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The Federal Reserve
Bank of St. Louis
Financial Statements as of and for the Years Ended
December 31, 2014 and 2013 and
Independent Auditors’ Report
All table units in this document are in millions of U.S. dollars
unless otherwise noted.

THE FEDERAL RESERVE BANK OF ST. LOUIS
Table of Contents

Management’s Report on Internal Control Over Financial Reporting

1
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Independent Auditors’ Report
Abbreviations

2-4
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5
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Financial Statements:
Statements of Condition as of December 31, 2014 and December 31, 2013

6
e
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p

Statements of Income and Comprehensive Income for the years ended December 31,2
,
3
r
b
m
c
e
D
d
n
a
4
1
0

7
e
g
a
p

Statements of Changes in Capital for the years ended December 31, 2014 andD
0
2
,
1
3
r
b
m
c
e

8
e
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a
p

Notes to Financial Statements

9-36
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F

ederal

R

eserve

Ba n k

of

St . Lo u is

P.O. Box 442
St. Louis, MO 63166-0442
www.stlouisfed.org

Management’s Report on Internal Control Over Financial Reporting
March 11, 2015
To the Board of Directors
The management of the Federal Reserve Bank of St. Louis (Bank) is responsible for the preparation and fair
presentation of the Statements of Condition as of December 31, 2014 and 2013, and the Statements of Income and
Comprehensive Income, and Statements of Changes in Capital for the years then ended (the financial statements). The
financial statements have been prepared in conformity with the accounting principles, policies, and practices established
by the Board of Governors of the Federal Reserve System as set forth in the Financial Accounting Manual for Federal
Reserve Banks (FAM), and, as such, include some amounts that are based on management judgments and estimates. To
our knowledge, the financial statements are, in all material respects, fairly presented in conformity with the accounting
principles, policies and practices documented in the FAM and include all disclosures necessary for such fair
presentation.
The management of the Bank is responsible for establishing and maintaining effective internal control over financial
reporting as it relates to the financial statements. The Bank’s internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with the FAM. The Bank’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the Bank’s assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with FAM, and that
the Bank’s receipts and expenditures are being made only in accordance with authorizations of its management and
directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Bank’s assets that could have a material effect on its financial statements.
Even effective internal control, no matter how well designed, has inherent limitations, including the possibility of
human error, and therefore can provide only reasonable assurance with respect to the preparation of reliable financial
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
The management of the Bank assessed its internal control over financial reporting based upon the criteria established in
the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, we believe that the Bank maintained effective internal control over
financial reporting.

James Bullard, President and Chief Executive Officer
)
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(

(signed by) David A. Sapenaro, First Vice President and Chief Operating Officer

Marilyn K. Corona, Vice President and Chief Financial Officer
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Deloitte.

Deloitte & Touche LLP

100 South Fourth Street
Suite 300
St. Louis, MO 63102-1821
USA
Tel: +1 314 342 4900
Fax: +1 314 840 1100
www.deloitte.com

INDEPENDENT AUDITORS’ REPORT
To the Board of Governors of the Federal Reserve System
and the Board of Directors of the Federal Reserve Bank of St. Louis:
We have audited the accompanying financial statements of the Federal Reserve Bank of St. Louis
(“FRB St. Louis”), which are comprised of the statements of condition as of December 31, 2014 and
2013, and the related statements of income and comprehensive income, and of changes in capital for
the years then ended, and the related notes to the financial statements. We also have audited the FRB
St. Louis’ internal control over financial reporting as of December 31, 2014, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Management’s Responsibility
The FRB St. Louis’ management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles established by the Board of Governors
of the Federal Reserve System (the “Board”) as described in Note 3 to the financial statements. The
Board has determined that this basis of accounting is an acceptable basis for the preparation of the
FRB St. Louis’ financial statements in the circumstances. The FRB St. Louis’ management is also
responsible for the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error. The FRB St. Louis’ management is also responsible for its assertion of
the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements and an opinion on the FRB
St. Louis’ internal control over financial reporting based on our audits. We conducted our audits of
the financial statements in accordance with auditing standards generally accepted in the United States
of America and in accordance with the auditing standards of the Public Company Accounting
Oversight Board (United States) (the “PCAOB”) and we conducted our audit of internal control over
financial reporting in accordance with attestation standards established by the American Institute of
Certified Public Accountants and in accordance with the auditing standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement and whether effective internal control over
financial reporting was maintained in all material respects.
An audit of the financial statements involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers

Member of
Deloitte Touche Tohmatsu Limited

internal control relevant to the FRB St. Louis’ preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit of
the financial statements also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements. An audit of internal control over financial reporting
involves obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary
in the circumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Definition of Internal Control Over Financial Reporting
The FRB St. Louis’ internal control over financial reporting is a process designed by, or under the
supervision of, the FRB St. Louis’ principal executive and principal financial officers, or persons
performing similar functions, and effected by the FRB St. Louis’ board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with the accounting principles
established by the Board. The FRB St. Louis’ internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the FRB St. Louis; (2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with the accounting principles established by the Board, and that
receipts and expenditures of the FRB St. Louis are being made only in accordance with authorizations
of management and directors of the FRB St. Louis; and (3) provide reasonable assurance regarding
prevention or timely detection and correction of unauthorized acquisition, use, or disposition of the
FRB St. Louis’ assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Control Over Financial Reporting
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected and corrected on a timely basis. Also, projections of
any evaluation of the effectiveness of the internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the FRB St. Louis as of December 31, 2014 and 2013, and the results of its
operations for the years then ended in accordance with the basis of accounting described in Note 3 to
the financial statements. Also, in our opinion, the FRB St. Louis maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2014, based on the criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.

Basis of Accounting
We draw attention to Note 3 to the financial statements, which describes the basis of accounting. The
FRB St. Louis has prepared these financial statements in conformity with accounting principles
established by the Board, as set forth in the Financial Accounting Manual for Federal Reserve Banks,
which is a basis of accounting other than accounting principles generally accepted in the United States
of America. The effects on such financial statements of the differences between the accounting
principles established by the Board and accounting principles generally accepted in the United States
of America are also described in Note 3 to the financial statements. Our opinion is not modified with
respect to this matter.

(gyoTL
se)eeoP
inD u
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bt c
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e
March 11, 2015

FEDERAL RESERVE BANK OF ST. LOUIS
Abbreviations:

ACH
ASC
ASU
BEP
Bureau
FAM
FASB
FOMC
FRBNY
GAAP
GSE
IMF
MBS
SDR
SERP
SOMA
TBA
TDF

Automated clearinghouse
Accounting Standards Codification
Accounting Standards Update
Benefit Equalization Retirement Plan
Bureau of Consumer Financial Protection
Financial Accounting Manual for Federal Reserve Banks
Financial Accounting Standards Board
Federal Open Market Committee
Federal Reserve Bank of New York
Accounting principles generally accepted in the United States of America
Government-sponsored enterprise
International Monetary Fund
Mortgage-backed securities
Special drawing rights
Supplemental Retirement Plan for Select Officers of the Federal Reserve Banks
System Open Market Account
To be announced
Term Deposit Facility

FEDERAL RESERVE BANK OF ST. LOUIS
STATEMENTS OF CONDITION
As of December 31, 2014 and December 31, 2013
(in millions)
2014
G
:
t
e
s
A o ld certificates
S
:
t
e
s
Apecial draw ing rights certificates
C
:
t
e
s
A oin
L
:
t
e
s
Ao an s to d ep o sito ry institutions
System O pen M ark et A ccount:
:
t
e
s
A
t
e
s reasu ry securities, net ( o f w hich $137 and $276 is lent as o f D ecem ber 31, 2 0 1 4 and 2013,
m
y
A
p
O
S
:
n
k
a
M
r
c
o
T
u
respectively)
t
e
s
A o v ern m en t-sp o n sored enterprise d eb t securities, net ( o f w hich $8 and $18 is len t as o f D ecem ber 31,
m
y
p
O
S
:
n
k
a
M
r
c
o
G
u
2 0 1 4 and 2013, respectively)

2013
278
150
23
-

310
150
19
3

32,023

37,964

t
e
s
Ao reig n cu rren cy denom inated investm ents, net
m
y
p
O
S
:
n
k
a
M
r
c
o
F
u
t
e
s
A entral b an k liqu id ity sw aps
m
y
p
O
S
:
n
k
a
M
r
c
o
C
u
t
e
s
A ccru ed in terest receivable
m
y
p
O
S
:
n
k
a
M
r
c
o
u
B
:
t
e
s
A a n k prem ises and equipm ent, net
O th er assets
T otal assets

493
22,067
176
13
316
136
66
55,741

951
24 ,6 8 0
198
2
377
141
69
64,864

C
d
n
s
e
t
l
b
a
i
L ed eral R eserv e notes outstanding, net
F
:
p

36,699

31,298

6,288
10

5,083
21

7,610
97
12
4,483
10
55,209

8,325
93
62
19,511
9
64,402

266

231

266
532
55,741

231
4 62
64,864

o
c e d e ra l a g e n c y a n d g o v e rn m e n t-s p o n s o r e d e n te rp ris e m o rtg a g e -b a c k e d s e c u ritie s , n e t
F
:
t
n
u
A
e
k
r
a
M
p
O
m
s
S
y

e
t
l
a
i
L ecurities sold u nder agreem ents to repurchase
s
b
n
C
d
m
y
p
O
S
:
k
M
r
c
A
o
u
e
t
l
a
i
L th er liabilities
s
b
n
C
d
m
y
p
O
S
:
k
M
r
c
A
o
u
e
t
l
a
i ep o sito ry institutions
s
b
L
n
C
d
p
D
:
o
A
:
p
C
d
n
s
e
t
l
b
a
i
L ccru ed ben efit costs
A
:
p
C
d
n
s
e
t
l
b
a
i
L ccru ed rem ittances to the T reasury
In
:
p
C
d
n
s
e
t
l
b
a
i
L terd istrict settlem ent account
O
:
p
C
d
n
s
e
t
l
b
a
i
L th er liabilities
T otal liabilities
C apital paid-in
Surplus (including accum ulated other com prehensive loss o f $1 and $3 at
D ecem b er 31, 2 0 1 4 and 2013, respectively)
T otal capital
T otal liab ilities and capital

The accompanying notes are an integral part of these financial statements.

FEDERAL RESERVE BANK OF ST. LOUIS
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended December 31, 2014 and December 31, 2013
(in millions)
2014

Treasury securities, net
u
A
k
a
M
p
O
y
S
:
m
o
c
s
r
e
t
n
I
Government-sponsored enterprise debt securities, net
u
A
k
a
M
p
O
y
S
:
m
o
c
s
r
e
t
n
I

837
21
683
1
1,542

Federal agency and government-sponsored enterprise m ortgage-backed securities, net
u
A
k
a
M
p
O
y
S
:
m
o
c
s
r
e
t
n
I

Foreign currency denominated investments, net
u
A
k
a
M
p
O
y
S
:
m
o
c
s
r
e
t
n
I
Total interest income
:
m
o
c
s
r
e
t
n
I

Securities sold under agreements to repurchase
u
o
c
A
k
a
M
O
m
y
S
:
p
x
E
s
r
e
t
n
I
e
t
n
I
s
r
p
x
E
Deposits:
:
Depository institutions
i
o
D
:
p
x
E
s
r
e
t
n
I
Total interest expense
:
p
x
E
s
r
e
t
n
I
Net
:
p
x
E
s
r
e
t
n
I interest income

2013

824
35
585
1
1,445

2

-

1

23
25
1,517

28
29
1,416

Foreign currency translation losses, net
u
A
k
a
M
p
O
y
S
:
m
c
s
r
e
t
I
n
o
N
e
t
I
n
o
Nompensation received for service costs provided
s
r
c
m
:
C
e
t
I
n
o
Neimbursable services to government agencies
s
r
c
m
R
:
e
t
I
n
o
Nther
s
r
c
m
:
O
Total non-interest income

1
(24)
2
144
1
124

1
(10)
3
122
1
117

a
e
p
t
r
O
s
x
E
g
n
i
Salaries and benefits
:
a
e
p
O
t
r
x
E
g
n
i
s
Occupancy
:
s
x
E
g
a
e
p
O
n
i
t
r
Equipment
:
a
e
p
O
t
r
x
E
g
n
i
s
Other
:

153
14
5
114

136
14
5
99

27
5
318

28
5
287

1,323
1,276
47

1,246
1,245
1

2
2
49

16
16
17

F
u
A
k
a
M
p
O
y
S
:
m
c
s
r
e
t
I
n
o
Ne d e ra l ag e n cy an d g o v ern m en t-sp o n so re d en terp rise m o rtg ag e-b ac k ed secu rities g ain s, n e t

Board of Governors operating expenses and currency costs
m
A
:
s
x
E
g
n
i
t
a
r
e
p
O
Bureau of Consumer Financial Protection
m
A
:
s
x
E
g
n
i
t
a
r
e
p
O
Total operating expenses
Net income before providing for remittances to the Treasury
Earnings remittances to the Treasury
Net income
Change in prior service costs and actuarial losses related to benefit plans
Total other comprehensive income
Comprehensive income

The accompanying notes are an integral part of these financial statements.

