Short answer: The median FDIC-insured bank posted an efficiency ratio of 61.85% in the quarter ending June 30, 2026, meaning it spent almost 62 cents to generate each dollar of revenue. Lower is better. The middle half of banks fell between 52.99% and 72.38%. The widely repeated 'under 50% is good' rule describes large banks only: among banks under $100 million, the median is 70.63% and even the top quartile sits at 58.22%.
The 2026 benchmark, by bank size
The efficiency ratio is the cleanest measure of how much overhead a bank carries per dollar of revenue. It is quoted more often than almost any other bank metric, usually with a rule of thumb attached: under 50% is excellent, over 70% is a problem. That rule is roughly right for a $20 billion bank and badly wrong for a $90 million one.
Here is what banks actually posted in the quarter ending June 30, 2026.
| Bank size (total assets) | Banks | Bottom quartile | Median | Top quartile |
|---|---|---|---|---|
| All banks | 4,278 | 52.99% | 61.85% | 72.38% |
| Under $100M | 575 | 58.22% | 70.63% | 83.68% |
| $100M - $300M | 1,221 | 54.67% | 63.25% | 73.63% |
| $300M - $1B | 1,431 | 52.63% | 60.82% | 70.38% |
| $1B - $3B | 627 | 51.64% | 60.34% | 69.13% |
| $3B - $10B | 265 | 49.13% | 55.73% | 64.23% |
| $10B - $100B | 127 | 48.43% | 55.42% | 61.26% |
| Over $100B | 32 | 50.39% | 55.26% | 61.65% |
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.
The 50% rule describes large banks, not most banks
Read the table from the bottom up and the pattern is unmistakable. Efficiency improves almost monotonically with size, from a 70.63% median under $100 million to roughly 55% above $3 billion. A community bank hitting 58% is in the top quartile of its peer group. Judged against the popular 50% benchmark it looks mediocre, which is simply the wrong comparison.
The cause is fixed cost. A bank needs a core processing system, a BSA officer, an audit relationship, cybersecurity tooling, a board, and a regulatory examination whether it holds $80 million in assets or $8 billion. Those costs barely scale down. Spread across a small revenue base they dominate the ratio, and no amount of good management makes them disappear.
That single fact explains most of the consolidation in American banking. A merger that adds assets without proportionally adding overhead improves the ratio mechanically, which is why acquirers talk about efficiency in nearly every deal announcement.
Reading the ratio correctly
The efficiency ratio has a denominator, and it is the half people forget. Revenue sits in it alongside expense, so the ratio can improve without a dollar of cost being cut, and can deteriorate in a quarter where the bank spent nothing unusual. A bank whose margin compressed 40 basis points will post a worse efficiency ratio on identical overhead.
This is why the ratio should be read as a trend rather than a snapshot, and always alongside the direction of revenue. A bank moving from 68% to 61% because it grew net interest income is in a fundamentally different position from one that got there by closing branches, and the two will look identical in a single quarter's number.
Non-recurring items distort it further. A large one-time legal expense, a branch consolidation charge, or a securities loss can push a quarter's ratio up sharply without telling you anything about the underlying franchise. Comparing four quarters filters most of this out.
What to do with it
If you are benchmarking a bank, use the row in the table that matches its asset size and treat the quartiles as the real scale. A bank in the bottom quartile of its own size band has a genuine cost problem worth investigating. A bank in the top quartile of its band is running lean regardless of how its number compares to a money-center bank.
If you are evaluating a potential lender, a very high efficiency ratio is worth noting for a different reason. Banks under cost pressure tend to have thinner commercial lending teams, longer approval queues, and less appetite for deals that require custom underwriting. That has nothing to do with your credit and everything to do with how quickly you will get an answer.
Frequently asked questions
What is a good efficiency ratio for a bank?
The median US bank posted a 61.85% efficiency ratio in the quarter ending June 30, 2026, with the middle half between 52.99% and 72.38%. Lower is better. Under 55% is strong for most banks, but the right benchmark depends heavily on size: the median bank under $100 million runs at 70.63%, while the median bank over $3 billion runs near 55%.
Is a lower efficiency ratio always better?
Generally yes, but not without limit. A very low ratio can reflect deferred investment in technology, compliance, or staff, which shows up later as operational risk or lost growth. It can also reflect a revenue mix that is temporarily inflated. A ratio falling because revenue is growing is healthy; one falling because costs were cut to the bone is not always.
Why do small banks have worse efficiency ratios?
Fixed costs. Core processing contracts, compliance staff, audit, cybersecurity, and a branch network cost roughly the same whether a bank has $80 million or $800 million in assets, so the expense is spread across a much smaller revenue base. This is the single largest economic force behind community bank consolidation.
How is a bank's efficiency ratio calculated?
Non-interest expense divided by the sum of net interest income and non-interest income. It answers how many cents of overhead the bank spends to produce one dollar of revenue. A 60% efficiency ratio means 60 cents of expense per revenue dollar.
What is the efficiency ratio for the largest US banks?
Banks over $100 billion in assets posted a median efficiency ratio of 55.26% in Q2 2026, with the middle half between 50.39% and 61.65%. Banks in the $10 billion to $100 billion range were almost identical at a 55.42% median, and slightly better at the top quartile with 48.43%.
Where these numbers come from
Every figure on this page is computed from the FFIEC call reports that all 4,296 FDIC-insured banks file each quarter, for the quarter ending June 30, 2026. Nothing here is modeled, estimated, or sampled. You can pull any individual bank behind these distributions on Bank Peer Intel, or, if you are trying to borrow rather than benchmark, see which lenders these numbers point to on Borrower Assist.