I am considering a role in loan originations at a large bank. I have a few questions about the different options I have:
1.) Agency Lending- this space seems so saturated and competitive. Can you actually get paid well here? Also, does doing it at a bank limit your edge vs non-bank (non-regulated) lenders? I have read that you are fed permanent deals from the new construction side. Any thoughts on realistic compensation for an MF Agency Loan Originator ? Also, how does the compensation work and does the compensation increase with experience or purely on deal volume?
2.) Affordable/LIHTC Loan Originations at a large bank- I realize these are very complex loans and mostly new construction. These deals may take very long to close and require more hand holding. What is the typical salary/compensation for this product line. I realize banks have to do these loans to meet CRA requirements. Do they treat the loan originators well in this space? I would think these originators would make the most given the complexity but I may be wrong.
3.) Middle Market/Traditional CRE Lending (Relationship Manager)- What do the folks doing larger (>$5MM) CRE deals (not the smaller business banking stuff) make? How is their compensation calculated? I'm assuming these people make more the longer they are at the bank. They may also have additional responsibilities with the borrowers after the loan closes. Looking for a realistic salary/comp structure for this type of role.
Ah, the world of lending! It's a jungle out there, but let's break it down:
1.) Agency Lending: You're right, it's a competitive space, but that doesn't mean there isn't room for a smart monkey like you. Compensation can vary widely depending on the bank, the volume of deals you're handling, and your experience. It's not just about deal volume, but also the complexity and size of the deals. As for the edge, non-bank lenders might have more flexibility, but banks often have the advantage of established relationships and a wider range of services to offer.
2.) Affordable/LIHTC Loan Originations: These loans are indeed complex and can take a while to close, but that's where the opportunity lies. If you're good at navigating these complexities, you can be well compensated. Again, compensation can vary, but the complexity and importance of these loans to the bank's CRA requirements can make this a lucrative area.
3.) Middle Market/Traditional CRE Lending: Compensation here is often tied to the size and volume of deals, as well as your experience and the relationships you bring to the table. The more you bring in, the more you make. And yes, there can be additional responsibilities after the loan closes, which can also impact compensation.
Remember, in all these roles, your compensation will likely be a mix of base salary and bonuses tied to performance. And as always, the better you are at your job, the more you can make. So, keep swinging from those branches, my friend!
Sources: Q&A: Non-Bank Commercial Lending, Venture Debt/Lending Industry and Career Opportunities, Which Bank for Career Bankers?, So you want to work in CRE Debt? Here are the options...
Ah, the world of lending! It's a jungle out there, but let's navigate it together.
1.) Agency Lending: You're right, it's a competitive space, but that doesn't mean there isn't room for a smart monkey like you. Compensation can vary widely depending on the bank, the volume of deals you're handling, and your experience. It's not just about the number of deals, but also the quality and complexity of those deals. As for the edge, non-bank lenders might have more flexibility, but banks often have the advantage of established relationships and trust.
2.) Affordable/LIHTC Loan Originations: These loans are indeed complex and can take a while to close, but that's where the challenge (and the fun!) lies. Compensation in this space can be quite rewarding, given the complexity and the importance of these loans for the bank's CRA requirements. But remember, it's not just about the money - it's also about the satisfaction of helping to create affordable housing.
3.) Middle Market/Traditional CRE Lending: The compensation for these roles can be quite substantial, especially for larger deals. The exact structure can vary, but it often includes a base salary plus a bonus tied to the volume and profitability of the deals you close. And yes, the longer you're at the bank and the more relationships you build, the more opportunities you'll have to increase your earnings.
Remember, in all of these roles, your compensation will also reflect your ability to manage relationships, navigate complex deals, and contribute to the bank's overall goals. So, keep honing those skills and you'll be swinging from the treetops in no time!
Sources: Q&A: Non-Bank Commercial Lending, Venture Debt/Lending Industry and Career Opportunities, Which Bank for Career Bankers?, Confused about my career...
LIHTC Originating Banking: Salary for Analyst role probably $130k + 50% bonus. I imagine a full blown originating banker clears $400k?
I’m not sure what market rate or Freddie is like but yeah LIHTC is complex with a lot of moving parts. Each deal can be entirely different from one another. You often have multiple subordinate debt/grants, regulatory agreements, HAP contracts, etc.
Deals constantly have to push or die because everyone involved has deadlines they need to meet.
Everyone in originations seem to work 70-80 hours a week. You have to be “on” at all times. I get emails from originators at midnight. While they’re on vacation.
Yeah they’re well respected for sure.
You can learn a ton of course but just have to prepared to put in…your life…for it (at the company I’m referring to at least) I don’t think the work ever slows down as you climb the ladder. You’ll become attractive for other roles though.
Why are the hours so long on the originations side?
Worked in debt originations for my first 2 years. Debt is essentially a commodity and you want to be faster than the competitors. Also gives you more of a time buffer to give things to internal credit and terms can change on short notice so you need to be prepared. It can be a work hard and fast to wait type of deal at times.
Client may also give you last minute info at 8pm so you work til 1am or so.
I would caveat that if you're in a CRE "Relationship Manager" type role at a bank doing #3 (standard balance sheet lending) the hours are likely to be way better than a pure debt originator. Basically commercial banking hours, 35-50 a week.
I would say LIHTC/affordable originations at a bank may make a little less than those numbers up there (sadly....in my experience) - but yes, the deals are complex and there are a lot of parties involved on the transactions which makes them super interesting.
Yes, on the originations side you are kind of the face of the bank (so you need to be ready to answer client's questions at all times) and the "deal leader" for the bank's team (keeping internal items on track) so it can be pretty demanding.
Should add LifeCo to your list. Can make the same and hours are the best in the biz.
I do #3 as a lender (RM) at a large bank. A good year is $500k, a bad year is $250k.
Agency is extremely lucrative at a brokerage, less so at a bank. As you note, incredibly competitive.
How many years of experience?
How did you get into the RM role at a large bank (out of curiosity)?
10 YOE. Credit analyst > portfolio manager > junior RM > senior RM
By portfolio manager, do you mean debt AM?
Probably? I’ve only ever worked in banks. PM is underwriting, covenant tracking, guarantor analysis, annual reviews, risk ratings, etc. RM is mainly a sales job but you’re also doing high level deal/sponsor evaluation and negotiating docs. The key to the job is expectations management, both with customers and internally. And you have to bite tour tongue A LOT in a bank, there is endless nonsense.
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