EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT:
Media: Glen Mathison; Marta von Loewenfeldt
The Charles Schwab Corporation
212-906-3149 or
415-636-5454
Analysts: Rich Fowler
The Charles Schwab Corporation
415-636-9869
SCHWAB AND U.S. TRUST TO FORM
FULL-SERVICE BROKERAGE AND WEALTH MANAGEMENT FIRM
COMBINED ENTITY POISED TO TAKE A LEADERSHIP POSITION
SERVING THE EMERGING AND ESTABLISHED AFFLUENT MARKETS
NEW YORK CITY - January 13, 2000 - The Charles Schwab Corporation [SCH] and U.S.
Trust Corporation [UTC] today announced they have signed a definitive agreement
for Schwab and U.S. Trust to merge, creating a combined organization positioned
to serve the investment and wealth management needs of investors at every stage
of their financial growth.
The transaction joins two powerful brands. Measured by client assets, Schwab is
the nation's fourth largest U.S. financial services company and a leading
provider of retail and institutional investment services. U.S. Trust is one of
the nation's leading wealth management firms serving affluent individuals and
families. Together, the two companies establish a complete service provider for
investors seeking to manage their investments and wealth for the long-term,
whether they are beginning investors or managing significant accumulated wealth.
Under the terms of the agreement, U.S. Trust shareholders will receive 3.427
shares of Schwab stock for each share of U.S. Trust stock. Based on Schwab's
closing stock price as of 1/12/2000, the transaction values each U.S. Trust
share at $129, resulting in a total transaction value of approximately $2.7
billion. The companies expect the transaction to qualify for pooling of
interests accounting treatment. Both companies will retain their separate brand
identities, while sharing significant synergies and capabilities across their
complementary business lines.
Announcing the acquisition, Schwab chairman and co-CEO, Charles R. Schwab said,
"We've long held a goal of building an organization that can serve investors
completely - from those taking their first steps towards becoming lifelong
investors, to those looking to manage their accumulated wealth for themselves
and their families. We believe U.S. Trust brings the most respected wealth
management expertise in the nation, and our combined strengths create an
organization that can serve clients at every stage of wealth accumulation. The
combination also adds new strengths to the services that Schwab's affiliated
investment advisors provide. U.S. Trust represents for us a piece of the puzzle
that had been missing in our offering to affluent investors, and we're very
excited about the prospects that this combination offers."
U.S. Trust, which was founded in 1853, is a wealth management company that
provides investment management and consulting, fiduciary services, financial and
estate planning and private banking. Headquartered in New York City, the company
has 24 offices nationwide in nine states and the District of Columbia and 1,900
employees. As of December 31st, 1999, U.S. Trust had $86 billion of assets under
management.
"We are very enthusiastic about our merger with Schwab," said H. Marshall
Schwarz, chairman and chief executive officer of U.S. Trust. "Chuck Schwab has
transformed the brokerage industry to serve investors, and he's done that based
on deeply held values that U.S. Trust shares: services to clients at the highest
levels of our abilities and a focus on their long term well-being. We are
confident that our complementary strengths will lead to greatly enhanced success
for both firms. Schwab will be able to offer affluent clients access to U.S.
Trust's wealth management expertise, while Schwab's vast technological resources
will enable U.S. Trust to combine our traditional high-touch approach with
high-tech to better serve our clients."
Schwab's merger with U.S. Trust takes place at a time when the number of
affluent investors is growing at a rapid pace. Today, there are over six million
U.S. households each with a net worth of over $1 million. More than three
million households in the U.S. have investable assets in excess of $1 million,
and the number of these households is expected to grow 13-14 percent per year
over the next three years.
"The baby boomers are emerging as a dominant wealth segment in the United
States," said Schwab president and co-CEO David Pottruck. "They bring with them
a desire for a high degree of control, a willingness to embrace technology for
their investing needs and an unwillingness to compromise. Many of these
investors will demand wealth management services - supported by the unique
strengths of the Internet - that offer them more control and information than
has ever been available before. At the same time, we believe that these
investors are underserved - no one has garnered a truly significant share of
this expanding market; no one has developed a comprehensive wealth management
service especially for the needs of the emerging affluent investor."
