The Charles Schwab Corporation (SCHW) 10-K 2010 FY Annual report

THE CHARLES SCHWAB CORPORATION

EXHIBIT 12.1

Computation of Ratio of Earnings to Fixed Charges

(Dollar amounts in millions)

(Unaudited)

Year Ended December 31,	2010		2009		2008		2007		2006
Earnings from continuing operations before taxes on earnings	$	779	$	1,276	$	2,028	$	1,853	$	1,476
Fixed charges
Interest expense:
Deposits from banking clients		105		107		104		238		200
Payables to brokerage clients		2		3		55		329		426
Short-term borrowings		—		—		1		—		—
Long-term debt		92		71		59		38		29
Other		—		2		7		15		23
Total		199		183		226		620		678
Interest portion of rental expense		56		71		62		60		55
Total fixed charges (A)		255		254		288		680		733
Earnings from continuing operations before taxes on earningsand fixed charges (B)	$	1,034	$	1,530	$	2,316	$	2,533	$	2,209
Ratio of earnings to fixed charges (B) ÷ (A)(1)		4.1		6.0		8.0		3.7		3.0
Ratio of earnings to fixed charges, excluding deposits from banking clients and payables to brokerage clients interest expense(2)		6.3		9.9		16.7		17.4		14.8

⁽¹⁾ 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.

⁽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.