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January 11, 2021

FED announces Reserve Bank income & expense data & transfers to the Treasury for 2020

For release at 12:00 p.m. EST

The FED on Monday announced preliminary results indicating that the Reserve Banks provided for payments of approximately $88.5 billion of their estimated 2020 net income to the U.S. Treasury. The 2020 audited Reserve Bank financial statements are expected to be published in March & may include adjustments to these preliminary unaudited results.

The Federal Reserve Banks’ 2020 estimated net income of $88.8 billion represents an increase of $33.3 billion from 2019, primarily attributable to a $27.1 billion decrease in interest expense associated with reserve balances held by depository institutions & a $5.3 billion decrease in interest expense associated with securities sold under agreements to resell. Net income for 2020 was derived primarily from $100 billion in interest income on securities acquired through open market operations–U.S. Treasury securities, federal agency & government-sponsored enterprise (GSE) mortgage-backed securities (MBS), & GSE debt securities, $723 million interest income on securities purchased under agreements to resell, realized gains of $664 million on GSE MBS, & foreign currency gains of $1.5 billion that result from the daily revaluation of foreign currency denominated investments at current exchange rates. The Federal Reserve Banks realized net income of $405 million from facilities established in response to the COVID-19 pandemic. The Federal Reserve Banks had interest expense of $7.9 billion primarily associated with reserve balances held by depository institutions, & interest expense of $711 million on securities sold under agreement to repurchase.

Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury & other entities for services the Reserve Banks provided as fiscal agents, totaled $4.5 billion in 2020. In addition, the Reserve Banks were assessed $831 million for the costs related to producing, issuing, & retiring currency, $947 million for Board expenditures, & $517 million to fund the operations of the Consumer Financial Protection Bureau. Additional earnings were derived from income from services of $448 million. Statutory dividends totaled $386 million in 2020.

The attached chart illustrates the amount the Reserve Banks distributed to the U.S. Treasury from 2011 through 2020 (estimated).

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Federal Reserve Remittances to the U.S. Treasury: bar chart, units in billions, from 2011 – 2020 Est. with 2 series, “Earnings Remittances” & “Transfer of Capital Surplus.” Earnings Remittances has totals for 2011=$75.4, 2012=$88.4, 2013=$79.6, & 2014=$96.9. 2015 shows $97.7 for Earnings Remittances & $19.3 for Transfer of Capital Surplus for a total of $117. The Reserve Banks transferred to the Treasury $19.3 billion from their capital surplus on December 28, 2015, which was the amount necessary to reduce aggregate Reserve Bank surplus to the $10 billion surplus limitation in the Fixing America’s Surface Transportation Act. Earnings Remittances has totals for 2016=$91.5 & 2017=$80.6. 2018 shows $62.1 for Earnings Remittances & $3.2 for Transfer of Capital Surplus for a total of $65.3. The Reserve Banks transferred to the Treasury $3.175 billion from their capital surplus in 2018, of which $2.5 billion was the amount necessary to reduce aggregate Reserve Bank surplus to the $7.5 billion surplus limitation in the Bipartisan Budget Act of 2018 & $675 million was the amount necessary to further reduce aggregate Reserve Bank surplus to the $6.825 billion surplus limitation in the Economic Growth, Regulatory Relief, & Consumer Protection Act. Earnings Remittances has totals for 2019=$54.9 & 2020 Est.=$88.5.

Last Update:

January 11, 2021