EX-99.1 2 c48881aexv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(PRIVATEBANCORP LOGO)
For further information:
Media Contact:
Amy Yuhn
Director of Communications
312-564-1378
ayuhn@theprivatebank.com
Investor Relations Contact:
Dennis Klaeser
Chief Financial Officer
312-564-1700
dklaeser@pvtb.com
For Immediate Release
PrivateBancorp Reports Fourth Quarter and Year-End 2008 Results
Significant Charges Taken in Residential Development Portfolio;
Strategic Growth Plan Continues to Generate Positive Results
•   The Company reported net charge-offs of $108.8 million in the fourth quarter after a proactive loan review to address credit quality concerns, particularly in the residential development sector. None of the losses reported were from loans originated as part of the Strategic Growth Plan.
 
•   Net loss was $62.0 million for the fourth quarter 2008 and $91.5 million for the 12 months ended December 31, 2008.
 
•   The Company’s continued well-capitalized position will be bolstered by preliminary approval for $244 million in TARP capital, which will support further execution of the Strategic Growth Plan.
 
•   The Strategic Growth Plan resulted in substantial new client growth that generated a 9 percent increase in revenue over third quarter 2008 and an 84 percent increase in revenue year over year.
 
•   Client deposits grew $1.0 billion or 20 percent from the third quarter 2008 including significant increases in new business DDA accounts.
 
•   Loans increased in the fourth quarter by $595.7 million or 8 percent over the third quarter as the Company continued a pattern of selective client development.

 

 

     CHICAGO, January 26, 2009 — PrivateBancorp, Inc. (NASDAQ: PVTB) today reported a net loss for the fourth quarter 2008 of $62.0 million, or $1.96 per diluted share, compared to a net loss of $15.1 million, or $0.68 per diluted share, for the fourth quarter 2007.
     The net loss for the fiscal year ended December 31, 2008, was $91.5 million, or $3.11 per diluted share, compared to net income of $11.8 million, or $0.53 per diluted share, for the 2007 fiscal year.
     “We knew that 2008 would be a challenging year but we could not predict the magnitude of the impact from the unprecedented downturn in the economy,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “While we are pleased with the outcomes of the first full year under our Strategic Growth Plan, the economic environment caused significant weakness in our legacy loan portfolio. During the fourth quarter, we undertook a comprehensive loan review, which resulted in substantial charge-offs. We believe it was prudent to proactively address these credit quality issues given the rapid deterioration in the market.
     “Throughout 2008 we strengthened our capital base and made substantial progress implementing our Strategic Growth Plan,” Richman added. “We added a large number of new client relationships that resulted in almost $4 billion in new loans, additional client deposits of nearly $3 billion and almost $15 million in new fee income. Without question, the economic environment will remain a challenge in 2009. Yet we are confident we have significant momentum and we will continue to drive toward improving operating leverage and achieving positive earnings. I believe over the long-term, the market opportunities are considerable and we will continue to achieve the objectives of the Strategic Growth Plan.”
Comprehensive Loan Review and Credit Quality
     As a result of the rapid deterioration in economic conditions, in the fourth quarter the Company undertook a comprehensive review of all residential development loans and all underperforming assets. The intent of the review was to identify inherent losses where cash flow and guarantor support indicated likely non-performance and where losses from deteriorating asset values were evident. The Company believes the review was prudent in light of market conditions, particularly in the residential sector in Georgia and Michigan. The actions proactively addressed the deterioration in the loan portfolio and the Company believes the result is reduced balance sheet risk.

 

 

     The fourth quarter loan loss provision was $119.3 million and resulted from $108.8 million net charge-offs (an annualized rate of 5.49 percent of average total loans) and $10.5 million in additional loan-loss provision primarily related to growth in the loan portfolio. Of the fourth quarter net charge-offs, $86.2 million, or 79.2 percent, were related to the residential development portfolio. Total charge-offs for the year were $125.8 million, or a net charge-off ratio of 2.00 percent, compared to $6.1 million, or a net charge-off ratio of 0.17 percent, for the year ended December 31, 2007.
     None of the losses reported were from loans originated since the commencement of the Strategic Growth Plan in the fourth quarter 2007. These loans continue to perform as expected with no significant payment past dues.
     In addition, the Company strengthened its allowance for loan losses in recognition of the weakened credit climate expected to remain through at least 2009. The allowance for loan losses as a percentage of total loans was 1.40 percent at December 31, 2008, compared to 1.37 percent at September 30, 2008 and 1.17 percent at December 31, 2007. The allowance for loan losses as a percent of non-performing loans decreased to 85 percent in the fourth quarter 2008 from 116 percent in the third quarter 2008 and 125 percent in the fourth quarter 2007. The lower ratio is warranted given that a significant portion of these loans were charged down to fair value.
     After giving effect to these charge-offs, as of December 31, 2008, the Company had approximately $400 million in residential development loans remaining, with 59 percent in single family homes/condominiums built for sale, which is held as construction exposure, and 41 percent in land (developed and undeveloped), which is held as commercial real estate exposure.
     The Company made a strategic decision in early 2008 to curtail any new production in the residential development sector and will allow a substantial portion of this portfolio to wind down as residential development lending is not a core component of the Strategic Growth Plan.

