AMA - Commercial Banking Credit Risk SVP in Southeast USA

MidasMulligan's picture
MidasMulligan - Certified Professional
Rank: Gorilla | banana points 517

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

Comments (58)

Apr 10, 2018

What does managing a 3 billion portfolio involve?

Apr 10, 2018

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.

    • 2
Apr 10, 2018

You underwrote $1B+ in loans. Now you manage 12 underwriters who collectively manage $3B+, implying $250MM+ per underwriter. How much of this is because your new bank has smaller hold sizes per borrower vs additional paperwork taking time away from actual underwriting?

Apr 10, 2018

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.

    • 3
Apr 12, 2018

On the commercial side, how do you get in? Do people generally lateral from other fields in finance or is it mostly straight from undergrad? Because everyone needs to know, what would you expect comp to look like 1 yr in, 5 and 10+? Is there significant pay variation across banks (BB vs regional)?

Thanks in advance!

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Apr 12, 2018

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.

    • 4
Jan 16, 2019

I want to weigh in here as I'm transitioning to commercial banking (from M&A investment banking) and have done TONS of research. It's really hard to transition to business banking when you haven't made your career in business banking. Hiring people want to see that you know the business, and have solid credit analysis skills, which is almost exclusively taught by banks and almost exclusively to fresh college grads (i.e., not to people a few years or more out of college).

There's a chance someone would take a risk by hiring an exceptional sales person who doesn't have business banking or credit experience, but it's really unlikely. Remember, traditional banks don't like to take risks. This is coming from tons of reading on WSO, conversations with bankers, and conversations with recruiters. Best bet is to start right out of undergrad (I wish I did that); second best is to get MBA and try to reset your career in business banking; third option is super unlikely to be successful, but just network the hell out of it. Problem with third option is there are likely tons of business bankers in your area who will be a shoe-in for the job that you want. :|

I look forward to the disagree-ers :)

Apr 12, 2018

Whats the best way for a graduate with no experience to break in? Thanks in advance

Apr 12, 2018

Most of your banks have a training program. If they dont and you still want to get in the door, just start at entry level analyst job and work your way up. It can be done and happens often.

Apr 12, 2018

I currently work as an analyst in commercial at a ~$1.5B bank. For a bank of your size, how often do you see analysts lateral 'up' to a Bank of your size?

I'm assuming it's easier for RMs to do this, as the book of business they're able to bring speaks for themselves. But as an analyst the level of sophistication of the Borrowers and products I'm exposed to at the $1.5B level seems to be drastically different in comparison to banks in the $10B+ range. We're well respected in the builder and A&D market in our region, but our C&I exposure is limited. Is that limiting for my career growth?

Apr 12, 2018

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.

    • 3
Apr 12, 2018
MidasMulligan:

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.

Can you shed some more light on how the sophistication is greater? I've heard some people say "commercial banking is commercial banking" and that the analysis isn't much different between the different sizes of bank. I know this general comment really marginalizes the underwriting process analysts at commercial banks do. But this point of view is opposite to your comment that the level of sophistication is quite different.

I am in the same position as laxman. Work at a $1.5B bank as an analyst for 4 years, and am looking to move up to a larger bank admittedly for the greater pay. I would be fine with working 50ish hours a week, but would not be a happy individual if I was consistently putting in 60-80.

Thanks for the thread, I enjoy being able to read about commercial banking on this forum, and appreciate thoughts and comments on the industry in general.

Apr 12, 2018

This comment hits home hard. Keep telling myself I want to do IB but CB is one hell of a lifestyle with 40 hour weeks and the potential to make $100-150k+ in very low COL cities.

I feel like I'd hate myself the second I started working 60-70+ almost every week

    • 1
Apr 12, 2018

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".

    • 6
Apr 12, 2018

Mind if I shoot you a PM?

Apr 12, 2018

By all means

Apr 18, 2018

The aim to move to a bigger bank would be for both of the reasons mentioned. I want to gain more exposure/skills and believe I have the ability to grow into a roll with greater pay/benefits. I'll also say that the senior management at the $1.5B bank are primarily outside hires that worked in commercial at BB, so I think the exposure at a larger bank would open more doors for me. That being said, I'm looking a job a lease financing company in town that does lending to companies in a lot of growth industries, so I think a role like that will help with my C&I knowledge should I ever want to come back to the banking world.

