The objectives of this research were to analyze quality of earnings and operating efficiencyof listed companies in the banking sector, to study the relationship between quality ofearnings and operating efficiency, and to compare the quality of earnings and operatingefficiency among small, medium, and large banks. The data was collected fromthe annual financial statements of ten listed companies in the bank sector during the years2001-2005. This study classified the banks into 3 groups based on total assets: large,medium and small banks. Statistical analysis methods used in this study aredescriptive analysis and trend analysis. Three hypotheses were tested by carryingout Pearson correlation coefficients (Scheffe) and One-Way ANOVA. The resultsindicated that from 2001 to 2005, 50 percent of the banks had a quality of earnings ratio,a ratio of cash flow from operations per average total assets, and a ratio of cash flow torevenue higher than the sectorûs average. In addition, quality of earnings was found tobe significantly related to operating efficiency. Quality of earnings is not different relative to the size of the bank and a ratio of cash flow from operations per average total assetswas not different, either. However, the ratio of cash flow to revenue is different dependingon the size of the bank.