EX-12.1 7 d455860dex121.htm EX-12.1 EX-12.1

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)

 

Year Ended December 31,

    2012      2011      2010      2009      2008  

Earnings from continuing operations before taxes on earnings

    $ 1,450       $ 1,392       $ 779       $ 1,276       $ 2,028   

Fixed charges

               

Interest expense:

              

Deposits from banking clients

      42         62         105         107         104   

Payables to brokerage clients

      3         3         2         3         55   

Short-term borrowings

      —         —         —         —         1   

Long-term debt

      103         108         92         71         59   

Other

      2         2         —         2         7   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      150         175         199         183         226   

Interest portion of rental expense

      68         62         56         71         62   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges (A)

      218         237         255         254         288   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

    $   1,668       $   1,629       $   1,034       $   1,530       $   2,316   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

      7.7         6.9         4.1         6.0         8.0   

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

      9.4         9.1         6.3         9.9         16.7   

Total fixed charges

    $ 218       $ 237       $ 255       $ 254       $ 288   

Preferred stock dividends (3)

      70         —         —         —         —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed charges and preferred stock dividends (C)

    $ 288       $ 237       $ 255       $ 254       $ 288   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

     5.8         6.9         4.1         6.0         8.0   

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

      6.7         9.1         6.3         9.9         16.7   

 

(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 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.

 

(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.