I will say, for anyone reading MidasMulligan's post, it's an accurate representation of work/life in the commercial banking field. For people looking to work less hours and still make a solid, I think it offers a great career tract. And at the $1.5B bank you're not pigeon hole-d to a certain industry, so the work stays interesting IMO

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Apr 12, 2018

How would you articulate your bank's appetite to extend C&I credit? Direct lenders came en masse to fill the void left by banks when they all pulled back. Any insight on your bank's (or traditional banks in general) place in the new marketplace, or how that might evolve when we inevitably hit a down credit cycle?

Apr 12, 2018

Great question.

We are very hungry for C&I exposure. The main impetus for that appetite is to offset a RE portfolio that has ballooned during last several years since it was the low hanging fruit. The secondary impetus is because its just good business and much stickier with better overall yields and fee income than CRE (you get deposits and ancillary services). I would hazard an educated guess that the same sentiment is true for small to mid-tier banks across the board excepting banks who make RE their specialty (a la, OZRK).

I won't pretend to know what the new marketplace even is since so much of it is in the shadows (again). This question deserves it's own thread since there's so many factors at play. I have several thoughts, but they'd end up being too lengthy for purposes of this (now evolved) AMA. I'll mull on this.

    • 2
Apr 12, 2018

Banks pulled back from high leverage Lbos which is a small segment of the overall market. Keep in mind that about half the middle market are non borrowers. The rest are mostly single bank non levered deals. The key is if the bank has a realistic credit box for that market or if they are overally picky or only dabble. Commercial banking is very idiosyncratic.

Apr 13, 2018

Do you expect this to remain true for the foreseeable future? I generally understood that direct lenders are operating in the higher-leverage or LBO space. But once a borrower has de-levered after the buyout and the PE firm makes its exit, will that borrower necessarily go back to the traditional banks for financing? Or will that relationship be sticky such that direct lenders start to encroach on the traditional market?

Apr 12, 2018

How do you feel about the relationship between the credit side and sales side?

I have only worked at one bank, and the credit team is always "discussing" (read: arguing) deals with lenders. We as analysts try and get higher rates, more strict terms, etc. and the lenders are always trying to get away with as much as possible. It doesn't feel like a cohesive work environment, but that may be by design. I'm just curious on how different shops handle the sales and credit balance.

Apr 12, 2018

This is 100% a function of culture and leadership. The environment you described is not healthy for anyone (or the bank). You can (and should) have a constructive and meaningful relationship between sales and credit - it does not have to be a contest with everything being a fight. The partnerships we have are just that - real partnerships. However, much of this is attributable to the fact that my market is composed almost entirely of senior bankers and underwriters. Our credit officer is also in market and they usually only see deals after they've already been hashed out and discussed so all they're doing is adding their signature.

Humor me - was this a bigger bank? was it 'established' meaning its been around for decades? was the bank struggling to meet its growth goals?

Based on what you described, I'd wager the answer to each of those questions is 'yes'

    • 1
Apr 12, 2018

Actually, quite the contrary. Our bank is $1.5B in size and have been ranked quite highly by various community bank publications (one year we were actually #1 for banks under a billion when we were that size). From what I know it really sounds like we hit our sales and growth targets quite often. I would preface that with, I likely wouldn't hear about too many situations where growth goals are not met, but from the face of it, we are a somewhat well performing bank.

Apr 12, 2018

Intriguing. Well, if you take out the 'hitting sales growth' part - that's what you can generally expect at the bigger players.

You can continually hit growth targets at that size cause you're flying mostly under the regulatory radar so the C-suite can say "we need this much growth this year" and it happens. It's been very interesting (and rewarding, frankly) to drop into a smaller bank taking that strategy rather than being so constrained on growth because of fear.

Related to HighlyClevered's question, I tend to think there's a LOT of risk out there brought on by the need to grow balance sheets and keep up with the market.

