In the spirit of sharing, I figured I would set up one of these to help out those interested in learning more about Commercial Banking. As there is no separate sub forum, it is hard to find up to date/current info. Commercial Baking isn’t super sexy like IB, but it’s a good W/L balance gig that pays well.
A bit about myself:
I am a SVP with a top 20 Bank (both deposits and assets). I’ve been with the bank for 10+ years and manage an underwriting team. I have experience in specialty lending as well as core C&I (i.e. Middle Market). I am also one of our business line approvers with a $30MM+ pen.
I took the traditional route to get where I am, formal credit training program, analyst, Portfolio Manager, Senior PM, Team Leader.
I also frequently sit on our super day committees for the incoming analyst class (in addition to interviewing).
Feel free to ask anything.
Are you credit only or sales/RM also? If credit only- what types of products do you underwrite? If sales - Did you experience any difficulty regarding the uncertainty of success going from credit to sales, specifically surrounding sales goals and expectations? How was the transition process and what were your considerations in changing your mindset?
The structure on the bank is sales, credit, and portfolio management/underwriting which is outside of the other two. I am currently in that world now.
Candidly, i am most likely going to make a transition into a sales role in the near future (12 months). ultimately, sales is where the $$$ is.
I think moving in to a sales role is scary when you are a younger guy/gal because all you hear about are goals. having been around long enough to realize that its not that bad as long as you have 1: a supportive Team Lead 2: a existing portfolio that you are picking up (i cannot stress this enough starting from scratch is brutal) 3: realistic expectations. you are not going to generate anything in your first 6-12 months. work on getting your name out there/perfecting your value proposition.
Thank you very much for doing this. I am interested in the day to day tasks of juniors in your team - could you please give a brief overview?
Depends on the group but you are primarily responsible for underwriting new and existing transactions (in conjunction with a PM), maintaining the credit files (electronic),quarterly file updates, and all the other non transferable systems admin crap.
The amount of underwriting you do is depending on the group. Some are more busy than others (CRE or ABL vs middle market for instance). IT also depends on your specific PM pairing. Some only give out sections of an approval package to work on (background industry, etc). I used to have you tackle the whole thing and edit. I felt you learned more that way. Different groups are more model dependent than others. While its great if you know how to build one from scratch, We have canned ones that don't let you tinker with the formulas.
Not mentioned above but something to think about is the level of customer contact you get is going to be dictated by how busy your group is. the busier the group, the less you get out. Also, some of our groups are national so you will see customers less. Groups like Middle Market see customers a ton. I used to go on calls alone as a PM when i was in that group.
Great, SB'ed!
could you talk about your bank's risk tolerance? of course...comp? progression timeline - how long it did take you to work to each level?
I would say our Bank's risk tolerance is above average given our desire to grow market share. Especially if there is some meaningful cross-sell and or capital markets opportunities.
Comp - varies. be more specific. I would say on average the analysts in the training program get $65K to start with semi annual increases for the 1st few years. you could be at $75-$85 base 2 years out. bonuses vary wildly depending on your business unit. it could be 8%-15% in Middle Market. it could be 50%+ in leveraged lending.
i was an analyst for less than a year. i landed in a group that had a desperate need for a PM and got that role early. the bump was negligible initially (got a 20% one within 18 months). I was in a PM/Sr. PM role for a long time (7+ years). part of that was recession driven, part just because i didn't know what i wanted to do (i back doored into the training program). The progression is more structured now with analyst levels going to associate levels (annual moves). after here the moves are less structured and more need based/skillset driven. ultimately, if you are on a team with a heavy Sr PM load you arent going to become a PM quickly (you should post into another group/leave).
+1 SB thanks for this great insight! Could you talk about the difference in what to expect for MM interviews versus leverage lending interviews and what you do in leverage lending generally (I assume there would be different industry specific considerations). Also, what does a supportive team lead look like and how does he make you more confident about being in a sales type role?
by higher, do you mean you offer better terms or leverage levels than market? Can you PM me which bank you are at?
What is your institution's specific delineation between Credit and PM/Underwriting? are the Credit guys/gals doing basic spreads/annual reviews and serving more of a doc collection function, with the Underwriters actually preparing and structuring the deals for presentation? Always interested to see how other places function, where i am credit is a catch all for both underwriting and PManagement, with an OPs team working on the doc process/booking, and sales being sales.
Credit at our shop is just that. independent approvers. All deals need two signatures one from credit, one from the business line (or in most cases portfolio management). I am our PM/Business line approver,
Portfolio Management is soup to nuts spreads through docs. from the green light customer signed term sheet through closing. and then the ongoing financial monitoring/covenant testing. We have been this way for 5+ years now. prior to that Analysts/Portfolio Managers reported to Sales. Fed puked on that.
Ops does ops crap.
Ops will forever be doing ops crap haha.
I've always thought about the compensation curve in commercial banking as incredibly exponential. All finance is, but where you start in commercial banking (first 5 years) is substantially lower than IB, PE, etc. For example, I imagine some MDs at the Bulge Brackets with huge books make $750k+, but probably took 20 years to get there.
Can you talk about how compensation ramps up as you move up into the VP, SVP, MD levels? Just curious
I hate to keep saying its group specific but it is. i will use a regular middle market guy as an example. All in comp
analyst/Associate years: $65-$100K VP years: $100K - $225K (upper end for specialty groups. MM non sales caps out around $175K and you are an outlier) SVP: $200K-$350K (specialty is higher and assumes you are managing and not an individual contributor).
the above is all non sales. if you move into sales at a VP role its higher. say $125-$150 base with up to 1x bonus (unlikely, but possible). SVP (individual contributor) would be $175K-$225K plus $100-$150K. MDs (who run teams) for sales bring in $350K-$400K+. Not super sure here.
