According to the announcement, following transaction close in the second quarter of 2007, the company estimates it will record a pre-tax gain on the sale of approximately $1.9 billion and after-tax proceeds totaling 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, the announcement said. Through the first nine months of 2006, U.S. Trust represented 17% of Schwab’s revenue and 10% of its pre-tax income.
“[W]e 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 Schwab, Schwab Chairman and CEO, and Chairman of the U.S. Trust Board of Directors. “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 advisers.”