Howdy all, I'm a long-time lurker on this site, finally decided to post and say hi. About Me: - I'm a 10 year commercial banking veteran that got started in 2008-2009 going through a super-regional's FLDP right out of school. - Spent time in various credit functions during and after the Crisis and eventually ended up managing the commercial portfolio ($3B+) for one of the bank's regions that covered an entire state. - Grew mentally and physically sick of the ever increasing bullshit so decided to quit and take a year (2017) off to get lost in the world. - Rode my motorcycle to Key West, FL and then to the Arctic Circle in Alaska. Rode home via the California coast, Grand Canyon, and the Gulf Coast. - After my trip, decided to get back in business so took a new job with a smaller, fast-growing regional bank and I started there in Q4-2017. - That's my story and I'm sticking to it (until the next opportunity presents itself) Home is in Tennessee, went to school at Clemson (go Tigers, class of '07), and have lived all over the Southeast. I'm more than happy to help any users with perspectives on commercial banking. Best, MM
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It was largely process management. My job was to manage the quality of the portfolio while my boss (the regional president) managed the profitability and growth. I managed a team of 12 underwriters who collectively performed: - Loan reviews - New/renewal underwriting - portfolio monitoring (past dues, covenant compliance, risk rating updates, loan policy compliance, et al) - Loan closing due diligence and documentation
When I got started as an underwriter early on, my personal portfolio was $1B+ in credit exposure and most of my time was spent on looking at new deals and client/prospect meetings with the balance of time spent on back-end portfolio monitoring.
As we got larger and under more regulatory scrutiny (or at least thats what we were told; I now believe this was not the case), the process morphed into much more of process management and pushing paper. The core skills shifted from credit analysis and decisioning to managing a series of checklists which took thinking out of the equation.
Still, when they made me the boss-man it was great having the experience so I could explain the 'why' to the people who were doing the work.
Apologies for not sufficient clarity - everything described above was at my previous institution.
When I was in the trenches, my portfolio was $1B. You are right to note the disproportionate allocation of credit exposure. My portfolio consisted of corporate/specialty assets which by design had larger, chunkier exposures. The balance of ~$2B was in your small business and middle market credits which are much more voluminous but smaller on a relationship level necessitating a larger number of people to manage them. When I was promoted, I managed 12 underwriters and was responsible for the $3B total. One of those 12 was effectively my own replacement.
Today, I am back in a production capacity and manage nobody (yay!). My new institution definitely has smaller house limits, but not to a degree that is really noticeable for the market I'm used to playing in (there are only 2-3 large exposures from my old portfolio that I couldn't hold entirely now). The real difference between the institutions is their ease of doing business. Whereas before, we were (or tried to be) too clever about it all and made processes that got in the way of doing business. Now, my firm has a focus on simple owner-operated C&I/CRE clients and in that segment there is a lot of empowerment to make decisions for which I will be held accountable if they are poor. Very refreshing and makes for a more enjoyable working environment, but comes at the expense of doing deals which are larger, more complex and require specialized underwriting that is my specialty.
First, it's worth noting that in the commercial banking side there are two basic divisions: retail and commercial. Retail is retail and commercial is where everything really happens. Within commercial you can either be on the business development side or the credit side. For simplicity I'm ignoring all the support , back office operations, et all staff.
With that said, you can get in to the commercial (sales or credit) any number of ways. I got in on the entry-level via the bank's leadership development program where they "train" you and then release you out into the bank to do your entry-level job. From there it's whatever you make of it and, depending on your skills and competencies, you can switch between the sales and credit sides fairly easily (or multiple times) depending on your goals.
You could just as well get into banking laterally by coming from another outside sales position (ex: pharma rep switching gears and calling all his old doctor clients but selling loans/deposits instead of drugs) or from an accounting firm or from being a CFO of a business.
I would say that the majority of people in banking started out in banking and worked their way up but its not uncommon to see people move into and out of the field at all levels of experience.
Regarding pay, there are going to be significant differences in compensation between community banks, regionals, super-regionals, and the TBTF megabanks. Even within those banks, there are going to be material differences in compensation based on geography. And further, within those banks there's going to be significant differences between compensation for sales and credit people.
Most of my career was at a super-regional bank but in southern non-metro areas so my pay was not like what you could expect in places like DC/NY/ATL, etc. Coming out of the gate of the development program, I was taking home ~$50k. Couple years/promotions later I was in the upper $60s and a couple of years/promotions after that I was north of $100k. YMMV but I'd say that's directional. At all levels I'd say a bonus target of 20% is market. There's other perks/bennies that come with higher levels of seniority (equity grants) but I dont really count those.
For reference, my first bank was $150B+ when I joined it and closer to $250B when I left it. My current institution is north of $20B but below the $50B SIFI threshold (which was just eliminated).
Yes, the level of sophistication is going to be drastically different going from a ~$1B bank to a >$10B bank and the level of sophistication is also going to be an order of magnitude higher if you were to go from a $20B bank to a $200B bank.
