The paper examines the impact of the U.S. banking industry's increasing reliance on nontraditional business activities, such as fee income, trading revenue, and other noninterest income, on the volatility and risk of bank profits and revenues. It finds that while noninterest income has grown in importance, it has become more volatile and correlated with net interest income, rather than providing diversification benefits. At the aggregate level, the decline in volatility of net operating revenue is attributed to reduced volatility in net interest income, not diversification from noninterest income. At the bank level, the correlation between net interest income and noninterest income growth has increased, and the typical bank shows a modest positive correlation between the two. Additionally, higher reliance on noninterest income, particularly trading revenue, is associated with higher risk and lower risk-adjusted profits. These findings suggest that the shift towards noninterest income does not offer significant diversification benefits and may worsen the risk/return trade-off for banks.The paper examines the impact of the U.S. banking industry's increasing reliance on nontraditional business activities, such as fee income, trading revenue, and other noninterest income, on the volatility and risk of bank profits and revenues. It finds that while noninterest income has grown in importance, it has become more volatile and correlated with net interest income, rather than providing diversification benefits. At the aggregate level, the decline in volatility of net operating revenue is attributed to reduced volatility in net interest income, not diversification from noninterest income. At the bank level, the correlation between net interest income and noninterest income growth has increased, and the typical bank shows a modest positive correlation between the two. Additionally, higher reliance on noninterest income, particularly trading revenue, is associated with higher risk and lower risk-adjusted profits. These findings suggest that the shift towards noninterest income does not offer significant diversification benefits and may worsen the risk/return trade-off for banks.