EX-12.1 4 schw-20131231ex12106bcc6.htm EX-12.1 Exhibit 121

THE CHARLES SCHWAB CORPORATION

 

 

EXHIBIT 12.1

 

 

Computation of Ratio of Earnings to Fixed Charges and

Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

(Dollar amounts in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

2013

 

 

2012

 

 

2011

 

 

2010

 

 
2009 

Earnings before taxes on earnings

$
1,705 

 

 

$
1,450 

 

 

$
1,392 

 

 

$
779 

 

 

$
1,276 

Fixed charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits from banking clients

 
31 

 

 

 
42 

 

 

 
62 

 

 

 
105 

 

 

 
107 

Payables to brokerage clients

 
3 

 

 

 
3 

 

 

 
3 

 

 

 
2 

 

 

 
3 

Long-term debt

 
69 

 

 

 
103 

 

 

 
108 

 

 

 
92 

 

 

 
71 

Other

 
2 

 

 

 
2 

 

 

 
2 

 

 

 

 -

 

 

 
2 

Total

 
105 

 

 

 
150 

 

 

 
175 

 

 

 
199 

 

 

 
183 

Interest portion of rental expense

 
69 

 

 

 
68 

 

 

 
62 

 

 

 
56 

 

 

 
71 

Total fixed charges (A)

 
174 

 

 

 
218 

 

 

 
237 

 

 

 
255 

 

 

 
254 

Earnings before taxes on earnings and fixed charges (B)

$
1,879 

 

 

$
1,668 

 

 

$
1,629 

 

 

$
1,034 

 

 

$
1,530 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges (B) ÷ (A) (1)

 
10.8 

 

 

 
7.7 

 

 

 
6.9 

 

 

 
4.1 

 

 

 
6.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges, excluding deposits from banking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

clients and payables to brokerage clients interest expense (2)

 
13.2 

 

 

 
9.4 

 

 

 
9.1 

 

 

 
6.3 

 

 

 
9.9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total fixed charges

$
174 

 

 

$
218 

 

 

$
237 

 

 

$
255 

 

 

$
254 

Preferred stock dividends (3)

 
97 

 

 

 
70 

 

 

 

 -

 

 

 

 -

 

 

 

 -

Total fixed charges and preferred stock dividends (C)

$
271 

 

 

$
288 

 

 

$
237 

 

 

$
255 

 

 

$
254 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges and preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dividends (B) ÷ (C) (1)

 
6.9 

 

 

 
5.8 

 

 

 
6.9 

 

 

 
4.1 

 

 

 
6.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges and preferred stock dividends,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

excluding deposits from banking clients and payables to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

brokerage clients interest expense (2)

 
7.8 

 

 

 
6.7 

 

 

 
9.1 

 

 

 
6.3 

 

 

 
9.9 

 

 

 

 

 

(1)

The ratios of earnings to fixed charges and earnings to fixed charges and preferred stock dividends are calculated in accordance with SEC requirements. For such purposes, “earnings” consist of earnings before taxes on earnings and fixed charges. “Fixed charges” consist of interest expense as listed above, and one-third of rental expense, which is estimated to be representative of the interest factor.

 

 

(2)

Because interest expense incurred in connection with both deposits from banking clients and payables to brokerage clients is completely offset by interest revenue on related investments and loans, the Company considers such interest to be an operating expense. Accordingly, the ratio of earnings to fixed charges, excluding deposits from banking clients and payables to brokerage clients interest expense, and the ratio of earnings to fixed charges and preferred stock dividends, excluding deposits from banking clients and payables to brokerage clients interest expense, reflect the elimination of such interest expense as a fixed charge.

 

 

 

 

 

(3)

The preferred stock dividend amounts represent the pre-tax earnings that would be required to pay the dividends on outstanding preferred stock.