Noninterest income: Noninterest income is everything a bank earns that is not interest: fees, service charges, card interchange, trust and wealth fees, mortgage banking and gains on sales.
Where it comes from
Reported on Schedule RI. It is the second half of the revenue denominator in the efficiency ratio, sitting alongside net interest income.
How to read it
Fee income is the part of revenue that does not depend on the rate cycle, which is why banks that have it are valued above banks that do not. It is also uneven: a large securities gain or a one off sale lands here and flatters a quarter that was otherwise ordinary.
The common mistake. Comparing it across banks without asking what is inside it. A bank with a trust department and a bank with heavy overdraft fees both report strong noninterest income, and only one of those lines survives a change in regulation or in customer behavior.
Go deeper
- What is a good efficiency ratio for a bank?
- BankingLens pricing and what a subscription adds: percentile rank against the bank’s own FFIEC peer group, fourteen quarters of trend, and the flags an examiner reaches for first.
See also. Net interest income, Noninterest expense, Efficiency ratio.
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