Federal Reserve Banks
Combined Statements of Condition
As of December 31, 2009 and December, 2008
ASSETS 2009 2008
Gold Certificates 11,037 11,037
Special drawing rights certificates 5,200 2,200
Coin 2,053 1,688
Items in process of collection 507 979
Prepaid interest on Federal Reserve notes - 2,425
Loans to depository institutions 96,618 544,010
Other loans, net (of which $48, 183 million is measured at fair
Value as of December 31, 2009) 69,433 100,082
System Open Market Account:
Securities purchased under agreements to resell - 80,000
Treasury securities, net 805,972 481,449
Government-sponsored enterprise debt securities, net 167,362 20,740
Federal agency and government-sponsored enterprise mortgage-
backed securities, net 918,927 -
Investments denominated in foreign currencies 25,272 24,804
Central bank liquidity swaps 10,272 553,278
Other investments 5 -
Consolidated variable interest entities:
Investments held by consolidated variable interest entities (of
which $71,648 million and $74,570 million is measured
at fair value as of December 31, 2009 and 2008, respectively) 81,380 411,996
Preferred securities 25,106 -
Accrued interest receivable 12,641 73,389
Bank premises and equipment, net 2,624 2,572
Other assets 638 629
Total assets 2,235,047 2,245,728
LIABILITIES AND CAPITAL 2009 2008
Federal Reserve notes outstanding, net 887,846 853,168
System Open Market Account:
Securities sold under agreements to repurchase 77,732 88,352
Other liabilities 601 -
Consolidated variable interest entities:
Beneficial interest in consolidated variable interest entities 5,095 2,824
Other liabilities (of which $143 million is measured at fair
value as of December 31, 2009) 1,316 5,813
Deposits:
Depositary institutions 976,988 860,000
Treasury, general account 186,632 106,123
Treasury, supplementary financing account 5,001 259,325
Other deposits 36,228 21,671
Deferred credit items 2,103 2,471
Accrued interest on Federal Reserve notes 1,191 -
Interest due to depositary institutions 113 88
Accrued benefit costs 2,631 3,374
Other liabilities 290 367
Total liabilities 2,183,767 2,203,576
Capital paid-in 25,640 21,076
Surplus (including accumulated other comprehensive loss of
$3,676 million $4,683 million at December 31, 2009
and 2008, respectively) 25,640 21,076
Total capital 51,280 42,152
Total liabilities and capital 2,235,047 2,245,728
2.12.1 Income statement
Federal Reserve Banks
Combined Statements of Income and Comprehensive Income
For the years ended December 31, 2009 and December 31, 2008
(In millions)
INTEREST INCOME 2009 2008
Loans to depository institutions 990 3,817
Other loans, net 4,519 3,348
System Open Market Account:
Securities purchased under agreements to resell 13 1,891
Treasury securities 22,873 25,532
Government sponsored enterprise debt securities 2,048 99
Federal agency and government-sponsored enterprise mortgage-
backed securities 20,407 -
Investment denominated in foreign currencies 296 623
Central bank liquidity swaps 2,168 3,606
Other investments 1 -
Investments held by consolidated variable interest entities 9,820 4,087
Total interest income 63,135 43,003
INTEREST EXPENSE
System Open Market Account:
Securities sold under agreements to repurchase 98 737
Depository institution deposits 2,183 817
Beneficial interest in consolidated variable interest entities 267 463
Total interest expense 2,548 2,017
Provision for loan restructuring (2,621) -
Net interest income, after provision for loan restructuring 57,966 40,986
NON-INTEREST INCOME (LOSS)
Other loans unrealized gains 557 -
System Open market Account:
Treasury securities gains - 3,769
Federal agency and government-sponsored enterprise mortgage-
backed securities gains, net 879 -
Foreign currency gains, net 172 1,266
Consolidated variable interest entities
Investment held by consolidated variable interest entities losses, net (1,937) (9,626)
Beneficial interest in consolidated variable interest entities (losses)
gains, net (1,903) 4,389
Dividends on preferred securities 106 -
Income from services 663 773
Reimbursable services to government agencies 450 461
Other income 443 899
Total non-interest (loss) income (570) 1,931
OPERATING EXPENSES
Salaries and other benefits 2,802 2,184
Occupancy expense 280 275
Equipment expense 183 200
Assessment by the Board of Governors 888 853
Professional fees related to conditional variable interest entities 125 80
Other expenses 702 662
Total operating expenses 4,980 4,254
Net income prior to distribution 52,416 38,663
Charge in funded status of benefit plans 1,007 (3,159)
Comprehensive income prior to distribute 53,423 35,504
Distribution of comprehensive income:
Dividends paid to member banks 1,428 1,189
Transferred to surplus and change in accumulated other
Comprehensive income (loss) 4,564 2,626
Payments to Treasury as interest on Federal Reserve notes 47,431 31,689
Total distribution 53,423 35,504
2.12.3 Changes in Capital
Federal Reserve Banks
Combined Statements of Changes in Capital
For the years ended December 31, 2009 and December 31, 2008
(In millions, except share data)
Surplus
Accumulated
other
Net income comprehensive
Capital paid-in retained (loss) income Total surplus Total capital
Balance at January1,2008
(368,996,413 shares) 18,450 19,974 (1,524) 18,450 36,900
Net change in capital
stock issued
(52,521,054 shares) 2,626 - - - 2,626
Transferred to surplus
and change in
accumulated other
comprehensive income
(loss) - 5,785 (3,159) 2,626 2,626
Balance at December 31,
2008(421,517,467 shares) 21,076 25,759 (4,683) 21,076 42,152
Net change in capital
stock issued (91,289,192
shares) 4,564 - - - 4,564
Transferred to (from)
surplus and change in
accumulated other
comprehensive income - 3,557 1,007 4,564 4,564
Balance at December 31,
2009 (512,806,659 shares) 25,640 29,316 (3,676) 25,640 51,280
2.12.4 Comment on financial report
Based on Federal Reserve's balance sheet in 2008 and 2009, we can see that the amount of assets and liabilities and capital are different so much. However, Federal Reserve had granted fewer loans to the depository institution. It uses a large volume of assets invest into the securities such as Treasury securities, Government-sponsored enterprise debt securities, Federal agency and government sponsored enterprise mortgage-backed securities. This condition happens because the liquidity swap issue had brought a lot of criticisms. So, Federal Reserve invests the money which supply by itself in the securities since the interest rate was still low.
According to the combined statements of income and comprehensive income in year 2008 and 2009, the total distribution by net interest income had increase by over 15,000 million. This is because the return gained from the investment into securities was increased. Although the Federal Reserve had granted fewer loans to the depository institution in 2009, but it still have to pay large amount of interest to the depositors which deposit more in 2009 into Federal Reserve. Besides, it also spends money to restructuring the loan.
Federal Reserve had suffer lose on non-interest income in 2009. However, the loss is still reasonable since its net interest income was able to cover it. So, it would not be a big problem. The operating expenses in both years were not much different. The only thing that increases the most is the salaries and other benefits which are 500 million. Since the inflation is still high, so an increase of this amount could be understood.
Based on the combined statements of changes in capital of Federal Reserve Banks in 2008 and 2009, we can saw that the share issues had increase. So, of course the surplus will be increased.