Leverage, capital markets,, structured finance, etc are all completely different beasts.
Again. def lower than IB. But even in a high COL city you aren't poor. especially for 40-50h a week.
Could you please give examples of what you mean by specialty groups (in the context of higher pay).
Thank you for answering all of these questions. I'm mostly interested in CRE. I have a couple follow-up questions. 1) Do you have a good idea of where CRE would fall in those ranges? 2) Below I wrote my assumptions for the years of experience one would commonly see. Can you give me an idea of how reasonable these ranges are? * Analyst: Entry level * Associate: 2-6 years of experience * VP: 5-15 years of experience * SVP: 12+ years of experience
Thanks again!
First off, thanks for doing this!
This may be a dumb question, but could you please differentiate between corporate finance of a Bank vs Commercial Bank? -Anyone can answer this one, not just for OP.
Thanks!
I think it's bank specific. Typically it's used to separate smaller deals (MM regional banking) vs large Corp. It's pretty interchangeable in our shop and I would assume it's the same in most regionalized banks vs BB. Sometimes it's used separate commercial smaller deals from leverage, structured finance, sometimes REIT CRE, and very industry specific groups.
The rule of thumb is corporate banking comp is better.
One more question. As you mentioned it differs from bank to bank, but what are the general transferable skills that one can learn when picking up a Commercial Banking career?
I currently work in Asset Management and would actually like to learn to more about commercial banking and a possible MBA a couple years down the line, possible Top 15.
Any advice?
Haha, great post. I wonder if we know each other.
Your bank have a leverage basket? Most of your lending direct or do you have a sponsor team? Sales is good as long as you have the product to sell and a credit team that will approve your deals. Tough to find both, especially if it is a larger bank that tends to favor one market segment over another.
Good post. Too many people get blinded by the IB light and forget there are other well paying paths. Always a ton of banks out there as well.
Pretty big leverage basket here. It's outsized for our size.
We have a sponsor team but it's small and covers just top end guys (who lord only knows why they deal with us). Almost all out leverage stuff is direct and comes out of MM or Large Corp.
Schools do most kids a disservice but not exposing them to other types of banking. They all think they are going to become Gordon Geko and have literally zero shot.
It's funny, if you intern at my bank and do a good job/are liked you are 95 percent going to get into the training program. Not a bad way to start your senior year.
I'm sorry if you answered this somewhere else, but how does recruiting work for your bank? Do you have schools you actively recruit at, or is it more so just sending in your resume?
When you talked about training program, did you mean a rotating program?
What region of the country are you in? or if you dont want to be specific are you in a High or Low COL city?
East Coast. High COL
Just wanted to say thanks for the post. Group sounds just like mine. Also NE. Almost sounds like we work in the same shop.
Just to chime in, I am an rm at a regional bank middle market group. I am a top producer and work a solid 30 hours a week. We don't have a sponsor group we typically only coincidentally do sponsor deals. We don't do any credit manual labor, we just discuss deals with credit admin and if they want to do the deal the analysts write it up.
How big is your bank? And what's typical deal size in MM? Just trying to get a feel for the scope.
Thanks
To not give away where I work, The asset size of the baby somewhere between 50 billion and 200 billion. We have deals as large as triple digit millions but overall the majority are lower double digits.
Where have you seen analysts exit to?
Say you have a couple years of experience as an analyst at a BB. Where would you go from there if you want to exit?
Also, how does pay differ between MM/CRE/ABL at your bank? Which group had the best analyst pay? Last question...what is the Associate pay in the MM/ABL group at your bank?
I'm at a BB in the South/Southeast (ATL/Charlotte/Houston) making high $60's base working 50-55 hours a week. Not bad
Thanks.
Three years in and upper 60s isn't terrible for a low COL. Seems a little light for BB though. You'd be 75-100 (all in) most likely three years in.
I would say comp is directly correlated to average ticket size with MM being the smallest of the three mentioned (ABL the largest). Keep in mind, at three years out the spread is small.
Exit ops I've seen after three years?
Depends on the group. ABL? I've seen distressed debt shops or pure play ABL offices.
CRE-REITs, CBRE , etc.
Leverage - boutique IBs. I've seen several in the last few years.
Specialty groups- same as above. Fewer though.
MM - BB MM groups. Top 20 grad school (seen a few). Sometimes Large Corp groups st similar sized banks. Worst exits of the the lot, but probably best place to start (sweeping generalization) if you want to stay and become a sales guy LT.
NE but mid- range COL. FYI my all-in as second year analyst was $83k. Just to give you another data point.
Thanks. I'm actually just starting Year 2, all-in last first year was $72K (stub bonus). I lateraled from a specialty finance company after a year and had to come in to my group as a 1st year Analyst.
Another analyst at my bank has a couple years of analyst experience (he's in Year 3) and we make the same base I think (although I think he was ranked in the bottom tier so that does seem low as you said). I'm not sure if he's a good data point.
Can you elaborate on the hours you're seeing at the Analyst level? As I said before, my usual work week is 50-55 hours but when we're working on a big (> $500MM) syndication the hours are 60-65.
If our long term goal is to be a relationship manager, is the best starting point in the credit analysis/underwriting side? How long is the low end for someone getting a relationship manger type role?
That's pretty much your only starting point. its hard to be an RM without a good credit foundation.
getting to RM is faster the more downmarket you go. in MM i have seen analyst to RM in 4 years. that is not average though. i would say 6 years is reasonable if thats the path you want. I would make it clear that is what you want and be working toward it. after 5 years if you decide that you want to be an RM, well you might be SOL and that might not be the path they see for you.
Again. its really group dependent. there has to be a need. You aren't just made an RM after hitting a time threshold. if there isnt a market need for another calling RM, you could be on the portfolio side for 10y.
also understand, its hard to go from PM/credit at one shop to an RM at another. they don't know you and are going to be very leery of handing the keys to 30+ relationships to a stranger.
