Federal Register, Volume 90 Issue 234 (Tuesday, December 9, 2025)

[Federal Register Volume 90, Number 234 (Tuesday, December 9, 2025)]
[Notices]
[Pages 57052-57062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-22268]

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FEDERAL RESERVE SYSTEM

[Docket No. OP-1873]

Federal Reserve Bank Services

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
has approved the private-sector adjustment factor (PSAF) for 2026 of
$34.1 million and the 2026 fee schedules for Federal Reserve priced
services and electronic access. These actions were taken in accordance
with the Monetary Control Act of 1980 (MCA), which requires that, over
the long run, fees for Federal Reserve priced services be established
based on all direct and indirect costs, including the PSAF.

DATES: The new fee schedules become effective January 1, 2026.

FOR FURTHER INFORMATION CONTACT: For questions regarding the fee
schedules: Ian Spear, Deputy Associate Director, (202) 285-2732; Neha
Contractor, Manager, (202) 568-0125; Baran Cansever, Senior Financial
Institution Policy Analyst, (202) 580-9880; Division of Reserve Bank
Operations and Payment Systems. For questions regarding the PSAF: Casey
Clark, Associate Director, (202) 912-7978; Jamie Noonan, Assistant
Director, (202) 530-6296; Sarah Skariah, Senior Financial Institution
Policy Analyst, (202) 407-2042; Division of Reserve Bank Operations and
Payment Systems. For users of TTY-TRS, please call 711 from any
telephone, anywhere in the United States. Copies of the 2026 fee
schedules for Check Services are available from the Board, the Federal
Reserve Banks, or the Federal Reserve Financial Services (FRFS) website
at www.FRBservices.org.

SUPPLEMENTARY INFORMATION:

I. Overview

As required by the MCA, the Reserve Banks set fees for priced
services provided to financial institutions. These fees are set to
recover, over the long run, all direct and indirect costs and imputed
costs, including financing costs, taxes, and certain other expenses, as
well as the return on equity (profit) that would have been earned if a
private-sector business provided the services.\1\ The imputed costs and
imputed profit are collectively referred to as the PSAF.
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\1\ See 12 U.S.C. 248a. See also Principles for the Pricing of
Federal Reserve Bank Services, 46 FR 1338, 1339 (Jan. 6, 1981),
available at https://www.federalreserve.gov/paymentsystems/pfs_principles.htm. Although the Monetary Control Act does not
define ``over the long run,'' the Board has generally measured long-
run cost recovery for mature services to be over a 10-year rolling
time frame. The Board currently views a 10-year cost recovery
expectation as appropriate for assessing mature services, which are
those that have achieved a critical mass of customer participation
and generally have stable and predictable volumes, costs, and
revenues. The 10-year recovery rate is based on the pro forma income
statements for Federal Reserve priced services published in the
Board's Annual Report. In accordance with Accounting Standards
Codification (ASC) 715 Compensation--Retirement Benefits, the
Reserve Banks recognized a $574.5 million cumulative reduction in
equity related to the priced services' benefit plans through 2024.
Including this cumulative reduction in equity from 2015 to 2024
results in cost recovery of 103.5 percent for the 10-year period.
This measure of long-run cost recovery is also published in the
Board's Annual Report.
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1. Cost Recovery--From 2015 through 2024, the Reserve Banks
recovered 103.5 percent of their total expenses (including imputed
costs) and targeted after-tax profits or return on equity (ROE) for the
mature services. During that period, Check Services, the
Fedwire[supreg] Funds Service, the National Settlement Service, the
Fedwire[supreg] Securities Service, and FedACH[supreg] Services
achieved full cost recovery.
In addition to long-run cost recovery as required by the MCA, the
Reserve Banks also seek to manage their cost recovery any given year.
For 2025, the Reserve Banks forecast that they will recover 107.8
percent of the costs of providing all mature priced services in 2025
compared with a 2025 budgeted recovery rate of 104.4 percent. The
Reserve Banks forecast that each mature service will achieve full cost
recovery in 2025 except for Check Services. Check Services are
anticipated to recover below 100 percent because of projected declines
in volume.
2. Summary of 2026 Pricing, Project Performance, and PSAF--The
Reserve Banks are making price changes in 2026 in order to offset
rising costs, diversify revenue sources, and reduce pricing volatility
for customers. These changes generally include modest increases in
certain fixed fees for FedACH Services, the Fedwire Funds Service, and
FedLine Solutions; decreases to Fedwire Securities Service transfer and
maintenance fees considering the service's cost recovery position; and
significant increases to paper check fees for Check Services due to
continued decline in check volumes. The Reserve Banks are not making
any changes to fees for the FedNow[supreg] Service. These changes
collectively will result in an average price increase of 0.9 percent
for customers.
In addition to fee changes, the Reserve Banks will make changes to
their service offerings in 2026. First, the Reserve Banks will
introduce a new Payee Name Verification tool to support customers in
efforts to reduce fraud and misdirected payments. Additionally, the
Reserve Banks will sunset three products in 2026: FedComplete[supreg]
Packages, the Foreign and Canadian Check Service, and FedGlobal[supreg]
ACH Payments. The Foreign and Canadian Check Service and FedGlobal ACH
Payments will be discontinued at the end of 2026 because of declining
volumes and rising operational costs. FedComplete Packages will sunset
as of January 1, 2026. Lastly, the Reserve Banks will expand
eligibility for the FedACH Receipt Discount Program by lowering the
required monthly threshold of ACH receipt volume.
Other than those changes discussed in Section II, all other
previously approved fees and discounts currently in effect across the
Reserve Banks' Check Services, FedACH Services, Fedwire Funds Service,
Fedwire Securities Service, National Settlement Service, FedNow
Service, and FedLine Solutions will be maintained at this time. For a
full list of fees, please refer to the Reserve Banks' published fee
schedules available at: https://www.frbservices.org/resources/fees.
Based on these pricing changes, the Reserve Banks project a mature
priced services cost recovery rate of 108.0 percent in 2026, with a net
gain of $53.9 million and targeted ROE of $12.6 million. The Reserve
Banks project that each of the individual mature service lines will
achieve full cost recovery in 2026 except for Check Services, which is
expected to under recover because of projected declines in volume. The
primary risk to the Reserve Banks' current projections are
unanticipated volume and revenue reductions as well as the potential
for cost overruns from infrastructure maintenance and upgrades.
These estimates include a PSAF of $34.1 million.\2\ This amount is
an

