SWS (SWS) 8-K SWS Group, Inc. Reports Significantly Higher First Quarter Results

Exhibit 99.1

For Immediate Release

SWS Group, Inc. Reports Significantly Higher First Quarter Results

Net Income Increases 41 Percent to $10.1 Million

DALLAS, November 6, 2006 – SWS Group, Inc. (NYSE: SWS) today reported a 41 percent increase in net income on a 20 percent increase in revenues for its fiscal 2007 first quarter ended September 29, 2006.

SWS earned $10.1 million, or diluted earnings per share (EPS) of 57 cents, on revenues of $116.1 million for the September quarter, compared with net income of $7.2 million, or diluted EPS of 41 cents, on revenues of $96.8 million for the prior year’s first quarter.

In March 2006, SWS sold the assets of its bank’s auto finance subsidiary. This business is presented as discontinued operations. For the September quarter, SWS recorded income from continuing operations of $10.08 million, or diluted EPS from continuing operations of 57 cents, compared with income from continuing operations of $6.6 million, or diluted EPS from continuing operations of 38 cents, for the prior year’s first quarter.

“We had an excellent start to our new fiscal year,” said Chief Executive Officer Donald W. Hultgren. “Our income from continuing operations increased 52 percent in the first quarter, and with daily market volume increasing, we anticipate continued progress toward our performance goals.”

Hultgren noted that both brokerage and banking subsidiaries had a strong first quarter. He said Southwest Securities’ corporate finance unit made a significant contribution to the quarter by closing a merger and acquisition transaction.

Net revenues (total revenues less interest expense) increased $6.2 million over results reported for the prior year’s first quarter. The largest components of the increase were net interest revenue, $4.6 million; net gains on principal transactions, $3.2 million; and investment banking, advisory and administrative fees, $1.2 million.

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Net interest revenue benefited from higher average loan balances and improved rates on interest-earning assets at the bank and an increase in spreads and average balances in the stock lending business. Net gains on principal transactions increased as a result of appreciation of the company’s stock holdings in NYSE Group, Inc. (NYX) by $814,0000 pre-tax and an increase in fixed income trading revenue. Investment banking, advisory and administrative fees rose because of increased corporate finance fees. The increases were partially offset by a $2.1 million decrease in commission revenue due to the sale of Southwest Securities’ institutional sales business in the third quarter of fiscal 2006 and reduced commissions in the fixed income area in the first quarter of fiscal 2007.

Overall first quarter operating expenses increased by $1.8 million compared with first quarter expenses a year ago. Commissions and other employee compensation increased $3 million, primarily as a result of increased business line revenues. All other categories of operating expense were lower than in the prior year period.

Southwest Securities processed 4.4 million securities transactions in the first quarter compared with 2.4 million in the comparable period of the prior year. However, clearing revenues decreased $646,000 as the additional volume came primarily from high-volume trading correspondents who are charged lower transaction fees than general securities customers who require higher service levels.

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 Southwest Securities, Inc, a full-service brokerage and clearing firm; Southwest Securities, FSB, a community bank; SWS Financial Services, Inc., a brokerage firm serving independent registered reps and their customers, and Southwest Insurance Agency.

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First Quarter Segment Results

(In thousands)

	1st Quarter FY’07					1st Quarter FY’06
	Net Revenue		Pretax			Net Revenue		Pretax
Clearing	$	9,027	$	4,396		$	9,602	$	4,411
Retail Brokerage		17,545		2,920			16,758		2,129
Institutional Brokerage		29,240		10,092			23,770		6,873
Bank		12,322		6,216			10,759		4,705
Other Consolidated Entities		2,207		(8,904	)		3,276		(7,763	)
Consolidated	$	70,341	$	14,720		$	64,165	$	10,355

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 beyond our control, including, but not limited to, volume of trading in securities, volatility of securities prices and interest rates, customer margin loan activity, creditworthiness of our correspondents and customers, demand for housing, loss of correspondents to self-clearing or as the result of consolidations or otherwise, and 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 Commission.