 

 

     Non-performing assets to total assets were 1.55 percent at December 31, 2008, compared to 1.18 percent at September 30, 2008, and 0.97 percent at December 31, 2007. The Company had $155.7 million in total non-performing assets at December 31, 2008, compared to $106.5 million at September 30, 2008, and $48.3 million at December 31, 2007. Non-accruing loans totaled $131.9 million and other real estate owned (OREO) was $23.8 million. Approximately $105.7 million, or 68 percent of the non-performing assets, were related to the residential development sector.
     Delinquencies (loans 30-89 days past due and still accruing) were $35.4 million, or 0.44 percent, of total loans at December 31, 2008, compared to $50.0 million, or 0.67 percent, of total loans at September 30, 2008, and $102.6 million, or 2.46 percent, of total loans at December 31, 2007. The Company had no loans over 90 days past due and accruing.
Execution of the Strategic Growth Plan
     During the fourth quarter, the Company continued to execute on fundamental elements of its Strategic Growth Plan:
  •   The Company’s loan portfolio increased in the fourth quarter by more than $700 million, or $595.7 million after net charges of $108.8 million, compared to an increase of $1.0 billion in the third quarter, through continued selective strategic growth.
 
  •   Client deposits grew $1.0 billion, or 20 percent, during the fourth quarter, compared to $615.4 million, or 14 percent, in the third quarter 2008, once again supporting the Company’s goal to fund a substantial portion of loan growth with client deposits. Quarterly average balances of business DDA accounts, an important measure of new client growth, grew by 26 percent over the third quarter.
 
  •   Revenue grew 9 percent to $71.7 million in the fourth quarter from $65.8 million in the third quarter, with continued strong new fee revenue from the Treasury Management and Capital Markets groups.

 

 

  •   After a year of significant investment in personnel for client development and support infrastructure, hiring related to the Strategic Growth Plan is largely complete.
     Progress against Strategic Growth Plan objectives is measured by key performance indicators including revenue, deposit and loan growth, asset quality, operating efficiency and profitability, as well as selective client acquisition. Despite the current economic challenges, the Company believes attractive market opportunities continue to exist, and it will selectively pursue those that drive long-term growth.
     The Company makes loans based on relationships that are well-tested and analyzed. All loans are subject to a selective screening and approval process including downside stress testing and consideration of the economic climate. All production is originated to hold on the balance sheet.
Balance Sheet
     Total assets increased over 100 percent to $10.0 billion at December 31, 2008, from $5.0 billion at December 31, 2007. Total loans increased 92 percent to $8.0 billion at December 31, 2008, from $4.2 billion at December 31, 2007. Commercial loans increased to $4.0 billion, or 50 percent of the Company’s total loans, from $1.3 billion, or 32 percent of total loans, at the end of 2007. Commercial loans include commercial and industrial and owner-occupied commercial real estate loans and continue to be the fastest-growing segment of the loan portfolio. Commercial real estate loans decreased to 30 percent of the Company’s total loans at the end of the fourth quarter, compared to 38 percent of total loans at December 31, 2007. Management believes further diversifying the portfolio has resulted in a more preferred loan mix relative to the end of 2007.
     Total deposits increased 113 percent to $8.0 billion at December 31, 2008, from $3.8 billion at December 31, 2007. Approximately $2.8 billion of the increase in total deposits was attributable to an increase in client deposits, and includes $679.0 million in client CDARS® deposits. Brokered deposits (excluding client CDARS) were 25 percent of total deposits in the fourth quarter 2008, 33 percent of total deposits in the previous quarter and 14 percent of total deposits as of December 31, 2007. Client deposits were $6.0 billion, or 75 percent, of total deposits at the end of the fourth quarter. During the quarter, the Company facilitated its deposit growth by aggressively pursuing deposits from existing and new clients, expanding its business DDA account balances through its enhanced treasury management services, and continuing implementation of the CDARS deposit program.
     Funds borrowed, which include federal funds purchased, FHLB advances, borrowings under the Company’s credit facility, and convertible senior notes, increased to $1.0 billion at December 31,

 

 

2008, from $560.8 million at December 31, 2007, primarily due to increased FHLB borrowings. Junior subordinated deferrable-interest debentures increased to $244.8 million from $101.0 million at December 31, 2007.
     The Company’s investment securities portfolio increased to $1.5 billion at December 31, 2008, from $538.7 million at December 31, 2007. Net unrealized gains in the securities portfolio increased to $44.2 million compared to $12.5 million at the end of 2007. The Company’s securities portfolio is primarily comprised of U.S. government agency backed mortgage pools, agency collateralized mortgage obligations, and investment grade municipal bonds. The Company does not own Freddie Mac or Fannie Mae preferred stock or sub-debt obligations, bank trust preferred securities, nor does it own any sub-prime mortgage-backed securities.
Revenue Growth
     Revenue grew 9 percent over the third quarter 2008 to $71.7 million from $65.8 million, reflecting an increase in net interest income.
     Net interest income totaled $59.2 million in the fourth quarter 2008, compared to $53.2 million in the third quarter 2008, an increase of 11 percent, and $31.7 million for the fourth quarter 2007, an increase of 86 percent. Net interest margin (on a tax equivalent basis) decreased to 2.62 percent compared to 2.72 percent for the third quarter 2008 and 3.00 percent for the fourth quarter 2007. Net interest margin declined throughout 2008 due to continued decreases in the prime and LIBOR rates of interest as our interest-earning assets repriced more quickly than our interest-bearing liabilities, and the impact of non-accruing loans on interest income.
     Non-interest income, excluding securities gains and losses, was $12.4 million, compared to $11.5 million in the third quarter 2008, and $6.2 million in the fourth quarter 2007. The Company continued to experience robust growth in fee income from its Treasury Management and Capital Markets groups. Treasury Management and Capital Markets contributed a combined $5.9 million in new fee income in the fourth quarter 2008, compared to $4.5 million in the third quarter 2008, and $151,000 in the fourth quarter 2007. Banking and other services income decreased to $1.3 million at the end of the fourth quarter 2008 from $1.7 million in the third quarter 2008 and $484,000 at the end of the fourth quarter 2007, comprised mostly of letter of credit fees.

