Commercial Banking - Salary progression
Hi everyone,
I was recently offered a position within a bank's commercial banking analyst training program, and I was wondering if anyone may have any say as to how I should expect my earnings to progress in the coming years. The bank is largely regional (Midwestern), with its commercial bank is about the 11th or 12th largest in the country. The starting base salary for a trainee is 60K with a 5K sign-on bonus.
I'm very excited about the job. I really like the company (I interned there in the summer), and I really do value the sort of work/life balance commercial banking would provide compared to investment banking.
That being said, though, I am still interested in have some general idea of what I should expect my earnings to be in the coming years if I do take this position. And do commercial bankers receive bonuses (even though I'm sure they'd be much, much smaller than bonuses given to those on the investment banking side)?
Thanks!
how much does a commercial banker make?
Here is a breakdown on the salary levels at each level within commercial banking.from user @Banker21"
I wanted to update this thread with more specific comp progression details, relevant for middle market (companies with $20MM to $1bn in annual revenue) commercial banking.
5 years into commercial banking, you should be at the Relationship Manager (RM) level. The typical progression at my employer (one of largest banks in US) is as follows:
1-2 years out of undergrad - financial/credit analyst at ~$60k base plus $5-10k bonus.
2-3 years out - jr RM at $70-95k base and 10-40% bonus (by your second year as an RM you have to demonstrate that you can sell and build up a portfolio)
3-4 years out (assuming you have built a portfolio and can sell bank products and services): $95-120k base and 20%-50% bonus.
After that, you should be making ~$180-200k total comp, then as you move into leadership positions, it escalates from there ($250k+).
The key factor in determining your earning potential in commercial banking is your ability to win new clients. If you acquire 3-4 new middle market relationships per year, you should be able to hit your sales goals.
An attractive aspect of commercial banking is the work/life balance. Once you establish a portfolio and a reputation in your market, you can get away with a 30 hour (or less) workweek.
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Bonus of 5-10k and in good times you can probably expect to average increases of salary of 2-5% per year with bigger bumps coming at promotion points.
You should take to some of the other analysts in your program.
it really depends on the firm. i've seen 60 salary + $10/15K bonus for commercial and 70K + 10/15K for corporate.
Could you explain the difference between commercial and corporate banking?
60k starting in the midwest sounds really good
@Bulldogs usually size commercial may include small family businesses and the like where as corporate are larger, the cutoff is blurry
Business Banking - real small businesses - sub $5mm EBITDA
Commercial Banking - middle market centric - mostly smaller private companies typically no more than $100mm EBITDA
Corporate Banking - mostly large public companies typically larger than $100mm EBITDA
Size cutoffs vary by bank
Thanks! I know that the commercial bank I'd be working for deals with companies with revenues from $100-500 in revenues. I'm not sure how that'd translate into EBITDA.
tagged for future reference
Any other info would be nice too, as I'm curious about commercial banking salaries. What would a person who was 5 years in be looking at, assuming major city/bank?
Salary is very stagnent...minimal increases until you hit promotion points. I probably ~100k on the high end and no worse than 85k on the low end. Buddies of mine who were in the commercial banking during 08 ad 09 received no annual increases so it really depends.
Do you have a experience level you could assign to those projected salaries? Should someone expect to be earning 85K or 100K after 5 years? 10 years? I’m sorry--this just isn’t something I know much about or honestly have even thought much about.
I am very surprised your salary is so high. I know some commercial bankers at a very respectable regional bank in one of the largest cities who are not making squat.
I suppose I should feel fortunate, then!
My buddies who started in '08 were making 50-55k straight out of school (JPM, BAML, etc)....60k starting base today at a big bank wouldnt surprise me one bit.
Sorry if I wasnt clear, at 5 years I would bet you are between 85-100k. It will depend on the state of the economy and how fast you get promoted. As I said during the last don cycle salaries across the board were frozen.
I wanted to update this thread with more specific comp progression details, relevant for middle market (companies with $20MM to $1bn in annual revenue) commercial banking.
5 years into commercial banking, you should be at the Relationship Manager (RM) level. The typical progression at my employer (one of largest banks in US) is as follows:
1-2 years out of undergrad - financial/credit analyst at ~$60k base plus $5-10k bonus.
