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
September 30,		    Nine Months Ended
September 30,
     2009    2008    2009    2008

Earnings from continuing operations before taxes on earnings

    $ 320    $ 499    $ 1,010    $ 1,521

Fixed charges

            

Interest expense excluding provision for credit losses (1)

            

Deposits from banking clients

      32      22      73      79

Payables to brokerage clients

      —      6      2      49

Short-term borrowings

      —      —      —      1

Long-term debt

      22      14      51      44

Other

      1      8      2      19
                           

Total

      55      50      128      192

Interest portion of rental expense

      13      15      56      46
                           

Total fixed charges (A)

      68      65      184      238
                           

Earnings from continuing operations before taxes on earnings and fixed charges (B)

    $    388    $    564    $ 1,194    $ 1,759
                           
           

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

      5.7      8.7      6.5      7.4
                           

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

      9.9      14.5      10.3      14.8
                           

 

(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 from continuing operations 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.