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The Federal Reserve
Bank of Atlanta
Financial Statements as of and for the Years Ended
December 31, 2013 and 2012 and
Independent Auditors' Report
THE FEDERAL RESERVE BANK OF ATLANTA
Table of Contents
Management's Report on Internal Control Over Financial Reporting
Independent Auditors' Report
Abbreviations
Page
1
Pages
2- 4
Page
5
Financial Statements:
Statements of Condition as of December 31, 2013 and December 31, 2012
Page
6
Statements of Income and Comprehensive Income for the years ended December 31, Page 7
2013 and December 31, 2012
Statements of Changes in Capital for the years ended December 31, 2013
Notes to Financial Statements
Pages
Page
8
9 - 40
FEDERAL
RESERVE
BANK
of ATLANTA
March 14,2014
To the Board of Directors of the Federal Reserve Bank of Atlanta:
1000 Peachtree Street N.E.
Atlanta, Georgia 30309-4470
404.498.8500
www.frbatlanta.org
The management of the Federal Reserve Bank of Atlanta (Bank) is responsible for the preparation and fair
presentation of the Statements of Condition as of December 31, 2013 and 2012, 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 (1992) 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.
Federal Reserve Bank of Atlanta
Signed by Dennis P. Lockhart
Dennis P. Lockhart, President and Chief Executive Officer
Signed by Marie C. Gooding
Marie C. Gooding, First Vice President and Chief Operating Officer
Signed by Anne M. DeBeer
Anne M. DeBeer, Senior Vice President and Chief Financial Officer
Deloitte.
Deloitte & Touche LLP
191 Peachtree Street NE
Suite 2000
Atlanta, GA 30303-1749
USA
Tel: +1 404 220 1500
Fax: +1 404 220 1583
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 Atlanta:
We have audited the accompanying financial statements of the Federal Reserve Bank of Atlanta
("FRB Atlanta"), which are comprised of the statements of condition as of December 31, 2013 and
2012, 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
Atlanta's internal control over financial reporting as of December 31, 2013, based on criteria
established in Internal Control — Integrated Framework (1992) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Management's Responsibility
The FRB Atlanta's 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 Atlanta's financial statements in the circumstances. The FRB Atlanta's 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 Atlanta's 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
Atlanta's 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) ("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 T o u c h e T o h m a t s u Limited
internal control relevant to the FRB Atlanta's 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 Atlanta's internal control over financial reporting is a process designed by, or under the
supervision of, the FRB Atlanta's principal executive and principal financial officers, or persons
performing similar functions, and effected by the FRB Atlanta's 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 Atlanta's 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 Atlanta; (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 Atlanta are being made only in accordance with authorizations of
management and directors of the FRB Atlanta; and (3) provide reasonable assurance regarding
prevention or timely detection and correction of unauthorized acquisition, use, or disposition of the
FRB Atlanta's 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 Atlanta as of December 31, 2013 and 2012, 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 Atlanta maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2013, based on the criteria
established in Internal Control — Integrated Framework (1992) 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 Atlanta 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.
signed by Deloitte & Touche LLP
March 14, 2014
FEDERAL RESERVE BANK OF ATLANTA
Abbreviations:
ACH
Automated clearinghouse
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
BEP
Benefit Equalization Retirement Plan
Bureau
Bureau of Consumer Financial Protection
FAM
Financial Accounting Manual for Federal Reserve Banks
FASB
Financial Accounting Standards Board
FOMC
Federal Open Market Committee
FRBNY
Federal Reserve Bank of New York
GAAP
Accounting principles generally accepted in the United States of America
GSE
Government-sponsored enterprise
IMF
International Monetary Fund
MBS
Mortgage-backed securities
OFR
Office of Financial Research
SDR
Special drawing rights
SERP
Supplemental Retirement Plan for Select Officers of the Federal Reserve Banks
SOMA
System Open Market Account
TBA
To be announced
TDF
Term Deposit Facility
FEDERAL RESERVE BANK OF ATLANTA
STATEMENTS OF CONDITION
As of December 31, 2013 and December 31, 2012
(in millions)
header row
col certificates
1: drawing
categoryrights
col 22 2013
2013 $col
3 2012
header
row
ASSETS
Gold
col
1,421
32013
2012
$31,337
Special
certificates
col
2 end
654
col
3 2012
654 $1,139 and $551 is lent as of December 31, 2013 and 2012,
ASSETS
Coin
col
2depository
2013
238
col
3 2012
209
Loans
to2Open
institutions
col
2col
2013
6 col
2012
4 which
ASSETS
System
Market
Account::
Treasury
securities,
net
(of
respectively)
col
2013
156,734
col
3
2012
109,082
ASSETS
System
Open
Market
Account::
Government-sponsored
enterprise
debt securities,
net (of
which $73 andsecurities,
$42 is lent as of
December
31,
2013
and
2012,
respectively)
col
2
2013
3,927
col
3
2012
4,792
ASSETS
System
Open
Market
Account::
Federal
agency
and
government-sponsored
enterprise
mortgage-backed
col
2 2013System
101,892
col 3Market
2012 57,298
ASSETS
Open
Account::
Foreign
currency
denominated
investments,
net
col
2 2013
1,352 col 3 2012 1,422 net
ASSETS
System
Open
Market
Account::
Central
bank
liquidity
swaps
col
2
2013
15
col
3
2012
508
ASSETS
System
Open
Market
Account::
Accrued
interest
receivable
col
2
2013
1,560
col
3
2012
1,147
ASSETS
System
Open
Market
Account::
Other
investments
col322012
2013
- col 3 2012 1
ASSETS
Bank
premises
and collection
equipment,
net
col
2 2013
240
col
ASSETS
Items
in
process
2col
165
2012
208 241
ASSETS
Interdistrict
settlement
account
22013
2013
- col
3 32012
36,287
OtherAND
assets
col 22of2013
2013Federal
colcol
3col
2012
ASSETS
Total
assets
col
$67268,271
379
2012
$col
213,269
LIABILITIES
CAPITAL
Reserve
notes
outstanding,
net colsold
2 2013
$ 152,081
col 3to2012
$ 149,849
LIABILITIES
AND
CAPITAL
System
Open
Market
Account:
Securities
under
agreements
repurchase
col
3
2012
6,463
LIABILITIES
AND
CAPITAL
System
Open
Market institutions
Account: Other
liabilities
col 2col
2013
88 col
3 2012
192 col 2 2013 20,986
LIABILITIES
AND
CAPITAL
Deposits:
LIABILITIES
AND
CAPITAL
Deposits:
Depository
col
2
2013
45,828
3
2012
52,776
LIABILITIES
AND
CAPITAL
Deposits:
Other
deposits
col
2
2013
12
col
3
2012
10
LIABILITIES
AND
CAPITAL
Interest
payable
to
depository
institutions
col
2
2013
2
col
3
2012
7
benefit
coststo
col
2013col
175
195
Deferred
credit
items
col
22 2013
1,009
col344,679
32012
2012col
553
LIABILITIES
remittances
Treasury
col
2col
2013
231
3 32012
LIABILITIES AND
AND CAPITAL
CAPITAL Accrued
Interdistrict
settlement
account
col
201290Other
liabilities
colaccumulated
2013
16 col
32col
2012
161,559
LIABILITIES
AND
CAPITAL
Total
liabilities
col
2013
265,107
3 2012
210,151
Capital
paid-in
col
2222013
1,582
col
32013
2012
LIABILITIES
AND
CAPITAL
Surplus
(including
other
comprehensive
loss of $19 and $48 at December 31, 2013 and
2012,
respectively)
col
2
2013
1,582
col
3
2012
1,559
LIABILITIES
AND
CAPITAL
Total
capital
col
2
2013
3,164
col
3
2012
3,118
LIABILITIES AND CAPITAL Total liabilities and capital col 2 2013 $ 268,271 col 3 2012 $ 213,269
The accompanying notes are an integral part of these financial statements.
header
row col
1: category
col Open
2: 2013
col 3:Account:
2012 endTreasury
header row
INTEREST
INCOME
System
Market
securities,
net col
2: 2013debt
$ 3,345
col 3: 2012
$ 2:
2,982
INTEREST
INCOME
System
Open
Market
Account:
Government-sponsored
enterprise
securities,
net col
2013 140 col 3: 2012 170
INTEREST
INCOME
System
Open
Market
Account:
Federal
agency
and
government-sponsored
enterprise
net
col 2: 2013
2,377 col
3: 2012
2,034
INTEREST
INCOME
System
Open
Market
Account:
Foreign
currency
denominated
assets,
net1col
2:3:2013
6mortgage-backed
col 3: 2012 8 securities,
INTEREST
INCOME
System
Open
Market
Account:
Central
bank
liquidity
swaps
col
2:
2013
col
2012
14
INTEREST
INCOME
Total
interest
income
col
2:
2013
5,869
col
3:
2012
5,208
EXPENSE
System
Open
Market
Account:
Securities
sold
under
agreements
to
repurchase
col
2:
2013
4 col 3: 2012 9
INTEREST
EXPENSE
Deposits:
INTEREST
EXPENSE
Deposits:
Depository
institutions
col
2013
114
3: 2012
INTEREST
EXPENSE
Deposits:
Term
Deposit
Facility
col
2:2:col
2013
12012
col col
3:
2012
- 114
INTEREST
EXPENSE
Totalinterest
interest
expense
2:
2013
119
col
3: 2012
123
INTEREST
EXPENSE
Net
income
colcol
2:
2013
5,750
3:
5,085
NON-INTEREST
INCOME
System
Open
Market
Account:
Treasury
securities
gains,
net
col
2:
2013
col
3:
2012
840
NON-INTEREST
INCOME
System
Open
Market
Account:
Federal
agency
and
government-sponsored
enterprise
mortgage-backed
securities
gains, netINCOME
col 2: 2013
4 colOpen
3: 2012
16 Account:
NON-INTEREST
INCOME
System
Market
Foreign
currency
translation
losses,
net
col 2:1 2013 (72) col 3: 2012 (64)
NON-INTEREST
Income
from
services
col
2:service
2013
274
col
3: 2012
290
Compensation
received
for
costs
provided
col
2:
2013
1
col
3:
2012
NON-INTEREST
INCOME
Reimbursable
services
to
government
agencies
col
2:
2013
22
col
3:
2012
19
Other non-interest
col
2013
7income
col212:
3:col
2012
72013
NON-INTEREST
INCOMEOccupancy
Total
col3:
2:2012
236
col 3:199
2012 1,109
Salaries
and2:
benefits
col
2013
206
col
3: 2012
OPERATING
EXPENSES
col
2: 2013
2013
3:costs
2012
21
OPERATING
EXPENSES
2:
10
col
13
OPERATING
EXPENSES Equipment
Compensation
paid
service
incurred
col 2: 2013
126
col 3:of
2012
1402: 2013
Other
col 2:col
2013
74for
col
3:
2012
80operating
OPERATING
EXPENSES
Assessments:
Board
of
Governors
expenses
and
currency
costs
col
col
Assessments:
Bureau
of
Consumer
Financial
Protection
Office
Financial
col 3:
2: 2012
2013 131
33
col
3:
2012
22
OPERATING
EXPENSES
Total
operating
expenses
col
2:
2013
611
col
3:
2012
606
OPERATING
EXPENSES
Net
income
before
providing
for
remittances
to
Treasury
col
2: 2013
5,375
col -3:Research
2012141
5,588
OPERATING
EXPENSES
Earnings
remittances
to costs
Treasury
col
2:135
2013
5,286
col
3:and
2012
5,453
Net
income
col
2:
2013
89
col
3:
2012
OPERATING
EXPENSES
Change
in
prior
service
related
to
benefit
plans
col
2:
2013
1
col
3:
2012
OPERATING
EXPENSES
Change
in
actuarial
gains
(losses)
related
to
benefit
plans
col
2:
2013
28
col
3:
2012
(22)
OPERATING EXPENSES
EXPENSES Comprehensive
Total other comprehensive
col 3: 2012 (22)
OPERATING
income colincome
2: 2013(loss)
$ 118col
col2:3:2013
201229
$ 113
The accompanying notes are an integral part of these financial statements.