2-3 years out - jr RM at $70-95k base and 10-40% bonus (by your second year as an RM you have to demonstrate that you can sell and build up a portfolio)
3-4 years out (assuming you have built a portfolio and can sell bank products and services): $95-120k base and 20%-50% bonus.
After that, you should be making ~$180-200k total comp, then as you move into leadership positions, it escalates from there ($250k+).
The key factor in determining your earning potential in commercial banking is your ability to win new clients. If you acquire 3-4 new middle market relationships per year, you should be able to hit your sales goals.
An attractive aspect of commercial banking is the work/life balance. Once you establish a portfolio and a reputation in your market, you can get away with a 30 hour (or less) workweek.
This is very helpful! Now I'm assuming this is a BEST case scenario.
I've tested this time frame with a senior VP and she confirmed it's accurate! That said, breaking in will be the important part. My school's finance degree has very limited banking focus. Is there anything I could be doing to make my college resume look better for a bank aside from my executive finance club position? Like work as a teller? Or is that a waste of time?
ah, I see. Thanks, firebi!
Banker21, does your bank have a hybrid role between credit/sales or do analysts go into RM roles as part of the program.
To my knowledges the U.S. BBs split commercial banking into the Relationship management (client management) side and the credit side.
On the RM side you typically either get a portfolio of names that you are the primary contact for to represent the bank in all products (credit, FX, etc). And you grow your book over time if successful. Bonus would depend on your ability to generate revenues for the bank.
On the credit side (the part I am most familiar with) you would start out as an analyst and the transition to an Underwriter role and then to a credit officer. On the credit side you either have a portfolio of names you cover or support certain RMs and underwrite new deals/renew existing exposure. Once you are an underwriter there are several designations or "promotion" points to more senior underwriter roles prior to becoming a credit officer.
I think the pay/progression on the credit side is definitely slower and it takes ~10 years to become an officer where you probably make 120-150k with 30-40% bonus.
Rm hierarchy seems flat where you are RM or Senior RM and it doesnt matter much as pay comes from being able to generate revenues for the bank rather on the credit side there is less upside.
Yes, that is a really good summary of the two basic career paths in commercial banking. Here is an idea of what to expect in pay (and when)...
At my bank, all of the recent undergrads start off in a 2-3 year analyst program. From there, you could take a number of different routes. The best way to move up is to take the RM path (as described in my previous post). You could also pursue a career on the credit side, but there is not significant opportunity to make much more than $100-150k in credit - at least in commercial banking.
If someone started as a jr credit analyst right out of college, they would make $60k base + $5k or so bonus. A senior credit analyst on the commercial banking side (~7 years experience) makes $90k base with a 10-15% bonus. Credit Analyst pay tops off at ~$120k base, but it takes a long time to get there, as you mentioned around 10+ years.
On the credit side, since you are not performing against direct sales goals, you are not going to get bonuses much more than 15% of base salary.
At my bank, there really isn't a hybrid role. You are either sales or credit. They try to separate the two - and I'm not sure whether or not that actually is a regulatory requirement (????)
Beyond the credit anyst roles, there are senior leadership positions on the credit side; however, the best candidates for these positions usually are former RMs, since at that level you have to have demonstrated "customer facing" skills and some personnel management experience. In those positions, you manage a number of analysts and are the senior credit approver in a given region. That job pays around $130-150k base and 30-50% bonus. A high performing RM with 6 years of experience could move into that role, while it would probably take a CA much, much longer.
Ultimately, unless you can perform as an RM and have some sales ability, it is a very long and slow process moving into a credit position that pays particularly well.
I think the above hit it pretty well. Commercial and even corporate banking (albeit to a lesser degree) take a lot of patience. The compensation often increases at a pretty slow rate until you hit the Director level, then the job is worth it. However, this might take 10+ years. Once you get there, it's great, however in the mean time you will be getting passed up by others in different positions (although still making a pretty decent living, all things considered).
Thanks for the follow up Banker21, makes a lot of sense. My bank has the RM path and Credit path split up and they have different training programs both on the corporate side and on the commercial side. From what I have seen, the RMs are all a bit older, don't see too many folks who look like they are several years out of school as RMs. Its definitely nice that they have the prospective RMs do the credit program and develop credit skills, that goes a great deal in helping with client selections and ironing out any issues that can arise.
