Commercial Banking - Relationship Manager

Hida Kisada:

OP - feel free to PM me

Thanks. I sent you a note.

Anyone else have any thoughts they can share?

Sorry for the spacing. This is my first comment on WSP

Hey MMCB. I’m currently interning at a community bank $4B AUM and was wondering if I could ask you a few questions about finding credit training programs! Anything helps !

This is spot on. Great summary. Wish there was more CB talk on here.

ez_money:

I think that MMCB provided some good info, but I'll chime in with my two cents as well.

What is a day in the life like?

If you start your career on the credit side, your job will be supporting the relationship team by underwriting new credit requests, renewals of existing credits, and potentially some annual reviews where you will either affirm the existing risk rating or recommend a change in risk rating based on the updated financials and any recent developments. As you become more experienced you may play a larger role in helping to structure credits and screen potential deals prior to issuing term sheets. Ultimately your primary work product is the credit packages you prepare, and your role is to help present credit requests to the approver (either a credit officer or credit committee) in the best light possible. Usually pretty good work-life balance, with actual work ranging from 30 hours a week to 60+.

A junior RM is less credit focused, although you'll certainly be required to develop a strong credit foundation so that you know what you are doing and are focusing on bringing in deals your bank actually wants. Day to day is focused on assisting the relationship manager with various tasks, like preparing pricing models, prepare pitch materials when calling on clients, reviewing loan documents prior to closing and make sure there are no issues, acting as a liaison between the RM and credit, etc., while developing the skills necessary to be a relationship manager. I haven't been a junior RM, but overall I'd imagine the work-life balance is pretty similar to a credit analyst, so you might have light weeks where you are spending under 40 hours actually working, and you will certainly have weeks where there is a lot happening and you're working 60+ hours. Definitely not IB hours though.

Either way, the next step is generally becoming an RM (although some people decide to remain on the credit side or go into some other back-office banking role and make a career there). Your job is to manage existing relationships, trying to strike a balance between maximizing interest and non-interest income for the bank without overpricing and losing the client to a competitor, and then obviously to bring in new business. If you're at a good bank and are good at your job you've usually got warm introductions from CPAs, existing commercial/corporate banking clients, and clients in other lines of business (private banking clients for example). There is also generally a focus on being involved in the community, and if you get involved in the right way (Chamber of Commerce, professional organizations, leading charity efforts that solicit donations from businesses, etc.) you'll often be able to generate leads that way. Work-life balance still compares favorably to investment banking, and honestly depends on how established you are. You can easily put in consistent 60+ hour weeks, but I know there are plenty of bankers that have been around for a long time, have a good existing client base, and have established connections that continue to generate leads for new business, and rarely put in more than 40 hours a week. Personally, I think that's kind of lazy, but I'm still relatively young and very competitive, and might feel different in 20 years lol. To try and give you specifics on the day to day, you're going to be required to make a certain number of calls per day/week/month, so your day will consist of preparing for those calling efforts, actually going on those calls, and then actively managing your existing business (meet with existing clients to make sure you're maximizing that relationship, getting renewals approved and booked, etc.). If you have specific questions beyond this I can do my best to give you more details.

What types of products are offered?

I think that in general banking products are pretty consistent across the board, but may vary slightly depending on if you're at a small community bank or a large regional or national bank. What you specifically offer as an RM will depend on your line of business (industry agnostic middle market C&I lending, CRE lending, asset based lending, government and institutional lending, healthcare lending, dealer finance, correspondent lending, etc.) and the size of the bank you work at. For example at a small bank you may be in a position to offer any product the bank offers, while at larger banks you may be devoted to a specific lending segment. Specific products offered will be various loans (owner occupied commercial real estate loans, income producing commercial real estate loans, term loans to finance capital expenditures, working capital lines, dealer floorplan lines, and on and on), interest rate swaps, letters of credit, deposit products, commercial card programs and other treasury/cash management products.

Given the straight forward nature of the products (I am assuming), is it boring work or do you actually provide value to clients?

I think this is two questions. For the first part, I think almost any job can be boring, but with all of the opportunities in commercial and corporate banking I think that if you're a capable person you should be able to work your way into an area you find interesting. The bank I work at has lines of business dedicated to providing senior financing for private equity leveraged buyouts, providing commercial real estate financing for developers and large institutional real estate investors, dealer finance, bank direct municipal bond purchasing, and on and on, plus various credit risk roles, more traditional back office corporate finance roles, etc. There obviously isn't going to be the same entrepreneurial aspect to commercial and corporate banking that there is in founding or working at some startup, but I really do think that most people can find an area that they are interested in and not find the work boring. I'm definitely biased though as I love my job.

What is the career trajectory of a relationship manager? I understand there are levels of RMs (I, II, III, etc) - can you talk through the differences?

Thinking about the career path of a relationship manager in terms of progressing from some internal job title of RM I, RM II, etc. is probably not the best way to think about things. All those really do is align to a spot on the pay scale, and maybe a corporate title (VP, SVP, etc.). In your first RM role you'll start out at maybe RM I. If you're successful at maximizing the profitability of existing relationships and bringing in new business, they'll "promote" you to RM II and you'll get a pay bump. You do well enough that another bank tries to hire you away? You might jump up a few spots to RM III or RM IV, etc. Again, in general that's just where you fall on the pay scale. Generally, really successful RMs are offered opportunities to lead a team of RMs with responsibility for that team's success. People who succeed in leading a team might be promoted to leading a "market", which might involve P&L responsibility for not only the commercial banking activities in that area, but the consumer/retail side as well. Or maybe instead of leading a market you head up a specialized lending segment, like ABL, CRE, healthcare, sponsor coverage, etc. Basically, I think the best way to think about your career path/trajectory is in taking on increasing responsibility. In that sense your career path could (almost certainly won't, but could) involve becoming the CEO of the bank. Being a RM at an earlier stage in your career is probably the ultimate proving ground in that it is very results oriented, with a very direct P&L impact, and you end up establishing important relationships both internally and externally that can help you move up.

