UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For transition period from ________ to ________

Commission File Number: 000-25887

PRIVATEBANCORP, INC.

(Exact name of Registrant as specified in its charter.)

Delaware (State or other jurisdiction of incorporation or organization)	36-3681151 (I.R.S. Employer Identification Number)
70 W. Madison Suite 900 Chicago, Illinois (Address of principal executive offices)	60602 (Zip Code)

(312) 683-7100

(Registrant’s telephone number, including area code)

Indicate by checkmark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ? No ?

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ?Accelerated filer ?Non-accelerated filer ?

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes? No ?

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of November 1, 2006
Common, no par value	21,397,082

PRIVATEBANCORP, INC.

FORM 10-Q Quarterly Report

Table of Contents

				Page Number
Selected Financial Data				3
Part I
	Item 1.		Financial Statements	6
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk	51
	Item 4.		Controls and Procedures	55
Part II
	Item 1.		Legal Proceedings	56
	Item 1A.	Risk Factors		56
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	56
	Item 3.		Defaults upon Senior Securities	57
	Item 4.		Submission of Matters to a Vote of Security Holders	57
	Item 5.		Other Information	57
	Item 6.		Exhibits	57
Signatures				59

Selected Financial Data

The following table summarizes certain selected unaudited consolidated financial information of PrivateBancorp, Inc. at or for the periods indicated. This information should be read in conjunction with the unaudited consolidated financial statements and related notes included pursuant to Item 1 of this report.

	Quarter Ended
	09/30/06			06/30/06			03/31/06			12/31/05			09/30/05
	(dollars in thousands, except per share data)
Selected Statement of Income Data:
Interest income:
Loans, including fees	$	60,361		$	55,127		$	48,910		$	45,244		$	39,580
Securities		6,320			7,734			8,302			8,585			9,093
Federal funds sold and interest-bearing deposits		116			199			87			207			166
Total interest income		66,797			63,060			57,299			54,036			48,839
Interest expense:
Interest-bearing demand deposits		569			364			241			248			218
Savings and money market deposit accounts		14,499			13,089			11,463			9,998			8,072
Brokered deposits and other time deposits		17,736			15,828			12,848			10,754			8,521
Funds borrowed		2,398			2,387			3,468			3,756			4,387
Long-term debt --trust preferred securities		1,555			1,530			1,504			1,563			1,377
Total interest expense		36,757			33,198			29,524			26,319			22,575
Net interest income (8)		30,040			29,862			27,775			27,717			26,264
Provision for loan losses		1,494			2,382			2,253			1,690			2,046
Net interest income after provision for loan losses		28,546			27,480			25,522			26,027			24,218
Non-interest income:
Wealth management income		3,477			3,603			3,160			2,771			2,627
Mortgage banking income		804			1,005			724			784			1,284
Other income		1,351			2,616			1,138			1,361			1,165
Securities gains (losses), net		1,212			(1,007	)		(578	)		(192	)		(249	)
(Gains) losses on interest rate swap		(904	)		413			555			252			644
Total non-interest income		5,940			6,630			4,999			4,976			5,471
Non-interest expense:
Salaries and employee benefits		10,864			10,325			10,536			10,677			10,011
Occupancy expense		2,639			2,214			2,169			2,012			1,963
Professional fees		1,866			1,955			1,016			1,284			1,272
Wealth management fees		774			799			406			326			308
Marketing		1,159			1,083			913			1,140			1,150
Data processing		788			764			766			820			803
Insurance		349			323			310			287			275
Amortization of intangibles		152			153			154			156			156
Other operating expenses		1,420			1,318			1,288			2,132			1,221
Total non-interest expense		20,011			18,934			17,558			18,834			17,159
Minority interest expense		85			86			77			76			82
Income before income taxes		14,390			15,090			12,886			12,093			12,448
Income tax expense		4,596			5,077			3,899			3,851			4,542
Net income	$	9,794		$	10,013		$	8,987		$	8,242		$	7,906
Per Share Data:
Basic earnings	$	0.48		$	0.48		$	0.44		$	0.40		$	0.39
Diluted earnings		0.46			0.47			0.42			0.39			0.37
Dividends		0.060			0.060			0.060			0.045			0.045
Book value (at end of period)		12.87			12.22			11.86			11.64			11.26

Footnotes begin on page 4. All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

	Quarter Ended
	09/30/06			06/30/06			03/31/06			12/31/05			09/30/05
Selected Financial Data (at end of period):
Total securities(1)	$	458,869		$	499,801		$	682,355		$	695,151		$	720,055
Total loans		3,136,634			2,956,026			2,786,075			2,608,067			2,421,725
Total assets		3,876,892			3,651,566			3,671,219			3,497,308			3,328,696
Total deposits		3,238,822			3,125,774			2,939,503			2,823,382			2,572,234
Funds borrowed		235,858			133,163			351,523			296,980			417,664
Long-term debt—trust preferred securities		98,000			98,000			98,000			98,000			78,000
Total stockholders’ equity		268,196			253,769			245,831			238,629			230,803
Wealth management assets under management		2,780,121			2,686,255			2,716,599			2,436,766			2,061,510
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin(2)(8)		3.47	%		3.55	%		3.45	%		3.55	%		3.53	%
Net interest spread(3)		2.97			3.10			3.04			3.15			3.18
Non-interest income to average assets		0.63			0.73			0.57			0.58			0.67
Non-interest expense to average assets		2.13			2.08			2.01			2.20			2.10
Net overhead ratio(4)		1.50			1.35			1.44			1.62			1.43
Efficiency ratio(5), (8)		53.9			50.3			51.7			55.7			52.2
Return on average assets(6)		1.04			1.10			1.03			0.97			0.97
Return on average equity(7)		15.25			16.45			15.21			14.44			14.01
Fee income to total revenue(8)(9)		15.79			19.48			15.32			15.07			16.20
Dividend payout ratio		12.96			12.65			14.06			11.41			11.91
Asset Quality Ratios:
Non-performing loans to total loans		0.06	%		0.10	%		0.15	%		0.04	%		0.05	%
Allowance for loan losses to:
total loans		1.11			1.13			1.13			1.13			1.15
non-performing loans		1,490			1,051			693			2,201			1,954
Net charge-offs (recoveries) to average total loans		0.04			0.05			0.02			0.03			(0.12	)
Non-performing assets to total assets		0.06			0.09			0.12			0.04			0.04
Non-accrual loans to total loans		0.02			0.06			0.12			0.03			0.02
Balance Sheet Ratios:
Loans to deposits		96.8	%		94.6	%		94.8	%		92.4	%		94.2	%
Average interest-earning assets to average interest-bearing liabilities		112.2			111.9			111.2			112.0			111.7
Capital Ratios:
Total equity to total assets		6.92	%		6.95	%		6.70	%		6.82	%		6.93	%
Total risk-based capital ratio		10.71			10.66			10.51			10.65			10.25
Tier 1 risk-based capital ratio		8.65			8.65			8.57			8.61			8.79
Leverage ratio		7.26			7.44			7.28			7.18			7.16

Note: All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

(1) The entire securities portfolio was classified as “available-for-sale” for the periods presented.

(2) Net interest income, on a tax-equivalent basis, divided by average interest-earning assets.

(3) Yield on average interest-earning assets less rate on average interest-bearing liabilities.

(4) Non-interest expense less non-interest income divided by average total assets.

(5) Non-interest expense divided by the sum of net interest income (tax equivalent) plus non-interest income.

(6) Net income divided by average total assets.

(7) Net income divided by average common equity.

(Footnotes continued on next page.)

(8) The company adjusts GAAP reported net interest income by the tax equivalent adjustment amount to account for the tax attributes on federally tax exempt municipal securities. For GAAP purposes, tax benefits associated with federally tax-exempt municipal securities are reflected in income tax expense. The following table reconciles reported net interest income to net interest income on a tax equivalent basis for the periods presented:

Reconciliation of net interest income to net interest income on a tax equivalent basis
	3Q06		2Q06		1Q06		4Q05		3Q05
Net interest income	$	30,040	$	29,862	$	27,775	$	27,717	$	26,264
Tax equivalent adjustment to net interest income		1,166		1,173		1,174		1,143		1,132
Net interest income, tax equivalent basis	$	31,206	$	31,035	$	28,949	$	28,860	$	27,396

(9) Wealth management, mortgage banking and other income as a percentage of the sum of net interest income and wealth management, mortgage banking and other income.

Part I

Item 1. Financial Statements

PRIVATEBANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30, 2006			December 31, 2005			September 30, 2005
	(unaudited)						(unaudited)
Assets
Cash and due from banks	$	91,026		$	47,736		$	43,246
Federal funds sold and other short-term investments		33,565			14,133			11,179
Total cash and cash equivalents		124,591			61,869			54,425
Loans held for sale		7,719			5,269			9,104
Available-for-sale securities, at fair value		458,869			695,151			720,055
Loans, net of unearned discount		3,136,634			2,608,067			2,421,725
Allowance for loan losses		(34,693	)		(29,388	)		(27,884	)
Net loans		3,101,941			2,578,679			2,393,841
Goodwill		63,176			63,176			63,160
Premises and equipment, net		19,825			11,754			9,798
Accrued interest receivable		20,987			16,642			14,176
Other assets		79,784			64,768			64,137
Total assets	$	3,876,892		$	3,497,308		$	3,328,696
Liabilities and Stockholders’ Equity
Demand deposits:
Non-interest-bearing	$	280,478		$	252,625		$	261,808
Interest-bearing		115,531			132,787			121,696
Savings and money market deposit accounts		1,327,932			1,272,353			1,108,299
Brokered deposits		720,673			586,605			528,651
Other time deposits		794,208			579,012			551,780
Total deposits		3,238,822			2,823,382			2,572,234
Funds borrowed		235,858			296,980			417,664
Long-term debt --trust preferred securities		98,000			98,000			78,000
Accrued interest payable		14,290			8,767			6,434
Other liabilities		21,726			31,550			23,561
Total liabilities	$	3,608,696		$	3,258,679		$	3,097,893
Stockholders’ Equity
Preferred stock, 1,000,000 shares authorized		—			—			—
Common stock, without par value, $1 stated value; 39,000,000 shares authorized; 21,249,183, 20,983,934, and 20,978,119 shares issued and outstanding as of September 30, 2006, December 31, 2005 and September 30, 2005, respectively		20,842			20,492			20,490
Treasury stock		(3,830	)		(2,728	)		(2,635	)
Additional paid-in-capital		128,106			122,157			120,816
Retained earnings		116,278			91,274			83,971
Accumulated other comprehensive income		6,800			7,434			8,161
Total stockholders’ equity		268,196			238,629			230,803
Total liabilities and stockholders’ equity	$	3,876,892		$	3,497,308		$	3,328,696

The accompanying notes to consolidated financial statement are an integral part of these statements. All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

PRIVATEBANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Interest Income
Loans, including fees	$	60,361		$	39,580		$	164,398		$	94,369
Federal funds sold and interest-bearing deposits		116			166			402			293
Securities:
Taxable		3,769			6,620			14,672			20,387
Exempt from federal income taxes		2,551			2,473			7,684			7,347
Total interest income		66,797			48,839			187,156			122,396
Interest Expense
Deposits:
Interest-bearing demand		569			218			1,174			616
Savings and money market		14,499			8,072			39,051			20,564
Brokered and other time		17,736			8,521			46,412			20,469
Funds borrowed		2,398			4,387			8,253			9,611
Long-term debt -- trust preferred securities		1,555			1,377			4,589			2,453
Total interest expense		36,757			22,575			99,479			53,713
Net interest income		30,040			26,264			87,677			68,683
Provision for loan losses		1,494			2,046			6,129			4,848
Net interest income after provision for loan losses		28,546			24,218			81,548			63,835
Non-interest Income
Wealth management income		3,477			2,627			10,240			7,174
Mortgage banking income		804			1,284			2,532			3,102
Other income		1,351			1,165			5,106			2,915
Securities gains (losses), net		1,212			(249	)		(373	)		691
(Gains) losses on interest rate swap		(904	)		644			64			152
Total non-interest income		5,940			5,471			17,569			14,034
Non-interest Expense
Salaries and employee benefits		10,864			10,011			31,725			25,634
Occupancy expense, net		2,639			1,963			7,022			5,505
Professional fees		1,866			1,272			4,837			3,285
Wealth management fees		774			308			1,979			735
Marketing		1,159			1,150			3,154			2,409
Data processing		788			803			2,318			2,012
Postage, telephone & delivery		325			304			1,050			814
Insurance		349			275			982			808
Amortization of intangibles		152			156			459			255
Other non-interest expense		1,095			917			2,977			2,395
Total non-interest expense		20,011			17,159			56,503			43,852
Minority interest expense		85			82			248			231
Income before income taxes		14,390			12,448			42,366			33,786
Income tax provision		4,596			4,542			13,572			11,116
Net income	$	9,794		$	7,906		$	28,794		$	22,670
Basic earnings per share	$	0.48		$	0.39		$	1.40		$	1.13
Diluted earnings per share	$	0.46		$	0.37		$	1.34		$	1.07

The accompanying notes to consolidated financial statement are an integral part of these statements. All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

PRIVATEBANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

(In thousands, except per share data)

	Common Stock		Treasury Stock			Additional paid-in-capital		Retained Earnings			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
Balance, January 1, 2005	$ 19,986		$ (2,207)			$107,999		$ 64,086			$   7,056			$ 196,920
Net income		—		—			—		22,670			—			22,670
Net decrease in fair value of securities classified as available-for-sale, net of income taxes and reclassification adjustments		—		—			—		—			1,105			1,105
Total comprehensive income		—		—			—		22,670			1,105			23,775
Cash dividends declared ($0.045 per share)		—		—			—		(2,785	)		—			(2,785	)
Issuance of common stock		456		—			8,081		—			—			8,537
Acquisition of treasury stock		48		(428	)		184		—			—			(196	)
Restricted shares expense		—		—			1,370		—			—			1,370
Stock option expense		—		—			2,050		—			—			2,050
Tax benefit from certain stock option exercises and vesting restricted shares		—		—			1,132		—			—			1,132
Balance, September 30, 2005	$	20,490	$	(2,635	)	$	120,816	$	83,971		$	8,161		$	230,803
Balance, January 1, 2006	$	20,492	$	(2,728	)	$	122,157	$	91,274		$	7,434		$	238,629
Net income		—		—			—		28,794			—			28,794
Net decrease in fair value of securities classified as available-for-sale, net of income taxes and reclassification adjustments		—		—			—		—			(634	)		(634	)
Total comprehensive income (loss)		—		—			—		28,794			(634	)		28,160
Cash dividends declared ($0.060 per share)		—		—			—		(3,790	)		—			(3,790	)
Issuance of common stock		294		—			1,288		—			—			1,582
Acquisition of treasury stock		56		(1,102	)		499		—			—			(547	)
Restricted shares expense		—		—			1,523		—			—			1,523
Stock option expense		—		—			1,314		—			—			1,314
Tax benefit from certain stock option exercises and vesting restricted shares		—		—			1,325		—			—			1,325
Balance, September 30, 2006	$	20,842	$	(3,830	)	$	128,106	$	116,278		$	6,800		$	268,196

The accompanying notes to consolidated financial statement are an integral part of these statements. All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

PRIVATEBANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

(In thousands)

	Nine months ended September 30,
	2006			2005
Cash flows from operating activities
Net income	$ 28,794			$ 22,670
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,027			3,270
Restricted shares expense		1,523			1,370
Stock option expense		1,314			2,050
Provision for loan losses		6,129			4,848
Net loss (gain) on sale of securities		373			(691	)
Gains on interest rate swap		(64	)		(152	)
Net increase in loans held for sale		(2,451	)		(595	)
Decrease in deferred loan fees		(111	)		(320	)
Change in minority interest		248			231
Increase in accrued interest receivable		(4,345	)		(1,706	)
Increase in accrued interest payable		5,523			2,481
Increase in other assets		(14,756	)		(10,013	)
Decrease in other liabilities		(10,072	)		(9,649	)
Total adjustments		(14,662	)		(8,876	)
Net cash provided by operating activities		14,132			13,794
Cash flows from investing activities
Proceeds from maturities, paydowns, and sales of available-for-sale securities		157,723			104,722
Purchase of securities available-for-sale		(61,232	)		(120,702	)
Redemption of FHLB (Chicago) stock		138,506			67,602
Acquisition of The PrivateBank - Michigan, net of cash and cash equivalents acquired		--			(48,468	)
Net loan principal advanced		(529,212	)		(453,374	)
Premises and equipment expenditures		(10,100	)		(5,085	)
Net cash used in investing activities		(304,315	)		(455,305	)
Cash flows from financing activities
Net increase in total deposits		415,501			425,663
Proceeds from exercise of stock options		2,174			1,126
Proceeds from Private Placement		--			7,565
Acquisition of treasury stock		(1,102	)		(428	)
Dividends paid		(3,790	)		(2,785	)
Excess tax benefit from share-based payments		1,325			1,132
Issuance of debt related to the acquisition of The PrivateBank - Michigan		--			57,000
Other equity transactions, net		(36	)		78
Issuance of debt		223,663			324,120
Repayment of debt		(284,830	)		(368,189	)
Net cash provided by financing activities		352,905			445,282
Net increase in cash and cash equivalents		62,722			3,771
Cash and cash equivalents at beginning of year		61,869			50,654
Cash and cash equivalents at end of period	$	124,591		$	54,425

The accompanying notes to consolidated financial statement are an integral part of these statements. All previously reported data has been restated to reflect the adoption of SFAS No. 123(R), “Share Based Payment”

PRIVATEBANCORP, INC. AND SUBSIDIARIES

NOTE 1—BASIS OF PRESENTATION

The consolidated financial information of PRIVATEBANCORP, Inc. (the “Company”) and its subsidiaries, The PrivateBank and Trust Company (the “Bank” or “The PrivateBank - Chicago”), The PrivateBank - St. Louis (which includes The PrivateBank - Wisconsin, an office of The PrivateBank - St. Louis), The PrivateBank - Michigan, and The PrivateBank Mortgage Company (the “Mortgage Company”) included herein is unaudited; however, such information reflects all adjustments (consisting only of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation for the interim periods. The financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The annualized results of operations for the three and nine months ended September 30, 2006 are not necessarily indicative of the results expected for the full year ending December 31, 2006. The accompanying consolidated financial statements are unaudited and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, or cash flows in accordance with U.S. generally accepted accounting principles. The consolidated financial statements for the period ended September 30, 2006 should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2005 included in the Company’s Annual Report on Form 10-K and restated consolidated financial statements and notes for the year ended December 31, 2005, filed on Form 8-K on September 19, 2006. For 2005, The PrivateBank - Michigan’s results of operations are included since the date of acquisition, June 20, 2005.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reported period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements,” to provide guidance on how to measure fair value, which would apply broadly to financial and non-financial assets and liabilities that are measured at fair value under other authoritative accounting pronouncements. The statement defines fair value, provides a hierarchy that prioritizes inputs that should be used in valuation techniques used to measure fair value, and expands current disclosures about the use of fair value to measure assets and liabilities. The disclosures focus on the methods used for the measurements and their effect on earnings and would apply whether the assets were measured at fair value in all periods, such as trading securities, or in only some periods, such as for impaired assets. A transition adjustment would be recognized as a cumulative-effect adjustment to beginning retained earnings for the fiscal year in which statement is initially adopted. This adjustment is measured as the difference between the carrying amounts and the fair values of those financial instruments at the date of adoption. The statement is effective for fiscal years beginning after November 15, 2007 (or January 1, 2008 for calendar-year companies) and interim periods within those fiscal years. The Company will adopt the statement on January 1, 2008. The fair value disclosures required by this statement will be effective for the first interim period in which the statement is adopted. The Company is currently evaluating the impact of the statement on its financial position, results of operations, and liquidity.

