A.G. Edwards, Inc. Announces Results for the Third Quarter and First Nine Months of Fiscal 2007

Quarterly Earnings Per Share Up 54% From Same Quarter Last Year; Client Assets Reach $370 Billion 


ST. LOUIS, Dec. 21  /PRNewswire-FirstCall/ -- A.G. Edwards, Inc. (NYSE:AGE) today announced results for the third quarter and first nine months of fiscal 2007, which ended November 30, 2006.

Net earnings for the quarter were $78 million, or $1.03 per diluted share, on net revenues of $768 million.  For the same quarter last year, net earnings were $52 million, or $0.67 per diluted share, on net revenues of $674 million.

For the first nine months of fiscal 2007, net earnings were $222 million, or $2.90 per diluted share, on net revenues of $2.2 billion.  For the same period last year, net earnings were $151 million, or $1.95 per diluted share, on net revenues of $2.0 billion.

Results for the prior periods have been adjusted to reflect a change in accounting method for stock awards to retirement-eligible employees under Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share Based Payment."

"Our third-quarter performance maintained the year-over-year trends of steady client-asset growth and solid earnings growth," said Robert L. Bagby, chairman and chief executive officer.  "I want to again thank all of our employees for producing such strong results while always staying focused on our clients' best interests.

"Along with these results, we are pleased to announce the Office of Thrift Supervision has approved the expansion of powers of A.G. Edwards Trust Company FSB, which will be able to accept clients' cash deposits from our FDIC-insured bank deposit program.  We believe this program and other recent initiatives reinforce our commitment to enhance the value we provide our clients while developing new revenue streams to enhance value for our shareholders."

RESULTS OF OPERATIONS

Asset management and service fees - Asset-management and service-fee revenues for the third quarter increased 18 percent ($48 million) versus the third quarter last year.  For the first nine months of fiscal 2007, these revenues increased 20 percent ($152 million) versus last year's first nine months.  Results in both periods continued to reflect greater client interest in the firm's fee-based programs and services, particularly its fund-advisory programs, as well as increased client-asset values in mutual funds.

Commissions - Commission revenues for the third quarter were essentially flat when compared to the year-ago quarter, as decreased client activity in individual equities was offset by increased client activity in insurance products and individual mutual funds.  For the first nine months of fiscal 2007 compared to the same period last year, commission revenues increased 2 percent ($17 million) mainly as a result of increased client activity in individual equities and insurance products.

Principal transactions - Revenues from principal transactions increased 7 percent ($3 million) compared to last year's third quarter.  Versus the first nine months of last fiscal year, principal-transaction revenues increased 5 percent ($8 million).  The increases in both periods reflected increased client activity in the over-the-counter equity markets.

Investment banking - Investment-banking revenues for the third quarter increased 25 percent ($15 million) versus the same three-month period last year, largely resulting from greater volume of equity underwritings and related management fees.  For the first nine months of fiscal 2007, investment-banking revenues decreased 4 percent ($7 million) compared to the same period last year, primarily reflecting lower volume of closed-end fund and municipal-debt underwritings.

Net interest revenue - Interest revenue net of interest expense in the third quarter increased 20 percent ($9 million) from the year-ago quarter. For fiscal 2007's first nine months, net interest revenue increased 28 percent ($35 million) over last year's first nine months.  Both the third-quarter and nine-month results reflect an increased prime rate resulting in higher interest rates charged on margin balances, higher interest payments on the fixed-income inventory held for sale to clients and higher revenue from short- term investments.  The results in both periods were partially offset by lower average client margin balances.

Other revenue - Other revenue increased $17 million in the third quarter and increased $40 million for the first nine months of fiscal 2007 compared to the same periods last year.  The increases in both periods reflect higher private-equity gains along with the mark-to-market on NYSE Group shares the firm currently holds.  Through the first nine months, the firm recorded $26 million in revenue related to its investment in NYSE Group.

