Occupation Profile for Loan Officers
Evaluate, authorize, or recommend approval of commercial, real estate, or credit loans. Advise borrowers on financial status and methods of payments. Includes mortgage loan officers and agents, collection analysts, loan servicing officers, and loan underwriters.
Signficant Points
- About 9 out of 10 loan officers work for commercial banks, savings institutions, credit unions, and related financial institutions.
- Loan officers usually need a bachelor’s degree in finance, economics, or a related field; training or experience in banking, lending, or sales is advantageous.
- Earnings often fluctuate with the number of loans generated, rising substantially when the economy is good and interest rates are low.
Earnings
Median annual earnings of wage and salary loan officers were $51,760 in May 2006. The middle 50 percent earned between $37,590 and $73,630. The lowest 10 percent earned less than $29,590 while the top 10 percent earned more than $107,040. Median annual earnings in the industries employing the largest numbers of loan officers were as follows:
| Activities related to credit intermediation | $54,880 |
| Other nondepository credit intermediation | 52,250 |
| Nondepository credit intermediation | 52,100 |
| Depository credit intermediation | 48,900 |
The form of compensation for loan officers varies. Most are paid a commission based on the number of loans they originate. Some institutions pay only salaries, while others pay their loan officers a salary plus a commission or bonus based on the number of loans originated. Loan officers who are paid on commission usually earn more than those who earn only a salary, and those who work for smaller banks generally earn less than those employed by larger institutions.
According to a salary survey conducted by Robert Half International, a staffing services firm specializing in accounting and finance, consumer loan officers, referred to as personal bankers, with 1 to 3 years of experience earned between $30,750 and $36,250 in 2007, and commercial loan officers with 1 to 3 years of experience made between $45,750 and $70,250. Commercial loan officers with more than 3 years of experience made between $61,750 and $100,750, and consumer loan officers earned between $36,250 and $51,250. Earnings of loan officers with graduate degrees or professional certifications are higher.
Banks and other lenders sometimes may offer their loan officers free checking privileges and somewhat lower interest rates on personal loans.
Job Outlook
Loan officers can expect average employment growth. Job opportunities will be best for people with a college education and related experience.
Employment change. Employment of loan officers is projected to increase 11 percent between 2006 and 2016, which is about as fast as the the average for all occupations. Employment growth stemming from economic expansion and population increases—factors that generate demand for loans—will be partially offset by increased automation that speeds the lending process and by the growing use of the Internet to apply for and obtain loans.
The use of credit scoring has made the loan evaluation process much simpler than in the past and even unnecessary in some cases. Credit scoring allows loan officers—particularly loan underwriters—to evaluate many more loans in less time than previously. In addition, the mortgage application process has become highly automated and standardized, a simplification that has enabled mortgage loan vendors to offer their services over the Internet. Online vendors accept loan applications from customers over the Internet and determine which lenders have the best interest rates for particular loans. With this knowledge, customers can go directly to the lending institution, thereby bypassing mortgage loan brokers. Shopping for loans on the Internet, especially for mortgages, is expected to become more common in the future and to slow job growth for loan officers.
Job prospects. Besides openings arising from growth, additional job openings will result from the need to replace workers who retire or otherwise leave the occupation permanently.
College graduates and those with banking, lending, or sales experience should have the best job prospects.
Job opportunities for loan officers are influenced by the volume of applications, which is determined largely by interest rates and by the overall level of economic activity. Although loans remain a major source of revenue for banks, demand for new loans fluctuates and affects the income and employment opportunities of loan officers. An upswing in the economy or a decline in interest rates often results in a surge in real estate buying and mortgage refinancing, requiring loan officers to work long hours processing applications and inducing lenders to hire additional loan officers. Loan officers often are paid by commission on the value of the loans they place, and when the real estate market slows, they often suffer a decline in earnings and may even be subject to layoffs. The same applies to commercial loan officers, whose workloads increase during good economic times as companies seek to invest more in their businesses. In difficult economic conditions, an increase in the number of delinquent loans results in more demand for loan collection officers.
Employment
Loan officers held about 373,000 jobs in 2006. About 9 out of 10 loan officers were employed by commercial banks, savings institutions, credit unions, and related financial institutions. Loan officers are employed throughout the Nation, but most work in urban and suburban areas. At some banks, particularly in rural areas, the branch or assistant manager often handles the loan application process.