In July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. FIN 48 also will require expanded disclosure with respect to the uncertainty in income taxes. The provisions of FIN 48 are required to be adopted as of the beginning of the annual reporting period that begins after December 15, 2006 and the Company is currently evaluating the impact of the adoption on its consolidated financial statements.

In February 2006, the FASB issued Statement No. 155, “Accounting for Certain Hybrid Financial Instruments,” which permits, but does not require, fair value accounting for any hybrid financial instrument that contains an embedded derivative that would otherwise require bifurcation in accordance with Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (“SFAS No. 133”). The statement also subjects beneficial interests in securitized financial assets that were previously exempted to the requirements of SFAS No. 133. This statement is effective for fiscal years beginning after December 15, 2006. The Company will adopt the standard effective January 1, 2007. The Company is currently evaluating the impact of the statement on its financial position, results of operations, and liquidity.

NOTE 2 — ACCOUNTING FOR STOCK-BASED COMPENSATION

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123R (revised 2004), “Share Based Payment.” This statement requires use of the fair value method of accounting for share-based payment transactions with employees. With the adoption of SFAS No. 123R effective January 1, 2006, the Company began accounting for stock options under the fair value method of accounting and estimating expected forfeitures of stock grants instead of its previous practice of accounting for forfeitures as they occurred. In addition, the Company began to classify the excess tax benefits, if any, related to employee option exercises as financing activities rather than operating activities in its consolidated statements of cash flows. The Company elected the modified-retrospective-transition method, which results in the restatement of prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosures. Compensation cost recognized includes the cost of all share-based payments granted, but not yet fully vested in all periods presented.

The following table summarizes the impact of modified retrospective application on the previously reported results for the three and nine months ended September 30, 2005:

	2005
	Three Months Ended September 30		Nine Months Ended September 30
Income before income taxes, originally reported		$13,051		$35,836
Stock-based compensation expense under the fair value method		603		2,050
Income before income taxes, restated		$12,448		$33,786
Net Income, originally reported		$ 8,865		$24,570
Stock-based compensation expense under the fair value method, net of tax		959		1,900
Net Income, restated		$ 7,906		$22,670
Net income per share (basic), originally reported		$0.43		$1.22
Net income per share (basic), restated		0.39		1.13
Net income per share (diluted), originally reported		$0.41		$1.17
Net income per share (diluted), restated		0.37		1.07

The following table includes the adjustments to these accounts as of January 1, 2005, the beginning of the earliest period presented.

	As Reported January 1, 2005	Adjustment for adoption of SFAS No. 123R	Adjusted Balance January 1, 2005
	(in thousands)
Retained earnings	$ 73,789	$(9,703)	$ 64,086
Additional Paid in Capital	100,091	7,909	108,000
Deferred compensation	(5,056)	5,056	--
Deferred Income Tax Asset	(588)	2,847	2,259

Prior to January 1, 2006, the Company accounted for its stock-based employee compensation plans under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations, as permitted by Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation.” No stock based employee compensation was recognized in the Consolidated Statements of Income in periods prior to the restatements under SFAS No. 123R, as all options granted under the Company’s compensation plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

Prior to the adoption of SFAS No. 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options and vesting of restricted shares as operating cash flows in the Statement of Cash Flows. SFAS No. 123R requires the cash flows resulting from the tax benefits of these tax deductions in excess of the compensation cost recognized for those share-based payments (the excess tax benefits) be classified as financing cash flows. The excess tax benefit in financing cash flows was $1.3 million in the first nine months of 2006 and $1.1 million in the first nine months of 2005.

Beginning in 2006, the Company has modified its retirement provision for all employee grants of stock options and restricted stock. Retirement eligibility is defined as having completed at least ten years of employment with the Company (or a predecessor) and having attained at least 62 years of age. The 2006 and subsequent awards held by employees who retire with retirement eligibility will continue to vest on the normal vesting schedule so long as the retiree remains retired from the financial services industry. In the financial statements, these grants will be amortized up to the retirement eligibility date. Any grants awarded to employees already meeting the retirement definition will be immediately expensed on the grant date. During the third quarter 2006, theCompany incurred $96,490 of immediate expense due to the retirement eligibility of one award recipient.

The Company has the following employee savings and incentive plans.

a.Stock Options

The Company had stock options outstanding (split-adjusted) under its Stock Incentive Plan and its Incentive Compensation Plan of 399,110 and 1,145,541 at September 30, 2006, and 607,515 and 927,450 options outstanding at September 30, 2005, respectively, for each plan. All options have a strike price equal to the per share fair market value of the underlying common stock on the date of grant. All options have a term of 10 years. Beginning with stock options granted in the third quarter 2006, employee options vest equally over the first five years on each anniversary date of the grant, and non-employee director options vest equally over the first three years on each anniversary date of the grant. Options granted to employees prior to 2006 were first exercisable beginning on the second anniversary date of the grant, and then fully vested on the fourth anniversary date. Options awarded to non-employee directors prior to 2006 vested at the end of the year in which the awards were granted. Additionally, all options granted in 2006 were non-qualified stock options. Prior to 2006, employees were primarily granted incentive stock options and non-employee directors were granted non-qualified stock options. Due to the different rules of taxation to the option holder, non-qualified stock options require the Company to record a tax benefit related to the amortized compensation expense in its financial statements. The periods presented include $412,000 and $603,000 of stock option expense for the three months ended September 30, 2006 and 2005, respectively.

At September 30, 2006, the Incentive Compensation Plan had 204,880 shares available to be granted under the Plan either pursuant to the granting of stock options, as restricted stock awards or as deferred stock units. No shares remain available for grant under the Stock Incentive Plan.

The following table summarizes the status of the Company’s stock option agreements and stock option program as of September 30, 2006 and 2005, adjusted to reflect all stock splits and changes during the nine months then ended:

	2006		2005
	Weighted Average		Weighted Average
	Shares	Exercise Price	Shares	Exercise Price
Outstanding at beginning of period	1,540,350	$17.65	1,445,585	$12.65
Granted	296,200	46.51	328,800	31.97
Exercised	(270,199)	8.05	(200,470)	5.61
Forfeited	(21,700)	28.90	(38,950)	18.26
Outstanding at end of year	1,544,651	24.71	1,534,965	17.56
Options exercisable at end of period	779,176	13.87	814,240	8.84
Weighted average fair value of options granted during the year	$18.41		$12.04

The range of exercise prices was $3.65 to $46.51 and the weighted average remaining contractual life was 7.1 years for stock options outstanding as of September 30, 2006. The weighted average contractual life of stock options that were vested and unexercised at September 30, 2006 was 5.4 years. The aggregate intrinsic value of these options was $24.8 million. If these options were exercised, the Company would receive an additional $10.8 million of capital.

The following table presents the range of exercise prices for the stock option grants outstanding at September 30, 2006.

Exercise Price Range	Stock Options Outstanding	Weighted Average Remaining Contractual Life
$3.13 - $7.50	399,110	3.5
$17.23 - $33.98	753,341	7.7
$34.29 - $46.51	392,200	9.7
Total stock options outstanding	1,544,651	7.1

As of September 30, 2006, total unrecognized compensation costs related to unvested stock options was $8.4 million with a weighted average remaining life of 3.8 years.

Stock Option Valuation

During the third quarter of 2006, the Company granted stock options to a portion of its employees and to all of its non-employee directors. All stock options grants are approved by the Company’s Board of Directors on the grant date. These stock options are exercisable at the price equal to the closing price of the Company’s common stock on the date of grant.

To derive the estimated fair value of these stock options, the Company used the Cox-Ross-Rubenstein binomial method of valuing options. The Company adopted this formula in the second quarter of 2004. Previously the Black-Scholes method was used. The Cox-Ross-Rubenstein formula is similar to the Black-Scholes method because it uses similar inputs of expected term, expected volatility, interest rate and dividend yield.

In 2006, the Company derived expected term by using the calculation prescribed in the SEC’s Staff Accounting Bulletin No. 107 “Share Based Payment” (“SAB 107”). This calculation arrives at expected term using the vesting schedule and the contractual term of the stock options. Previously the Company estimated expected term based on its history of exercises. The Company believes it is appropriate to use the SAB 107 calculation based on its new vesting schedule for stock options.

In 2006, the Company changed its method for determining expected volatility. Expected volatility is calculated by combining the historical volatility on the Company’s exchange traded common stock and the implied volatility on the exchange traded stock options that are derived from the value of the Company’s exchange traded common stock. In previous years, the Company used the expected volatility computed solely from an index of strategic peers and their common stock volatility. The Company changed its method for calculating expected volatility because of the shortening of the expected term of the options granted in 2006 and the length of time the Company’s stock has been traded on a publicly accessible exchange, the latter validating reliance on the Company’s own common stock historical volatility.

The interest rate and dividend yield calculations remain unchanged from prior years. The interest rate is the U.S. Treasury yield over the expected term of the stock options. The dividend yield is calculated by annualizing the Company’s most recent dividend paid and dividing by the Company’s market capitalization.

In determining the fair value of each option grant, the Company used the following assumptions:

Inputs	2006	2005	2004
Expected term	6.0 - 6.5 years	7 years	7 years
Expected volatility	32.36-32.71%	30%	30%
Interest rate	4.56 - 4.58%	3.81 - 4.15%	3.74 - 4.27%
Dividend yield	0.52%	0.57%	0.37%

b.Restricted Stock

Restricted shares carry voting and dividend rights. Sale of the shares is restricted prior to vesting. Subject to continued employment, vesting occurs five years from the date of grant. Upon adoption of SFAS No. 123R, the Company records compensation expense on a straight-line basis over the vesting period based on the fair market value on the grant date. Included in salaries and employee benefits in the consolidated statements of income is compensation expense for restricted shares, net of forfeits of $1,522,910 and $1,370,152 for the nine months ended 2006 and 2005, respectively.

The following table summarizes the status of the Company’s restricted stock program as of September 30, 2006 and 2005, adjusted to reflect all stock splits and changes during the years then ended:

	2006					2005
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of period		491,500		$	22.87		414,400		$	16.23
Granted		136,400			46.51		147,000			32.04
Vested		(70,000	)		6.99		(73,200	)		3.53
Forfeited		(14,400	)		35.63		---			-----
Unvested at end of period		543,500			25.53		488,200			16.86

As of September 30, 2006, total unrecognized compensation costs related to non-vested restricted stock was $11.6 million with a weighted average remaining life of 4.1 years.

c.Deferred Compensation Plan

The Company established a deferred compensation plan on April 24, 2003 as part of its Incentive Compensation Plan that was approved by shareholders. The purpose of the Company’s Deferred Compensation Plan is to further the Company’s ability to attract and retain high quality executives and non-employee directors. The Plan also furthers the retention of stock ownership of participants by facilitating deferral of gains resulting from the exercise of nonqualified stock options or the receipt of shares pursuant to awards under the Company’s Stock Incentive Plan and the Incentive Compensation Plan, and conversion of cash compensation into deferred stock units representing the right to receive, on a one-for-one basis, shares of Company Common Stock. The Deferred Compensation Plan permits the deferral of base compensation, bonus compensation, and/or cash and the receipt of shares of Common Stock pursuant to exercises of non-qualified stock options and pursuant to other awards under the Company’s Incentive Compensation Plan. The Deferred Compensation Plan is structured as a “nonqualified plan” under applicable IRS and Department of Labor guidelines. At September 30, 2006 and 2005, 13,792 and 11,693 deferred stock units, respectively, were recorded in the plan.

d.Savings and Retirement Plan

The Company maintains The PrivateBancorp, Inc. Savings and Retirement Plan (the “Plan”) pursuant to Section 401(k) of the Internal Revenue Code, whereby eligible employees may contribute a percentage of compensation, but not in excess of the maximum amount allowed under the Code. The banks can make discretionary contributions to the Plan as determined and approved by the bank’s board of directors. Total discretionary contributions to the Plan amounted to $540,469 for the nine months ended September 30, 2006 and $405,822 for the nine months ended September 30, 2005.

NOTE 3—EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share (in thousands except per share data) for the three and nine months ended September 30, 2006 and 2005:

	Three months ended September 30,
	2006	2005
Net income	$9,794	$7,906
Weighted average common shares outstanding	20,582	20,408
Weighted average common shares equivalent(1)	859	965
Weighted average common shares and common share equivalents	21,441	21,373
Net income per average common share - basic	$  0.48	$  0.39
Net income per average common share - diluted	$  0.46	$  0.37

	Nine months ended September 30,
	2006	2005
Net income	$28,794	$22,670
Weighted average common shares outstanding	20,520	20,130
Weighted average common shares equivalent(1)	893	908
Weighted average common shares and common share equivalents	21,413	21038
Net income per average common share - basic	$  1.40	$  1.13
Net income per average common share - diluted	$  1.34	$  1.07

(1)   Common shares equivalent result from stock options being treated as if they had been exercised and are computed by application of the treasury stock method.

NOTE 4—OPERATING SEGMENTS

For purposes of making operating decisions and assessing performance, management regards The PrivateBank - Chicago, The PrivateBank - St. Louis, The PrivateBank - Michigan, Wealth Management and the Holding Company as five operating segments. The Company’s investment securities portfolio is comprised of the three banks’ portfolios and, accordingly, each portfolio is included in total assets and reported in the results of The PrivateBank - Chicago, The PrivateBank - St. Louis and The PrivateBank - Michigan. Compensation expense related to the management of the investment portfolios is allocated primarily to The PrivateBank - Chicago. Insurance expense for the Company is allocated to each segment. The results for each business segment are summarized in the paragraphs below and included in the following segment tables.

The Company applies the accrual basis of accounting for each reportable segment and for transactions between reportable segments. During the first nine months of 2006, there were no changes in the measurement methods used to determine reported segment profit or loss as compared to the same period in 2005. For the periods presented, there are no asymmetrical allocations to segments requiring disclosure.

The accounting policies of the segments are generally the same as those described in Note 1 — Basis of Presentation to the consolidated financial statements included in this report.

The PrivateBank - Chicago

The PrivateBank - Chicago, an Illinois state-chartered bank, through its main office located in downtown Chicago as well as six full-service Chicago suburban locations and the Gold Coast location, provides personal and commercial banking services primarily to affluent individuals, professionals, entrepreneurs and their business interests. The PrivateBank - Chicago’s commercial lending products include lines of credit for working capital, term loans for equipment and letters of credit to support the commitments made by its clients. Non-credit products include lock-box, cash concentration accounts, merchant credit card processing, electronic funds transfer, other cash management products and insurance. The PrivateBank - Chicago offers a full range of real estate lending products including fixed and floating rate permanent and mini-permanent mortgages, construction and commercial real estate loans. Personal loans include installment loans and lines of credit, home equity loans and a wide variety of home mortgage loans.

Individual banking services include interest-bearing checking, money market accounts, certificates of deposit, ATM/debit cards and investment brokerage accounts. Additionally, The PrivateBank - Chicago offers secured and unsecured personal loans and lines of credit. Through The PrivateBank - Chicago’s affiliations with independent firms, clients have access to insurance products and securities brokerage services. The PrivateBank - Chicago also offers domestic and international wire transfers and foreign currency exchange. The PrivateBank - Chicago balance sheet reflects goodwill of $19.2 million and intangibles of $1.9 million at September 30, 2006, which remained relatively unchanged compared to December 31, 2005 balances. The PrivateBank Mortgage Company results are included in The PrivateBank - Chicago since June 15, 2004, the date of acquisition.

