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Preliminary figures indicate that operating income of the Federal Reserve Banks amounted to $26.916 billion during 1997. Net income before payment of dividends, additions to surplus, and payments to the Treasury totaled $21.793 billion. About $20.662 billion of this net income was distributed to the U.S. Treasury during 1997.
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. Income from the provision of financial services amounted to $790 million. Operating expenses of the 12 Reserve Banks and branches totaled $1.813 billion. In addition, earnings credits in the amount of $361.6 million were granted to depository institutions under the Monetary Control Act of 1980. Assessments to Reserve Banks for Board expenditures totaled $174.4 million and the cost of currency amounted to $364.5 million. Net deductions from income amounted to $2.577 billion, resulting primarily from unrealized losses on assets denominated in foreign currencies revalued to reflect current market exchange rates. Statutory dividends to member banks were $299.7 million. Under the policy established by the Board of Governors at the end of 1964, all 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. In October 1996 and October 1997 the Reserve Banks also transferred $106 million and $107 million, respectively, from their surplus accounts to the Treasury, as statutorily required.
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