header
col 1: category
col 2:
Capital
paid-in
colcol
3: Surplus
Net
income
retained
col Surplus
4: Surplus
Accumulated
other$ comprehensive
loss
colrow
5:
Surplus
Total
surplus
col
6: Total
capital
end
row
Balance
at
December
31,
2011
(30,761,523
2:header
Capital
paid-in
$$1,538
col
Net
income
retained
4: Surplus
Accumulated
other
comprehensive
loss
$ (26)
col 5:loss
Surplus
Total
surplus
1,538
col
Total
capital
end21end
header
$1,564
3,076
at
December
31,
2011
Net
change
inshares)
capital
stock
issued
(410,559
shares)
col3:
2:
Capital
paid-in
col
3: row
Surplus
Netcol
income
retained
-Balance
col 4: Surplus
Accumulated
other
comprehensive
-Surplus
col
5:
Surplus
Total
surplus
-6:6:
col
6:col
Total
capital
header
row
21
Balance
at
December
31,
2011
Comprehensive
income:
Net
income
col
2:
Capital
paid-in
3:
Surplus
Net
income
retained
135 col
4:
Surplus
Accumulated
other
comprehensive
loss
col
5:
Total
surplus
135
col
Total
capital
end
header
row
135
Balance
at
December
31,
2011
Comprehensive
income:
Other
comprehensive
loss
col
2:
Capital
paid-in
col
3:
Surplus
Net
income
retained
col
4:
Surplus
Accumulated
other
comprehensive
loss
(22)
col
5:
Surplus
Total
surplus
(22)
col
6:
Total
capital
end
header
row
(22)
Balance
at
December
31,
2011
Dividends
on
capital
stock
col
2:
Capital
paid-in
col
3:
Surplus
Net
income
retained
(92)
col
4:
Surplus
Accumulated
other
comprehensive
loss
col
5:
Surplus
Total
surplus
(92)
col
6:
Total
capital
end
header
row
(92)
Balance
at
December
31,
2011
Net
change
in
capital
col
2:
Capital
paid-in
21
col
3:
Surplus
Net
income
retained
43
col
4:
Surplus
Accumulated
other
comprehensive
loss
(22)
col
5:
Surplus
Total
surplus
21
col
6:
Total
capital
end
header
row
42
Balance
at
December
31,
2012
(31,172,082
shares)
col
2:
Capital
paid-in
$
1,559
col
3:
Surplus
Net
income
retained
$
1,607
col
4:
Surplus
Accumulated
other
comprehensive
loss
$ (48)
col 5: Surplus
Total
surplus
$shares)
1,559
col
6:
end23header
$header
3,118
Balance
at
December
31,
2012
Net
change
incomprehensive
capital
stock
issued
col surplus
2: Total
Capital
paid-in
colincome
3: row
Surplus
Net row
income
retained
- col
4:
Surplus
Accumulated
other
loss
- (459,924
col
5:
Surplus
Total
-capital
col
6:end
Total
capital
end
23 4:
Balance
at
December
31,
2012
Comprehensive
income:
Net
income
col
2:
Capital
paid-in
- col
3:
Surplus
Net
89
col
Surplus
Accumulated
other
comprehensive
loss
- col 5: Surplus
Total
surplus
89
col
6:col
Total
capital
header
row
89retained
Balance
at
December
31,
2012
Comprehensive
income:
Other
comprehensive
income
2:
Capital
paid-in
col
3:
Surplus
Net
income
retained
col
4:
Surplus
Accumulated
other
comprehensive
loss
29
col
5:
Surplus
Total
surplus
29
col
6:
Total
capital
end
header
row 29
Balance
at
December
31,
2012
Dividends
on
capital
stock
col
2:
Capital
paid-in
col
3:
Surplus
Net
income
retained
(95)
col
4:
Surplus
Accumulated
other
comprehensive
loss
col
5:
Surplus
Total
surplus
(95)
col
6:
Total
capital
end
header
row
(95)
Balance
at
31,
2012
Net
change
inshares)
capitalcol
col2:2:Total
Capital
paid-in
23
col
3: Surplus
NetNet
income
retained
(6) col
4: Surplus
Accumulated
other comprehensive
loss
29 col
surplus
23$col
6: Total
header
rowretained
46
Balance Accumulated
at December
December
31,
2013
(31,632,006
Capital
paid-in
1,582
col
3:capital
Surplus
income
$ 1,601
4:
Surplus
other
comprehensive
loss5:$Surplus
(19) col
5: Surplus
Total
surplus
$ 1,582
colend
6: Total
capital
end header
rowcol
$ 3,164
The accompanying notes are an integral part of these financial statements.
1.
STRUCTURE
The Federal Reserve Bank of Atlanta (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 Sixth Federal Reserve District, which includes Georgia, Florida, Alabama, and portions of
Louisiana, Tennessee, and Mississippi.
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 national 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.
OPERATIONS AND SERVICES
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 large-dollar
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 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 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 temporary U.S. dollar
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. In addition, as a contingency measure, the FOMC authorized and
directed the FRBNY to establish temporary foreign currency liquidity swap arrangements with these five
central banks to allow for the System to access liquidity, if necessary, in any of the foreign central banks'
currencies. On October 31, 2013, the Federal Reserve and five other central banks agreed to convert their
existing temporary liquidity swap arrangements to standing agreements which will remain in effect 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 the Retail Payments Office and Central Billing
Services.
3.
SIGNIFICANT ACCOUNTING POLICIES
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, and the recording of all SOMA securities on a settlement-date
basis. Amortized cost, rather than the fair value presentation, more appropriately reflects 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 straightline 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 Banks' 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 2013, the description of certain line items presented in the Statements of Income and Comprehensive Income
and the Statements of Condition have been revised to better reflect the nature of these items. Amounts related
to these line items were not changed from the prior year, only the nomenclature for the line item was revised,
as further noted below:
•
The line item, "Accrued interest on Federal Reserve notes" has been revised in the Statements of
Condition to "Accrued remittances to Treasury."
•
The line item, "Net income before interest on Federal Reserve notes expense remitted to Treasury" has
been revised in the Statements of Income and Comprehensive Income to "Net income before providing for
remittances to Treasury."
•
The line item, "Interest on Federal Reserve notes expense remitted to Treasury" has been revised in the
Statements of Income and Comprehensive Income to "Earnings remittances to Treasury."
Certain amounts relating to the prior year have been reclassified in the Statements of Condition to conform to the
current year presentation. The amount reported as "System Open Market Account: Accrued interest
receivable" for the year ended December 31, 2012 ($1,147 million) was previously reported as a component of
"System Open Market Account: Foreign currency denominated assets, net" ($6 million) and "Accrued interest
receivable" ($1,141 million).
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. Section 152 of the Dodd-Frank Act established the
Office of Financial Research (OFR) within the Treasury and required the Board of Governors to fund the
OFR for the two-year period ended July 21, 2012. The Reserve Banks reviewed the law and evaluated the
design of and their relationships to the Bureau and the OFR and determined that neither should 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, 2013 and 2012.
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 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 and Separate Trading of Registered Interest and Principal of
Securities Treasury securities); 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 (reverse repurchase
transactions) with primary dealers and with the set of expanded counterparties which includes banks,
savings associations, GSEs, and domestic money market funds. These reverse repurchase transactions,
when arranged as open market operations, 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, and 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
"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 "Treasury securities, net" and "Government-sponsored
enterprise debt securities, net," as appropriate, in the Statements of Condition. Securities lending
transactions are fully collateralized by Treasury securities that have fair values in excess of the securities
lent. The FRBNY charges the primary dealer a fee for borrowing securities, and these fees are reported as
a component of "Non-interest income: 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 Assets; and
Warehousing Agreements
Interest income on Treasury securities, GSE debt securities, and foreign currency denominated assets included
in the SOMA is accrued on a straight-line basis. 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,
2013 and 2012, the FRBNY executed dollar rolls primarily 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 assets, 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 assets 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 assets, 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 amount received would be reported as a liability
by the Bank.
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 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
At the close of business each day, 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 $18,059 million and $26,016 million at
December 31, 2013 and 2012, respectively.
At December 31, 2013 and 2012, all Federal Reserve notes outstanding, reduced by the Reserve Bank's
currency holdings, were fully collateralized. At December 31, 2013, all gold certificates, all special
drawing rights certificates, and $1,182 billion of domestic securities held in the SOMA were pledged as
collateral. At December 31, 2013, 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, 2013
and 2012.
Other
Other deposits include the Bank's allocated portion of foreign central bank and foreign government deposits
held at the FRBNY. Other deposits also include cash collateral held by the Bank.
l. Items in Process of Collection and Deferred Credit Items
Items in process of collection primarily represents amounts attributable to checks that have been deposited for
collection and that, as of the balance sheet date, have not yet been presented to the paying bank. Deferred
credit items represents the counterpart liability to items in process of collection. The amounts in this
account arise from deferring credit for deposited items until the amounts are collected. The balances in
both accounts can fluctuate significantly.
m. 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.
n. 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.
o. Remittances to 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 Treasury are made
on a weekly basis. This amount is reported as "Earnings remittances to Treasury" in the Statements of
Income and Comprehensive Income. The amount due to the Treasury is reported as "Accrued remittances
to Treasury" in the Statements of Condition. See Note 12 for additional information on interest on Federal
Reserve notes.
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.
p. 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, 2013 and 2012, the Bank was reimbursed
for all services provided to the Treasury as its fiscal agent.
q. Income from Services, Compensation Received for Service Costs Provided, and Compensation Paid for
Service Costs Incurred
The Bank has overall responsibility for managing the Reserve Banks' provision of check and ACH services to
depository institutions and, as a result, reports total System revenue for these services as "Income from
services" in its Statements of Income and Comprehensive Income. The Bank compensates the applicable
Reserve Banks for the costs incurred to provide these services and reports the resulting compensation paid
as "Operating expenses: Compensation paid for service costs incurred" in its Statements of Income and
Comprehensive Income.
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.
r. Assessments
The Board of Governors assesses the Reserve Banks to fund its operations, the operations of the Bureau and,
for a two-year period following the July 21, 2010 effective date of the Dodd-Frank Act, the OFR. 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 date of 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. The fixed percentage
of total operating expenses of the System for the years ended December 31, 2013 and 2012 was 12 percent
($597.6 million) and 11 percent ($547.8 million), respectively. After 2013, the amount will be adjusted in
accordance with the provisions of the Dodd-Frank Act. The Bank's assessment for Bureau funding is
reported as "Assessments: Bureau of Consumer Financial Protection and Office of Financial Research" in
the Statements of Income and Comprehensive Income.
The Board of Governors assessed the Reserve Banks to fund the operations of the OFR for the two-year period
ended July 21, 2012, following enactment of the Dodd-Frank Act; thereafter, the OFR is funded by fees
assessed on bank holding companies and nonbank financial companies that meet the criteria specified in
the Dodd-Frank Act.
s. 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 $3 million for each of the years ended December 31, 2013 and 2012, and
are reported as a component of "Operating expenses: Occupancy" in the Statements of Income and
Comprehensive Income.
t. 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.
