Each note of the same denomination has its own serial number. Up through Series 1995, all Federal Reserve notes had serial numbers consisting of one letter, eight digits, and one letter, such as A12345678B; now only the $1 and $2 notes still use this form.
The first letter of such a serial number identifies the Federal Reserve Bank (FRB) which issued the note; since there are 12 FRBs, this letter is always between A and L. The last letter advances through the alphabet when all eight character serial numbers have been printed for a specific Federal Reserve Bank within the same series. At the time of a series change, the suffix letter returns to the letter A and repeats the cycle.
The letter O is not used because of its similarity to the digit 0, and the letter Z is not used because it is reserved for test printings. On some notes, a star appears in place of the last letter. When an imperfect sheet is detected during the manufacturing process after the serial number has been overprinted, it must be replaced with a new sheet. A "star" sheet is used to replace the imperfect sheet. Reusing an exact serial number to replace an imperfect note is costly and time consuming. A "star" note has its own special serial number followed by a star in place of a suffix letter.
Federal Reserve notes, beginning with Series 1996, have two letters rather than one at the beginning of the serial number. On these notes, the first letter corresponds to the series of the note and the second letter of each serial number now represents the issuing FRB and ranges from A through L. The last letter still can be anything but O or Z, and is still occasionally replaced by a star, with the same meaning as before.