Profile: KBW, Inc. (KBW.N)

KBW, Inc. is a full-service investment bank specializing in the financial services industry. The Company’s business is organized into four general service offerings: investment banking, including mergers and acquisitions (M&A) and other strategic advisory services, equity and fixed income securities offerings, and mutual thrift conversions; equity and fixed income sales and trading; research that provides fundamental, objective analysis that identifies investment opportunities and helps investor customers make better investment decisions, and asset management, including investment management and other advisory services to institutional clients and private high net worth clients and various investment vehicles.

KBW operates through a United States registered broker-dealer, Keefe, Bruyette & Woods, Inc.; a United States registered investment advisor, KBW Asset Management, Inc. (KBWAM); and Keefe, Bruyette & Woods Limited, an investment firm authorized and regulated by the United Kingdom Financial Services Authority. The Company has 10 broker-dealer offices with its headquarters in New York City and other offices in Atlanta, Boston, Chicago, Columbus (Ohio), Hartford, Houston, Richmond (Virginia), San Francisco and London. Its asset management company is located in New York City in the same building as its headquarters.

Investment Banking

KBW’s investment banking practice provides a range of investment banking services to bank and thrift holding companies, banks and thrifts, insurance companies, broker-dealers, mortgage banks, asset management companies, real estate investment trusts (REITs), consumer and specialty finance firms, financial processing companies and securities exchanges. The investment banking practice is based on long-term relationships developed by the department’s professionals operating from its offices.

The Company provides a range of advice to its clients in relation to mergers, acquisitions and similar corporate finance matters and is positioned to be involved at each stage of these transactions, from initial structuring to final execution. Strategic advisory services also include advisory assignments, such as divestitures, hostile takeover defenses and special committee assignments. Fees for advisory services may be determined based on a flat fee, a fee based on the value of the transaction, or a fee for specified services blended with a fee based on the value of the transaction.

Capital raising services involve underwriting for financial services equity capital markets transactions. KBW acts as underwriter and placement agent in both public and private offerings of equity and debt securities. Its equity and fixed income capital markets departments assist the investment banking department in efforts to obtain capital markets investment banking mandates and also coordinate with syndicate departments of other investment banks in obtaining underwriting and co-manager roles.

Equity and Fixed Income Sales and Trading

The Company’s institutional equity sales team serves customers out of its New York, London, Boston, Hartford, Atlanta and San Francisco offices. The sales and trading team provides specialized services, including value-added, industry and sector-specific trading expertise, research and access to capital markets transactions. The Company’s equity sales group provides institutional customers with access to company managements and research analysts. It is a participant in corporate repurchase programs for small, mid and large cap companies.

KBW’s fixed income group conducts sales and trading operations in New York City with sales branches in Atlanta, Boston, Chicago, Hartford and San Francisco. The Company trades and underwrites a range of fixed income securities, including mortgage-backed securities, United States Treasury and Federal Agency securities, and an array of corporate bonds and preferred stock, including trust preferred or other capital securities and collateralized debt obligations comprised of such securities and bank-qualified municipal securities.

Research

As of December 31, 2008, KBW’s research covered 548 domestic and international financial services companies, such as bank and thrift holding companies, banks, thrifts, REITs, and specialty finance, insurance and securities firms and securities exchanges. Its research group follows financial services industry companies in the S&P 500 and Dow Jones STOXX 600 Index, as well as other United States and European financial services companies on a daily basis. Research provides the foundation for seven domestic industry indices: the KBW Bank Index, the KBW Regional Banking Index, the KBW Insurance Index, the KBW Capital Markets Index, the KBW Mortgage Finance Index, the KBW Premium Yield Equity REITs Index (KYX), and the KBW Property & Casualty Index (KPX). The indices are also used in Exchange Traded Funds and exchange traded options under licenses from the Company.

The United States-based research analysts covered the equity securities of 418 companies in the United States as of December 31, 2008. The European research team covers 130 companies in diverse portions of the financial services sector predominantly in various countries in Europe and emerging markets. The Company covers 67 banks, including 64 commercial banks and three investment banks; 45 insurance companies, including 33 European insurers, five reinsurance companies and seven integrated Lloyd’s of London market vehicles. The Company also covers diversified financial companies, including consumer finance companies, securities exchanges, private banks and asset managers.

Asset Management

KBWAM is a registered investment adviser focused on investments in the securities of financial services companies. The Company is the advisor to two hedge funds and a private equity fund. It also serves as a discretionary sub advisor for a fund managed by an unaffiliated third party.