Note 11 describes the Bank's restructuring initiatives and provides information about the costs and liabilities
associated with employee separations. Costs and liabilities associated with enhanced pension benefits in
connection with the restructuring activities for all of the Reserve Banks are recorded on the books of the
FRBNY. Costs and liabilities associated with enhanced postretirement benefits are discussed in Note 9.
The Bank had no significant restructuring activities in 2013 and 2012.
u. Recently Issued Accounting Standards
In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to
the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in
Accounting Standards Update No. 2011-05. This update indefinitely deferred the requirements of ASU
2011-05, which required an entity to report the effect of significant reclassifications out of accumulated
other comprehensive income on the respective net income line items. Subsequently, in February 2013, the
FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out
of Accumulated Other Comprehensive Income, which established an effective date for the requirements of
ASU 2011-05 related to reporting of significant reclassification adjustments from accumulated other
comprehensive income. This update improves the transparency of changes in other comprehensive
income and items reclassified out of accumulated other comprehensive income in the financial statements.
These presentation requirements of ASU 2011-05 and the required disclosures in ASU 2013-02 are
effective for the Bank for the year ending December 31, 2013, and are reflected in the Bank's 2013
financial statements and Note 10.
4.
LOANS
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 $6 million and $4 million as of December 31, 2013 and 2012, respectively,
with a remaining maturity within 15 days.
At December 31, 2013 and 2012, 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, 2013 and 2012.
5.
SYSTEM OPEN MARKET ACCOUNT
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, 2013 and 2012, 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 the existing policy of reinvesting principal
payments from the SOMA portfolio holdings of GSE debt securities and federal agency and GSE MBS in
federal agency and GSE MBS. 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 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 at the end of 2012. In December 2012, the FOMC announced that the Federal Reserve would
continue the policy of rolling over maturing Treasury securities into new issues at auction.
During the year ended December 31, 2012, the FRBNY also continued the purchase and sale of SOMA portfolio
holdings under the maturity extension programs authorized by the FOMC. In September 2011, the FOMC
announced that the Federal Reserve would extend the average maturity of the SOMA portfolio holdings of
securities by purchasing $400 billion par value of Treasury securities with maturities of six to thirty years and
selling or redeeming an equal par amount of Treasury securities with remaining maturities of three years or
less by the end of June 2012. In June 2012, the FOMC announced that the Federal Reserve would continue
through the end of 2012 its program to extend the average maturity of securities by purchasing $267 billion par
value of Treasury securities with maturities of six to thirty years and selling or redeeming an equal par amount
of Treasury securities with maturities of three and a quarter years or less by the end of 2012.
The Bank's allocated share of activity related to domestic open market operations was 6.643 percent and 6.029
percent at December 31, 2013 and 2012, 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):
header
row
col
1:cost
2013
col
2: 2013
Par2013
col 3:
2013 Unamortized
premiums
col 4:
Unaccreted
discounts
col
5: 2013 5: 2013
Total
amortized
header
row
Notes
col
2:
2013
Par
97,479
col
Unamortized
premiums
$ 2,218
4: 2013
2013
Unaccreted
discounts
$ (379)
Total
amortized
cost
$$49,247
99,318
Bonds
col cost
2: 2013
Parend
3:3:2013
premiums
8,539
col col
4:premiums
2013
Unaccreted
discounts
(370)
col 5:col
2013
Total
amortized
57,416
Total
Treasury
securities
col
2:col
2013
Par
$Unamortized
146,726
col 3:
2013 Unamortized
$ 10,757
col
4: 2013
Unaccreted
$col(749)
col
5:
2013
Total
amortized
cost
$
156,734
GSE
debt
securities
col
2:
2013
Par
$
3,801
col
3:
2013
Unamortized
premiums
$
126
col
4:
2013
Unaccreted
discounts
$discounts
5:
2013
Total
amortized
cost
$
3,927
Federal
agency
and
GSE
MBS
col
2:
2013
Par
$
98,989
col
3:
2013
Unamortized
premiums
$
2,975
col
4:
2013
Unaccreted
discounts
(72)end
col
5:$2013
amortized
cost
101,892
header
row$cost
col
1:cost
2012
col
2:Total
2012
Par2012
col 3:
2012$ Unamortized
premiums
col 4:
Unaccreted
discounts
col
5: 2012
amortized
header
row
Notes
col
Par
66,949
col3:
3:
Unamortized
premiums
$ 1,962
4: 2012
2012
Unaccreted
discounts
$col
(43)
col 5:Total
2012
Total amortized
$ 33,508
68,868
Bonds
col2:
2:2012
2012
Par
col
2012
Unamortized
premiums
6,714
col col
4:premiums
2012
Unaccreted
discounts
(8)
5: 2012
Total
amortized
cost
40,214
Total
Treasury
securities
col
2:
2012
Par
$
100,457
col
3:
2012
Unamortized
$
8,676
col
4:
2012
Unaccreted
discounts
$
(51)
col
5:
2012
Total
amortized
cost
$
109,082
GSE
debt
securities
col
2:
2012
Par
$
4,629
col
3:
2012
Unamortized
premiums
$
163
col
4:
2012
Unaccreted
discounts
$
col 5: 2012
amortized
cost
$ amortized
4,792
Federal
agency
GSE
MBS
col
2: 2012 Par
$ 55,871
col 3: 2012 Unamortized premiums $ 1,469 col 4: 2012 Unaccreted
discounts
$ Total
(42)and
col
5: 2012
Total
cost
$ 57,298
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. 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, 2013 and 2012. Financial information related to securities sold under agreements to
repurchase for the years ended December 31 was as follows (in millions):
header
row
col
1:outstanding,
category
col
2: Allocated
to2:
theAllocated
Bank 2013
col
3: Allocated
the Bank
col 4: Total
2013$ col
5:
Total
SOMA
2012
end
header
row
Contract
amount
end
ofduring
year
to the
Bank
2013
$ to
20,986
col 3:2012
Allocated
to theSOMA
Bank
2012
6,463
col
4:
Total
SOMA
2013
$99,681
315,924
col
5: col
Total
SOMA
$ 107,188
Average
daily
amount
outstanding,
the
year
col
2:2012
Allocated
to the
Bank
2013
6,458
col
Allocated
to
Bank
2012
5,903
col
4:
Total
SOMA
2013
col
5:5:the
Total
SOMA
91,898
Maximum
balance
outstanding,
during
year
col
2:2012
Allocated
toBank
the
Bank
2013
20,986
col
3: 3:
Allocated
toBank
thethe
Bank
2012
7,427
col
4:
Total
SOMA
2013
315,924
col
Total
SOMA
2012
122,541
Securities
pledged
(par
value),
end
of
year
col
2:
Allocated
to
the
2013
20,623
col
3:
Allocated
to
the
2012
5,640
col
4:
Total
SOMA
2013
310,452
col
5:
Total
SOMA
2012
93,547
Securities
pledged
(market
value),
end
of
year
col
2:
Allocated
to
the
Bank
2013
20,918
col
3:
Allocated
to
the
Bank
2012
6,463
col 4: Total SOMA 2013 314,901 col 5: Total SOMA 2012 107,188
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, 2013 and 2012 was as follows (in millions):
header
row
col
1:
2013
col
15years
daysvalue)
col
3:
16
days
toheader
90 15
days
col$4:- col
91 days
1 year
coldays
5: Over
year
yearstocol
6:
Over
512
years
to
10
years
col2:to
7:Within
10
colcol
8: 6:
Total
row
December
31,
Treasury
securities
col
2: end
Within
16todays
to
90
$years
201col
4: to
915days
year
$debt
col
5:2013:
Over
1 year
5Over
years
$ (par
50,707
Over
5 years
todays
10toyears
$ 3:
57,441
col4:
7:91
Over
10to
$ 38,546
col
8: 1
Total
$to146,726
securities
(par
value)
col
2:
Within
15
days
153
col
3:
16
days
90
days
503
col
days
1
year
576
col
5:
Over
1GSE
year
5
years
2,409
col
6:
Over
5
years
to
10
years
4
col
7:
Over
10
years
156
col
8:
Total
3,801
Federal
agency
and
GSE
MBS
(par
col
6:3:Over
5amount)
years
to col
10 years
169
7: to
Over
10 years
col 8: to
Total
98,989
Securities
sold
under
agreements
to7:value)1
repurchase
(contract
2:col
Within
15
days
20,986
col 5:
8:98,820
Total120,986
header
row
col
1:
2012
col
2: Within
15 (par
days
col
16
to 90
days
4:
91col
days
1 year
col
5 years
col
6:
Over
5 years
toTreasury
10
years
col
Over
10value)
years
col5days
8:
Total
end
header
row
December
31,
2012:
securities
col
2:
Within
15
days
$90
- days
col
3:169
16 7:
days
to9110
90
daysOver
$$1-25,639
colyear
4:917
91
days
to
1 $year
$1 1year
col
5:
Over
1
year
to
5
years
$
22,820
col
6:
Over
years
to
10
years
$
51,997
col
Over
years
col
8:
Total
100,457
GSE
debt
securities
(par
value)
col
2:
Within
15
days
94
col
3:
16
days
to
col
4:
days
to
year
col
5:
Over
toagency
5sold
yearsunder
3,185
colMBS
6: Over
years tocol
10(contract
col 7:toOver
years
141
8:
Total
4,629
Federal
and
GSE
(par
6:years
Over123
5amount)
years
10 years
143 col
7:col
Over
10 col
years
col 8: Total 55,871
Securities
agreements
to5value)1
repurchase
col
2:10Within
15 days
6,463
8: 55,728
Total 6,463
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 6.5 and 3.3 years as of December 31, 2013 and
2012, respectively.
The amortized cost and par value of Treasury securities and GSE debt securities that were loaned from the SOMA
at December 31 was as follows (in millions):
header
row
col
1: category
2:
Allocated
to the$ Bank
2013
col 2013
3: Allocated
tocolthe3:Bank
2012 to
colthe
4: Bank
Total 2012
SOMA
2013
Total
SOMA
end
header
row
Treasury
securities
(amortized
cost)
col
2: Allocated
toBank
the
Bank
$col
1,139
Allocated
$4:551
colcol
4:5:
Total
SOMA
2013
$2012
17,153
col
5:colTotal
SOMA
2012
9,139
Treasury
securities
(par
value)
col
2:
Allocated
to the
2013
1,026
3: Allocated
to the
Bank
2012
51042colcol
Total
SOMA
2013
15,447
col
5:Total
Total
SOMA
2012
8,460
GSE
debt
securities
(amortized
cost)
col
2:
Allocated
to
the
Bank
2013
73
col
3:
Allocated
to
the
Bank
2012
4:
Total
SOMA
2013
1,099
col
5:
SOMA
2012
697
GSE debt
securities
(par value)
1,055
col 5:
Total SOMA
2012 col
6762: Allocated to the Bank 2013 70 col 3: Allocated to the Bank 2012 41 col 4: Total SOMA 2013
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, 2013, 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, 2013, the total purchase price of the federal agency
and GSE MBS under outstanding purchase commitments was $59,350 million, of which $479 million was
related to dollar rolls. The total purchase price of outstanding purchase commitments allocated to the Bank
was $3,943 million, of which $32 million was related to dollar rolls. As of December 31, 2013, there were no
outstanding sales commitments for federal agency and GSE MBS. These commitments, which had contractual
settlement dates extending through February 2014, are 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
commitments as part of the risk management practices used to mitigate the counterparty credit risk.
