Fed banks earned $88.6 billion in 2020, outpacing 2019 by $33.1 billion

The 12 Federal Reserve Banks earned some $88.6 billion in 2020, up $33.1 billion from 2019 and helped by a $27.1 billion decrease in expense for interest paid on depository institution reserve balances, the Federal Reserve System’s 2020 audited statements show.

The 2020 statements, which earned an unqualified audit opinion from KPMG LLP and were released Monday, also show that the Reserve Banks paid $86.9 billion to Treasury.

The statements show that interest income on securities acquired through open market operations totaled $101.2 billion, down $1.6 billion from 2019. Interest expense on depository institutions’ reserve balances in 2020 was $7.9 billion, a decrease of $27.1 billion from the previous year. Interest expense on securities sold under agreements to repurchase was $711.2 million, a decrease of $5.3 billion from the previous year.

The Federal Reserve Banks realized net income of $275 million from the credit facilities established by the Federal Reserve Board in response to the COVID-19 pandemic. Reserve Bank operating expenses were $7.9 billion, including assessments of $2.3 billion for Fed Board expenses, currency costs, and the operations of the Bureau of Consumer Financial Protection, which totaled $517.3 million. The CFPB expense was down $1.3 million, or about 0.3%, from 2019.

The Fed said total Reserve Bank assets as of Dec. 31, 2020, were approximately $7.4 trillion, up $3.2 trillion from the previous year. Total Reserve Bank assets were composed primarily of $7.1 trillion of securities under agreements to resell, U.S. Treasury securities, and federal agency and government-sponsored enterprise mortgage-backed securities acquired through open market operations.

The Fed Board reported $1.03 billion in total assets at year-end 2020. It had $947 million in operating expenses and capital expenditures.

Federal Reserve System publishes annual financial statements