EX-12.1 2 schw-20140930ex1210977e6.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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2014

 

2013

 

2014

 

2013

Earnings before taxes on earnings

 

$
518 

 

$
464 

 

$
1,561 

 

$
1,207 

Fixed charges

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits from banking clients

 

 
7 

 

 
7 

 

 
22 

 

 
24 

Payables to brokerage clients

 

 
1 

 

 
1 

 

 
2 

 

 
2 

Long-term debt

 

 
19 

 

 
17 

 

 
55 

 

 
51 

Other

 

 

 -

 

 

 -

 

 

 -

 

 
2 

Total

 

 
27 

 

 
25 

 

 
79 

 

 
79 

Interest portion of rental expense

 

 
18 

 

 
17 

 

 
54 

 

 
51 

Total fixed charges (A)

 

 
45 

 

 
42 

 

 
133 

 

 
130 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before taxes on earnings and fixed charges (B)

 

$
563 

 

$
506 

 

$
1,694 

 

$
1,337 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 
12.5 

 

 
12.0 

 

 
12.7 

 

 
10.3 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges, excluding deposits from banking

 

 

 

 

 

 

 

 

 

 

 

 

clients and payables to brokerage clients interest expense (2)

 

 
15.0 

 

 
14.6 

 

 
15.3 

 

 
12.6 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total fixed charges

 

$
45 

 

$
42 

 

$
133 

 

$
130 

Preferred stock dividends (3)

 

 
15 

 

 
13 

 

 
63 

 

 
63 

Total fixed charges and preferred stock dividends (C)

 

$
60 

 

$
55 

 

$
196 

 

$
193 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges and preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

dividends (B) ÷ (C) (1)

 

 
9.4 

 

 
9.2 

 

 
8.6 

 

 
6.9 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges and preferred stock dividends,

 

 

 

 

 

 

 

 

 

 

 

 

excluding deposits from banking clients and payables to

 

 

 

 

 

 

 

 

 

 

 

 

brokerage clients interest expense (2)

 

 
10.7 

 

 
10.6 

 

 
9.7 

 

 
7.9 

 

(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.