Other investments consist of cash and short-term investments related to the federal agency and GSE MBS
portfolio. Other liabilities, which are 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 securities 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 investments
and other liabilities allocated to the Bank and held in the SOMA at December 31 was as follows (in millions):
header
row col
1: category
col
2: Allocated
to the
Bank
3: Allocated
toBank
the Bank
2012
col4:4:Total
TotalSOMA
SOMA2013
2013$col
5:
Total
2012
end
header
row
Other
investments
2:
Allocated
toAllocated
the
Bank
$ -2013
col2013
3:col
Allocated
2012
1 col
2SOMA
col
5:$SOMA
Total
2012
$SOMA
23from
Other
liabilities:
Cash
margin
col
2:MBS
to2013
thefails
Bank
$ 87 col to
3: the
Allocated
to the$1Bank
2012 $ 187
colthe
4: Bank
Total 2012
2013
1,320SOMA
col
5:col
$SOMA
3,092
Other
liabilities:
Obligations
transaction
Allocated
2013
col
to
col
4: SOMA
Total
SOMA
2013
11col
col5:5:2012
Total
SOMA
2012
Other
liabilities:
Total
other
liabilities
col
2: Allocated
tocol
the2:
Bank
2013 $to88the
colBank
3: Allocated
to 3:
theAllocated
Bank 2012
$ 192
col 4: 5
Total
2013
$Total
1,331
Total
2012
$85
3,177
Accrued interest receivable on domestic securities holdings was $23,405 million and $18,924 million as of
December 31, 2013 and 2012, respectively, of which $1,555 million and $1,141 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, 2013 and 2012, is summarized as follows (in millions):
header
row
col
1:toMBS
category
col
2: Allocated
to
the BankcolBills
col 3: Allocated
to theGSE
Bankdebt
Notes
col 4: Allocated
to the Bank
col
5: Allocated
the31,
Bank
Total
securities
6: Bills
Allocated
to the
securities
col 7:$Allocated
to4:
theBonds
Bank Federal
agency
and
GSE
end2011
header
row
Balance
at December
col Treasury
2:Federal
Allocated
to the
Bank
$securities
1,370
col$Bank
3:130,120
Allocated
Bank Notes
97,531
col
to the
Bank
Bonds
$ Allocated
31,219
col
5:the
Allocated
to the
Bank
Total
Treasury
colto
6:the
Allocated
to the related
Bank
GSE
debtAllocated
securities
$discounts,
8,016
col
7:
to
Bank
agency
and
GSE
MBS
$
63,062
Balance
at
December
31,
2011
Purchases
Footnote
1
Purchases
and
sales
may
include
payments
and
receipts
to
principal,
premiums,
and
inflation
compensation
adjustments
to
the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
and
losses
on
such
transactions.
Purchases
and
sales
exclude
MBS
TBA
transactions
that
are
settled
on
a
net
basis.
End
footnote
col
2:
Allocated
to
the
Bank
Bills
8,115
col
3:
Allocated
to
the
Bank
Notes
25,859
col
4:
Allocated
to
the
Bank
Bonds
16,985
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
50,959
col
6:
Allocated
to
the
Bank
GSE
debt
securities
col
7:
Allocated
to
the
Bank
Federal
agency
and
GSE MBS
27,460
Balance
at and
December
31,
2011
Footnote
1 Purchases
and
sales
may
include
payments
and
receipts
related
to principal,
premiums,
discounts,
inflation
compensation
adjustments
to3:the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
losses
ontoSales
such
transactions.
Purchases
and
sales
exclude
MBS
TBA
transactions
that
aretosettled
on
aBonds
net
basis.
End
footnote
col
2:and
Allocated
theTreasury
Bank
Bills
- col
Allocated
to6:the
Bank Notes
(32,646)
col
4:
Allocated
the
Bank
(746)
col
5:
Allocated
to
the
Bank
Total
securities
(33,392)
col
Allocated
to
the
Bank
GSE
debt
securities
col
7:
Allocated
the
Bank
Federal
agency
and
GSE
MBS
Balance
at
December
31,
2011
Realized
gains,
net
Realized
gains,
net
offset
the
amount
of
realized
gains
and
losses
included
in
thetoBonds
reported
sales
amount.
end
footnote
col
2:
Allocated
to
the
Bank
Bills
col
3:
Allocated
to
the
Bank
Notes
760
col
4:
Allocated
to
the
Bank
80
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
840
col
6:
Allocated
to
the
Bank
GSE
debt
securities
col
7:
Allocated
to
the
Bank
Federal
agency
and
GSE
MBS
Balance
at December
31, 2011
Principal
payments
and
maturities
colto2:the
Allocated
to
the
Bank(20,566)
Bills
(9,226)
col 3: Allocated
to the Bank
Notes
(4,451)
colsecurities
4: Allocated
to
the
Bank
Bonds
-to
col
5:
Allocated
Bank
Total
Treasury
securities
(13,677)
col Bills
6: Allocated
to the
Bank
GSE
debt
(1,764)
col
7:
Allocated
the
Bank
Federal
agency
and
GSE
MBS
Balance
at
December
31,
2011
Amortization
of
premiums
and
accretion
of
discounts,
net
col
2:
Allocated
to
the
Bank
col
3:
Allocated
toDecember
the Bank
Bank 31,
Notes
(351)
col 4:adjustment
Allocated
to
the
Bank Bonds
(481)
col 5: Allocated
to the
Bank
Treasury
securities
(832) col
Allocated
to
the
GSE
debt
(74) col 65
7:
to the Bank
Federal
agency
and
GSE
(330)
Balance
atsecurities
2011
Inflation
onAllocated
inflation-indexed
col
2: Treasury
Allocated
toMBS
theTotal
Bank
Bills
3: Allocated
the6:
Bank
Notes
40
col 4:- Allocated
tosecurities
the Bank
col
5:
Allocated
to4securities
the
Bank- the
Total
securities
105Bank's
col 6:- col
Allocated
to the to
Bank
GSE
debt
col
Allocated
toreallocation
the Bonds
Bank Federal
agency
and GSE
MBS
Balance
at SOMA
December
31, 7:
2011
Annual
adjustment
footnote
Reflects
annual
adjustment
toasthe
allocated
portion
of
the
related
securities
that
results
from
the
annual
settlement
of
the
interdistrict
settlement
account,
discussed
in
Note
3i.
end
footnote
col
2: Allocated
the Bank
Bills
(259)
col
3: Allocated
tocol
the Bank
Notesto
(17,874)
colGSE
4: Allocated
to the (1,386)
Bank Bonds
(6,908)
col
5:the
Allocated
to2012
thetoagency
Bank
Treasury
securities
(25,041)
Allocated
Bank
securities
col
Allocated
Bank
Federal
and
GSE
MBS
(12,328)
Balance
attoDecember
31,
col 2:Total
Allocated
to the
Bank
Bills
$securities
-$col
3: 6:
Allocated
tocol
thethe
Notes
$ debt
68,868
colGSE
4: Allocated
to7:
the
Bank
Bonds
$ Allocated
40,214
col
5:the
Allocated
to the
Bank
Total
Treasury
$ 109,082
6:Bank
Allocated
to
the related
Bank
debt securities
$discounts,
4,792
col
7:
to
Bank
Federal
agency
and
GSE
MBS
57,298
Balance
at
December
31,
2012
Purchases
Footnote
1
Purchases
and
sales
may
include
payments
and
receipts
to
principal,
premiums,
andcol
inflation
compensation
adjustments
to3:the
basis
of inflation-indexed
securities.
The
amount
asasales
includes
the
realized
gains
and
losses
on such
transactions.
Purchases
and sales
exclude
MBS
TBA
transactions
that
arereported
settled
on
net
basis.
End
footnote
2:
Allocated
to
the
Bank
Bills
col
Allocated
to
the
Bank
Notes
23,178
col
4:
Allocated
to
the
Bank
Bonds
13,307
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
36,485
col
6:
Allocated
to
the
Bank
GSE
debt
securities
col
7:
Allocated
to
the
Bank
Federal
agency
and
GSE MBS
55,615
Balance
at and
December
31,compensation
2012
Sales
Footnote
1 Purchases
andsales
sales
may include
payments
and
receipts
related
to principal,
premiums,
discounts,
inflation
adjustments
to
the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
and
losses
on
such
transactions.
Purchases
and
exclude
MBS
TBA
transactions
that
are
settled
on
a
net
basis.
End
footnote
coland
2: Allocated
to- the Bank
Bills -- col
3:
to
the
Bank
Notes
- colsecurities
4: Allocated
Bank Bonds
col 5:
Allocated
toDecember
the
Bank
Total
Treasury
securities
col
6: Allocated
Allocated
tonet
theoffset
Bankthe
GSE
debt
- gains
colto7:the
Allocated
to
the- Bank
Federal
agency
GSE
MBS
Balance
at
31,
2012
Realized
gains,
net
Realized
gains,
amount
of
realized
and
losses
included
in
the
reported
sales
amount.
end
footnote
col
2:
Allocated
to
the
Bank
Bills
col
3:
Allocated
to
the
Bank
Notes
col
4:
Allocated
to
the
Bank
Bonds
- col 5: agency
Allocated
the Bank
Total
Treasury
securities
- 2:
colAllocated
6: Allocated
to Bank
the Bank
GSE
debt
securitiesto- col
7:
Allocated
to
the
Federal
andto
GSE
MBS
- 5: Allocated
Balance
December
31,
2012
Principal
payments
andagency
maturities
col
to securities
the
Billscol
- col
3: Allocated
the
Bank
Notes
(1)
colBank
4:at
the
Bank
Bonds
- col
toand
theand
Bank
Total
Treasury
6: Allocated
to the
Bank
securities
(1,271)
colto7:
Allocated
to
the
Bank
GSE
MBS
(17,654)
Balance
atAllocated
December
31,
2012
Amortization
ofFederal
premiums
accretion
of discounts,
net col
2:(1)
Allocated
to
the
Bank
Bills
- colGSE
3: debt
Allocated
to
the
Bank
Notes
(390)
col
4:
Allocated
to
the
Bank
Bonds
(616)
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
(1,006)
col
6:
Allocated
to
the
Bank
GSE
debt
securities
(51)
col
7:
Allocated
to
the
Bank
Federal
agency
and
GSE
MBS
(453)
Balance
at
December
31,
2012
Inflation
adjustment
on
inflation-indexed
securities
col
2:
Allocated
to
the
Bank
Bills
col
3:
Allocated
to
the
Bank
Notes
19
col
4:
Allocated
to
the
Bank
Bonds
43
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
62
col
6:
Allocated
to
the BankatGSE
debt securities
- Annual
col 7: Allocated
to the
Bank Federal
agency
and GSE
- adjustment to the Bank's allocated portion
Balance
December
31, 2012
reallocation
adjustment
footnote
4 Reflects
theMBS
annual
the
related
SOMA
securities
that
results
from
the
annual
settlement
of
the
interdistrict
settlement
account,
as
discussed
in Allocated
Note4,468
3i. to of
end
footnote
col
2:
Allocated
to
the
Bank
Bills
col
3:
Allocated
to
the
Bank
Notes
7,644
col
4:
Allocated
to
the
Bank
Bonds
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
12,112
col
6:
Allocated
to
the
Bank
GSE
debt
securities
457
col
7:
the
Bank
and
MBS
7,086
Balance
31,Allocated
2013GSE
2: the
Allocated
toBank
the Bank
Bills
$ GSE
- col
3: Allocated
to thecol
Bank
Notes $ 99,318
4: GSE
Allocated
the
BankatFederal
Bonds
$agency
57,416
5:col
Allocated
to theinformation
Total
securities
$ 156,734
6: Allocated
the col
Bank
debt to
securities
$December
3,927
col
7:
to
Bank
Federal
agency
and
$ 101,892
Year-ended
December
31,col
2012
Supplemental
- Treasury
par
value
ofMBS
transactions:
Purchases
Footnote
3to
Includes
inflation
compensation.