[[Page 57053]]

increase of $2.2 million from the 2025 PSAF of $31.9 million, an
increase attributable to a $2.8 million increase in the cost of capital
partially offset by a $0.4 million decrease in Board of Governors'
expense and a $0.2 million decrease in sales taxes. Additional details
on the methodology and computation of this year's PSAF are provided in
the included appendix.
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\2\ The FedNow Service launched in July 2023. Inclusive of the
FedNow Service, the PSAF increases to $42.7 million for 2026. Per
its 2019 notice entitled Federal Reserve Actions to Support
Interbank Settlement of Instant Payments (2019 Notice), the Board
has determined that it is most appropriate to report FedNow Service
cost recovery independently of mature priced services until the
service has relatively stable revenues and costs. Thus, FedNow
Service revenue is excluded from overall performance projections for
2026.
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Additionally, the Board has published separately a request for
information and comment (RFI) on the future of the Reserve Banks' check
services, in light of the steady decline in check use, the Reserve
Banks' aging check infrastructure, and other factors. The Board will
use responses to this RFI to assess possible strategies for the future
of the Reserve Banks' check services, including potentially substantial
changes that may have longer-run effects on the payments system.
Comments are due 90 days after publication.
3. Data Tables--The tables below provide additional details for all
mature priced services.\3\ Table 1 summarizes 2024 actual, 2025
forecast, and 2026 budgeted annual cost recovery rates for all mature
priced services. Table 2 provides an overview of cost recovery budgets,
forecasts, and performance for the 10-year period from 2015 to 2024,
2024 actual, 2025 budget, 2025 forecast, and 2026 budget by mature
priced service.
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\3\ FedNow Service revenue and expenses are excluded from the
overall performance projections. In its 2019 Notice, the Board
communicated that it expects the FedNow Service to achieve its first
instance of long-run cost recovery outside the 10-year time frame
typically applied to mature services. New services like the FedNow
Service are not expected to initially have stable volumes, costs,
and revenues; application of the 10-year rolling time frame used to
evaluate mature services to the FedNow Service would result in
prohibitively high or unnecessarily volatile pricing, negatively
affecting the Federal Reserve's public policy objectives in
providing the service. See Federal Reserve Actions to Support
Interbank Settlement of Instant Payments, 84 FR 39297, (Aug. 9,
2019). The FedNow Service is discussed in section II.

Table 1--Aggregate Mature Priced Services Pro Forma Cost and Revenue Performance \a\
[Dollars in millions]
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Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE (%)
1 \b\ 2 \c\ 3 [1-2] 4 \d\ 5 \e\ [1/(2 +
4)]
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2024 (actual)................. $524.3 $464.2 $60.1 $9.7 110.6
2025 (forecast)............... 543.8 493.7 50.4 10.8 107.8
2026 (budget)................. 556.0 502.1 53.9 12.6 108.0
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\a\ Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding.
Excludes amounts related to the FedNow Service.
\b\ Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital
requirements and, when combined with liabilities, exceeds total assets. For 2026, the budgeted revenue assumes
implementation of the fee changes.
\c\ The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses
include taxes, Board of Governors priced services expenses, the cost of float, and interest on imputed debt,
if any. Credits or debits related to the accounting for pension plans under ASC 715 are also included.
\d\ Targeted ROE is the after-tax ROE included in the PSAF.
\e\ The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be
recognized in accordance with ASC 715. Future gains or losses, and their effect on cost recovery, cannot be
projected.

Table 2--Mature Priced Services Cost Recovery
[Percent]
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2025 Budget 2026 Budget
Priced service 2015-2024 2024 Actual \a\ 2025 Forecast \b\
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All mature services............. 103.5 110.6 104.4 107.8 108.0
Check........................... 105.6 104.2 98.2 98.6 95.0
FedACH.......................... 101.6 111.7 105.9 110.0 112.8
Fedwire Funds and NSS........... 102.7 110.1 103.5 106.6 108.0
Fedwire Securities.............. 108.5 124.8 115.8 125.6 120.9
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\a\ The 2025 budget figures reflect the final budgets as approved by the Board in December 2024. See Board of
Governors of the Federal Reserve System, 2025 Federal Reserve Banks Budgets, https://www.federalreserve.gov/foia/files/2025ReserveBankBudgets.pdf.
\b\ The 2026 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks
will submit final budget data to the Board for consideration by December 2025.

II. Pricing Changes

Check Services

Table 3 shows the 2024 actual, 2025 forecast, and 2026 budgeted
cost recovery performance for commercial check services.

[[Page 57054]]

Table 3--Check Services Pro Forma Cost and Revenue Performance
[Dollars in millions]
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Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE (%)
1 \b\ 2 \c\ 3 [1-2] 4 \d\ 5 \e\ [1/(2 +
4)]
----------------------------------------------------------------------------------------------------------------
2024 (actual)................. $111.1 $104.5 $6.6 $2.1 104.2
2025 (forecast)............... 108.7 108.1 0.6 2.1 98.6
2026 (budget)................. 109.8 112.7 (2.9) 2.8 95.0
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1. 2025 Forecast--The Reserve Banks forecast that Check Services
will recover 98.6 percent of total expenses and targeted ROE, compared
with a 2025 budgeted recovery rate of 97.5 percent.
Through August 2025, total commercial forward and total commercial
return check volumes were 5.0 percent lower and 0.7 percent lower,
respectively, than they were during the same period last year. For
full-year 2025, the Reserve Banks estimate that total forward check
volume will decline 5.4 percent (compared with a budgeted decline of
6.9 percent) and total return check volume will fall 1.3 percent
(compared with a budgeted decline of 3.9 percent) from 2024 levels. The
Reserve Banks expect that check volumes will continue to decline
because of ongoing substitution away from checks to other payment
instruments.
2. 2026 Pricing--The Reserve Banks expect Check Services to recover
95.0 percent of total expenses and targeted ROE in 2026. The Reserve
Banks project revenue to be $109.8 million, an increase of $1.1
million, or 1.0 percent from the 2025 forecast. Total expenses for
Check Services are projected to be $112.7 million, an increase of $4.6
million, or 4.3 percent, from 2025 forecast expenses.
Pricing increases are intended to help stabilize check revenues
given continued check volume declines and rising operational costs. To
that end, in 2026, the Reserve Banks will increase fixed monthly
participation fees for all tiers, all forward paper fees, certain
return paper fees, and fees for certain Premium Delivery options in the
FedReceipt suite of service offerings. These fee changes support the
cost of maintaining FRFS Check Services infrastructure, as fewer checks
are written each year. The fee changes also follow the Check Services
business line's pricing strategy to increase the share of revenue
collected through fixed fees. In light of the steeper volume declines
in foreign check items as compared to all check items, the 2026 pricing
increases for foreign check items are intended to address rising
operational costs. The Reserve Banks intend to sunset the foreign check
service at the end of 2026.\4\ Tables 4-7 show the 2025 and 2026 tiered
participation fees, forward paper fees, return paper fees, and Premium
Delivery fees.
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\4\ More detailed communication will be forthcoming from the
Reserve Banks on the wind-down of Foreign and Canadian Check
Services.
\5\ This fee is charged to financial institutions that have
received any Check 21 electronic or substitute check volume (forward
or return) from the Reserve Banks during the month. The fee is
applied at the parent financial institution level, as defined in the
Reserve Banks' Global Customer Directory. Each financial
institution's tier assignment is determined by the criteria
described in the FedForward Standard Endpoint Tier Listing.

