Circular
Federal Reserve Priced Services
December 13, 1996
Circular No. 10901

1997 Fee Schedules and Private Sector Adjustment Factor (PSAF)

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has announced the adoption of 1997 fee schedules, and the Private Sector Adjustment Factor (PSAF), for services provided by the Federal Reserve Banks, effective January 2, 1997. Following is the text of the Board's announcement:

The Federal Reserve Board has announced the 1997 fee schedules for priced services provided by the Federal Reserve Banks. The fees become effective January 2, 1997.

Overall, prices across all services are projected to decline by approximately 3.4 percent in 1997. This price decline is attributable to significant fee reductions in the Reserve Banks' electronic payment services to reflect efficiencies associated with automation consolidation and centralization of applications.

The Federal Reserve's fees apply to the check, automated clearing house, funds transfer and net settlement, book-entry securities, noncash collection, and special cash services, as well as electronic connections to the Federal Reserve. The 1997 fee schedules are available from the Reserve Banks.

In the Fedwire funds transfer service, the basic funds transfer fee will decline by 10 percent, from 50 cents to 45 cents.

In the ACH service, the premium surcharge on items deposited after 8:00 p.m. Eastern Time will decline by 50 percent. The addenda record fee will decline by 25 percent, and the discrete/commingled file fee will be eliminated.

These reductions follow substantial ACH fee reductions that were implemented on October 1. At that time, the interregional and intraregional fees were merged into one basic per-item fee of 1 cent, which represented a 17 percent fee reduction for interregional items. In addition, the presort deposit fee was reduced by 10 percent and several deposit deadlines were eliminated, giving ACH originators an additional one to one and one-half hours of processing time.

In the check service, fees for forward collection products will increase 1.8 percent on a volume-weighted basis and returned check product fees will increase 2.6 percent. Fees for electronic check products will decline or remain stable.

Prices for the Fedwire book-entry securities service and the noncash collection service will remain at their 1996 levels.

The Reserve Banks project that 1997 total revenue will be $813.9 million, which will recover 100.5 percent of total operating costs plus imputed expenses as well as the special project costs budgeted for recovery. Net income for 1997 is projected to be $49.8 million, compared with a targeted return on equity of $45.8 million.

The Board also approved the 1997 private sector adjustment factor (PSAF) for Reserve Bank priced services of $101.5 million, an increase of $15.7 million or 18.3 percent from the 1996 targeted PSAF of $85.8 million. The PSAF is an allowance for taxes and other imputed expenses that would have been paid and the return on capital that would have been earned had the Federal Reserve's priced services been provided by a private business firm.

The text of the Board's official notice in this matter, as published in the Federal Register of December 3, is available. Questions regarding our priced services may be directed to your Account Manager at the Head Office, or at the Buffalo Branch telephone number 716-849-5065.