FINANCIAL TABLES FOLLOW

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SWS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

September 29, 2006 and June 30, 2006

(In thousands, except par values and share amounts)

	September 29, 2006			June 30, 2006
Assets
Cash and cash equivalents	$	90,400		$	41,674
Assets segregated for regulatory purposes		373,187			345,028
Receivable from brokers, dealers and clearing organizations		3,117,072			2,821,512
Receivable from clients, net of allowances		328,929			373,245
Loans held for sale, net		110,750			124,874
Loans, net		695,103			642,541
Securities owned, at market value		206,283			159,004
Securities purchased under agreements to resell		53,753			63,636
Goodwill		7,552			7,552
Marketable equity securities available for sale		3,536			3,593
Other assets		78,007			75,192
Total assets	$	5,064,572		$	4,657,851
Liabilities and Stockholders’ Equity
Short-term borrowings	$	40,400		$	30,500
Payable to brokers, dealers and clearing organizations		2,993,633			2,775,564
Payable to clients		649,979			617,697
Deposits		782,580			705,894
Securities sold under agreements to repurchase		30,457			7,719
Securities sold, not yet purchased, at market value		127,128			96,909
Drafts payable		31,923			29,144
Advances from Federal Home Loan Bank		55,006			47,094
Other liabilities		54,626			57,217
Total liabilities		4,765,732			4,367,738
Minority interest in consolidated subsidiaries		628			641
Commitments and contingencies
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 18,307,483 and outstanding 17,799,879 shares at September 29, 2006; issued 18,283,074 and outstanding 17,727,927 shares at June 30, 2006		1,830			1,828
Additional paid-in capital		255,596			255,331
Retained earnings		45,894			37,968
Accumulated other comprehensive income – unrealized holding gain (loss), net of tax		1,200			1,225
Deferred compensation, net		1,607			1,610
Treasury stock (507,604 shares at September 29, 2006 and 555,147 shares at June 30, 2006, at cost)		(7,915	)		(8,490	)
Total stockholders’ equity		298,212			289,472
Total liabilities and stockholders’ equity	$	5,064,572		$	4,657,851

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SWS GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

For the three months ended September 29, 2006 and September 30, 2005

(In thousands, except per share and share amounts)

	Three Months Ended September 29, 2006			Three Months Ended September 30, 2005
Revenues:
Net revenues from clearing operations	$	3,071		$	3,717
Commissions		18,939			21,070
Interest		69,905			52,092
Investment banking, advisory and administrative fees		10,375			9,176
Net gains on principal transactions		8,198			5,000
Other		5,658			5,716
Total revenue		116,146			96,771
Interest Expense		45,805			32,606
Net Revenues		70,341			64,165
Non-Interest Expenses:
Commissions and other employee compensation		40,844			37,823
Occupancy, equipment and computer service costs		5,340			5,637
Communications		2,186			2,402
Floor brokerage and clearing organization charges		1,170			1,295
Advertising and promotional		455			653
Other		5,626			6,000
Total Non-Interest Expenses		55,621			53,810
Income from continuing operations before income tax expense		14,720			10,355
Income tax expense		4,637			3,729
Income from continuing operations		10,083			6,626
Discontinued operations:
Income from discontinued operations		41			754
Income tax expense		(13	)		(254	)
Minority interest		(4	)		(29	)
Income from discontinued operations		24			471
Income before cumulative effect of change in accounting principles		10,107			7,097
Cumulative effect of change in accounting principles, net of tax of $40		—			75
Net income		10,107			7,172
Net income (loss) recognized in other comprehensive income		(25	)		258
Comprehensive income	$	10,082		$	7,430

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	Three Months Ended September 29, 2006		Three Months Ended September 30, 2005
Earnings per share – basic
Income from continuing operations	$	0.57	$	0.38
Income from discontinued operations		—		0.03
Cumulative effect of change in accounting principles, net of tax		—		—
Net income	$	0.57	$	0.41
Weighted average shares outstanding – basic		17,652,500		17,328,934
Earnings per share – diluted
Income from continuing operations	$	0.57	$	0.38
Income from discontinued operations		—		0.03
Cumulative effect of change in accounting principles, net of tax		—		—
Net income	$	0.57	$	0.41
Weighted average shares outstanding – diluted		17,839,017		17,440,574

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CONTACT: Jim Bowman, Vice President – Corporate Communications, (214) 859-9335

jbowman@swst.com