January 23, 2009 / 6:41 PM / 10 years ago

PREVIEW-Steep provision, costs to hit PrivateBancorp's Q4

* To report Q4 results on Jan. 26

* Analysts see Q4 loss/shr of $0.15

* Higher loan loss provision and costs to take toll

* Analysts: co will need fresh capital in 2009

By Amiteshwar Singh

BANGALORE, Jan 23 (Reuters) - A higher loan loss provision and operating expenses stemming from its aggressive growth strategy are set to spoil PrivateBancorp Inc’s PVTB.O fourth-quarter results, and the regional bank may need to raise capital in 2009.

The Chicago-based company has been pursuing a competitive growth plan, adding new hires and continuing to get business accounts.

“While I still expect them to post very substantial growth, particularly on the loan side, I think credit costs and expense growth will continue to weigh on the company,” Sandler O’Neill analyst Daniel Arnold told Reuters.

The company’s push to hire executives from LaSalle Bank, which is now a unit of Bank of America (BAC.N), was “obviously very expensive,” Arnold said. PrivateBancorp is still trying to cover the costs, he added.

The company provides personalized financial services primarily to entrepreneurial and middle-market companies, affluent individuals, wealthy families, professionals, entrepreneurs and real estate investors.

Commercial real estate loans, which accounted for 33 percent of the company’s total loan portfolio at the end of the third quarter, have potential for losses as the market has been under stress.

But increasing net interest income and fee income may partly offset the rise in loan loss provision and expenses, analysts said.

Analysts polled by Reuters expect PrivateBancorp to post a loss of 15 cents a share in the fourth quarter, the company’s smallest in 2008, and an improvement over the loss of 23 cents a share it posted in the same period a year earlier.

Oppenheimer & Co analyst Terry McEvoy expects net loans to grow by $800 million in the fourth quarter, which is down from the growth of about $1 billion in the third quarter and the $1.3 billion growth in the second quarter.

PrivateBancorp’s growth plan will make it necessary for the company to get fresh capital sometime in 2009, analysts said.

They expect the company to be able to secure funds under the U.S. Treasury’s capital purchase program, about which the regional bank has hitherto been silent.

The analysts see PrivateBancorp returning to profitability in 2009.

Shares of the company, which have lost more than a quarter of their value in the last 52 weeks, closed at $19.88 Thursday on Nasdaq. (Editing by Pratish Narayanan)

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