Cost of funds: Cost of funds is the rate a bank pays for the money it lends.
How it is calculated
Total interest expense over average interest bearing liabilities, annualized, on the same two point average basis as every other ratio here.
Formula
Cost of funds = annualized total interest expense / average interest-bearing liabilities
What banks reported in Q2 2026
Across every bank that filed for Q2 2026, the median cost of funds was 2.34%, with the middle half between 1.90% and 2.79%. The right comparison is almost always the row for the bank’s own size rather than the industry line.
| Bank size (total assets) | Bottom quartile | Median | Top quartile |
|---|---|---|---|
| Under $100M | 1.51% | 2.05% | 2.56% |
| $100M - $300M | 1.81% | 2.22% | 2.69% |
| $300M - $1B | 1.94% | 2.38% | 2.79% |
| $1B - $3B | 2.15% | 2.49% | 2.95% |
| $3B - $10B | 2.14% | 2.56% | 2.93% |
| $10B - $100B | 2.09% | 2.54% | 3.03% |
| Over $100B | 2.24% | 2.76% | 3.50% |
Source: BankingLens, computed from FFIEC call reports for the quarter ending June 30, 2026. Quartiles are calculated across the full population of filing banks in each size band, not sampled. Non-insured non-deposit trust companies are left out of every statistic: they take no deposits and make no loans, so a margin or a funding cost computed for them has no meaning.
How to read it
This is the half of the net interest margin a bank can actually manage, and the half that moves first when rates turn. Cheap funding almost always traces back to deposits that pay no interest at all, so the noninterest bearing share sitting beside it explains most of any bank’s number on its own.
The common mistake. Treating cheap as good without asking whether it is stable. A low rate on a shrinking or captive deposit base is not an advantage, and it reprices the moment the relationship behind it changes.
Go deeper
- What is a good cost of funds 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. Cost of deposits, Noninterest-bearing deposits, Deposit beta, Net interest spread.
Every figure on this page is computed from FFIEC call reports for the quarter ending June 30, 2026 and is not modeled, estimated or sampled. This page is generated by _tools/seo/build_glossary.mjs and carries no figure that was typed in. See our methodology and disclaimer. Definitions are general guidance, not regulatory or investment advice.