Federal Reserve Board announces Reserve Bank income and expense data and transfers to the Treasury for 2021

January 14, 2022/US Federal Reserve

The Federal Reserve Board on Friday announced preliminary financial information indicating that the Reserve Banks had estimated net income of $107.8 billion during 2021, of which $107.4 billion was remitted to the U.S. Treasury as required under the Federal Reserve Act. The Federal Reserve Act requires the Reserve Banks to remit excess earnings to the U.S. Treasury after providing for operating expenses, payment of dividends, and the amount necessary to maintain surplus. The 2021 audited Reserve Bank financial statements are expected to be published later this year and may include adjustments to these preliminary unaudited results.

The Federal Reserve Banks’ 2021 estimated net income of $107.8 billion is an increase of $19.3 billion from 2020. The increase is primarily from a $25.1 billion increase in interest income associated with U.S. Treasury securities, offset by decreases in interest income on federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS) of $2.7 billion, and a decrease of $3.4 billion in the annual amount of net gain or loss that results from the daily revaluation of foreign currency denominated asset holdings at current exchange rates.

Net income for 2021 was derived primarily from interest income on securities acquired through open market operations—U.S. Treasury securities, federal agency and GSE MBS, and GSE debt securities of $122.4 billion. It was offset by interest expense associated with reserve balances held by depository institutions of $5.3 billion, foreign currency revaluation losses of $1.9 billion, and interest expense of $414 million on securities sold under agreement to repurchase. The Federal Reserve Banks realized net income of $275 million from facilities established in response to the COVID-19 pandemic.

Operating expenses of the Reserve Banks, excluding amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $5.3 billion in 2021. In addition, the Reserve Banks were assessed $1.0 billion for the costs related to producing, issuing, and retiring currency, $970 million for Board expenditures, and $628 million to fund the operations of the Consumer Financial Protection Bureau.

Additional earnings were derived from income from services of $457 million. Statutory dividends totaled $583 million in 2021.

The attached chart illustrates the amount the Reserve Banks distributed to the U.S. Treasury from 2012 through 2021 (estimated).

For media inquiries, e-mail media@frb.gov or call 202-452-2955.

Federal Reserve Remittances to the U.S. Treasury: bar chart, units in billions, from 2012 – 2021 Est. with 2 series, 'Earnings Remittances' and 'Transfer of Capital Surplus.' Earnings Remittances has totals for 2012=$88.4, 2013=$79.6, and 2014=$96.9. 2015 shows $97.7 for Earnings Remittances and $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 and 2017=$80.6. 2018 shows $62.1 for Earnings Remittances and $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 and $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, and Consumer Protection Act. Earnings Remittances has totals for 2019=$54.9 and 2020 Est.=$88.5. 2021 shows $104.2 for Earning Remittances and $40M in Transfer of Capital Surplus for a total of $104.24. The Reserve Banks transferred to the Treasury $40 million from their capital surplus in 2021, which was the amount necessary to reduce aggregate Reserve Bank surplus to the $6.785 billion surplus limitation in the National Defense Authorization Act for 2021.

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