Table 4--Check 21 Participation Fee Structure
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2025 Monthly 2026 Monthly
Tier \5\ fee fee
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1....................................... $550 $1,100
2....................................... 340 500
3....................................... 215 250
4....................................... 90 100
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Table 5--Forward Paper Check Clearing Fees
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2025 Monthly fee 2026 Monthly fee
Forward paper check ----------------------------------------------------------------
Fixed/CL Items Fixed/CL Items
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Canadian Items--U.S. Funds..................... $19.00 $6.50 $40.00 $10.00
Canadian Items--Canadian Funds................. 19.00 6.50 40.00 10.00
Canadian CL Correction Fee..................... .............. 22.00 .............. 40.00
Foreign Items--GBP and EURO.................... 15.00 25.00 40.00 40.00
Foreign Items--All Other Funds................. 15.00 95.00 40.00 100.00
Amount Encoding................................ .............. 2.50 .............. 5.00
Mixed Forward Paper Deposits................... 19.00 5.00 40.00 10.00
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Table 6--Return Legacy/Paper Fees
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2025 Monthly fee 2026 Monthly fee
Return paper check ----------------------------------------------------------------
Fixed/CL Items Fixed/CL Items
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Canadian Items--Returns........................ .............. $16.50 .............. $40.00
Foreign Items--Returns......................... .............. 44.00 .............. 100.00
Mixed Return Paper Deposits.................... 19.00 8.50 40.00 10.00
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[[Page 57055]]

Table 7--Premium Delivery Fees
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2025 Monthly 2026 Monthly
Premium delivery fees fee fee
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8:00 a.m. ET Target..................... $0.037 $0.048
10:00 a.m. Local Target................. 0.022 0.029
12:00 p.m. Local Target................. 0.016 0.021
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Additionally, the Reserve Banks evaluate and set tier assignments
every other year based on changes in the volume of items received by
endpoints. These tier changes are designed to keep customers assigned
to the appropriate tier based on their volume. In 2026, the Reserve
Banks will reassign the tier placement of about 306 customers in the
FedForward Standard tiers, 354 customers in the FedForward Premium
Daily tiers, 26 customers in the FedReturn[supreg] Standard tiers, and
26 customers in the FedReturn Premium Daily tiers. Following these
reassignments, the Reserve Banks will charge these customer segments in
accordance with their tier's participation fee. Additionally, the
Reserve Banks will reduce the volume thresholds in the Accelerated
Forward Delivery service 8 percent for both Retail Payments Premium
Receiver (RPPR) customers and non-RPPR customers to reflect ongoing
volume declines.
The primary risk to Reserve Banks' current projections for Check
Services is a greater-than-expected decline in check volumes. Check
volume declines are due to the general reduction in check writing and
to competition from correspondent banks, aggregators, and direct
exchanges. Should those declines be greater than expected, anticipated
revenue would be lower. The Reserve Banks estimate that these
cumulative price changes will result in a 5.9 percent average increase
for Check Services customers.
All other previously approved prices and discounts in the Check
Services Fee Schedule that are currently in effect will be maintained
in 2026. For full details, please refer to the Reserve Banks' Check
Services Fee Schedule available at https://www.frbservices.org/resources/fees.

FedACH Services

Table 8 shows the 2024 actual, 2025 forecast, and 2026 budgeted
cost recovery performance for commercial FedACH Services.

Table 8--FedACH Services Pro Forma Cost and Revenue Performance
[Dollars in millions]
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Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE
1 2 3 [1-2] 4 5 [1/(2 + 4)]
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2024 (actual)................. $190.0 $166.5 $23.5 $3.7 111.7
2025 (forecast)............... 199.3 177.4 21.9 3.7 110.0
2026 (budget)................. 203.7 175.9 27.8 4.6 112.8
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1. 2025 Forecast--The Reserve Banks forecast that FedACH Services
will recover 110.0 percent of total expenses and targeted ROE, compared
with a 2025 budgeted recovery rate of 105.9 percent.
Through August 2025, FedACH commercial origination and receipt
volume were 9.6 percent higher and 5.9 percent higher, respectively,
than they were during the same period last year. For full-year 2025,
the Reserve Banks estimate that FedACH commercial origination and
receipt volume will increase 8.6 percent and 5.4 percent, respectively,
from 2024 levels, compared with a budgeted increase for commercial
origination of 4.9 percent and receipt of 3.9 percent.
2. 2026 Pricing--The Reserve Banks expect FedACH Services to
recover 112.8 percent of total expenses and targeted ROE in 2026. The
Reserve Banks project revenue to be $203.7 million, an increase of $4.4
million, or 2.2 percent, from the 2025 forecast. Total expenses are
projected to be $175.9 million, a decrease of $1.5 million, or 0.8
percent, from the 2025 forecast.
The Reserve Banks will expand eligibility for the FedACH Receipt
Discount Program in 2026 by lowering the Level Two monthly receipt
discount threshold from 5 million to 1 million items. As a result,
depository institutions that receive between 1 million and 5 million
items per month and [supreg]enroll in the program will be eligible for
the same benefits currently available to institutions receiving between
5 million and 30 million items, as outlined at https://www.frbservices.org/financial-services/ach/receipt-discount-program.
The Reserve Banks will also increase the FedACH Information File
Extract Fee per routing transit number by 6 percent from $180 to $190
per month. The service provides subscribing financial institutions an
information-only copy of a FedACH file, allowing them to perform
additional processing outside of their core ACH system. The fee
increase is intended to address rising operational costs and
enhancements across the FedACH product suite.
The Reserve Banks also will introduce a new Payee Name Verification
tool to support customers in efforts to reduce fraud and misdirected
payments. This expansion of the FedDetect[supreg] Notification Services
will help FedACH customers assess whether the information supplied by
the sender corresponds with the intended destination account. Payee
Name Verification will work by searching historic FedACH data for past
transactions to that payee account, comparing the submitted name with
previous recipients. The Payee Name Verification will be priced at
$0.02 per transaction. The service will initially only be available for
FedACH customers, but the Reserve Banks may expand service access via
other payment rails in the future.
The Reserve Banks ended FedGlobal ACH Payments service to Europe
and Canada in 2023 because of low

[[Page 57056]]

transaction volumes. Given continued FedGlobal ACH Payments volume
declines and rising operational costs, the Reserve Banks intend to
sunset the remaining FedGlobal ACH Payments services to Mexico and
Panama at the end of 2026.\6\
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\6\ More detailed communication will be forthcoming from the
Reserve Banks on the full wind-down of FedGlobal ACH Payments.
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The Reserve Banks' primary risk to current projections for the
FedACH Service are lower-than-projected volumes and growth due to
potential customer attrition or economic conditions. The Reserve Banks
estimate these cumulative price changes will result in a 0.1 percent
average decrease for FedACH customers.
All other previously approved price points and discounts in the
FedACH Fee Schedule that are currently in effect will be maintained in
2026. For full details, please refer to the FedACH Fee Schedule
available at https://www.frbservices.org/resources/fees.

Fedwire Funds Service and National Settlement Service

Table 9 shows the 2024 actual, 2025 forecast, and 2026 budgeted
cost recovery performance for the Fedwire Funds Service and the
National Settlement Service.

