II. Career Paths in Finance

B. Commercial Banking

To be good in banking, a person needs a broad understanding of business because banking jobs typically involve interacting with a variety of businesses. People skills are essential because bankers must work with customers to secure loans and make investments. The most common jobs in commercial banking are credit analyst and lending officer positions, both of which require an excellent understanding of both accounting and finance.

Because banking often requires written documentation for loans and justification of credit analyses, written communication skills are vital. Successful bankers are detail oriented, unafraid to sell, and conscientious. And international talent is in high demand at money-center banks.

Successful bankers today are faced with a dynamic business environment. The prevailing business model, which has continued to spread throughout the banking industry, is that of the marketing-oriented consumer products company. Banks are trying to build valuable brand images with consumer-oriented advertising and distinct product lines.

Because of this increasing marketing-orientated strategy, many banks have been paying large salaries to lure product managers away from consumer products companies and are competing with Wall Street for "high-tech finance jocks" involved in foreign exchange derivatives and financial engineering. There is also high demand for finance professionals who can develop products for the corporate market. And another high growth area in commercial banking is investment products and mutual funds.

It is useful, but usually not necessary, to get an MBA in commercial banking. However, many top banking executives do have MBAs from prestigious schools, while others have attended summertime master's programs.

Consumers are increasingly banking from home using online services and the Internet. Employees who are Internet savvy and familiar with computers will have an edge in the banking industry today.

1. Personality Traits and Skill Requirements. A typical job in commercial banking in the lending or branch management area would require the following skills:
   1. People Skills: High
   2. Sales Skills: High
   3. Communications Skills: High
   4. Computer Skills: Medium
   5. Analytical Skills: Medium
   6. Ability to Synthesize: Medium
   7. Creative Ability: Medium
   8. Initiative: High
   9. Work Hours: 40-60/week

2. Key Career Areas:
   1. Credit Analyst. Credit analyst is a common entry-level position, which requires the evaluation of business and consumer loan applications. Common duties include projecting company cash flows, evaluating a company's financial soundness, visiting and interacting with financial professionals at businesses, and interacting with lenders. Credit analysts usually learn a great deal about how businesses function and operate. Successful credit analysts are detail-oriented, understand accounting, and have good communications skills.

   2. Loan Officer. Loan officer is a highly desirable job in banking that involves making loans to businesses and consumers. A good loan officer must possess excellent sales skills, an ability to understand businesses, and a solid understanding of how banking works. Most people in upper management at banks were once loan officers.

   3. Branch Manager. Branch managers are responsible for overseeing all activities at a bank branch including opening new accounts, loan origination, solving customer problems, foreign exchange, and safe deposit boxes. Most importantly, branch managers are responsible for establishing relations with customers. This job can be very satisfying, is rarely boring, and requires hands-on attention. Successful branch managers possess excellent customer service skills, quantitative ability, a strong work ethic, organization and a comprehensive understanding of all bank functions.

   4. Trust Officer. Trust officers provide trust services, financial products, and advice to (generally) affluent bank customers. Trust officers must understand business, investing, estate planning, taxes, and probate law. Trust officers provide financial planning and advice, assist in estate planning and management, and provide individualized customer counseling.

   5. Mortgage Banker. Mortgage bankers provide mortgage loans to homebuyers and businesses. This position involves heavy contact with both real estate professionals and mortgages.

   6. Other. Other jobs in banking involve accounting, marketing and advertising, commercial credit card operations, securities transfer, wire operations, private banking, cash management services, installment loans, loan servicing, correspondent banking, personnel, operations and communications.

3. Salaries. Banking is not known for high salaries (it's a margin business, which puts downward pressure on pay). Below are salaries and typical experience/education for bankers:

   Trainee/Credit Analyst: $24,000 and a B.S. or B.A. Junior Loan Officer: $34,000 and a B.S. or B.A. plus 3 years experience Portfolio Lender: $45,000 plus 5 to 7 years experience Senior Corporate Loan Officer: $50,000 plus 10 years experience Loan Department Manager: $80,000 plus 10 or more years experience

   Offers made by major regional and money center banks in 1998 to MBA students have ranged from the high $40 thousands to low $70 thousands. A good offer would be somewhere in the mid $50 thousands.

   The following describe average salaries for money center/regional banks from the 2001 Robert Half Salary Guide.

   Commercial Lender, 3+ years: $66-95K
   Commercial Lender, 1 to 3 years: $48-65K
   Commercial Credit Analyst, 3+ years: $53-80K
   Executive/Professional/Consumer Lender, 3+ years: $56-76K
   Executive/Professional/Consumer Lender, 1 to 3 years: $42-57K
   Mortgage Lender: $36-48K

4. Suggested Coursework. Careers in banking are focused on the day-to-day management and operations of financial institutions. Courses relevant to a major in banking and financial institutions would include the following:
   1. Strongly recommended:
      Corporate Finance
      Advanced Corporate Finance
      Financial Institutions
      Management of Financial Institutions
      Securitization
      Financial Statement Analysis
      Corporate Financial Reporting
      Investment Analysis and Portfolio Management
      Derivatives
      Money and Capital Markets

   2. Recommended:
      Investment Banking & Financial Intermediation
      Market Microstructure and Trading
      International Corporate Finance
      Corporate Restructuring
      Taxation and Management Decisions

   3. Other Suggested Courses:
      Decision Analysis
      Corporate Strategy
      Advanced Marketing Strategy
      International Marketing

5. Useful Professional Certifications

   Certified Public Accountant (CPA)
   Chartered Financial Analyst (CFA)
   Certified Financial Planner (CFP)
   NASD Exams (Series 7, 63, etc...)
   Chartered Financial Consultant (ChFC)

6. Internet Resources

   Robert Half Career Center
   American Banking Association
   Bank Administration Institute
   The Risk Management Association
   American Banker
   List of Banks of the Web
   Jobs in Banking

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