FEDERAL RESERVE BANK OF ST. LOUIS
STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 2014 and December 31, 2013
(in millions, except share data)
S u r p lu s :

A c c u m u la te d
o th e r
N
:
s
l
p
r
u
S e t in c o m e
re ta in e d

C
:
s
l
p
r
u
S a p ita l p a id -in

c o m p re h e n siv e
lo s s

T
:
s
l
p
r
u
S o ta l s u rp lu s

T o ta l c a p ita l

B a la n c e a t D e c e m b e r 3 1 , 2 0 1 2
( 4 ,5 6 2 ,0 0 1 s h a re s )

228

247

228

3

-

456

-

-

1

-

1

1

-

-

16

16

16

(1 4 )

(1 4 )

(1 9 )

3

N
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B e t c h a n g e in c a p ita l s to c k is s u e d
( 6 2 ,5 5 0 s h a re s )

-

C
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B o m p r e h e n s iv e in c o m e :
N
v
i
s
h
p
o
C
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

e t

O
v
i
s
h
p
o
C
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

t h e r

i n c o m

i v i d e n d s

c o m

o n

e

p r e h e n s i v e

c a p i t a l

i n c o m

e

-

N
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B e t c h a n g e in c a p ita l

(1 4 )

-

3

s t o c k

(1 3 )

16

234

(3 )

3

6

231

462

B a la n c e a t D e c e m b e r 3 1 , 2 0 1 3
( 4 ,6 2 4 ,5 5 1 s h a re s )

231

N
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B e t c h a n g e in c a p ita l s to c k is s u e d

35

( 6 9 7 ,9 8 8 s h a re s )

N
v
i
s
h
p
o
C
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

N
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

e t

e t

O
v
i
s
h
p
o
C
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a
B

t h e r

i n c o m

i v i d e n d s

c h a n g e

c o m

o n

i n

-

-

35

-

e

p r e h e n s i v e

c a p i t a l

-

i n c o m

s t o c k

c a p i t a l

e

47

-

47

-

-

2

2

2

(1 4 )

-

(1 4 )

(1 4 )

35

33

2

35

70

266

267

266

532

-

47

B a la n c e a t D e c e m b e r 3 1 , 2 0 1 4
( 5 ,3 2 2 ,5 3 9 s h a re s )

(1 )

The accompanying notes are an integral part of these financial statements.

FEDERAL RESERVE BANK OF ST. LOUIS
NOTES TO FINANCIAL STATEMENTS

1.

St r u c t u r e
The Federal Reserve Bank of St. Louis (Bank) is part of the Federal Reserve System (System) and is one of the 12
Federal Reserve Banks (Reserve Banks) created by Congress under the Federal Reserve Act of 1913 (Federal
Reserve Act), which established the central bank of the United States. The Reserve Banks are chartered by the
federal government and possess a unique set of governmental, corporate, and central bank characteristics. The
Bank serves the Eighth Federal Reserve District, which includes Arkansas, and portions of Illinois, Indiana,
Kentucky, Mississippi, Missouri and Tennessee.
In accordance with the Federal Reserve Act, supervision and control of the Bank is exercised by a board of
directors. The Federal Reserve Act specifies the composition of the board of directors for each of the Reserve
Banks. Each board is composed of nine members serving three-year terms: three directors, including those
designated as chairman and deputy chairman, are appointed by the Board of Governors of the Federal Reserve
System (Board of Governors) to represent the public, and six directors are elected by member banks. Banks
that are members of the System include all nationally-chartered banks and any state-chartered banks that apply
and are approved for membership. Member banks are divided into three classes according to size. Member
banks in each class elect one director representing member banks and one representing the public. In any
election of directors, each member bank receives one vote, regardless of the number of shares of Reserve Bank
stock it holds.
In addition to the 12 Reserve Banks, the System also consists, in part, of the Board of Governors and the Federal
Open Market Committee (FOMC). The Board of Governors, an independent federal agency, is charged by the
Federal Reserve Act with a number of specific duties, including general supervision over the Reserve Banks.
The FOMC is composed of members of the Board of Governors, the president of the Federal Reserve Bank of
New York (FRBNY), and, on a rotating basis, four other Reserve Bank presidents.

2.

Op e r a t i o n s a n d Se r v i c e s
The Reserve Banks perform a variety of services and operations. These functions include participating in
formulating and conducting monetary policy; participating in the payment system, including transfers of funds,
automated clearinghouse (ACH) operations, and check collection; distributing coin and currency; performing
fiscal agency functions for the U.S. Department of the Treasury (Treasury), certain federal agencies, and other
entities; serving as the federal government’s bank; providing short-term loans to depository institutions;
providing loans to participants in programs or facilities with broad-based eligibility in unusual and exigent
circumstances; serving consumers and communities by providing educational materials and information
regarding financial consumer protection rights and laws and information on community development programs
and activities; and supervising bank holding companies, state member banks, savings and loan holding
companies, U.S. offices of foreign banking organizations, and designated financial market utilities pursuant to
authority delegated by the Board of Governors. Certain services are provided to foreign and international
monetary authorities, primarily by the FRBNY.
The FOMC, in conducting monetary policy, establishes policy regarding domestic open market operations,
oversees these operations, and issues authorizations and directives to the FRBNY to execute transactions. The
FOMC authorizes and directs the FRBNY to conduct operations in domestic markets, including the direct
purchase and sale of Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal
agency and GSE mortgage-backed securities (MBS); the purchase of these securities under agreements to
resell; and the sale of these securities under agreements to repurchase. The FRBNY holds the resulting
securities and agreements in a portfolio known as the System Open Market Account (SOMA). The FRBNY is
authorized and directed to lend the Treasury securities and GSE debt securities that are held in the SOMA.
To be prepared to counter disorderly conditions in foreign exchange markets or to meet other needs specified by
the FOMC to carry out the System’s central bank responsibilities, the FOMC has authorized and directed the
FRBNY to execute spot and forward foreign exchange transactions in 14 foreign currencies, to hold balances

in those currencies, and to invest such foreign currency holdings, while maintaining adequate liquidity. The
FRBNY holds these securities and obligations in the SOMA. The FOMC has also authorized the FRBNY to
maintain reciprocal currency arrangements with the Bank of Canada and the Bank of Mexico in the maximum
amounts of $2 billion and $3 billion, respectively, and to warehouse foreign currencies for the Treasury and
the Exchange Stabilization Fund in the maximum amount of $5 billion.
Because of the global character of bank funding markets, the System has at times coordinated with other central
banks to provide liquidity. The FOMC authorized and directed the FRBNY to establish U.S. dollar liquidity
and reciprocal foreign currency liquidity swap lines with the Bank of Canada, the Bank of England, the
European Central Bank, the Bank of Japan, and the Swiss National Bank. The FRBNY holds amounts
outstanding under these swap lines in the SOMA. These swap lines, which were originally established as
temporary arrangements, were converted to standing arrangements on October 31, 2013, and will remain in
place until further notice.
Although the Reserve Banks are separate legal entities, they collaborate on the delivery of certain services to
achieve greater efficiency and effectiveness. This collaboration takes the form of centralized operations and
product or function offices that have responsibility for the delivery of certain services on behalf of the Reserve
Banks. Various operational and management models are used and are supported by service agreements
between the Reserve Banks. In some cases, costs incurred by a Reserve Bank for services provided to other
Reserve Banks are not shared; in other cases, the Reserve Banks are reimbursed for costs incurred in providing
services to other Reserve Banks. Major services provided by the Bank on behalf of the System for which the
costs were not reimbursed by the other Reserve Banks include operation of the Treasury Relations and Support
Office, the Treasury Financial Management Department and the Treasury Agency Support Department, which
provide services to the Treasury. These services include: relationship management, strategic consulting, and
monitoring of Federal Reserve System operations and technology support for the Treasury. In addition,
operational support is provided for the Treasury’s cash management, debt management and accounting
functions.
3.

Si g n i f i c a n t Ac c o u n t i n g P o l i c i e s
Accounting principles for entities with the unique powers and responsibilities of the nation’s central bank have not
been formulated by accounting standard-setting bodies. The Board of Governors has developed specialized
accounting principles and practices that it considers to be appropriate for the nature and function of a central
bank. These accounting principles and practices are documented in the Financial Accounting Manual for
Federal Reserve Banks (FAM), which is issued by the Board of Governors. The Reserve Banks are required to
adopt and apply accounting policies and practices that are consistent with the FAM. The financial statements
have been prepared in accordance with the FAM.
Limited differences exist between the accounting principles and practices in the FAM and accounting principles
generally accepted in the United States of America (GAAP), due to the unique nature of the Bank’s powers
and responsibilities as part of the nation’s central bank and given the System’s unique responsibility to conduct
monetary policy. The primary differences are the presentation of all SOMA securities holdings at amortized
cost, adjusted for credit impairment, if any, the recording of all SOMA securities on a settlement-date basis,
and the use of straight-line amortization for Treasury securities, GSE debt securities, and foreign currency
denominated investments. Amortized cost, rather than the fair value presentation, more appropriately reflects
the financial position associated with the Bank’s securities holdings given the System’s unique responsibility
to conduct monetary policy. Although the application of fair value measurements to the securities holdings
may result in values substantially greater or less than their carrying values, these unrealized changes in value
have no direct effect on the quantity of reserves available to the banking system or on the ability of the Reserve
Banks, as the central bank, to meet their financial obligations and responsibilities. Both the domestic and
foreign components of the SOMA portfolio may involve transactions that result in gains or losses when
holdings are sold before maturity. Decisions regarding securities and foreign currency transactions, including
their purchase and sale, are motivated by monetary policy objectives rather than profit. Accordingly, fair
values, earnings, and gains or losses resulting from the sale of such securities and currencies are incidental to

open market operations and do not motivate decisions related to policy or open market activities. Accounting
for these securities on a settlement-date basis, rather than the trade-date basis required by GAAP, better
reflects the timing of the transaction’s effect on the quantity of reserves in the banking system. The cost bases
of Treasury securities, GSE debt securities, and foreign government debt instruments are adjusted for
amortization of premiums or accretion of discounts on a straight-line basis, rather than using the interest
method required by GAAP.
In addition, the Bank does not present a Statement of Cash Flows as required by GAAP because the liquidity and
cash position of the Bank are not a primary concern given the Reserve Bank’s unique powers and
responsibilities as a central bank. Other information regarding the Bank’s activities is provided in, or may be
derived from, the Statements of Condition, Income and Comprehensive Income, and Changes in Capital, and
the accompanying notes to the financial statements. Other than those described above, there are no significant
differences between the policies outlined in the FAM and GAAP.
Preparing the financial statements in conformity with the FAM requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
In 2014, the description of a line item presented in the Statements of Income and Comprehensive Income has been
revised to better reflect the nature of the item. The amount related to the line item was not changed from the
prior year, only the nomenclature for the line item was revised. The line item “System Open Market Account:
Foreign currency denominated assets, net” has been revised in the Statements of Income and Comprehensive
Income to “System Open Market Account: Foreign currency denominated investments, net.”
Significant accounts and accounting policies are explained below.
a. Consolidation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) established the
Bureau of Consumer Financial Protection (Bureau) as an independent bureau within the System that has
supervisory authority over some institutions previously supervised by the Reserve Banks in connection
with those institutions’ compliance with consumer protection statutes. Section 1017 of the Dodd-Frank
Act provides that the financial statements of the Bureau are not to be consolidated with those of the Board
of Governors or the System. The Board of Governors funds the Bureau through assessments on the
Reserve Banks as required by the Dodd-Frank Act. The Reserve Banks reviewed the law and evaluated
the design of and their relationship to the Bureau and determined that it should not be consolidated in the
Bank’s financial statements.
b. Gold and Special Drawing Rights Certificates
The Secretary of the Treasury is authorized to issue gold certificates to the Reserve Banks. Upon
authorization, the Reserve Banks acquire gold certificates by crediting equivalent amounts in dollars to the
account established for the Treasury. The gold certificates held by the Reserve Banks are required to be
backed by the gold owned by the Treasury. The Treasury may reacquire the gold certificates at any time,
and the Reserve Banks must deliver them to the Treasury. At such time, the Treasury’s account is
charged, and the Reserve Banks’ gold certificate accounts are reduced. The value of gold for purposes of
backing the gold certificates is set by law at $42 2/9 per fine troy ounce. Gold certificates are recorded by
the Banks at original cost. The Board of Governors allocates the gold certificates among the Reserve
Banks once a year based on each Reserve Bank’s average Federal Reserve notes outstanding during the
preceding twelve months.
Special drawing rights (SDR) are issued by the International Monetary Fund (IMF) to its members in
proportion to each member’s quota in the IMF at the time of issuance. SDRs serve as a supplement to
international monetary reserves and may be transferred from one national monetary authority to another.