end
footnote
col
2:
Allocated
to
the
Bank
Bills
$
8,115
col
3:
Allocated
to
the
Bank
Notes
$
24,864
col
4:
Allocated
to
the
Bank
Bonds
$
13,207
col
5:
Allocated
to
the
Bank
Total
Treasury
securities
$
46,186
col
6:
Allocated
to
the
Bank
GSE
debt securities
$ - 31,
col 2012
7: to
Allocated
toBills
the Bank
andofBank
GSE
MBS $(31,682)
26,306
Year-ended
December
Supplemental
information
- agency
parcol
value
transactions:
Sales GSE
Footnote
3securities
Includes
compensation.
end
footnote
col
2: the
Allocated
the
Bank
- col Federal
3:(32,260)
Allocated
to6:the
Notes
col 4:debt
Allocated
to the
Bonds
(578)
col
5:
Allocated
to
Bank
Total
Treasury
securities
Allocated
to the Bank
-inflation
colBank
7:
Allocated
to the
Bank
Federal
agency
and
GSE
MBS
Year-ended
December
31,
2013
Supplemental
information
par
value
of
transactions:
Purchases
Footnote
3
Includes
inflation
compensation.
end
footnote
col
2: the
Allocated
toMBS
theTreasury
Bank
Bills
$ - col $3:35,055
Allocated
to
Bank Notes
23,088
coldebt
4: Allocated
to$ the
Bonds
$ to
11,967
col
5:
Allocated
to
Bank
Total
securities
col
6: the
Allocated
to the$Bank
GSE
securities
- colBank
7: compensation.
Allocated
the
Bank
Federal
agency
and
GSE
$
53,893
Year-ended
December
31,
2013
Supplemental
information
par
value
of
transactions:
Sales
Footnote
3
Includes
inflation
end
footnote
col 2:Treasury
Allocated
to the Bank
- col 3: Allocated
to GSE
the Bank
- col-4:
to the
Bonds
- col 5:
Allocated
to
the
Bank-Total
securities
- colBills
6: Allocated
to the Bank
debtNotes
securities
colAllocated
7: Allocated
toBank
the Bank
Federal
agency
and
GSE
MBS
header
row
col6:1:Total
category
colGSE
2:
SOMA
Bills
col
Total
SOMA
NotesSOMA
col 4: Total
SOMA
Bonds
col4:5:Total
TotalSOMA
SOMABonds
Total$Treasury
securities
col
SOMA
debt
securities
col
7: 3:
Total
Federal
agency
and
GSE
MBS
endcol
header
Balance
atMBS
December
31,
2011
colTotal
2:
Total
SOMA
Bills
$col
18,423
col SOMA
3:
Total
$1,311,917
419,937
col
5:
Total
SOMA
Total
Treasury
securities
$1,750,277
6:SOMA
Total
GSE
debtNotes
securities
$ 107,828
col
7:row
Total
SOMA Federal
agency
and
GSE
$ 848,258
Balance
at
December
31,
2011
Purchases
Footnote
1
Purchases
and
sales
may
include
payments
and
receipts
related
to
principal,
premiums,
discounts,
and
inflation
compensation
adjustments
to
the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
and
losses
on
such
transactions.
Purchases
and
sales
exclude
MBS
TBA
transactions
that
are
settled
on
a
net
basis.
end
footnote
col
2:
Total
SOMA
Bills
118,886
col
3:
Total
SOMA
Notes
397,999
col
4:
Total
SOMA
Bonds
263,991
col
5:
Total
SOMA
Total
Treasury
securities
780,876
col
6:
Total
SOMA
GSE
debt
securities
col
7:
Total
SOMA
Federal
agency
and
GSE
MBS
431,487
Balance
at
December
31,
2011
Sales
Footnote
1
Purchases
and
sales
may
include
payments
and
receipts
related
to
principal,
premiums,
discounts,
and
inflation
compensation
adjustments
to (507,420)
the basis
of
securities.
The amount
reported
asasales
includes
realized
gains
and
losses
onTotal
such
transactions.
Purchases
and-sales
MBS
TBA
transactions
that
areTotal
settled
net basis.
endthe
footnote
col
2: Total
SOMA
Bills
col
3:Realized
Total
SOMA
Notes
colinflation-indexed
4:Total
Total
SOMA
Bonds
(11,727)
col
5:
SOMA
Treasury
securities
col
SOMA
GSE
debt
securities
7:exclude
SOMA
Federal
agency
and
GSE
MBS
- on
Balance
at(519,147)
December
31,6:-2011
gains,
net
Footnote
2 col
Realized
gains,
net
offset
the
amount
ofTotal
realized
gains
andTotal
losses
included
in
the
reported
sales
amount.
end
footnote
col
2:
Total
SOMA
Bills
col
3:
Total
SOMA
Notes
12,003
col
4:
Total
SOMA
Bonds
1,252
col
5:
Total
SOMA
Total
Treasury
securities
13,255
col
6:
Total
SOMA
GSE
debt
securities
col
7:
SOMA
Federal
agency
and
GSE
- Bonds
Balance
atMBS
December
31, 2011
payments
andTreasury
maturities
col 2: Total
SOMA Bills
(137,314)
colGSE
3: Total
Notes
(67,463)
col
4:
Total
SOMA
- agency
colPrincipal
5: Total
SOMA
Total
securities
Total
SOMA
debtSOMA
securities
(27,211)
col
7:
Total
SOMA
and GSE
MBS
Balance
at(1,138)
December
31,Total
2011
Amortization
of
premiums
andSOMA
accretion
of(204,777)
discounts,col
net6:col
2:(12,986)
Total
SOMA
5SOMA
col 3: Total
Notes
(5,460)
col col
4:Federal
Total
SOMA
Bonds
(7,531)
col(324,181)
5:and
Total
Total
Treasury
securities
col 6:- Bills
Total
GSE SOMA
debt
securities
7:
SOMA
Federal
agency
GSE
MBS
(5,243)
Balance
at
December
31,
2011
Inflation
adjustment
on
inflation-indexed
securities
col
2:
Total
SOMA
Bills
col
3:
Total
SOMA
643
col
4:
Total
SOMA
Bonds
1,047
col
5: SOMA
Total
SOMA
Total
Treasury
securities
1,690
col 6: Total
SOMA
GSE
debtBonds
securities
-Notes
col 7:col 5:
Total
SOMA
Federal
agency
and
GSE
MBS
Balance
at
December
31,
2012
col
2:
Total
Bills
$
col
3:
Total
SOMA
Notes
$1,142,219
col
4:
Total
SOMA
$
666,969
Total
SOMA
Total
Treasury
securities
$
1,809,188
col
6:
Total
SOMA
GSE
debt
securities
$
79,479
col
7:
Total
SOMA
Federal
agency
and
GSE
MBS
$
950,321
Balance
at
December
31,
2012
Purchases
Footnote
1
Purchases
and
sales
may
include
payments
and
receipts
related
to
principal,
premiums,
discounts,
and
inflation
compensation
adjustments
to
the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
and
losses
on
such
transactions.
Purchases
and
sales
exclude
MBS
TBA
transactions
that
are
settled
on
a
net
basis.
end
footnote
col
2:
Total
SOMA
Bills
col
3:
Total
SOMA
Notes
358,656
col
4:
Total
SOMA
Bonds
206,208
col
5:
Total
SOMA
Total
Treasury
securities
564,864
coland
6: inflation
Total SOMA
GSE
debtFootnote
securities
- col
7: Total
SOMA
Federal
agency
and GSE
MBS
864,537
Balance
at
December
31,compensation
2012
Sales
1Purchases
Purchases
andsales
sales
may
include
payments
and
receipts
related
to principal,
premiums,
discounts,
adjustments
to
the
basis
of
inflation-indexed
securities.
The
amount
reported
as
sales
includes
the
realized
gains
and
losses
on
such
transactions.
and
exclude
MBS
TBA
transactions
that
are
settled
on
a
net
basis.
end
footnote
col
2: 6:
Total
SOMA
Bills
- col
3:gains,
Totalnet
SOMA
Notes
-Realized
col
4: Total
SOMA
Bonds
- amount
col
5: Total
SOMA
Totaland
Treasury
securities
- December
col
Total
SOMA
GSE
debt
securities
- col
7: Total
SOMA
Federal
and
GSE
MBS
Balance
at
31,
2012
Realized
Footnote
2GSE
gains,
net-agency
offset
the
of4:Federal
realized
gains
losses
included
in
the SOMA
reported
sales
amount.
end
footnote
col
Total
SOMA
Bills
- col
3:
Total
SOMA
Notes
-3:col
Total
SOMA
Bonds
- col4:
5:Total
Total
Total
Treasury
securities
- col
6:2:
Total
SOMA
debt
securities
col Bills
7:
Total
SOMA
agency
and
GSE
MBS
Balance
at
December
31,
2012
Principal
payments
and
maturities
col
2:
Total
SOMA
col
Total
SOMA
Notes
(21)
col
SOMA
Bonds
col
5:
Total
SOMA
Total
Treasury
securities
(21)
col
6:
Total
SOMA
GSE
debt
securities
(19,562)
col
7:
Total
SOMA
Federal
agency
and
GSE
MBS
(273,990)
Balance
at
December
31,
2012
Amortization
of
premiums
and
accretion
of
discounts,
net
col
2:
Total
SOMA
Bills
col
3:
Total
SOMA
Notes
(6,024)
col
4:
Total
SOMA
Bonds
(9,503)
col
5:
Total
SOMA
Total
Treasury
securities
(15,527)
col
6:
Total
SOMA
GSE
debt
securities
(795)
col
7:
Total
SOMA
Federal
agency
and
GSE
MBS
(7,008)
Balance
at December
31,
2012
Inflation
on inflation-indexed
securities
Total
SOMA
Bills
- col
3: Total-SOMA
Notes 285
col
4: Total
SOMA
Bonds
645
colMBS
5: Total
Total
SOMA Bills
Total
securities
930Notes
colcol
6:2:
Total
SOMA
GSE
debt
securities
col 7:
Total
SOMA
Federal
agency
and
GSE
- adjustment
Balance
at December
31,
2013
col
2:
SOMA
$Treasury
- col
3: Total
SOMA
4: Total
SOMA
Bonds
864,319
col
5: Total
SOMA
Total
Treasury
securities
$2,359,434
col
6: Total
SOMA
GSE debt$1,495,115
securities Footnote
$col
59,122
col
7: Totalinflation
SOMA$ compensation.