Non-interest expenses - During the third quarter, non-interest expenses increased 8 percent ($45 million) compared to last year's third quarter.  For the first nine months of fiscal 2007, non-interest expenses increased 7 percent ($121 million) compared to the same period last fiscal year.

As previously disclosed in the firm's latest Annual Report on Form 10-K, the firm changed its accounting method for stock awards to retirement-eligible employees effective March 1, 2006.  As a result, compensation and benefits expense in the prior period has been adjusted to reflect this change. Compensation and benefits increased 10 percent ($42 million) in this year's third quarter versus the year-ago quarter.  Comparing the first nine months of fiscal 2007 to the same period last year, compensation and benefits increased 8 percent ($109 million).  The results in both periods mainly reflect higher commissionable revenue as well as higher incentive-compensation accruals due to increased firm profitability.

Non-compensation-related expenses for the third quarter this year increased 2 percent ($3 million) compared to the same quarter last year.  For this year's first nine months, non-compensation-related expenses increased 3 percent ($12 million) versus last year's first nine months.  Both periods reflect higher technology consulting expenses, partially offset by lower expenses for addressing various regulatory changes and legal matters.  The nine-month results additionally reflect increased securities-processing expenses as well as higher training and business-development expenses.

ADDITIONAL STOCKHOLDER INFORMATION

Total client assets at the end of the third quarter were $370 billion, a 12 percent increase when compared to the end of the third quarter last year. Client assets in fee-based accounts at the end of the third quarter of fiscal 2007 were $42 billion, a 22 percent increase when compared to the end of the third quarter of fiscal 2006.

As of November 30, 2006, stockholders' equity was $2.0 billion, for a book value per share of $27.02.  Diluted per share earnings for the third quarter were based on 76.4 million average common and common equivalent shares outstanding compared to 77.2 million in the prior year.  Diluted per share earnings for the current nine-month period were based on 76.6 million average common and common equivalent shares outstanding compared to 77.4 million in the prior year.

ABOUT A.G. EDWARDS, INC.

A.G. Edwards, Inc. is a financial services holding company whose primary subsidiary is the national investment firm of A.G. Edwards & Sons, Inc.  Drawn to the firm's client-first philosophy, individuals and businesses have turned to A.G. Edwards for sound advice and access to a wide array of investment products and services that can help them meet their financial goals and objectives.  Founded in 1887, A.G. Edwards and its affiliates employ 6,628 financial consultants in 744 offices nationwide and two European locations in London and Geneva.  More information can be found on agedwards.com.

This material may contain forward-looking statements within the meaning of federal securities laws.  Actual results are subject to risks and uncertainties, including both those specific to A.G. Edwards and those to the industry, which could cause results to differ materially from those contemplated.  The risks and uncertainties include, but are not limited to, general economic conditions, government monetary and fiscal policy, the actions of competitors, changes in and effects of marketing strategies, client interest in specific products and services, the completion of all contractual, technological, legal and other requirements for the introduction of new products or services, regulatory changes and actions, changes in legislation, risk management, the expansion of powers of A.G. Edwards Trust Company FSB, legal claims, technology changes, compensation changes, the impact of outsourcing agreements, the impact of Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share-Based Payment," and implementation and effects of expense-reduction strategies.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this release.  A.G. Edwards does not undertake any obligation to publicly update any forward-looking statements.

                             A. G. EDWARDS, INC.
                     CONSOLIDATED STATEMENTS OF EARNINGS
                   (In thousands, except per share amounts)
                                 (Unaudited)