Under the law providing for U.S. participation in the SDR system, the Secretary of the Treasury is
authorized to issue SDR certificates to the Reserve Banks. When SDR certificates are issued to the
Reserve Banks, equivalent amounts in U.S. dollars are credited to the account established for the Treasury
and the Reserve Banks’ SDR certificate accounts are increased. The Reserve Banks are required to
purchase SDR certificates, at the direction of the Treasury, for the purpose of financing SDR acquisitions
or for financing exchange-stabilization operations. At the time SDR certificate transactions occur, the
Board of Governors allocates the SDR certificates among the Reserve Banks based upon each Reserve
Bank’s Federal Reserve notes outstanding at the end of the preceding calendar year. SDR certificates are
recorded by the Banks at original cost. There were no SDR certificate transactions during the years ended
December 31, 2014 and 2013.
c. Coin
The amount reported as coin in the Statements of Condition represents the face value of all United States coin
held by the Bank. The Bank buys coin at face value from the U.S. Mint in order to fill depository
institution orders.
d. Loans
Loans to depository institutions are reported at their outstanding principal balances and interest income is
recognized on an accrual basis.
Loans are impaired when current information and events indicate that it is probable that the Bank will not
receive the principal and interest that are due in accordance with the contractual terms of the loan
agreement. Impaired loans are evaluated to determine whether an allowance for loan loss is required. The
Bank has developed procedures for assessing the adequacy of any allowance for loan losses using all
available information to identify incurred losses. This assessment includes monitoring information
obtained from banking supervisors, borrowers, and other sources to assess the credit condition of the
borrowers and, as appropriate, evaluating collateral values. Generally, the Bank would discontinue
recognizing interest income on impaired loans until the borrower’s repayment performance demonstrates
principal and interest would be received in accordance with the terms of the loan agreement. If the Bank
discontinues recording interest on an impaired loan, cash payments are first applied to principal until the
loan balance is reduced to zero; subsequent payments are applied as recoveries of amounts previously
deemed uncollectible, if any, and then as interest income.

e. Securities Purchased Under Agreements to Resell, Securities Sold Under Agreements to Repurchase, and
Securities Lending
The FRBNY may engage in purchases of securities with primary dealers under agreements to resell
(repurchase transactions). These repurchase transactions are typically settled through a tri-party
arrangement. In a tri-party arrangement, two commercial custodial banks manage the collateral clearing,
settlement, pricing, and pledging, and provide cash and securities custodial services for and on behalf of
the FRBNY and counterparty. The collateral pledged must exceed the principal amount of the transaction
by a margin determined by the FRBNY for each class and maturity of acceptable collateral. Collateral
designated by the FRBNY as acceptable under repurchase transactions primarily includes Treasury
securities (including Treasury Inflation-Protected Securities, Separate Trading of Registered Interest and
Principal of Securities Treasury securities, and Treasury Floating Rate Notes); direct obligations of several
federal and GSE-related agencies, including Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, and Federal Home Loan Banks; and pass-through federal agency and GSE MBS.
The repurchase transactions are accounted for as financing transactions with the associated interest income
recognized over the life of the transaction. These transactions are reported at their contractual amounts as
“System Open Market Account: Securities purchased under agreements to resell” and the related accrued
interest receivable is reported as a component of “System Open Market Account: Accrued interest
receivable” in the Statements of Condition.

The FRBNY may engage in sales of securities under agreements to repurchase with primary dealers and with a
set of expanded counterparties which includes banks, savings associations, GSEs, and domestic money
market funds (Overnight and term reverse repurchase agreements). These reverse repurchase transactions,
are settled through a tri-party arrangement, similar to repurchase transactions. Reverse repurchase
transactions may also be executed with foreign official and international account holders as part of a
service offering. Reverse repurchase agreements are collateralized by a pledge of an amount of Treasury
securities, GSE debt securities, or federal agency and GSE MBS that are held in the SOMA. Reverse
repurchase transactions are accounted for as financing transactions, and the associated interest expense is
recognized over the life of the transaction. These transactions are reported at their contractual amounts as
“System Open Market Account: Securities sold under agreements to repurchase” and the related accrued
interest payable is reported as a component of “System Open Market Account: Other liabilities” in the
Statements of Condition.
Treasury securities and GSE debt securities held in the SOMA may be lent to primary dealers, typically
overnight, to facilitate the effective functioning of the domestic securities markets. The amortized cost
basis of securities lent continues to be reported as “System Open Market Account: Treasury securities,
net” and “System Open Market Account: Government-sponsored enterprise debt securities, net,” as
appropriate, in the Statements of Condition. Securities lending transactions are fully collateralized by
Treasury securities based on the fair values of the securities lent increased by a margin determined by the
FRBNY. The FRBNY charges the primary dealer a fee for borrowing securities, and these fees are
reported as a component of “Non-interest income: System Open Market Account: Other” in the
Statements of Income and Comprehensive Income.
Activity related to securities purchased under agreements to resell, securities sold under agreements to
repurchase, and securities lending is allocated to each of the Reserve Banks on a percentage basis derived
from an annual settlement of the interdistrict settlement account that occurs in the second quarter of each
year.
f. Treasury Securities, Government-Sponsored Enterprise Debt Securities, Federal Agency and GovernmentSponsored Enterprise Mortgage-Backed Securities, Foreign Currency Denominated Investments, and
Warehousing Agreements
Interest income on Treasury securities, GSE debt securities, and foreign currency denominated investments
included in the SOMA is accrued using the straight-line method. Interest income on federal agency and
GSE MBS is accrued using the interest method and includes amortization of premiums, accretion of
discounts, and gains or losses associated with principal paydowns. Premiums and discounts related to
federal agency and GSE MBS are amortized or accreted over the term of the security to stated maturity,
and the amortization of premiums and accretion of discounts are accelerated when principal payments are
received. Gains and losses resulting from sales of securities are determined by specific issue based on
average cost. Treasury securities, GSE debt securities, and federal agency and GSE MBS are reported net
of premiums and discounts in the Statements of Condition and interest income on those securities is
reported net of the amortization of premiums and accretion of discounts in the Statements of Income and
Comprehensive Income.
In addition to outright purchases of federal agency and GSE MBS that are held in the SOMA, the FRBNY
enters into dollar roll transactions (dollar rolls), which primarily involve an initial transaction to purchase
or sell “to be announced” (TBA) MBS for delivery in the current month combined with a simultaneous
agreement to sell or purchase TBA MBS on a specified future date. During the years ended December 31,
2014 and 2013, the FRBNY executed dollar rolls to facilitate settlement of outstanding purchases of
federal agency and GSE MBS. The FRBNY accounts for dollar rolls as purchases or sales on a
settlement-date basis. In addition, TBA MBS transactions may be paired off or assigned prior to
settlement. Net gains resulting from these MBS transactions are reported as “Non-interest income:
System Open Market Account: Federal agency and government-sponsored enterprise mortgage-backed
securities gains, net” in the Statements of Income and Comprehensive Income.

Foreign currency denominated investments, which can include foreign currency deposits, securities purchased
under agreements to resell, and government debt instruments, are revalued daily at current foreign
currency market exchange rates in order to report these assets in U.S. dollars. Foreign currency translation
gains and losses that result from the daily revaluation of foreign currency denominated investments are
reported as “Non-interest income: System Open Market Account: Foreign currency translation losses, net”
in the Statements of Income and Comprehensive Income.
Because the FRBNY enters into commitments to buy Treasury securities, federal agency and GSE MBS, and
foreign government debt instruments and records the related securities on a settlement-date basis in
accordance with the FAM, the related outstanding commitments are not reflected in the Statements of
Condition.
Activity related to Treasury securities, GSE debt securities, and federal agency and GSE MBS, including the
premiums, discounts, and realized gains and losses, is allocated to each Reserve Bank on a percentage
basis derived from an annual settlement of the interdistrict settlement account that occurs in the second
quarter of each year. Activity related to foreign currency denominated investments, including the
premiums, discounts, and realized and unrealized gains and losses, is allocated to each Reserve Bank
based on the ratio of each Reserve Bank’s capital and surplus to the Reserve Banks’ aggregate capital and
surplus at the preceding December 31.
Warehousing is an arrangement under which the FOMC has approved the exchange, at the request of the
Treasury, of U.S. dollars for foreign currencies held by the Treasury over a limited period. The purpose of
the warehousing facility is to supplement the U.S. dollar resources of the Treasury for financing purchases
of foreign currencies and related international operations. Warehousing agreements are valued daily at
current market exchange rates. Activity related to these agreements is allocated to each Reserve Bank
based on the ratio of each Reserve Bank’s capital and surplus to the Reserve Banks’ aggregate capital and
surplus at the preceding December 31.
g. Central Bank Liquidity Swaps
Central bank liquidity swaps, which are transacted between the FRBNY and a foreign central bank, can be
structured as either U.S. dollar or foreign currency liquidity swap arrangements.
Central bank liquidity swaps activity, including the related income and expense, is allocated to each Reserve
Bank based on the ratio of each Reserve Bank’s capital and surplus to the Reserve Banks’ aggregate
capital and surplus at the preceding December 31. The foreign currency amounts associated with these
central bank liquidity swap arrangements are revalued daily at current foreign currency market exchange
rates.
U.S. dollar liquidity swaps
At the initiation of each U.S. dollar liquidity swap transaction, the foreign central bank transfers a specified
amount of its currency to a restricted account for the FRBNY in exchange for U.S. dollars at the
prevailing market exchange rate. Concurrent with this transaction, the FRBNY and the foreign central
bank agree to a second transaction that obligates the foreign central bank to return the U.S. dollars and the
FRBNY to return the foreign currency on a specified future date at the same exchange rate as the initial
transaction. The Bank’s allocated portion of the foreign currency amounts that the FRBNY acquires are
reported as “System Open Market Account: Central bank liquidity swaps” in the Statements of Condition.
Because the swap transaction will be unwound at the same U.S. dollar amount and exchange rate that were
used in the initial transaction, the recorded value of the foreign currency amounts is not affected by
changes in the market exchange rate.
The foreign central bank compensates the FRBNY based on the amount outstanding and the rate under the
swap agreement. The Bank’s allocated portion of the amount of compensation received during the term of

the swap transaction is reported as “Interest income: System Open Market Account: Central bank liquidity
swaps” in the Statements of Income and Comprehensive Income.
Foreign currency liquidity swaps
The structure of foreign currency liquidity swap transactions involves the transfer by the FRBNY, at the
prevailing market exchange rate, of a specified amount of U.S. dollars to an account for the foreign central
bank in exchange for its currency. The foreign currency amounts that the FRBNY receives are recorded
as a liability.
h. Bank Premises, Equipment, and Software
Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a
straight-line basis over the estimated useful lives of the assets, which range from 2 to 50 years. Major
alterations, renovations, and improvements are capitalized at cost as additions to the asset accounts and are
depreciated over the remaining useful life of the asset or, if appropriate, over the unique useful life of the
alteration, renovation, or improvement. Maintenance, repairs, and minor replacements are charged to
operating expense in the year incurred.
Costs incurred to acquire software are capitalized based on the purchase price. Costs incurred during the
application development stage to develop internal-use software are capitalized based on the cost of direct
services and materials associated with designing, coding, installing, and testing the software. Capitalized
software costs are amortized on a straight-line basis over the estimated useful lives of the software
applications, which generally range from two to five years. Maintenance costs and minor replacements
related to software are charged to operating expense in the year incurred.
Capitalized assets, including software, buildings, leasehold improvements, furniture, and equipment, are
impaired and an adjustment is recorded when events or changes in circumstances indicate that the carrying
amount of assets or asset groups is not recoverable and significantly exceeds the assets’ fair value.
i. Interdistrict Settlement Account
Each Reserve Bank aggregates the payments due to or from other Reserve Banks. These payments result from
transactions between the Reserve Banks and transactions that involve depository institution accounts held
by other Reserve Banks, such as Fedwire funds and securities transfers and check and ACH transactions.
The cumulative net amount due to or from the other Reserve Banks is reflected in the “Interdistrict
settlement account” in the Statements of Condition.
An annual settlement of the interdistrict settlement account occurs in the second quarter of each year. As a
result of the annual settlement, the balance in each Bank’s interdistrict settlement account is adjusted by
an amount equal to the average balance in the account during the previous twelve-month period ended
March 31. An equal and offsetting adjustment is made to each Bank’s allocated portion of SOMA assets
and liabilities.
j. Federal Reserve Notes
Federal Reserve notes are the circulating currency of the United States. These notes, which are identified as
issued to a specific Reserve Bank, must be fully collateralized. All of the Bank’s assets are eligible to be
pledged as collateral. The collateral value is equal to the book value of the collateral tendered with the
exception of securities, for which the collateral value is equal to the par value of the securities tendered.
The par value of securities sold under agreements to repurchase is deducted from the eligible collateral
value.
The Board of Governors may, at any time, call upon a Reserve Bank for additional security to adequately
collateralize outstanding Federal Reserve notes. To satisfy the obligation to provide sufficient collateral