	The PrivateBank - Chicago
	September 30,
	2006	2005
	(in thousands)
Total gross loans	$ 2,249,812	$ 1,776,623
Total assets	2,848,195	2,551,493
Total deposits	2,430,999	1,981,215
Total borrowings	135,143	339,661
Total capital	257,632	210,020
Net interest income	67,892	57,557
Provision for loan loss	3,478	2,893
Non-interest income	6,053	5,832
Non-interest expense	27,033	23,693
Net income	30,162	25,119

The PrivateBank - St. Louis (includes The PrivateBank - Wisconsin)

The PrivateBank - St. Louis, a federal savings bank, was established as a new bank subsidiary of the Company on June 23, 2000, and is headquartered in St. Louis, Missouri. The PrivateBank - Wisconsin was established under the charter of The PrivateBank - St. Louis and is presently a branch of The PrivateBank - St. Louis. In September 2005, The PrivateBank - Wisconsin opened its permanent space in downtown Milwaukee, Wisconsin, after operating in temporary space since March 2005. Both locations offer a full range of real estate lending products including fixed and floating rate permanent and mini-permanent mortgages and construction loans. Personal loans include installment loans and lines of credit, home equity loans and a wide variety of home mortgage loans. Commercial lending products provided by The PrivateBank - St. Louis and The PrivateBank - Wisconsin include lines of credit for working capital, term loans for equipment and letters of credit to support the commitments made by its clients. Non-credit products include lock-box, cash concentration accounts, merchant credit card processing, electronic funds transfer, and other cash management products. Individual banking services include interest-bearing checking, money market deposit accounts, certificates of deposit, ATM/debit cards and investment brokerage accounts. The PrivateBank - St. Louis and The PrivateBank - Wisconsin also offer domestic and international wire transfers and foreign currency exchange. For the period ended September 30, 2006, the financial results of The PrivateBank - Wisconsin are included in results of The PrivateBank - St. Louis. The PrivateBank - Wisconsin had a net loss of $755,000 for the nine months ended September 30, 2006 compared to a net loss of $903,000 in the prior year period.

During the second quarter of 2006, the Company submitted an application to the Office of the Comptroller of Currency (“OCC”) to obtain a national bank charter. On September 18, 2006, the OCC granted conditional approval of the charter application. FDIC approval of an application for deposit issuance is pending. All regulatory approvals for this new charter are expected to be received prior to year-end. The new charter will receive the assets and liabilities currently attributed to The PrivateBank - Wisconsin as well as a capital contribution from the Holding Company.

	The PrivateBank - St. Louis & Wisconsin
	September 30,
	2006	2005
	(in thousands)
Total gross loans	$ 402,965	$ 287,891
Total assets	482,698	354,980
Total deposits	405,703	288,397
Total borrowings	28,857	33,182
Total capital	44,655	29,947
Net interest income	11,558	8,075
Provision for loan losses	2,031	1,408
Non-interest income	1,441	1,688
Non-interest expense	7,470	5,784
Net income	2,426	1,826

The PrivateBank - Michigan

The PrivateBank - Michigan, a Michigan state-chartered bank, through its main office located in Bloomfield Hills, and offices located in the cities of Grosse Pointe and Rochester, provides personal and commercial banking services primarily to affluent individuals, professionals, entrepreneurs and their business interests. The PrivateBank - Michigan’s commercial lending products include lines of credit for working capital, term loans for equipment and other asset acquisitions and letters of credit to support the commitments made by its clients. Non-credit products include merchant credit card processing and electronic funds transfer. The PrivateBank - Michigan offers a full range of real estate lending products including fixed and floating rate permanent and mini-permanent mortgages, construction and commercial real estate loans. Personal loans include installment loans and secured and unsecured lines of credit, home equity loans and a wide variety of home mortgage loans.

Individual banking services include interest-bearing checking, money market accounts, certificates of deposit, ATM/debit cards and investment brokerage accounts. Through The PrivateBank - Michigan’s affiliations with Linsco Private Ledger, clients have access to insurance products and securities brokerage services. The PrivateBank - Michigan also offers domestic and international wire transfers and foreign currency exchange. The PrivateBank - Michigan balance sheet reflects goodwill of $42.6 million and intangibles of $3.2 million at September 30, 2006, as a result of its acquisition by the Company on June 20, 2005, which remain relatively unchanged from December 31, 2005 balances.

	The PrivateBank - Michigan
	September 30,
	2006	2005 (1)
	(in thousands)
Total gross loans	484,470	$ 362,407
Total assets	555,000	430,569
Total deposits	408,287	306,306
Total borrowings	52,529	44,965
Total capital	90,486	76,700
Net interest income	12,837	4,225
Provision for loan losses	620	546
Non-interest income	594	418
Non-interest expense	6,649	2,284
Net income	4,021	1,180

___________________

(1) Includes results since June 20, 2005, the acquisition date.

Wealth Management

Wealth Management activities include personal trust services, investment agency services, and custody, escrow and tax-deferred exchange services that are provided primarily to owners or beneficiaries of wealth. Experienced trust and investment professionals provide advice and guidance to clients and their other advisors, implement agreed-upon strategies, and then report and assess the results of the strategies. We use an "open architecture" investment approach that aligns our interests with those of our clients as we seek the best combination of separate account managers, actively managed or index mutual funds, exchange-traded funds, and other investment strategies. Consistent with our private banking approach, we emphasize a high level of personal attention and responsiveness to client needs. This segment includes wealth management activities from all of our geographic locations as well as the results of Lodestar. The minority interest expense related to Lodestar is included in non-interest expense for this segment. Fees earned by Lodestar as a third-party investment manager and paid by the Wealth Management segment are eliminated from non-interest income and non-interest expense, respectively, for all periods presented.

	Wealth Management
	September 30,
	2006	2005
	(in thousands)
Wealth Management assets under management	$2,780,121	$2,061,510
Wealth Management fee revenue	10,240	7,174
Net interest income	748	618
Non-interest income	10,240	7,174
Non-interest expense	9,069	6,698
Minority interest expense	248	231
Net income	1,340	801

The following tables indicate the breakdown of our wealth management assets under management at September 30, 2006, by account classification and related gross revenue for the nine months ended September 30, 2006 and September 30, 2005:

	At or for the nine months ended September 30, 2006		At or for the nine months ended September 30, 2005
	Market Value	Revenue	Market Value	Revenue
Account Type	(in thousands)		(in thousands)
Wealth Management Department (Chicago and Michigan(1))
Trust, estate and guardianship —managed	$830,994	$ 3,478	$ 465,471	$ 2,010
Investment agency—managed	603,560	2,862	412,614	1,654
Custody - not managed	641,347	816	533,451	723
Retirement plan—managed	80,576	158	80,731	119
Lodestar - managed	739,279	3,258	674,305	3,029
Less assets managed and revenue earned by Lodestar(2)	(115,635)	(332)	(105,062)	(361)
Total	$2,780,121	$ 10,240	$2,061,510	$ 7,174

(1)   For the 2005 table, includes results of The PrivateBank - Michigan since June 20, 2005, the acquisition date.

(2)   These assets are held in managed or unmanaged accounts at the Wealth Management Department (Chicago and Michigan) as well as in managed accounts at Lodestar. The revenues related to these assets are allocated based on the services provided.

Holding Company Activities

Holding Company activities consist of parent company only matters. The Holding Company’s most significant assets are net investments in its three banking subsidiaries, The PrivateBank - Chicago, The PrivateBank - St. Louis, and The PrivateBank - Michigan and a mortgage company subsidiary, The PrivateBank Mortgage Company.

As of September 30, 2006, the Company had a total of $98.0 million of Trust Preferred Securities outstanding, which are accounted for as long-term debt and also qualify for Tier 1 and Tier 2 capital (see note 6).

The Company also has a $65.0 million credit facility with LaSalle Bank comprised of a $40.0 million senior debt facility and $25.0 million of subordinated debt. The senior debt facility is comprised of a $250,000 term loan with a maturity of December 31, 2016, and a revolving loan with a maturity of December 1, 2006. Management expects to renew the revolving loan on an annual basis. The subordinated debt matures on December 31, 2016. The interest rate on the senior debt facility resets quarterly, and is based on, at the Company’s option, either the lender’s prime rate or three-month LIBOR plus 120 basis points, with a floor of 3.50%. The interest rate on the subordinated debt resets quarterly, and is equal to three-month LIBOR plus 135 basis points, with a floor of 3.50%. Currently, $20.75 million is available on the senior debt facility and $4.0 million is available on the subordinated debt facility.

At September 30, 2006, the Company had $19.25 million outstanding on the senior debt facility and $21.0 million of subordinated debt outstanding. The subordinated debt qualifies as Tier 2 capital under applicable rules and regulations promulgated by the Board of Governors of the Federal Reserve System. The credit facility is used for general corporate and other working capital purposes. The Company expects to further draw down on the facilities over the next year to support continued balance sheet growth.

Holding Company activities consist primarily of interest expense on borrowings and operating expenses. Recurring holding company operating expenses consist of compensation (expensing of restricted stock awards, stock options and other salary expense) and miscellaneous professional fees.

	Holding Company Activities
	At or for the nine months ended September 30,
	2006	2005
	(in thousands)
Total assets	$406,678	$323,453
Total borrowings	40,250	19,250
Long-term debt - trust preferred securities	98,000	78,000
Total capital	268,196	227,806
Net interest expense	5,645	2,408
Non-interest income	162	150
Non-interest expense	7,245	4,319
Net loss	8,656	4,357

The following is a summary of certain operating information for reportable segments at or for the periods presented and the reported consolidated balances (in millions):

At or for the nine months ended September 30, 2006	The PrivateBank- Chicago		The PrivateBank - St. Louis & Wisconsin		The PrivateBank - Michigan		Wealth Management		Holding Company Activities			Intersegment Eliminations(2)			Consolidated
Total assets	$2,848.2		$	482.7	$	555.0	$	-	$	406.7		$	(415.7	)	$	3,876.9
Total deposits	2,431.0			405.7		408.3		-		-			(6.2	)		3,238.8
Total borrowings(1)	135.1			28.9		52.5		-		138.3			(20.9	)		333.9
Total loans	2,249.8			403.0		484.5		-		-			(0.7	)		3,136.6
Total capital	257.6			44.7		90.5		-		268.2			(392.8	)		268.2
Net interest income	67.9			11.6		12.8		0.7		(5.6	)		0.3			87.7
Provision for loan loss	3.5			2.0		0.6		-		-			-			6.1
Non-interest income	6.1			1.4		0.6		10.2		0.2			(0.9	)		17.6
Non-interest expense	27.0			7.5		6.6		9.1		7.2			(0.9	)		56.5
Minority interest expense		-                              -				-		0.2		-			-			0.2
Net income	30.2			2.4		4.0		1.3		(8.7	)		(0.4	)		28.8
Wealth Management assets under management	-			-		500.8		2,395.0		-			(115.7	)		2,780.1

At or for the nine months ended September 30, 2005	The PrivateBank- Chicago		The PrivateBank - St. Louis & Wisconsin		The PrivateBank - Michigan		Wealth Management		Holding Company Activities			Intersegment Eliminations(2)			Consolidated
Total assets	$	2,551.5	$	355.0	$	430.6	$	-	$	323.5		$	(331.9	)	$	3,328.7
Total deposits		1,981.2		288.4		306.3		-		-			(3.7	)		2,572.2
Total borrowings(1)		339.7		33.2		45.0		-		97.3			(19.5	)		495.7
Total loans		1,776.6		287.9		362.4		-		-			(5.2	)		2,421.7
Total capital		210.0		29.9		76.7		-		227.8			(313.6	)		230.8
Net interest income		57.6		8.1		4.2		0.6		(2.4	)		0.6			68.7
Provision for loan loss		2.9		1.4		0.5		-		-			-			4.8
Non-interest income		5.8		1.7		0.4		7.2		0.2			(1.3	)		14.0
Non-interest expense		23.7		5.8		2.3		6.7		4.3			1.1			43.9
Minority interest expense		-		-		-		0.2		-			-			0.2
Net income		25.1		1.8		1.2		0.8		(4.4	)		(1.8	)		22.7
Wealth Management assets under management		-		-		250.2		1,916.3		-			(105.0	)		2,061.5

(1)Includes long-term debt-trust preferred securities for the Holding Company Activities segment.

(2)The intersegment elimination for total loans reflects the exclusion of unearned income for management reporting purposes. The intersegment elimination for total deposits reflects the exclusion of intercompany deposits held at The PrivateBank - Chicago. The intersegment elimination for total capital reflects the elimination of the net investment in The PrivateBank - Chicago, The PrivateBank - St. Louis, The PrivateBank - Wisconsin, The PrivateBank - Michigan and The PrivateBank Mortgage Company in consolidation. The intersegment eliminations include adjustments necessary for each category to agree with the related consolidated financial statements.

The adjustments to total assets presented in the table above represent the elimination of the net investment in banking subsidiaries in consolidation, the elimination of the Company’s cash that is maintained in a subsidiary bank account, the elimination of federal funds purchased and sold between Chicago, St. Louis and Michigan, the reclassification of the unearned discount on loans, the reclassification related to current and deferred taxes, the elimination of The PrivateBank - Chicago commercial loan and offsetting the warehouse borrowing on The PrivateBank Mortgage Company’s books and the reclassification of loan fee income which is included in non-interest income for segment reporting purposes as compared to interest income for consolidated reporting purposes. Additionally, The PrivateBank Mortgage Company’s loans held for sale to its affiliate The PrivateBank - Chicago, if any, are reclassified to consolidated loans from loans held for sale.

Note 5—Other Comprehensive Income

Change in the fair value of securities available-for-sale is presented on a net basis on the Consolidated Statement of Changes in Stockholders’ Equity. The following table discloses the changes in the components of other accumulated comprehensive income for the nine months ended September 30, 2006 and 2005 (in thousands):

	September 30, 2006
	Before Tax Amount	Tax Effect	Net of Tax Amount
Change in unrealized (losses) gains on securities available-for-sale	$(2,109)	$(1,239)	$ (870)
Less: reclassification adjustment for losses (gains) included in net income	373	137	236
Change in net unrealized (losses) gains	$(1,736)	$(1,102)	$ (634)
	September 30, 2005
	Before Tax Amount	Tax Effect	Net of Tax Amount
Change in unrealized gains on securities available-for-sale	$ 2,475	$ 945	$ 1,530
Less: reclassification adjustment for gains included in net income	(691)	(266)	(425)
Change in net unrealized gains	$ 1,784	$ 679	$ 1,105

Note 6—Long Term Debt — Trust Preferred Securities

As of September 30, 2006, the Company owned 100% of the common securities of three trusts, PrivateBancorp Statutory Trust II, Bloomfield Hills Statutory Trust I and PrivateBancorp Statutory Trust III. PrivateBancorp Statutory Trust II and PrivateBancorp Statutory Trust III were established as wholly-owned subsidiaries of the Company in June 2005 and December 2005, respectively. Bloomfield Hills Statutory Trust I was acquired as part of the acquisition of BHB on June 20, 2005. The Trusts were formed for purposes of issuing trust preferred securities to third-party investors and investing the proceeds from the issuance of the trust preferred securities and common securities solely in junior subordinated debentures (“Debentures”) issued by the Company with the same maturities and interest rates as the trust preferred securities. The Debentures are the sole assets of the Trusts.

On June 20, 2005, the Company issued $50.0 million of trust preferred securities, which pay interest quarterly at a fixed rate of 6.00% until September 2010 and then subsequently at a floating rate equal to three-month LIBOR plus 1.71%. The trust preferred securities mature in September 2035 and are callable at par at the option of the Company in whole or in part after year five, on any interest payment date.

In connection with the acquisition of BHB, the Company acquired $8.0 million in floating rate trust preferred securities. The trust preferred securities and related junior subordinated debentures pay interest quarterly at a rate equal to three month LIBOR plus 2.65%. The trust preferred securities have a maturity date of June 17, 2034 and are callable beginning June 17, 2009.

On December 5, 2005, the Company issued $40.0 million of trust preferred securities, which pay interest quarterly at a rate of 6.10% until December 2010 and subsequently at a floating rate equal to the three-month LIBOR rate plus 1.50%. These securities mature in December 2035 but are redeemable at par at our option after five years. A portion of the proceeds was used to fund the redemption, on December 31, 2005 of $20.0 million of previously outstanding 9.50% trust preferred securities that were originally issued in 2001. As a result of this redemption, the Company incurred a pre-tax charge of approximately $980,000.

The Trusts are reported in the Company’s consolidated financial statements as unconsolidated subsidiaries. Accordingly, the Debentures, which include the Company’s ownership interest in the Trusts, are reflected as “Long-term debt — trust preferred securities” and the common securities are included in “Available-for-sale securities.”

The following table is a summary of the Company’s Long-term debt — trust preferred securities as of September 30, 2006. The Debentures represent the aggregate liquidation amount issued.

Long-term debt -- Trust Preferred Securities (dollars in thousands)
	Trust						Earliest
	Preferred				Maturity		Redemption		Coupon
Issuance Trust	Securities		Debentures		Date		Date		Rate
PrivateBancorp Statutory Trust II		$50,000		$51,547		09/15/35		09/15/10	6.00%(1)
PrivateBancorp Statutory Trust III		40,000		41,238		12/15/35		12/15/10	6.10%(2)
Bloomfield Hills Statutory Trust I		8,000		8,248		06/17/34		06/17/09	Floating LIBOR + 2.65%
Total		$98,000		$101,033

(1)   6.00% rate effective until 9/15/2010, then floating at three-month LIBOR + 1.71%.

(2)   6.10% rate effective until 12/15/2010, then floating at three-month LIBOR + 1.50%.

The Company has guaranteed the payment of distributions and payments upon liquidation or redemption of the Trust Preferred Securities, in each case to the extent of funds held by the Trusts. The Company and the Trusts believe that, taken together, the obligations of the Company under the guarantees, the Debentures, and other related agreements provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a subordinated basis, of all of the obligations of the Trusts under the trust preferred securities. Subject to certain limitations, the Company has the right to defer the payment of interest on the Debentures at any time, or from time to time, for a period not to exceed 20 consecutive quarters. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the Debentures at maturity or their earlier redemption. The Debentures are redeemable in whole or in part prior to maturity at any time after the dates shown in the table, and earlier at the discretion of the Company if certain conditions are met, and, in any event, only after the Company has obtained Federal Reserve approval, if then required under applicable guidelines or regulations.

