Schwab Enhances Pricing and Services

Actions Include Lower and Simplified Trade Pricing, Elimination of Nuisance Fees, Expanded Research Availability and Enhanced Telephone Services

SAN FRANCISCO, June 14 /PRNewswire-FirstCall/ -- Charles Schwab & Co., Inc. today announced a number of pricing and service enhancements based on continuing input from clients.
In Schwab Investor Services, the company will be lowering and simplifying prices for equity, option, mutual fund and bond transactions, all effective July 1. As a result, no retail client will pay more than $12.95 for an online equity trade*, while many clients will continue to enjoy a flat rate of $9.95. (See chart on page 2 for more detail.) The company is also eliminating a number of service fees -- including charges for ATM withdrawals, various checking services and electronic bill payments -- and expanding access to research, market insight and portfolio evaluation tools that were previously only available to clients with larger asset balances. The company also announced a number of initiatives to provide a better client experience.

Schwab Institutional® is making a similar commitment to the more than 5,000 independent fee-based investment advisors it serves by reducing and simplifying pricing for mutual fund trades for their clients, reducing fees for certain fixed income trades, and eliminating a number of service fees.

Schwab's Message to Clients: "You're talking. We're listening."

"When I returned as CEO two years ago, we promised our clients we would do everything in our power to enhance the value they get from Schwab and help them improve their investing results," said Founder, Chairman and CEO Charles R. Schwab. "We've come a long way. But clients have encouraged us to make our services more responsive, easier to use, and more broadly available, and to make our prices simpler and more straightforward. Clients have let us know what matters, and we have listened and responded."

Simplified and Reduced Trade Pricing Details for Retail Clients

Effective July 1, 2006 What Changed

Online Equity Trades No one pays more per Eliminates top tier
than $12.95* per trade of $19.95* per trade

Online Options All online option Eliminates tiered
commissions are $9.95 per contract charges
plus a flat $.75 per as high as $1.40
contract

Online Bonds Online exchange-traded Replaces more
corporate bond commissions complicated sliding
reduced to $2.00 per bond, fee schedule
with no minimum

Transaction fees Eliminates online
eliminated for online fee of $44
Treasuries (auction only)

Online Transaction-Fee Flat fee of $49.95 Replaces tiered
Mutual Funds commission schedule
with $49.95 minimum

Automated Phone Trades For equity or option Down from top rate
trades, simply add $5 to of $29.95 for
the online commission equity trades**
For example, no one pays
more than $17.95 for an
equity trade*

For transaction-fee mutual Replaces tiered
funds, same fee as online commission schedule
with $49.95 minimum

Broker Assisted Trades For any trade, simply add For equities and
$25 to the online exchange-traded
commission bonds, replaces
sliding commission
For example, no one pays schedule with a
more than $37.95 for an $54.95 minimum
equity trade* or $74.95
for a transaction-fee
mutual fund trade For mutual funds,
replaces sliding
commission schedule
with a $74.95
minimum

NOTE: Mutual Fund OneSource® no-load funds continue to carry no transaction fee when traded online

*For the first 1,000 shares plus $.015 for each additional share

**For the first 1,000 shares plus $.03 for each additional share

A Dozen Nuisance Fees Eliminated
The company is also getting rid of a dozen different service fees and eliminating or reducing certain account fees.

Among the service fees being eliminated -- for both retail clients of Schwab and clients of investment advisors who do business with Schwab Institutional -- are a $20 charge for branch office check pick-ups (already waived by Schwab Institutional) and a number of Schwab One® cash management charges including $1 for ATM transactions (ATM fees from other financial institutions will be rebated), $6.95 per month for electronic bill pay, $15 for stop payment orders, $1.50 for check copies and $9.95 for standard check orders. Also being removed are a variety of fees for supplemental brokerage account reporting and recordkeeping inquiries and requests. Additionally, Schwab is eliminating the $45 annual fee for Company Retirement Accounts and reducing its transfer of account fees by nearly 50 percent.

Similarly, Charles Schwab Bank is eliminating fees for Investor Checking account stop payment orders, standard check orders and check copies. The bank also rebates ATM fees from other financial institutions.