As it relates to your career, it's hard to say because even the big banks have very large portfolios of clients in the segmentation you're talking about. They're just called "small business" clients and originated a slightly different way. Credit analysis is still credit analysis, though, so if you're doing it well there and learning something new every day then you could very well just hang out and ride the growth and work your way up. Especially if you have a niche expertise like AD&C, that skill is transferable to banks of all sizes but it is more process-based and limited to local market knowledge.
In my opinion, the lack of significant C&I exposure is an anchor on you. It's very easy for banks to get addicted to real estate so when that happens in their life-cycle they are invariably going to reach for lenders and analysts/underwriters who have that experience and skill set to help them rebalance the portfolio. You'll always be marketable to banks large and small if you have a good pedigree of C&I experience.
Are you looking to get into a bigger bank to increase your exposure/skills or want to be at a bigger bank for the greater pay/perks/bennies? Remember that there's a certain "quality of life" factor at play.
To be sure, the fundamentals of credit risk assessment are universal and its not like big banks have a secret sauce or anything. But the particulars of credit risk to a particular type of borrower, type of industry, or type or product vary substantially. The big banks generally have infrastructure in place that recognizes this while smaller banks dont because they can't afford it.
The difference in sophistication comes from two things: 1. Product Knowledge 2. Process Management
Product Knowledge at a big bank is the sum of all the people and their career experiences. due to the law of large numbers, when you have a lot more clients in a lot more geographies you get much better understanding of what risks are universal and what risks may be more market-specific. You will not find small banks doing asset-based lending, equipment finance (leasing), private equity subscription lines, public finance, healthcare, etc. There's fundamentals to credit risk manaagement like less leverage and higher profits that are "good" but there's specifics to how you structure loans to particular types of borrowers or for particular types of credit that is best managed by experienced people.
Process management is the less enjoyable aspect of sophistication at the larger banks. This is an all-encompassing type of thing where it's things like: - having a group of analysts to do all your spreads using a manual to achieve consistency - having fulfillment be centralized to achieve consistency - Loan systems that require lots of inputs for reporting purposes and consistency - Richly detailed policies and procedures on your various product types which gives everyone in the firm background and terminology and guidance on how to manage various types of products and secure your credits - Underwriting/risk rating templates that are robust and require a great deal of inputs to get outputs - Processes that require various forms of approval/authority/training to reduce operational risk - Systems to track anything and everything you can imagine
That all sounds like Mickey Mouse simple things that every bank has (which they do to an extent) but its just more intense at your bigger banks, to a fault because all those things get in the way of doing business in a way that's easy, simple, fast. It's a major, major tradeoff. As an analyst/underwriter at a big bank; you are just managing the process and your manager is managing the reports that show how well/fast the process is being following. The "banking" part is an afterthought. Even your credit officers' ability to make an impact is weakened due to their being tracked for exceptions to policy and those policies being so narrow and detailed that what is "compliant" is so narrow that it may as well be done by a machine. Indeed, in the small business segments your credit decisioning is almost entirely "score-based".
I have several thoughts, most of which are going to throw cold water on your aspirations.
The biggest drawbacks to a job in sales are the ones you don't/won't know about until you're doing it. However, if you do not want to be on call 24/7 to your clients, then you should ratchet down your expectations so as not to disappoint theirs. The truth is that (in commercial banking) you are almost certainly not going to get calls between 6 pm and 8 am. But you are (or should act like you are) their partner. If they succeed - you succeed. If that means you have to burn the midnight oil sometimes; that's the business. You'll do something heroic for them and think you've earned eternal loyalty and then somebody will come in and just do the same thing you did but undercut you by 0.25% on rate and you'll see how cheaply your hard work was valued. Money and talk is cheap - its your distinctive service and effective advice that will differentiate you and that usually shouldn't come with an "office hours" notice. As a relationship manager, most of your time isn't going to be spent in the office anyway, so your cell phone is the only number most of your clients are going to call anyway. One of my favorite colleagues made a habit of saying, anytime he handed his business card to a client/prospect, "my cell number is on there so please call me any time but understand that if it's after 11 pm it may take me a few minutes to get back with you so I don't wake my wife up." Of course, that always got people laughing but it was also memorable and he meant it. Nobody ever took him up on it, but he was ready to do business with the person that wanted HIM to be there at 11 pm because none of his competitors would be. The money you lend in banking is just as green as everyone else's so they're doing business with YOU, not your money and not your bank. I say this point #1 to drive home that if you're not of the mindset that you work for your clients on their schedule (not the other way around) then the sales part may not be for you. That's not a dig at you; everyone's natural temperament is different. There are aspects to the sales job that are really enjoyable and plenty of opportunities in that middle-ground that may be exciting to you. Again, not a knock on you as much as caution so you dont do something and find you're miserable at it cause you're not good at it which makes you even more miserable. I've personally hired people into jobs with that reservation in my mind (because they said they really really wanted to do it and I liked them) and watched them struggle mightily to do what it takes others very little effort to master. Twelve months later I'm moving them to another group in my team and watching them blossom splendidly and enjoying themselves. "Know thyself"
Work-life balance is important; but in a sales job that's really up to you to manage. It's like the old and wise adage that "if you are depressed about the world; thats a reflection on you, not the world." Some people have to pound the pavement all day every day to get their numbers and they are lucky to make $80k. Some people have good books of business with consistent customers (again, #distinctiveservice) and they can put in 30 hour (or less) work weeks and they clock close to $200k. Some people have to T&E all the time to stay in front of and popular with their clients, others just don't. That's far more on you than it is your analyst/bank/credit officer, etc. I say this point #2 to drive home that being in sales does not necessarily inhibit a very healthy work/life balance.