The Company’s aggregate principal amount of outstanding trust preferred securities at September 30, 2006 is $98.0 million. As of September 30, 2006, $87.2 million of the trust-preferred securities is eligible for treatment as Tier I capital as allowed by the Federal Reserve. On March 1, 2005, the Federal Reserve issued a final rule that retains Tier 1 capital treatment for trust preferred securities but with stricter limits. Under the rule, after a five-year transition period, the aggregate amount of the trust preferred securities and certain other capital elements will retain their current limit of 25% of Tier 1 capital elements, net of goodwill less any associated deferred tax liability. The amount of trust preferred securities and certain other capital elements in excess of the limit could be included in Tier 2 capital, subject to restrictions. Applying the final rule at September 30, 2006, the Company would still be considered well-capitalized under regulatory capital guidelines.

NOTE 7—CAPITAL TRANSACTIONS

During the third quarter 2006, the Company declared and paid a $0.06 per share dividend, even with the second quarter 2006 dividend of $0.06 and an increase of 30% over the third quarter 2005 dividend of $0.045 per share.

During the third quarters 2006 and 2005, the Company did not repurchase any shares of its common stock.

NOTE 8—SUBSEQUENT EVENTS

On October 31, 2006, the Company entered into a Contribution and Stockholder Agreement whereby it agreed to capitalize a de novo bank in Kansas City, Missouri, to be named The PrivateBank - Kansas City. As part of the transaction, the Company created a new subsidiary, Kansas City Private Development Corporation, a Delaware corporation ("Development Corporation"), that will serve as the holding company of the new bank. Under the terms of a related Plan and Agreement of Merger, the transaction also includes Development Corporation's acquisition through merger of Midwest Financial Services Corp., a Delaware corporation ("Midwest Financial"), whereby the shareholders of Midwest Financial will receive either cash or stock of Development Corporation as consideration in the merger. Upon completion of the transactions, the Company will own at least 82 percent of the common stock of Development Corporation, and the remaining shares will be owned by senior management of the new bank as well as other local investors. The Contribution and Stockholder Agreement provides that the shares of Development Corporation owed by shareholders other than the Company will be purchased by the Company no later than five years after forming the new bank. The bank will be 100 percent owned by Development Corporation. On November 1, 2006, and as an interim business step, the Company caused The PrivateBank - St. Louis to open a loan production office in Kansas City, Missouri that will be converted to a full service branch office upon expiration of applicable waiting periods. The branch will be sold by The PrivateBank - St. Louis to the new bank at the time the bank opens for business. It is contemplated that the transactions will close in the second quarter 2007.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

PrivateBancorp was organized as a Delaware corporation in 1989 to serve as the holding company for a de novo (start-up) bank. We currently have 14 banking offices, a mortgage company and an 80% interest in Lodestar, an asset manager. Our flagship downtown Chicago location opened in 1991. We expanded to Wilmette in north suburban Cook County in 1994 and Oak Brook in west suburban DuPage County in 1997. We established the St. Charles office in the Fox Valley in January 2000, in connection with our purchase of Towne Square Financial Corporation (a company which was in the process of forming a de novo bank) in August 1999. In February 2000, we completed our acquisition of Johnson Bank Illinois adding two additional locations in Lake Forest and Winnetka, Illinois. On June 23, 2000, PrivateBancorp capitalized The PrivateBank - St. Louis, and opened an office in the western St. Louis suburb of Brentwood. In May 2001, The PrivateBank - Chicago opened a second office in the Fox Valley area in Geneva, Illinois. In December 2002, The PrivateBank - Chicago acquired an 80% controlling interest in Lodestar, a Chicago-based investment adviser with $739.3 million of assets under management at September 30, 2006. Lodestar is a subsidiary of The PrivateBank - Chicago. On June 15, 2004, the Company formed a new subsidiary, The PrivateBank Mortgage Company, as a result of the acquisition of Corley Financial Corporation, a Chicago based mortgage banking firm. On January 27, 2005, the Company opened a new Chicago banking office in Chicago’s Gold Coast neighborhood. On June 20, 2005, the Company completed its acquisition of Bloomfield Hills Bancorp, Inc., including its bank subsidiary, The Private Bank, now known as The PrivateBank - Michigan, and a mortgage banking subsidiary. The PrivateBank - Michigan has three banking offices located in the suburban Detroit communities of Bloomfield Hills, Grosse Pointe, and Rochester. The PrivateBank - Michigan also operates a trust and wealth management unit and a mortgage banking subsidiary. In September 2005, the Company established The PrivateBank - Wisconsin and opened an office in downtown Milwaukee. The PrivateBank - Wisconsin is currently operating as a branch of The PrivateBank - St. Louis and is expected to obtain a separate bank charter in the fourth quarter of 2006 or first quarter of 2007. During the second quarter 2006, our Oak Brook and Geneva, Illinois offices moved into expanded facilities, and we opened a new office in Chesterfield, Missouri. The Chicago headquarters relocated to 70 W. Madison during the third quarter 2006.

On August 2, 2006, the Company entered into an agreement and plan of merger to acquire Piedmont Bancshares, Inc. (“Piedmont”), the holding company of Piedmont Bank of Georgia headquartered in Atlanta, Georgia, in a stock and cash transaction valued at $46.6 million. Under the terms of the merger agreement, each holder of Piedmont common stock will be entitled to elect to receive either cash in the amount of $29.68 per share, or that number of shares of the Company’s common stock equal to $29.68 divided by the average of the last reported sales price of the Company’s common stock over the ten days ending five days prior to the closing, subject to a maximum price per share of $48.40 and a minimum price per share of $39.60, as further described in the merger agreement, or a combination of both cash and stock, subject to the limitation and proration procedures detailed in the merger agreement. Approximately 60% of the total consideration will be paid in shares of the Company’s common stock and approximately 40% will be paid in cash. Upon completion of the merger, Piedmont Bank will become a wholly-owned subsidiary of the Company. Consummation of the merger is subject to the receipt of all necessary federal and state regulatory approvals (which were received in October 2006), the approval of Piedmont’s shareholders, and satisfaction of certain other customary closing conditions. The transaction is currently expected to be completed in the fourth quarter of 2006. At September 30, 2006, Piedmont had total assets of $237.3 million. Piedmont Bank is headquartered at 3423 Piedmont Road in Atlanta, recently opened a second office in Norcross, Georgia, and has identified office space for a third location to be opened in Alpharetta, Georgia after the closing of the transaction.

For financial information regarding the Company’s five separate lines of business, The PrivateBank - Chicago, The PrivateBank - St. Louis (which currently includes The PrivateBank - Wisconsin), The PrivateBank - Michigan, Wealth Management and Holding Company Activities, see “Operating Segments Results” beginning on page 39 and “Note 4 — Operating Segments” to the unaudited consolidated financial statements of the Company included on page 16.

The profitability of our operations depends on our net interest income, provision for loan losses, non-interest income, and non-interest expense. Net interest income is dependent on the amounts and yields of interest-earning assets as compared to the amounts and rates on interest-bearing liabilities. Net interest income is sensitive to changes in market rates of interest as well as to the execution of our asset/liability management strategy. The provision for loan losses is affected by changes in the loan portfolio, management’s assessment of the collectability of the loan portfolio, loss experience, as well as economic and market factors.

Non-interest income consists primarily of wealth management income, mortgage banking income, and to a lesser extent, fees for ancillary banking services. Net investment securities and interest rate swap gains and losses are also included in non-interest income. Non-interest income from fees and deposit service charges are below peer group levels. This is largely the result of the profile of our typical client. Our clients tend to have larger deposit account balances than customers of traditional banks. Because average balances tend to be high, we do not earn high service charge income typical of many retail banks.

Non-interest expense consists primarily of salary and employee benefits, occupancy expense and professional fees. Non-interest expenses are heavily influenced by the growth of operations. Our growth directly affects the majority of our expense categories. Our efficiency ratio is better as compared to peer group levels due to our staffing model. We have fewer employees that manage more business thereby resulting in lower expenses as a percentage of total revenues as compared to our peers.

Critical Accounting Policies

Generally accepted accounting principles are complex and require management to apply significant judgment to various accounting, reporting and disclosure matters. Management must use assumptions and estimates to apply these principles where actual measurements are not possible or practical. Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited consolidated financial statements included herein. For a complete discussion of our significant accounting policies, see the footnotes to our Consolidated Financial Statements included on pages F-8 through F-14 in our Form 10-K for the fiscal year ended December 31, 2005. Below is a discussion of our critical accounting policies. These policies are critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. Changes in such estimates may have a significant impact on the financial statements. Actual results could differ from those estimates. Management has reviewed the application of these policies with the Audit Committee of the Company’s Board of Directors.

For PrivateBancorp, Inc., the accounting policies that are viewed as critical are those relating to estimates and judgments regarding the determination of the adequacy of the allowance for loan losses and the estimation of the valuation of goodwill and the useful lives applied to intangible assets.

Allowance for Loan Losses

We maintain an allowance for loan losses at a level management believes is sufficient to absorb credit losses inherent in our loan portfolio. The allowance for loan losses represents our estimate of probable losses in the portfolio at each balance sheet date and is based on a review of available and relevant information. The allowance contains provisions for probable losses that have been identified relating to specific borrowing relationships as well as probable losses inherent in our loan portfolio and credit undertakings that are not specifically identified. Our allowance for loan losses is reassessed quarterly to determine the appropriate level of the allowance. The amount of the allowance for loan losses is determined based on a variety of factors, including assessment of the credit risk of the loans in the portfolio, evaluation of watch list loans, volume of loans in the portfolio, delinquent loans, impaired loans, evaluation of current economic conditions in the market area, actual charge-offs and recoveries during the period and historical loss experience. The unallocated portion of the reserve involves the exercise of judgment by management and reflects various considerations, including management’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating credit losses.

Management adjusts the allowance for loan losses by recording a provision for loan losses in an amount sufficient to maintain the allowance at the level determined appropriate. Loans are charged-off when deemed to be uncollectible by management. We believe that the allowance for loan losses is adequate to provide for estimated probable credit losses inherent in our loan portfolio. The allowance for loan losses as a percentage of total loans was 1.11% as of September 30, 2006, down from 1.13% at June 30, 2006 and 1.15% at September 30, 2005.

Goodwill and Intangible Assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. The Company performs an annual goodwill impairment test in accordance with FAS No. 142, which requires that goodwill and intangible assets that have indefinite lives no longer be amortized but be reviewed for impairment annually, or more frequently if certain indicators arise.Prior to the adoption of FAS No. 142, goodwill was being amortized using the straight-line method over a period of 15 years. Impairment losses on recorded goodwill, if any, will be recorded as operating expenses.

Goodwill is “pushed down” to business segments at acquisition. Fair values of reporting units are determined using either discounted cash flow analyses based on internal financial forecasts or, if available, market-based valuation multiples for comparable businesses. No impairment was identified as a result of the testing performed during 2005 or 2004. Note 1(o) to our audited financial statements for the years ended December 31, 2005, 2004 and 2003 included in our 2005 Form 10-K contains additional information regarding goodwill and the carrying values by segment.

Customer intangibles acquired in connection with the acquisition of Lodestar are amortized over an estimated useful life of 15 years. Customer intangibles acquired in connection with the acquisition of The PrivateBank - Michigan are amortized over 10 years using an accelerated method of amortization.

Goodwill was $63.2 million at September 30, 2006 and September 30, 2005. Total customer intangibles at September 30, 2006 were $5.1 million. Amortization expense related to the Lodestar customer intangible assets of $1.9 million is currently recognized at approximately $169,500 per year until 2017. The amortization expense related to The PrivateBank - Michigan intangibles of $3.2 million for the years 2006 through 2010 will be approximately $441,000, $423,000, $406,000, $389,000 and $373,000, respectively.

RESULTS OF OPERATIONS -THREE AND NINE MONTHS

ENDED SEPTEMBER 30, 2006 AND 2005

Net Income

Net income for the third quarter ended September 30, 2006, was $9.8 million compared to third quarter 2005 net income of $7.9 million. The increase in net income was primarily due to strong loan and core deposit growth and growth in our wealth management business. Earnings per diluted share increased 24% to $0.46 in the third quarter 2006 compared to $0.37 per diluted share in the third quarter 2005. Third quarter earnings include the impact of net securities gains of $1.2 million, a loss of $904,000 on an interest rate swap, and $615,000 of expenses associated with the relocation of our headquarters. The combined effect of these items decreased our diluted earnings per share by $0.01 for the third quarter. Net income for the nine months ended September 30, 2006, increased to $28.8 million, or $1.34 per diluted share, compared to $22.7 million, or $1.07 per diluted share, for the same period last year, reflecting an increase of 25%.

The growth in net income between periods results from increases in interest earning assets and growth in fee income. Increases in fee income are primarily the result of our growing wealth management fee revenue. Our income growth has been offset by growth in non-interest expense as evidenced by our efficiency ratio, which was 53.9% in the third quarter 2006, up from 52.2% in the prior year quarter, primarily due to the impact of expenses associated with our headquarters move during the third quarter.

Earnings for the quarter and nine months ended September 30, 2006 include $0.02 and $0.06 per share of options expense, respectively. Financial results for the quarter and nine months ended September 30, 2005 include $0.04 and $0.10 per share, net of tax, respectively, of option expense, as a result of adoption of Statement of Financial Accounting Standards (SFAS) No. 123R (revised 2004), “Share Based Payment.” The Company adopted the new standardon January 1, 2006 and elected the modified-retrospective-transition method, which results in the restatement of prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosures. Option expense is expected to be $0.03 per share in the fourth quarter of 2006 resulting in $0.09 of total option expense for the full year 2006 compared to $0.12 of options expense for 2005.

Net Interest Income

Net interest income is the difference between interest income and fees on earning assets and interest expense and amortization of fees on deposits and borrowings. Interest income includes amortization of loan origination fees recorded from loans. Interest expense includes amortization of prepaid fees on brokered deposits, issuance costs of trust preferred securities, and the amortization of loan origination costs. Net interest margin represents the net interest income on a tax equivalent basis as a percentage of average earning assets during the period. Net interest margin reflects the spread between average yields earned on interest earning assets and the average rates paid on interest bearing deposits and borrowings. The volume of non-interest bearing funds, largely comprised of demand deposits and capital, also affects the net interest margin.

Net interest income was $30.0 million for the three months ended September 30, 2006, compared to $26.3 million in the prior year quarter, an increase of 14%. Net interest income is affected by both the volume of assets and liabilities held and the corresponding rates earned and paid. The increase in net interest income for 2006 is primarily attributable to growth in earning assets. Average earning assets at September 30, 2006 were $3.5 billion compared to $3.1 billion for the prior year period, an increase of 15%. Our net interest margin on a tax equivalent basis was 3.47% for the three months ended September 30, 2006 compared to 3.53% for the prior year period and 3.55% in the second quarter 2006. Yield on average earning assets increased by 20 basis points from the second quarter 2006, while cost of average interest bearing liabilities increased 33 basis points, primarily due to the behavior of the short end of the yield curve during the quarter.

During the third quarter 2006, increased volumes of interest earning assets at higher rates were offset by increased interest rates on liabilities. Our cost of funds was 136 basis points higher during the third quarter 2006 compared to the third quarter 2005, 4.62% compared to 3.26%, respectively, as a result of volume increases and increases in wholesale funding costs, time deposit rates, and increased interest expense related to additional trust preferred securities. Earning assets yielded 7.59% in the third quarter 2006 compared to 6.44% in the third quarter 2005, an increase of 115 basis points due primarily to increased loan volumes and increases in the prime rate, which increased 150 basis points over the course of the year. Non-interest bearing funds impact net interest margin since they represent non-interest bearing sources of funds that are deployed in interest bearing assets. Non-interest bearing funds positively impacted net interest margin by 0.50% at September 30, 2006 and by 0.35% at September 30, 2005.

Net interest income was $87.7 million for the nine months ended September 30, 2006 compared to $68.7 million for the same period in 2005. Net interest margin on a tax equivalent basis was 3.49% for the nine months ended September 30, 2006, compared to 3.54% in the prior year period. The decline in net interest margin during the nine months ended September 30, 2006 as compared to the same period in 2005 was primarily attributable to an increase of 130 basis points in the rates paid on our interest bearing liabilities, which more than offset the 114 basis point increase in the rates earned on interest yielding assets.

 During the fourth quarter 2006, we expect that the continued negatively sloped yield curve will result in additional compression to our net interest margin due to the refunding costs of brokered deposits that mature in the fourth quarter and because the negatively sloped yield curve also is increasing the costs of money market deposit accounts and short-term CDs. Increases in the short-end of the treasury yield curve without commensurate increases in the prime rate of interest negatively impact the Company's net interest margin. The Company's loan growth has and will continue to offset the effects of compression in the Company's margin, to a degree, dependent upon the loan volume. The net interest margin benefited by approximately 4 basis points in the third quarter due to dividends in arrears received from the FHLB (Chicago). The Company will not receive such a dividend in the fourth quarter since the Company completed its divestiture of FHLB (Chicago) stock in the second quarter 2006. Approximately 70% of the loan portfolio is indexed off of short-term interest rates with the substantial majority of these loans being indexed to the prime rate of interest and the remainder being indexed to other short-term interest rates. The rising interest rate environment that we experienced in 2005 and throughout the first nine months of 2006 increased the benefit from non-interest bearing funds on our overall net interest margin and has partially offset the decline in net interest spread on a year-over-year basis.