for outstanding Federal Reserve notes, the Reserve Banks have entered into an agreement that provides for
certain assets of the Reserve Banks to be jointly pledged as collateral for the Federal Reserve notes issued
to all Reserve Banks. In the event that this collateral is insufficient, the Federal Reserve Act provides that
Federal Reserve notes become a first and paramount lien on all the assets of the Reserve Banks. Finally,
Federal Reserve notes are obligations of the United States government.
“Federal Reserve notes outstanding, net” in the Statements of Condition represents the Bank’s Federal Reserve
notes outstanding, reduced by the Bank’s currency holdings of $4,734 million and $3,161 million at
December 31, 2014 and 2013, respectively.
At December 31, 2014 and 2013, all Federal Reserve notes outstanding, reduced by the Reserve Bank’s
currency holdings, were fully collateralized. At December 31, 2014, all gold certificates, all special
drawing rights certificates, and $1,282 billion of domestic securities held in the SOMA were pledged as
collateral. At December 31, 2014, no investments denominated in foreign currencies were pledged as
collateral.
k. Deposits
Depository Institutions
Depository institutions’ deposits represent the reserve and service-related balances in the accounts that
depository institutions hold at the Bank. The interest rates paid on required reserve balances and excess
balances are determined by the Board of Governors, based on an FOMC-established target range for the
federal funds rate. Interest payable is reported as a component of “Interest payable to depository
institutions” in the Statements of Condition.
The Term Deposit Facility (TDF) consists of deposits with specific maturities held by eligible institutions at
the Reserve Banks. The Reserve Banks pay interest on these deposits at interest rates determined by
auction. Interest payable is reported as a component of “Interest payable to depository institutions” in the
Statements of Condition. There were no deposits held by the Bank under the TDF at December 31, 2014
and 2013.
Other
Other deposits include the Bank’s allocated portion of foreign central bank and foreign government deposits
held at the FRBNY.
l. Capital Paid-in
The Federal Reserve Act requires that each member bank subscribe to the capital stock of the Reserve Bank in
an amount equal to six percent of the capital and surplus of the member bank. These shares are nonvoting,
with a par value of $100, and may not be transferred or hypothecated. As a member bank’s capital and
surplus changes, its holdings of Reserve Bank stock must be adjusted. Currently, only one-half of the
subscription is paid in, and the remainder is subject to call. A member bank is liable for Reserve Bank
liabilities up to twice the par value of stock subscribed by it.
By law, each Reserve Bank is required to pay each member bank an annual dividend of six percent on the
paid-in capital stock. This cumulative dividend is paid semiannually.
m. Surplus
The Board of Governors requires the Reserve Banks to maintain a surplus equal to the amount of capital paidin. On a daily basis, surplus is adjusted to equate the balance to capital paid-in. Accumulated other
comprehensive income is reported as a component of “Surplus” in the Statements of Condition and the

Statements of Changes in Capital. Additional information regarding the classifications of accumulated
other comprehensive income is provided in Notes 9 and 10.
n. Remittances to the Treasury
The Board of Governors requires the Reserve Banks to transfer excess earnings to the Treasury as interest on
Federal Reserve notes after providing for the costs of operations, payment of dividends, and reservation of
an amount necessary to equate surplus with capital paid-in. Currently, remittances to the Treasury are
made on a weekly basis. This amount is reported as “Earnings remittances to the Treasury” in the
Statements of Income and Comprehensive Income. The amount due to the Treasury is reported as
“Accrued remittances to the Treasury” in the Statements of Condition. See Note 12 for additional
information on earnings remittances to the Treasury.
If earnings during the year are not sufficient to provide for the costs of operations, payment of dividends, and
equating surplus and capital paid-in, remittances to the Treasury are suspended. A deferred asset is
recorded that represents the amount of net earnings a Reserve Bank will need to realize before remittances
to the Treasury resume. This deferred asset is periodically reviewed for impairment.
o. Income and Costs Related to Treasury Services
When directed by the Secretary of the Treasury, the Bank is required by the Federal Reserve Act to serve as
fiscal agent and depositary of the United States Government. By statute, the Treasury has appropriations
to pay for these services. During the years ended December 31, 2014 and 2013, the Bank was reimbursed
for all services provided to the Treasury as its fiscal agent.
p. Compensation Receivedfor Service Costs Provided
The Federal Reserve Bank of Atlanta has overall responsibility for managing the Reserve Banks’ provision of
check and ACH services to depository institutions, the FRBNY has overall responsibility for managing the
Reserve Banks’ provision of Fedwire funds and securities services, and the Federal Reserve Bank of
Chicago has overall responsibility for managing the Reserve Banks’ provision of electronic access
services to depository institutions. The Reserve Bank that has overall responsibility for managing these
services recognizes the related total System revenue in its Statements of Income and Comprehensive
Income. The Bank is compensated for costs incurred to provide these services by the Reserve Banks
responsible for managing these services and reports this compensation as “Non-interest income:
Compensation received for service costs provided” in its Statements of Income and Comprehensive
Income.
q. Assessments
The Board of Governors assesses the Reserve Banks to fund its operations and the operations of the Bureau.
These assessments are allocated to each Reserve Bank based on each Reserve Bank’s capital and surplus
balances. The Board of Governors also assesses each Reserve Bank for expenses related to producing,
issuing, and retiring Federal Reserve notes based on each Reserve Bank’s share of the number of notes
comprising the System’s net liability for Federal Reserve notes on December 31 of the prior year.

The Dodd-Frank Act requires that, after the transfer of its responsibilities to the Bureau on July 21, 2011, the
Board of Governors fund the Bureau in an amount not to exceed a fixed percentage of the total operating
expenses of the System as reported in the Board of Governors’ 2009 annual report, which totaled $4.98
billion. After 2013, the amount will be adjusted annually in accordance with the provisions of the DoddFrank Act. The percentage of total operating expenses of the System for the years ended December 31,
2014 and 2013 was 12.22 percent ($608.4 million) and 12 percent ($597.6 million), respectively. The
Bank’s assessment for Bureau funding is reported as “Assessments: Bureau of Consumer Financial
Protection” in the Statements of Income and Comprehensive Income.

r. Taxes
The Reserve Banks are exempt from federal, state, and local taxes, except for taxes on real property. The
Bank’s real property taxes were $1 million for each of the years ended December 31, 2014 and 2013,
respectively, and are reported as a component of “Operating expenses: Occupancy” in the Statements of
Income and Comprehensive Income.
s. Restructuring Charges
The Reserve Banks recognize restructuring charges for exit or disposal costs incurred as part of the closure of
business activities in a particular location, the relocation of business activities from one location to
another, or a fundamental reorganization that affects the nature of operations. Restructuring charges may
include costs associated with employee separations, contract terminations, and asset impairments.
Expenses are recognized in the period in which the Bank commits to a formalized restructuring plan or
executes the specific actions contemplated in the plan and all criteria for financial statement recognition
have been met.
In 2014, the Treasury announced plans to consolidate the provision of substantially all fiscal agent services for
the U.S. Treasury at the Federal Reserve Bank of Cleveland, the Federal Reserve Bank of Kansas City, the
FRBNY, and the Bank. The implementation plan associated with this consolidation is expected to be
completed in 2018.
The Bank had no significant restructuring activities in 2014 and 2013.
t. Recently Issued Accounting Standards
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
2014-08, Presentation o f Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic
360): Reporting Discontinued Operations and Disclosures o f Disposals o f Components o f an Entity. This
update changes the requirements for reporting discontinued operations, which may include a component
of an entity or a group of components of an entity, or a business or nonprofit activity. This update is
effective for the Bank for the year ending December 31, 2015, and is not expected to have a material
effect on the Bank’s financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This
update was issued to create common revenue recognition guidance for U.S. GAAP and International
Financial Reporting Standards. The guidance is applicable to all contracts for the transfer of goods or
services regardless of industry or type of transaction. This update requires recognition of revenue in a
manner that reflects the consideration that the entity expects to receive in return for the transfer of goods
or services to customers. This update is effective for the Bank for the year ending December 31, 2018,
and is not expected to have a material effect on the Bank’s financial statements.
In June 2014, the FASB issued ASU 2014-11, Transfer and Servicing (Topic 860): Repurchase-to-Maturity
Transactions, Repurchase Financings, and Disclosures. This update requires changes in the accounting
for repurchase to maturity transactions and repurchase financing transactions. Additionally, this update
provides guidance for the disclosures for certain transfers of financial assets accounted for as sales, where
the transferor retains substantially all of the exposure to economic return on the transferred financial asset;
and repurchase agreements, securities lending transactions, and repurchase to maturity transactions that
are accounted for as secured borrowings. This update is effective for the Bank for the year ending
December 31, 2015, and is not expected to have a material effect on the Bank’s financial statements.

4.

Lo a n s
Loans to Depository Institutions
The Bank offers primary, secondary, and seasonal loans to eligible borrowers, and each program has its own
interest rate. Interest is accrued using the applicable interest rate established at least every 14 days by the
Bank’s board of directors, subject to review and determination by the Board of Governors. Primary and
secondary loans are extended on a short-term basis, typically overnight, whereas seasonal loans may be
extended for a period of up to nine months.
Primary, secondary, and seasonal loans are collateralized to the satisfaction of the Bank to reduce credit risk.
Assets eligible to collateralize these loans include consumer, business, and real estate loans; Treasury
securities; GSE debt securities; foreign sovereign debt; municipal, corporate, and state and local government
obligations; asset-backed securities; corporate bonds; commercial paper; and bank-issued assets, such as
certificates of deposit, bank notes, and deposit notes. Collateral is assigned a lending value that is deemed
appropriate by the Bank, which is typically fair value reduced by a margin. Loans to depository institutions
are monitored daily to ensure that borrowers continue to meet eligibility requirements for these programs. If a
borrower no longer qualifies for these programs, the Bank will generally request full repayment of the
outstanding loan or, for primary or seasonal loans, may convert the loan to a secondary credit loan. Collateral
levels are reviewed daily against outstanding obligations, and borrowers that no longer have sufficient
collateral to support outstanding loans are required to provide additional collateral or to make partial or full
repayment.
Loans to depository institutions were immaterial as of December 31, 2014, and were $3 million at December 31,
2013, with a remaining maturity within 15 days.
At December 31, 2014 and 2013, the Bank did not have any loans that were impaired, restructured, past due, or on
non-accrual status, and no allowance for loan losses was required. There were no impaired loans during the
years ended December 31, 2014 and 2013.

5.

Sy s t e m O p e n M a r k e t Ac c o u n t
a.

Domestic Securities Holdings

The FRBNY conducts domestic open market operations and, on behalf of the Reserve Banks, holds the resulting
securities in the SOMA.
During the years ended December 31, 2014 and 2013, the FRBNY continued the purchase of Treasury securities
and federal agency and GSE MBS under the large-scale asset purchase programs authorized by the FOMC. In
September 2011, the FOMC announced that the Federal Reserve would reinvest principal payments from the
SOMA portfolio holdings of GSE debt securities and federal agency and GSE MBS in federal agency and GSE
MBS. In June 2012, the FOMC announced that it would continue this reinvestment policy. In September
2012, the FOMC announced that the Federal Reserve would purchase additional federal agency and GSE MBS
at a pace of $40 billion per month. In December 2012, the FOMC announced that the Federal Reserve would
also purchase longer-term Treasury securities initially at a pace of $45 billion per month after its program to
extend the average maturity of its holdings of Treasury securities was completed in 2012. In December 2013,
the FOMC announced that it would slow the pace of its additional asset purchases. In October 2014, the
FOMC concluded its asset purchase program while maintaining its existing policy of reinvesting principal
payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed
securities and of rolling over maturing Treasury securities at auction.
The Bank’s allocated share of activity related to domestic open market operations was 1.233 percent and 1.609
percent at December 31, 2014 and 2013, respectively.