To further benefit clients and better recognize them for the entirety of their relationship with Schwab, on July 1 the company will begin to consider not only Schwab brokerage account assets and trades but also Charles Schwab Bank accounts and products in determining client eligibility for more benefits within their brokerage accounts. Charles Schwab Bank mortgages, home equity lines of credit, credit card balances and deposit accounts will all be included in determining eligibility for more beneficial commission tiers, fee waivers and interest rates on cash, as well as for certain money market funds, within clients' Schwab brokerage accounts.

Expanded Access to Investment Insight and Reporting

To help all of its retail clients improve their investing results, the firm is expanding access to investment research, market insight and portfolio monitoring tools that had generally been available only to active traders or clients with more than $100,000 in household assets, including:

-- Argus Research -- Schwab On Investing® magazine

-- Goldman Sachs PrimeAccess(SM) -- Schwab Quarterly Portfolio
Research Profile(TM)

-- Reuters ProVester Plus -- Schwab Investing Insights® Brief
Research and Alerts

-- Premium Schwab Alerts® -- Schwab Webcasts

The company is also enhancing its brokerage account statements including how it delivers gain/loss information to clients.

Improving Service

Schwab Investor Services President Walt Bettinger also announced additional initiatives aimed at enhancing service to clients with less than $250,000 in household assets at Schwab. In one program, the company will pilot complimentary portfolio consultations over the phone. In another pilot, the company will designate Schwab representatives to establish ongoing, telephone-based relationships with certain clients. These client relationship enhancements build on services introduced in early 2005 that provide clients who have more than $250,000 in household assets at Schwab with a designated financial consultant in one of Schwab's 300 branches.

More generally, the company has launched an initiative to improve telephone response times through additional staff, increased training and more direct access to individual service representatives. For new clients, the company is piloting a "concierge" service designed to simplify their transfer to Schwab and ensure they find the services that meet their needs.

"Service is the number one reason clients say they stay with Schwab," Bettinger noted. "Today's announcements reflect a continuing focus on improving the service experience for all of our clients."

Financial Considerations

The Charles Schwab Corporation believes that the pricing actions described above will encourage the consolidation of client assets and trades at Schwab. Chief Financial Officer Chris Dodds commented: "If the pricing actions we've announced today had been implemented at the beginning of 2006, we estimate that revenues could have been reduced by up to $25 million for the first quarter, a small percentage of our $1.3 billion in first-quarter revenues. That said, we believe our success with investors over the past two years is a clear reminder that clients reward us for the investments we make in them -- whether it's through targeted price reductions, simplifying our offerings, or just making it easier to do business with us. Strong client account openings and asset flows, as well as the interest rate environment, have enabled us to exceed our revenue expectations thus far in 2006, and we remain committed to our overarching financial goals for the year, including a pre-tax profit margin of at least 30% and a return on stockholders' equity of at least 20%."

Forward-Looking Statements

This press release contains forward-looking statements relating to client assets, trading and revenues, as well as pre-tax profit margin and return on stockholders' equity. These statements reflect management's current expectations and objectives, the achievement of which is subject to certain risks and uncertainties that could cause actual results to differ from the expressed expectations and objectives. These risks include, but are not limited to, the Company's ability to accurately assess the elasticity of client demand for trading services and the effect of pricing changes on client acquisition, retention and asset levels; a sustained decline in securities prices, trading volumes and investor confidence from recent levels; the company's ability to manage expenses and investments, and other risks set forth in the Company's most recent 10-Q.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq: SCHW - News) is a leading provider of financial services, with more than 330 offices, 6.8 million client brokerage accounts, 522,000 401(k) plan participants, 177,000 banking accounts, and $1.3 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org ), offers a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. The Charles Schwab Bank, N.A. (member FDIC and Equal Housing Lender) provides banking and mortgage services and products. The company's other operating subsidiaries include U.S. Trust Corporation (member FDIC) and CyberTrader, Inc. (member SIPC, http://www.sipc.org ). More information is available at www.schwab.com. (0606-6817)

Brokerage Products: Not FDIC Insured No Bank Guarantee May Lose Value

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Source: Charles Schwab