The following tables present a summary of our net interest income, related net interest margin, and average balance sheet calculated on a tax equivalent basis (dollars in thousands):

	Three Months Ended September 30,
	2006								2005
	Average Balance(1)			Interest		Rate			Average Balance(1)			Interest		Rate
Fed funds sold and other short-term investments	$ 7,101			$ 116		6.40%			$ 18,233			$ 166		3.59%
Tax-exempt municipal securities	216,056			3,717		6.88%			207,310			3,605		6.96%
US Government Agencies, MBS and CMOs		263,531			3,288		4.99	%		361,163			4,383		4.85	%
Taxable municipal securities		3,825			72		7.51	%		3,840			69		7.14	%
FHLB stock		3,749			404		42.22	%		162,588			2,159		5.20	%
Other securities		2,199			5		0.87	%		1,974			9		1.72	%
Investment securities (taxable)		273,304			3,769		5.50	%		529,565			6,620		4.96	%
Commercial, Construction and Commercial Real Estate Loans		2,503,998			50,791		7.98	%		1,850,813			32,463		6.91	%
Residential Real Estate Loans		248,632			3,690		5.94	%		190,274			2,626		5.52	%
Personal Loans		287,773			5,880		8.11	%		269,594			4,491		6.61	%
Total Loans(2)		3,040,403			60,631		7.83	%		2,310,681			39,580		6.76	%
Total earning assets	$	3,536,864			67,963		7.59	%	$	3,065,789		$	49,971		6.44	%
Allowance for Loan Losses		(34,335	)							(26,271	)
Cash and Due from Banks		43,029								34,513
Other Assets		181,082								166,765
Total Average Assets	$	3,726,640							$	3,240,796
Interest Bearing Demand accounts	$	122,321			734		2.38	%	$	119,060			394		1.31	%
Regular Savings Accounts		14,179			28		0.78	%		15,254			22		0.57	%
Money Market Accounts		1,301,051			14,306		4.36	%		1,105,082			7,875		2.83	%
Time Deposits		737,814			9,339		5.02	%		517,669			4,256		3.26	%
Brokered Deposits		697,531			8,397		4.78	%		439,971			4,264		3.84	%
Total Deposits		2,872,896			32,804		4.53	%		2,197,036			16,811		3.04	%
FHLB advances		46,775			221		1.85	%		334,379			3,206		3.75	%
Other borrowings		133,834			2,177		6.36	%		134,302			1,181		3.44	%
Trust preferred securities		98,000			1,555		6.21	%		78,000			1,377		7.06	%
Total interest-bearing liabilities	$	3,151,505			36,757		4.62	%	$	2,743,717			22,575		3.26	%
Non-Interest Bearing Deposits	$	271,287							$	238,632
Other Liabilities		49,033								34,645
Stockholders' Equity		254,815								223,802
Total Average Liabilities & Stockholders' Equity	$	3,726,640							$	3,240,796
Tax equivalent net interest income(3)				$	31,206							$	27,396
Net interest spread(4)							2.97	%							3.18	%
Effect of non interest bearing funds							0.50	%							0.35	%
Net interest margin(3)(5)							3.47	%							3.53	%

(footnotes begin on next page)

	Nine Months Ended September 30,
	2006								2005
	Average Balance(1)			Interest		Rate			Average Balance(1)			Interest		Rate
Fed funds sold and other short-term investments	$ 6,592			$ 402		8.05%			$ 10,823			$ 293		3.58%
Tax-exempt municipal securities		216,491			11,197		6.90	%		205,384			10,712		6.95	%
US Government Agencies, MBS and CMOs		295,450			11,818		5.33	%		355,661			12,388		4.64	%
Taxable municipal securities		3,825			215		7.52	%		3,840			216		7.51	%
FHLB stock		65,269			2,604		5.26	%		175,240			7,653		5.18	%
Other securities		2,136			35		2.18	%		3,744			129		4.60	%
Investment securities (taxable)		366,680			14,672		5.32	%		538,485			20,386		5.03	%
Commercial, Construction and Commercial Real Estate Loans		2,345,472			137,849		7.80	%		1,570,380			78,072		6.59	%
Residential Real Estate Loans		239,333			10,594		5.90	%		138,181			5,612		5.42	%
Personal Loans		275,094			15,955		7.75	%		230,384			10,685		6.20	%
Total Loans(2)		2,859,899			164,398		7.63	%		1,938,945			94,369		6.46	%
Total earning assets	$	3,449,662			190,669		7.34	%	$	2,693,637			125,760		6.20	%
Allowance for Loan Losses	$	(32,305	)						$	(22,124	)
Cash and Due from Banks		38,598								31,856
Other Assets		175,170								128,211
Total Average Assets	$	3,631,125							$	2,831,580
Interest Bearing Demand accounts	$	124,895			1,687		1.81	%	$	110,353			1,144		1.39	%
Regular Savings Accounts		14,643			81		0.74	%		16,192			78		0.64	%
Money Market Accounts		1,262,223			38,457		4.07	%		1,010,013			19,958		2.64	%
Time Deposits		663,897			22,872		4.61	%		402,139			9,111		8.99	%
Brokered Deposits		688,598			23,540		4.57	%		415,206			11,358		3.66	%
Total Deposits		2,754,256			86,637		4.21	%		1,953,903			41,649		2.85	%
FHLB advances		119,585			2,791		3.08	%		292,048			7,519		3.40	%
Other borrowings		117,662			5,462		6.12	%		98,872			2,092		2.79	%
Trust preferred securities		98,000			4,589		6.17	%		41,743			2,453		7.83	%
Total interest-bearing liabilities	$	3,089,503			99,479		4.30	%	$	2,386,566			53,713		3.00	%
Non-Interest Bearing Deposits	$	259,094							$	200,704
Other Liabilities		40,741								32,347
Stockholders' Equity		241,787								211,963
Total Average Liabilities & Stockholders' Equity	$	3,631,125							$	2,831,580
Tax equivalent net interest income(3)				$	91,190							$	72,047
Net interest spread(4)							3.04	%							3.20	%
Effect of non interest bearing funds							0.45	%							0.34	%
Net interest margin(3)(5)							3.49	%							3.54	%

(1)   Average balances were generally computed using daily balances.

(2)   Nonaccrual loans are included in the average balances and do not have a material effect on the average yield. Interest due on non-accruing loans was not material for the periods presented.

(3)   We adjust GAAP reported net interest income by the tax equivalent adjustment amount to account for the tax attributes on federally tax exempt municipal securities. The total tax equivalent adjustment reflected in the above table is $1.2 million and $1.1 million in the third quarters of 2006 and 2005, respectively. The total tax equivalent adjustment reflected in the above table is $3.5 million and $3.4 million for the nine months ended September 30, 2006 and 2005, respectively. For GAAP purposes, tax benefits associated with federally tax-exempt municipal securities are reflected in income tax expense. The following table reconciles reported net interest income to net interest income on a tax equivalent basis for the periods presented:

(footnotes continued on next page)

Reconciliation of quarter net interest income to quarter net interest income on a tax equivalent basis
	Three months ended September 30,
		2006		2005
Net interest income	$	30,040	$	26,264
Tax equivalent adjustment to net interest income		1,166		1,132
Net interest income, tax equivalent basis	$	31,206	$	27,396
Reconciliation of year-to-date net interest income to year-to-date net interest income on a tax equivalent basis
	Nine months ended September 30,
		2006		2005
Net interest income	$	87,677	$	68,683
Tax equivalent adjustment to net interest income		3,513		3,364
Net interest income, tax equivalent basis	$	91,190	$	72,047

(4) Yield on average interest-earning assets less rate on average interest-bearing liabilities.

(5) Net interest income, on a tax-equivalent basis, divided by average interest-earning assets.

The following tables show the dollar amount of changes in interest income (tax equivalent) and interest expense by major categories of interest-earning assets and interest-bearing liabilities attributable to changes in volume or rate, or a mix of both, for the periods indicated. Volume variances are computed using the change in volume multiplied by the previous period’s rate. Rate variances are computed using the changes in rate multiplied by the previous period’s volume.

Three Months Ended September 30, 2006

Compared to Three Months Ended September 30, 2005

	Change due to rate			Change due to volume			Change Due to mix			Total change
	(dollars in thousands)
Interest income/expense from:
Fed funds sold and other short-term investments	$	129		$	(101	)	$	(78	)	$	(50	)
Investment securities (taxable)		721			(3,206	)		(365	)		(2,850	)
Investment securities (non-taxable)(1)		(38	)		153			(4	)		111
Loans, net of unearned discount		6,233			12,429			2,119			20,781
Total tax equivalent interest income(1)	$	7,045		$	9,275		$	1,672		$	17,992
Interest-bearing deposits		8,276			5,171			2,546			15,993
Funds borrowed		1,811			(2,660	)		(1,140	)		(1,989	)
Trust preferred securities		(168	)		356			(10	)		178
Total interest expense	$	9,919		$	2,867		$	1,396		$	14,182
Net tax equivalent interest income(1)	$	(2,874	)	$	6,408		$	276		$	3,810

Nine Months Ended September 30, 2006

Compared to Nine Months Ended September 30, 2005

	Change due to rate			Change due to volume			Change Due to mix			Total change
(dollars in thousands)
Interest income/expense from:
Fed funds sold and other short-term investments	$	362		$	(113	)	$	(140	)	$	109
Investment securities (taxable)		1,200			(6,460	)		(454	)		(5,714	)
Investment securities (non-taxable)(1)		(88	)		578			(5	)		485
Loans, net of unearned discount		16,962			44,520			8,547			70,029
Total tax equivalent interest income(1)	$	18,436		$	38,525		$	7,948		$	64,909
Interest-bearing deposits		19,812			17,060			8,116			44,988
Funds borrowed		3,933			(3,727	)		(1,564	)		(1,358	)
Trust preferred securities		(518	)		3,297			(643	)		2,136
Total interest expense	$	23,227		$	16,630		$	5,909		$	45,766
Net tax equivalent interest income(1)	$	(4,791	)	$	21,895		$	2,039		$	19,143

(1)Interest income on tax-advantaged investment securities reflects a tax equivalent adjustment based on a marginal federal corporate tax rate of 35% for 2006 and 2005. The total tax equivalent adjustment reflected in the above table $1.2 million and $1.1 million in third quarters of 2006 and 2005, respectively. The total tax equivalent adjustment reflected in the above table is $3.5 million and $3.4 million for the nine months ended September 30, 2006 and September 30, 2005, respectively.

Provision for Loan Losses

For the three months ended September 30, 2006, the provision for loan losses was $1.5 million compared to $2.0 million for the comparable period in 2005. The decrease in the provision reflects the state of credit quality: a low level of non-accrual loans as well as a sequential decrease in net charge-offs and non-performing loans. Net charge-offs totaled $291,000 for the quarter ended September 30, 2006 versus net recoveries of $686,000 for the third quarter 2005 and net charge-offs of $389,000 for the quarter ended June 30, 2006. For the nine months ended September 30, 2006, the provision for loan losses was $6.1 million compared to $4.8 million in the prior year period.

Our allowance for loan losses is reassessed quarterly to determine the appropriate level of the reserve. Our analysis is influenced by the following factors: credit quality of loans, the volume type and quality of loans and commitments in the portfolio, historical loss experience, and economic conditions. A discussion of the allowance for loan losses and the factors on which provisions are based begins on page 43.

Non-interest Income

Non-interest income was $5.9 million in the third quarter 2006 compared to $5.5 million during the third quarter 2005, reflecting an increase of $469,000 or 9%, primarily due to growth in wealth management fee revenue and other income, partially offset by a decrease in mortgage banking income. For the three months ended September 30, 2006, securities gains of $1.2 million combined with net losses of $904,000 from an interest rate swap resulted in a $308,000 gain that affected our non-interest income. For the third quarter 2005, a $644,000 gain from an interest rate swap combined with securities losses of $249,000 resulted in $395,000 of other income. During the third quarter 2006, the Company retired its investment in the interest rate swap derivative.

Non-interest income for the nine months ended September 30, 2006 was $17.6 million compared to $14.0 million during the same period in 2005, reflecting an increase of $3.6 million or 25% from the third quarter. The growth in non-interest income as compared to the nine months ended September 30, 2006 in the prior year was driven by growth in wealth management income and other income, partially offset by a decrease in mortgage banking income. Wealth management fee income increased to $10.2 million for the nine months ended September 30, 2006, up from $7.2 million in the same period in 2005. Mortgage banking income fell to $2.5 million for the nine months ended September 30, 2006 compared to $3.1 million for the prior year period.

The following table presents the breakdown of income from wealth management, mortgage banking, banking and other services, and bank owned life insurance for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
Wealth management fee revenue	$	3,477	$	2,627	$	10,240	$	7,174
Mortgage banking income		804		1,284		2,532		3,102
Banking and other services		872		740		3,895		1,847
Bank owned life insurance		479		425		1,211		1,068
Total wealth management, mortgage banking and other income	$	5,632	$	5,076	$	17,878	$	13,191

Wealth management fee revenue totaled $3.5 million for the third quarter 2006, a decrease of $125,000, or 3% from the second quarter 2006 and an increase of $850,000, or 32% from the third quarter 2005. The increase in wealth management fee revenue over the prior year period primarily reflects the addition of net new business at Loadstar, Chicago, and Michigan and increased portfolio valuations due to positive investment market performance during the quarter. Of the $3.5 million, approximately $986,000 was revenue generated in the third quarter 2006 from wealth management services provided to those clients where a third-party investment manager is utilized, compared to $776,000 in the third quarter 2005. For the nine months ended September 30, 2006, $3.0 million in revenue was generated from wealth management services provided to those clients where a third-party investment manager was utilized, compared to $1.8 million in the prior year period.

Wealth management assets under management increased 35 percent to $2.8 billion at September 30, 2006 compared to $2.1 billion at September 30, 2005 and up $93.9 million from $2.7 billion at June 30, 2006. The September 30, 2006 balances reflect trust services assets under management of $1.7 billion, Lodestar assets under management of $739.3 million, and The PrivateBank - Michigan assets under management of $500.8 million. Excluded from the total wealth management assets under management are $115.6 million of trust services assets that are managed by Lodestar. At September 30, 2005, trust services managed $1.2 billion of assets, Lodestar managed $674.3 million of assets, The PrivateBank - Michigan managed $250.2 million in assets and $105.1 million of trust assets managed by Lodestar were excluded from total wealth management assets under management. Growth in assets under management at September 30, 2006 compared to the prior year reflects net new business generated.

Mortgage banking income was $804,000 during the third quarter 2006 compared to $1.3 million during the prior year quarter. Residential mortgage fee income generated by The PrivateBank Mortgage Company was $627,000 for the third quarter 2006. Overall residential mortgage fee income has decreased between periods due to a lower volume of loans sold as a result of decreased demand for residential real estate loans and management’s decision to place more loans on the Company’s balance sheet for asset liability management purposes. Fee income is generated by The PrivateBank Mortgage Company, The PrivateBank - Michigan, and The PrivateBank - St. Louis. For the nine months ended September 30, 2006, residential mortgage fee income was $2.5 million compared to $3.1 million during the prior year period.

During the third quarter 2006, bank owned life insurance (BOLI) revenue increased to $479,000 as compared to revenue of $425,000 in the third quarter 2005. Income recognized on this product increased in 2006 as compared to 2005 primarily due to the inclusion of $48,000 of BOLI income from The PrivateBank - Michigan’s $5.5 million of BOLI policies. These policies cover certain higher-level employees who are deemed to be significant contributors to the Company. All employees included in this policy are aware and have consented to the coverage. The cash surrender value of BOLI at September 30, 2006 was $42.1 million, compared to $40.5 million at September 30, 2005, and is included in other assets on the balance sheet. BOLI revenue for the nine months ended September 30, 2006 was $1.2 million, versus $1.1 million in the prior year period.

Non-interest Expense

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(in thousands)				(in thousands)
Salaries and employee benefits	$	10,864	$	10,011	$	31,725	$	25,634
Occupancy		2,639		1,963		7,022		5,505
Professional fees		1,866		1,272		4,837		3,285
Wealth management fees		774		308		1,979		735
Marketing		1,159		1,150		3,154		2,409
Data processing		788		803		2,318		2,012
Postage, telephone and delivery		325		304		1,050		814
Office supplies and printing		285		189		656		521
Insurance		349		275		982		808
Amortization of intangibles		152		156		459		255
Other expense		810		728		2,321		1,874
Total non-interest expense	$	20,011	$	17,159	$	56,503	$	43,852

Non-interest expense increased $2.8 million to $20.0 million in the third quarter 2006 from $17.2 million in the third quarter 2005, an increase of 17%. For the nine months ended September 30, 2006, non-interest expense was $56.5 million compared to $43.9 million in the prior year period, reflecting an increase of 29%. The increase in non-interest expense between periods is primarily attributable to increases in personnel, professional fees, wealth management fees and occupancy expenses. During the quarter, the Company moved its downtown Chicago headquarters into a larger facility. Approximately $615,000 of expenses were recognized in conjunction with the move during the quarter. These expenses are spread across the occupancy expense, marketing expense, professional fees, and printing and office supplies expense categories.

The periods presented include $412,000 and $603,000 of stock option expense for the third quarters ended September 30, 2006 and 2005, respectively. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R. The Company elected the modified-retrospective-transition method, which results in the restatement of prior periods by recognizing compensation cost in the amounts previously reported in the SEC pro forma footnote disclosures. Compensation cost recognized includes the cost of all share-based payments granted, but not yet fully vested in all periods presented. Additionally, the balance of certain accounts have been adjusted on a cumulative basis to reflect the activity of periods that are not presented. The following table includes the adjustments to these accounts as of January 1, 2005, the beginning of the earliest period presented.

