EX-12.1 4 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
June  30,		    Six Months Ended
June 30,
     2010    2009    2010    2009

Earnings before taxes on earnings

    $ 338    $ 335    $ 351    $ 690

Fixed charges

            

Interest expense excluding provision for credit losses :

            

Deposits from banking clients

      25      26      56      41

Payables to brokerage clients

      1      1      1      2

Long-term debt

      19      15      39      29

Other

      —      —      —      1
                           

Total

      45      42      96      73

Interest portion of rental expense

      14      23      28      43
                           

Total fixed charges (A)

      59      65      124      116
                           

Earnings before taxes on earnings and fixed charges (B)

    $   397    $   400    $   475    $   806
                           

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

      6.7      6.2      3.8      6.9

Ratio of earnings to fixed charges, excluding deposits from banking clients and payables to brokerage clients interest expense (2)

      11.2      9.8   

 

6.2

   

 

10.5

 

(1)

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.

 

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