Table 9--Fedwire Funds Service and National Settlement Service Pro Forma Cost and Revenue Performance
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE
1 2 3 [1-2] 4 5 [1/(2 + 4)]
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2024 (actual)................. $170.3 $151.7 $18.6 $3.0 110.1
2025 (forecast)............... 178.0 162.7 15.2 4.1 106.6
2026 (budget)................. 181.8 164.4 17.4 4.0 108.0
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1. 2025 Forecast--The Reserve Banks forecast that the Fedwire Funds
Service and the National Settlement Service will recover 106.6 percent
of total expenses and targeted ROE, compared with a 2025 budgeted
recovery rate of 103.5 percent.
Through August 2025, Fedwire Funds Service online volume has been
3.5 percent higher than it was during the same period last year. The
Reserve Banks expect volume to remain near this level through the
remainder of 2025. Through August 2025, the National Settlement Service
settlement file volume was 1.3 percent lower than it was during the
same period last year, and settlement entry volume was 0.3 percent
higher. For full-year 2025, the Reserve Banks estimate that settlement
file volume will decrease 1.3 percent (compared with a budgeted
increase of 0.4 percent) and settlement entry volume will increase 0.3
percent (compared with a budgeted 0.4 percent decrease) from 2024
levels.
2. 2026 Pricing--The Reserve Banks expect the Fedwire Funds Service
and the National Settlement Service to recover 108.0 percent of total
expenses in 2026. The Reserve Banks project revenue to be $181.8
million, an increase of $3.8 million, or 2.1 percent, from the 2025
forecast. The Reserve Banks project total expenses to be $164.4
million, an increase of $1.7 million, or 1.0 percent, from the 2025
forecast.
The Reserve Banks will increase the Fedwire Funds Service
participation fee from $120 to $125. In addition, the Tier 2 and Tier 3
monthly fixed fees will increase from $250 to $300 and $500 to $600,
respectively.\7\ The Reserve Banks will also change National Settlement
Service fees for 2026. The per-file fee will increase from $40 to $45,
and the per-entry fee will increase from $1.95 to $2.10.
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\7\ This fee is based on the volume tier thresholds. Tiers are
based on monthly total volume (send and receive) at the master
account level: 0-14,000 messages (Tier 1); 14,001-90,000 (Tier 2),
and all volume above 90,000 messages (Tier 3). The volume-based
fixed fee is one price point assessed at the parent level and is
based on the highest volume tier of its associated affiliates. For
example, if a parent customer has affiliates in the Tier 2 and Tier
3 volume thresholds, the parent will be assessed the corresponding
$600 Tier 3 monthly fee.
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These fee increases are intended to offset rising costs, primarily
from the transition to the ISO[supreg] 20022 message format, and to
better balance fixed fees with variable revenue.\8\ Further, the fee
increases are intended to be commensurate with customer usage and are
structured so that smaller customers are not disproportionally
impacted. In addition, the fee increases serve to help balance
increases in ongoing operational costs incurred by the National
Settlement Service for the period between 2014 and 2023, when fees did
not increase.
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\8\ The Federal Reserve Banks adopted the ISO 20022 message
format for the Fedwire Funds Service on July 14, 2025. For
additional information see https://www.frbservices.org/resources/financial-services/wires/iso-20022-implementation-center.
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The primary risk to Reserve Banks' current projections for these
services is lower-than-projected volumes and growth due to the market
and economic environment given that historically, Fedwire Funds Service
volume has reflected market conditions.\9\ The Reserve Banks estimate
that these cumulative price changes will result in a 2.8 percent
average price increase for Fedwire Funds Service and National
Settlement Service customers.
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\9\ Fedwire Funds Service volume growth reflects economic
growth. For example, its volume has grown every year except for 2008
and 2009, when it contracted 2.5 percent and 5.0 percent,
respectively, during the Great Recession. For historical Fedwire
Funds Service volume data, see FRBservices.org, Fedwire Funds
Service--Annual Statistics, https://www.frbservices.org/resources/financial-services/wires/volume-value-stats/annual-stats.html.
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All other previously approved prices and discounts in the Fedwire
Funds Service and National Settlement Service Fee Schedules that are
currently in effect will be maintained in 2026. For full details,
please refer to the Reserve Banks' Fedwire Funds Service and National
Settlement Service Fee Schedules available at https://www.frbservices.org/resources/fees.

[[Page 57057]]

Fedwire Securities Service

Table 10 shows the 2024 actual, 2025 forecast, and 2026 budgeted
cost recovery performance for the Fedwire Securities Service.\10\

Table 10--Fedwire Securities Service Pro Forma Cost and Revenue Performance
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE
1 2 3 [1-2] 4 5 [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2024 (actual)................. $53.0 $41.6 $11.4 $0.9 124.8
2025 (forecast)............... 58.2 45.5 12.7 0.9 125.6
2026 (budget)................. 60.8 49.1 11.7 1.1 120.9
----------------------------------------------------------------------------------------------------------------

1. 2025 Forecast--The Reserve Banks forecast that the Fedwire
Securities Service will recover 125.6 percent of total expenses and
targeted ROE, compared with a 2025 budgeted recovery rate of 115.8
percent.
Through August 2025, Treasury security transfer volume was 14.6
percent higher than it was during the same period last year. For full-
year 2025, the Reserve Banks estimate that Treasury security transfer
volume will increase 15.4 percent from 2024 levels, compared with a
budgeted increase of 9.9 percent. Through August 2025, Agency security
transfer volume was 3.3 percent higher than it was during the same
period last year. For full-year 2025, the Reserve Banks estimate that
Agency security transfer volume will increase 1.1 percent from 2024
levels, compared with a budgeted increase of 0.4 percent.
Through August 2025, account maintenance volume was nearly
unchanged (0.02 percent increase) compared with the same period last
year. For full-year 2025, the Reserve Banks estimate that account
maintenance volume will remain nearly unchanged (0.03 percent
decrease), consistent with recent trends and primarily driven by a
reduction in joint custody accounts, compared with a budgeted decline
of 0.8 percent. Through August 2025, the volume of Agency issues
maintained was 2.1 percent higher than it was during the same period
last year. For full-year 2025, the Reserve Banks estimate that the
volume of Agency issues maintained will increase 2.0 percent from 2024
levels, compared with a budgeted change of 0.1 percent.
2. 2026 Pricing--The Reserve Banks expect the Fedwire Securities
Service to recover 120.9 percent of total expenses and targeted ROE in
2026. Revenue is projected to be $60.8 million, an increase of $2.6
million, or 4.4 percent, from the 2025 revenue forecast. The Reserve
Banks also project that 2026 expenses will be $49.1 million, an
increase of $3.6 million, or 7.9 percent from the 2025 forecast.
The Reserve Banks will decrease the transfer and monthly
maintenance fees and moderately raise fees related to the Automated
Claim Adjustment Process (ACAP). The transfer fees will decrease from
$0.61 per transfer to $0.55 per transfer. The monthly account
maintenance fee will also decrease from $57.50 to $51.50 per account,
and the issue maintenance fee will decrease from $0.61 to $0.55 per
issue per account. Separately, the ACAP-related fees will increase
based on the table below to better align the cost of providing these
services with overall revenue.