	As Reported January 1, 2005			Adjustment for adoption of SFAS No. 123R			Adjusted Balance January 1, 2005
	(in thousands)
Retained earnings		73,789			(9,703	)		64,086
Additional Paid in Capital		100,091			7,909			108,000
Deferred compensation		(5,056	)		5,056			--
Deferred Income Tax Asset		(588	)		2,847			2,259

Prior to January 1, 2006, the Company accounted for its stock-based employee compensation plans under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations, as permitted by Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation.” No stock based employee compensation was recognized in the Consolidated Statements of Income in periods prior to the restatements under SFAS No. 123R, as all options granted under the Company’s compensation plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

Prior to the adoption of SFAS No. 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options and vesting of restricted shares as operating cash flows in the Statement of Cash Flows. SFAS No. 123R requires the cash flows resulting from the tax benefits of these tax deductions in excess of the compensation cost recognized for those share-based payments (the excess tax benefits) be classified as financing cash flows. The excess tax benefit in financing cash flows was $1.3 million in the first nine months of 2006 and $1.1 in the first nine months of 2005.

As of September 30, 2006, total unrecognized compensation costs related to non-vested restricted stock was $11.6 million with a weighted average remaining life of 4.1 years.

Our efficiency ratio (non-interest expense divided by the sum of net interest income on a tax equivalent basis plus non-interest income) increased to 53.9% for the third quarter 2006, from 52.2% in the third quarter 2005 and decreased from 55.7% for the fourth quarter 2005. On a tax-equivalent basis, this ratio indicates that in the third quarter of 2006, we spent 53.9 cents to generate each dollar of revenue while in the second quarter 2005, we spent 52.2 cents. The higher ratio is primarily attributable to the $615,000 of headquarters relocation costs. Our efficiency ratio for the nine months ended September 30, 2006 was 52.0% compared to the efficiency ratio of 50.9% for the nine months ended September 30, 2005.

Salaries and benefits increased to $10.9 million, or 9% during the third quarter 2006 as compared to the year ago quarter, reflecting the increased level of full-time equivalent employees to 421 people at September 30, 2006 from 366 people at September 30, 2005. Salaries and benefits increased to $31.7 million, or 24% during the nine months ended September 30, 2006 as compared to the year ago period. The Company has continued to add qualified, experienced managing directors to its team to support growth throughout the organization. At September 30, 2006, the Company had 129 managing directors compared to 109 at September 30, 2005 and 126 managing directors at June 30, 2006.

Occupancy expense increased by 34% during the third quarter 2006 to $2.6 million, from $2.0 million in the prior year quarter. Occupancy expense was $7.0 million for the nine months ended September 30, 2006 compared to $5.5 million in the prior year period. The increase is primarily due to the completion of the buildout of the new Chicago headquarters’ office, including one month of overlapping lease expense; the lease on our prior headquarters ran through the end of August and the lease for the new headquarters began on August 1, 2006.

Professional fees, which include fees paid for legal, accounting, consulting, and information systems consulting services, were $1.9 million during the third quarter 2006, increasing from $1.3 million in the prior year period. During the nine months ended September 30, 2006, professional fees increased by 47% to $4.8 million over the prior year period. A portion of wealth management fee revenue is used to pay third-party investment managers and the remaining amount of fees collected are utilized to cover costs associated with administering other aspects of the wealth management services that we provide to clients. Fees paid to third-party investment managers were $774,000 in the third quarter 2006 compared to $308,000 in the prior year quarter, an increase of 151%. For the nine months ended September 30, 2006, fees paid to third party investment managers were $2.0 million, compared to $735,000 in the prior year period, an increase of 130%. Marketing expense was $1.2 million during the third quarter 2006, even with the prior year quarter and increased 31% to $3.2 million for the nine months ended September 30, 2006 as compared to the prior year period. This increase year over year reflects events planned in connection with Company-wide marketing initiatives, as well as receptions and events at our existing offices.

During the first nine months of 2006, we amortized $459,000 in intangible assets, $127,000 related to our acquisition of a controlling interest in Lodestar and $332,000 related to our acquisition of The PrivateBank - Michigan, compared to $255,000 in the first nine months of 2005.

Minority Interest Expense

On December 30, 2002, The PrivateBank - Chicago acquired an 80% controlling interest in Lodestar. The Company records its 20% non-controlling interest in Lodestar related to Lodestar’s results of operations, in minority interest expense on the consolidated statement of income. For the quarters ended September 30, 2006 and 2005, we recorded $85,000 and $82,000 of minority interest expense, respectively.

Income Taxes

The following table shows our income before income taxes, applicable income taxes and effective tax rate for the nine months ended September 30, 2006 and 2005, respectively (in thousands):

	Nine months ended September 30,
		2006			2005
Income before taxes	$	42,366		$	33,786
Income tax provision		13,572			11,116
Effective tax rate		32.0	%		32.9	%

The effective income tax rate varies from statutory rates principally due to certain interest income, which is tax-exempt for federal or state purposes, and certain expenses, which are disallowed for tax purposes. Income before taxes for the first nine months of 2006 grew 25% over the same period in 2005. Our effective tax rate was 32.0% at September 30, 2006 versus 32.9% in the prior year period.

Operating Segments Results

As described in Note 4 to the consolidated financial statements, our operations consist of five primary business segments: The PrivateBank - Chicago, The PrivateBank - St. Louis, The PrivateBank - Michigan, Wealth Management, and the Holding Company. The PrivateBank Mortgage Company results are included in The PrivateBank - Chicago segment. The PrivateBank - Wisconsin’s results are included in the results of The PrivateBank - St. Louis.

The profitability of The PrivateBank - Chicago is primarily dependent on net interest income, provision for loan losses, non-interest income and non-interest expense. Net income for The PrivateBank - Chicago for the nine months ended September 30, 2006 increased 20% to $30.2 million from $25.1 million at September 30, 2005. The growth in net income for the period resulted from improvements in net interest income, which was driven by increased volume in loans. Improvement in net interest income and non-interest income for the nine months ended September 30, 2006 more than offset increases in operating expenses associated with continued growth of The PrivateBank - Chicago as compared to the same period in 2005.

Total loans at The PrivateBank - Chicago increased by 27%, or $473.2 million, to $2.2 billion at September 30, 2006 as compared to total loans of $1.8 billion at September 30, 2005. Commercial real estate loans grew by 26%, commercial loans grew by 37%, and construction loans grew by 23% over prior year’s quarter. Of secured commercial and residential real estate loans in Chicago at September 30, 2006, 85% were located in Illinois, 3% were located in Florida and 2% were located in Wisconsin and Michigan. Approximately $187.1 million of commercial real estate loans were owner-occupied at September 30, 2006.

Total deposits increased by 23% to $2.4 billion at September 30, 2006, from $2.0 billion at September 30, 2005. Growth in money market deposits, brokered deposits, and other time deposits accounted for the majority of the deposit growth. Brokered deposits were $644.7 million at September 30, 2006 compared to $459.0 million in the prior year, an increase of 40%. Chicago core deposits grew by 17% year over year to $1.8 billion at September 30, 2006.

Financial results of The PrivateBank - St. Louis include the results of The PrivateBank - Wisconsin. Net income for The PrivateBank - St. Louis for the nine months ended September 30, 2006 increased 33% to $2.4 million as compared to $1.8 million in the prior year period. Net income for The PrivateBank - St. Louis included a net loss of $755,000 for the first nine months of 2006 from The PrivateBank - Wisconsin, which opened in 2005. Excluding the results of The PrivateBank - Wisconsin, net income of The PrivateBank - St. Louis increased by 17% year over year. The increase in net income of The PrivateBank - St. Louis resulted primarily from increases in net interest income, slightly offset by a 44% increase in the provision for loan losses due to overall growth in the loan portfolio and an increase in specific reserves during the first and second quarters.

Total loans at The PrivateBank - St. Louis increased 40% to $403.0 million at September 30, 2006 from $287.9 million at September 30, 2005, due to growth in commercial real estate, construction, residential, commercial, and personal loan categories. Of secured commercial and residential real estate loans in The PrivateBank - St. Louis portfolio, 77% were located in Missouri, 12% were located in Wisconsin and 5% were located in Florida at September 30, 2006. Included in St. Louis totals are Wisconsin loans of $59.9 million.

Total deposits increased by $117.3 million to $405.7 million at September 30, 2006 from $288.4 million at September 30, 2005. The majority of the deposit growth at The PrivateBank - St. Louis was due to increased money market, other time, and demand deposits during the nine months ended September 30, 2006 as compared to the prior year period. Core deposits grew 51% to $329.8 million at September 30, 2006. Included in St. Louis totals are Wisconsin deposits of $71.4 million.

The PrivateBank - Michigan had loans of $484.5 million at September 30, 2006 up from $362.4 million at September 30, 2005. This 34% increase in loan growth was mainly due to an increase in commercial real estate loans from September 30, 2005. Of secured commercial and residential real estate loans in The PrivateBank - Michigan portfolio, 94% were located in Michigan. Total deposits at The PrivateBank - Michigan increased by $102.0 million to $408.3 million at September 30, 2006, an increases of 33% from the September 30, 2005 balance. The majority of the deposit growth was due to increases in money market and other time deposits. Net income for The PrivateBank - Michigan for the nine months ended September 30, 2006 was $4.0 million.

Wealth Management includes investment management, personal trust and estate services, custodial services, retirement accounts and brokerage and investment services. Consolidated Wealth Management assets under management increased by 35%, or $718.6 million, to $2.8 billion at September 30, 2006 as compared to $2.1 billion at September 30, 2005. This growth was due to the addition of new assets under management and portfolio performance. Michigan’s assets under management have grown 100% year over year to $500.8 million at September 30, 2006 from $250.2 at September 30, 2005. Lodestar’s assets under management at September 30, 2006 were $739.3 million, compared to $674.3 million in the year earlier period. At September 30, 2006, Lodestar assets under management include $115.6 million of assets managed by the Wealth Management department for clients who have selected Lodestar as investment adviser, compared to $105.1 million at September 30, 2005. Excluding Lodestar and Michigan, assets under management for the Wealth Management segment were $1.7 billion at September 30, 2006, compared to $1.2 billion at September 30, 2005. Wealth management fee revenue increased to $10.2 million for the nine months ended September 30, 2006 compared to $7.2 million for the prior year period. The year-over-year increase in wealth management income was primarily due to the addition of new assets under management. Lodestar fee income increased by $257,000, or 9%, year over year. Net income for our Wealth Management segment increased by 67% to $1.3 million for the nine months ended September 30, 2006 from $801,000 for the same period in 2005.

Holding Company Activities consist of parent company only matters. The Holding Company’s most significant assets are its net investments in its four banking subsidiaries, The PrivateBank - Chicago, The PrivateBank - St. Louis, The PrivateBank - Michigan, and our mortgage banking subsidiary, The PrivateBank Mortgage Company. Holding Company Activities are reflected primarily by interest expense on borrowings and operating expenses of the parent company. Recurring holding company operating expenses consist primarily of compensation (expensing of restricted stock awards, stock options and other salary expense) and miscellaneous professional fees.

The Holding Company Activities segment reported a net loss of $8.7 million for the nine months ended September 30, 2006 as compared to a net loss of $4.4 million for the nine months ended September 30, 2005. The increase in net loss for 2006 as compared to the prior year period reflects an increase in net interest expense primarily due to additional trust preferred securities interest expense and the drawdown on lines of credit with LaSalle Bank. Non-interest expense increased by 68% primarily resulting from increases in the expensing of restricted share grants and increases in professional fees. On September 29, 2005, the Company entered into a $65.0 million credit facility with LaSalle Bank. The credit facility replaced an existing $40.0 million revolving credit facility that was originally entered into in February 2000 with LaSalle.

The $65.0 million credit facility is comprised of a $40.0 million senior debt facility and $25.0 million of subordinated debt. The senior debt facility is comprised of a $250,000 term loan with a maturity of December 31, 2016, and a revolving loan with a maturity of December 1, 2006. Management expects to renew the revolving loan on an annual basis. The subordinated debt matures on December 31, 2016. The interest rate on the senior debt facility resets quarterly, and is based on, at the Company’s option, either the lender’s prime rate or three-month LIBOR plus 120 basis points, with a floor of 3.50%. The interest rate on the subordinated debt resets quarterly, and is equal to three-month LIBOR plus 135 basis points, with a floor of 3.50%. Currently, $20.75 million is available on the senior debt facility and $4.0 million is available on the subordinated debt facility. The subordinated debt qualifies as Tier 2 capital under applicable rules and regulations promulgated by the Board of Governors of the Federal Reserve System.

At September 30, 2006, the Company had $19.25 million outstanding on the senior debt facility and $21.0 million of subordinated debt outstanding. The credit facility is used for general corporate and other working capital purposes. The Company expects to further draw down on the facilities over the year to support continued balance sheet growth.

FINANCIAL CONDITION

Total Assets

Total assets increased to $3.9 billion at September 30, 2006, an increase of $379.6 million, or 11% over total assets of $3.5 billion at December 31, 2005, and an increase of $548.2 million, or 16% over total assets of $3.3 billion at September 30, 2005. The balance sheet growth during the nine months ended September 30, 2006 was due to loan growth throughout the Company offset by our withdrawal from the FHLB (Chicago) in May of 2006 and the resulting deleveraging of the balance sheet. Asset growth was funded primarily through core deposit growth and increases in brokered deposits.

Loans

Total loans increased to $3.1 billion at September 30, 2006, an increase of $528.6 million, or 20%, from $2.6 billion at December 31, 2005 and an increase of $714.9 million, or 30%, from $2.4 billion at September 30, 2005.

Company-wide, loan growth since December 31, 2005 has occurred primarily in the commercial real estate, commercial, and construction categories. The loan growth of $528.6 million experienced since December 31, 2005, net of inter-company eliminations, is composed of $86.7 million in loans at The PrivateBank - Michigan, growth in loans at The PrivateBank - Chicago of $371.9 million and $69.5 million at The PrivateBank - St. Louis.

The following table sets forth the composition of our loan portfolio net of unearned discount by category (in thousands) at the following dates:

	September 30, 2006		% loans to total loans			December 31, 2005		% loans to total loans			September 30, 2005		% loans to total loans
Loans
Commercial real estate	$	1,336,663		43	%	$	1,073,711		41	%	$	973,153		41	%
Multi-family		218,464		7	%		195,140		7	%		191,786		8	%
Commercial		551,624		18	%		436,416		17	%		401,796		17	%
Residential real estate		258,134		8	%		221,786		9	%		203,761		8	%
Personal (1)		172,377		5	%		148,670		6	%		130,848		5	%
Home Equity		138,334		4	%		139,747		5	%		147,676		6	%
Construction		461,038		15	%		392,597		15	%		372,705		15	%
Total loans, net of unearned discount	$	3,136,634		100	%	$	2,608,067		100	%	$	2,421,725		100	%

(1) Includes overdraft lines.

The following table sets forth the composition of our commercial real estate loan portfolio net of unearned discount by property type and collateral location at September 30, 2006:

							Collateral Location												Loan Type as a % of total CRE
Loan Type	IL			MO			MI			WI			FL			Other
Construction:
Residential 1-4 Family		7.13	%		2.15	%		0.83	%		0.58	%		0.36	%		0.39	%		11.44	%
Multi-Family		4.15	%		0.67	%		0.03	%		0.00	%		0.00	%		0.06	%		4.91	%
Other		4.28	%		1.09	%		0.23	%		0.25	%		0.00	%		0.36	%		6.21	%
Total Construction		15.56	%		3.91	%		1.09	%		0.83	%		0.36	%		0.81	%		22.56	%
Commercial Real Estate:
Vacant Land		11.04	%		1.61	%		3.17	%		0.41	%		0.69	%		1.62	%		18.54	%
Residential 1-4 Family		5.14	%		1.43	%		0.90	%		0.41	%		0.52	%		1.19	%		9.59	%
Multi-Family		8.46	%		1.01	%		0.65	%		0.39	%		0.00	%		0.24	%		10.75	%
Mixed Use		3.05	%		1.81	%		1.55	%		0.07	%		0.00	%		0.03	%		6.51	%
Office		7.29	%		0.92	%		2.77	%		0.57	%		0.06	%		0.87	%		12.48	%
Warehouse		5.70	%		0.12	%		0.40	%		0.11	%		0.06	%		0.58	%		6.97	%
Retail		4.65	%		0.30	%		1.74	%		0.06	%		0.12	%		1.41	%		8.28	%
Other		2.16	%		0.08	%		0.90	%		0.06	%		0.80	%		0.32	%		4.32	%
Total Commercial Real Estate		47.49	%		7.28	%		12.08	%		2.08	%		2.25	%		6.26	%		77.44	%
Total Commercial Real Estate & Construction		63.05	%		11.19	%		13.17	%		2.91	%		2.61	%		7.07	%		100.00	%

Allowance for Loan Losses

Loan quality is continually monitored by management and reviewed by the loan committees of the boards of directors of the banks on a quarterly basis. The amount of additions to the allowance for loan losses, which is charged to earnings through the provision for loan losses, is determined based on a variety of factors, including assessment of the credit risk of the portfolio, evaluation of loans classified as special mention, sub-standard and doubtful loans, delinquent loans, evaluation of current economic conditions in the market area, actual charge-offs during the year, historical loss experience and industry loss averages. The unallocated portion of the reserve involves the exercise of judgment by management and reflects various considerations, including management’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating credit losses.

We maintain an allowance for loan losses sufficient to absorb credit losses inherent in our loan portfolio. The allowance for loan losses represents our estimate of probable losses in the portfolio at each balance sheet date and is supported by available and relevant information. The allowance contains provisions for probable losses that have been identified relating to specific borrowing relationships, as well as probable losses inherent in the loan portfolio and credit undertakings that are not specifically identified. Management’s application of the methodology for determining the allowance for loan losses resulted in an allowance for loan losses of $34.7 million at September 30, 2006 compared with $29.4 million at December 31, 2005. The increase in the provision from December 31, 2005 reflects management’s judgment about the generalized risk of real estate related lending in our various markets, the addition of new lending personnel as well as strong loan growth from all existing offices in the third quarter 2006. We believe that the allowance for loan losses is adequate to provide for estimated probable credit losses inherent in our loan portfolio.