Federal
agency
and
GSE
MBS
$ 1,533,860
Year-ended
December
31,
2012
Supplemental
information
par
value
of
transactions:
Purchases
3
Includes
end
footnote
col
2:
Total
SOMA
Bills
$
118,892
col
3:
Total
SOMA
Notes
$
383,106
col
4:
Total
SOMA
Bonds
$
205,115
col
5:
Total
SOMA
TotalDecember
Treasury 31,
securities
$ 707,113 colinformation
6: Total SOMA
debt
securities $ -Sales
col 7:Footnote
Total SOMA
Federal
agencycompensation.
and GSE
MBS
$ 413,160
Year-ended
2012
Supplemental
-Notes
parGSE
value
ofcol
transactions:
3 (9,094)
Includes
inflation
end
footnote
col 2: Total
SOMA
Bills
- colSOMA
3: Total
SOMA
(492,234)
col
4: Total
SOMA
Bonds
col
5:MBS
Total-SOMA
Total
Treasury
securities
(501,328)
col
6:
Total
GSE
debt
securities
7:
Total
SOMA
Federal
agency
and
GSE
Year-ended
December
31,
2013
Supplemental
information
par
value
of
transactions:
Purchases
Footnote
3
Includes
inflation
compensation.
end
footnote
col 2: Total
SOMA
Bills
$ - col
3:information
Total
SOMA
Notes
$ 356,766
4: Total
SOMA
Bonds
$ 184,956
colMBS
5:compensation.
Total
SOMA Total
Treasury
securities
$ 541,722
colSupplemental
6: Total
SOMA
GSE
debt-Notes
securities
$of4:- transactions:
col
7:col
Total
SOMA
Federal
agency
andinflation
GSE
$ 837,490
Year-ended
December
31,
2013
par
value
Sales
Footnote
3
Includes
end
footnote
col
2:
Total
SOMA
Bills
col
3:
Total
SOMA
col
Total
SOMA
Bonds
col
5:
Total
SOMA
Total
Treasury
securities - col 6: Total SOMA GSE debt securities - col 7: Total SOMA Federal agency and GSE MBS -
b.
Foreign Currency Denominated Investments
The FRBNY conducts foreign currency operations and, on behalf of the Reserve Banks, holds the resulting foreign
currency denominated assets 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 guaranteed as to principal and interest by 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.
The Bank's allocated share of activity related to foreign currency operations was 5.697 percent and 5.718 percent at
December 31, 2013 and 2012, 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):
header
row
col
1:
colSOMA
2: deposits
Allocated
2013
col
3: Allocated
2012
col 4:145
Total
2013
5:4:Total
SOMA
end
header
Foreign
currency
col
2:Bank
Allocated
to Bank
2013 $ to
429Bank
col
Allocated
to Bank
$ 510col
colBank
Total
SOMA
2013
$Euro:
7,530
col row
5:2013
Total
2012
$to8,925
Euro:
Securities
purchased
agreements
to resell
to 3:
Bank
2013
colSOMA
3:2012
Allocated
to
2012
38
col2012
4:
Total
SOMA
2,549SOMA
colunder
5: Total
SOMAcol
2012
659col 2: Allocated
Euro:2,396
German
government
debt
instruments
2:Allocated
Allocated
toBank
Bank2013
2013
136col
col3:3:Allocated
Allocated
toBank
Bank2012
2012
122col
col4:4:Total
Total
SOMA
2013
col
5:
Total
2012
2,133
Euro:
French
government
debt
instruments
col
2:
to
137
to
138
SOMA
2013
2,397
col
5:
Total
SOMA
2012
2,421
Japanese
yen:
Foreign
currency
deposits
col
2:
Allocated
to
Bank
2013
167
col
3:
Allocated
to
Bank
2012
203
col
4:
Total
SOMA
2013 2,927
col
5:
Total
SOMA
2012
3,553
Japanese
yen:
Japanese
government
debt
instruments
col
2:
Allocated
to
Bank
2013
338
col
3:
Allocated
to
Bank
2012
411
col
4:
SOMA
2013
5,925
col
5:
Total
SOMA
2012
7,182
Total
col
2:
Allocated
to
Bank
2013
$
1,352
col
3:
Allocated
to
Bank
2012
$
1,422
col
4:
Total
SOMA
2013
$
23,724
col
5:
Total
SOMA 2012 $ 24,873
Accrued interest receivable on foreign currency denominated assets was $88 million and $99 million as of
December 31, 2013 and 2012, respectively, of which $5 million and $6 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.
The remaining maturity distribution of foreign currency denominated investments that were allocated to the Bank
at December 31, 2013 and 2012, was as follows (in millions):
header
rowheader
col2013:
1:row
category
col2:2:Within
Within15
15days
days$col
3:col
16 3:
days
to
90 days
4: 91
days
to4:191
year colto5:1 Over
yearcol
to 55:years
col 6: to
Total
end
December
31,
Euro
401
16
days
90 col
days
103
col
$1 123
55 years
$199
220
col
6:Total
Total
$col
847
December
31,
2013:
Japanese
yen
col 2: 15
Within
15
days
177
col
3: 16to
days
to 90$$days
22
col
4: days
91
days
toyear
1 year
107col
col5:5:Over
Over111year
yeartoto
years
col
6:
505
December
31,
2013:
Total
col
2:
Within
days
$
578
col
3:
16
days
to
90
days
125
col
4:
91
days
to
1
year
$
230
Over
year
5 years $ 419
6: Total
$col
1,352
December
31,col
2012:
Euro
2:
Within
15
days
$
377
col
3:
16
days
to
90
days
$
98
col
4:
91
days
to
1
year
$
123
col
5:
Over
1
year
to to
5December
years
$
210
col
6:
Total
$
808
31,
2012:
Japanese
yen
col 2: 15
Within
dayscol
217
3: 16todays
to 90$days
4: 91
days
1 year
122col
col5:5:Over
Over11year
year
55 years
colcol
6:6:Total
614
December
31,
2012:
Total
2: Within
days 15
$ 594
3: col
16 days
90 days
127 29
colcol
4: 91
days
to 1toyear
$ 245
to
years 246
$ 456
Total
$col
1,422
There were no foreign exchange contracts related to open market operations outstanding as of December 31, 2013.
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, 2013, there were no outstanding commitments to
purchase foreign government debt instruments. During 2013, there were purchases and maturities of foreign
government debt instruments of $3,539 million and $3,431 million, respectively, of which $202 million and
$196 million, respectively, were allocated to the Bank. During 2013, there were no sales of foreign
government debt instruments.
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 daily monitoring procedures.
At December 31, 2013 and 2012, 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, 2013 and 2012.
c.
Central Bank Liquidity Swaps
U.S. Dollar Liquidity Swaps
The Bank's allocated share of U.S. dollar liquidity swaps was approximately 5.697 percent and 5.718 percent at
December 31, 2013 and 2012, respectively.
The total foreign currency held under U.S. dollar liquidity swaps in the SOMA at December 31, 2013 and 2012,
was $272 million and $8,889 million, respectively, of which $15 million and $508 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):
header
row
col
1:
category
col
Within
15
days
colto3:902013
16
days
col $4:15
2013
colWithin
5: 201215Within
col 6:
2012
16
days
to
days
7: 2:
2012
header
row
Euro col
2: 2013
Within
days
$2013
6 Total
col
3:end
2013
16
days
days
$ 9days
col to
4: 90
2013
Total
col Total
5: 2012
days $15
99days
col 6:
2012
16 days
to 90
90
days col
$15409
col
7:
2012
Total
end
header
row
$ 508
Foreign Currency Liquidity Swaps
There were no transactions related to the foreign currency liquidity swaps during the years ended December 31,
2013 and 2012.
d.
Fair Value of SOMA Assets
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.
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, 2013, there are no credit impairments of SOMA securities holdings.
The following table presents the amortized cost and fair value of and cumulative unrealized gains (losses) on the
Treasury securities, GSE debt securities, and federal agency and GSE MBS, net held in the SOMA at
December 31 (in millions):
header
rowto
category
col
2:value
Allocated
toAllocated
the Bank
2013
Amortized
cost
col 3:toAllocated
to
the Amortized
Bank
2013end
Fairheader
value
col 4:
Allocated
tocol
the1:Bank
Bank
2013col
Cumulative
unrealized
gains
(losses)
col2012
5: Allocated
the
2012
cost
col
6: row
Allocated
the
2012
Fair
7:
to
theAmortized
Bank
Cumulative
unrealized
gains
(losses)
Treasury
Notes
2:Allocated
Allocated
tothe
theBank
Bank
2013
cost
$gains
99,318
colBank
3:$Allocated
toAllocated
the2012
Bank
2013
Fair
valuesecurities:
$gains
99,577
col
4:$col
Allocated
to col
theto
Bank
2013
Cumulative
unrealized
(losses)
259to
col
5:
to
the Bank
2012
Amortized
cost
$
68,868
6:
2012
Fair
value
$
73,146
col
7:
Allocated
the
Bank
Cumulative
unrealized
(losses)
4,278
Treasury
Bonds
col
2:
Allocated
to the
Bank
2013
Amortized
cost 57,416
colcol
3: 5:
Allocated
to to
thethe
Bank
2013
Fair
value(losses) 5,677
55,955
colsecurities:
4:col
Allocated
to Treasury
the
Bank
20132012
Cumulative
unrealized
gains
(losses)
(1,461)
Allocated
Bank
2012
Amortized
cost
40,214
6:
Allocated
to
the
Bank
Fair
value
45,891
col
7:
Allocated
to
the
Bank
2012
Cumulative
unrealized
gains
Treasury
securities:
Total
securities
col
2:
Allocated
to
the
Bank
2013
Amortized
cost
$
156,734
col
3:
Allocated
to
the
2013
Fair value
$(losses)
155,532
col
4:col
Allocated
to thetoBank
2013 2012
Cumulative
unrealized
gains
$ (1,202)
colBank
5: Allocated
to theBank
Bank
2012
Amortized
cost
$ 109,082
6:toAllocated
the Amortized
Bank
Fair3,927
value
$ 119,037
col(losses)
7:to
Allocated
to2013
the
2012 4,134
Cumulative
unrealized
gains
9,955
GSE
debt
securities
col
2:$ Allocated
the
Bank
2013
cost
col
3: Allocated
the2012
Bank
Fair cost
value
col6:4:
Allocated
to
the
Bank
2013
Cumulative
unrealized
gains
(losses)
207
col
5:
Allocated
to
the
Bank
Amortized
4,792
col
Allocated
to
the
Bank
2012
Fair
value
5,125
col
7:
Allocated
to
the
Bank
2012
Cumulative
unrealized
gains
(losses)
333
Federal
agency
and
GSEMBS
col
2:
Allocated
to
the
Bank
2013
Amortized
cost
101,892
col
3:
Allocated
to
the
Bank
2013
Fair
value
99,349
col
4:
Allocated
to
the
Bank
2013
Cumulative
unrealized
gains
(losses)
(2,543)
col
5:
Allocated
to
the
Bank
2012
Amortized
cost
57,298col
col3:and
6:Allocated
Allocated
tothe
theBank
Bank
2012Fair
Fairvalue
value
col
7:4:Allocated
tocol
Bank
2012
unrealized
gains
(losses)
2,633
GSEMBS
Total
domestic
SOMA
portfolio
securities
holdings
2:to
Allocated
to
the Fair
Bankvalue
2013
$Federal
262,553
2013
$ 59,931
259,015
tothe
the
Bank
2013Cumulative
Cumulative
unrealized
gains
(losses)
$Memorandum-Commitments
(3,538)agency
col
5: Allocated
totoCumulative
the
Bank
2012
Amortized
$ 171,172
colAllocated
6: Allocated
the Bank
2012
$Amortized
184,093
colcost
7:
Allocated
to
the
Bank
2012
unrealized
gainscost
(losses)
$col