All of the above being said, other shops have a different set up with associates and VPs working under a MD all on the sales side. you aren't an independent RM, but its sale side experience. better than the way we do thing IMHO
Thanks for this info. Goal is also RM. What I have seen in the less than major markets is that 6 years from analyst to RM is pretty fast. My experience (though limited) is that 4-6 is possible in major/almost major markets (Boston/NY/Chicago). But in other smaller markets its more like 8 years. I'm 3 years in and my 5 year goal is RM. I am smart, hard working, and a high potential person. I think my 5 yr goal is realistic unless I move to another bank for the opportunity (I have prior sales experience so it's a possibility).
Do you think corporate banking or middle market is more interesting in terms of clients, deal type, any other factors?
"Corporate" i assume you mean large corp. it depends on what you want and where you are.
at smaller and Regional Banks, you are usually just a participant on the large corp stuff. you are getting a CIM which you basically parrot back into your approval. no real critical thinking there. but at the same time, they tend to be public Companies with diverse capital structures etc.
In MM, you have higher level connectivity (C-suite vs Assistant Treasurer), are relied on more as a "trusted adviser" and your modeling etc can add more value to the Company. at the same time, structures tend to be more vanilla.
there are pros and cons to both.
Corporate banking is only interesting if your firm takes the lead position in a syndicate. In that case, you're underwriting the whole deal, negotiating covenants, pricing, repayment etc.
If you're not a syndicate lead, it's essentially a "take it or leave it" package you're underwriting based on what the lead has already structured.
I really like MM because I like the connectivity and relationships. I much prefer to tour the facilities, see how they make their product and/or run their business, and talk directly with a CFO. MM has some challenges but if I had to chose that's what I'd like. Corporate structure can be more robust than some smaller MM deals.
For other reasons I won't go back to MM but this is what I miss most. The customer contact is a highpoint of that world.
Thanks for this thread! I'm in the lev lending/sponsors group of a credit shop too (we do the same thing as CIT/Antares/Golub and are pretty big in the space). Just joined as an analyst, how would comp progression look? I'm currently around 100 - 105K all in as a first year analyst.
Not sure. It's going to be different than a traditional bank. Higher for sure.
I'm a SVP Market Manager on the sales side at a large community Bank. Our Bank deals with clients typically up to $250MM revenue and/or credit needs up to $40MM. Our sweet spot is deal sized $2MM-$10MM.
As op mentioned - money is on the sales side. Make no mistake - you only need baseline accounting and finance skills. The guys crushing it pay no mind to the details and our purely out there making sales calls.
My all-in cash comp is roughly $250K in a very low col city (albeit it in California - nothing is really cheap here). Stock and retirement adds another $55K.
What was your career path? Also, does your bank have any former BB guys that have transitioned over?
My President / CEO and most of the executives he brought with him came from BofA's middle market group about 20 years ago. They were tired of the beaucracy and were tired of not being able to properly service the clients. Community and Regional Banking is a much different world than Corparate Banking but make no mistake - there is still plenty of money to be made and exciting deals to get into. I just wouldn't go to a Bank lower than $2B in assets. Those less are getting eaten up by compliance and this prolonged low interest rate cycle. Not to mentioned they are capped on legal lending limits. Pay can also suffer at the really small shops.
Started as a Credit Analyst doing spreads and then moving to low complexity renewals. We had a formal training program that rotated you around different departments but most of my time was spent as a Analyst before progressing to a Jr RM.
how do you view candidates that look for entry-level Analysts roles coming out of school but do not have any credit/underwriting experience and, instead, interned at a no-name boutique M&A advisory firm, for instance?
That is, what key points do they need to get across in an interview for you to give them the green light and not think that they're just there because they struck out in IB recruiting?
If a kid's resume came across your desk and it appeared as described (internship at boutique; no credit experience; finance or accounting or econ undergrad from decent school), would you give them an interview any way, but press them during your conversation to ensure that they're not a flight risk?
Interested in hearing your thoughts...!
Great question.
I typically look at these kids with a heavy dose of skepticism. i press hard during an interview on career pathing goals, knowledge of commercial banking, why not IB, etc. if at any point in the conversation you start talking to me about Beta, etc. i write you off. I usually offer to hook them up with someone in our DCM group if they want to go that route. it tells me where your head really is.
I would suggest that you organically explain how you got the M&A gig, what you did and didn't like and, why you are looking at commercial, etc.
i will typically give you a interview even if i am leery initially. That being said, if you have a 4.0 for the honors program at your school and have 2 internships in IB. i wont waste my time. i know i am your safety school.
Damn ... the truth comes out haha I completely understand though. I'd see it the same way to be honest. Been dinged from a few credit analyst commercial banking gigs, despite having really great conversations with folks. Truth be told, you can't just go and do ANYTHING with IB experience, as is often said on this forum. It's a harsh reality, and we shouldn't tell 18 and 19 year olds on this forum that IB experience allows them to do anything they want. Makes kids think that they're all of a sudden invincible because they spent a summer at a BB. 2 years of IB experience certainly opens up a decent amount of doors, and a summer at a BB, or even a no-name boutique, could get you interviews for roles that you're not necessarily qualified for, but we need to guide the young ones with some more accurate information about the workforce. I'm in my mid 20s nowadays and starting to feel like an old head haha seen a few things though, so I think it's helpful for kids to get all sides of the story.
Appreciate the honesty! And thanks for making this thread!
We love these types. Honeslty we just want someone who is smart, motivated and works well with other. I do push hard to make sure they understand the job and I want to know in depth what their expectations and career goals are. I also want to know what they think they will find enjoyable and interesting about the job.
Yes. An interview is a two way street. Not only am I seeing if you would be a good fit, but you should be making sure you know what you're buying into.
