July 29, 2008 / 4:42 PM / 10 years ago

UPDATE 2-PrivateBancorp swings to Q2 loss

(Adds analysts comments, details, share movement)

By Sweta Singh and Krishna Chaithanya

BANGALORE, July 29 (Reuters) - PrivateBancorp Inc PVTB.O swung to a second-quarter loss, hurt by higher expenses and provision for bad loans, but its shares rose sharply as investors cheered the modest rise in the bank’s nonperforming assets and the strong loan growth.

Shares of the Chicago-based regional bank rose as much as 17 percent in morning trade.

“A 25 percent loan growth is unheard of in this market.. as well as the aggressive pace of hiring,” Oppenheimer & Co analyst Terry McEvoy said.

The quarter saw a modest growth in non-performing assets and manageable net charge-offs, McEvoy told Reuters, adding that there was no “pronounced deterioration” in the company’s loan portfolio amid a difficult credit market.

PrivateBancorp, which has been hiring aggressively as part of its strategic growth plan, benefited from adding executives from LaSalle Bank, a unit of Bank of America (BAC.N) since Oct. 1.

“It is the first situation where a much smaller bank has taken pretty much the entire management team from a larger company... a lot of the head guys from LaSalle Bank,” Sandler O’Neill & Partners analyst Daniel Arnold said.

In a conference call with analysts, a company executive said the bank will continue to hire in the third quarter and that expenses are expected to be moderate.

The bottom line is not that important given the strategic growth plan the company has in place, the impact of which can be seen on the balance sheet in terms of expenses and loan growth, McEvoy said.

Both analysts expect the company to return to profitability in 2009.


PrivateBancorp said net loss for the second quarter was $13.3 million, or 48 cents a share, compared with net income of $8.8 million, or 40 cents a share, for the same period last year.

Special expenses in the quarter hurt earnings by 5 cents a share, the company said.

Analysts on average were expecting a loss of 24 cents, before special items, according to Reuters Estimates.

Provision for loan losses rose nearly eight-fold to $23 million.

Commercial loans, PrivateBancorp said, continue to be the fastest-growing segment of the loan portfolio, and that increased to $2.7 billion or 42 percent of the total loans.

Net charge-offs totaled $6.0 million in the second quarter, or an annualized rate of 0.42 percent of average total loans.

Net interest income rose 34 percent to $43.1 million in the quarter.

Total assets increased 50 percent to $7.5 billion at June 30, 2008, while total loans increased 54 percent to $6.4 billion, PrivateBancorp said.

Shares of the company were up 13 percent at $29.65 in afternoon trade on Nasdaq. They had touched a high of $30.79 earlier. (Editing by Deepak Kannan)

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