SWS Group Announces Agreement to Sell Auto Finance Subsidiary; Company Expects to Realize Pre-Tax Gain of Approximately $17 Million

DALLAS, Feb. 16, 2006 -- SWS Group, Inc. today announced an agreement to sell the assets of FSB Financial to a subsidiary of BB&T Corporation, the nation's ninth largest financial holding company. The purchaser will also assume certain liabilities of FSB Financial.

FSB Financial is in the non-prime auto loan business. It is a subsidiary of SWS Group's community bank, Southwest Securities, FSB.

"While FSB Financial has been a great business for us, the sale will allow the bank to focus more attention on its core businesses of community banking and real estate lending," said SWS Group CEO Donald W. Hultgren. "We think this transaction is in the best interests of our shareholders."

As a result of the sale, Hultgren said the company expects to realize a total pre-tax gain of approximately $17 million from its ownership in FSB Financial. The subsidiary contributed approximately 10 cents per share to SWS' earnings in each of the last two fiscal years. The transaction will add approximately 60 to 65 cents per share to SWS' third fiscal quarter earnings and will increase book value per share by a like amount.

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., Southwest Securities, FSB, SWS Financial Services, Inc., and Southwest Insurance Agency.

This release contains forward-looking statements regarding the company's future overall performance. Readers are cautioned that any forward-looking statements, including those predicting or forecasting future events or results, which depend on future events for their accuracy, embody projections or assumptions, or express the intent, belief or current expectations of the company or management, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially as a result of various factors, some of which are out of our control, including, but not limited to those factors discussed in our Annual Report on Form 10-K and in our other reports filed with and available from the Securities and Exchange Commission.

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