San Antonio’s USAA Bank racks up huge losses on falling revenue, rising costs over last 2 years

USAA Federal Savings Bank pulled off a dubious feat in 2020, one it hadn’t achieved in 34 years. The bank actually lost money — $323,842,000, to be precise. It marked the first time since 1985 that the bank ended a year in negative territory. USAA Bank followed up with an even bigger loss in 2021: $386.5 million. So what’s behind all the red ink flowing at the largest financial institution based in San Antonio? “A number of issues drove USAA Bank to experience the net-income losses,” Senior Financial Officer Michael Moran said. “A couple of them are industry-driven. A couple of them are specific to USAA.”

Like other banks, USAA has grappled with falling loan volume, soaring deposits and record-low interest rates. At the same time, its costs have shot up. It’s spending heavily on technology systems, hiring and compensation to improve the business. It also has beefed up its risk management and regulatory compliance after regulators levied penalties against the bank in 2019 and 2020 for alleged violations of banking regulations. To be sure, USAA Bank isn’t in any financial danger. It has more than enough capital to absorb the losses. In fact, one measure of the bank’s capital is more than twice the regulatory minimum requirement. It also doesn’t hurt to have the backing of a financial services company with a net worth of about $40 billion. “USAA has rock-solid financial strength,” Moran said. It reported $117.4 billion in assets at the end of last year, ranking it among the 35 largest financial institutions in the country.