I have a request for all you experienced lenders out there. I am hoping you might share some insight and perspective on starting a career as a commercial lender and perhaps provide some advice on my specific circumstances. Some of my questions are as follows:

1) What do you think is the average retention rate of new commercial lenders after 3 yrs? After 5 yrs?

2) What is the average age of new commercial lenders? I am 34; would you consider that to be too old to start?

3) What kind of work background is a good springboard into commercial lending? I currently work as a commercial credit analyst at a statewide (but federally chartered) bank of $4B in assets. I have experience analyzing financial statements, evaluating credit risk, addressing compliance issues and collateralization.

4) How important is having a pre-existing network of business contacts? Mine is very small. Fortunately, I am a fairly personable guy who genuinely likes to meet people and understand their situations although I don't come across as a huge extrovert.

5) What kind of training did you receive or what is the practice at your institutions? Training seminars? 2-week new lenders 'boot camp'? Assignment to a senior lender 'mentor'?

6) I understand most com lending positions are commision based but is there a typical base pay, at least starting out?

7) Finally, how would you describe the life of a new commercial lender?

Thanks a lot for your input.

Summer Intern


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I have a request for all you experienced lenders out there. I am hoping you might share some insight and perspective on starting a career as a commercial lender and perhaps provide some advice on my specific circumstances. Some of my questions are as follows:

I assume that you are talking about becoming a commercial loan officer not a lender.

1) What do you think is the average retention rate of new commercial lenders after 3 yrs? After 5 yrs?

It varies as with any other position. Most LO positions are strongly based on performance both of the portfolio and new loan origination. Some last a few months, others decades. It's very situational.

2) What is the average age of new commercial lenders? I am 34; would you consider that to be too old to start?

34 is not too old to start. Average age is meaningless in my opinion. If it interests you go for it.

3) What kind of work background is a good springboard into commercial lending? I currently work as a commercial credit analyst at a statewide (but federally chartered) bank of $4B in assets. I have experience analyzing financial statements, evaluating credit risk, addressing compliance issues and collateralization.

Being a credit analyst is a very good start. The difference between a credit analyst and a successful loan officer is people skills. You must be able to market yourself and easily relate to customers both for new loans and management of a portfolio.

4) How important is having a pre-existing network of business contacts? Mine is very small. Fortunately, I am a fairly personable guy who genuinely likes to meet people and understand their situations although I don't come across as a huge extrovert.


An existing network helps tremendously but is not absolutely necessary. If you are an internal LO you will be handling loans that come in via the bank's marketing efforts. This requires less personality than being external. Building a network will take time, substantial effort and require patience. You don't have to be an huge extrovert but is sure does help when establishing new relationships. If you are not comfortable walking up to a complete stranger and introducing yourself, then you may have some trouble.

5) What kind of training did you receive or what is the practice at your institutions? Training seminars? 2-week new lenders 'boot camp'? Assignment to a senior lender 'mentor'?

Training varies. You have the analysis skills, but need to develop marketing skills. Two completely separate animals there. I know nothing of the boot camps. Having a mentor who has been successful is in my opinion the absolute best way to ensure success. They can impart real world experience as to what works for them and what doesn't. They will know the market and have already made mistakes that you hope to avoid. Credit training is done in the office, marketing training can only be done in the field and on the phone.

6) I understand most com lending positions are commision based but is there a typical base pay, at least starting out?

Varies by market and responsibilties. External LO's are more commission based. Internal are more salary based. Portfolio management responsibilities generally mean a higher base salary. External LO's have the most earning potential while internal have the security of a higher base.

7) Finally, how would you describe the life of a new commercial lender?

New commercial LO's are generally very busy trying to establish contacts and a book of business. The vast majority of your time will be spent making phone calls and getting your name out there. Prepare for frustration. It does not happen overnight. You will be putting in a lot of effort with little immediate reward. It's a process than can take time.

Thanks a lot for your input.

Here is my view from the same vantage point as yourself {credit department of a bank lender}, which means that I will be talking about commercial loan officers working for banks.

1) What do you think is the average retention rate of new commercial lenders after 3 yrs? After 5 yrs?

From what I have seen in the three financial institutions that I worked for, about one in three will not be in lending after five years. If you are talking about institutional retention, I would say that only one in three will be with the bank that gave them the opportunity.

2) What is the average age of new commercial lenders? I am 34; would you consider that to be too old to start?