 

 

     The PrivateWealth Group’s assets under management were $3.3 billion at December 31, 2008, a slight decrease from $3.4 billion at September 30, 2008 and December 31, 2007. Net additions to existing and new accounts during the fourth quarter 2008 nearly offset decreases in assets under management related to market performance. The PrivateWealth Group’s fee revenue was flat at $4.1 million in the fourth quarter 2008 compared to prior quarter, and slightly below the $4.3 million in the fourth quarter 2007.
Expenses
     Non-interest expense was $53.9 million in the fourth quarter 2008, compared to $47.1 million in the third quarter 2008, an increase of 14 percent, and $51.8 million in the fourth quarter 2007, an increase of 4 percent. The majority of the increase was due to credit-related actions including write-downs related to other real estate owned; professional fees related to capital raising activities and ongoing professional expenses related to infrastructure development. These factors also contributed to an increase in the efficiency ratio to 75.13 percent in the fourth quarter 2008 from 71.57 percent at the end of the third quarter 2008.
Capital Resources and Liquidity
     The Company today announced it has received preliminary approval of a $244 million investment from the U.S. Treasury Department as part of the Capital Purchase Program under the Emergency Economic Stabilization Act of 2008. The TARP capital infusion will support the Company’s lending activity under the Strategic Growth Plan and further enhanced its “well capitalized” status. Since the inception of the Strategic Growth Plan in October 2007, the Company has added $800 million in new regulatory capital, including the TARP capital.
     As of December 31, 2008, the Company had total risk-based capital at 10.32 percent and Tier 1 risk-based capital ratio at 7.25 percent, exceeding the well-capitalized thresholds of 10 percent and 6 percent, respectively. With the addition of the TARP capital, the Company’s pro forma total risk-based capital ratio and Tier 1 risk-based capital ratio at December 31, 2008, would have been 12.96 percent and 10.44 percent, respectively.
     The Company experienced strong deposit growth of 7 percent during the fourth quarter that improved its overall liquidity. Additionally, the Company increased the size of its securities portfolio to 14 percent of total assets.

 

 

About PrivateBancorp, Inc.
     PrivateBancorp, Inc. is a growing diversified financial services company with 23 offices in nine states and more than $10 billion in assets as of December 31, 2008. Through its subsidiaries, PrivateBancorp delivers customized business and personal financial services to middle-market commercial and commercial real estate companies, as well as business owners, executives, entrepreneurs and wealthy families.
     Additional information can be found in the Investor Relations section of PrivateBancorp, Inc.’s website at www.pvtb.com.
Forward-Looking Statements: Statements contained in this news release that are not historical facts may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, unforeseen difficulties and higher than expected costs associated with the continued implementation of our Strategic Growth Plan, fluctuations in market rates of interest and loan and deposit pricing in the Company’s market areas; the effect of continued margin pressure on the Company’s earnings; further deterioration in asset quality; the failure to obtain on terms acceptable to us, or at all, the capital necessary to fund our growth and maintain our regulatory capital ratios above the “well-capitalized” threshold; the need to continue to increase our allowance for loan losses; additional charges related to asset impairments; insufficient liquidity/funding sources or the inability to obtain on terms acceptable to the Company the funding necessary to fund its loan growth; legislative or regulatory changes, particularly changes in the regulation of financial services companies and/or the products and services offered by financial services companies; adverse developments in the Company’s loan or investment portfolios; slower than anticipated growth of the Company’s business or unanticipated business declines, including as a result of continual negative economic conditions; competition; unforeseen difficulties in integrating new hires; failure to improve operating efficiencies through expense controls; and the possible dilutive effect of potential acquisitions, expansion or future capital raises. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update publicly any of these statements in light of future events unless required under the federal securities laws.
Editor’s Note: Financial highlights attached.

 

 

PrivateBancorp, Inc.
Consolidated Income Statements
Unaudited
(amounts in thousands except per share data)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
Interest Income
                                
Loans, including fees
   $ 107,370     $ 71,062     $ 367,104     $ 282,979  
Federal funds sold and interest-bearing deposits
     488       275       1,145       1,011  
Securities:
                                
Taxable
     10,754       3,951       28,657       14,584  
Exempt from federal income taxes
     2,025       2,313       8,477       9,350  
 
                        
Total Interest Income
     120,637       77,601       405,383       307,924  
 
                                
Interest Expense
                                
Deposits:
                                
Interest-bearing demand
     285       451       1,515       1,959  
Savings and money market
     11,579       16,813       48,880       68,446  
Brokered and other time
     36,405       20,894       126,316       83,640  
Funds borrowed
     8,064       6,087       22,205       19,393  
 
                                
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities
     5,122       1,608       14,710       6,364  
 
                        
Total Interest Expense
     61,455       45,853       213,626       179,802  
 
                                
Net Interest Income
     59,182       31,748       191,757       128,122  
Provision for loan losses
     119,250       10,171       189,579       16,934  
 
                        
Net Interest Income after Provision for Loan Losses
     (60,068 )     21,577       2,178       111,188  
 
                        
 