The Bank’s allocated share of Treasury securities, GSE debt securities, and federal agency and GSE MBS, net,
excluding accrued interest, held in the SOMA at December 31 was as follows (in millions):

20,166
10,193
30,359

U
:
4
1
0
2 nam o rtize d
p rem ium s
341
1,537
1,878

477

16

21,423

656

(12)

22,067

23,611
11,929
35,540

U
:
3
1
0
2 n a m o rtize d
p rem ium s
537
2,068
2,605

U
:
3
1
0
2 n a c c re te d
d is c o u n ts
(91)
(90)
(181)

T
:
3
1
0
2 o ta l am o rtized
co st
24,057
13,907
37,964

P
:
4
1
0
2 ar
N o te s
B onds
T o ta l T re a s u ry se c u ritie s
G SE d e b t se c u ritie s
F e d e ra l a g e n c y a n d G SE M B S

P
:
3
1
0
2 ar
N o te s
B onds
T o ta l T re a s u ry se c u ritie s
G SE d e b t s e c u ritie s
F e d e ra l a g e n c y a n d G SE M B S

921

(119)
(214)

T
:
4
1
0
2 o ta l am o rtized
co st
20,412
11,611
32,023
493

-

30

23,977

U
:
4
1
0
2 n a c c re te d
d is c o u n ts
(95)

720

951

-

24,680

(17)

The FRBNY enters into transactions for the purchase of securities under agreements to resell and transactions to
sell securities under agreements to repurchase as part of its monetary policy activities. These operations are
for the purpose of further assessing the appropriate structure of such operations in supporting the
implementation of monetary policy during normalization. In addition, transactions to sell securities under
agreements to repurchase are entered into as part of a service offering to foreign official and international
account holders.
There were no material transactions related to securities purchased under agreements to resell during the years
ended December 31, 2014 and 2013. Financial information related to securities sold under agreements to
repurchase for the years ended December 31 was as follows (in millions):
A llo c a te d tA th e B a n k :
:d
ke
nt
aa
B
ec
ho
ol o
2014

T o ta l S O
M
A
:

2013

2014

2
:
A
M
O
S
l
a
t
o
T0 1 3

C
:
c
u
p
s
m
d
a
t
h
g
i
n
r
e
v
O o n tr a c t a m o u n t o u ts ta n d in g , e n d o f y e a r

4,893

3,182

396,705

A
:
c
u
p
s
m
d
a
t
h
g
i
n
r
e
v
O v e ra g e d a ily a m o u n t o u ts ta n d in g , d u rin g th e y e a r

1,694

67

130,281

4,161

M
:
c
u
p
s
m
d
a
t
h
g
i
n
r
e
v
O a x im u m

4,893

3,182

396,705

197,755

S
:
c
u
p
s
m
d
a
t
h
g
i
n
r
e
v
O e c u r itie s p le d g e d ( p a r v a lu e ), e n d o f y e a r

4 ,5 0 5

3,025

365,235

188,028

S
:
c
u
p
s
m
d
a
t
h
g
i
n
r
e
v
O e c u r itie s p le d g e d ( m a r k e t v a lu e ), e n d o f y e a r

4 ,9 1 6

3,165

398,540

196,726
118,169

b a la n c e o u ts ta n d in g , d u rin g th e y e a r

197,755

C
:
s
u
t
d
l
a
c
f
n
g
i
e
r
o
F o n tr a c t a m o u n t o u ts ta n d in g , e n d o f y e a r

1,395

1,901

113,132

A
:
s
u
t
d
l
a
c
f
n
g
i
e
r
o
F v e r a g e d a ily a m o u n t o u ts ta n d in g , d u rin g th e y e a r

1,371

1,525

102,968

95,520

M
:
s
u
t
d
l
a
c
f
n
g
i
e
r
o
F a x im u m

1,901

1,901

122,232

118,169

S
:
s
u
t
d
l
a
c
f
n
g
i
e
r
o
F e c u r itie s p le d g e d ( p a r v a lu e ), e n d o f y e a r

1,336

1,970

108,355

122,424

S
:
s
u
t
d
l
a
c
f
n
g
i
e
r
o
F e c u r itie s p le d g e d ( m a r k e t v a lu e ), e n d o f y e a r

1,395

1,902

113,132

118,175

6,288

5,083

509,837

315,924

b a la n c e o u ts ta n d in g , d u rin g th e y e a r

T o ta l c o n tr a c t a m o u n t o u ts ta n d in g , e n d o f y e a r

Securities pledged as collateral, at December 31, 2014 and 2013, consisted solely of Treasury securities.
The remaining maturity distribution of Treasury securities, GSE debt securities, federal agency and GSE MBS
bought outright, and securities sold under agreements to repurchase that were allocated to the Bank at
December 31, 2014 and 2013 was as follows (in millions):
W ith in 15
days

16 d a y s t o
90 d a y s

91 d a y s t o
1 year

O ver 1 year
to 5 y e a rs

-

-

43

O v e r 5 y e a rs
to 10 y e a rs

13,727

O v e r 10
y e a rs

T o ta l

D e c e m b e r 31, 2014:
T
:
4
0
2
,
1
3
r
b
m
c
e
D r e a s u r y s e c u ritie s
(p a r v a lu e )
G
:
4
0
2
,
1
3
r
b
m
c
e
D S E d e b t s e c u r itie s

8,469

8,120

30,359

29

477

13

9

49

377

-

-

-

-

80

21,343

21,423

6,288

(p a r v a lu e )

-

-

-

-

6,288

F
:
4
0
2
,
1
3
r
b
m
c
e
De d e r a l a g e n c y a n d G S E
M B S ( p a r v a l u e ) [fn
stt1
eo
o
e
]
S
:
4
0
2
,
1
3
r
b
m
c
e
De c u r i t i e s s o l d u n d e r
a g re e m e n ts to re p u rc h a s e
(c o n tra c t a m o u n t)

-

D e c e m b e r 31, 2013:
T
:
0
2
,
1
3
r
b
m
c
e
D r e a s u r y s e c u ritie s

$

(p a r v a lu e )

-

$

$

5

3

$

12,282

$

13,913

$

9,337

$

35,540

G
:
0
2
,
1
3
r
b
m
c
e
D S E d e b t s e c u r itie s

37

(p a r v a lu e )

122

139

584

1

38

921

23,936

23,977

F
:
0
2
,
1
3
r
b
m
c
e
De d e r a l a g e n c y a n d G S E
M B S ( p a r v a l u e ) [fn
stt1
eo
o
e
]

-

-

S
:
0
2
,
1
3
r
b
m
c
e
De c u r i t i e s s o l d u n d e r

-

41

-

-

-

a g re e m e n ts to re p u rc h a s e
(c o n tra c t a m o u n t)

5,083

5,083

1
]
e
n
t
o
f
[ T h e p a r a m o u n t s h o w n fo r fe d e ra l a g e n c y a n d G SE M B S is th e rem ain in g p rin c ip a l b a la n c e o f th e s e c u ritie s . [
]
.
t
f
o
d
n
e

Federal agency and GSE MBS are reported at stated maturity in the table above. The estimated weighted average
life of these securities, which differs from the stated maturity primarily because it factors in scheduled
payments and prepayment assumptions, was approximately 5.7 and 6.5 years as of December 31, 2014 and
2013, respectively.
The amortized cost and par value of Treasury securities and GSE debt securities that were loaned from the SOMA
under securities lending agreements, at December 31 were as follows (in millions):
A l l o c a t e d t oloeo t h e B a n k :
:
k
n
a
Bt
ea
hct
tAd
2014

T o t a l S:
O
M
A

2013

2014

2
:
A
M
O
S
l
a
t
o
T0 1 3

T re a s u ry s e c u ritie s (am o rtize d c o s t )

137

276

11,144

17,153

T re a s u ry s e c u ritie s ( p a r v a lu e )

125

249

10,105

15,447

G S E d e b t s e c u ritie s (a m o rtiz e d c o s t )

8

18

633

1,099

G S E d e b t s e c u ritie s ( p a r v a lu e )

8

17

616

1,055

The FRBNY enters into commitments to buy and sell Treasury securities and records the related securities on a
settlement-date basis. As of December 31, 2014, there were no outstanding commitments.
The FRBNY enters into commitments to buy and sell federal agency and GSE MBS and records the related
securities on a settlement-date basis. As of December 31, 2014, the total purchase price of the federal agency
and GSE MBS under outstanding purchase commitments was $28,692 million, none of which was related to
dollar rolls. The total purchase price of outstanding purchase commitments allocated to the Bank was $354

million, none of which was related to dollar rolls. As of December 31, 2014, there were no outstanding sales
commitments for federal agency and GSE MBS. These commitments, which had contractual settlement dates
extending through January 2015, are principally for the purchase of TBA MBS for which the number and
identity of the pools that will be delivered to fulfill the commitment are unknown at the time of the trade.
These commitments are subject to varying degrees of off-balance-sheet market risk and counterparty credit
risk that result from their future settlement. The FRBNY requires the posting of cash collateral for MBS
commitments as part of its risk management practices used to mitigate the counterparty credit risk.
Other assets consists primarily of cash and short-term investments related to the federal agency and GSE MBS
portfolio. Other liabilities, which are primarily related to federal agency and GSE MBS purchases and sales,
includes the FRBNY’s obligation to return cash margin posted by counterparties as collateral under
commitments to purchase and sell federal agency and GSE MBS. In addition, other liabilities includes
obligations that arise from the failure of a seller to deliver MBS to the FRBNY on the settlement date.
Although the FRBNY has ownership of and records its investments in the MBS as of the contractual
settlement date, it is not obligated to make payment until the securities are delivered, and the amount included
in other liabilities represents the FRBNY’s obligation to pay for the securities when delivered. The amount of
other assets and other liabilities allocated to the Bank and held in the SOMA at December 31 was as follows
(in millions):
A llo c a te d

Total SOMA:

t o llo toth B a n k :
:
k
n
a
B
e
h
tA cated e

2014

2014

2013

2
:
A
M
O
S
l
a
t
o
T0 1 3

-

-

28

1

-

-

1

1

-

-

29

2

10

M
:
s
a
r
e
h
t
O B S p o rtfo lio r e la te d c a s h a n d

21

793

1,320

-

-

30
7

11
-

10

21

830

1,331

s h o r t te r m in v e s tm e n ts
:
s
a
r
e
h
t
O th e r
T o ta l o t h e r a s s e t s

C
:
s
b
a
i
l
r
e
h
t
O a s h m a rg in
:
s
b
a
i
l
r
e
h
t
O b lig a tio n s fr o m M B S

-

-

tr a n s a c t i o n fails
:
s
b
a
i
l
r
e
h
t
O th e r
T o ta l o t h e r lia b ilitie s

Accrued interest receivable on domestic securities holdings was $25,561 million and $23,405 million as of
December 31, 2014 and 2013, respectively, of which $315 million and $376 million, respectively, was
allocated to the Bank. These amounts are reported as a component of “System Open Market Account:
Accrued interest receivable” in the Statements of Condition.

Information about transactions related to Treasury securities, GSE debt securities, and federal agency and GSE
MBS during the years ended December 31, 2014 and 2013, is summarized as follows (in millions):
l
Ao c a t e d t o t h e

B a nk:

T o ta l

n
h
d
e
t
a
o
l
Ae d e ra l
F
:
k
B
c

T re a su ry
N
:
k
n
B
h
d
e
t
a
c
o
l
A o te s

Balance a t D ecem ber 31, 2012

G S E

s e c u ritie s

R
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a e a liz e d g a in s, n e t[
B
2
]
n
t
o
f
e
s
P
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a rin c ip a l p a y m e n ts a n d m a tu ritie s
B
D
t
e
c
n
l
a m o r tiz a tio n o f p re m iu m s a n d a c c r e t io n o f d is c o u n ts , n e t
A
:
0
2
,
1
3
r
b
m
B

I
:
0
2
,
1
3
r
b
m
c
en f l a t i o n a d j u s t m e n t o n i n f l a ti o n - i n d e x e d s e c u r i t i e s
D
t
n
l
a
B

A
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a n n u a l re a llo c a tio n a d ju s tm e n t[
B
3
]
n
t
o
f
e
s

Balance a t D ecem ber 31, 2013
P
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a u rch ases[
B
1
]
n
t
o
f
e
s
S
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a a le s [
B
1
]
n
t
o
f
e
s
R
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a e a liz e d g a in s, n e t[
B
2
]
n
t
o
f
e
s
P
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a rin c ip a l p a y m e n ts a n d m a tu ritie s
B
D
t
e
c
n
l
a m o r tiz a tio n o f p re m iu m s a n d a c c r e t io n o f d is c o u n ts , n e t
A
:
0
2
,
1
3
r
b
m
B

I
:
0
2
,
1
3
r
b
m
c
en f l a t i o n a d j u s t m e n t o n i n f l a ti o n - i n d e x e d s e c u r i t i e s
D
t
n
l
a
B

A
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a n n u a l re a llo c a tio n a d ju s tm e n t[
B
3
]
n
t
o
f
e
s

Balance a t D ecem ber 31, 2014

10,427

28,285

1,243

5,723
(1)
(96)
5
568
24,057
2,322
(7)
(74)
6
(5,892)
20,412

S
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a a le s [
B
1
]
n
t
o
f
e
s

3,289
(151)
10
332
13,907
1,197
(135)
18
(3,376)
11,611

9,012 (1)
(247)
15
900
37,964
3,519
(7)
(209)
24
(9,268)
32,023

(313)
(13)
34
951
(266)
(8)
(184)
493

5,695

P
s
v
o
f
i
t
l
p
u
S
:
0
2
,
1
3
b
m
c
D
d
n
r
a
e
Y u rc h a s e s [
4
]
n
t
o
f
e
s