12,921
for:
Purchases
of
Treasury
securities
col
2:
Allocated
to
the
Bank
2013
Amortized
cost
$
col
3:
Allocated
to
the
Bank
2013
Fair
value
$
col
4:
Allocated
to
the
Bank
2013
Cumulative
unrealized
gains
(losses)
$
col
5:
Allocated
tounrealized
the Bank 2012
Amortized
- Federal
col 6: Allocated
to the
Bank 2012
Fair
value $ -tocol
Allocated
to
the Bank 2012
Cumulative
gains
(losses)
$ 2013
-cost $of
Memorandum-Commitments
for:Bank
Purchases
agencycol
and
col
2:
Allocated
the7:value
Bank
2013
Amortized
cost3,943
3: Allocated
the
Fair
value
3,928
col
4: GSEMBS
Allocated to
to the
the
Bank 2012
2013 Fair
Cumulative
unrealized
gains (losses)
(15)
col
5:col
Allocated
to unrealized
thetoBank
2012
Amortized
cost
7,128
6:
Allocated
Bank
7,139
col 7: Allocated
Bank
2012
Cumulative
gains
(losses)
11
Memorandum-Commitments
for:
Sales
of
Federal
agency
and
GSEMBS
col
2:
Allocated
to
the
Bank
2013
Amortized
costcol 3:to the
Allocated
to
the
Bank
2013
Fair
value
col
4:
Allocated
to
the
Bank
2013
Cumulative
unrealized
gains
(losses)col
5:
Allocated
to
the
Bank
2012
Amortized
cost
col
6:
Allocated
to
the
Bank
2012
Fair
value
col
7:
Allocated
to
the
Bank
2012
Cumulative
unrealized gains (losses)-
header
row col2012
1: unrealized
category
col
2:unrealized
Total
SOMA
2013
Amortized
cost row
col 3: Totalcost
SOMA
2013
Fair
value 2012
col 4:Fair
Total
SOMA
2013
Cumulative
gains
(losses)
colcol
5:
Total
SOMA
2012
Amortized
col
6:
Total
SOMA
value
7:
Total
SOMA
Cumulative
gains
(losses)
end
header
Treasury
securities:
Notes
col
2:
$864,319
1,495,115
3:
$$ 1,499,000
col
4:
$$ 3,885
col
5:col
$ 1,142,219
col col
6:col
$5:1,213,177
col col
7:col
$6:70,958
Treasury
securities:
Bonds
col
2:
col
3:
842,336
col
4:
(21,983)
col
5:
666,969
col
6:
761,138
7:
94,169
Treasury
securities:
Total
Treasury
securities
col
2:
2,359,434
col
3:
2,341,336
4:
$
(18,098)
$
1,809,188
$ 1,974,315
col 7:debt
$ agency
165,127
GSE
securities
col
2:
59,122
col
3:
62,236
col
4:
3,114
col
5:
79,479
col
6:
85,004
col
7:
5,525
Federal
and
GSEMBS
col
2:
1,533,860
col
3:
1,495,572
col
4:
(38,288)
col
5:
950,321
col
6:
993,990
col
7:
43,669
Federal
agency
and
GSEMBS
Total
domestic
SOMA
portfolio
securities holdings col
2:Purchases
$ 3,952,416
col
3: $ 3,899,144
col
4:2:$$(53,272)
col
5:
$
2,838,988
col
6:
$
3,053,309
col
7:
$
214,321
Memorandum-Commitments
for:
of
Treasury
securities
col
col
3:
$
col
4:
$
col
5:
$
:
col
6:
$
col
7:
$
Memorandum-Commitments
for: Sales
Purchases
of Federal
agency
and GSEMBS
2: 59,350
59,129
col6:4:- (221)
col
6: 118,397 col 7: 182
Memorandum-Commitments
for:
of Federal
agency
and GSEMBS
col 2:col
- col
3: - colcol
4: -3:col
5: - col
col 7: col
- 5: 118,215
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.
At December 31, 2013 and 2012, the fair value of foreign currency denominated investments was $23,802 million
and $25,042 million, respectively, of which $1,356 million and $1,432 million, respectively, was allocated to
the Bank. The fair value of government debt instruments was determined using pricing services that 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 cost basis of securities purchased under agreements to resell, securities sold under agreements to repurchase,
and other investments held in the SOMA approximate fair value.
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):
header
rowto
Distribution
of2:
holdings
by
coupon
rate
col
2:col
2013
Amortized cost col 3: 2013 Fair value col 4:
2012
Amortized
cost
col
5: 2012
Fair
value
end
header
row
Allocated
the
2.0%
col
$34,663
943
col
3:3:$7,869
899
$col
51
5:
$col
51
2.5%
8,226
4:col
2,265
5:
2,277
Allocated
tocol
the1:Bank:
Bank:
3.0%
col
2:MBS
col
32,170
col
4:
9,684
3.5%
23,229
22,477
10,828
col5:
5:9,753
11,139
4.0%
15,295
15,352
8,306
col
5:
8,800
Allocated
to
the
Bank:
4.5%
col
2:
12,344
col3:3:1,509
12,985
col
4:
15,826
col
5:
17,014
5.0%
5,533
5,844
7,543
7,972
Allocated
to
the
Bank:
5.5%
col
2:
1,428
col
col
4:
2,410
col
5:
2,521
6.0%
203
col118,458
col
col
5:4:355
6.5%
col
3:
30214
4:
45
col
5:
Allocated
to the
Bank:
col 2: 28
$col
101,892
colcol3:
$ 4:
99,349
col49
$ 57,298
Total
SOMA:
2.0%
colTotal
2: $521,809
14,191
3:
$3:13,529
col
4:340
$ 845
col
5:
$37,766
846 col 5: $ 59,931
2.5%
123,832
col
3:
col
4:
37,562
3.0%
484,275
160,613
161,757
Total
SOMA:
3.5%
col
2:
349,689
col
3:
338,357
col
4:
179,587
col
5:
184,752
4.0%
230,256
231,113 col 4:
137,758
145,955
Total
SOMA: 4.5%
col 2:
185,825
col3:3:22,718
195,481
262,484
col
5:
282,181
5.0%
83,290
87,968
125,107
col5:
5:41,819
132,214
Total
col
col
col
6.0% col
3,051
3,225
col
4: 4:
5,642
6.5%
col 2:
2: 21,496
421
colcol
3:3:448
753
col39,970
5:col
8125:
Total SOMA:
SOMA: 5.5%
Total
$ 1,533,860
colcol
3: 4:
$ 1,495,572
4: 5,888
$ 950,321
col 5: $ 993,990
Because SOMA securities are recorded at amortized cost, the change in the cumulative unrealized gains (losses) is
not reported in the Statements of Income and Comprehensive Income. The following tables present the
realized gains and the change in the cumulative unrealized gains (losses), presented as "Fair value changes
unrealized losses," of the domestic securities holdings during the years ended December 31, 2013 and 2012 (in
millions):
header row
col 1: category
col 2: are
Allocated
toinBank
2013 Totalincome:
portfolio
holdings
realized
gains
Footnote
1 Total
portfolio
holdings
realized gains
reported
"Non-interest
System
Open
Market
Account"
in the
Statements
of
and
Income
end footnote
colrealized
3: Allocated
Bank
2013
Fair
value
changes
unrealized
colIncome
4: Allocated
to Bank 2012income:
Total
portfolio
holdings
gains to
Footnote
1 Total
portfolio
holdings
realized losses
gains
are
reported
in Comprehensive
"Non-interest
System
Open
Market
Account"
inunrealized
the Statements
of
Income
and
Comprehensive
Income
end
footnote
col
5:
Allocated
to
Bank
2012
Fair
value
changes
losses
end
header
row
Treasury
securities
col
2:2:MBS
$colcol
3: (158)
$2:(12,206)
col
4: 5:
$ col
840
col
5:col
$ (250)
GSE
debt
securities
col
col
3:
col
4:
col
(58)
Federal
agency
and
GSE
4
col
3:
(5,412)
4:
16
5:
(194)
Total col 2: $ 4 col 3: $ (17,776) col 4: $ 856 col 5: $ (502)
headerare
row
col 1:category
col 2: Total
SOMA
2013 Open
Total Market
portfolioAccount"
holdingsinrealized
gains Footnote
1 Total
holdings realized
gains
reported
in "Non-interest
income:
System
the Statements
of SOMA
Income
and portfolio
Comprehensive
Income
end
footnote
col13:Total
Totalportfolio
SOMA
2013
Fairrealized
value changes
unrealized
losses
col 4: Total
2012
Total
holdings
realized
gains
Footnote
holdings
gains
are
reported
in "Non-interest
income:
System
Openportfolio
Market Account"
in
the
Statements
of
Income
and
Comprehensive
Income
end
footnote
col
5:
Total
SOMA
2012
Fair
value
changes
unrealized
losses
end
header
row
Treasury
securities
col
2:
$
col
3:
$
(183,225)
col
4:
$
13,255
col
5:
$
(1,142)
GSE
debt
securities
col
2:
col
3:
(2,411)
col
4:
col
5:
(885)
Federal
agency
and
GSE
MBS
col
2:
51
col
3:
(81,957)
col
4:
241
col
5:
(3,568)
Total col 2: $ 51 col 3: $ (267,593) col 4: $ 13,496 col 5: $ (5,595)
The amount of change in unrealized gains position, net, related to foreign currency denominated assets was a
decrease of $90 million and an increase of $3 million for the years ended December 31, 2013 and 2012,
respectively, of which $5 million and $148 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.
BANK PREMISES, EQUIPMENT, AND SOFTWARE
Bank premises and equipment at December 31 were as follows (in millions):
header
row col and
1: category
col 2:
2013and
colland
3: 2012
row
Bank
premises
equipment:
Land
col
2: col
$ 382:col
3: $ 38
Bank
premises
and
equipment:
Buildings
col
2:improvements
238end
colheader
3:
236
Bank
premises
and
equipment:
Building
machinery
and
equipment
Bank
premises
and
equipment:
Construction
in
progress
col
2:
175col
3:3:2 7240 col 3: 37
Bank
premises
and
equipment:
Furniture
and
equipment
col
2:
col
Bank
premises
and
equipment:
Subtotal
col
2:
392
col
3:
385
Accumulated
depreciation
colyears
2:net
(152)
col$December
3:
(144)
Bank
premisesexpense,
and equipment,
col
2:
240
col 3: 31
$ 241
Depreciation
for the
ended
col 2: $ 12 col 3: $ 12
The Bank leases space to outside tenants with remaining lease terms ranging from one to eight years. Rental
income from such leases was $2 million for each of the years ended December 31, 2013 and 2012, and is
reported as a component of "Non-interest income: Other" in the Statements of Income and Comprehensive
Income. Future minimum lease payments that the Bank will receive under noncancelable lease agreements in
existence at December 31, 2013, are as follows (in thousands):
2014
2015
2016
2017
2018
Thereafter
Total
$
$
1,193
909
704
517
454
309
4,086
The Bank had capitalized software assets, net of amortization, of $22 million and $27 million at December 31,
2013 and 2012, respectively. Amortization expense was $6 million and $3 million for the years ended
December 31, 2013 and 2012, 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.
As a result of the Bank's restructuring plan as discussed in Note 11, the Bank sold the Nashville building during
the second quarter of 2013. This sale resulted in a $546 thousand gain. This gain is reflected in "Non-interest
income: Other" in the Statements of Income and Comprehensive Income.
7.
COMMITMENTS AND CONTINGENCIES
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, 2013, the Bank was obligated under noncancelable leases for premises and equipment with
remaining terms ranging from one to approximately six years. These leases provide for increased lease
payments based upon increases in real estate taxes and operating costs.
Rental expense under operating leases for certain operating facilities, warehouses, 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, 2013 and 2012.