    • 1
Apr 12, 2018

This is a great conversation and I can echo many of OPs views here. To anyone considering a path outside of IB / PE / HF, I strongly recommend reading these views to see if commercial or corporate banking would be a good fit. There's a lot to like about the industry if you're not the kind of person who work 80+ hours a week.

    • 1
Apr 13, 2018

Midas, as previously mentioned, I am an analyst at a $1.5B commercial bank, and have 4 years of experience. Through the past couple months I have been able to work with customers and it has really given me an appreciation for the sales side. With that said, I am looking to possibly transfer to the sales side in the near future. The one drawback is being available to your customers 24/7. I am a big proponent of the work-life balance, so the always being on call part of sales is my biggest drawback.

In your opinion, what would be some typical positions (credit or sales) that I could apply for that would maybe make $80-$100k/year and work 50ish hours a week? Is that even possible?

From the other messages on this board, I think any information pertaining to a solid work life balance, along with a decent pay, would be helpful to many people here.

Thanks again!

Best Response
Apr 13, 2018

I have several thoughts, most of which are going to throw cold water on your aspirations.

  1. 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"
  2. 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.
  3. 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.
  4. 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

    • 8
Apr 13, 2018

Great advice. That was actually refreshing to hear honest constructive feedback, as we generally don't get that in my neck of the woods (Midwest); we more so get feedback without trying to hurt feeling which can, and oftentimes, be misleading. Also, your comments on knowing oneself made a lot of sense, as you mentioned your output at work takes less effort than someone who is in the wrong position. I honestly think sales is where I fit in best, for various reasons. I sort of alluded to this earlier, but working the occasional late nights or weekends is perfectly fine. Especially when "work" means meeting customers out for lunch/supper/drinks/any other sort of entertainment. I generally enjoy helping people and being a part of their success.

Thanks again for the commentary, it was well received.

Apr 15, 2018

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.

    • 3
Apr 15, 2018

congrats on making the switch. Are you happy being in IB now or do you sometimes wish you wouldn't have left CB?

Curious if you plan on staying in IB for the long haul or are going to try getting into PE etc.

Lastly - did you stay at the same bank when you switched to IB or did you have to switch firms?

Apr 16, 2018

I am definitely happy i made the switch simply for the fact that it gives me more options moving forward. For me (and I suspect many others as well), the decision to remain in IB is evaluated every year. As long as I am still enjoying it, I will continue to do it, but when I am finally fed up or decide that it's no longer worth the time it consumes.

I left the CB I was at to join a boutique IB before making the jump to the shop I am at now. With that said, I know of several individuals who made the transition from CB to IB internally.

    • 2
Apr 16, 2018

Nice! Yeah personally PE would be a long shot for me so that's why I asked if you planned on staying in it for the long term.

I work at a large regional and we have a decent IB arm with more sustainable hours so I'd probably look to stay on till at least VP.

    • 1
Apr 16, 2018

I am also a bit jaded when it comes to PE. The majority of the guys I have seen leave to join the buyside don't last very long and quickly realize that the jobs are very similar.

    • 1
Apr 16, 2018
Mini-Monk:

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.

Are leadership training programs only designed for 1st year analysts? Or do people with 3+ years of experience get placed in these as well?

Apr 16, 2018

Most of these programs target new hires straight from undergrad, but also allocate some slots for existing employees looking to further their career. In my class we had 3 guys who were long-time bank employees that had performed well and been offered the chance to join the program. If I were you, I would bring it up with your manager to see if he/she would push for you to be a part of that program.

    • 1
Apr 16, 2018
MidasMulligan:

I have several thoughts, most of which are going to throw cold water on your aspirations.

  1. 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"
  2. 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.
  3. 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.
  4. 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

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.

    • 4
Apr 15, 2018

As a middle market rm I work a solid 35 hour week and never have to take calls after hours. Primarily this is because I do only c&i lending so we don't have the transaction deadlines that you do in Cre lending for purchases.

    • 1
Apr 15, 2018

curious what comp progression looks like for a MM RM?

Apr 16, 2018

I won't speak for @Pio Nono, but in my experience the REAL comp progression comes from when you have a book of business that other banks want and they'll pay you to bring it with you when you jump ship. I've seen that progression be anywhere from 10% upwards of 40% in base pay. Do that a couple 2-3 times and you're doing OK for yourself.

