Bank of America Private Bank (formerly U.S. Trust) was founded in 1853 as the United States Trust Company of New York.
It operated independently until 2000, when it was acquired by
Charles Schwab, and Co. and subsequently sold to, and became a subsidiary of,
Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank w ...
in 2007.
Bank of America Private Bank provides investment management, wealth structuring, and credit and lending services to clients.
History
U.S. Trust was founded in 1853 and chartered by the State of New York. It is the first and oldest
trust company
A trust company is a corporation that acts as a fiduciary, trustee or agent of trusts and agencies. A professional trust company may be independently owned or owned by, for example, a bank or a law firm, and which specializes in being a trust ...
in the United States.
The venture was backed by a group of wealthy men who invested $1 million in the company, at the time named ''United States Trust Company of New York''.
The inaugural board of trustees included thirty prominent New Yorkers. Among the founding investors were
Cornelius Lawrence of the Bank of the State of New York and then
Mayor of New York
The mayor of New York City, officially Mayor of the City of New York, is head of the executive branch of the government of New York City and the chief executive of New York City. The mayor's office administers all city services, public property ...
who was appointed president, and
John Aikman Stewart
John Aikman Stewart (August 26, 1822 – December 18, 1926) was a New York City banker who during the administration of Grover Cleveland replenished the nation's gold supply by issuing new bonds. He was also the third person in its history to serv ...
of the United States Life Insurance Company of New York who assumed the role of Secretary. Other founders included inventor, philanthropist and industrialist Peter Cooper, department store founder
Marshall Field
Marshall Field (August 18, 1834January 16, 1906) was an American entrepreneur and the founder of Marshall Field and Company, the Chicago-based department stores. His business was renowned for its then-exceptional level of quality and customer ...
, Shepherd Knapp, president of Mechanics National Bank of the City of New York, and railroad developer and iron and steel manufacturer
Erastus Corning
Erastus Corning (December 14, 1794 – April 9, 1872) was an American businessman and politician from Albany, New York. A Democrat, he was most notable for his service as mayor of Albany from 1834 to 1837, in the New York State Senate from 1842 ...
.
Adding Services
U.S. Trust was created as a financial company to serve both institutions and individuals by acting as executor and trustee of their funds. At a time when trusts were rare, the concept was innovative. By 1886 the company had established itself as a reputable and stable financial institution.
In the mid-1800s, U.S. Trust had a list of wealthy clients and played a role in major construction projects including railroads and the
Panama Canal
The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The canal cuts across the Isthmus of Panama and is a conduit ...
. Many of the company's corporate clients issued securities to finance these initiatives, allowing U.S. Trust to serve as corporate trustee. The boom in industry and enterprise also helped to grow U.S. Trust's business in managing personal trusts. In the 1880s and 90s U.S. Trust clients included
William Waldorf Astor
William Waldorf "Willy" Astor, 1st Viscount Astor (31 March 1848 – 18 October 1919) was an American-British attorney, politician, businessman (hotels and newspapers), and philanthropist. Astor was a scion of the very wealthy Astor family of ...
,
Jay Gould
Jason Gould (; May 27, 1836 – December 2, 1892) was an American railroad magnate and financial speculator who is generally identified as one of the robber barons of the Gilded Age. His sharp and often unscrupulous business practices made hi ...
and
Oliver Harriman
Oliver Harriman (September 16, 1829 – March 12, 1904) was an American businessman and member of the wealthy Harriman family.
Early life
Oliver Harriman was born on September 16, 1829 in New York City. His parents were Orlando Harriman (1790â ...
.
U.S. Trust withstood a number of financial crises throughout the latter half of the 1800s and into the 1900s. By 1928 it had more than $1 billion in trusted assets and led competitors by a considerable margin.
