On March 24, the Federal Reserve System released the 2015–2016 combined annual audited financial statements for the Reserve Banks and Board of Governors (Board) for the years ended December 31, 2015 and 2016 (27-FMIC-B-002). The report—conducted by an independent auditing firm and reviewed by the Office of Inspector General—issues unqualified opinions on the Reserve Banks’ and Board’s financial statements and internal controls over financial reporting. According to the Federal Reserve System, the financial statements “provide a significant amount of information about the assets, liabilities, and earnings of the Reserve Banks and the Board as of December 31, 2016, including information about the composition, fair value, and earnings related to the $4.4 trillion of U.S. Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal agency and GSE mortgage-backed securities (MBS) acquired through open market operations.”

Some of the highlights include:

  • 2016 earnings for the Reserve Banks were approximately $92 billion;
  • Reserve Banks provided payments of $91.5 billion to the U.S. Treasury in 2016;
  • Reserve Banks’ interest income on securities acquired through open market operations totaled $111.1 billion, a decrease of $2.5 billion when compared to 2015 results, and attributable to “changes in the composition of securities held in the Federal Reserve System Open Market Account”;
  • Interest expense on depository institutions’ reserve balances and term deposits during 2016 was $12 billion, an increase of $5.1 billion from 2015;
  • Interest expense on securities sold under agreements to repurchase was $1.1 billion in 2016, an increase of $874 million when compared to the prior year; and
  • Reserve Bank operating expenses for 2016 were $6.7 billion, which includes assessments of $2 billion for Board expenses, currency costs, and the operations of the CFPB.