                               For the Three Months Ended
                               November 30,   November 30, Increase/   %
                                    2006          2005    (Decrease)  Chg.
                                            (As Adjusted)
  Revenues
  Asset management and service fees:
    Distribution fees             $172,326    $146,425    $25,901     17.7
    Fee-based accounts             119,886      98,108     21,778     22.2
    Service fees                    25,982      25,256        726      2.9
          Total                    318,194     269,789     48,405     17.9
  Commissions:
    Equities                       132,314     133,817     (1,503)    (1.1)
    Mutual funds                    56,343      54,521      1,822      3.3
    Insurance                       48,050      47,219        831      1.8
    Futures & Options               10,696      11,468       (772)    (6.7)
    Other                              218         184         34     18.5
          Total                    247,621     247,209        412      0.2
  Principal transactions:
    Debt securities                 31,694      30,655      1,039      3.4
    Equities                        21,966      19,609      2,357     12.0
          Total                     53,660      50,264      3,396      6.8
  Investment banking:
    Underwriting fees and
     selling concessions            52,818      40,216     12,602     31.3
    Management fees                 19,802      17,758      2,044     11.5
          Total                     72,620      57,974     14,646     25.3
  Interest:
    Margin account balances         35,546      35,446        100      0.3
    Securities owned and
     deposits                       22,453      12,718      9,735     76.5
          Total                     57,999      48,164      9,835     20.4
  Other                             21,390       3,966     17,424    439.3

    Total Revenues                 771,484     677,366     94,118     13.9

  Interest expense                   3,955       3,281        674     20.5

         Net Revenues              767,529     674,085     93,444     13.9

  Non-Interest Expenses:
  Compensation and benefits        476,208     434,431     41,777      9.6
  Communication and technology      64,736      56,938      7,798     13.7
  Occupancy and equipment           37,584      36,423      1,161      3.2
  Marketing and business
    development                     17,669      16,554      1,115      6.7
  Floor brokerage and clearance      4,895       5,095       (200)    (3.9)
  Other                             42,391      48,795     (6,404)   (13.1)
    Total Non-Interest Expenses    643,483     598,236     45,247      7.6

  Earnings Before Income Taxes     124,046      75,849     48,197     63.5

  Income Taxes                      45,719      24,179     21,540     89.1

  Net earnings                     $78,327     $51,670    $26,657     51.6

  Earnings per diluted share         $1.03       $0.67      $0.36     53.7

  Average Common and Common
  Equivalent Shares Outstanding
   (Diluted)                        76,411      77,189

  Stockholders' Equity          $2,039,141  $1,855,663
  Book Value per share              $27.02      $24.40

  Total Shares Outstanding (end of
   period)                          75,477      76,048

  Note:  Results for the prior period have been adjusted to reflect a change
  in accounting method for stock awards to retirement-eligible employees
  under Statement of Financial Accounting Standards No. 123 (Revised 2004)
  "Share Based Payment".


                             A. G. EDWARDS, INC.
                     CONSOLIDATED STATEMENTS OF EARNINGS
                   (In thousands, except per share amounts)
                                 (Unaudited)

                               For the Nine Months Ended
                               November 30,  November 30, Increase/     %
                                   2006         2005     (Decrease)    Chg.
                                            (As Adjusted)
  Revenues
  Asset management and service
   fees:
    Distribution fees            $502,895    $419,183    $83,712      20.0
    Fee-based accounts            347,149     281,840     65,309      23.2
    Service fees                   80,313      76,935      3,378       4.4
          Total                   930,357     777,958    152,399      19.6
  Commissions:
    Equities                      402,752     390,131     12,621       3.2
    Mutual funds                  174,504     175,957     (1,453)     (0.8)
    Insurance                     147,846     143,061      4,785       3.3
    Futures & Options              35,721      34,314      1,407       4.1
    Other                             826         712        114      16.0
          Total                   761,649     744,175     17,474       2.3
  Principal transactions:
    Debt securities                97,559      97,916       (357)     (0.4)
    Equities                       64,405      56,177      8,228      14.6
          Total                   161,964     154,093      7,871       5.1
  Investment banking:
    Underwriting fees and
     selling concessions          125,619     132,230     (6,611)     (5.0)
    Management fees                51,800      52,326       (526)     (1.0)
          Total                   177,419     184,556     (7,137)     (3.9)
  Interest:
    Margin account balances       112,523     102,262     10,261      10.0
    Securities owned and
     deposits                      58,167      28,830     29,337     101.8
          Total                   170,690     131,092     39,598      30.2
  Other                            55,789      15,441     40,348     261.3