Table 11--Fedwire Securities Service ACAP Fee Schedule Changes
------------------------------------------------------------------------
Current 2025 Proposed 2026
ACAP fees fee fee
------------------------------------------------------------------------
Fail Claim Adjustment Fee (debit/credit) $1.00 $1.10
Interim Claim Adjustment Fee............ 1.00 1.10
Repo Claim Adjustment Fee............... 1.00 1.10
Securities Lending Claim Adjustment Fee. 1.00 1.10
Repo Start Fee/Reversal Fee............. 0.10 0.11
Repo Close Fee/Reversal Fee............. 0.10 0.11
Repo Balance Only Adjustment Fee/ 0.10 0.11
Reversal Fee...........................
Securities Lending Start Fee/Reversal 0.10 0.11
Fee....................................
Securities Lending Close Fee/Reversal 0.10 0.11
Fee....................................
Securities Lending Balance Only Adj Fee/ 0.10 0.11
Rev Fee................................
Repo Position Maintenance Fee........... 0.03 0.04
Securities Lending Position Maintenance 0.03 0.04
Fee....................................
------------------------------------------------------------------------

The volume of Treasury security transfers is projected to continue
its record growth trend primarily because of debt issuance by the
Treasury. The volume of accounts maintained are expected to decrease
consistent with recent trends and primarily driven by a reduction in
joint custody accounts. The volume of Agency issues maintained is
expected to increase in line with the increasing count of unique
securities outstanding on the service.
---------------------------------------------------------------------------

\10\ The Reserve Banks provide transfer services for securities
issued by the U.S. Treasury, federal government agencies,
government-sponsored enterprises, and certain international
institutions. Before 2023, the priced component of this service
consisted of revenues, expenses, and volumes associated with the
transfer of all non-Treasury securities. Starting in 2023, the
revenues, expenses, and volumes associated with the transfer of
Treasury securities are also included in the priced component of
this service.

---------------------------------------------------------------------------

[[Page 57058]]

The primary risks to the Reserve Banks' current projections for the
Fedwire Securities Service include variations in product volume
forecasts stemming from an uncertain macroeconomic outlook and market
conditions. The Reserve Banks estimate these cumulative price changes
will result in a 9.4 percent average price decrease for Fedwire
Securities Service customers.
All other previously approved prices and discounts in the Fedwire
Securities Service Fee Schedule that are currently in effect will be
maintained in 2026. For full details, please refer to the Reserve
Banks' Fedwire Securities Fee Schedule available at https://www.frbservices.org/resources/fees.

FedNow Service

1. 2025 Forecast--The Reserve Banks forecast that the FedNow
Service will generate a total of $235.1 million in operating expenses
in 2025.
The number of transactions processed by the FedNow Service in 2025
is modest and consistent with the Federal Reserve's expectations for a
new service line. From January through August 2025, the transaction
volume of the FedNow Service totaled 5,140,518 transactions. Broad
adoption of the FedNow Service across an industry with more than 9,000
financial institutions will be a gradual journey, similar to that of
other new payment services, such as FedACH in the 1970s and 1980s. As a
result, the Board has adopted a long-term outlook in evaluating the
development of the FedNow Service. The Board anticipates acceleration
in volume over time as more financial institutions join the network and
as the Reserve Banks release new service features on an ongoing
basis.\11\
---------------------------------------------------------------------------

\11\ For quarterly FedNow Service transaction data, see Board of
Governors of the Federal Reserve System, FedNow Service, https://www.federalreserve.gov/paymentsystems/fednow_about.htm.
---------------------------------------------------------------------------

2. 2026 Pricing--In 2026, the Reserve Banks project total operating
expenses to be $230.3 million, which will be a decrease of $4.8
million, or 2.0 percent from the 2025 forecast.\12\
---------------------------------------------------------------------------

\12\ During the time in 2023 when the FedNow Service was in
production, expenses (including imputed costs) totaled $99.7
million.
---------------------------------------------------------------------------

The FedNow Service intends to continue the discounts and incentives
currently in place through 2026. These include the participation fee
discounted to $0, the first 2,500 transactions per month discounted to
$0, and the FedLine connectivity discount program. These continued
discounts reflect the nascency of the FedNow Service and the desire for
financial institutions to experiment with new use cases. The Reserve
Banks will revisit FedNow discounts and pricing structures after 2026.
For full details concerning FedNow pricing and discounts, please
refer to the Reserve Banks' FedNow Service Fee Schedule available at
https://www.frbservices.org/resources/fees.

FedLine Solutions

There are currently five FedLine Solutions channels through which
customers can access the Reserve Banks' priced services:
FedMail[supreg], FedLine Web[supreg], FedLine Advantage[supreg],
FedLine Command[supreg], and FedLine Direct[supreg]. The Reserve Banks
currently bundle these channels into 10 FedLine Solutions packages that
are supplemented by a number of premium (or [agrave] la carte) access
and accounting information options.
In 2026, the Reserve Banks will increase the monthly fee for the
FedLine Direct Solution's additional 2 mbps (megabits per Second) WAN
(Wide Area Network) Connection service from $3,000 to $3,300. This is
an [agrave] la carte upgrade to the FedLine Direct Solution that offers
enhanced connection reliability, network performance, and operational
continuity during failovers or maintenance. The price change to this
component of the FedLine Direct Solution is primarily driven by rising
costs related to recent network vendor changes, hardware upgrades, and
operational enhancements to the FedLine channels' infrastructure.
Beginning in January 2026, the Reserve Banks will discontinue
FedComplete packages, which are bundled offerings of FedLine
connections and a fixed number of FedACH Services, Fedwire Funds
Services, and Check Services transactions. These changes are intended
to simplify the billing process for customers and to streamline
internal operations across the FedLine product suite. There will be no
disruption in service for customers currently using FedComplete
Packages; these institutions will maintain electronic access and
payment service connectivity but will be billed as an unbundled FedLine
Advantage base, Plus, or Premier customer.
The Reserve Banks estimate these cumulative price changes will
result in a 2.5 percent average price increase for FedLine customers.
All other previously approved price points and discounts in the FedLine
Fee Schedule that are currently in effect will be maintained in 2026.
For full details, please refer to the FedLine Fee Schedule available at
https://www.frbservices.org/resources/fees.