How about compensation? What is the breakdown between salary vs. incentive based? And what does it look like?

Disclaimer: In commercial and corporate banking $50,000.00 would be abbreviated as $50M rather than $50k, and $50,000,000.00 would be $50MM, with an M representing three zeros. I'm going to use that when giving compensation info, and I just say that because I saw someone else get ripped on here by people who didn't understand that.

Starting point for salary will depend largely on how you got your start. Did you get an offer to join the leadership development program out of college? Or did you just get lucky and through networking and/or a random open job posting land an entry level job? If you start in the leadership program I'd say a starting salary in the $50M to $60M range is probably to expected, and will obviously depend on if you're working in New York or Dallas. If you don't start in the leadership program it may be less, maybe $40M to $50M unless you're a mid-career person transitioning to banking in which case it would obviously be more. Again, this range could change based on where in the country you are. Either way, assuming you start in some credit analyst or junior RM role, for a bonus the target could range anywhere from 10% of your salary to 30% of your salary, but I'd be surprise if the target was substantially higher or lower than that. Assuming you are good at your job and impress your boss, two to three years in you should have been "promoted" at least once, although that will probably just mean going from "credit analyst 1" to "credit analyst 2". As a general rule I would expect a promotion of "job title 1" to "job title 2" or "job title 2" to "job title 3" to result in roughly a 10% - 15% bump in salary. The bigger jumps happen when you either accept an offer to go to a competitor bank, or accept the counter/matching offer from your current bank. When you become an RM I would expect a starting salary of somewhere between $80M and $100M. The main factors will be the city you're working in, and how long you've been with the bank (e.g. someone who is in a credit role 5-7 years before becoming an RM would probably be closer to the $100M range assuming they got a few promotions/pay bumps over that time, whereas someone who got an earlier opportunity, maybe 3-4 years in would probably be closer to the $80M range). After that it really just depends on your performance. At my bank the targeted salary for a RM roughly starts around $90M-$95M, and through a combination of success, time served, and probably a receiving a matching offer or two, can escalate to $180M+ over time without taking on a managerial/leadership position. Bonus will depend on a variety of factors, including what job level you are at (RM I or RM IV) and what line of business you are in, but the target will probably range anywhere from 30% to 100% of your salary (which I know is a massive range, but it just depends on a bunch of factors). I think that in general good commercial RMs with an established client base working at a decent sized regional bank or national bank will probably have a targeted bonus in the 40% to 60% range, but this is dependent on so many factors. For instance, there is a specialized lending segment at my bank where the targeted bonus for an RM is 100% of your salary basically from day one. Progressing in your career beyond that is such a crap shoot that there isn't much point in me trying to give compensation ranges here, but just to give you some sort of idea based on internally posted pay grades I've seen at a couple of banks I've worked at, if over the years you progress to heading up a market or specialized lending segment, your base salary might be somewhere in the $200M to $300M range, but obviously could be substantially more or less depending on the size of the bank, the volume of business you do (are you heading up a successful ABL group at a large bank or the market president at a mid-sized city?), etc.

It sounds like a "salesy" role - is it simply cold calling?

Being an RM is definitely a "salesy" role. At the end of the day your job is to sell customers on the idea that they should borrow money from your bank, and that they should keep all of their money at your bank (preferably in non-interest bearing accounts lol). Definitely something to keep in mind when considering commercial banking as a career. As I've mentioned earlier in my response, there are plenty of other career paths in commercial banking that don't involve sales, but being in a revenue generating position is definitely a ticket to higher earning potential. Calling efforts will depend on the bank you work for and the relationships you have. The better the reputation of the bank, the better reputation you have as a banker, and most importantly the relationships you establish, will determine how many warm introductions you have and how many truly cold calls you end up making.

If looking for a better work life balance and to move to a smaller city, is this a good role to consider?

Depending on what you want for your career, I think that commercial banking can be a solid option, and work-life balance is definitely one of the selling points for a lot of people. I think that an RM position in particular can be a great opportunity for someone looking to live in a small to mid-sized city. My reasoning goes something like this: 1) the position exists in mid to small sized cities; 2) the position is generally well compensated, with all-in compensation usually falling somewhere in the six figures range; 3) successful people in client facing, revenue generating positions are much safer if their bank is acquired or makes an acquisition than someone in a back-office, non-revenue generating position.

Any other thoughts or things to look out for in these roles?

I'll just say that I'm in a commercial banking credit risk role right now, will probably make the transition to an RM role in the next couple of years, and absolutely love my job. I have a lot of friends and family in commercial banking, so I've been able to see a lot of people succeed in a lot of different commercial banking roles. I think it provides a lot of opportunities for a great career. If you have any specific questions I'll do my best to answer.

In your opinion, what specialized lending segment is most promising?

ez_money:

Disclaimer: In commercial and corporate banking $50,000.00 would be abbreviated as $50M rather than $50k, and $50,000,000.00 would be $50MM, with an M representing three zeros. I'm going to use that when giving compensation info, and I just say that because I saw someone else get ripped on here by people who didn't understand that.

That was me.....

Can you talk some more about prospecting and goals at the VP level?