Schwab Sells Wealth Management Unit to BofA

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.”