III. Analysis of Competitive Effect

All operational and legal changes considered by the Board that have
a substantial effect on payment system participants are subject to the
competitive impact analysis described in the Board's policy, The
Federal Reserve in the Payments System.\13\ Under this policy, the
Board assesses whether changes would have a direct and material adverse
effect on the ability of other service providers to compete effectively
with the Federal Reserve in providing similar services due to differing
legal powers or constraints or due to a dominant market position
deriving from such legal differences. If any proposed changes create
such an effect, the Board must further evaluate the changes to assess
whether the benefits associated with the changes--such as contributions
to payment system efficiency, payment system integrity, or other Board
objectives--can be achieved while minimizing the adverse effect on
competition.
---------------------------------------------------------------------------

\13\ See Board of Governors of the Federal Reserve System,
Policies: The Federal Reserve in the Payments System, https://www.federalreserve.gov/paymentsystems/pfs_frpaysys.htm.
---------------------------------------------------------------------------

The Board has conducted this analysis and concluded that the 2026
fees, fee structures, and changes in service will not have a direct and
material adverse effect on the ability of other service providers to
compete effectively with the Reserve Banks in providing similar
services. When conducting the competitive effect analysis for the
FedNow Service, the Board assessed whether its pricing strategy as a
new service, including discounts, would have a material, adverse effect
on the ability of other service providers to compete effectively with
the Reserve Banks due to differing legal powers or a dominant market
position as a result of such differing legal powers. The Board
concluded that the pricing strategy, including discounts, followed
general market practice for new services and could similarly be
implemented by private-sector providers unrelated to any differing
legal powers. Therefore, the Reserve Banks' pricing does not have a
material adverse effect on the ability of other service providers to
compete effectively with the Reserve Banks in providing similar
services.
The Reserve Banks expect to continue to achieve aggregate long-run
cost recovery across all mature priced services.

[[Page 57059]]

By order of the Board of Governors of the Federal Reserve
System.
Benjamin W. McDonough,
Deputy Secretary of the Board.

Appendix

Private-Sector Adjustment Factor Methodology and Computation

The imputed debt financing costs, targeted ROE, and effective
tax rate are based on a U.S. publicly traded market model.\14\ The
method for calculating the financing costs in the PSAF requires
determining the appropriate imputed levels of debt and equity and
then applying the applicable financing rates. In this process, a pro
forma balance sheet using estimated assets and liabilities
associated with the Reserve Banks' priced services is developed, and
the remaining elements that would exist are imputed as if these
priced services were provided by a private business firm. The same
generally accepted accounting principles that apply to commercial-
entity financial statements apply to the relevant elements in the
priced services pro forma financial statements.
---------------------------------------------------------------------------

\14\ Data for U.S. publicly traded firms is from the Standard
and Poor's Compustat[supreg] database. This database contains
information on more than 6,000 U.S. publicly traded firms, which
approximates information for the entirety of the U.S. market.
---------------------------------------------------------------------------

The portion of Federal Reserve assets that will be used to
provide priced services during the coming year is determined using
information about actual assets and projected disposals and
acquisitions. The priced portion of these assets is determined based
on the allocation of depreciation and amortization expenses of each
asset class. The priced portion of actual Federal Reserve
liabilities consists of post-employment and post-retirement
benefits, accounts payable, and other liabilities. The priced
portion of the actual net pension asset or liability is also
included on the balance sheet.\15\
---------------------------------------------------------------------------

\15\ The pension assets are netted with the pension liabilities
and reported as a net asset or net liability as required by ASC 715.
---------------------------------------------------------------------------

The equity financing rate is the targeted ROE produced by the
capital asset pricing model (CAPM). In the CAPM, the required rate
of return on a firm's equity is equal to the return on a risk-free
asset plus a market risk premium. The risk-free rate is based on the
three-month Treasury bill; the beta is assumed to be equal to 1.0,
which approximates the risk of the market as a whole; and the market
risk premium is based on the monthly returns in excess of the risk-
free rate over the most recent 40 years. The resulting ROE reflects
the return a shareholder would expect when investing in a private
business firm.
For simplicity, given that state income tax rates vary, and
various credits and deductions can apply at the federal or state
level, an actual income tax expense is not explicitly calculated for
Reserve Bank priced services. Instead, the Board targets a pretax
ROE that would provide sufficient income to fulfill the priced
services' imputed income tax obligations. To the extent that
performance results are greater or less than the targeted ROE,
income taxes are adjusted using the effective tax rate.
Capital structure. The capital structure is imputed based on the
imputed funding need (assets less liabilities), subject to minimum
equity constraints. Short-term debt is imputed to fund the imputed
short-term funding need. Long-term debt and equity are imputed to
meet the priced services long-term funding need at a ratio based on
the capital structure of the U.S. publicly traded market.\16\ Any
equity imputed that exceeds the amount needed to fund the priced
services' assets and meet the minimum equity constraints is offset
by a reduction in imputed long-term debt. When imputed equity is
larger than what can be offset by imputed debt, the excess is
imputed as investments in Treasury securities; income imputed on
these investments reduces the PSAF.
---------------------------------------------------------------------------

\16\ The FDIC rule requires that well-capitalized institutions
meet or exceed the following standards: (1) total capital to risk-
weighted assets ratio of at least 10 percent, (2) tier 1 capital to
risk-weighted assets ratio of at least 8 percent, (3) common equity
tier 1 capital to risk-weighted assets ratio of at least 6.5
percent, and (4) a leverage ratio (tier 1 capital to total assets)
of at least 5 percent. Because all of the Federal Reserve priced
services' equity on the pro forma balance sheet qualifies as tier 1
capital, only requirements 1 and 4 are binding. The FDIC rule can be
located at 12 CFR 324.403(b).
---------------------------------------------------------------------------

Application of the Federal Reserve Policy on Payment System Risk
(PSR policy) to the Fedwire Funds Service. The Board's PSR policy
incorporates the international standards for financial market
infrastructures (FMIs) developed by the Committee on Payments and
Market Infrastructures (CPMI) and the Technical Committee of the
International Organization of Securities Commissions (IOSCO) known
as the Principles for Financial Market Infrastructures.\17\ The
Board recognizes the critical role the Fedwire Services, including
the Fedwire Funds Service, play in the financial system and requires
them to meet or exceed the risk management standards in the PSR
policy, consistent with relevant guidance and the requirements in
the MCA.\18\ Principle 15 states that an FMI should identify,
monitor, and manage general business risk and hold sufficient liquid
net assets funded by equity to cover potential general business
losses so that it can continue operations and services as a going
concern if those losses materialize. Further, liquid net assets
should at all times be sufficient to ensure a recovery or orderly
wind-down of critical operations and services. The Fedwire Funds
Service does not face the risk that a business shock would cause the
service to wind down in a disorderly manner and disrupt the
stability of the financial system. To foster competition with
private-sector FMIs, however, the Reserve Banks' priced services
will hold an amount equivalent to six months of the Fedwire Funds
Service's current operating expenses as liquid financial assets and
equity on the pro forma balance sheet.\19\ Current operating
expenses are defined as normal business operating expenses on the
income statement, less depreciation, amortization, taxes, and
interest on debt. Using the Fedwire Funds Service's preliminary 2026
budget, six months of current operating expenses is $71.4 million.
In 2026, equity was sufficient to meet the FDIC capital and the PSR
policy requirement.
---------------------------------------------------------------------------

