PrivateBancorp has solid quarter as portfolio strengthens

Private Bancorp Inc.'s third quarter earnings exceeded expectations.
PrivateBancorp’s third quarter earnings exceeded expectations.

By Megan Hart

PrivateBancorp Inc.’s third-quarter earnings grew 23 percent to top expectations Thursday, as the Chicago-based bank benefited from a dramatic drop in loan loss set asides.

In the latest quarter, net income climbed to $40.5 million, or 51 cents per diluted share, from $33.1 million, or 42 cents per share, in the year-ago period.

As in recent quarters, PrivateBancorp was helped by a decline in loan loss provisions, as the bank’s once badly damaged loan portfolio continues to recover. Such profit-draining provisions dropped to $3.9 million in the latest quarter, down 52 percent from last year’s $8.1 million.

The company’s stronger results were fueled by “revenue growth on higher average loan balances, along with lower credit costs,” PrivateBancorp’s President and CEO Larry Richman said.

The $14.6 billion-asset bank holding company’s per-share earnings exceeded by three cents the 48 cents that analysts surveyed by Yahoo Finance had been expecting.

In NASDAQ trading Thursday, PrivateBancorp shared climbed $1.08, or 3.9 percent, to close at $28.33.

“Our performance over the last several years shows the strength of our commercial banking business and our ability to consistently grow loans and deposits over the long term,” Richman said.

PrivateBancorp’s last several years have been turbulent: A breakneck growth strategy the company had been pursuing soured when the financial crisis hit, saddling the bank with a huge amount of bad loans. Just three years ago, the company’s shares traded as low as $7.41; in the interim the stock has nearly quadrupled as the company regained its health.

On Thursday, the company noted that its net interest margin inched up to 3.23 percent from last year’s 3.18 percent. While the company has been pressured by a competitive market and low interest rates, PrivateBancorp said those challenges were offset by higher loan fees. PrivateBancorp’s third quarter total interest income rose 8.7 percent to $134.4 million from $123.6 million in the year-ago quarter.

For nine months, PrivateBancorp’s net income was $115.9 million, or $1.47 per diluted share. This was a 30 percent increase over the $89.2 million, or $1.24 per diluted share that it reported at the same point in 2013.