Future minimum lease payments under noncancelable operating leases, net of sublease rentals, with remaining
terms of one year or more, at December 31, 2013, are as follows (in thousands):
header
row
col
category
col 2: col
Operating
leases end header row
2014
$ 292
2015
256
2016
229
2017
225
2018
2:col
230
Thereafter
2:1:196
Futurecol
minimum
lease
payments
2: $ 1,428
At December 31, 2013, 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, 2013 and
2012.
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.
RETIREMENT AND THRIFT PLANS
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, 2013 and 2012, 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, 2013 and 2012, 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 six percent of employee contributions from
the date of hire and provides an automatic employer contribution of one percent of eligible pay. The Bank's
Thrift Plan contributions totaled $8 million for each of the years ended December 31, 2013 and 2012, and are
reported as a component of "Operating expenses: Salaries and benefits" in the Statements of Income and
Comprehensive Income.
9.
POSTRETIREMENT BENEFITS OTHER THAN RETIREMENT PLANS AND POSTEMPLOYMENT BENEFITS
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):
header
row
colpostretirement
1: category
col
2: 2013
col
3: 2012
Accumulated
benefit
obligation
at
1 col
2:
Service
cost
earned
during
the
period
col
2:2:7.1
3:3:5.6
Interest
cost benefits
on
accumulated
benefit
obligation
colJanuary
6.7col
col
6.6$ 172.5 col 3: $ 142.1
Net
actuarial
(gain)
loss
col 2:
(23.7)
col
3: 23.8
Special
termination
benefits
loss
col
2:
col
3:
0.1
Contributions
by
plan
participants
col
2:
2.5
col
3:
2.1
Benefits
paid
col
2:
(8.8)
col
3:
(8.2)
Medicare
Partpostretirement
D subsidies
colbenefit
2: 0.4
col 3: 0.4 at December 31 col 2: $ 155.1 col 3: $ 172.5
Plan
amendments
col 2: (1.6)
col
3: -obligation
Accumulated
At December 31, 2013 and 2012, the weighted-average discount rate assumptions used in developing the
postretirement benefit obligation were 4.79 percent and 3.75 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. Beginning in 2013, the System Plan discount rate assumption setting
convention changed from rounding the rate to the nearest 25 basis points to using an unrounded rate.
Following is a reconciliation of the beginning and ending balance of the plan assets, the unfunded postretirement
benefit obligation, and the accrued postretirement benefit costs (in millions):
header
rowofcol1:
category
2:col
2013
col2:
3:$2012
end$header
row
Fair
value
plan
assets
atcol
January
Contributions
by
the
employer
2:1 col
5.9
col
3:- col
5.7
Contributions
by
plan
participants
col
2: 3:
2.5
col
3:- 3:
2.1 3:- $ Benefits
paid
col
2:assets
(8.8)
col
3:2:
(8.2)
Medicare
Part
D
subsidies
col
0.4
col
0.4
Fair
value
of
plan
at
December
31
col
2:
$
col
Unfunded
obligation
and
accrued
postretirement
benefit
cost
col
2: $ 155.1
col 3: $ 172.5
Amounts
included
in accumulated
other
loss are shown
below
Prior
service
cost
2: $(20.6)
1.9 col
$(48.6)
0.8comprehensive
Net actuarial
loss col
col3:3:
Total
accumulated
other
comprehensive
loss col 2: $ (18.7) col 3: $ (47.8)
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:
header
row
colthe
1: category
col
2:is2013
col
3:to
2012
end2:(the
header
row 3:trend
Health-care
assumed
fortrend
next
year
col
7.00%
7.00%
Rate
which
cost rate
trend
rate
assumed
decline
ultimate
rate) col 2: 5.00% col 3: 5.00%
Year to
that
thecost
ratetrend
reaches
the
ultimate
rate
col
2: 2019
colcol
3: 2018
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, 2013 (in millions):
header
row
col 1: category
col and
2: One
percentage
point increase
colperiodic
3: One
percentage
point
decrease
Effect on
on
aggregate
of service
interest
costobligation
components
net
postretirement
benefit
costs col 2: $ 2.8 col 3: $ (2.2)
Effect
accumulated
postretirement
benefit
col of
2: 22.3
col
3: (18.3)
The following is a summary of the components of net periodic postretirement benefit expense for the years ended
December 31 (in millions):
header
row
col
1:
category
col
2: 2013
col
3: 2012
header
row
Service
cost-benefits
earned
during
the
period
col
2:end
7.1
col3:3:
$ 5.6
Interest
cost
on
accumulated
benefit
obligation
col
2:-$6.7
col
6.6
Amortization
of
prior
service
costcol
col
2:
(0.4)
3:
Amortization
of
net
actuarial
loss
col
3:
Total
periodic
expense
col 2:benefit
17.7
col
3:-4.3
13.8
Special
termination
benefits
loss
2:2:
col col
3:col
0.1
Net
periodic
postretirement
expense
col
2: 1.6
$ 17.7 col 3: $ 13.9
Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic
postretirement benefit expense in 2014 are shown below:
Prior service cost
Net actuarial loss
Total
$
_$
(0.5)
0.6
01_
Net postretirement benefit costs are actuarially determined using a January 1 measurement date. At January 1,
2013 and 2012, the weighted-average discount rate assumptions used to determine net periodic postretirement
benefit costs were 3.75 percent and 4.50 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 recognition of special termination benefit losses is primarily the result of enhanced retirement benefits
provided to employees during the restructuring described in Note 11.
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 $349 thousand and $328 thousand in the years ended December 31,
2013 and 2012, respectively. Expected receipts in 2014, related to benefits paid in the years ended December
31, 2013 and 2012, are $263 thousand.
Following is a summary of expected postretirement benefit payments (in millions):
header
row
col
1:
category
col
2: Without subsidy col 3: With subsidy end header row
2014
$8.9
7.4
2015
7.7
7.3
2016
8.1
7.6
2017
2:
col
3:3:8.0
2018 col
8.3
2019
-col
2023
2:col
51.5
3: 47.4
Total
2: 8.5
$col
92.1
col
3:$col
$7.0
85.6
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 providing disability; medical,
dental, and vision insurance; survivor income benefits; and self-insured workers' compensation expenses. The
accrued postemployment benefit costs recognized by the Bank at December 31, 2013 and 2012, were $11
million and $13 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 2013 and 2012 operating
expenses were $1 million and $3 million, respectively, and are recorded as a component of "Operating
expenses: Salaries and benefits" in the Statements of Income and Comprehensive Income.
10. ACCUMULATED OTHER COMPREHENSIVE INCOME A N D OTHER COMPREHENSIVE INCOME
Following is a reconciliation of beginning and ending balances of accumulated other comprehensive loss as of
December 31 (in millions):
header
row
col
1:tocategory
2: 2013
related
to postretirement
other than retirement plans col 3: 2012
Amount
related
postretirement
benefits
than retirement
plans
endbenefits
header
row
Balance
at
January
1 col of
2: col
$ (47.8)
colAmount
3:Amortization
$other
(25.6)
Change
in
funded
status
of
benefit
plans:
Prior
service
costs
arising
during
year
col 2:
1.5Comprehensive
col 13:Reclassification
Change
in
funded
status
benefit
plans:
of prior
service
costthe
col
2: (0.4)
Footnote
isend
reported
as a
component
of
"Operating
Expenses:
Salaries
and
benefits"
in
the
Statements
of
Income
and
footnote
col
3:
Footnote 1 Reclassification
is reported as a component of "Operating Expenses: Salaries
and benefits"Income.
in the Statements
of Income
and
Comprehensive
Income.
end
footnote
Change
in
funded
status
of
benefit
plans:
Change
in
prior
service
costs
related
to
benefit
plans
col
2:
1.1
col
3:
Net actuarial gain
(loss)
arising
during
the
year
col 2: 123.7
col 3: (23.8) is reported as a component of "Operating Expenses: Salaries and
Amortization
net
actuarial
col 2:
4.3Comprehensive
Footnote
Reclassification
benefits"
in of
theof
Statements
of loss
Income
and
Income.
end footnote
col 3: 1.6
1 Reclassification
is reported
component
"Operating
Expenses:
Salaries
and benefits"
in2:the
Statements
of Income
andFootnote
Comprehensive
Income. end
footnote as a
Change
in
actuarial
gain
(losses)
related
to
benefit
plans
col
28.0
col 3:
(22.2)
Change in
status
planscol
- other
comprehensive
income
(loss)
col 2: 29.1 col 3: (22.2)
Balance
at funded
December
31 of
colbenefit
2: $ (18.7)
3: $ (47.8)
Additional detail regarding the classification of accumulated other comprehensive loss is included in Note 9.
11. BUSINESS RESTRUCTURING CHARGES
The Bank had no business restructuring charges in 2013 or 2012.
In years prior to 2012, the Reserve Banks announced the acceleration of their check restructuring initiatives to align
the check processing infrastructure and operations with declining check processing volumes. The new
infrastructure consolidated paper and electronic check processing at the Bank. In addition, the Reserve Banks
announced the consolidation of some of their currency processing operations. As a result of this initiative,
currency processing operations performed in Nashville were consolidated into Atlanta.
Following is a summary of financial information related to the restructuring plans (in millions):
header
row col
1: category
col 2: 2011
andas
restructuring
plans end
header
rowcosts related
Information
related
to
plans
of
December
31,
2013:
Total
activity col 2: $ 5.4
Information
related
to restructuring
restructuring
plans
asprior
of
December
31,
2013:
Expected
date colto2:restructuring
2011
Reconciliation
of
liability
balances:
Balance
at
December
31,
2011
col
2:
$expected
1.7completion
Reconciliation
of
liability
balances:
Balance
at
December
31,
2011
Adjustments
col 2: (1.5)
Reconciliation
2:
Reconciliation of
of liability
liability balances:
balances: Balance
Balance at
at December
December 31,
31, 2012
2012 col
Payments
Reconciliation
of
liability
balances:
Balance
at
December
31,
2013
col
2: $$ 0.2
- col 2: (0.2)
Employee separation costs are primarily severance costs for identified staff reductions associated with the
announced restructuring plans. Separation costs that are provided under terms of ongoing benefit
arrangements are recorded based on the accumulated benefit earned by the employee. Separation costs that
are provided under the terms of one-time benefit arrangements are generally measured based on the expected
benefit as of the termination date and recorded ratably over the period to termination. Restructuring costs
related to employee separations are reported as a component of "Operating expenses: Salaries and benefits" in
the Statements of Income and Comprehensive Income.
Adjustments to the accrued liability are primarily due to changes in the estimated restructuring costs and are
shown as a component of the appropriate expense category in the Statements of Income and Comprehensive
Income.
Costs associated with enhanced pension benefits for all Reserve Banks are recorded on the books of the FRBNY
as discussed in Note 8. Costs associated with enhanced postretirement benefits are disclosed in Note 9.
Additional information regarding the Nashville building sold as a result of the currency processing
restructuring is discussed in Note 6.
12. DISTRIBUTION OF COMPREHENSIVE INCOME
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
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):
header
row
colcapital
1: category
colrequired
2: $2013
col
end header
row paid-in col 2: 23 col 3: 21
Dividends
on
stock
col
2:
952:
col
3:3:$2012
92
Transfer
to
surplus
- amount
equate
surplus
with capital
Earnings
remittances
to
col
col
3: 5,453
Total distribution
col
2: Treasury
$ 5,404
col
3:to
$5,286
5,566
13. SUBSEQUENT EVENTS
There were no subsequent events that require adjustments to or disclosures in the financial statements as of
December 31, 2013. Subsequent events were evaluated through March 14, 2014, which is the date that the
financial statements were available to be issued.
@FedFRASER