January 13, 2023
Federal Reserve Board announces Reserve Bank income and expense data and transfers to the Treasury for 2022
For release at 11:00 a.m. EST
The Federal Reserve Board on Friday announced preliminary financial information indicating that the Federal Reserve Banks had estimated net income of $58.4 billion in 2022. The 2022 audited Reserve Bank financial statements are expected to be published in coming months and may include adjustments to these preliminary unaudited results.
The Federal Reserve Act requires the Reserve Banks to remit excess earnings to the U.S. Treasury after providing for operating costs, payments of dividends, and any amount necessary to maintain surplus. During a period when earnings are not sufficient to provide for those costs, a deferred asset is recorded. The deferred asset is the amount of net earnings the Reserve Banks will need to realize before their remittances to the U.S. Treasury resume.
During 2022, Reserve Banks transferred $76.0 billion from weekly earnings to the U.S. Treasury, and, in September 2022, most Reserve Banks suspended weekly remittances to the Treasury and started accumulating a deferred asset, which totaled $18.8 billion by the end of the year. A deferred asset has no implications for the Federal Reserve's conduct of monetary policy or its ability to meet its financial obligations.
Additional information related to 2022 preliminary financial results for the Reserve Banks include:
- The Reserve Banks' 2022 estimated net income of $58.4 billion decreased $49.5 billion from 2021 earnings of $107.9 billion, primarily driven by increased interest expense;
- Interest income on securities acquired through open market operations totaled $170.0 billion in 2022, an increase of $47.6 billion from 2021 interest income of $122.4 billion;
- Total interest expense of $102.4 billion increased $96.6 billion from 2021 total interest expense of $5.7 billion; of the increase in interest expense, $55.1 billion pertained to interest expense on Reserve Balances held by depository institutions and $41.5 billion related to interest on securities sold under agreements to repurchase;
- Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $5.6 billion in 2022;
- In addition, the Reserve Banks were assessed $1.0 billion for the costs related to producing, issuing, and retiring currency, $1.0 billion for Board expenditures, and $0.7 billion to fund the operations of the Consumer Financial Protection Bureau.
- The Federal Reserve Banks realized net income of $108 million from facilities established in response to the COVID-19 pandemic;
- Losses from the daily revaluation of foreign currency denominated investments was $1.8 billion;
- Additional earnings were derived from income from services of $0.5 billion;
- Statutory dividends totaled $1.2 billion in 2022.
The attached chart illustrates the amount the Reserve Banks distributed to the U.S. Treasury from 2013 through 2022 (estimated).
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