Age and background in credit will be a plus as far as marketing is concerned.

3) What kind of work background is a good springboard into commercial lending? I currently work as a commercial credit analyst at a statewide (but federally chartered) bank of $4B in assets. I have experience analyzing financial statements, evaluating credit risk, addressing compliance issues and collateralization.

It is a sales position so personality is the most important factor.

4) How important is having a pre-existing network of business contacts? Mine is very small. Fortunately, I am a fairly personable guy who genuinely likes to meet people and understand their situations although I don't come across as a huge extrovert.

From what I have seen, an existing network or the beginnings of a network is very important. At the very least, you should have the personality that allows you to take rejection well so that you do not get discouraged while building your network. From the people I know that have transitioned from credit to lending, the successful ones have been the ones with the contacts. You can not rely on the bank’s marketing efforts to meet your production quotas.

5) What kind of training did you receive or what is the practice at your institutions? Training seminars? 2-week new lenders 'boot camp'? Assignment to a senior lender 'mentor'?

Junior lender positions are usually attached to a Sr. lender. Some pick it up faster than others. Community Banking {under $15 Billion in assets} is big on “on the job training”, and offers very little formal training. Your success depends a lot on your mentor being willing to let you meet his contacts and letting you follow up on leads.


6) I understand most com lending positions are commision based but is there a typical base pay, at least starting out?

Junior lenders get paid about what a credit analyst I would get paid. This means anywhere from $35M to $60M as a base salary {depending on your location and the type of loans that you are selling. Seasoned lenders that meet large production quotas, and good portfolios make 6 figures easily inclusive of bonuses.

7) Finally, how would you describe the life of a new commercial lender?

Hectic, but rewarding if you are successful.

Thanks for your replies from my inquiry a couple weeks ago. I still invite any other lenders who visit this forum to chime in with their prespectives, too!

A couple follow-up questions.....

1) At my institution, the commercial lenders make both real estate deals and business banking deals. I was wondering if this was the norm for larger banks or if you see more specialization into either RE or BB? It seems many of the larger or more complex deals my bank makes is structured to include both. Still, I only have this one point-of-view on the field.

2) What are your thoughts about trade finance reps from places like Wells Fargo Trade Bank or CIT Group? A specialized loan officer or a different breed altogether?

Thanks a ton for helping guide this analyst form a direction for his career plans!
Patacon

1) At my institution, the commercial lenders make both real estate deals and business banking deals. I was wondering if this was the norm for larger banks or if you see more specialization into either RE or BB? It seems many of the larger or more complex deals my bank makes is structured to include both. Still, I only have this one point-of-view on the field.

Well, this is one of the sore points between Departments. Usually, as the bank grows bigger, you will have two specialized areas of the Bank. One dedicated to Corporate/Commercial and the other dedicated to Commercial Real Estate. The problem is that this business is very much relationship driven, and lenders are not keen on letting someone else handle their clients. There are some clear disincentives for you as a lender to hand your client to someone else such as:

- Part of your evaluation will be based on production. If you are a corporate lender that has a client with a working capital line of credit and a term loan financing their corporate headquarters, will you be willing to hand off a loan to the owner because it is to be used to buy income producing property? Technically, income producing property loans belong in Commercial Real Estate, but this is additional business.
- There is a lot of turnover in banking and by referring the business to someone else, you might be referring away not only this deal, but loosing your customer. If you leave the bank to go somewhere else, your value is somehow determined by the number of relationships you bring.

On the other hand, you really want to have each particular loan handled by people that are experienced. For example, corporate lenders can do income producing property loans. Nothing in commercial lending is easier than that. However, lenders are expected to generate and manage construction loans. You really don’t want a corporate lender structuring a construction loan with a client. On the other hand, you don’t want a Commercial Real Estate lender handling an Eximbank line of credit.

Eventually, you will want to specialize. The potential for a six figure income is there for both Corporate lenders as well as Commercial Real Estate lenders. I have not dealt with lenders that did both since my days in a small bank with less than $100MM in assets.

2) What are your thoughts about trade finance reps from places like Wells Fargo Trade Bank or CIT Group? A specialized loan officer or a different breed altogether?
Not familiar with the functions of that position, but it sounds like someone that might do a lot of Eximbank lines, Insured receivable lines, letters of credit or even factoring. Corporate lenders will do almost all of that. Some of them have built their whole niche around one or two of those products.