Me selling you a bill of goods and you hating the job helps no one. You end up quitting in 6 months and I'm back doing this all over again.
.
Exit opps from a commercial banking rotation program at a BB?
So this is going to come off harsh but hear me out.
Your only exit op coming out of a rotation program is/should be the LOB that they put you in. You literally know nothing and haven't even given the bank that selected you a year of productivity. Give it a few years see if you even like the job before scheming to leave.
I don't mind talking exit ops with people who have experience but there is way to much focus from young people on where they can get to next without actually spending any time in their current role. It's distasteful.
Feel free to send some MS my way.
Good point. +SB for the truth they need to hear.
What's your outlook on the industry over the next year or two?
These are going to sound canned...
Come early/stay late Volunteer for projects Offer to help others Look for additional stuff to do when there is downtime. Don't sit at your desk with ear buds 24/7(personal pet peeve).
But honestly the best way is to pick it up quickly and not make major mistakes (related to sloppy work)
Employment or market?
Employment is regional. Great for younger guys (very few people are less than 50) and most banks have no bench.
Market should get better with Republicans in control. Hopefully loosen some of the Dodd frank garbage. Rising rates are great but because there is so much capital out there (both banks and PE) that valuations are unreasonable and spread continue to shrink.
MM is increasingly difficult with BB continuing to creep down and community banks taking bigger holds. Squeezes the regional guys who can't compete on price, structure, or product set.
Interesting thread, thanks for doing this!
What are some non-traditional/non-conventional paths to CB? In your career, what kind of background have you seen in candidates/colleagues that "broke" into CB that did not have relevant experience? For example, have you seen folks in support roles/ops (more tenured like, 3-4 years in) that moved over to CB? And in that case, do their years of experience transfer over or do they need to start over from scratch? (i.e. analyst)
Move in from outside commercial? Not really. As an analyst maybe. I've seen a few DCM guys end up in specialty groups as RMs.
BO kids can get into analyst roles. Hard but I see it. And yes. They start over.
Thank you for the AMA.
I had interviewed at M&M and a number of small firms that does both residential and commercial, investments and management.
If I wanted to go into Commercial Sales, would an internship be a best approach or go for the home run at M&M or a small shop?
I am considered a non-traditional given my background and age. However, I know a few brokers who have built a client-based spanning several generations.
M&M? I don't know what you mean.
From the rest of your post it looks like you are focusing on real estate? Different business. I know nothing about brokers etc.
But I will say, we only take Jr's for internships. Period.
What is your pay range?
Lol.
I talked about general comp way above. That's sufficient
What formal credit training program did you complete? Was this something you did as part of an incoming analyst training program, etc. or more something where you went off and you did on your own. Can't seem to find much information on the subject. Thanks in advance.
Yes. Banks formal credit training program. Classroom and rotations.
Self credit training... Never heard of it. Maybe something moodys might offer. I wouldn't give it much credence when interviewing though.
Most banks don't do a goof job of advertising them (most banks shut them down for 7+ years in the late 00s). Honestly, go to linked in, find some recent alumni in commercial banks and look at their profiles. If you find a few that went through programs, ping them for coffee.
Or grab a list of the top 20 banks (true commercial banks not State Street etc). And just pick around their careers page. If they have one, it will pop up.
Just a reminder, we take less than 20 kids annually and have one of the bigger programs. There aren't a lot of spots. That's the main reason I am not keen on taking/offering to kids who really want IB. There are enough people who want this to not be someone's safety net.
I am a SDR at a Fin Tech company and going to pursue my MBA at night..
Do I have a shot at getting into a RM role in Commercial Banking and if so, how is the best way to go about that?
Sorry. What's an SDR? I'll let other speak for their own institutions but most likely anyone coming in from something else can't move right into an RM role. The exception is into a specialty that you currently work in (I. E. PE VP moves over to cover sponsors for a commercial bank). Rare.
Moving from anything else (MBA or NO) straight into commercial in a sales role doesn't really happen. I think some of the bigger banks have programs that take in grad students. Look into that.
Sales Development Representative.
I think the senior sales guys here make 300-1mm so it varies wildly, but I wanted to see if I still had a shot at Banking. So what would be the entrance point for someone with 4 years of sales experience and a MBA, but no lending experience above SMB loans.
How much does the school you attended matter in the long run for experienced/mid-career hires?
I've noticed that people generally don't care where you went if you have good experience. I've seen people from non-targets with experience at super regional banks move into Commercial Banking at top BB's (WF/BAML/JPM) but I know some people can be super pretentious about this.
Experience and your network is far more important than your school for Commercial Banking from my experience and talking to MDs in that space at several BBs. The school will help you get your foot in the door as an analyst for the training program, but going to a non target has never kept high performing analysts from moving up. I went to a non target and worked at a community bank and got several interviews from all three BBs you mentioned and got offers and worked at two of those.
Completely agree. No one internally ever asks where you went to school or if you went to graduate school all about experience. The caveat is sometimes having gone to an ivy Etc is a talking point with customers. Gives you a little more credence
Candidly I rather get a kid with a good GPA from a meh state school then some kid from a semi-target. The state school kid is going to appreciate it more, maybe work harder, and be less likely to try and lateral out right away.
Obviously this is a massive generalization but it has been my experience in hiring analyst.
One thing to note, our training program is all undergrad kids. When I went through it back in the stone ages it was MBA preferred.
CB SVP What an original username! Wells Fargo right?
Username was selected for anonymity.
Not not WF. That's BB
Should I be easily able to break back in? I was in CB for 1.5 years and left for an opportunity which didn't work out and am currently looking for a better path.
Depends. If your willing to go back to being a day 1 analyst (I assume you were an analyst) and have a good story for why you left initially, sure. Hopefully it's not, I just wanted to try something else. You'll have to assuage my fears that you're a flight risk.