                                
Non-interest Income
                                
The PrivateWealth Group fee revenue
     4,140       4,310       16,968       16,188  
Mortgage banking income
     622       828       4,158       4,528  
Capital markets product income
     4,767       —       11,049       —  
Treasury management income
     1,086       151       2,369       579  
Bank owned life insurance
     501       431       1,809       1,656  
Banking and other services
     1,297       484       4,453       2,975  
Net securities (loss) gain
     (770 )     —       510       348  
 
                        
Total Non-interest Income
     11,643       6,204       41,316       26,274  
 
                                
Non-interest Expense
                                
Salaries and employee benefits
     27,219       31,673       115,678       71,219  
Occupancy expense, net
     4,543       3,918       17,098       13,204  
Professional fees
     5,766       6,442       16,450       11,876  
Investment manager expenses
     690       925       3,299       3,432  
Marketing
     2,781       2,422       10,395       6,099  
Data processing
     1,634       1,282       5,576       4,206  
Postage, telephone, and delivery
     563       483       2,226       1,706  
Office supplies and printing
     405       362       1,392       1,084  
Amortization of intangibles
     267       240       1,164       966  
Insurance
     2,341       772       7,408       1,937  
Other non-interest expense
     7,694       3,291       14,439       6,680  
 
                        
Total Non-interest Expense
     53,903       51,810       195,125       122,409  
 
                        
 
                                
Minority interest expense
     53       78       309       363  
 
                        
(Loss) Income Before Income Taxes
     (102,381 )     (24,107 )     (151,940 )     14,690  
Income tax (benefit) provision
     (40,370 )     (8,962 )     (60,439 )     2,883  
 
                        
Net (loss) income
     (62,011 )   $ (15,145 )     (91,501 )     11,807  
 
                        
Preferred stock dividends
     146       107       546       107  
 
                        
Net (loss) income available to Common Shareholders
     (62,157 )   $ (15,252 )   $ (92,047 )   $ 11,700  
 
                        
 
                                
Weighted Average Common Shares Outstanding
     31,733       22,537       29,553       21,572  
Diluted Average Common Shares Outstanding
     31,733       22,537       29,553       22,286  
 
                                
Per Common Share Information
                                
Basic
   $ (1.96 )   $ (0.68 )   $ (3.11 )   $ 0.54  
Diluted
   $ (1.96 )   $ (0.68 )   $ (3.11 )   $ 0.53  
Dividends
   $ 0.075     $ 0.075     $ 0.300     $ 0.300  
Note 1: Certain reclassifications have been made to prior period financial statements to place them on a basis comparable with the current period financial statements.
Note 2: Diluted shares are equal to Basic shares for the three and twelve months ended December 31, 2008 and the three months ended December 31, 2007 due to the net loss. The calculation of diluted earnings per share results in anti-dilution.

 

 

PrivateBancorp, Inc.
Quarterly Consolidated Income Statements
Unaudited
(amounts in thousands except per share data)
                                         
    4Q08     3Q08     2Q08     1Q08     4Q07  
Interest Income
                                        
Loans, including fees
   $ 107,370     $ 99,408     $ 84,231     $ 76,113     $ 71,062  
Federal funds sold and interest-bearing deposits
     488       217       207       246       275  
Securities:
                                        
Taxable
     10,754       8,161       5,456       4,286       3,951  
Exempt from federal income taxes
     2,025       2,027       2,181       2,244       2,313  
 
                              
Total Interest Income
     120,637       109,813       92,075       82,889       77,601  
 
                                        
Interest Expense
                                        
Deposits:
                                        
Interest-bearing demand
     285       383       425       422       451  
Savings and money market
     11,579       12,785       11,303       13,221       16,813  
Brokered and other time
     36,405       33,598       29,950       26,358       20,894  
Funds borrowed
     8,064       4,634       4,523       4,996       6,087  
 
                                        
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities
     5,122       5,258       2,758       1,572       1,608  
 
                              
Total Interest Expense
     61,455       56,658       48,959       46,569       45,853  
 
                                        
Net Interest Income
     59,182       53,155       43,116       36,320       31,748  
Provision for loan losses
     119,250       30,173       23,024       17,133       10,171  
 
                              
Net Interest Income after Provision for Loan Losses
     (60,068 )     22,982       20,092       19,187       21,577  
 
                              
 
                                        
Non-interest Income
                                        
The PrivateWealth Group fee revenue
     4,140       4,059       4,350       4,419       4,310  
Mortgage banking income
     622       776       997       1,530       828  
Capital markets product income
     4,767       3,932       1,959       391       —  
Treasury management income
     1,086       600       279       184       151  
Bank owned life insurance
     501       439       437       432       431  
Banking and other services
     1,297       1,728       1,119       746       484  
Net securities (loss) gain
     (770 )     180       286       814       —  
 
                              
Total Non-interest Income
     11,643       11,714       9,427       8,516       6,204  
 
                                        
Non-interest Expense
                                        
Salaries and employee benefits
     27,219       28,895       31,817       27,749       31,673  
Occupancy expense, net
     4,543       4,364       4,338       3,845       3,918  
Professional fees
     5,766       3,374       5,005       2,311       6,442  
Investment manager expenses
     690       829       812       968       925  
Marketing
     2,781       2,083       2,700       2,828       2,422  
Data processing
     1,634       1,554       1,168       1,220       1,282  
Postage, telephone, and delivery
     563       575       546       541       483  
Office supplies and printing
     405       275       371       350       362  
Amortization of intangibles
     267       241       422       234       240  
Insurance
     2,341       2,460       1,627       870       772  
Other non-interest expenses
     7,694       2,435       2,401       2,016       3,291  
 
                              
Total Non-interest Expense
     53,903       47,085       51,207       42,932       51,810  
 
                              
 