Remarking on the importance of the merger to its investment advisor business,
Mr. Pottruck added, "Through U.S. Trust, we will be able to provide the trust,
financial and estate planning, and private banking services that are so crucial
to wealth management. Our investment manager clients have told us repeatedly
that trust and private banking services are absolutely essential in order to
serve affluent clients well."
Schwab has steadily broadened its offerings to affluent investors. Its rapidly
growing Schwab Institutional business, which has grown to over $200 billion in
assets, provides back-end and custodial services to over 5600 independent
fee-based advisors. Its Schwab AdvisorSource(R) program refers affluent
investors to independent advisors to whom they can delegate their day-to-day
investment management. In 1999, Schwab created its Signature Services program to
provide affluent investors with investment help and advice as well as tax,
attorney and other advisor referrals, and Schwab Access, a cash management
account providing online checking, bill paying, and ATM access. The addition of
U.S. Trust will complement rather than duplicate those services. For instance,
there will be opportunities to provide Schwab's advisor clients with trust
services, private banking and equity and fixed-income research within their
Schwab relationship.
"U.S. Trust will continue to pursue its strategy of expanding nationally into
areas where wealth is concentrated," said Jeffrey S. Maurer, president and chief
operating officer of U.S. Trust. "We anticipate that the merger will enable us
to devote added resources to new offices and marketing which will enable us to
establish the dominant national brand in the wealth management business."
Mr. Schwarz and Mr. Maurer will join the Schwab board of directors. Both U.S.
Trust executives will maintain their current titles. Messrs. Schwab and Pottruck
will join the U.S. Trust board of directors, which will remain in place.
Schwab expects to become a financial holding company under the Financial
Services Reform Act of 1999. The transaction is subject to Federal Reserve Board
and other regulatory approvals and to U.S. Trust shareholder approval. The
transaction is expected to close by July 2000.
On a proforma basis, in 1999 (based on the mid-point of the pre-announced range
for Schwab) the combined company would have had net revenues of $4.5 billion,
net income of $663 million, and year end customer assets of about $800 billion.
THE CHARLES SCHWAB CORPORATION (NYSE:SCH), through its principal operating
subsidiary Charles Schwab & Co., Inc. (member SIPC, NYSE), is the nation's
fourth largest financial services firm and the nation's largest electronic
brokerage serving 6.4 million active accounts with $725 billion in customer
assets through 340 branch offices, four regional customer telephone service
centers and automated telephonic and online channels. More than 30 percent of
Schwab's customer assets and more than 10 percent of its customer accounts are
managed by the 5,600 independent, fee-based investment advisors served by
Schwab's Institutional division.
U.S. TRUST (NYSE: UTC) provides investment management, fiduciary, financial
planning and private banking services to affluent individuals, families and
institutions nationwide through its 24 offices in California, Connecticut,
Florida, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas and
Washington, D.C. Approximately 80 percent of the company's investment assets
under management are personal assets, while 20 percent are institutional. U.S.
Trust is also the investment advisor to the $8 billion Excelsior mutual fund
family of 27 no-load funds.
BRIEFING NOTE: An analyst briefing and conference call to discuss the announced
acquisition with co-CEOs Charles Schwab and David Pottruck and Marshall Schwarz
and Jeffrey Maurer of U.S. Trust will be held today at 10:00 A.M. Eastern
Standard Time at The Intercontinental Hotel, 48th Street and Lexington Avenue.
Please attend 15 minutes prior to the event. If you are unable to attend, you
can call in by dialing 1-800-288-8967. Please dial in 10 minutes before the
conference starts. A simultaneous presentation of slides from the briefing will
be available on the internet at www.placeware.com/schwabone.
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