I appreciate your honesty, thank you.
Thank you so much for doing this thread.
My question for you is I am currently interning at a regional bank working in C&I primarily working with the underwriters spreading, and doing covenant testing. The problem I see is that it is not a formal credit analyst training program. My ultimate goal is too move into corporate banking where I can work as the lead in a syndication group. My current bank participates but we are often left with take it or leave it deals.
I find the work extremely interesting and as I head into my senior year for my undergrad I am looking for something more permanent as I do not see myself making a career at the current bank I am interning at. My other question for you is getting in as an analyst for capital markets and syndications what steps should I begin taking to have the opportunities to pursue my goals for after graduation.
You want to go to DCM? You should be networking like mad or get in front of these groups prior to their hiring cycle. Do you expect a return offer from your current internship? If not (due to them not taking anyone, not performance) see if you can get some of the guys there to connect you with DCM folks at bigger banks. Everyone knows each other.
You're going to be targeting BB banks and the larger regionals (PNC, sun trust, CFG, etc.). They get 100s of applicants who have been IB interns and come from semi targets. You're biggest challenge is even getting in the door.
You've got a tough road ahead, Good Luck.
YMMV, but I know that our DCM group doesn't do fit interviews. They pound modeling (three statement, DC, etc.) Make sure you know this stuff backward and forward.
To piggy back off what cb svp said keys are:
if you can get a return offer that helps if not it's not a deal breaker but be prepared to explain
network like crazy this is imperative (MAY have to do this on the down low in order to get return offer. Or if you have a supportive office or they've already said they're not making return offers ask for intros and references. Also make sure you're networking includes the folks who were lead left on your participations.
when lateralling dcm shops care about the following: knowing the syndication issuance process (cims, lender presentations, tlb vs tla vs revolvers, lender call, underwrite vs best efforts, commitment letters, fee letters, etc.) Unfortunately there is no one stop shop of information for this but it's definitely a good question for networking (shows interest etc.), knowing modeling, credit knowledge, being able to handle long hours and short deadlines.
as far as modeling, you may get a modeling test esp if it's a smaller shop. Good resource is the book Investment banking by Rosenbaum and pearl. Focus on the LBO section as it walks through various types of debt and shows you step by step how to build a 3 statement lbo model.
definitely include regional banks in your networking process. Regions bank and citizens bank I know have been building out their dcm teams also talk to PNC, us bank, SunTrust, etc.
Good luck
I just want to say thank you for both of your replies. Finding information like this is hard to come by especially when the forums are mostly tailored to more traditional roles of IB PE and HFs.
My current boss is grooming me too come in as a credit analyst with a quick transition into underwriter after I graduate in the spring but, I still want to try out actual syndication lead.
Is the recruiting cycle different than IB recruiting cycles where they already hired there summer 2018 analyst or is there still time. As far as modeling goes I will definitely need to read that book and start net working too obtain more information.
My last comment is in the fall I will be taking a modeling class led by the MD of a boutique investment bank one of the only investment banks in my city, is this some relevant information to bring up in an interview about my experience with modeling? I do not want to come off as childish and trying to brag just merely state my experience so far.
What is your day in the life is like? Thank you.
I'm in a High volume group. I spend roughly 40% of my time reading approvals, 30%walking through transactions with RMs and PMs for structure etc. And the rest doing crap work (data integrity stuff, troubled assert management, dealing with whining analysts etc.)
CB SVP my sincere thanks for doing this, prior to this AMA we did not have this type of content from someone at a senior level.
Couple of questions / observations:
Whats kept you at your bank all of these years as opposed to lateraling around.
Am I correct in assuming you are in your low 30s (assume this as you worked your way up out of undergrad). If so, congrats on the rapid career progression, feels that most folks are at the PM / Senior PM level 10 years in if they stay on the credit path as opposed to being a TL.
Who writes the credit memo in your group? This seems to be the biggest difference between CIB and Cb. In CIB you can get out of memo writing as early as the Associate level and review Analyst work & direct their traffic. PM is getting the memo only after Analyst wrote it and Assocoate scrubbed it and all the numbers are correct. Some CB shops have a Underwriter position where folks can spend years writing the memo until they get promoted out of PM. Other shops are more flat and have only Analysts & PM and PMs are still doing memos and have no way to promote out of it. I'm not a big fan of the latter structure as there is no career development in writing memos beyond doing it for a few years. There is development in seeing, structuring, and working on different transactions over the years, just not in the memo component, IMO.
How does your group interface with RM / coverage. Are you viewed as the credit products partner and own the process (similar to how a DCM/ECM banker owns the process and RM/coverage know it's their show and stay out of the way) or do the RMs get more involved in credit and think they run the process? I've been at shops where coverage just brought in business and credit handled whole process soup to nuts without coverage involvement and also at a shop where rMs think they own the credit process and view PM as an underwriting resources (inspite of PM being much more knowledgeable than the RMs).
Technicals: Is your your group big on doing your own quantitative analysis and having your own view around EBITDA and financial ratios, FCF, etc or are people relying on covenants to analyze the company. I've seen some groups regurgitating company provided ratios, EBITDA instead of doing all work. Covenants will be doctTed by market convention (I.e. Dropping a covenant or watering it down) and will be calculated differently for each client, so this was something I had a big issue with. For internal memos (for own analysis, not covenants) are you guys using top down or bottom up EBITDA
I noticed that outside of a structured role, career progression on the commercial side as compared to the corporate side (meaning corporate credit / coverage that rolls up to CIB) is much more haphazard. Typically folks can spend different amounts of time as a junior banker prior to getting promoted to more senior roles where they are running the transaction process and managing analyst workload. Comp tends to vary a lot as well, with mostly inflation adjusted raises and a random larger increase of 10-20% every few years or during a promotion. In contrast CIB credit/coverage has a predetermined career progression An1-3, As1-2, VP with a predetermined base salary and bonus range for each level.