                                        
Minority interest expense
     53       86       101       68       78  
 
                              
Loss Before Income Taxes
     (102,381 )     (12,475 )     (21,789 )     (15,297 )     (24,107 )
Income tax benefit
     (40,370 )     (5,211 )     (8,494 )     (6,364 )     (8,962 )
 
                              
Net loss
   $ (62,011 )   $ (7,264 )   $ (13,295 )   $ (8,933 )   $ (15,145 )
 
                              
Preferred stock dividends
     146       146       146       107       107  
 
                              
Net loss available to Common Shareholders
   $ (62,157 )   $ (7,410 )   $ (13,441 )   $ (9,040 )   $ (15,252 )
 
                              
 
                                        
Weighted Average Common Shares Outstanding
     31,733       31,634       27,914       26,886       22,537  
Diluted Average Common Shares Outstanding
     31,733       31,634       27,914       26,886       22,537  
 
                                        
Per Common Share Information
                                        
Basic
   $ (1.96 )   $ (0.23 )   $ (0.48 )   $ (0.34 )   $ (0.68 )
Diluted
   $ (1.96 )   $ (0.23 )   $ (0.48 )   $ (0.34 )   $ (0.68 )
Dividends
   $ 0.075     $ 0.075     $ 0.075     $ 0.075     $ 0.075  
Note 1: Certain reclassifications have been made to prior period financial statements to place them on a basis comparable with the current period financial statements.
Note 2: Diluted shares are equal to Basic shares for the first, second, third and fourth quarter 2008 and the fourth quarter 2007 due to the net loss. The calculation of diluted earnings per share results in anti-dilution.

 

 

PrivateBancorp, Inc.
Consolidated Balance Sheets
(dollars in thousands)
                                         
    12/31/08     09/30/08     06/30/08     03/31/08     12/31/07  
    unaudited     unaudited     unaudited     unaudited     audited  
Assets
                                        
Cash and due from banks
   $ 131,848     $ 76,314     $ 76,924     $ 54,576     $ 51,331  
Fed funds sold and other short-term investments
     98,387       363,991       41,034       22,226       13,220  
 
                              
Total cash and cash equivalents
     230,235       440,305       117,958       76,802       64,551  
 
                              
Available-for-sale securities, at fair value
     1,425,564       899,301       712,158       575,798       526,271  
Non-marketable equity investments
     27,213       18,958       13,807       13,157       12,459  
Loans held for sale
     17,082       6,736       10,988       9,659       19,358  
 
                                        
Loans net of unearned discount
     8,036,807       7,441,137       6,417,026       5,136,066       4,177,795  
Allowance for loan losses
     (112,672 )     (102,223 )     (79,021 )     (61,974 )     (48,891 )
 
                              
Net loans
     7,924,135       7,338,914       6,338,005       5,074,092       4,128,904  
 
                              
 
                                        
Goodwill
     95,045       95,045       95,045       93,341       93,341  
Premises and equipment, net
     34,201       29,650       27,513       26,356       25,600  
Accrued interest receivable
     34,282       32,466       27,809       25,287       24,144  
Bank owned life insurance
     45,938       45,438       44,999       44,561       44,129  
Other assets
     206,647       104,650       90,656       74,591       51,448  
 
                              
Total Assets
   $ 10,040,342     $ 9,011,463     $ 7,478,938     $ 6,013,644     $ 4,990,205  
 
                              
 
                                        
Liabilities
                                        
Demand deposits:
                                        
Non-interest bearing
   $ 711,693     $ 601,653     $ 548,710     $ 341,779     $ 299,043  
Interest bearing
     232,099       164,318       164,541       159,003       157,761  
Savings and money market deposit accounts
     2,798,882       2,407,641       2,086,929       1,663,275       1,594,172  
Brokered deposits
     2,654,768       2,749,735       1,889,401       1,396,930       542,470  
Other time deposits
     1,599,014       1,526,601       1,466,369       1,453,479       1,167,692  
 
                              
Total deposits
     7,996,456       7,449,948       6,155,950       5,014,466       3,761,138  
 
                              
 
                                        
Funds borrowed
     1,029,085       592,194       369,570       359,099       560,809  
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities
     244,793       244,793       244,793       101,033       101,033  
Accrued interest payable
     37,809       31,959       30,039       17,670       16,134  
Other liabilities
     126,367       52,449       33,087       28,169       50,298  
 
                              
Total Liabilities
     9,434,510     $ 8,371,343     $ 6,833,439     $ 5,520,437     $ 4,489,412  
 
                              
 
                                        
Stockholders’ Equity
                                        
Preferred stock
     58,070       58,070       58,070       41,000       41,000  
Common stock
     32,468       32,147       31,944       27,289       27,225  
Treasury stock
     (17,285 )     (15,626 )     (14,150 )     (13,925 )     (13,559 )
Additional paid-in-capital
     480,529       474,354       467,294       314,961       311,989  
Retained earnings
     24,482       89,248       99,177       115,016       126,204  
Accumulated other comprehensive income
     27,568       1,927       3,164       8,866       7,934  
 
                              
Total Stockholders’ Equity
   $ 605,832     $ 640,120     $ 645,499     $ 493,207     $ 500,793  
 
                              
 
                                        
Total Liabilities and Stockholders’ Equity
   $ 10,040,342     $ 9,011,463     $ 7,478,938     $ 6,013,644     $ 4,990,205  
 
                              
Note 1: Certain reclassifications have been made to prior period financial statements to place them on a basis comparable with the current period financial statements.