I know a few people in commercial at my bank and the credit path is definitely a slow grind. 60k base + 5k bonus is market right now for a newly minted analyst and you are pretty much looking at 2-3% pay bumps YoY with no big raises until you hit promotion points. But yeah making a base of 70-80k after 6 years is pitiful.
The corporate side is much faster as it mirrors IBD compensation in the way that base salary increases by +10k every year at most if not all banks. Banks would also start you either at 60/65/70k depending on where you are but then pay goes up by 10k per year and bonus is more 20-25% at the lower paying ones and I have heard up to 40% at the best paying BBs.
alot of info here. thanks for bringing this back.
Commercial Banking BB Salary Ladder (Originally Posted: 09/13/2014)
Been looking on this site for a little and haven't found anything to conclusive. I recently accepted a credit analyst position at BB for when I graduate and I should clear 80k in my first year. I was wondering if anyone knew the salary ladder for a credit role in the CB of a BB bank 3, 5, 10 years out? Thanks for the help.
80k in your first year sounds like corporate banking not commercial. Although the boundaries may be more blurred depending on where you work.
im also interested in progression for both commercial and corporate banking.
Commercial banking salary progression is very slow.
Right now starting salaries average 60k with 5k sign on. Base increases are minimal outside of promotions (think 3% per year).
Analyst: 60k + 5k. Year end bonus ~10%. Can take anywhere from 1-3 years to be promoted to an underwriter role, average of 2 years.
Underwriter: Start somewhere around high 60s - 70k. Looking at about 10k bonus. Once you hit underwriter the next promotions are to more senior underwriter roles such as "senior underwriter". Pay bumps can be 5-10k between promotions depending on your bank and your performance. You can grind in this role for up to 10 years making at ~120-130k all in.
Officer: Very slow career progression up to this point as it can take ~10 years to achieve (maybe 7-8 years if you are good and bank moves up top talent). Newly minted officers make about 150k. Very senior guys can make close to 200k in a good year. After this there is really no where to go, lots of senior folks stay long term in such roles with little turnover. The only promotion is to credit management roles (managing analysts and other officers) but these roles are very limited. You can also lateral into client management.
As the other poster mentioned 80k all in is too high for commercial as a first year. Mind sharing where you got the offer and what base is?
Feel free to pm me if you have questions.
@"B2Banker" thanks for the input. The numbers you gave sound a little low though. I'm in a pretty general group in a major commercial bank (think wells, jpmc, baml, etc.) The offer I received for post graduation is 65k base and 10k sign on.
These numbers are very similar to what friends of mine make at BAML / WF on the credit side actually. To put it in perspective, someone with 5-6 years of work experience will make about 90-95k all in with bonus. JPM pays above market in most things and I expect them to have a higher salary but BAML/WF usually comp close together.
Our training class analysts started at $65k (Might be $67k now) with some getting as high as $70k and signing bonuses of $5k to $10k. You don't really get a performance bonus your first year since you're still rotating through the different groups, but after that, it ranges from 16% to 20%, depending on your rating and the group's performance. You're generally an analyst for 3 years (Including the training year) with 3-5% annual raises.
After that our associates average around $80k base with the same bonus structure and are promoted to AVP (Officer) in 2 to 3 years.
This could probably be considered "Corporate Banking" depending on which group you end up in (Like the Corporate Banking group...or one of the LPG's). Our corporate banking group is diversified and covers revenues from $500MM to $2Bn, but falls under commercial banking, which goes as low as $50MM in revenue.
This is just at a Canadian bank, so I'm shocked to see that pay is so competitive with BB's.
Hey Everyone,
I have a corporate banking interview next month and I would love some advice for it. I am not trying to hijack the post, its just that seeing as how everyone on this post is knowledgeable on CB, it seems like a good place to post. I come from an Acct. background so I have the 3 financial statements down pretty well, but I just want to know what other kinds of technicals I should prepare for?
If anyone wants to PM instead that is fine.
Always consider that with the salary comes a relatively low demand for hours (as compared to IBD). It allows time for side ventures or just enjoying life. We have an adjunct professor who something like a Sr. Credit Analyst with a MS at my school. Seems to do pretty well for himself, not IBD levels but drives a nice BMW.
commercial banking exit ops / future comp (Originally Posted: 06/13/2013)
Hello everyone,
Long time lurker. I have been working at a top BB as a commercial bank analyst. I do a lot of cash flow and profitability analysis. Not really so much modeling though.