-Seems that the best way to advance quickly on the commercial side is to move around and get promoted and a sizable comp step up each time. For instance, I know plenty of folks who have 8-10 years of industry experience and make low 100s all in due to being at the same employer for a while, spending too much time with annual reviews and analyst tasks, and lots of 2% pay raises YoY.
-I hear you on junior bankers quitting at the Analyst level and not showing commitment. Part of the issue is people settle for jobs due to not being able to get what they want out of undergrad and then jumping if their target industry offers a role. There are people who want IB and couldn't get it so take CB and then jump when they can. I saw a few quit the formal credit training program 6 months in and do something else. Personally, I never wanted IB and targeted CB as I considered it the best comp/WL balance job that lets you do interesting work outside of the elite finance jobs (IB, PE, HF, ER, MBB consulting)
-Having spent time on the both commercial and corporate side, I can reflect that analysts are given more responsibility, challenged more, and paid more on the corporate side that rolls into CIB. For example, on the commercial side, analysts typically do risk ratings, quarterly updates, annual reviews, administrative internal tasks for the most part and work 9-5. Some banks have an Underwriter/Senior Underwriter position that focuses on new deals. Others have Analyst - PM. In CIB analysts have to do all of the above but they also own the credit memo and the underwriting process whether it is a new deal, renewal, or AR. They will take the first shot at putting the entire memo together soup to nuts including running the model. Once that's done, the Associate will review their work, make sure all of the numbers are correct, and then send to the PM for approval. As a consequence, analysts work longer hours on the CIB side as there is more expected of them but they also are paid more. If analysts do not have a good grasp of modeling, memo writing, attention to detail, they won't be promoted to associate or held back (this happened to someone in my group). As a result, CB analysts seem to be more "protected" and actually have better hours than the Underwriters or PMs who are actually writing memos or running transactions.
-From what I've seen there is more analytical rigor at the CIB vs CB credit level. There is a big emphasis on historical FCF analysts and bridging from Adjusted EBITDA to FCF and making sure the #s are right. Modeling is more in depth and closer to what is done on the IB side. As an example, having grown up on the Analyst&Associate ranks and joining a new group with a CB structure, folks in my group were not as familiar with EBITDA-FCF and modeling, whereas I learned to even build a modeling template rather just running numbers through one.
• Mid 30s. grad school 1st. stayed here partially because of the recession when I was younger, then I bought a house, got married, and was given opportunities (see: more money) for growth. Not that I didn’t flirt with a few other places.
• Pretty flat org. Analysts and PMs write memos. PMs typically only write new complex stuff with analyst doing the more mundane. But that’s a team by team thing. And you’re correct. Its not ideal and leads to job stagnation, and disillusion. • The RM/PM interaction is group, team, and individual relationship dependent. As a PM I have worked with RMs who do all the initial modeling so they know it cold and I have worked with RMs who don’t even call into to loan approval committee. Is an individual case by case process. Ideally, it should be pretty hands off on the RM side unless they are working with a Jr guy. As you progress, you 100% want the second guy. The 1st guy tends to want to drive the process (see the memo/make comments etc.) • Internal memos, top down EBITDA. But covenants are almost always written bottom up. Its stupid but I think defining operating CF is troublesome in loan docs. We do our own CF analysis. No reusing their ratios. But they should foot (or be close). • We are trying to get better at that (at least at the jr level) with predetermined progression. Once you hit Sr associate its not guaranteed to VP. The term haphazard is a pretty good one and described what it was like when I was coming up. • Moving around is always the best way to make more money whether you are a banker or engineer. Just a word of caution, it’s a small world and if you are in a secondary city, an even smaller one. No one begrudges you moving for a promotion but to lateral for $10k isn’t a great idea. • I’m ok if people don’t want to do CB and leave the industry after 18 months. No reason to do something you don’t want to. I blame the interviewers for someone leaving a rotation program in progress. You did a shitty job screening. But focusing on exit ops before you even finish a program is crappy. You don’t even know if you don’t like the job yet. Give it a chance. • The true analyst, associate, vp structure is superior. Its also more costly. Id love to do it here (some groups are better about it than others) but we have too many VP level C+ PMs that need to be culled.
• To me Commercial and corporate are interchangeable unless you are in DCM/Lev/or some very specific specially. Those groups are almost always looking at EBITDA multiples hence the focus on true EBITDA and CF. lower end MM is focused
CB Analyst here.
I think Analyst level work (annual reviews / credit memos and general portfolio management task like risk grading, ancillary product grading, etc.) can be mastered in two years. I'm a couple of months into Year 2 and I'm definitely still learning. My bank does not promote Analysts to Associates until after 3 years (no exceptions) and a lot of people (80%) move elsewhere after two years so turnover is high.
I make somewhere in the neighborhood of $68-$72K base. I've flirted with a few opportunities and ultimately declined because I felt like the brand name and deal flow at my bank would pay off more in the long run, but it seems like unless I move to another bank, it'll be a couple of years before I even hit $80K base.
Opportunities that recruiters have reached out to me about in the past: (I either interviewed and turned these down or declined to interview due to fit)
1) Associate / AVP role in a Commercial Card underwriting group at a regional bank - $80K base 2) Corporate Loan Ops at BB - $75K base (def did not interview) 3) Micro Lending startup Credit Risk role - $70K base 4) Super regional bank(s) Analyst offers ($73-76K base)
For what it's worth, I started at a blue chip BB in a top group and what I learned was absolutely crucial to set me up now. Since then, everywhere I've gone, there has always been a big difference in what I am able to do vs peers that did not have a similar upbringing. We did not pay the best, though comp was decent and we had annual base increases of 10k but started at a base that was below market hence 10k base difference across the Analyst levels and 20k at the Associate level. However, the exposure I got made up for it in spades.