    Total Revenues              2,257,868   2,007,315    250,553      12.5

  Interest expense                 12,418       7,755      4,663      60.1

    Net Revenues                2,245,450   1,999,560    245,890      12.3

  Non-Interest Expenses:
  Compensation and benefits     1,408,502   1,299,707    108,795       8.4
  Communication and technology    187,972     172,788     15,184       8.8
  Occupancy and equipment         111,445     107,809      3,636       3.4
  Marketing and business
   development                     61,088      55,650      5,438       9.8
  Floor brokerage and clearance    13,995      15,024     (1,029)     (6.8)
  Other                           111,618     122,529    (10,911)     (8.9)
    Total Non-Interest
     Expenses                   1,894,620   1,773,507    121,113       6.8

  Earnings Before Income Taxes    350,830     226,053    124,777      55.2

  Income Taxes                    128,654      78,167     50,487      64.6

  Earnings Before Cumulative
    Effect of Accounting
    Change                        222,176     147,886     74,290      50.2
  Cumulative Effect of
    Accounting Change, Net                      2,768     (2,768)   (100.0)
  Net earnings                   $222,176    $150,654    $71,522      47.5

  Earnings per diluted share:
    Earnings before cumulative
      effect of accounting
      change                        $2.90       $1.91      $0.99      51.8
     Cumulative effect of
      accounting change, net                     0.04      (0.04)
                                    $2.90       $1.95      $0.95      48.7


  Average Common and Common
  Equivalent Shares Outstanding
   (Diluted)                       76,566      77,419

  Stockholders' Equity         $2,039,141  $1,855,663
  Book Value per share             $27.02      $24.40

  Total Shares Outstanding
    (end of period)                75,477      76,048

  Note:  Results for the prior period have been adjusted to reflect a change
  in accounting method for stock awards to retirement-eligible employees
  under Statement of Financial Accounting Standards No. 123 (Revised 2004)
  "Share Based Payment".


                           A. G. EDWARDS, INC.
                    CONSOLIDATED FIVE-QUARTER SUMMARY
                 (In thousands, except per share amounts)
                               (Unaudited)

                 November 30, August 31,  May 31,  February 28, November 30,
                      2006       2006        2006         2006       2005
                                                           (As       (As
                                                        Adjusted)  Adjusted)
  Revenues
  Asset management
   and service fees:
   Distribution
    fees            $172,326    $164,131    $166,438    $152,390   $146,425
   Fee-based
    accounts         119,886     115,203     112,060     104,745     98,108
   Service fees       25,982      25,750      28,581      27,779     25,256
     Total           318,194     305,084     307,079     284,914    269,789

  Commissions:
   Equities          132,314     126,399     144,039     139,921    133,817
   Mutual funds       56,343      51,046      67,115      66,926     54,521
   Insurance          48,050      48,529      51,267      52,415     47,219
   Futures &
    Options           10,696      11,386      13,639      14,097     11,468
   Other                 218         342         266         182        184
     Total           247,621     237,702     276,326     273,541    247,209

  Principal
    transactions:
   Debt securities    31,694      35,871      29,994      33,368     30,655
   Equities           21,966      19,285      23,154      22,649     19,609
     Total            53,660      55,156      53,148      56,017     50,264

  Investment
    banking:
   Underwriting fees
    and selling
    concessions       52,818      40,003      32,798      36,733      40,216
   Management fees    19,802      16,709      15,289      13,108      17,758
     Total            72,620      56,712      48,087      49,841      57,974

  Interest:
   Margin account
    balances          35,546      39,020      37,957      36,204      35,446
   Securities owned
     and deposits     22,453      20,030      15,684      14,041      12,718
     Total            57,999      59,050      53,641      50,245      48,164
  Other               21,390       4,206      30,193      28,893       3,966