-

2,952
-

2,356

P
s
v
o
f
i
t
l
p
u
S
:
4
0
2
,
1
3
b
m
c
D
d
n
r
a
e
Y u rc h a s e s [
4
]
n
t
o
f
e
s
S
:
c
s
u
v
p
m
r
o
f
i
l
a
t
n
e a le s
4
0
2
,
1
3
b
D
d
Y

s e c u ritie s

:
k
n
B
h
d
e
t
a
c
o
l
A o n d s

a g e n c y a n d

d e b t

17,858

P
:
0
2
,
1
3
r
b
m
D
t
e
c
n
l
a u rch ases[
B
1
]
n
t
o
f
e
s

S
:
c
s
u
v
p
m
r
o
f
i
l
a
t
n
e a le s
0
2
,
1
3
b
D
d
Y

G
:
k
n
B
h
d
e
t
a
c
o
l
A S E

-

8,647
-

1,176
-

3,532
-

14,857
13,776
(4,368)
(112)
527
24,680
6,333
(2,654)
(94)
(6,198)
22,067

13,346

-

-

6,121

-

M B S

-

[ePurchases and sales m ay include payments and receipts related to principal, premiums, discounts, and inflation compensation adjustments to the basis o f
f]
o
t1
n
o
inflation-indexed securities. The amount reported as sales includes the realized gains and losses on such transactions. Purchases and sales exclude MBS
T B A transactions that are settled on a net basis.[
]
.
t
f
o
d
n
e
[tt2Realized gains, net offset the amount o f realized gains and losses included in the reported sales amount.[
fn
o
o
e
]
]
.
t
f
o
d
n
e
3
]
e
n
t
o
f
[ Reflects the annual adjustment to the Bank's allocated portion of the related SOM A securities that results from the annual settlem ent of the interdistrict
settlem ent account, as discussed in Note 3i.[
]
.
t
f
o
d
n
e
4
]
e
n
t
o
f
[ Includes inflation compensation.[
]
.
t
f
o
d
n
e

23

F
:
A
M
O
S
l
a
t
o
Te d eral
:
A
M
O
S
l
a
t
o
T o ta l T r e a s u r y
N
:
A
M
O
S
l
a
t
o
T o te s

B alance at D ecem ber 31, 2012

G
:
A
M
O
S
l
a
t oS E d e b t
T
s e c u r itie s

s e c u r itie s

B
:
A
M
O
S
l
a
t
o
T onds

agency and
G SE M BS

D
t
e
c
n
l
a a le s [
S
:
0
2
,
1
3
r
b
m
B
1
]
n
t
o
f
e
s
D
t
e
c
n
l
a e a liz e d g a in s , n e t[
R
:
0
2
,
1
3
r
b
m
B
2
]
n
t
o
f
e
s
D
t
e
c
n
l
a rin c ip a l p a y m e n ts a n d m a tu ritie s
P
:
0
2
,
1
3
r
b
m
B
D
t
e
c
n
l
a m o rtiz a tio n o f p re m iu m s a n d a c c r e tio n o f d is c o u n ts , n e t
A
:
0
2
,
1
3
r
b
m
B
D
t
e
c
n
l
an f l a t i o n a d j u s t m e n t o n i n f l a t i o n - i n d e x e d s e c u r i t i e s
I
:
0
2
,
1
3
r
b
m
B

B alance at D ecem ber 31, 2013
D
t
e
c
n
l
a u rc h a se s[
P
:
0
2
,
1
3
r
b
m
B
1
]
n
t
o
f
e
s
D
t
e
c
n
l
a a le s [
S
:
0
2
,
1
3
r
b
m
B
1
]
n
t
o
f
e
s
D
t
e
c
n
l
a e a liz e d g a in s , n e t[
R
:
0
2
,
1
3
r
b
m
B
2
]
n
t
o
f
e
s
D
t
e
c
n
l
a rin c ip a l p a y m e n ts a n d m a tu ritie s
P
:
0
2
,
1
3
r
b
m
B
D
t
e
c
n
l
a m o rtiz a tio n o f p re m iu m s a n d a c c r e tio n o f d is c o u n ts , n e t
A
:
0
2
,
1
3
r
b
m
B
D
t
e
c
n
l
an f l a t i o n a d j u s t m e n t o n i n f l a t i o n - i n d e x e d s e c u r i t i e s
I
:
0
2
,
1
3
r
b
m
B

B alance at D ecem ber 31, 2014

Yu rc h a s e s [
P
s
v
o
f
i
t
l
p
u
S
:
0
2
,
1
3
b
m
c
D
d
n
r
a
e
3
]
n
t
o
f
e
s
s
v
o
f
i
t
l
p
u
S
:
0
2
,
1
3
b
m
c
D
d
n
r
a
e
Ya le s

Yu rc h a s e s [
P
s
v
o
f
i
t
l
p
u
S
:
4
0
2
,
1
3
b
m
c
D
d
n
r
a
e
3
]
n
t
o
f
e
s
s
v
o
f
i
t
l
p
u
S
:
4
0
2
,
1
3
b
m
c
D
d
n
r
a
e
Ya le s

666,969

1,809,188

358,656
-

206,208
-

564,864
-

(21)
(6,024)
285
1,495,115
165,306
(475)
(5,545)
500
1,654,901

(9,503)
645
864,319
85,826
(10,132)
1,327
941,340

(21)
(15,527)
930
2,359,434
251,132
(475)
(15,677)
1,827
2,596,241

356,766

184,956

541,722

-

-

-

837,490

-

D
t
e
c
n
l
a u rc h a se s[
P
:
0
2
,
1
3
r
b
m
B
1
]
n
t
o
f
e
s

1,142,219

167,497
-

83,739
-

251,236
-

-

450,633
(29)

-

-

79,479

950,321

-

864,538
-

(19,562)
(795)
59,122
(18,544)
(588)
39,990

(273,991)
(7,008)
1,533,860
466,384
(29)
(203,933)
(7,199)
1,789,083

-

1
]
e
n
t
o
f
[ P urchases and sales m ay include paym ents and receipts related to principal, premiums, discounts, and inflation compensation adjustments to the basis o f
inflation-indexed securities. The am ount reported as sales includes the realized gains and losses on such transactions. P urchases and sales exclude M BS TBA
transactions that are settled on a n et basis.[
]
.
t
f
o
d
n
e
2
]
e
n
t
o
f
[ Realized gains, n et offset the am ount o f realized gains and losses included in the reported sales amount.[
]
.
t
f
o
d
n
e
3
]
e
n
t
o
f
[ Includes inflation compensation.[
]
.
t
f
o
d
n
e

b.

Foreign Currency Denominated Investments

The FRBNY conducts foreign currency operations and, on behalf of the Reserve Banks, holds the resulting foreign
currency denominated investments in the SOMA.
The FRBNY holds foreign currency deposits with foreign central banks and the Bank for International Settlements
and invests in foreign government debt instruments of Germany, France, and Japan. These foreign
government debt instruments are backed by the full faith and credit of the issuing foreign governments. In
addition, the FRBNY enters into transactions to purchase Euro-denominated government debt securities under
agreements to resell for which the accepted collateral is the debt instruments issued by the governments of
Belgium, France, Germany, Italy, the Netherlands, and Spain, which are backed by the full faith and credit of
those issuing governments.
The Bank’s allocated share of activity related to foreign currency operations was 0.841 percent and 0.834 percent at
December 31, 2014 and 2013, respectively.

Information about foreign currency denominated investments valued at amortized cost and foreign currency market
exchange rates at December 31 was as follows (in millions):
Allocated to Bank:
2
:
k
n
B
d
e
t
a
c
o
l
A0 1 4

Total SOMA:

2 0 1 3

2 0 1 4

2
:
A
M
O
S
l
a
t
o
T0 1 3

59
21
31

S
:
o
r
u
E e c u ritie s p u rc h a s e d u n d e r a g re e m e n ts to re s e ll
G
:
o
r
u
E e rm a n g o v e rn m e n t d e b t in s tru m e n ts
F
:
o
r
u
E re n c h g o v e rn m e n t d e b t in s tru m e n ts

F
:
y
s
e
n
p
a
J o re ig n c u rre n c y d e p o s its
:
y
s
e
n
p
a
J a p a n e s e g o v e rn m e n t d e b t in s tru m e n ts
T o ta l

63
21
20
20

6,936
2,494
3,687

7,530
2,549
2,397
2,397

21
44
176

F
:
o
r
u
E o re ig n c u rre n c y d e p o s its

24
50
198

2,576
5,207
20,900

2,926
5,925
23,724

Accrued interest receivable on foreign currency denominated investments was $83 million and $88 million as of
December 31, 2014 and 2013, respectively, of which $1 million for each year ended was allocated to the Bank.
These amounts are reported as a component of “System Open Market Account: Accrued interest receivable” in
the Statements of Condition.
The remaining maturity distribution of foreign currency denominated investments that were allocated to the Bank
at December 31, 2014 and 2013, was as follows (in millions):
Within 15
days

16 days to
90 days

E
:
4
0
2
,
1
3
r
b
m
c
e
Du ro

31

24

14

42

111

J
:
4
0
2
,
1
3
r
b
m
c
e
Da p a n e s e y e n

23
54

3
27

13
27

26
68

65
176

E
:
0
2
,
1
3
r
b
m
c
e
Du ro

59

15

18

32

124

J
:
0
2
,
1
3
r
b
m
c
e
Da p a n e s e y e n

26
85

3
18

16
34

29
61

74
198

T
:
4
0
2
,
1 o ta l
3
r
e
b
m
c
D

T
:
3
0
2
,
1 o ta l
r
e
b
m
c
D

91 days to 1
year

Over 1 year
to 5 years

Total

There were no foreign exchange contracts related to open market operations outstanding as of December 31, 2014.
The FRBNY enters into commitments to buy foreign government debt instruments and records the related
securities on a settlement-date basis. As of December 31, 2014, there were $137 million of outstanding
commitments to purchase foreign government debt instruments, of which $1 million was allocated to the Bank.
These securities settled on January 5, 2015, and replaced Euro-denominated government debt instruments held
in the SOMA that matured on that date. During 2014, there were purchases and maturities of foreign
government debt instruments of $5,494 million and $3,337 million, respectively, of which $46 million and $28
million, respectively, were allocated to the Bank. There were no sales of foreign government debt instruments
in 2014.

In connection with its foreign currency activities, the FRBNY may enter into transactions that are subject to
varying degrees of off-balance-sheet market risk and counterparty credit risk that result from their future
settlement. The FRBNY controls these risks by obtaining credit approvals, establishing transaction limits,
receiving collateral in some cases, and performing monitoring procedures.
At December 31, 2014 and 2013, there was no balance outstanding under the authorized warehousing facility.
There were no transactions related to the authorized reciprocal currency arrangements with the Bank of Canada and
the Bank of Mexico during the years ended December 31, 2014 and 2013.
Foreign currency working balances held and foreign exchange contracts executed by the Bank to facilitate its
international payments and currency transactions it made on behalf of foreign central banks and U.S. official
institution customers were not material as of December 31, 2014 and 2013.
c.

Central Bank Liquidity Swaps

U.S. Dollar Liquidity Swaps
The Bank’s allocated share of U.S. dollar liquidity swaps was approximately 0.841 percent and 0.834 percent at
December 31, 2014 and 2013, respectively.
The total foreign currency held under U.S. dollar liquidity swaps in the SOMA at December 31, 2014 and 2013,
was $1,528 million and $272 million, respectively, of which $13 million and $2 million, respectively, was
allocated to the Bank.
The remaining maturity distribution of U.S. dollar liquidity swaps that were allocated to the Bank at December 31
was as follows (in millions):

Within 15
:
4
1
0
2
days
Euro
Japanese yen
Total

2014:
16 days to
90 days

13
13

-

Total
:
4
1
0
2
13
13

Within 15
:
3
1
0
2
days

2013:
16 days to
90 days

1
1

1
1

Total
:
3
1
0
2
2
2

Foreign Currency Liquidity Swaps
At December 31, 2014 and 2013, there was no balance outstanding related to foreign currency liquidity swaps.
d.

