diluted

$
0.12


$
0.11


$
0.14


$
0.26Average shares
    outstanding:Basic


26,114,803



26,068,019



27,748,158



27,875,524Diluted


26,146,365



26,100,656



27,753,877



27,893,283     *
    
    Summation of the quarters earnings per share may not equal
    the annual amounts due to the averaging effect of the number of
    shares outstanding throughout the respective year. 62




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.   Item 9A.  Controls
    and Procedures.         Item 9B.  Other
    Information.   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   63




---



##### Table of Contents



PART IV  Item 15.
    Exhibits  Form 10-K:
    Form 10-K
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Report of
    Independent Registered Public Accounting Firm


44Consolidated
    Statements of Financial Condition as of December 31, 2006
    and 2005


45Consolidated
    Statements of Income for the years ended December 31, 2006,
    2005 and 2004


46Consolidated
    Statements of Changes in Stockholders Equity for the years
    ended December 31, 2006, 2005 and 2004


47Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


48Notes to
    Consolidated Financial Statements


49         E-1 Form 10-K.
 64




---



##### Table of Contents



SIGNATURES      
  John
    G. Duffy
 
       Signature

Title/s/
    John G. DuffyJohn
    G. Duffy

Director, Chairman and Chief
    Executive Officer (principal executive officer)/s/
    Robert GiambroneRobert
    Giambrone

Chief Financial Officer (principal
    financial and accounting officer)/s/
    Andrew M. SenchakAndrew
    M. Senchak

Director/s/
    Thomas B. MichaudThomas
    B. Michaud

Director/s/
    Daniel M. HealyDaniel
    M. Healy

Director/s/
    Christopher M.
    CondronChristopher
    M. Condron

Director  65




---



##### Table of Contents



EXHIBIT INDEX  3
.1

Second Amended and Restated
    Certificate of Incorporation of KBW, Inc. (incorporated by
    reference to Exhibit 3.1 to the Registrants quarterly
    report on
    Form 10-Q
    with respect to the quarter ended September 30, 2006 filed
    on December 15, 2006).3
.2

Amended and Restated Bylaws of
    KBW, Inc. (incorporated by reference to Exhibit 3.2 to the
    Registrants quarterly report on
    Form 10-Q
    with respect to the quarter ended September 30, 2006 filed
    on December 15, 2006).4
.1

Specimen Common Stock Certificate
    of KBW, Inc. (incorporated by reference to Exhibit 4.1 to
    the Registrants registration statement on Form S-1/A (No.
    333-136509) filed on September 28, 2006).4
.2

Second Amended and Restated
    Stockholders Agreement (incorporated by reference to
    Exhibit 4.1 to the Registrants quarterly report on
    Form 10-Q
    with respect to the quarter ended September 30, 2006 filed
    on December 15, 2006).10
.1

KBW, Inc. 2006 Equity Incentive
    Plan (incorporated by reference to Exhibit 10.4 to the
    Registrants quarterly report on
    Form 10-Q
    with respect to the quarter ended September 30, 2006 filed
    on December 15, 2006).10
.2

Fully Disclosed Clearing
    Agreement, dated as of October 22, 1992, between Pershing
    LLC and Keefe, Bruyette & Woods, Inc., as amended
    (incorporated by reference to Exhibit 10.3 to the
    Registrants registration statement on
    Form S-1/A
    (No. 333-136509)
    filed on September 28, 2006).10
.3

Fully Disclosed Clearing
    Agreement, dated as of February 28, 2005, between Fortis
    Securities LLC and Keefe, Bruyette & Woods, Inc.
    (incorporated by reference to Exhibit 10.4 to the
    Registrants registration statement on Form S-1/A
    (No. 333-136509)
    filed on September 28, 2006).10
.4

Agreement of Lease, dated
    November 12, 2002, between the Equitable Life Assurance
    Society of the United States, ELAS Securities Acquisition Corp.
    and Keefe, Bruyette & Woods, Inc. (incorporated by
    reference to Exhibit 10.5 to the Registrants
    registration statement on Form S-1/A
    (No. 333-136509)
    filed on September 28, 2006).10
.5

First Amendment to Lease, dated
    September 6, 2003, between the Equitable Life Assurance
    Society of the United States, ELAS Securities Acquisition Corp.
    and Keefe, Bruyette & Woods, Inc. (incorporated by
    reference to Exhibit 10.6 to the Registrants
    registration statement on Form S-1/A
    (No. 333-136509)
    filed on September 28, 2006).10
.6

Second Amendment to Lease, dated
    September 6, 2004, between the Equitable Life Assurance
    Society of the United States, ELAS Securities Acquisition Corp.
    and Keefe, Bruyette & Woods, Inc. (incorporated by
    reference to Exhibit 10.7 to the Registrants
    registration statement on Form S-1/A
    (No. 333-136509)
    filed on September 28, 2006).10
.7

KBW, Inc. Annual Incentive Plan
    (incorporated by reference to Exhibit 10.5 to the
    Registrants quarterly report on
    Form 10-Q
    with respect to the quarter ended September 30, 2006 filed
    on December 15, 2006).10
.8*

Form of Restricted Stock Award
    Agreement for Awards under the 2006 Equity Incentive Plan in
    connection with the IPO.10
.9*

Form of Restricted Stock Award
    Agreement for Awards under the 2006 Equity Incentive Plan.10
.10

Employment Agreement with John G.
    Duffy (incorporated by reference to Exhibit 10.1 to the
    Registrants quarterly report with respect to the quarter
    ended September 30, 2006 on
    Form 10-Q
    filed on December 15, 2006).10
.11

Employment Agreement with Thomas
    B. Michaud (incorporated by reference to Exhibit 10.2 to
    the Registrants quarterly report with respect to the
    quarter ended September 30, 2006 on
    Form 10-Q
    filed on December 15, 2006).10
.12

Employment Agreement with Andrew
    M. Senchak (incorporated by reference to Exhibit 10.3 to
    the Registrants quarterly report with respect to the
    quarter ended September 30, 2006 on
    Form 10-Q
    filed on December 15, 2006).11


Statement regarding computation of
    per share earnings. (The calculation of per share earnings is in
    Part II, Item 8, Note 12 to the Consolidated
    Financial Statements (Earnings Per Share) and is omitted here in
    accordance with Section(b)(11) of Item 601 of
    Regulation S-K). E-1




---



##### Table of Contents



21
.1

List of Subsidiaries of KBW, Inc.
    (incorporated by reference to Exhibit 21.1 to the
    Registrants registration statement on Form S-1/A
    (No. 333-136509)
    filed on August 11, 2006).31
.1*

Certification of the Chief
    Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2*

Certification of the Chief
    Financial Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1*

Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2*

Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
    
    Indicates a management contract of compensatory arrangement*
    
    Filed herewith E-2