EXHIBIT 99.3
CHARLES SCHWAB U.S.TRUST
Continued Leadership in Serving
Customers:
Growing With the Affluent Investor
January 13, 2000
Introduction
- Announcing the combination of two premier firms in financial services -
The Charles Schwab Corporation and U.S. Trust Corporation.
- This transaction advances our new model of full-service investing and
creates compelling benefits for today's affluent and emerging affluent
investors.
- We're creating a new platform for continuing our growth and
profitability in a rapidly changing marketplace.
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In addition to historical information, this presentation contains
forward-looking statements that reflect management's goals, objectives and
expectations as of the date hereof. These statements relate to, among other
things, U.S. investor demographics, benefits to be realized from the transaction
and the pro forma financial impact of the transaction. Achievement of the
expressed goals, expectations and objectives is subject to certain risks and
uncertainties that could cause actual results to differ materially from those
goals, objectives or expectations.
Important factors that may cause such differences include, but are not limited
to: economic disruptions; a severe downturn in the securities markets; changes
in the growth rate of U.S. household assets; outcomes significantly different
than assumptions concerning the feasibility, magnitude or timing of expected
benefits; intensified competition in the wealth management arena; and changes in
the legal and regulatory environment. Additional discussions of the risks faced
by Schwab and U.S. Trust are contained in their Annual Reports and Quarterly
Reports on Form 10-Q.
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CHARLES SCHWAB U.S.TRUST
Continued Leadership in Serving
Customers:
Growing With the Affluent Investor
January 13, 2000
Transaction Summary
- Structured as a non-taxable stock for stock exchange with pooling of
interests accounting:
- $129 per share based on January 12 Schwab closing price.
- 3.4 shares of Schwab stock for each share of U.S. Trust.
- 19.9% option granted to Schwab.
- Retention program for U.S. Trust employees.
- Targeted to close by July 2000.
- Accretive to earnings before synergies.
- Increases Schwab's customer assets by 10%.
- Will apply for Financial Holding Company status.
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Two Shared Visions:
CHARLES SCHWAB
To provide customers with the most useful and ethical financial services
in the world.
U.S.TRUST
To provide professional expertise in wealth management and build lasting
relationships based on performance, quality and integrity.
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The Opportunity
- The affluent market is the growth engine of investable assets in the
U.S.
$15 trillion U.S. investable assets
70% + among households with >$500,000
- All high net worth categories are growing rapidly.
Source: PSI 1997
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The Opportunity
- Today's affluent ($2-10 million net worth) and emerging affluent ($0.5-2
million) retail investors face a number of service compromises...
- An opportunity to create a comprehensive, integrated,
value-priced wealth management offer for these investors.
... and the super-affluent ($10 million and up) lack
multi-channel access.
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The Opportunity
- Independent investment advisors and their clients face the same
compromises.
- An opportunity to create a comprehensive, integrated suite of
services -
Trust and Estate
Private Banking
Specialized Products
for investment advisors competing with national brokerage and
advisory firms.
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THE OPPORTUNITY
- Affluent investors need a full array of wealth management services.
----
- They want value, transparency, no-conflict help and control.
----
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U.S. Trust - Key Capabilities
- Providing a full range of wealth management services to affluent
individuals and their families.
PRIVATE BANKING FIDUCIARY SERVICES
TAX PLANNING/PREPARATION FINANCIAL PLANNING
ESTATE PLANNING INVESTMENT CONSULTING
INVESTMENT MANAGEMENT EQUITY RESEARCH
- Relationships are sustained across generations.
- Primary target market is the 1.5 million U.S. households with at least
$2 million in investable assets.
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U.S. TRUST - DISTRIBUTION
===============================================================================
- With 24 offices across the U.S., U.S. Trust is the only firm dedicated to
wealth management that has developed a national presence.
- 14 of those offices opened over the past five years.
- Currently reaches most of the nation's largest affluent markets:
Essex
West Hartford
Stamford
Portland Greenwich
[MAP OF U.S.] Garden City
New York
Larkspur Morristown
San Francisco Philadelphia
Princeton
Washington
Los Angeles Raleigh Palm Beach
Costa Mesa Charlotte Boca Raton
Greensboro Naples
Dallas Vero Beach
Houston
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U.S. TRUST -- PERFORMANCE
================================================================================
- A record of growth and profitability.
CUSTOMER ASSETS UNDER MANAGEMENT ($ in billions)
[BAR GRAPH]
1996............ 38
1997............ 47
1998............ 61
1999............ 74
CAGR = 25%
NET REVENUES ($ in millions)
[BAR GRAPH]
1996............ 323
1997............ 373
1998............ 442
1999............ 541
CAGR = 19%
EARNINGS PER SHARE ($)
[BAR GRAPH]
1996............ 1.95
1997............ 2.39
1998............ 2.96
1999............ 3.72
CAGR = 24%
AFTER-TAX PROFIT MARGIN (%)
[BAR GRAPH]
1996............ 12.7
1997............ 13.7
1998............ 14.0
1999............ 14.3
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Schwab - Key Capabilities
- Growing customer assets by delivering innovation, technology-based
solutions, superior service and value.
* Estimated.
