The banking industry in Ethiopia is highly competitive, so banks must consider various strategic options and plans to survive and develop. One of the strategies is customer relationship marketing. Customer relationship marketing has the aim of building mutually satisfying long-term relationships between business organizations and their customers in order to earn and retain their business. This study was aimed at investigating the effects of customer relationship marketing variables of trust, commitment, and conflict handling on customer loyalty; and it has also identified the mediating role of customer satisfaction in the relationship between customer relationship marketing and customer loyalty in the banking sector in Bahr Dar city. The study employed an explanatory research design and used a quantitative approach. A structured questionnaire with a five-point Likert scale was used to collect the data from the customers, which was distributed to 399 questionnaires for selected commercial bank customers, and out of these, 327 were used for this analysis. Structural equation modeling was used to examine the measurement model and structural model. Descriptive statistics were analyzed using SPSS, and path analyses were computed using AMOS. The bootstrapping method was used in AMOS to analyze the mediating effect of customer satisfaction. The results of path analysis show that trust and conflict handling have a direct and significant effect on customer loyalty, but commitment has an insignificant direct effect on customer loyalty. And also trust, commitment, and conflict handling have a positive and significant effect on customer loyalty through customer satisfaction. Furthermore, customer satisfaction has mediates the relationship between relationship marketing and customer loyalty. This study recommended that bank service providers invest more in customer relationship marketing strategies to attract and maintain their customers and build relationships with them.