Apr 15, 2018

I'm doing a commercial banking internship at a large-scale bank this summer (think HSBC/ JPM in terms of size of assets). But I'm more interest in IB so I will try for a FT IB analyst position after my internship. How do you think I can make my CB experience seem relevant to I-banking?

    • 1
Apr 16, 2018

Emphasize your understanding of accounting and how banks view credit risk. This will show that you have a strong grasp of how to gauge the financial well-being of a company which is useful in a lot of contexts within IB. I would also try to get as much exposure to projection modeling and working with the financial statements as this will make IB interviews much easier.

Apr 15, 2018

Hello,

I'm 30 years old and I've had various sales roles my entire career (cars, tech, Commercial Real Estate). I have 3 years of direct CRE experience on the development side. Now that I'm working in tech I absolutely hate it and want to get back into CRE but on the lending side.

How can I break into commercial lending with no previous banking experience? I'm networking my face off, but what are some roles that could get my foot in the door?

Credit Analyst?
Commercial Loan Underwriter 1?

Any help would be appreciated.

Thanks!

    • 1
Apr 16, 2018

It would depend what you want to do. See above for the basic role dichotomy. If you want to be with CRE specifically, you need to find a team that focuses exclusively on that. All your MM+ sized banks will have specialized teams that do that and it wouldn't be hard to figure out who they are. LinkedIn can help you out there - I'd just reach out directly to them and try to get a meeting, Some may be willing to take a chance on you if you've got the sort of experience they want, but otherwise you may have to cut your teeth doing an analyst job for a while. You might also be able to try getting into a smaller community bank and sell yourself as a CRE specialist. Then use that time to learn the basics of banking and credit analysis and then go to those CRE teams at the MM banks.

If you have a good network of people in your area who know you and are pretty good at what they do, you might approach them about who they go to get their funding. If they don't have a "preferred provider" but instead just shop out every deal they do then you might see if you could get on that distribution list as a banker but that may be a bit of a long shot given the brief summary you gave of yourself.

As stated before, the only way to break into banking is to do it. That generally means having a book of business you could move or to start the hard way and learn the basics.

Do you have any sort of specialized credentials or skills in your current role?

Curiousity - why do you want to get in on the lending side of the equation instead of staying on the development side?

    • 2
Apr 16, 2018

Thanks for your reply.

I'm most likely going to have to hit the "reset" button and take a more entry level role as analyst or similar. My network is strong, but I've been out of CRE for 2 years now.

My current role is a Client Account Manager role in tech...it's essentially a RM role to make a banking comparison. When I was working on the development side I was involved in acquisitions/dispositions, underwriting deals, analysis, leasing, marketing, etc. A-Z.

I feel like there is more stability career-wise working on the lending side rather than the development side, but I could be wrong.

Your thoughts?

    • 1
Apr 16, 2018

If you're a RE specialist, your fortunes in banking are dependent on the bank you work for. If they get too heavily invested in that asset class and things go belly up - you could be on the street at a time when everybody is too full of RE. Even if you stay on with the bank, you may find yourself working the problem loans you and others originated during the prior years.

This latter scenario is what happened to me and many, many others during the Crisis. The good times came to an end and we took all the warm bodies that were previously doing originations/servicing and threw them at the snowballing bad RE portfolio. That quickly turned into a 60+ hour work week for a couple 18 months. And you may not simply be able to walk away because, as said, during those cycles it is rare that banks are looking to pick up CRE specialists. Practice Warren Buffett's contrarian advice, banks do not. You might could still make it doing note sales or jumping to a non-bank investor and buy notes or properties and do that, but that's still not what I'd call "stable".

If you got into a good RE development shop; they'll make it through the cycles regardless. As in all things it's about being adequately capitalized and having good risk management. But your importance through the cycle may be less if you're coming in at a junior level.

Not sure what to tell you - it does kinda sound like you'll be starting at the bottom of the totem pole if you want to get back into the business.

    • 2
Apr 24, 2018

All great information here. pretty much in line with what i have seen/experienced.