  Total Revenues     771,484     717,910     768,474     743,451     677,366

  Interest expense     3,955       4,682       3,781       2,898       3,281

  Net Revenues       767,529     713,228     764,693     740,553     674,085

  Non-Interest
   Expenses:
  Compensation
    and benefits     476,208     451,366     480,928     461,492     434,431
  Communication
   and technology     64,736      63,347      59,889      63,591      56,938
  Occupancy and
    equipment         37,584      37,845      36,016      36,305      36,423
  Marketing and
    business
    development       17,669      17,870      25,549      15,985      16,554
  Floor brokerage
   and clearance       4,895       5,548       3,552       6,049       5,095
  Other               42,391      32,890      36,337      42,176      48,795

  Total Non-Interest
   Expenses          643,483     608,866     642,271     625,598     598,236
  Earnings Before
    Income Taxes     124,046     104,362     122,422     114,955      75,849
  Income Taxes        45,719      38,136      44,799      39,517      24,179

  Net earnings       $78,327     $66,226     $77,623     $75,438     $51,670

  Earnings per
   diluted share       $1.03       $0.86       $1.01       $0.99       $0.67

  Average Common and
   Common Equivalent
   Shares Outstanding
   (Diluted)          76,411      76,691      76,690      76,562      77,189

  Stockholders'
   Equity         $2,039,141  $2,009,699  $1,971,895  $1,887,012  $1,855,663
  Book Value
   per share          $27.02      $26.40      $25.81      $24.96      $24.40


  Note: Results for the prior periods have been adjusted to reflect a change
  in accounting method for stock awards to retirement-eligible employees
  under Statement of Financial Accounting Standards No. 123 (Revised 2004)
  "Share Based Payment".



                            A.G. EDWARDS, INC.
                    QUARTERLY STATISTICAL INFORMATION
             (Dollars in thousands, except per share amounts)
                               (Unaudited)


                   3Q FY07     2Q FY07      1Q FY07    4Q FY06     3Q FY06
                                                         (As         (As
                                                       Adjusted)   Adjusted)

  Net Revenues     $767,529    $713,228    $764,693    $740,553    $674,085

  Earnings Before
   Income Taxes    $124,046    $104,362    $122,422    $114,955     $75,849

  Net Earnings      $78,327     $66,226     $77,623     $75,438     $51,670

  Pre-tax Net
   Earnings as a
   Percent of
   Net Revenues        16.2%       14.6%       16.0%       15.5%       11.3%

  Average Diluted
   Shares-(000's
   Omitted)          76,411      76,691      76,690      76,562      77,189

  Earnings Per
   Diluted Share      $1.03       $0.86       $1.01       $0.99       $0.67

  Dividends
   Per Share          $0.20       $0.20       $0.20       $0.20       $0.20

  Total Assets   $5,076,078  $4,708,961  $4,413,379  $4,671,643  $4,479,493

  Stockholders'
   Equity        $2,039,141  $2,009,699  $1,971,895  $1,887,012  $1,855,663

  Book Value
   Per Share         $27.02      $26.40      $25.81      $24.96      $24.40

  Return On
   Average Equity-
   (Quarter Results
   Annualized)         15.5%       13.3%       16.1%       16.1%       11.2%

  Financial
   Consultants        6,628       6,666       6,745       6,824       6,844

  Full-time
   Employees         15,364      15,323      15,420      15,480      15,472

  Locations             746         744         745         738         734

  Total Client
   Assets (in
   millions)       $370,000    $354,000    $345,000    $343,000    $331,000

  Assets In
   Fee-based
   Accounts (in
   millions)        $42,000     $40,000     $38,000     $37,000     $34,000


  Note: Results for the prior periods have been adjusted to reflect a change
  in accounting method for stock awards to retirement-eligible employees
  under Statement of Financial Accounting Standards No. 123 (Revised 2004)
  "Share Based Payment".


DATASOURCE: A.G. Edwards, Inc.



CONTACT:  Media Relations, Margaret Welch, [phone],

 , or Investor Relations, Justin Gioia, [phone],

 , both of A.G. Edwards, Inc.



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

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