Regarding compensation, I can only speak for the areas of the US where I have worked/lived so I don't know how much $80-100k is relative to your geography. However, for me, I was "fast-tracked" as a junior associate due to more luck/circumstance than skill, but I was not earning $80k (base) until probably my 6th or 7th year. That was in the lowest "bracket" of cost of living regions in the bank's footprint, though, so use that as a handicap how you will. And getting there required 50 hours a week more often than it didn't. But up to that point I was having fun doing it, so it wasn't really a big deal to me. If I had a family or some other obligations it may have been less enjoyable.
Regarding positions, there's really only two out there for somebody in your position: on the credit side they're called "analysts/underwriters/portfolio managers/credit advisors/???". On the sales side their called "relationship managers/account officers/financial advisors/business bankers/business services officer/???". Within each position there's going to be tiers of experience and compensation and you've just got to earn your stripes. If you have 4 years experience with a small bank, you could probably hit the market and upgrade yourself to a larger institution in the analyst track. To jump into the lending side though, I think most places that are going to be enjoyable places to work expect you to have a portfolio you can bring with you or the experience to build one up in short order. If you dont have that now; the only way to get it is to get it.
Hope I'm not being too harsh and crushing your dreams. Nothing is impossible, you can make it happen. You just have to work hard for it. I know people doing the same thing I do that have been doing it longer than me who make significantly less than I do and I know people that have been doing it longer than me who make significantly more than I do. Same thing with people who are in my same cohort - some make the same as me, some make less, and I'm sure there's some that make more. It's got a lot to do with your experience, your potential contribution to the bank's P&L, and your reputation in the marketplace. Whichever of those you don't have; earn it and the earnings will follow.
Keep the ?'s coming - good stuff.
EDIT: any other comm. bankers please let me know if you have experiences or thoughts different than my own. I'm curious myself if this is just a function of location and institution. If its better (or worse) in other places, interested minds want to know
Prior to making the jump to IB I was an analyst at a large commercial bank. I think the comments above are very accurate. I think that if you are placed within a leadership training program these days, you have the potential to earn well north of $80k base within your first five years (I left after 3 and was earning a base of $90k as part of the "fast-tracked" analyst program). Having now done Comm. Banking and IB, the work-life balance as a commercial banker is not even comparable to IB. I worked mostly 9-5 with the occasional late night, and the work was not mentally taxing. It is wonderful career choice if you want to maintain a nice balance and are good with making ~$200k.
The strongest RM's I came across worked very few hours, but had built fantastic relationships with the borrowers in their portfolio and knew how to leverage their support staff so they didn't end up doing too much work.
As always, everyone's experience is a little different, but this was mine.
Great color here. Pretty much nailed it when it comes to life on the sales side of a Commercial Bank.
I work in California for a larger community Bank (have about 3.5B in Assets). Started here as a credit analyst intern and now am at the SVP Market President level. You really highlighted what people need to know when it comes to commercial banking and sales / business development. For whatever reason, I really excelled at it and life became pretty easy as a RM. Just took orders from clients and grew my book pretty easy. Hardly ever had to make cold calls. Played a lot of golf (still do) and made all-in comp of around $225-$250K. I progressed a lot quicker than others really due to the success of my business development.
Most of our deal sizes are in the $1-$10MM range. Largest clients typically have $250MM in revenue or less. While that isn't sexy in terms of deals or clients, you can find yourself in complex transactions and while modeling out financials / projections is not required in community commercial banking, it certainly helps to set yourself a part from the rest who may not have a great background in accounting or finance but who are just good sales people. Knowing and understanding credit and accounting/finance can really help you excel in sales because of the points listed above (giving effective advice, etc).
Working on the lower end of the middle market hasn't prevented BofA/WF/JPMC from trying to recruit me into their Regional Commercial Banking units (mid market - revenue $20MM-$1B). As long as you know your accounting/finance/credit and have a great track record of business development, the BB banks will take you all day long even if your book was more small business / lower MM.
Always glad to participate in commercial banking threads.