For immediate release

The Federal Reserve Board on Friday released figures that indicate the Federal Reserve Banks distributed approximately $18.086 billion of their $23.541 billion total income to the U.S. Treasury during 2004.

Federal Reserve System income is derived primarily from interest earned on U.S. government securities that the Federal Reserve has acquired through open market operations. This income amounted to $22.344 billion in 2004. Additionally, income from fees for the provision of priced services to depository institutions totaled $867 million. The remaining income of $330 million includes earnings on foreign currencies, earnings from loans, and other income.

The operating expenses of the twelve Reserve Banks totaled $2.116 billion in 2004, including the System's net pension credit. In addition, the cost of earnings credits granted to depository institutions amounted to $116 million. Assessments against Reserve Banks for Board expenditures totaled $272 million and the cost of currency amounted to $504 million.

Net additions to income amounted to $919 million, primarily representing unrealized gains on assets denominated in foreign currencies that are revalued to reflect current market exchange rates. These gains were partially offset by interest expense on reverse repurchase agreements.

Total net income for the Federal Reserve Banks in 2004 amounted to $21.452 billion. Under the Board's policy, each Reserve Bank's net income after the statutory dividend to member banks and the amount necessary to equate surplus to paid-in capital is transferred to the U.S. Treasury. The statutory dividends to member banks in 2004 were $582 million.

2005 Other announcements