Board of Governors of the Federal Reserve System

The Federal Reserve System on Friday released the 2018 combined annual audited financial statements for the Federal Reserve Banks, as well as statements for the 12 individual Federal Reserve Banks and the Board of Governors. An independent public accounting firm engaged by the Board has issued unqualified opinions on the financial statements and on the Board's and the Bank's internal controls over financial reporting. The audited financial statements provide information about the assets, liabilities, and earnings of the Reserve Banks and the Board as of December 31, 2018.

The Federal Reserve Banks' 2018 earnings were approximately $63.1 billion, representing a decrease of $17.6 billion from 2017. The Reserve Banks provided for remittances to the U.S. Treasury of $65.3 billion in 2018, including two lump-sum payments totaling approximately $3.2 billion that were necessary to reduce the aggregate Reserve Bank capital surplus to $6.8 billion as required by the Bipartisan Budget Act of 2018 and the Economic Growth, Regulatory Relief, and Consumer Protection Act. Interest income on securities acquired through open market operations totaled $112.3 billion, a decrease of $1.3 billion from the previous year. Interest expense on depository institutions' reserve balances during the year was $38.5 billion, an increase of $12.6 billion from the previous year. Interest expense on securities sold under agreements to repurchase was $4.6 billion, an increase of $1.2 billion from the previous year. Reserve Bank operating expenses were $7.0 billion, including assessments of $2.0 billion for Board expenses, currency costs, and the operations of the Bureau of Consumer Financial Protection.

Total Reserve Bank assets as of December 31, 2018, were approximately $4.1 trillion, a decrease of $392.1 billion from the previous year. Total Reserve Bank assets were composed primarily of $4.0 trillion of U.S. Treasury securities and federal agency and government-sponsored enterprise mortgage-backed securities acquired through open market operations. The Federal Reserve Bank of New York provides additional detailed information about open market operations and securities holdings on an ongoing basis on its website at www.newyorkfed.org/markets/pomo_landing.html.

During 2018, all remaining securities held by Maiden Lane LLC, a variable interest entity created to support the Federal Reserve's response to the 2008 financial crisis, were sold. The net proceeds were distributed to the Federal Reserve Bank of New York and on November 1, 2018, Maiden Lane was dissolved.

The Board engages KPMG LLP, an independent public accounting firm, to conduct annual audits of these financial statements in accordance with auditing standards issued by the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, and, for the Board of Governors audit only, the Generally Accepted Government Auditing Standards. The public accounting firm also conducts audits of internal controls over financial reporting for the 12 individual Federal Reserve Banks and the Board of Governors.

The Federal Reserve System financial statements are available on the Federal Reserve Board's website at https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm.