EX-12.1 2 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

THE CHARLES SCHWAB CORPORATION

 

Exhibit 12.1

 

Computation of Ratio of Earnings to Fixed Charges

(Dollar amounts in millions)

(Unaudited)

 

     Three Months Ended
March 31,
     2009    2008

Earnings before taxes on earnings

   $ 355    $ 508
             

Fixed charges

      

Interest expense excluding provision for credit losses (1)

      

Deposits from banking clients

      15      36

Payables to brokerage clients

      1      35

Long-term debt

      14      15

Other

      1      5
             

Total

      31      91

Interest portion of rental expense

      19      16
             

Total fixed charges (A)

      50      107
             

Earnings before taxes on earnings and fixed charges (B) 

    $ 405    $ 615
             

Ratio of earnings to fixed charges (B) ÷ (A) (2)

      8.1      5.7

Ratio of earnings to fixed charges excluding deposits from banking clients and payables to brokerage clients interest expense (3)

      11.4      15.1

 

(1)

Beginning in 2009, the provision for credit losses has been excluded from fixed charges.

 

(2)

The ratio of earnings to fixed charges is 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.

 

(3)

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 reflects the elimination of such interest expense as a fixed charge.