Preliminary unaudited results indicate that the Federal Home Loan Banks of the U.S. Federal Reserve Board paid a record amount of approximately $98.7 billion out of their 2014 estimated net income of $101.5 billion to the U.S. Department of Treasury, according to an announcement from the Fed on Friday.
The previous high was $88.4 billion, paid in 2012. The Fed paid $79.6 billion to Treasury in 2013. That number has been above $75 billion every year since 2010 following a then-record high of $47.4 billion in 2009.
The Fed's policy requires each of its FHLBanks to distribute its residual earnings to Treasury, after providing the cost of operations, dividend payments, and the necessary amount to equate surplus with capital paid-in.
Interest income on securities acquired through open markets, which totaled $115.9 billion, was primarily responsible for the Fed's 2014 estimated net income of $101.5 billion. Those open market operations included Treasury securities, federal agency and GSE mortgage-backed securities, and GSE debt securities. The operating expenses for the FHLBanks totaled $3.6 billion in 2014 (net of amounts reimbursed by Treasury and other entities for services the banks provided as fiscal agents).
Other assessments on the FHLBanks included $711 million for costs associated with producing, issuing, and retiring currency, $590 million for board expenditures, and $563 million to fund Consumer Financial Protection Bureau (CFPB) operations. Interest expenses associated with reserve balances and term deposits held by depository institutions totaled $6.9 billion for the banks, which also recorded foreign currency translation losses of $2.9 billion that resulted from foreign currency denominated asset holdings being revaluated daily at current exchange rates.
Services of $435 million accounted for additional earnings for the FHLBanks, and consolidated limited liability companies created in response to the financial crisis netted another $101 million in income. Statutory dividends for 2014 amounted to $1.7 billion, and the amount used to equate surplus to capital paid-in totaled $1.1 billion.