My advice is stick it out until you make Associate or even a bit longer if you can. After that you can always move to a different shop and get a big pay bump. But it's better to do it when you are out of the production role (writing memos, etc) and more of a VP position where you can direct traffic. At least from my experience the quality of work and peers were of higher caliber at my Bb then where I've gone to after. At some point you've learned enough and it's time to get paid, but in the beginning it's crucial and can set you up to leapfrog others. If I could go it all over again, I'd have stayed at the Bb longer but I relocated for personal reasons rather than comp / career dev.
Thanks for your insight, this is really in line with how I feel about the progression as well, having gone through the Analyst ranks.
I think the most important Analyst skills to pick up are financial statement analysis, modeling, and attention to detail. This is a very marketable skill set and opens a lot of doors down the road. A competent analyst will be very good at these things going into their associate year and in great position to coach other analysts (especially 1-2nd years) through this having become very proficient.
A super star analyst in a high volume shop with lots of lead mandates will be ready for Associate after 2 years IMO.
I feel fortunate for having started at a top industry vertical at a BAML/JPM/Wells where I picked up a lot of skills I would not have been able to get at my previous employers and also picked them up much more quickly.
I'm now sitting on the commercial side and what still amazes me are the CIB analysts I previously worked with have much better technical skills 2-3 years out than a lot of the folks that have been here for 5-10 years. Lots of B-C level PMs as CB SVP pointed out that don't really get the technical side of lending that well. To structure and execute these deals, especially sponsor deals, as a left lead, you really need to have a strong grasp of EBITDA & adjustments, modeling, docs, DCF&EV. I see lots of people fumbling through or looking to the MRA spreads for analysis (I don't use the spreads for anything, they just feed into risk rating). It's still a big culture shock to me even though I've been here for a while.
Thanks for the doing this AMA, it is a great addition to the site. I have been a commercial banking analyst at a $1B bank for 3 years now. I have looked around for various jobs in middle market/corporate banking for a little while now. I haven't applied for many positions as I am unsure whether or not my experience will be sufficient enough to land a job as an analyst in MM or Corporate. I am currently 28 y/o, and am definitely not wanting to start over as a new analyst.
My main goal is to stay in credit, and I would be happy with $80k plus all in and a 40-50 hr. work week in a low/mid COL city.
What do you think would be the best fit for me in terms of bank size/role, given my skill set, and W/L balance goal?
Thanks again,
In all honesty, $1BN is a tiny bank. It will be virtually impossible to get to Large Corp or anything like that from there. There is a major big bank small bank bias. It will likely take you two steps to get there. you should be able to get an associate type role in regional bank (MM). I would target that, emphasizing the larger deals you have worked on and the customer interaction you have had. Both during the interview and on your resume.
My concern hiring you would be that you have spent the last three years doing $500K LOC and $2MM CREMs to Joe's pizza shop and Suzie's dry cleaner. not really applicable to anything else. you want to dispell this ASAP.
It can be done. I have a former coworker that has maneuvered himself from a small community bank to a VP DCM role. took some bouncing around and several years, but can be done.
A couple of questions/follow up points: - if you want to stay in that 40-50 hr W/L bucket, DCM and even Large Corp/Lev etc aren't going to be places you want to be. Middle Market would be a good fit, just LT dull. - what have you been doing for the last three years? what are typical deals for you? - do you have a network? that's how 90% of people i see move (and have interviewed) happen. - have you guys participated in larger deals with local banks? do you have contacts there? buy them coffee to see what their day is like? - don't sell yourself short. you are young. staying in credit/portfolio is fine, but see/experience sales. the culture is different at each shop. - DO NOT tell people you want to stay in credit at this stage of your career. you will not get seen as "high potential" etc and get second class tracked.
Hope this helps, feel free to PM me if you have specific questions.
I really appreciate the response.
I've been a credit analyst for the last three years. Typical deals have been hotel/apartment financing, land development notes, floor plan LOC's for auto shops, term notes for Agribusiness, etc. Loan size averages $3-5MM with the total relationship being between $2MM-$15MM.
Fairly small network, but I know a couple guys who work in larger cities that I could reach out to.
We don't participate on many deals, have got burned on a few so we mostly stay away from them.
Thanks for the advice on not mentioning I want to stay in credit. I think I would actually like the sales side, but haven't had much experience there.
How much are you coerced into donating to political campaigns annually?
They send out an annual email about donating to the PAC but other than that not at all.
Say I want to move banks (similar group though) and switch cities at or around the 2.5 to 3 year mark of being an Analyst at a BB. I'm not in MM, and about 75% of the deals we do are in the mid corporate $500MM to $2Bn revenue space if that makes sense. We deal with the full spectrum of clients from MM to large corporate. We lead most of the deals we're in and I've had a ton of modeling experience.
How hard would it be to switch cities? To go from ATL/Charlotte/Houston to the Midwest or Northeast, or even West Coast? I would not mind going to a super-regional or non-US Bank in Chicago, NYC, Philly, Seattle, etc. just to move to a different city to have a change of scenery since I've been in my current city for my whole life.
Also, do you have any tips in general for someone looking to change cities? Resume wise, search wise, or in general?
Certain levels of management at my old company had tiers of expected donations to the PAC. If you didn't donate it was undoubtedly held against them, lol.
If someone is trying to lateral from a rating agency with a few years of experience (let's say 3 years), what kind of questions would you expect to give in an interview? What kind of knowledge would you expect a lateral hire to know?