The allowance for loan losses as a percentage of total loans was 1.11% at September 30, 2006, down from 1.13% at December 31, 2005 and 1.15% at September 30, 2005. Net charge-offs totaled $824,000 for the nine months ended September 30, 2006 versus net recoveries of $436,000 in the year earlier period. The provision for loan losses was $6.1 million for the nine months ended September 30, 2006, versus $4.8 million for the nine months ended September 30, 2005.

Following is a summary of changes in the allowance for loan losses for the nine months ended September 30, 2006 and 2005 (in thousands):

	2006			2005
Balance, January 1	$	29,388		$	18,986
Provisions charged to earnings		6,129			4,848
Addition of The PrivateBank - Michigan loan loss reserve		-			3,614
Loans charged-off, net of recoveries		(824	)		436
Balance, September 30	$	34 693		$	27,884

The following table shows our allocation of the allowance for loan losses by specific category at the dates shown.

	September 30, 2006					December 31, 2005					September 30, 2005
Allocation of the Allowance for Loan Losses ($ in thousands)	Amount		% of allowance to total allowance			Amount		% of loans to total loans			Amount		% of allowance to total allowance
Allocated Inherent Reserve:
CRE Loans	$	17,545		51	%	$	12,975		44	%	$	11,868		43	%
Commercial Loans		6,275		18	%		6,453		22	%		5,925		21	%
Residential Loans		507		1	%		419		1	%		513		2	%
Personal Loans		1,962		6	%		1,714		6	%		1,575		6	%
Home Equity Loans		230		1	%		277		1	%		407		1	%
Construction Loans		6,051		17	%		4,686		16	%		4,414		16	%
Allocated Inherent Reserve		32,570		94	%		26,524		90	%		24,702		89	%
Specific Reserve		150		--			--		--			--		--
Unallocated Inherent Reserve		1,973		6	%		2,864		10	%		3,182		11	%
Total Reserve for Credit Losses	$	34,693		100	%	$	29,388		100	%	$	27,884		100	%

We considered various qualitative and quantitative factors about the loan portfolio in determining the level of the allowance for loan losses. Under our methodology, the allowance for loan losses is comprised of the following components:

Allocated Inherent Component of the Reserve

The allocated portion of the allowance for loan losses is based on loan type and by loan risk within each loan type. The Company assigns each of its loans a risk rating at the time of loan origination and either confirms or changes the risk rating at the time of subsequent reviews, loan renewals or upon default. The loss allocations are based on a combination of a historical analysis of the Company’s losses and adjustment factors deemed relevant by management. The adjustment factors take into account banking industry-wide loss statistics, current facts and circumstances, and long-term economic trends. During the second quarter 2005, the historical analysis was enhanced to include a five-year migration analysis of the Company’s losses and the documentation of the loss adjustment factors was augmented.

The allocated inherent component of the reserve increased by $6.1 million during the first nine months of 2006, from $26.5 million at December 31, 2005 to $32.6 million at September 30, 2006. The increase in the allocated portion of the reserve reflects higher loan volumes, particularly construction and commercial real estate loans.

Specific Component of the Reserve

For loans where management deems either the amount or the timing of the repayment to be significantly impaired, there are specific reserve allocations established. The specific reserve is based on a loan’s current value compared to the present value of its projected future cash flows, collateral value or market value, as is relevant for the particular loan pursuant to SFAS 114, “Accounting by Creditors for Impairment of a Loan.” As of September 30, 2006, management concluded that there were two commercial loans in the St. Louis portfolio that required specific reserves and one loan in the Chicago portfolio that required specific reserves.

The specific component of the reserve increased by $974,000 during the first nine months of 2006 to $150,000 at September 30, 2006 after giving effect to $824,000 in net charge-offs during the period, from zero at December 31, 2005.

Unallocated Inherent Components of the Reserve

The unallocated inherent component of the reserve is based on management’s review of other factors affecting the determination of probable losses inherent in the portfolio, which are not necessarily captured by the application of loss and loss adjustment factors. This portion of the reserve analysis involves the exercise of judgment and reflects consideration such as management’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating credit losses.

The unallocated inherent component of the reserve decreased by $891,000 for the first nine months of 2006, from $2.9 million at December 31, 2005 to $2.0 million at September 30, 2006.

Nonperforming Loans

The following table classifies our non-performing loans as of the dates shown:

	9/30/06			6/30/06			3/31/06			12/31/05			9/30/05
	(dollars in thousands)
Nonaccrual loans	$	588		$	1,721		$	3,228		$	663		$	472
Loans past due 90 days or more		1,260			1,262			1,080			280			744
Total nonperforming loans		1,848			2,983			4,308			943			1,216
OREO		480			203			235			393			211
Total nonperforming assets	$	2,328		$	3,186		$	4,543		$	1,336		$	1,427
Total nonaccrual loans to total loans		0.02	%		0.06	%		0.12	%		0.03	%		0.02	%
Total nonperforming loans to total loans		0.06	%		0.10	%		0.15	%		0.04	%		0.05	%
Total nonperforming assets to total assets		0.06	%		0.09	%		0.12	%		0.04	%		0.04	%

Nonperforming loans include nonaccrual loans and accruing loans, which are 90 days or more delinquent. Loans in this category include those with characteristics such as past maturity more than 90 days, those that have recent adverse operating cash flow or balance sheet trends, or loans that have general risk characteristics that management believes might jeopardize the future timely collection of principal and interest payments. The balance in this category at any reporting period can fluctuate widely based on the timing of cash collections, renegotiations and renewals.

Nonaccrual loans were $588,000 at September 30, 2006 as compared to $663,000 at December 31, 2005 and $472,000 at September 30, 2005. Loans delinquent over 90 days increased by $980,000 since December 31, 2005 to $1.3 million.

The $480,000 of OREO property at September 30, 2006 is comprised of $203,000 of property in the Detroit metropolitan area and $277,000 of property acquired by TrustCo, the 100% owned subsidiary of The PrivateBank - St. Louis, during the third quarter.

Investment Securities

The amortized cost and the estimated fair value of securities at September 30, 2006 and December 31, 2005, were as follows (in thousands):

	Investment Securities — Available-for-Sale
	September 30, 2006
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government agency mortgage backed securities and collateralized mortgage obligations	$	243,916	$	544	$	(3,567	)	$	240,894
Tax exempt municipal securities		194,165		13,331		(2	)		207,494
Taxable municipal securities		3,825		--		(1	)		3,824
Federal Home Loan Bank stock		3,738		--		--			3,738
Other		2,918		2		--			2,920
Total	$	448,562	$	13,877	$	(3,570	)	$	458,869

	Investment Securities — Available-for-Sale
	December 31, 2005
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government agency mortgage backed securities and collateralized mortgage obligations	$	319,525	$	941	$	(4,212	)	$	316,254
Tax exempt municipal securities		214,895		15,356		(43	)		230,208
Taxable municipal securities		3,825		1		—			3,826
Federal Home Loan Bank stock		142,396		—		—			142,396
Other		2,467		--		—			2,467
Total	$	683,108	$	16,298	$	(4,255	)	$	695,151

All securities are classified as available-for-sale and may be utilized as part of our asset/liability management strategy in response to changes in interest rates, liquidity needs or significant prepayment risk. Available-for-sale securities are carried at fair value, with related unrealized net gains or losses, net of deferred income taxes, recorded as an adjustment to equity capital. At September 30, 2006, reported stockholders’ equity reflected unrealized securities gains net of tax of $6.8 million, a decrease of $634,000 from $7.4 million at December 31, 2005.

During the third quarter 2006, our investment securities portfolio decreased 8% to $458.9 million from $499.8 million at the end of the second quarter 2006, and down 34% from December 31, 2005 due to the redemption of $138.5 million of FHLB (Chicago) stock during the second quarter 2006 and the sale of approximately $40.1 million of other securities at market. Securities sold consist primarily of selected municipal bonds and mortgage-backed securities and collateralized mortgage obligations. With the withdrawal from the FHLB (Chicago) in the second quarter and the change in the interest rate environment, adjustments to the investment portfolio worked to maintain the desired asset/liability position. Total securities represented less than 12% of total assets at September 30, 2006, compared to 22% in the prior year period.

During the third quarter, the Company also retired an interest rate swap that previously was used to hedge its investment position in municipal bonds. Retiring this interest rate derivative will eliminate the earnings volatility that it created in past quarters.

Securities available-for-sale decreased to $458.9 million at September 30, 2006 from $695.2 million as of December 31, 2005. U.S. government agency mortgage backed securities and collateral mortgage obligations decreased by $75.4 million at September 30, 2006 as compared to year-end due to the sale of selected securities and run off. Given the current yield curve and our strong loan growth, we expect the securities portfolio to remain at current levels or decrease slightly due to run-off; we do not currently plan to substantially add to the securities portfolio.

Deposits and Funds Borrowed

The following table presents the balances of deposits by category and each category as a percentage of total deposits at September 30, 2006 and December 31, 2005:

	September 30,					December 31,
	2006					2005
	Balance		Percent of Total			Balance		Percent of Total
	(dollars in thousands)
Non-interest bearing demand	$	280,478		9	%	$	252,625		9	%
Savings		12,411		0	%		14,596		1	%
Interest-bearing demand		115,531		4	%		132,787		5	%
Money market		1,315,521		40	%		1,257,757		44	%
Brokered deposits		720,673		22	%		586,605		21	%
Other time deposits		794,208		25	%		579,013		20	%
Total deposits	$	3,238,822		100	%	$	2,823,383		100	%

Total deposits of $3.2 billion at September 30, 2006 represent an increase of $415.4 million or 15% as compared to total deposits of $2.8 billion as of December 31, 2005. Core deposit growth, which represents total deposits less brokered deposits, increased 13%over the past three quarters.Non-interest-bearing demand deposits increased by 11% to $280.5 million at September 30, 2006 as compared to $252.6 million at December 31, 2005. Interest-bearing demand deposits decreased 13% to $115.5 million as compared to $132.8 million at December 31, 2005. Money market accounts remained relatively flat at $1.3 billion at September 30, 2006 and December 31, 2005. Brokered deposits increased by 23% or $134.1 million to $720.7 million at September 30, 2006 as compared to $586.6 million at December 31, 2005. Other time deposits increased by 37% to $794.2 million as compared to $579.0 million at year-end 2005.

We continue to utilize brokered deposits as a source of funding for growth in the loan portfolio. Our brokered deposits to total deposits ratio was 22% at September 30, 2006 compared to 21% at December 31, 2005. We have issued certain brokered deposits that include call option provisions, which provide us with the opportunity to redeem the certificates of deposit on a specified date prior to the contractual maturity date.

As of September 30, 2006, we held thirteen outstanding brokered deposits containing unexercised call provisions. We have brokered deposits with eleven different brokers and we receive periodic information from other brokers regarding potential deposits. The scheduled maturities of brokered deposits, net of unamortized prepaid broker commissions, as of September 30, 2006, for the fourth quarter 2006, 2007 quarters and fiscal years 2008 through 2010 and thereafter, are as follows:

Scheduled Maturities of Brokered Deposits

net of unamortized prepaid brokered commissions

at September 30, 2006

Maturity Date	Rate (1)			9/30/2006
4th quarter 2006		4.96	%		166,382
1st quarter 2007		4.87	%		175,829
2nd quarter 2007		5.04	%		147,719
Remainder 2007		4.66	%		54,400
2008 (2)		4.24	%		40,551
2009 - 2010 (3)		4.54	%		45,399
Thereafter (4)		5.21	%		92,466
Unamortized prepaid broker commissions					(2,073	)
Total brokered deposits, net of unamortized prepaid broker commissions				$	720,673

(1)   Represents the all-in rate of each brokered deposit.

(2)   This segment includes a callable $14.9 million brokered deposit with a maturity date of 3/26/2008 which is callable monthly.

(3)   This segment includes a $5.0 million brokered deposit with a maturity date of 6/12/09 which is callable monthly and a $1.6 million brokered deposit with a maturity date of 5/19/2010 callable quarterly.

(4)   This segment includes several callable deposits: a $3.5 million brokered deposit with a maturity date of 11/19/2012 callable semi-annually; a $9.8 million brokered deposit with a maturity date of 2/11/2013 callable monthly; a $9.9 million brokered deposit with a maturity date of 1/21/2014 callable monthly; a $9.9 million brokered deposit with a maturity date of 12/17/2014 callable monthly; a $7.3 million brokered deposit with a maturity of 1/28/2015 callable semi-annually; a $11.9 million brokered deposit with a maturity date of 2/27/2019 callable monthly; a $9.2 million brokered deposit with a maturity date of 3/12/2024 callable semi-annually; a $6.7 million zero coupon brokered deposit with a maturity date of 3/18/2024, an effective yield of 5.82% and callable semi-annually; a $8.4 million brokered deposit with a maturity date of 4/23/2024 callable monthly; and a $6.7 million brokered deposit with a maturity date of 6/30/2025, and semi-annually thereafter.

Membership in the FHLB system gives us the ability to borrow funds from the FHLB (Des Moines) and the FHLB (Indianapolis) under a variety of programs. We have periodically used the services of the FHLB for funding needs and other correspondent services. Our withdrawal as a member of the FHLB (Chicago) was completed during the second quarter 2006. Therefore, we are no longer able to borrow funds or participate in any of the other programs of the FHLB (Chicago); however, we anticipate that we will continue to be members of, and to take advantage of the programs offered by, the FHLB (Des Moines) and the FHLB (Indianapolis).

During the third quarter of 2006, our reliance on FHLB borrowings as a funding source decreased by $183.1 million from December 31, 2005. FHLB borrowings totaled $62.0 million at September 30, 2006 compared to $327.1 million at September 30, 2005 and $245.1 million at December 31, 2005. Included in the September 30, 2006 balance are The PrivateBank - Michigan FHLB borrowings of $45.0 million and The PrivateBank - St. Louis borrowings of $17.0 million. As a result of our withdrawal of membership from the FHLB (Chicago), we retired or sold $148.9 million of FHLB (Chicago) borrowings. The FHLB requires us to pledge collateral in connection with obtaining FHLB advances. Our pledged collateral consists of residential real estate loans and certain qualifying multi-family loans and investment securities.

On September 29, 2005, the Company entered into a $65.0 million credit facility with LaSalle Bank. The $65.0 million credit facility is comprised of a $40.0 million senior debt facility and $21.0 million of subordinated debt. The senior debt facility is comprised of a $250,000 term loan with a maturity of December 31, 2016, and a revolving loan with a maturity of December 1, 2006. Management expects to renew the revolving loan on an annual basis. The subordinated debt matures on December 31, 2016. The interest rate on the senior debt facility resets quarterly, and is based on, at the Company’s option, either the lender’s prime rate or three-month LIBOR plus 120 basis points, with a floor of 3.50%. The interest rate on the subordinated debt resets quarterly, and is equal to three-month LIBOR plus 135 basis points, with a floor of 3.50%. Currently, $4.0 million is available on the subordinated debt facility. The subordinated debt qualifies as Tier 2 capital under applicable rules and regulations promulgated by the Board of Governors of the Federal Reserve System.

At September 30, 2006, the Company had $19.25 million outstanding on the senior debt facility and $21.0 million of subordinated debt outstanding. The credit facility is used for general corporate and other working capital purposes. The Company expects to further draw down on the facilities over the next year to support continued balance sheet growth.

Capital Resources

Stockholders’ equity rose to $268.2 million at September 30, 2006, an increase of $29.6 million from December 31, 2005 stockholders’ equity of $238.6 million, due primarily to year to date 2006 net income of $28.8 million.

At September 30, 2006, $87.2 million of our total $98.0 million outstanding trust-preferred securities were treated as Tier 1 capital. The Company and its banking subsidiaries are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors, and the regulators can lower classifications in certain areas. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a banking subsidiary is not “well capitalized,” regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited as is asset growth and expansion and plans for capital restoration are required.

The following table sets forth our consolidated regulatory capital amounts and ratios as of September 30, 2006 and 2005, and December 31, 2005:

	September 30,																December 31,
	2006								2005								2005
	Capital			“Well-capital-ized” Standard			Excess/ (Deficit) Capital		Capital			“Well-capital-ized” Standard			Excess/ (Deficit) Capital		Capital			“Well-capital-ized” Standard			Excess/ (Deficit) Capital
Dollar basis:
Tier 1 leverage capital	$	280,341		$	193,077		$	87,264	$	226,970			158,596		$	68,374	$	238,552		$	166,110		$	74,442
Tier 1 risk-based capital		280,431			194,360			85,981		226,970			154,952			72,019		238,552			166,183			72,370
Total risk-based capital		346,881			323,933			22,948		264,643			258,253			6,390		294,894			276,971			17,923
Percentage basis:
Leverage ratio		7.26	%		5.00	%				7.16	%		5.00	%				7.18	%		5.00	%
Tier 1 risk-based capital ratio		8.65			6.00					8.79			6.00					8.61			6.00
Total risk-based capital ratio		10.71			10.00					10.25			10.00					10.65			10.00
Total equity to total assets		6.92								6.93								6.82
Tangible capital ratio		5.25								4.97								4.96

To be considered “well-capitalized,” an entity must maintain a leverage ratio of at least 5.0%, a Tier 1 risk-based capital ratio of at least 6.0%, and a total risk-based capital ratio of at least 10.0%. To be “adequately capitalized,” a bank must maintain a leverage ratio of at least 4.0%, a Tier 1 risk-based capital ratio of at least 4.0%, and a total risk-based capital ratio of at least 8.0%. At September 30, 2006, the Company and each of the banking subsidiaries exceeded the minimum levels of all regulatory capital requirements, and were considered “well-capitalized” under regulatory standards.

Liquidity

Liquidity measures our ability to meet maturing obligations and our existing commitments, to withstand fluctuations in deposit levels, to fund our operations and to provide for clients’ credit needs. Our liquidity principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings and our ability to borrow funds in the money or capital markets.