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Schwab - Key Capabilities
- A leadership position across multiple businesses.
- Fourth largest U.S. financial institution ranked by customer
assets.
- 6.5 million total active accounts.
- The world's largest online broker - $350 billion* in online
assets.
- The largest distributor of mutual funds -
Mutual Fund Marketplace Assets $176 billion
SchwabFunds Assets $109
Total Mutual Fund Assets $285
- The largest provider of investment manager services - $215 billion* in
SIM assets.
- Holds 10+% of assets belonging to investors with at least $1 million in
investable assets.
* Estimated
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SCHWAB -- PERFORMANCE
================================================================================
- Another record of growth and profitability.
CUSTOMER ASSETS ($ in billions)
[BAR GRAPH]
1996............ 253
1997............ 354
1998............ 491
1999(e)......... 725
CAGR -- 41%
NET REVENUES ($ in billions)
[BAR GRAPH]
1996............ 1.9
1997............ 2.3
1998............ 2.7
1999(e)......... 3.9
CAGR -- 27%
EARNINGS PER SHARE ($)
[BAR GRAPH]
1996............ 0.29
1997............ 0.33
1998............ 0.43
1999(e)......... 0.70
CAGR -- 34%
AFTER-TAX PROFIT MARGIN (%)
[BAR GRAPH]
1996............ 12.6
1997............ 11.8
1998............ 12.7
1999(e)......... 14.9
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The Solution
- Success comes from U.S. Trust's ability to round out Schwab's
offering...
Independent
Schwab Retail Investment Advisors
Successor & Corporate Trustee [x] [x]
Specialized Products [x] [x]
Equity Research [x] [x]
...and Schwab's ability to propel U.S. Trust's growth via brand
development, referrals and the application of technology.
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The Solution
- Take Schwab's core competencies ...
- Technology leadership and operations skills;
- Effective and efficient advertising/marketing;
- Integrated multiple distribution channels; and
- Strong market position with emerging and mid-affluent boomers.
- ... combine them with U.S. Trust's strengths ...
- Superior wealth management capabilities and reputation;
- Investment track record;
- Proven team of professionals;
- Research, trust, and private banking products; and
- High-touch service model.
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The Solution
- ... and create a new model of wealth management for affluent households.
- A unique, no-compromises capability, offering a combination of:
Value
Choice
Service Excellence
Control
that is unmatched in the marketplace for Schwab's retail and investment advisor
clients.
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The Solution
================================================================================
- We're creating an organization that can break the compromises and deliver
seamless full service for all investors.
Estate Planning
Financial Banking
Planning Services
Seamless
Trust Creation Integration Tax Planning
and for
Management Customers
Investment Self-Directed
Management Investing
U.S. TRUST Charles Schwab
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Pro Forma 1999 Financial Profile
* Estimated based on mid-point of pre-announced range.
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Targeted Synergies
==============================================================================
- High Net Worth private banking referral program.
- Electronic brokerage accounts and services for U.S. Trust.
- New for Schwab Retail:
----------------------------------
Trust services INCREASED
SHARE-OF-WALLET
Private banking
Research
INCREASED CLIENT
Specialized Products ACQUISITION
Wealth Management
for "middle" affluent DECREASED
ATTRITION
- New for Schwab SIM:
Top quality private label trust
and private banking services,
STRENGTHENED
research and specialized products IA RELATIONSHIPS
-----------------------------------
- Order flow/mutual funds
------------------------------------------------------
Incremental 2001 Revenue Impact: $80 to $100 million
------------------------------------------------------
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Pro Forma Financial Impact
- We expect this transaction to be EPS and growth accretive.
- EPS accretion of about 4% in 2000 before realization of any
synergies.
- Synergies expected to create incremental EPS accretion of 2-3%
in 2001.
Excludes expected acquisition related charges (fees and U.S. Trust employee
retention program costs).
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Implementation
- U.S. Trust will be a separate subsidiary of Schwab and retain its brand;
headquarters to remain in New York.
- H. Marshall Schwarz will continue as Chairman and CEO of U.S. Trust,
reporting to Schwab's President and Co-CEO. He and Jeffrey S. Maurer,
President and COO, will join Schwab's Board.
- U.S. Trust executives Schwarz; Maurer; Maribeth S. Rahe, Vice Chairman;
and Frederick B. Taylor, Vice Chairman and CIO; will join Schwab's
Management Committee.
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Implementation
- Effective cross-enterprise coordination, as always at Schwab, is a key
to success.
- Synergy Steering Committee will be led by John Coghlan, a Vice
Chairman of Schwab.
- Few organizational changes contemplated.
- No immediate system/back office changes expected.
- Customer technology solutions will be an immediate focus.
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Summary
- Two premier financial services brands are uniting to create a unique
platform for serving evolving investor needs.
- Consistency of vision and culture, including strong employee
ownership, means the combined firm will stay values driven,
customer focused and service oriented.
- We believe our success in building long-term relationships with affluent
investors and investment advisors will reward our customers, our
employees and our stockholders.
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CHARLES SCHWAB U.S.TRUST
Continued Leadership in Serving
Customers:
Growing With the Affluent Investor
January 13, 2000