 

 

PrivateBancorp, Inc.
Key Financial Data
Unaudited
(amounts in thousands except per share data)
                                         
    4Q08   3Q08   2Q08   1Q08   4Q07
Selected Statement of Income Data:
                                        
Net interest income
   $ 59,182     $ 53,155     $ 43,116     $ 36,320     $ 31,748  
Net revenue (1)
   $ 71,742     $ 65,787     $ 53,535     $ 45,862     $ 39,009  
Loss before taxes
   $ (102,381 )   $ (12,475 )   $ (21,789 )   $ (15,297 )   $ (24,107 )
Net loss
   $ (62,011 )   $ (7,264 )   $ (13,295 )   $ (8,933 )   $ (15,145 )
 
                                        
Per Common Share Data:
                                        
Basic earnings per share
   $ (1.96 )   $ (0.23 )   $ (0.48 )   $ (0.34 )   $ (0.68 )
Diluted earnings per share (2)
   $ (1.96 )   $ (0.23 )   $ (0.48 )   $ (0.34 )   $ (0.68 )
Dividends
   $ 0.075     $ 0.075     $ 0.075     $ 0.075     $ 0.075  
Book value (period end)
   $ 16.32     $ 17.32     $ 17.65     $ 15.97     $ 16.38  
Tangible book value (period end) (3)
   $ 13.29     $ 14.31     $ 14.61     $ 12.46     $ 12.82  
Market value (close)
   $ 32.46     $ 41.66     $ 30.38     $ 31.47     $ 32.65  
Diluted earnings multiple (4)
     (4.18 ) x      (44.83 ) x      (15.78 ) x      (23.08 ) x      (12.10 ) x
Book value multiple
     1.99   x     2.41   x     1.72   x     1.97   x     1.93   x
 
                                        
Share Data:
                                        
Weighted Average Common Shares Outstanding
     31,733       31,634       27,914       26,886       22,537  
Diluted Average Common Shares Outstanding (2)
     31,733       31,634       27,914       26,886       22,537  
Common shares issued (at period end)
     34,043       34,028       33,656       28,686       28,439  
Common shares outstanding (at period end)
     33,568       33,604       33,275       28,311       28,075  
 
                                        
Performance Ratios:
                                        
Return on average assets
     -2.61 %     -0.35 %     -0.80 %     -0.66 %     -1.30 %
Return on average total equity
     -40.37 %     -4.59 %     -9.89 %     -7.81 %     -16.61 %
Dividend payout ratio
     -4.28 %     -35.24 %     -18.93 %     -24.23 %     -14.30 %
Fee revenue as a percent of total revenue (5)
     17.34 %     17.83 %     17.49 %     17.49 %     16.35 %
Non-interest income to average assets
     0.49 %     0.57 %     0.57 %     0.63 %     0.53 %
Non-interest expense to average assets
     2.27 %     2.28 %     3.07 %     3.18 %     4.45 %
Net overhead ratio (6)
     1.78 %     1.71 %     2.50 %     2.55 %     3.92 %
Efficiency ratio (7)
     75.13 %     71.57 %     95.65 %     93.61 %     132.81 %
 
                                        
Selected Financial Condition Data:
                                        
Client deposits (8)
   $ 6,020,646     $ 5,006,397     $ 4,390,998     $ 3,697,598     $ 3,220,464  
The Private Wealth Group assets under management
   $ 3,261,061     $ 3,354,212     $ 3,305,477     $ 3,314,461     $ 3,361,171  
 
                                        
Balance Sheet Ratios:
                                        
Loans to Deposits (period end)
     100.50 %     99.88 %     104.24 %     102.42 %     111.08 %
 
                                        
Average interest-earning assets to average interest-bearing liabilities
     112.12 %     113.28 %     111.69 %     112.86 %     111.32 %
 
                                        
Capital Ratios (period end):
                                        
Total equity to total assets
     6.03 %     7.10 %     8.63 %     8.20 %     10.04 %
Total risk-based capital ratio
     10.32 %     12.09 %     13.47 %     11.54 %     14.20 %
Tier-1 risk-based capital ratio
     7.25 %     9.22 %     10.82 %     9.00 %     11.39 %
Leverage ratio
     7.18 %     9.28 %     11.46 %     9.13 %     10.93 %
Tangible capital ratio
     5.08 %     6.05 %     7.38 %     6.66 %     8.20 %
 
(1)   The sum of net interest income, on a tax equivalent basis, plus non-interest income.
 
(2)   Diluted shares are equal to Basic shares due to the net loss. The calculation of diluted earnings per share results in anti-dilution.
 
(3)   Tangible book value is total capital less goodwill and other intangibles divided by outstanding shares at end of period.
 
(4)   Period end closing stock price divided by annualized quarterly earnings for the quarter then ended.
 
(5)   Represents non-interest income less securities gains as a percentage of the sum of net interest income and non-interest income less securities gains.
 
(6)   Non-interest expense less non-interest income divided by average total assets.
 
(7)   Non-interest expense divided by the sum of net interest income, on a tax equivalent basis, plus non-interest income.
 
(8)   Client deposits are equal to total deposits less brokered deposits plus client CDARSTM.

