Banking industry has been playing a significant role in the process of economic development of Taiwan. There exists an inseparable relationship between its operation quality and the steady growth of national economy. Nevertheless, the drastically increasing numbers of bank in the recent years have caused a vicious competition in this industry. Meanwhile, the global economic recession also leads to the continuous rise of the percentage of nonperforming loans, ever-reducing profit earning as well as the financial chaos and crisis in the banking industry. This study adopts a more reliable efficiency evaluation method------ Data Envelopment Analysis(DEA) to judge the operation performance of banks. Besides, the CCR model and BCC model in DEA (Data Envelopment Analysis) are employed to explore whether the source of low efficiency comes from pure technical efficiency or from scale efficiency. Through slack variable analysis, this study suggests some room of improvement for the input and output of the low-efficiency banks. In view that the percentage of nonperforming loans is one of the essential factors for evaluating the operation performance of banks, this study puts it in the output variable of DEA so as to overcome the paradoxical isotonicity being caused. After verification is made by the study, the results show that it is really workable.