Commercial Loan Officer
Career review from a person working in the job
How I Got The Job
My Education: BA in Mathematics, Niagara University / MBA, Niagara University
My Prior Experience: I worked as a Loan Officer for the SBA office of Disaster Assistance for two years. I then began working at as a Loan Officer, and have been working in that capacity for 8 years.
My Job Profile
My Company: I work at a bank in the commercial lending division.
Job/Career Overview: Each loan officer maintains a "portfolio" of loans, which simply is a catalog of lines of credit, term loans, commercial mortgages, etc. I currently have a portfolio totaling approximately $80 million, consisting of 20 borrowers.
Each commercial loan officer must review the loan accommodations to all Borrowers with aggregate loan balances over $250,000 on an annual basis. To do this they must collect and analyze current financial information. Often there are "loan covenants" which the Borrower must meet. These typically are agreed upon performance ratios that help the Bank determine the Borrower's ability to pay its obligations in the future, and act as guidelines to help the Borrower maintain a viable business.
One of the most important roles for any commercial officer is to obtain new business for the Bank. This involves calling on prospects and existing customers with the possibility of lending them some money. Each loan officer has a goal set by their supervisor or department head, which is the amount of new loans that they must close in a year. My annual goal has ranged between $5 million and $10 million.
Once the need for a new loan is identified, the loan officer will negotiate terms with the Borrower. This includes--but is not limited to--the terms, amortization, collateral, guarantors, interest rate, and loan covenants. If both sides can reach an agreement, the loan officer collects financial information on the Borrower, guarantors, and collateral to underwrite the loan accommodation. Underwriting can range from a simple memo, to a more detailed "loan recap" which can be about 10 to 50 pages long.
After the loan recap is completed, it is presented to the appropriate approving body. depending upon the aggregate exposure to the Borrower. "Approval authority" is determined by the Bank's board of directors, and is provided to individuals and regional loan committees.
After approval, a commitment letter is issued to the borrower, outlining all the approved terms and conditions. After acceptance of these terms (by signing the letter), an attorney is engaged to draw loan documents. After these documents are prepared, a closing date is set for signing all the documents and filing any mortgages, etc. which may be required.
The typical time from proposal to loan closing can range from 4 weeks to 6 months, depending on the complexity and size of the deal.
Love It? Hate It?
I rate this career 7 out of 10.
What I Love or Hate
The worst part of being a commercial loan officer is the pressure of having to reach an annual goal. Each year the number must be met or there is the chance of losing your job. If you exceed your goal by too much, then there is a chance that the Bank will increase your goal the following year.
The best part of my job is interacting with clients, and trying to meet their needs. Each business is unique, and it is truly an art to balance what they want with meeting the bank's internal underwriting standards.
My Career Tips
My first recommendation is to not become a commercial loan officer. It is a very demanding career, and a stressful one at that.
If you are going to become a commercial loan officer, it is best that you are a "people person." You will need to rely on a network of contacts (i.e. attorneys, accountants, business owners, etc.) that can refer you business each year. This is very difficult to establish.
Also, you will be required to read and understand financial information. I would recommend at least an intermediate level of college accounting courses to receive a thorough understanding of income statements, balance sheets, and the elements of cash flow.