 

 

PrivateBancorp, Inc.
Asset Quality
Unaudited
(dollars in thousands)
                                         
    4Q08     3Q08     2Q08     1Q08     4Q07  
Credit Quality Key Ratios:
                                        
Net charge-offs to average loans
     5.49 %     0.40 %     0.42 %     0.35 %     0.35 %
Total non-performing loans to total loans
     1.64 %     1.18 %     0.91 %     0.91 %     0.93 %
Total non-performing assets to total assets
     1.55 %     1.18 %     0.98 %     1.10 %     0.97 %
Nonaccrual loans to:
                                        
total loans
     1.64 %     1.18 %     0.89 %     0.91 %     0.93 %
total assets
     1.31 %     0.98 %     0.77 %     0.77 %     0.78 %
Allowance for loan losses to:
                                        
total loans
     1.40 %     1.37 %     1.23 %     1.21 %     1.17 %
non-performing loans
     85 %     116 %     135 %     133 %     125 %
nonaccrual loans
     85 %     116 %     138 %     133 %     125 %
 
                                        
Non-performing assets:
                                        
Loans past due 90 days and accruing
   $ 0     $ 0     $ 1,180     $ 23     $ 53  
Nonaccrual loans
     131,919       88,057       57,348       46,517       38,983  
OREO
     23,823       18,465       14,579       19,346       9,265  
 
                              
Total non-performing assets
   $ 155,742     $ 106,522     $ 73,107     $ 65,886     $ 48,301  
 
                              
 
                                        
Allowance for Loan Losses Summary
                                        
Balance at beginning of period
   $ 102,223     $ 79,021     $ 61,974     $ 48,891     $ 42,113  
Provision
     119,250       30,173       23,024       17,133       10,171  
Loans charged off
     (109,459 )     (7,017 )     (6,097 )     (4,114 )     (3,435 )
Recoveries
     658       46       120       64       42  
 
                              
Balance at end of period
   $ 112,672     $ 102,223     $ 79,021     $ 61,974     $ 48,891  
 
                              
 
                                        
Net loan charge-offs (recoveries):
                                        
Commercial
   $ 11,010     $ 1,469     $ 1,109     $ 1,099     $ 752  
Construction
     47,081       2,507       2,555       1,813       1,006  
Commercial real estate
     45,237       2,349       1,764       481       1,388  
Residential real estate
     2,385       46       426       118       —  
Home equity
     1,781       50       34       333       —  
Personal
     1,307       550       89       206       247  
 
                              
Total net loan charge-offs
   $ 108,801     $ 6,971     $ 5,977     $ 4,050     $ 3,393  
 
                              
 
                                        
Loans past due 30-89 days and still accruing by type:
                                        
Commercial
   $ 12,060     $ 5,867     $ 5,983     $ 40,740     $ 11,170  
Construction
     9,166       19,113       7,062       35,738       38,407  
Commercial Real Estate
     9,113       18,473       8,282       47,265       34,366  
Residential Real Estate
     3,485       3,104       1,121       5,856       9,431  
Personal and Home Equity
     1,580       3,400       7,631       16,787       9,224  
 
                              
Total
   $ 35,404     $ 49,957     $ 30,079     $ 146,386     $ 102,598  
 
                              
 
                                        
Loans past due 30-89 days and still accruing as a percent
of total loan type:		                                
Commercial
     0.30 %     0.17 %     0.22 %     2.20 %     0.85 %
Construction
     1.12 %     2.69 %     1.00 %     5.75 %     6.26 %
Commercial Real Estate
     0.38 %     0.77 %     0.38 %     2.40 %     2.14 %
Residential Real Estate
     1.06 %     0.83 %     0.35 %     2.07 %     3.55 %
Personal and Home Equity
     0.30 %     0.69 %     1.65 %     4.05 %     2.41 %
     
Total
     0.44 %     0.67 %     0.47 %     2.85 %     2.46 %

 

 

PrivateBancorp, Inc.
Asset Quality by Location (1)
Unaudited
(dollars in thousands)
December 31, 2008
                                         
    Non performing     NPLs as % of Total     Other Real Estate     Non performing     NPAs as % of Total  
    Loans (2)     Loans (3)     Owned     Assets (4)     Assets (5)  
Chicago
   $ 61,812       0.96 %   $ 5,925     $ 101,023  (6)     1.20 % (6)
St. Louis (7)
     19,734       4.71 %     5,566       25,300       4.26 %
Michigan
     24,738       3.18 %     4,681       29,419       2.70 %
Georgia
     25,635       9.00 %     7,651       n/a  (6)     n/a  (6)
Wisconsin
     —       —       —       —       —  
 
                              
Consolidated non-performing assets
   $ 131,919       1.64 %   $ 23,823     $ 155,742       1.55 %
December 31, 2007
                                         
    Non performing     NPLs as % of Total     Other Real Estate     Non performing     NPAs as % of Total  
    Loans (2)     Loans (3)     Owned     Assets (4)     Assets (5)  
Chicago
   $ 11,012       0.39 %   $ 2,122     $ 13,134       0.39 %
St. Louis (7)
     12,413       3.30 %     4,537       16,950       3.51 %
Michigan
     5,266       0.88 %     1,466       6,732       0.98 %
Georgia
     10,345       3.93 %     1,140       11,485       3.44 %
Wisconsin
     —       —       —       —       —  
 
                              
Consolidated non-performing assets
   $ 39,036       0.93 %   $ 9,265     $ 48,301       0.97 %
 
(1)   Location is defined by the chartered bank where the loan is held.
 
(2)   Non performing loans are defined as loans delinquent > 90 days and non accrual loans.
 
(3)   Non performing loans are presented as a percentage of each entities’ gross loans
 
(4)   Non performing assets are non performing loans and Other Real Estate owned.
 
(5)   Non performing assets are presented as a percentage of each entities’ total assets
 
(6)   Due to the charter consolidation of Georgia into Chicago during the fourth quarter 2008, non performing assets and non performing assets as a percentage of total assets under Chicago represent the total consolidated assets of Chicago and Georgia.
 
