EX-12.1 3 d406155dex121.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 and

Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

(Dollar amounts in millions)

(Unaudited)

 

                                           
     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2012      2011      2012      2011  

Earnings before taxes on earnings

    $        361       $        360       $     1,106       $     1,140   

Fixed charges

            

Interest expense:

            

Deposits from banking clients

      11         16         31         49   

Payables to brokerage clients

      1         1         2         2   

Long-term debt

      27         27         81         81   

Other

      —         —         2         2   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

      39         44         116         134   

Interest portion of rental expense

      17         16         51         46   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges (A)

      56         60         167         180   
  

 

 

     

 

 

     

 

 

     

 

 

  

Earnings before taxes on earnings and fixed charges (B) 

    $ 417       $ 420       $ 1,273       $ 1,320   
  

 

 

     

 

 

     

 

 

     

 

 

  

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

     7.4         7.0         7.6         7.3   

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

     9.2         9.4         9.3         9.8   

Total fixed charges

    $ 56       $ 60       $ 167       $ 180   

Preferred stock dividends (3)

      14         —         36         —   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges and preferred stock dividends (C) 

    $ 70       $ 60       $ 203       $ 180   
  

 

 

     

 

 

     

 

 

     

 

 

  

Ratio of earnings to fixed charges and preferred stock dividends (B) ÷ (C) (1)

     6.0         7.0         6.3         7.3   

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

      7.0         9.4         7.3         9.8   

 

(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.