The Federal Reserve said Wednesday the payments it will make to the federal government based on its 2017 operations will drop to $80.2 billion, down 12.3 percent from 2016.

It will be the second year that the payments have declined although they still remain about three times higher than the level in effect before 2008, when the Fed began a massive expansion of its bond holdings.

After covering its own operating costs, the Fed sends the Treasury its remaining profits each year, money that is used to lower the government’s budget deficit.

The Fed said higher interest payments to banks on their reserves were a major reason for the drop in payments to the government. The $80.2 billion is preliminary and may change slightly when final results are released in March.

Based on the preliminary figures, the Fed said it earned $80.7 billion in net income in 2017, a drop of $11.7 billion from 2016. That decline reflected an increase of $13.8 billion in interest payments the Fed made to banks which was partially offset by an increase of $2.5 billion in the interest income the Fed earned on its holdings of Treasury bonds and mortgage-backed securities.

The Fed said operating expenses for the Fed system, which covers 12 regional banks, totaled $4.1 billion in 2017. In addition the 12 regional banks were assessed $724 million to cover costs related to producing and issuing currency. In addition, the Fed’s payments to fund the operations of the Consumer Financial Protection Bureau totaled $573 million.

The Fed’s bond holdings increased five-fold to $4.5 trillion starting in late 2008 as the central bank engaged in three rounds of bond purchases aimed at lowering long-term interest rates to help the country emerge from the Great Recession.

Starting last October, the Fed has been gradually trimming its bond holdings by not re-investing a portion of its maturing securities. But the holdings still total $4.4 trillion, far above the levels in effect before the 2008 financial crisis hit.

(AP)