(7)   St. Louis loans and total assets includes Kansas City total loans and assets at December 31, 2008 and 2007.

 

 

PrivateBancorp, Inc.
Loan Mix
Unaudited
(dollars in thousands)
                                         
    12/31/08     09/30/08     06/30/08     03/31/08     12/31/07  
Commercial Real Estate
     1,980,271       2,049,047     $ 1,838,301     $ 1,728,783     $ 1,386,275  
Multi-family CRE
     403,690       353,879       349,220       241,306       217,884  
 
                              
Total CRE Loans
     2,383,961       2,402,926       2,187,521       1,970,089       1,604,159  
 
                              
Commercial and Industrial
     3,437,130       2,957,507       2,292,960       1,410,442       827,837  
Owner-Occupied CRE
     538,688       499,964       451,455       437,587       483,920  
 
                              
Total Commercial Loans
     3,975,818       3,457,471       2,744,415       1,848,029       1,311,757  
 
                              
Residential Real Estate
     328,138       374,488       318,358       282,257       265,466  
Personal (1)
     341,806       318,552       296,458       269,848       247,462  
Home Equity
     191,934       176,094       164,771       144,209       135,483  
Construction
     815,150       711,606       705,503       621,634       613,468  
 
                              
Total Loans
   $ 8,036,807     $ 7,441,137     $ 6,417,026     $ 5,136,066     $ 4,177,795  
 
                              
 
(1)   The personal loan category includes overdrafts.
     
(PIE CHART)
  (PIE CHART)

 

 

PrivateBancorp, Inc.
Net Interest Margin
Unaudited
(dollars in thousands)
                                                 
    Three Months Ended December 31,  
    2008     2007 (1)
    Average                     Average              
    Balance(2)     Interest     Rate     Balance(2)     Interest     Rate  
           
Assets:
                                                
Fed funds sold and interest- bearing deposits
   $ 119,711     $ 488       1.61 %   $ 14,889     $ 275       7.27 %
Securities:
                                                
Taxable
     912,965       10,754       4.71 %     313,333       3,951       5.04 %
Tax exempt
     179,685       2,942       6.55 %     195,836       3,370       6.88 %
                         
Total securities
     1,092,650       13,696       5.01 %     509,169       7,321       5.75 %
                         
Loans:
                                                
Commercial, Construction & CRE
     7,023,689       96,904       5.44 %     3,218,560       60,504       7.46 %
Residential
     335,117       4,770       5.69 %     267,106       4,141       6.20 %
Private Client
     489,086       5,696       4.62 %     354,147       6,417       7.19 %
                         
Total Loans (3)
     7,847,892       107,370       5.40 %     3,839,813       71,062       7.35 %
                         
Total earning assets
   $ 9,060,253     $ 121,554       5.31 %   $ 4,363,871     $ 78,658       7.16 %
Allowance for loan losses
     (104,510 )                     (43,116 )                
Cash and dues from banks
     141,128                       53,603                  
Other assets
     338,602                       244,501                  
 
                                            
Total average assets
   $ 9,435,473                     $ 4,618,859                  
 
                                            
 
                                                
Liabilities:
                                                
Interest-bearing demand deposits
   $ 166,636     $ 285       0.68 %   $ 139,467     $ 451       1.28 %
Regular savings deposits
     15,912       46       1.14 %     11,827       61       2.05 %
Money market accounts
     2,607,552       11,533       1.75 %     1,549,211       16,752       4.29 %
Time deposits
     1,606,015       13,191       3.26 %     1,120,235       14,368       5.09 %
Brokered deposits
     2,600,547       23,214       3.54 %     507,434       6,526       5.10 %
                         
Total interest-bearing deposits
     6,996,662       48,269       2.74 %     3,328,174       38,158       4.55 %
Other borrowings
     839,166       8,064       3.76 %     492,198       6,087       4.84 %
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities
     244,793       5,122       8.19 %     101,033       1,608       6.23 %
                         
Total interest-bearing liabilities
     8,080,621       61,455       3.01 %     3,921,405       45,853       4.63 %
                         
Non-interest bearing deposits
     624,716                       302,864                  
Other liabilities
     120,649                       33,059                  
Stockholders’ equity
     609,487                       361,531                  
 
                                            
Total average liabilities and stockholders’ equity
   $ 9,435,473                     $ 4,618,859                  
 
                                
Tax equivalent net interest income (4)
           $ 60,099                     $ 32,805          
 
                                            
Net interest spread (5)
                     2.30 %                     2.53 %
Effect of non interest-bearing funds
                     0.32 %                     0.47 %
 
                                            
Net interest margin (4) (6)
                     2.62 %                     3.00 %
 
                                            
 
(1)   Prior period net interest margin computations were modified to conform with the current period presentation.
 
(2)   Average assets were generally computed using daily balances.
 
(3)   Non-accrual loans are included in the average balances and the average annualized interest foregone on these loans was approximately $5.9 million for the quarter ended December 31, 2008 compared to approximately $2.4 million in the prior year quarter.
 
(4)   Reconciliation of the current quarter net interest income to prior quarter :
                 
    Three months Ended December 31,
    2008   2007
     
Net interest income
   $ 59,182     $ 31,748  
Tax equivalent adjustment to net interest income
     917       1,057  
     
Net interest income, tax equivalent basis
   $ 60,099     $ 32,805  
     
 
(5)   Yield on average interest-earning assets less rate on average interest-bearing liabilities.
 
(6)   Net interest income, on a tax equivalent basis, divided by average interest-earning assets.