\17\ See Board of Governors of the Federal Reserve System,
Federal Reserve Policy on Payment System Risk, https://www.federalreserve.gov/paymentsystems/files/psr_policy.pdf. See also
CPMI-IOSCO, Principles for Financial Market Infrastructures (April
2012), https://www.bis.org/cpmi/publ/d101a.pdf.
\18\ Certain standards may require flexibility in the way they
are applied to central bank-operated systems because of central
banks' unique role in the financial markets and their public
responsibilities. These principles include principle 2 on
governance, principle 3 on the framework for the comprehensive
management of risks, principle 4 on credit risk, principle 5 on
collateral, principle 7 on liquidity risk, principle 13 on
participant-default rules and procedures, principle 15 on general
business risk, and principle 18 on access and participation
requirements. See section I.B.1.a of the PSR policy.
\19\ This requirement does not apply to the Fedwire Securities
Service. There are no private-sector competitors to the Fedwire
Securities Service that would be expected to meet such a
requirement. Imposing such a requirement when pricing the securities
services could artificially increase the cost of these services.
---------------------------------------------------------------------------

Effective tax rate. Like the imputed capital structure, the
effective tax rate is calculated based on data from U.S. publicly
traded firms. The tax rate is the mean of the weighted average rates
of the U.S. publicly traded market over the past five years.
Debt and equity financing. The imputed short- and long-term debt
financing rates are derived from the nonfinancial commercial paper
rates from the Federal Reserve Board's H.15 Selected Interest Rates
release (AA and A2/P2) and the annual Merrill Lynch Corporate & High
Yield Index rate, respectively. The equity financing rate is
described above. The rates for debt and equity financing are applied
to the priced services' estimated imputed short-term debt, long-term
debt, and equity needed to finance short- and long-term assets and
meet equity requirements.
The 2026 PSAF is $34.1 million, compared with $31.9 million in
2025. The increase of $2.2 million is attributable to a net $2.8
million increase in the cost of capital, partially offset by a
decrease in Board of Governors' expense, $0.4 million, and a
decrease in sales taxes, $0.2 million. The net $2.8 million increase
in cost of capital is driven by a $3.6 million increase in ROE,
primarily from higher equity resulting from an increase in long-term
assets to finance as noted in Table 12 and higher long-term debt
resulting in a $0.5 million increase in cost of debt.
The PSAF expense of $34.1 million, detailed in table 14,
includes $22.6 million for capital funding, $7.2 million for Board
of Governors' expense, and $4.3 million in sales tax expense.
As shown in table 12, 2026 total assets of $991.9 increased by
$101.6 million from 2025. The net increase in total assets includes
an additional $82.6 million in imputed investments and short-term
assets and a $19.0 million increase in long-term assets driven by an
increase in pension assets.
The net increase of $82.6 million primarily consists of a $68.2
million increase in the

[[Page 57060]]

imputed investments and a $14.4 million increase driven by short-
term assets. The imputed investment increase reflects a $75.0
million increase from float.\13\ The $14.4 million increase in
short-term assets is driven by an increase in prepaid expenses.
The $19 million increase in the long-term assets is primarily
driven by a $24.4 million increase in the net pension asset,
partially offset by a $3.2 million decrease in furniture and
equipment and a $5.7 million decrease in software and leasehold
improvements.
The capital structure of the 2026 pro forma balance sheet,
provided in table 13, is composed of equity of $91.5 million, or 15
percent of the 2026 risk-weighted assets detailed in table 15, and
long-term debt of $135.1 million. The 2026 capital structure aligns
with that of 2025, which was composed of $91.5 million of equity and
$135.1 million of long-term debt. As shown in table 14, the 2026
imputed equity required to fund assets and meet the publicly traded
firm model capital requirements is $91.5 million. As long-term
assets are marginally greater than long-term liabilities, long-term
debt of $135.1 million was imputed at the observed market ratio of
59.6 percent. The equity of $91.5 million was adequate to meet the
FDIC capital requirements for a well-capitalized institution and
satisfy PSR policy requirements.
The net accumulated other comprehensive loss is $553.0 million,
compared with $563.3 million in 2025. The $10.3 million increase is
primarily attributable to a lower discount rate. The net accumulated
other comprehensive loss position does not reduce the total imputed
equity required to fund priced services assets or fulfill the FDIC
equity requirements for a well-capitalized institution.
---------------------------------------------------------------------------

\20\ Credit float, which is the difference between items in
process of collection and deferred credit items, occurs when the
Reserve Banks debit the paying bank for transactions before
providing credit to the depositing bank. Float is directly estimated
at the service level.
\21\ Consistent with the PSR policy, the Reserve Banks' priced
services will hold an amount equivalent to six months of the Fedwire
Funds Service's current operating expenses as liquid net financial
assets and equity on the pro forma balance sheet. Six months of the
Fedwire Funds Service's projected current operating expenses is
$71.6 million. In 2026, imputed equity was sufficient to meet PSR
policy requirements.
\22\ Includes the allocation of Board of Governors assets to
priced services of $7.2 million for 2026 and $5.2 million for 2025.
\23\ Includes the allocation of Board of Governors liabilities
to priced services of $1.2 million for 2026 and $1.4 million for
2025.
\24\ Includes an accumulated other comprehensive loss of $553.0
million for 2026 and $563.3 million for 2025, which reflects the
ongoing amortization of the accumulated loss in accordance with ASC
715. Future gains or losses, and their effects on the pro forma
balance sheet, cannot be projected. See table 14 for calculation of
required imputed equity amount.

Table 12--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Mature Priced Services \a\
[Millions of dollars--projected average for year]
----------------------------------------------------------------------------------------------------------------
2026 2025 Change
----------------------------------------------------------------------------------------------------------------
Short-term assets:
Receivables................................................. $46.3 $44.3 $2.0
Inventory................................................... 0.1 0.4 (0.3)
Prepaid expenses............................................ 39.9 34.2 5.7
Items in process of collection \20\......................... 65.0 58.0 7.0
-----------------------------------------------
Total short-term assets................................. $151.3 $136.9 $14.4
Imputed investments: \21\
Imputed investment in Treasury securities................... $0.0 $6.8 $(6.8)
Imputed investment in Fed Funds............................. 368.0 293.0 75.0
-----------------------------------------------
Total imputed investments............................... $368.0 $299.8 $68.2
Long-term assets:
Premises \22\............................................... $108.2 $105.3 $2.9
Furniture and equipment..................................... 57.6 60.8 (3.2)
Software and leasehold improvements......................... 68.8 74.5 (5.7)
Net pension asset........................................... 106.8 82.4 24.4
Deferred tax asset.......................................... 131.2 130.6 0.6
-----------------------------------------------
Total long-term assets.................................. $472.6 $453.6 $19.0
-----------------------------------------------
Total assets........................................ $991.9 $890.3 $101.6
Short-term liabilities:
Deferred credit items....................................... $433.0 $351.0 $82.0
Short-term debt............................................. 9.0 42.2 (33.2)
Short-term payables......................................... 77.3 36.8 40.6
-----------------------------------------------
Total short-term liabilities............................ $519.3 $430.0 $89.3
Long-term liabilities:
Postemployment/postretirement benefits and net pension $246.0 $292.5 $(46.3)
liabilities \23\...........................................
Long term debt.............................................. 135.1 96.1 39.0
-----------------------------------------------
Total liabilities....................................... $900.4 $818.6 $81.8
Equity \24\................................................. $91.5 $71.7 $19.8
-----------------------------------------------
Total liabilities and equity............................ $991.9 $890.3 $101.6
----------------------------------------------------------------------------------------------------------------
\a\ Calculations in this table and subsequent PSAF tables may be affected by rounding. Excludes amounts related
to the FedNow Service.