An emphasis on stability helped it navigate the
Wall Street Crash of 1929
The Wall Street Crash of 1929, also known as the Great Crash, was a major American stock market crash that occurred in the autumn of 1929. It started in September and ended late in October, when share prices on the New York Stock Exchange colla ...
and subsequent depression. The company began to introduce more personalized services including advising clients on schools and careers for their children. In 1958 U.S. Trust launched its first advertisements in society pages of newspapers,
The New Yorker
''The New Yorker'' is an American weekly magazine featuring journalism, commentary, criticism, essays, fiction, satire, cartoons, and poetry. Founded as a weekly in 1925, the magazine is published 47 times annually, with five of these issues ...
and the programs of the
Metropolitan Opera
The Metropolitan Opera (commonly known as the Met) is an American opera company based in New York City, resident at the Metropolitan Opera House at Lincoln Center, currently situated on the Upper West Side of Manhattan. The company is operat ...
and the
New York Philharmonic Society
The New York Philharmonic, officially the Philharmonic-Symphony Society of New York, Inc., globally known as New York Philharmonic Orchestra (NYPO) or New York Philharmonic-Symphony Orchestra, is a symphony orchestra based in New York City. It is ...
.
Restructuring in the 1970s, 80s and 90s
U.S. Trust continued to grow through the 1960s and into the early 1970s. By 1965, 85% of the company's gross income was coming from trust and investment operations and estate administration. Banking operations emerged as an opportunity and the firm began selling investment services to banks and insurance companies, helping them manage their growing deposits. This shift had a large impact on U.S. Trust and by 1977 banking made up 50% of the company's earnings.
By the latter half of the 1970s, profits had declined and despite efforts to expand the firm's physical footprint,
it lost large pension fund clients due to poor performance and an incident where municipal bond certificates worth $397 million disappeared from its vault.
As a result, U.S. Trust stopped dealing in international lending, closed its Geneva and London branches
and reduced privileges available to lower-asset-level clients (less than $2 million).
The 1980s represented a time of restructuring for U.S. Trust. This included the launch of a subsidiary, Financial Technologies International, to market and license computer software to financial institutions, the discontinuation of business and real estate lending and the sale of its commercial, industrial and real estate portfolios valued at $275 million. In 1986, U.S. Trust was ranked behind trust competitors in assets under management and trust income.
In 1987 it dropped the account minimum from $1–2 million in liquid assets to $250,000.
U.S. Trust expanded its geographic presence throughout the 1990s by opening new offices and acquiring others across the continental United States.
Charles Schwab and Bank of America
U.S. Trust was acquired in May 2000 for $2.7 billion in stock, making it a wholly owned subsidiary of Charles Schwab & Co. David Pottruck, CEO of Charles Schwab at the time, pursued the acquisition to broaden the firm's wealth management platform and stop client outflow to bigger wealth management firms like
Merrill Lynch
Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment bank ...
and
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
. Efforts to integrate the exclusive U.S. Trust into the discount-broker Schwab yielded a culture clash that ultimately undermined the merger.
Schwab agreed to sell U.S. Trust to Bank of America for $3.3 billion in cash in November 2006.
The acquisition of U.S. Trust was completed in 2007 and significantly strengthened Bank of America's position in the private banking business and its ability to cater to some of the nation's wealthiest clients. Keith Banks became president of U.S. Trust in 2008.
On July 13, 2000, U.S. Trust Corporation was issued a "cease and desist" order directing U.S. Trust to strengthen money laundering policies relating to the Bank Secrecy Act. The order also included a fine of ten million dollars.
Services
U.S. Trust offers resources and customized services to help meet clients' wealth structuring, investment management, banking and credit needs. Clients are served by teams of advisors offering a range of financial services, including investment management, financial and succession planning, philanthropic and specialty asset management, family office services, custom credit services, financial administration and family trust stewardship.
Locations
U.S. Trust headquarters is located at 114 West 47th Street, New York City, NY, United States. The company has over 100 offices in the United States in 31 states and Washington, D.C.
References
{{Bank of America
Holding companies of the United States
Defunct banks of the United States
Defunct companies based in New York City
Bank of America legacy banks
Holding companies established in 1853
Banks established in 1853
1853 establishments in New York (state)
Banks disestablished in 2007
Holding companies disestablished in 2007
2007 disestablishments in New York (state)
2000 mergers and acquisitions
2007 mergers and acquisitions