Additionally, would the expectations or interview questions be different if a lateral hire is trying to get into a leveraged lending group?
tough question because i have no idea what an analyst at a rating agency does.
i would assume it focuses on fit with some basic P&L and CF questions that focus more on understanding than true technical skill. as an analyst you are still going to be expected to learn everything in house.
and unless you are actually underwriting, you are going to have a hard time trying to get an associate role.
I'm at a $3B Community Bank and have received offers from Wells Fargo Regional Commercial Banking Office for a RM role. I've also had JP Morgan Mid Market Group reach out.
You can def move to a Mid Market Group at a BB with Community Banking experience so long as you have been successful at generating revenue and have a decent network. The reality is, selling Joes Pizza on a CRE loan or structuring a line of credit for Ag production is not all that different from working with middle market companies. Most of the analysis is done by back shop anyway - the primary issue is if you are able to sell and build a network with a more sophisticated crowd. But it's not rocket science.
My guess is if you do well in the Mid Market Group - you can get to Corp Banking. From my understanding - Corp Banking is less credit focused as a RM - being a RM in the Mid Market requires a little more credit chops.
In any case - it is def possible if not common to lateral from Community Banking to A Mid Market Group at a BB. The question is - why the hell would you want to?
As an RM yes it's Def doable. You have a tangible proven track record. Definitely harder as an analyst or PM, but not impossible.
You're in a smaller city to right? I think that plays into it. I'm in a big market, and I've literally only seen one person move from a community bank to a BB or super regional in 10+ years. Maybe I just work with a bunch of snobby losers.
In a big market as well (at a Top BB) and I haven't seen ANY community bank people.
I do want to point out. Big bank isn't the end all be all. I have a few friends at sub 10BN banks. Loving life and making market comp with low pressure. And a pension.
Yeah exactly - that's how I feel.
I live in a City with 300,000 people. The County has about 750,000. Not a big city but certainly not small by any means.
I've seen plenty of Community Bankers go to BB Mid Market - both as a PM (Wells) and a RM (BofA, WF, Chase, BBVA, etc).
But again - why would you want to? If you can find a Bank with a couple B in assets - branch network of 20 or 30 - life is good. You can go after some sizable relationships, make GREAT coin, and work 35-40 hours a week.
Doesn't get better in my mind.
Would you have any advice for someone currently working in a finance development program at a bank who is interested in making the switch over to commercial banking? Is there a certain skillset/training that I need to seek out to be able to make the transition from core finance to commercial banking?
sorry. must have missed this.
see my comment way above. you aren't even in a job yet and looking to switch. give the role that you signed up for a chance before you bail on someone who is investing in you. a few years in if you want to switch, go nuts. who knows you might like what you end up doing.
After spending a few days doing superday interviews I just want to reiterate. if you don't send a thank you (email etc), you get disqualified on several peoples' list. it doesn't have to be War and Peace, just shows that you have common courtesy.
How critical is the case study for a commercial banking summer analyst interview? Already submitted my slide deck but realized I may have misinterpreted the question slightly/didn't answer it directly...
Depends on the individual interviewer. That being said, it's more important to show logical thought process thoroughness vs coming up with a specific set of numbers. Not all interviewees are finance kids so there is a spectrum.
And your presentation skills are bring judged too. Trying to see if you can become an RM at some point.
how?
What is the difference between Commercial Banking and Corporate Banking that also has the same focus on industry groups and their financing needs?
Really depends on the bank and how they delineate. Bigger Banks have a better Define separation with corporate focusing on larger customers. Typically 2 billion + in Revenue. Or at least that's how I see it in a generalist slashed Middle Market space. Industry-specific focuses your mileage may vary my thought is I just put in commercial or corporate depending on the bank. But I could be wrong and I really think it's Bank dependent
Thanks for the response. So does the main difference come from client size? Is commercial 2bil
Thanks for setting this up! It's very helpful as there are not a ton of reliable commercial banking threads out there.
I'm a 1st year analyst at a small CB (MBA program soon. What are your thoughts on the value/return for someone who is looking to go the RM route. Is the ROI worth it? I've heard mixed opinions saying if I can sell, then the MBA simply isn't necessary. If not, where is the salary/career progression capped, and if so, how much of difference does it make along the way in the lending/RM field? I would love to hear what differences an MBA can make at a larger bank vs. a smaller bank like mine, if possible. Thanks in advance!
HI, couple of imbedded questions. I will try to hit them all. 1. Full disclosure. I have an MBA. I was switching from a liberal arts background to banking and this helped me make the transition. If I could go back in time, I would have just gone to school for finance initially. Now that you are already in commercial banking, I don’t think the return is there unless you are going to a top school in which case you are really trying to network your way out of CB into IB or something related. I assume you are going to a decent but nothing special school? I don’t think it improves your comp materially. Especially if you are going to go down the sales route. 2. Salary/Career progression capped? I don’t think the 2/3rd tier MBA materially moves the comp or career progression cap. Salary cap is dependent on what role you end up in. and if you stay at a small bank (YMMV as I think there is someone on here in a small bank as an RM in a low COL who does quite well). Typically bigger banks pay better. This is skewed because they tend to have more specialties which pay better and larger customers. At a small bank you might get pigeon holed as a Regional/Community banking guy. You can make a nice life doing this, but you will never break the bank. 3. Ultimately, you just have way more options at a larger bank. This early in your career, I would tell you to go to a big bank and work in in a generalist C&I group (Middle Market, Large Corporate, Leverage Finance, etc). Specialize later.
MBA is waste of time in commercial banking
Do you have an idea of the W/L balance of someone in a commercial underwriting group at a top 5 US Bank?
in a middle market group? i would say MM for an analyst or PM were 8:30-5:30 with maybe 4-5 weekend days a year and maybe
Great - it is actually a commercial real estate group. I would imagine that would be similar?
complete assumption here, but i would think its more transaction oriented. probably a few longer days. i saw our RE analysts working longer days.
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