Net cash provided by operations totaled $14.1 million in the nine months ended September 30, 2006 compared to net cash provided by operations of $13.8 million in the prior year period. Net cash outflows from investing activities totaled $304.3 million in the first nine months of 2006 compared to a net cash outflow of $455.3 million in the prior year period primarily due to loan growth, securities sales and reduced securities purchases. Cash inflows from financing activities in the first nine months of 2006 totaled $352.9 million compared to a net inflow of $445.3 million in the first nine months of 2005.

In the event of short-term liquidity needs, our banking subsidiaries may purchase federal funds from correspondent banks and our investment portfolio can be used as a source of liquidity. Additionally, membership in the FHLB System gives the banking subsidiaries the ability to borrow funds from the FHLBs (Des Moines and Indianapolis) for short- or long-term purposes under a variety of programs. During the second quarter 2006, The PrivateBank - Chicago completed its withdrawal from the FHLB (Chicago) and therefore no longer has access to funds from that institution.

Our asset/liability policy currently limits our use of brokered deposits to levels no more than 40% of total deposits. As a result of our withdrawal from the FHLB (Chicago) and repayment and sale of our FHLB (Chicago) advances, along with continued strong loan growth, brokered deposits have increased to 22% of total deposits at September 30, 2006 compared to 21% of total deposits at September 30, 2005. We do not expect our 40% threshold limitation to limit our ability to implement our growth plan.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Risk Management

We are exposed to market risk from changes in interest rates that could affect our results of operations and financial condition. We manage our exposure to these market risks through our regular operating and financing activities. During 2001, we began to hedge interest rate risk through the use of derivative financial instruments. We use derivative financial instruments as a risk management tool.

Interest Rate Risk

 We use a combination of financial instruments, including medium-term and short-term financings and variable-rate debt instruments and, to a lesser extent, interest rate swaps to manage the interest rate mix of our balance sheet and related cash flows.

 As market interest rates continued to decline to historic lows in the second half of 2002, the value of our long-term tax-exempt bank-qualified municipal bond portfolio increased. In order to protect this gain should rates rise, we entered into a $25.0 million swap agreement whereby we sold the 10-year swap and bought three-month LIBOR to act as an economic hedge to a portion of our long municipal bonds. Given the current interest rate environment, we deemed it appropriate to retire this interest rate swap during the third quarter 2006. Another interest rate swap we entered into was designated as a fair value hedge of a fixed rate $20.0 million brokered deposit. We agreed to receive a 4.6% fixed rate in exchange for payment of three month LIBOR minus 12.5 basis points on an agreed upon notional amount of $20.0 million. This interest rate swap matured on June 28, 2006.

Changes in market rates give us the opportunity to make changes to our investment security portfolio as part of the implementation of our asset liability management strategies. Throughout 2005 and 2006, we continued to replace specific investment securities with alternative investment securities with greater risk/reward parameters on a selective basis. Our net interest margin decreased to 3.47% in the third quarter 2006 as compared to 3.53% in the prior year period. During 2005 and the first half of 2006 our costs on wholesale funds, short-term borrowings and deposits outpaced the increase in earning asset yields due to the shape of the yield curve and increases in the prime rate of interest. Approximately 70% of the loan portfolio is indexed to the prime rate of interest or otherwise adjusts with other short-term interest rates.

We have not changed our interest rate risk management strategy from the prior year and do not foresee or expect any significant changes in our exposure to interest rate fluctuations, but we will continue to consider the use of interest rate swaps on our debt obligations in the future depending on changes in market rates of interest.

Asset/Liability Management Policy

As a continuing part of our financial strategy, we attempt to manage the impact of fluctuations in market interest rates on our net interest income. This effort entails providing a reasonable balance between interest rate risk, credit risk, liquidity risk and maintenance of yield. Asset/liability management policy is established by our investment committee of our board of directors and is monitored by management. Our asset/liability management policy sets standards within which we are expected to operate. These standards include guidelines for exposure to interest rate fluctuations, liquidity, loan limits as a percentage of funding sources, exposure to correspondent banks and brokers, and reliance on non-core deposits. The policy also states our reporting requirements to our board of directors. The investment policy complements the asset/liability management policy by establishing criteria by which we may purchase securities. These criteria include approved types of securities, brokerage sources, terms of investment, quality standards, and diversification.

We measure the impact of interest rate changes on our income statement through the use of gap analysis. The gap represents the net position of assets and liabilities subject to repricing in specified time periods. During any given time period, if the amount of rate sensitive liabilities exceeds the amount of rate sensitive assets, a company would generally be considered negatively gapped and would benefit from falling rates over that period of time. Conversely, a positively gapped company would generally benefit from rising rates.

We have structured our assets and liabilities to mitigate the risk of either a rising or falling interest rate environment. We manage our gap position at the one-year horizon. Depending upon our assessment of economic factors such as the magnitude and direction of projected interest rates over the short- and long-term, we generally operate within guidelines set by our asset/liability management policy and attempt to maximize our returns within an acceptable degree of risk. Our policy states that we shall maintain a rate-sensitive assets to rate-sensitive liabilities position at the one-year horizon between 70% and 130%. Our position at September 30, 2006 was 83.3% as compared to 96.0% at December 31, 2005 and was within the guidelines of our policy. We have continued to maintain our gap position set by our policy guidelines and expect to continue to operate in this manner as long as the general rate structure of the economy and our business opportunities remain consistent. Therefore, generally speaking, a short-term rise in interest rates will positively impact our earnings, while a short-term drop in interest rates would negatively impact our earnings.

Interest rate changes do not affect all categories of assets and liabilities equally or simultaneously. There are other factors that are difficult to measure and predict that would influence the effect of interest rate fluctuations on our income statement. For example, a rapid drop in interest rates might cause our loans to repay at a more rapid pace and certain mortgage-related investments to prepay more quickly than projected. This could mitigate some of the benefits of falling rates that are expected when negatively gapped. Conversely, a rapid rise in rates could give us an opportunity to increase our margins and stifle the rate of repayment on our mortgage-related loans, which would increase our returns. The following tables illustrate our estimated interest rate sensitivity and periodic and cumulative gap positions calculated as of September 30, 2006 and December 31, 2005:

	September 30, 2006 Time to Maturity or Repricing
		0-90 days			91-365 days			1-5 years			Over 5 years			Total
(dollars in thousands)
Interest-Earning Assets
Net loans	$	1,905,825		$	302,276		$	844,342		$	49,498		$	3,101,941
Investments		9,996			39,638			183,770			218,156			451,560
FHLB stock		3,738			--			--			--			3,738
Federal funds sold		32,993			--			--			--			32,993
Total interest-earning assets	$	1,952,552		$	341,914		$	1,028,112		$	267,654		$	3,590,232
Interest-Bearing Liabilities
Interest-bearing demand deposits	$	--		$	--		$	--		$	115,531		$	115,531
Savings deposits		12,411			--			--			--			12,411
Money market deposits		1,315,521			--			--			--			1,315,521
Time deposits		378,599			346,756			68,464			389			794,208
Brokered deposits		164,309			371,220			92,678			92,466			720,673
Funds borrowed		156,829			8,000			148,000			21,029			333,858
Total interest-bearing liabilities	$	2,027,669		$	725,976		$	309,142		$	229,415		$	3,292,202
Cumulative
Rate sensitive assets (RSA)	$	1,952,551		$	2,294,465		$	3,322,577		$	3,590,232
Rate sensitive liabilities (RSL)		2,027,668			2,753,644			3,062,787			3,292,202
GAP (GAP=RSA-RSL)		(75,117	)		(459,179	)		259,790			298,030
RSA/RSL		96.30	%		83.32	%		108.48	%		109.05	%
RSA/Total assets		50.36	%		59.18	%		85.70	%		92.61	%
RSL/Total assets		52.30	%		71.03	%		79.00	%		84.92	%
GAP/Total assets		-1.94	%		-11.84	%		6.70	%		7.69	%
GAP/Total RSA		-2.09	%		-12.79	%		7.24	%		8.30	%

	December 31, 2005 Time to Maturity or Repricing
	0-90 days			91-365 days			1-5 years			Over 5 years			Total
	(dollars in thousands)
Interest-Earning Assets
Net loans	$1,718,484			$205,543			$625,756			$34,165			$2,583,948
Investments	74,004			40,212			222,383			252,764			589,363
FHLB stock	142,396			—			—			—			142,396
Federal funds sold	12,770			—			—			—			12,770
Total interest-earning assets	$1,947,654			$245,755			$848,139			$286,929			$ 3,328,477
Interest-Bearing Liabilities
Interest-bearing demand deposits	$—			$—			$—			$132,787			$132,787
Savings deposits	14,596			—			—			—			14,596
Money market deposits	1,257,757			—			—			—			1,257,757
Time deposits		261,445			252,319			64,922			326			579,012
Brokered deposits		67,763			255,771			167,782			108,833			600,149
Funds borrowed		109,301			65,634			117,045			103,000			394,980
Total interest-bearing liabilities	$	1,710,862		$	573,724		$	349,749		$	344,946		$	2,979,281
Cumulative
Rate sensitive assets (RSA)	$	1,947,654		$	2,193,409		$	3,041,548		$	3,328,477
Rate sensitive liabilities (RSL)		1,710,862			2,284,586			2,634,335			2,979,281
GAP (GAP=RSA-RSL)		236,792			(91,177	)		407,213			349,196
RSA/RSL		113.84	%		96.01	%		115.46	%		111.72	%
RSA/Total assets		55.74	%		62.77	%		87.05	%		95.26	%
RSL/Total assets		48.96	%		65.38	%		75.39	%		85.26	%
GAP/Total assets		6.78	%		-2.61	%		11.65	%		9.99	%
GAP/Total RSA		7.11	%		-2.74	%		12.23	%		10.49	%

The following table shows the impact of immediate 200 and 100 basis point changes in interest rates as of September 30, 2006 and December 31, 2005. The effects are determined through the use of a simulation model based on our interest-earning asset and interest-bearing liability portfolios, assuming the size of these portfolios remains constant from the balance sheet date throughout the one-year measurement period. The simulation assumes that assets and liabilities accrue interest on their current pricing basis. Assets and liabilities then reprice based on their terms and remain at that interest rate through the end of the measurement period. The model attempts to illustrate the potential change in net interest income if the foregoing occurred.

	September 30, 2006				December 31, 2005
	-200 Basis Points	-100 Basis Points	+100 Basis Points	+200 Basis Points	-200 Basis Points	-100 Basis Points	+100 Basis Points	+200 Basis Points
Percentage change in net interest income due to an immediate 100 and 200 basis point change in interest rates over a one-year time horizon	-8.4%	-3.6%	2.4%	4.5%	-13.9%	-6.4%	3.9%	7.2%

This table shows that if there had been an instantaneous parallel shift in the yield curve of -100 basis points on September 30, 2006, net interest income would decrease by 3.6% over a one-year period. The measurement of a -200 basis point instantaneous parallel shift in the yield curve at September 30, 2006 would result in a decline in net interest income of 8.4% over a one-year period versus a decline of 13.9% at December 31, 2005. At December 31, 2005, if there had been an instantaneous parallel shift in the yield curve of -100 we would have suffered a decline in net interest income of 6.4%. Conversely, a shift of +200 basis points would increase net interest income 4.5% over a one-year horizon based on September 30, 2006 balances, as compared to an increase of net interest income of 7.2% measured on the basis of the December 31, 2005 portfolio.

Changes in the effect on net interest income from the presented basis point movements at September 30, 2006, compared to December 31, 2005 are due to the timing and nature of the repricing of rate sensitive assets to rate sensitive liabilities over a one year time frame. The difference in the effect on net interest income a September 30, 2006 as compared to December 31, 2005 is due to differences in timing, balances, and the magnitude of rate changes on the repricing assets and liabilities.

The table presented above reflects that the Company is less interest rate sensitive at September 30, 2006 as compared to December 31, 2005. There are several factors contributing to the Company becoming less interest rate sensitive as of September 30, 2006, including the incremental increase in certain fixed rate loan products and reduction of certain portions of our collateralized mortgage obligation portfolio and FHLB stock position. Additionally, the Company’s borrowed funds have a shorter duration when comparing September 30, 2006 to December 31, 2005, further reducing interest rate sensitivity.

Management’s likely reaction to changes in interest rates is incorporated in the assumptions made in these calculations. Differences in these assumptions between the reporting periods have also had the effect of reducing the impact of a changing interest rate environment.

The preceding sensitivity analysis is based on numerous assumptions including the nature and timing of interest rate levels including the shape of the yield curve, prepayments on loans and securities, changes in deposit levels, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows and others. While assumptions are developed based upon current economic and local market conditions, we cannot make any assurances as to the predictive nature of these assumptions including how client preferences or competitor influences might change.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to the Company (and its consolidated subsidiaries) required to be included in the periodic reports the Company is required to file and submit to the SEC under the Exchange Act.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the three months ended September 30, 2006 that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995

This report contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ materially from those predicted in forward-looking statements. Factors which might cause such a difference include, but are not limited to, unanticipated difficulties or delays in obtaining the requisite Piedmont Bancshares shareholder or regulatory approval for the proposed merger, higher than expected costs related to the proposed merger with Piedmont, fluctuations in market rates of interest and loan and deposit pricing; greater than anticipated deterioration in asset quality due to a prolonged economic downturn in the greater Chicago, Detroit, Milwaukee or St. Louis metropolitan areas; legislative or regulatory changes; adverse developments or changes in the composition of the Company’s loan or investment portfolios; significant increases in competition; an increase in the Company’s funding costs as a result of its decision to withdraw as a member of the FHLB (Chicago); difficulties in identifying attractive acquisition opportunities or strategic partners to complement our private banking approach and the products and services we offer; slower than anticipated growth of the Company’s business, unanticipated business declines or higher than expected operational costs; unexpected difficulties in the continued integration of or in operating our mortgage banking business; the possible dilutive effect of potential acquisitions or expansion; and our ability to raise new capital as needed and the timing, amount and type of such capital raises. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Part II

Item 1. Legal Proceedings

From time to time, we may be party to various legal proceedings arising in the normal course of our business. Since we act as a depository of funds, we may be named from time to time as a defendant in various lawsuits (such as garnishment proceedings) involving claims to the ownership of funds in particular accounts. Neither PrivateBancorp nor any of our subsidiaries is currently a defendant in any such proceedings that we believe will have a material adverse effect on our business, results of operations, financial condition or cash flows.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2005, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases by the Company during the quarter ended September 30, 2006 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

Period	(a) Total Number of Shares Purchased		(b) Average Price paid per Share		(c) Total Number of Shares Purchased as part of publicly announced Plans or Programs		(d) Maximum Number of Shares that may be purchased under the Plans/Program (1)(3)
07/01/2006 - 07/31/2006		--		--		--		222,792
08/01/2006 - 08/31/2006		--		--		--		222,792
09/01/2006 - 09/30/2006		--		--		--		222,792
Total		--		--		--		222,792
(1)The Company’s Board of Directors approved the repurchase by the Company of up to an aggregate of 231,192 shares of its common stock pursuant to the repurchase program that was publicly announced on July 25, 2001 (the “Program”). Unless terminated earlier by the Company’s Board of Directors, the Program will expire when the Company has repurchased all shares authorized for repurchase thereunder.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None.

Item 6. Exhibits 

3.1	Certificate of amendment of the Amended and Restated Certificate of Incorporation of PrivateBancorp, Inc., as amended (filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
3.2	Amended and Restated Certificate of Incorporation of PrivateBancorp, Inc., as amended. (filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003, and incorporated herein by reference).
3.3	Amended and Restated By-laws of PrivateBancorp, Inc. (filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2003 and incorporated herein by reference).
4.1	Certain instruments defining the rights of the holders of long-term debt of the Company and certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Company and its subsidiaries on a consolidated basis, have not been filed as exhibits. The Company hereby agrees to furnish a copy of any of these agreements to the SEC upon request.
10.1	Form of Restricted Stock Award Agreement pursuant to the PrivateBancorp, Inc. Incentive Compensation Plan (as amended)
10.2	Form of Non-Qualified Stock Option Agreement pursuant to the PrivateBancorp, Inc. Incentive Compensation Plan (as amended)
15.0	Acknowledgment of Independent Registered Public Accounting Firm.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.0	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Report of Independent Registered Public Accounting Firm.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	PRIVATEBANCORP, INC.
	(Registrant)
	By:	/s/ Ralph B. Mandell
		Ralph B. Mandell,
		Chairman, President and
		Chief Executive Officer
	By:	/s/ Dennis L. Klaeser
		Dennis L. Klaeser,
		Chief Financial Officer
		(principal financial and accounting officer)
Date: November 9, 2006

EXHIBIT INDEX

3.1	Certificate of amendment of the Amended and Restated Certificate of Incorporation of PrivateBancorp, Inc., as amended (filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
3.2	Amended and Restated Certificate of Incorporation of PrivateBancorp, Inc., as amended. (filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003, and incorporated herein by reference).
3.3	Amended and Restated By-laws of PrivateBancorp, Inc. (filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2003 and incorporated herein by reference).
4.1	Certain instruments defining the rights of the holders of long-term debt of the Company and certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Company and its subsidiaries on a consolidated basis, have not been filed as exhibits. The Company hereby agrees to furnish a copy of any of these agreements to the SEC upon request.
10.1	Form of Restricted Stock Award Agreement pursuant to the PrivateBancorp, Inc. Incentive Compensation Plan. (as amended)
10.2	Form of Non-Qualified Stock Option Agreement pursuant to the PrivateBancorp, Inc. Incentive Compensation Plan (as amended)
15.0	Acknowledgment of Independent Registered Public Accounting Firm.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.0	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Report of Independent Registered Public Accounting Firm.