  • jason-rubio
  •  Apr 26, 2018

Hey I'm currently working in credit supervision at a decent sized CB (30b). The job is mostly administrative and credit monitoring and I'm looking to try and get into a credit analysis or underwriting role. My bank doesn't have any sort formal credit training programs or structured analyst track so I was wondering how I could better position myself to land in a decent spot as a credit analyst or possibly underwriter? Some of the positives in my current position are I work directly with a managing credit supervisor and I get a pretty high level view of the bank's credit portfolio. I'm learning a lot in my current position and building some good relationships, but I was also looking at getting a certificate in commercial credit or some other external credit training since I have a lot of free time at the moment (work 40 hour weeks, job isn't demanding at all).

Any input would be great

Jan 16, 2019

Curious, as I'm looking for the same thing - what commercial credit certificates are you aware of? I haven't really found many at all, almost none.

Apr 29, 2018

If you're still taking questions:

How does one get into the sales side at a commercial bank/What are the entry level sales roles in commercial banking?

I currently work as an analyst on the private equity side of CRE, but do not enjoy spending my days in excel. I'd like to make my way to a more exciting area of business and move beyond just CRE.

May 1, 2018

Entering sales side at commercial bank depends on a lot of factors. The bank and it's business development strategy, your depth/breadth of contacts in the market, and your experience in sales.

Entry level sales is tough to find in recent years just due to fallout from the GFC. A fair number of your larger banks that offered entry level roles have shuttered their training programs or are only directing their trainees to the credit analysis role to cut their teeth.

How plugged in to your market are you? If you have a decent rolodex and can get in front of some prospects and move their business to a bank you might could get something. A lot of banks are bursting at the seams with RE exposure though, so you may have a tougher time finding a bank that has material appetite for that.

How big are the deals you work on in PE?

If you don't have depth/breadth of contacts in the market, you might could still break into sales if you have sales experience in other industries. It would be common for a bank to hire a pharmaceutical rep with good experience to bring those same doctors practices into the bank. Or for a trade association person with good contacts to get hired for their credibility with players in that sector.

If you have none of those things you may have to resign yourself to starting as an analyst in the bank and getting close to some high producers or market leaders who can give you exposure to that side of the business and you can prove you're not a weirdo when put in front of a real live client. Generate some leads independently for the bankers to go and get.

    • 2
Jul 2, 2018

Thank you for sharing. I was hoping you could provide me with some advice. I am currently a year out of school in a finance & accounting development program at a midwest regional bank and am looking to make a move into the commercial/corporate banking side of things. I'm currently studying for the CFA but wondered if you would have any advice for me in making this transition?

Jul 3, 2018
Redhawk1234:

Thank you for sharing. I was hoping you could provide me with some advice. I am currently a year out of school in a finance & accounting development program at a midwest regional bank and am looking to make a move into the commercial/corporate banking side of things. I'm currently studying for the CFA but wondered if you would have any advice for me in making this transition?

I can add - Networking is the best tool at your disposal. Go on LinkedIn, find people who have the roles you want, find their seniors and message them. Ask them questions like how they got to where they are today and what they would do differently if they could go back in time to get to where they are today sooner. Aim for 15-20 new relationships per week. Build relationships with these people and when you're looking for job postings (if they show up) you can get a referral into the candidate pool much more easily.

Jul 6, 2018
  1. You're in the finance/accounting training program... as in, you're being prepared for the finance/accounting function within the bank? Like the ALCO and corporate treasury type work? How'd you get in there if you wanted to end up as a banker? Do you have any kind of obligation/commitment to them as part of your training?
  2. If your regional has commercial teams, try to sit with some SVP's there for 'informational interviews' and just ask how they got there, what they do, etc
  3. Follow the advice above about networking. Depending where in the midwest you are, it may be slim pickings for banks. If you're willing to move to a more metro area, work LinkedIn and ask some folks for lunch and sell your story. Ask them who you should connect with.
    • 1
Jan 28, 2019

mortgage underwriting to commercial underwriting?

Feb 5, 2019
    • 1
Feb 6, 2019
Feb 12, 2019