The banking system, as one of the main pillars of the financial system, plays a key role in mobilizing resources, optimally allocating them, and directing capital toward productive activities. Given the environmental changes and increasing competition in financial markets, it is necessary to pay attention to factors such as efficiency, creating additional value, and expanding income diversification to improve bank performance. This article examines the simultaneous relationships between income diversification, efficiency, and Excess value of banks listed on the Tehran Stock Exchange. The statistical population includes banks listed on the Tehran Stock Exchange during the years 2011-2023, and the data were collected based on annual financial statements. The simultaneous equations model and econometric methods were used to test the hypotheses and analyze the relationships. The research findings showed that both efficiency and Excess value have a positive and significant effect on the diversification strategy of banks. Also, the results indicate that the diversification strategy and Excess value can affect the efficiency of banks. Finally, diversification and efficiency strategies also showed a significant relationship with the Excess value of banks. In addition, return on equity was the only control variable that had a positive and significant effect on all three main variables. These results indicate that paying attention to the dynamic cycle between these components can help bank managers and policymakers in formulating financial strategies, supporting economic growth, and improving the performance of banks listed on the Tehran Stock Exchange.