Board of Governors of the Federal Reserve System

The Federal Reserve Board on Tuesday released the 2023 combined annual audited financial statements for the Federal Reserve Banks. An independent public accounting firm, issued unqualified opinions, asserting that its audit found the financial statements for the Board, the 12 Federal Reserve Banks, and 3 limited liability companies (LLCs) to be free of material misstatements in accordance with the applicable auditing standards.

Additionally, the Board released individual and combined statements for the Board, the 12 Federal Reserve Banks, and 3 LLCs related to lending facilities established to support the Federal Reserve's pandemic response. The audited financial statements provide information about the assets, liabilities, and earnings of the Board, the 12 Federal Reserve Banks, and the 3 LLCs as of December 31, 2023. The Board released the 2023 combined preliminary income and expense data earlier this year.

Total assets of the Reserve Banks as of December 31, 2023, were approximately $7.8 trillion, a decrease of $0.7 trillion from the previous year. Total assets were composed primarily of $7.5 trillion of U.S. Treasury securities and federal agency and government-sponsored enterprise mortgage-backed securities acquired through the conduct of monetary policy.

Additional information in the audited financial statements of the Reserve Banks includes:

• The Reserve Banks' 2023 sum total of expenses exceeded earnings by $114.3 billion. In 2022, net income was $58.8 billion;
• Interest income on securities acquired through open market operations totaled $163.8 billion in 2023, a decrease of $6.2 billion from 2022;
• Interest expense on depository institutions' reserve balances was $176.8 billion in 2023, an increase of $116.4 billion from 2022;
• Total interest income earned on loans to depository institutions and other eligible borrowers, including from the Bank Term Funding Program and Paycheck Protection Program Liquidity Facility, was $10.4 billion;
• Interest expense on securities sold under agreements to repurchase was $104.3 billion in 2023, an increase of $62.4 billion from 2022.
• The Reserve Banks realized net income of $0.1 billion from emergency credit facilities established in response to the COVID-19 pandemic; and
• Operating expenses were $9.2 billion in 2023, including assessments of $2.9 billion for Board expenses, currency costs, and the operations of the Consumer Financial Protection Bureau.

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 an amount necessary to maintain surplus at the statutory limit. During a period when earnings are not sufficient to provide for those costs, a deferred asset is recorded.

In 2023, the deferred asset reported by the Reserve Banks increased by $116.7 billion resulting in a cumulative deferred asset at year-end of $133.3 billion. The deferred asset is the amount of net excess earnings the Reserve Banks will need to realize before their remittances to the U.S. Treasury resume. A deferred asset has no implications for the Federal Reserve's conduct of monetary policy or its ability to meet its financial obligations.

The Board engaged KPMG LLP to audit the financial statements of the Reserve Banks and the LLCs in accordance with applicable standards. KPMG LLP also conducted audits of internal controls over financial reporting for the 12 individual Reserve Banks and the Board.

Financial statements for the Board, the 12 Federal Reserve Banks, and the 3 LLCs are available on the Federal Reserve Board's website.

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