Fair Value o f SOMA Assets and Liabilities

The fair value amounts below are presented solely for informational purposes. Although the fair value of SOMA
security holdings can be substantially greater than or less than the recorded value at any point in time, these
unrealized gains or losses have no effect on the ability of the Reserve Banks, as the central bank, to meet their
financial obligations and responsibilities. Because SOMA securities are recorded at amortized cost,
cumulative unrealized gains (losses) are not recognized in the Statements of Condition and the changes in
cumulative unrealized gains (losses) are not recognized in the Statements of Income and Comprehensive
Income.
The fair value of the Treasury securities, GSE debt securities, federal agency and GSE MBS, and foreign
government debt instruments in the SOMA’s holdings is subject to market risk, arising from movements in
market variables such as interest rates and credit risk. The fair value of federal agency and GSE MBS is also

affected by the expected rate of prepayments of mortgage loans underlying the securities. The fair value of
foreign government debt instruments is also affected by currency risk. Based on evaluations performed as of
December 31, 2014, there are no credit impairments of SOMA securities holdings.
The following table presents the amortized cost, fair value, and cumulative unrealized gains (losses) on the
Treasury securities, GSE debt securities, and federal agency and GSE MBS held in the SOMA at December 31
(in millions):

Allocated to the Bank: 2014:

AadohBk21:
lotet tea : 03
c
n

Acte tothBk
lloa d e a :
n

C
3
1
0
2
:
k
n
B
h
d
e
t
a
c
o
l
A u m u la tiv e

C u m u la tiv e
u n re a liz e d
4
1
0
2
:
k
n
B
h
d
e
t
a
c
o
l
A m o rtiz e d

c o s t

F
:
4
1
0
2 a ir v a lu e

u n re a liz e d

g a in s
3
1
0
2
:
k
n
B
h
d
e
t
a
c
o
l
A m o rtiz e d

( lo s s e s )

c o s t

F a ir v a lu e

g a in s

( lo s s e s )

N
:
t
i
c
y
u
s
a
e
r
T o te s

20,412

20,763

351

2 4 ,0 5 7

2 4 ,1 1 9

B
:
t
i
c
y
u
s
a
e
r
T onds

11,611

12,987

1,376

13,907

13,554

(353)

32,023

33,750

1,727

37,964

37,673

(291)

T o t a l T r e a s u r y s e c u r itie s
G S E d e b t s e c u r itie s

493

T o t a l d o m e s t ic S O M A p o r tf o lio s e c u r i ti e s h o l d in g s

31

951

1,001

22,455

388

2 4,680

2 4 ,0 6 4

(616)

54,583

56,729

2,146

63,595

62,738

(857)

-

a n d G S E M B S

-

-

1

955

951

-

-

-

50

-

355

-

a n d G S E M B S

-

354

s e c u r itie s

P
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Mu r c h a s e s o f F e d e r a l a g e n c y
S
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Ma l e s o f F e d e r a l a g e n c y

524

22,067

F e d e ra l a g e n c y a n d GSE M B S

P
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Mu r c h a s e s o f T r e a s u r y

62

-

-

(4)
-

T o ta lST O M A :
4
1
0
2S
: l
Aa
Mt
Oo
3
1
0
2

2
:
A
M
O
S
l
a
t
o
T0 1 4 :

2
:
A
M
O
S
l
a
t
o
T0 1 3 :
C u m u la tiv e
u n re a liz e d

4
1
0
2
:
A
M
O
S
l
a
t
o
T m o rtiz e d

c o s t

F a ir v a lu e

C
3
1
0
2
:
A
M
O
S
l
a
t
o
T u m u la tiv e

g a in s

u n re a liz e d

( lo s s e s )

A m o rtiz e d

c o s t

F a ir v a lu e

g a in s

( lo s s e s )

N
:
t
i
c
y
u
s
a
e
r
T o te s

1,654,901

1,683,377

28,476

1,495,115

1,499,000

B
:
t
i
c
y
u
s
a
e
r
T onds

941,3 4 0

1,052,916

111,576

864,319

842,336

(21,983)

2,596,241

2,73 6 ,2 9 3

140,052

2 ,3 5 9 ,4 3 4

2,34 1 ,3 3 6

(18,098)

39,990

42,499

2,509

5 9 ,1 2 2

6 2 ,2 3 6

1,789,083

1,820,544

31,461

1,533,860

1,495,572

(38,288)

4,42 5 ,3 1 4

4,59 9 ,3 3 6

174,0 22

3,952,416

3 ,8 9 9 ,1 4 4

(53,272)

T o t a l T r e a s u r y s e c u r itie s
G S E d e b t s e c u r itie s
F e d e ra l a g e n c y a n d GSE M B S
T o t a l d o m e s t ic S O M A p o r tf o lio s e c u r i ti e s h o l d in g s

P
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Mu r c h a s e s o f T r e a s u r y

s e c u r itie s

P
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Mu r c h a s e s o f F e d e r a l a g e n c y
S
:
f
s
t
i
C
u
d
n
a
r
o
m
e
Ma l e s o f F e d e r a l a g e n c y

a n d G S E M B S

a n d G S E M B S

-

-

-

-

28,803

111

5 9 ,3 5 0

59,129

-

-

-

-

3,114

-

2 8 ,6 9 2

3,885

-

The fair value of Treasury securities and GSE debt securities was determined using pricing services that provide
market consensus prices based on indicative quotes from various market participants. The fair value of federal
agency and GSE MBS was determined using a pricing service that utilizes a model-based approach that
considers observable inputs for similar securities.
The cost basis of securities purchased under agreements to resell, securities sold under agreements to repurchase,
and other investments held in the SOMA domestic portfolio approximate fair value.
At December 31, 2014 and 2013, the fair value of foreign currency denominated investments was $20,996 million
and $23,802 million, respectively, of which $176 million and $198 million, respectively, was allocated to the
Bank. The fair value of foreign government debt instruments was determined using pricing services that

(221)
-

provide market consensus prices based on indicative quotes from various market participants. The fair value of
foreign currency deposits and securities purchased under agreements to resell was determined by reference to
market interest rates.
The following table provides additional information on the amortized cost and fair values of the federal agency
and GSE MBS portfolio at December 31 (in millions):

Distribution of MBS
holdings by coupon rate
2.0%
:
k
n
B
h
d
e
t
a
c
o
l
A
2.5%
:
k
n
B
h
d
e
t
a
c
o
l
A
3.0%
:
k
n
B
h
d
e
t
a
c
o
l
A
3.5%
:
k
n
B
h
d
e
t
a
c
o
l
A
4.0%
:
k
n
B
h
d
e
t
a
c
o
l
A
4.5%
:
k
n
B
h
d
e
t
a
c
o
l
A
5.0%
:
k
n
B
h
d
e
t
a
c
o
l
A
5.5%
:
k
n
B
h
d
e
t
a
c
o
l
A
6.0%
:
k
n
B
h
d
e
t
a
c
o
l
A
6.5%
:
k
n
B
h
d
e
t
a
c
o
l
A
T
:
k
n
B
h
d
e
t
a
c
o
l
A o ta l

Total SOMA:
2.0%
:
A
M
O
S
l
a
t
o
T
2.5%
:
A
M
O
S
l
a
t
o
T
3.0%
:
A
M
O
S
l
a
t
o
T
3.5%
:
A
M
O
S
l
a
t
o
T
4.0%
:
A
M
O
S
l
a
t
o
T
4.5%
:
A
M
O
S
l
a
t
o
T
5.0%
:
A
M
O
S
l
a
t
o
T
5.5%
:
A
M
O
S
l
a
t
o
T
6.0%
:
A
M
O
S
l
a
t
o
T
6.5%
:
A
M
O
S
l
a
t
o
T
Total
:
A
M
O
S
l
a
t
o
T

A
:
4
1
0
2 m o rtiz e d c o s t

F
:
4
1
0
2 a ir v a lu e

A
:
3
1
0
2 m o rtiz e d c o s t

F
:
3
1
0
2 a ir v a lu e

158
1,414
6,331
5,936
5,280
1,922
808
188
26
4
22,067

156
1,400
6,245
6,036
5,442
2,070
872
202
28
4
22,455

228
1,992
8,396
5,627
3,705
2,990
1,340
346
49
7
24,680

218
1,906
7,792
5,444
3,719
3,145
1,415
366
52
7
24,064

12,788
114,609
513,289
481,305
428,047
155,867
65,544
15,232
2,110
292
1,789,083

12,618
113,468
506,280
489,390
441,204
167,844
70,719
16,414
2,287
320
1,820,544

14,191
123,832
521,809
349,689
230,256
185,825
83,290
21,496
3,051
421
1,533,860

13,529
118,458
484,275
338,357
231,113
195,481
87,968
22,718
3,225
448
1,495,572

The following tables present the realized gains and the change in the cumulative unrealized gains (losses) related to
SOMA domestic securities holdings during the years ended December 31, 2014 and 2013 (in millions):
AadB:24Actetoak21:
lot t a 0: load B : 03
ceon 1
k
n
A
lto
o2
c:4
a0
e1
d:
B
a
n
k

:
k
n
B
d
e
t
a
c
o0
l2
A1 3 :
C h a n g e in c u m u la t iv e
u n r e a liz e d g a in s

R e a liz e d g a1]ieotofsee[
tn o s

C h a n g e in c u m u la t iv e
R e a l iz e d g a1]ieotofsee[
tn o s

u n r e a liz e d l o s 2eotofes[
s]tenoe
s

( l o s s2tooes)
] ns [
etf
T r e a s u r y s e c u r it ie s

-

F ederal a g en cy and G S E M B S

2 ,1 5 1

-

G S E d e b t s e c u r it ie s

1

T o ta l

-

(3 9 )

1

( 1 ,3 1 6 )

1

3 ,0 9 7

1

( 2 ,9 5 1 )

-

(8 )
954

( 4 ,3 0 6 )

T S M : T S M :2 1 :
otal O A otal O A 0 3
2014:

TaSM21:
ol OA04
t :

C h a n g e in c u m u la tiv e
C h a n g e in c u m u la tiv e
R
4
1
0
2
:
A
M
O
S
l
a
t
o
T e a liz e d

u n r e a liz e d g a in s

g a i n s [o
se
e1
f]
t
n

R e a l i z e d g a i n s [t]
se
e
f1
o
n
u n r e a l i z e d l o s s e s [o
stt2
eo
fe
n
]

( l o s s e s ) [o
ste
eo
f]
n
2

T r e a s u r y s e c u r it ie s
G S E d e b t s e c u r it ie s

-

1 5 8 ,1 5 0
(6 0 5 )

-

( 1 8 3 ,2 2 5 )

-

T o ta l

81

6 9 ,7 4 9

51

( 2 ,4 1 1 )
(8 1 ,9 5 7 )

81

F ederal a g en cy and G S E M B S

2 2 7 ,2 9 4

51

( 2 6 7 ,5 9 3 )

1eoto[ Realized gains are reported in “Non-interest income: System Open Market Account” in the Statements o f Income and Comprehensive Income.e
]tnf
].eotoffod[
tno n
2eoo[ Because SOMA securities are recorded at amortized cost, the change in the cumulative unrealized gains (losses) is not reported in the Statements of
]tnf
t
Income and C
omprehensive Income.e
].eotoffod[
tno n

The amount of change in cumulative unrealized gains (losses) position, net, related to foreign currency
denominated investments was a gain of $18 million and a loss of $90 million for the years ended December 31,
2014 and 2013, respectively, of which $148 thousand and $742 thousand, respectively, were allocated to the
Bank.
Accounting Standards Codification (ASC) Topic 820 (ASC 820) defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. ASC 820 establishes a three-level fair value hierarchy that distinguishes between
assumptions developed using market data obtained from independent sources (observable inputs) and the
Bank’s assumptions developed using the best information available in the circumstances (unobservable
inputs). The three levels established by ASC 820 are described as follows:
•

Level 1 - Valuation is based on quoted prices for identical instruments traded in active markets.

•

Level 2 - Valuation is based on quoted prices for similar instruments in active markets, quoted prices
for identical or similar instruments in markets that are not active, and model-based valuation
techniques for which all significant assumptions are observable in the market.

•

Level 3 - Valuation is based on model-based techniques that use significant inputs and assumptions
not observable in the market. These unobservable inputs and assumptions reflect the Bank’s

estimates of inputs and assumptions that market participants would use in pricing the assets and
liabilities. Valuation techniques include the use of option pricing models, discounted cash flow
models, and similar techniques.
Treasury securities, GSE debt securities, federal agency and GSE MBS, and foreign government debt instruments
are classified as Level 2 within the ASC 820 hierarchy because the fair values are based on indicative quotes
and other observable inputs obtained from independent pricing services. The fair value hierarchy level of
SOMA financial assets is not necessarily an indication of the risk associated with those assets.
6.

Ba n k P r e m i s e s , Eq u i p m e n t , a n d So f t w a r e
Bank premises and equipment at December 31 were as follows (in millions):
2014

2013
12
158
21
34
225

12
156
21
1
35
225

Accumulated depreciation

(89)

(84)

Bank premises and equipment, net

136

141

10

10

L
:
t
u
q
d
s
i
m
e
r
p
k
n
a
B a n d a n d la n d im p ro v e m e n ts
:
t
u
q
d
s
i
m
e
r
p
k
n
a
B u ild in g s
:
t
u
q
d
s
i
m
e
r
p
k
n
a
B u ild in g m a c h in e ry a n d e q u ip m e n t
C
:
t
u
q
d
s
i
m
e
r
p
k
n
a
B o n stru c tio n in p ro g re ss
F
:
t
u
q
d
s
i
m
e
r
p
k
n
a
Bu rn itu re a n d e q u ip m e n t
:
p
q
n
s
i
m
e u b to ta l
S
t
u
d
a
r
k
B

Depreciation expense, for the years ended December 31

The Bank leases space to outside tenants with remaining lease terms of less than 1 year. Rental income from such
leases was immaterial for the years ended December 31, 2014 and 2013, and is reported as a component of
“Non-interest income: Other” in the Statements of Income and Comprehensive Income.