[[Page 57061]]

Table 13--Imputed Funding for Mature Priced Services Assets a
[Millions of dollars]
------------------------------------------------------------------------
2026 2025
------------------------------------------------------------------------
A. Short-term asset financing:
Short-term assets to be financed:
Receivables..................... $46.3 $44.3
Inventory....................... 0.1 0.4
Prepaid expenses................ 39.9 34.2
-------------------------------
Total short-term assets to $86.3 $78.9
be financed................
Short-term payables............. 77.3 36.8
Net short-term assets to be $9.0 $42.2
financed.......................
-------------------------------
Imputed short-term debt $9.0 $42.2
financing \25\.................
B. Long-term asset financing:
Long-term assets to be financed:
Premises........................ $108.2 $105.3
Furniture and equipment......... 57.6 60.8
Software and leasehold 68.8 74.5
improvements...................
Net pension asset............... 106.8 82.4
Deferred tax asset.............. 131.2 130.6
-------------------------------
Total long-term assets to be $472.6 $453.6
financed...................
Postemployment/postretirement 246.0 292.5
benefits and net pension
liabilities....................
Net long-term assets to be $226.6 $161.1
financed.......................
-------------------------------
Imputed long-term debt \29\..... 135.1 96.1
Imputed equity \29\............. 91.5 65.0
-------------------------------
Total long-term financing *. $226.6 $161.1
------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.

---------------------------------------------------------------------------

\25\ Imputed short-term debt financing is computed as the
difference between short-term assets and short-term liabilities. As
presented in table 14, the financing costs of imputed short-term
debt, imputed long-term debt and imputed equity are the elements of
cost of capital, which contribute to the calculation of the PSAF.
\26\ If minimum equity constraints are not met after imputing
equity based on the capital structure observed in the market,
additional equity is imputed to meet these constraints. The long-
term funding need was met by imputing long-term debt and equity
based on the capital structure observed in the market (see tables 13
and 15). In 2026, the amount of imputed equity met the minimum
equity requirements for risk-weighted assets.
\27\ Equity adjustment offsets are due to a shift of long-term
debt funding to equity in order to meet FDIC capital requirements
for well-capitalized institutions.
\28\ Additional equity in excess of that needed to fund priced
services assets is offset by an asset balance of imputed investments
in Treasury securities.
\29\ Imputed short-term debt and long-term debt are computed in
table 13.
\30\ The 2026 ROE is equal to a risk-free rate plus a risk
premium (beta * market risk premium). The 2026 after-tax CAPM ROE is
calculated as 4.43% + (1.0 * 9.30%) = 13.73%. Using a tax rate of
19.54%, the after-tax ROE is converted into a pretax ROE, which
results in a pretax ROE of (13.73%/(1-19.54%)) = 17.07%.
Calculations may be affected by rounding.

Table 14--Derivation of the PSAF for Mature Priced Services \a\
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
2026 2025
----------------------------------------------------------------
Debt Equity Debt Equity
----------------------------------------------------------------------------------------------------------------
A. Imputed long-term debt and equity:
Net long-term assets to finance............ $226.6 $226.6 $161.1 $161.1
Capital structure observed in market....... 59.6% 40.4% 59.7% 40.3%
----------------------------------------------------------------
Pre-adjusted long-term debt and equity. $135.1 $91.5 $96.1 $65.0
Equity adjustments: \26\
Equity to meet capital requirements........ .............. $91.5 .............. $65.0
Adjustment to debt and equity funding given .............. ............... .............. ..............
capital requirements \27\.................
Adjusted equity balance.................... .............. $91.5 .............. $65.0
Equity to meet capital requirements \28\... .............. ............... .............. ..............
----------------------------------------------------------------
Total imputed long-term debt and equity $135.1 $91.5 $96.1 $65.0
*.....................................
B. Cost of capital:
Elements of capital costs:
----------------------------------------------------------------
Short-term debt \29\................... $9.0 x 4.4% = $0.4
$42.2 x 5.4% = $ 2.3
Long-term debt \30\.................... $135.1 x 4.9% = $6.6
$96.1 x 4.4% = $4.2
Equity \30\............................ $91.5 x 17.1% = $15.6
$65.0 x 18.6% = $12.1
----------------------------------------------------------------

[[Page 57062]]

C. Incremental cost of PSR policy:

Equity to meet policy *.................... $-- x 17.1% = --
$0 = $6.8 x 18.6% = $1.3
----------------------------------------------------------------
D. Other required PSAF costs:
Sales taxes................................ .............. $4.3 .............. $4.5
Board of Governors expenses................ .............. 7.2 .............. 7.6
----------------------------------------------------------------
.............. $11.5 .............. $12.1
----------------------------------------------------------------
E. Total PSAF:................................. .............. $34.1 .............. $31.9
As a percent of assets..................... .............. 3.4% .............. 3.6%
As a percent of expenses................... .............. 3.8% .............. 3.4%
F. Tax rates................................... .............. 19.54% .............. 18.91%
----------------------------------------------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.
* Total equity to meet policy has been restated for 2025.

---------------------------------------------------------------------------

\31\ If minimum equity constraints are not met after imputing
equity based on all other financial statement components, additional
equity is imputed to meet these constraints. Additional equity
imputed to meet minimum equity requirements is invested solely in
Treasury securities. The imputed investments are similar to those
for which rates are available on the Federal Reserve's H.15
statistical release, available at https://www.federalreserve.gov/releases/h15/.
\32\ The investments are imputed based on the amounts arising
from the collection of items before providing credit according to
established availability schedules.

Table 15--Computation of 2026 Capital Adequacy for Federal Reserve Mature Priced Services \a\
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Weighted
Assets Risk weight assets
----------------------------------------------------------------------------------------------------------------
Imputed investments:
1-Year Treasury securities \31\............................. $ 0.0 $
Federal funds \32\.......................................... 368.0 0.2 73.6
-----------------------------------------------
Total imputed investments............................... 368.0 .............. 73.6
Receivables................................................. $46.3 0.2 $9.3
Inventory................................................... 0.1 1.0 0.1
Prepaid expenses............................................ 39.9 1.0 39.9
Items in process of collection.............................. 65.0 0.2 13.0
Premises.................................................... 108.2 1.0 108.2
Furniture and equipment..................................... 57.6 1.0 57.6
Software and leasehold improvements......................... 68.8 1.0 68.8
Pension asset............................................... 106.8 1.0 106.8
Deferred tax asset.......................................... 131.2 1.0 131.2
-----------------------------------------------
Total................................................... $991.9 .............. $608.5
-----------------------------------------------
Imputed equity:
Capital to risk-weighted assets............................. 15.0% .............. ..............
Capital to total assets..................................... 9.2% .............. ..............
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\a\ Excludes amounts related to the FedNow Service.

[FR Doc. 2025-22268 Filed 12-8-25; 8:45 am]
BILLING CODE 6210-01-P