SAN FRANCISCO, Nov. 20 /PRNewswire-FirstCall/ -- The Charles Schwab
Corporation today announced an agreement to sell U.S. Trust, its wealth
management subsidiary, to Bank of America for $3.3 billion in cash.
The transaction is expected to close in the second quarter of 2007,
subject to regulatory approvals. The company estimates it will record a
pre-tax gain on the sale of approximately $1.9 billion, and that after-tax
proceeds will total approximately $2.5 billion. Proceeds will be used for
general corporate purposes, including share repurchases and continued
investment in Schwab Investor Services, Schwab Institutional and Schwab
Bank. As of month-end September 2006, U.S. Trust had assets under
management of $94 billion and total client assets of $159 billion, or 12%
of Schwab's $1.33 trillion in total client assets. Through the first nine
months of 2006, U.S. Trust represented 17% of Schwab's revenue and 10% of
pre-tax income.
"While CEO Peter Scaturro and his management team have done a great job
improving U.S. Trust's business model and establishing a firm footing for
their future growth and success, we have decided that the business and its
clients will find even greater opportunity when combined with the platform
and products available through Bank of America," said Charles R. Schwab,
Schwab Chairman and CEO, and Chairman of the U.S. Trust Board of Directors.
"I can't imagine a better match for U.S. Trust than with Bank of America, a
world-class company with a broad scope of innovative wealth management
products and services. As a U.S. Trust client myself, with no intention to
leave, I'm confident this will be a real win for clients."
Mr. Schwab continued, "As for Schwab, this transaction will improve our
overall profit margin and return on equity, and further sharpen our
strategic focus on serving individual investors and independent investment
advisors."
This press release contains forward-looking statements that reflect
management's current expectations. These statements relate to the gain on,
and proceeds from, the sale of U.S. Trust, as well as the company's future
profit margin and return on equity performance. Achievement of these
expectations is subject to risks and uncertainties that could cause actual
results to differ materially from the expressed expectations. Important
factors that may cause such differences include, but are not limited to,
the final determination of related transaction costs and tax obligations,
the timing of necessary approvals, and the company's ability to sustain or
improve the financial performance of its remaining businesses.
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 330 offices and 6.8 million client
brokerage accounts, 535,000 corporate retirement plan participants, 181,000
banking accounts, and $1.33 trillion in client assets as of September 30,
2006. Through its operating subsidiaries, the company provides a full range
of securities brokerage, banking, money management and financial advisory
services to individual investors and independent investment advisors. The
Charles Schwab Bank, N.A. (member FDIC) provides banking and mortgage
services and products. More information is available at http://www.schwab.com .
SOURCE Charles Schwab
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Related links:
http://www.schwab.com/
CONTACT:
Media, Greg Gable, +1-415-636-5847, or
Investors/Analysts, Rich Fowler, +1-415-636-9869, both of Charles
Schwab
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