But the job has treated me well and has given me a solid credit base of knowledge.
Starting pay is ok and bonus is kinda small. I am looking to move on in my career and do not want to continue in the commerical bank. What type of exit ops could I pursue? I really want to get into IB or possibly a mezz debt fund or something that deals with more modeling / will give me more skills that are attractive to employers.
I also am kinda curious as to what commercial bankers are pulling in later in their careers. Even working in the CB for a year and a half, its really hard to judge what they make even though some of the deals are pretty large. Considering doing the banking path but I cant really tell if its worth it.
Whats everyone out there think?
Interested as well.
From reading all the previous post about commercial banking. There is huge difference in exit opportunities between middle market vs corporate. Which one are you in?
im in the middle market
How old are you? I would recommend you either jump to another bank that works on deals that interest you, move to a different role (BD) if you want to be more of an originator, or shoot for a smaller mezz fund.
You can get into Mezz. You are going to struggle breaking into IB without some type of entry mechanism (i.e. MBA).
As for salary, my friends in the industry tell me that base salary is relatively comparable, but bonuses are absolutely not.
Commercial Banking Salaries (Originally Posted: 05/19/2014)
Hi,
I was wondering if anybody knew the typical starting salaries for Commercial Banking in Canada?
From my understanding they are in the $60k range + 5% bonus for a recent undergrad. Does anybody have the specifics on this?
Good question, I don't know the answer but have a question of my own to add. Do the big 5 Canada banks rival those of the big 4 in America in terms of salary and compensation (at least in Toronto in bigger firms)?
Side question; does commercial bank = big4/5?
PS: I've also heard that they start around 60k in Toronto, but I've seen 1 job ad that started at 120k base salary and a 100% bonus for first year at big firms in T.O..
Commercial Banking Analyst1 (Originally Posted: 11/24/2013)
I was recently offered an analyst position at a top tier US Commercial Bank. I am looking for constructive answers to my questions below. Thanks in advanced!
Interested as well
What region are you in?
Just accepted an offer as well. My bank's very well known in my region but not nationwide. I took less with no sign on and was pretty happy with my offer. I'll be in a low COL market so money wasn't really a huge factor. $60k+$5k is honestly a great package for this industry. But if you're in New York I could see why it wouldn't feel like a lot.
Progression for my bank is something like Credit Analyst --> Associate Relationship Manager --> Relationship Manager
Relationship managers work to bring business into the bank. From what I've heard this is through dinners, sporting events, hunting trips. Not sure if this is just something they use to make the industry seem sexier than it really is though.
Some banks also have loan officers/underwriters as part of their career path. Those positions are built into the other titles at my bank from what I understand.
Like you, I'm also interested in exit opps.
Would you mind sharing your stats coming out of school (GPA, experience)?
both signed, both interested in exit opps, both dont know a single thing about the job
i hope that someone experienced in CB can help you here, all of those threads get deleted due to too much flaming on CB lol
Hi monkeys,
I do not have specific answers to your question since I just started a role in commercial banking. However, here is an interested read for those looking to transfer from CB to IB/PE/VC:
http://www.wallstreetoasis.com/forums/a-guide-for-switching-from-commer…
Enjoy
There are no "exit opps" in commercial banking. I guess you could move to the corporate banking side then laterall to the ibank. But the lifestyle is pretty good in CB so most people don't think about leaving.
exit opps is kind of a odd term. Yea it wouldn't be easy or you wouldn't be recruited but you could always switch to IB if you network and work on technical. I know people who have switched at 30 to IB from back office operations. They learned there stuff, networked and decided they wanted to bust there ass for a job and they got it.
Just sign with WF and stop posting about it. Its a great bank and the analyst program is fun. A lot of people move around the bank and don't find too much difficulty in it. Just enjoy it, learn, and be proactive.
Turned offer down at a top BB commercial bank. The pay is decent for starting positions, lets be real 60 +5 + small bonus isnt bad at all right out of school. There are NO exit opps besides other commercial banks. At my bank, people often got recruited from smaller firms for better pay and higher positions. I turned the offer down due to low comp and very limited career opportunities.
Interesting to note as well that at the BB i was at, the highest the CB's got on the corporate ladder wasnt really that high. All of the execs and top dawgs came from the IB and went down to the CB for less hours but had much higher positions.
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