The Bank had capitalized software assets, net of amortization, of $24 million and $29 million at December 31,
2014 and 2013, respectively. Amortization expense was $9 million and $2 million for the years ended
December 31, 2014 and 2013, respectively. Capitalized software assets are reported as a component of “Other
assets” in the Statements of Condition and the related amortization is reported as a component of “Operating
expenses: Other” in the Statements of Income and Comprehensive Income.
7.

Co m m i t m e n t s

and

Co n t i n g e n c ie s

In conducting its operations, the Bank enters into contractual commitments, normally with fixed expiration dates or
termination provisions, at specific rates and for specific purposes.
At December 31, 2014, the Bank was obligated under noncancelable leases for premises and equipment with
remaining terms ranging from one to approximately twelve years. These leases provide for increased lease
payments based upon increases in real estate taxes, operating costs, or selected price indexes.

Rental expense under operating leases for certain operating facilities, warehouses, and data processing and office
equipment (including taxes, insurance, and maintenance when included in rent), net of sublease rentals, was $1
million for each of the years ended December 31, 2014 and 2013. Certain of the Bank’s leases have options to
renew.
Future minimum lease payments under noncancelable operating leases, net of sublease rentals, with remaining
terms of one year or more, at December 31, 2014, are as follows (in millions):

2015
2016
2017
2018
2019
Thereafter
Future minimum lease payments

Operating leases
0.5
1.0
1.4
1.4
1.5
6.6
12.4

At December 31, 2014, there were no material unrecorded unconditional purchase commitments or obligations in
excess of one year.
Under the Insurance Agreement of the Reserve Banks, each of the Reserve Banks has agreed to bear, on a perincident basis, a share of certain losses in excess of 1 percent of the capital paid-in of the claiming Reserve
Bank, up to 50 percent of the total capital paid-in of all Reserve Banks. Losses are borne in the ratio of a
Reserve Bank’s capital paid-in to the total capital paid-in of all Reserve Banks at the beginning of the calendar
year in which the loss is shared. No claims were outstanding under the agreement at December 31, 2014 and
2013.
The Bank is involved in certain legal actions and claims arising in the ordinary course of business. Although it is
difficult to predict the ultimate outcome of these actions, in management’s opinion, based on discussions with
counsel, the legal actions and claims will be resolved without material adverse effect on the financial position
or results of operations of the Bank.
8.

Re t i r e m e n t

and

Th r i f t Pl a n s

Retirement Plans
The Bank currently offers three defined benefit retirement plans to its employees, based on length of service and
level of compensation. Substantially all of the employees of the Reserve Banks, Board of Governors, and
Office of Employee Benefits of the Federal Reserve System participate in the Retirement Plan for Employees
of the Federal Reserve System (System Plan). Under the Dodd-Frank Act, newly hired Bureau employees are
eligible to participate in the System Plan. In addition, employees at certain compensation levels participate in
the Benefit Equalization Retirement Plan (BEP) and certain Reserve Bank officers participate in the
Supplemental Retirement Plan for Select Officers of the Federal Reserve Banks (SERP).
The FRBNY, on behalf of the System, recognizes the net asset or net liability and costs associated with the System
Plan in its consolidated financial statements. During the years ended December 31, 2014 and 2013, certain
costs associated with the System Plan were reimbursed by the Bureau.
The Bank’s projected benefit obligation, funded status, and net pension expenses for the BEP and the SERP at
December 31, 2014 and 2013, and for the years then ended, were not material.

Thrift Plan
Employees of the Bank participate in the defined contribution Thrift Plan for Employees of the Federal Reserve
System (Thrift Plan). The Bank matches 100 percent of the first 6 percent of employee contributions from the
date of hire and provides an automatic employer contribution of 1 percent of eligible pay. The Bank’s Thrift
Plan contributions totaled $6 million and $5 million for the years ended December 31, 2014 and 2013,
respectively, and are reported as a component of “Operating expenses: Salaries and benefits” in the
Statements of Income and Comprehensive Income.
9.

Po s t r e t i r e m e n t Be n e f i t s Ot h e r Th a n Re t i r e m e n t P l a n s a n d P o s t e m p l o y m e n t Be n e f i t s
Postretirement Benefits Other Than Retirement Plans
In addition to the Bank’s retirement plans, employees who have met certain age and length-of-service requirements
are eligible for both medical and life insurance benefits during retirement.
The Bank funds benefits payable under the medical and life insurance plans as due and, accordingly, has no plan
assets.
Following is a reconciliation of the beginning and ending balances of the benefit obligation (in millions):
2014

2013
80.4

91.6

3.1

3.6

Interest cost on accumulated benefit obligation

3.9

3.5

Net actuarial loss (gain)

2.8

Contributions by plan participants

1.6

(14.4)
1.5

Accumulated postretirement benefit obligation at January 1
Service cost benefits earned during the period

Benefits paid
Medicare Part D subsidies
Plan amendments
Accumulated postretirement benefit obligation at December 31

(4.9)
0.3

(5.4)

(5.7)
81.5

(0.3)
80.4

0.3

At December 31, 2014 and 2013, the weighted-average discount rate assumptions used in developing the
postretirement benefit obligation were 3.96 percent and 4.79 percent, respectively.
Discount rates reflect yields available on high-quality corporate bonds that would generate the cash flows necessary
to pay the plan’s benefits when due. The System Plan discount rate assumption setting convention uses an
unrounded rate.

FEDERAL RESERVE BANK OF ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
Following is a reconciliation of the beginning and ending balance of the plan assets, and the unfunded
postretirement benefit obligation and accrued postretirement benefit costs (in millions):
2014

2013

Fair value of plan assets at January 1
Contributions by the employer
Contributions by plan participants
Benefits paid
Medicare Part D subsidies
Fair value of plan assets at December 31

3.0
1.6
(4.9)
0.3
-

3.6
1.5
(5.4)
0.3
-

Unfunded obligation and accrued postretirement benefit cost

81.5

80.4

P
:
v
p
r
h
a
e
d
l
c
i
s
t
n
u
o
m
Arior service cost
Net
:
v
p
r
h
a
e
d
l
c
i
s
t
n
u
o
m
A actuarial loss
Total accumulated other comprehensive loss

6.0
(6.9)
(0.9)

0.4
(4.0)
(3.6)

Accrued postretirement benefit costs are reported as a component of “Accrued benefit costs” in the Statements of
Condition.
For measurement purposes, the assumed health-care cost trend rates at December 31 are as follows:

Health-care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
Year that the rate reaches the ultimate trend rate

2014
6.60%

2013
7.00%

4.75%
2019

5.00%
2019

Assumed health-care cost trend rates have a significant effect on the amounts reported for health-care plans. A one
percentage point change in assumed health-care cost trend rates would have the following effects for the year
ended December 31, 2014 (in millions):

One percentage
point increase
Effect on aggregate of service and interest cost components
of net periodic postretirement benefit costs
Effect on accumulated postretirement benefit obligation

One percentage
point decrease

1.4
12.4

(1.1)
(10.1)

The following is a summary of the components of net periodic postretirement benefit expense for the years ended
December 31 (in millions):
2014

2013

Service cost-benefits earned during the period

3.1

3.6

Interest cost on accumulated benefit obligation

3.9

3.5

(0.2)

(0.3)
1.3
8.1

Amortization of prior service cost
Amortization of net actuarial loss

-

Net periodic postretirement benefit expense

6.8

Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic
postretirement benefit expense in 2015 are shown below:
Prior service cost
Net actuarial loss
Total

-

(1.1)
(1.1)

Net postretirement benefit costs are actuarially determined using a January 1 measurement date. At January 1,
2014 and 2013, the weighted-average discount rate assumptions used to determine net periodic postretirement
benefit costs were 4.79 percent and 3.75 percent, respectively.
Net periodic postretirement benefit expense is reported as a component of “Operating expenses: Salaries and
benefits” in the Statements of Income and Comprehensive Income.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 established a prescription drug
benefit under Medicare (Medicare Part D) and a federal subsidy to sponsors of retiree health-care benefit plans
that provide benefits that are at least actuarially equivalent to Medicare Part D. The benefits provided under
the Bank’s plan to certain participants are at least actuarially equivalent to the Medicare Part D prescription
drug benefit. The estimated effects of the subsidy are reflected in actuarial loss in the accumulated
postretirement benefit obligation and net periodic postretirement benefit expense.
Federal Medicare Part D subsidy receipts were $338 thousand and $249 thousand in the years ended December 31,
2014 and 2013, respectively. Expected receipts in 2015, related to benefits paid in the years ended December
31, 2014 and 2013, are $175 thousand.

FEDERAL RESERVE BANK OF ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
Following is a summary of expected postretirement benefit payments (in millions):

2015
2016
2017
2018
2019
2020 - 2024

Without subsidy
4.0
4.1
4.1
4.2
4.4
25.4

With subsidy
3.7
3.7
3.7
3.8
3.9
22.6

46.2

41.4

Total

Postemployment Benefits
The Bank offers benefits to former or inactive employees. Postemployment benefit costs are actuarially
determined using a December 31 measurement date and include the cost of medical, dental, and vision
insurance; survivor income; disability benefits; and self-insured workers’ compensation expenses. The
accrued postemployment benefit costs recognized by the Bank at December 31, 2014 and 2013, were $9
million and $8 million, respectively. This cost is included as a component of “Accrued benefit costs” in the
Statements of Condition. Net periodic postemployment benefit expense included in 2014 and 2013 operating
expenses were $2 million and $1 million, respectively, and are recorded as a component of “Operating
expenses: Salaries and benefits” in the Statements of Income and Comprehensive Income.
10. Ac c u m u l a t e d Ot h e r Co m p r e h e n s i v e In c o m e An d Ot h e r Co m p r e h e n s i v e In c o m e
Following is a reconciliation of beginning and ending balances of accumulated other comprehensive loss as of
December 31 (in millions):
2013
A m o u n t re la te d
to
p o stre tire m e n t
b e n e fits o th e r
th a n re tirem e n t
p la n s

2014
A m o u n t re la te d
to
p o stre tire m e n t
b e n e fits o th e r
th a n re tirem e n t
p la n s
B a la n ce a t J a n u a ry 1

(3.6)

Cifdttsbip: r i o r s e r v i c e c o s t s a r i s i n g d u r i n g t h e y e a r
hneaonln
a usuetaP
n n fe s
gd f
e

5.7

(0.3)[efoo]1
seone
tt

-

Cifdttsbip: h a n g e i n p r i o r s e r v i c e c o s t s r e l a t e d t o
hneaonln
a usuetaC
n n fe s
gd f
e

5.5

b e n e fit p la n s

Cifdttsbip: e t a c t u a r i a l ( l o s s ) g a i n a r i s i n g d u r i n g t h e y e a r
hneaonln
a usuetaN
n n fe s
gd f
e

(2.8)
0.0[efoo]1
seot t
ne

Cifdttsbip: m o r t i z a t i o n o f n e t a c t u a r i a l l o s s
hneaonln
a usuetaA
n n fe s
gd f
e

14.4
1.3[efoo]1
seot t
ne

r e la te d to

b e n e fit p la n s

C h a n g e in fu n d e d s ta tu s o f b e n e fit p la n s - o th e r
c o m p re h e n s iv e incom e
B a la n ce a t D e c e m b e r 31

0.3

(0.2)[efoo]1
seone
tt

Cifdttsbip: m o r t i z a t i o n o f p r i o r s e r v i c e c o s t
hneaonln
a usuetaA
n n fe s
gd f
e

Cifdttsbip: h a n g e i n a c t u a r i a l ( l o s s e s ) g a i n
hneaonln
a usuetaC
n n fe s
gd f
e

(19.3)

(2.8)

15.7

2.7

15.7

(0.9)

(3.6)

[ot] R e c la s sific a tio n is re p o rte d a s a c o m p o n e n t o f “ O p e ra tin g E x p en ses: Salaries a n d b e n e f its ” in
fto1
oe
n
th e S ta te m e n ts o f In c o m e a n d C o m p re h e n siv e Incom e. [nfoo
eott.
dn
fe
]

Additional detail regarding the classification of accumulated other comprehensive loss is included in Note 9.

11. Bu s in e s s Re s t r u c t u r i n g Ch a r g e s
The Bank had no restructuring charges in 2014 and 2013.
12. Di s t r i b u t i o n

of

Co m p r e h e n s i v e In c o m e

In accordance with Board policy, Reserve Banks remit excess earnings, after providing for dividends and the
amount necessary to equate surplus with capital paid-in, to the U.S. Treasury as earnings remittances to the
Treasury. The following table presents the distribution of the Bank’s comprehensive income in accordance
with the Board’s policy for the years ended December 31 (in millions):
2014
Dividends on capital stock
Transfer to surplus - amount required to equate
surplus with capital paid-in
Earnings remittances to the Treasury
Total distribution

2013
14

14

35
1,276
1,325

3
1,245
1,262

13. Su b s e q u e n t Ev e n t s
There were no subsequent events that require adjustments to or disclosures in the financial statements as of
December 31, 2014. Subsequent events were evaluated through March 11, 2015, which is the date that the
financial statements were available to be issued.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102