PrivateBancorp back in black for 1Q

PrivateBancorp Inc., which provides financial services to commercial firms, business owners, executives and individuals, said Monday it returned to profitability during the first quarter and easily topped analysts’ expectations.

The bank earned $4.8 million, or 14 cents per share, after paying preferred dividends. It lost $9.3 million, or 34 cents per share, during the same quarter last year.

Analysts polled by Thomson Reuters, on average, forecast a loss of 2 cents per share.

PrivateBancorp returned to profitability because of increases in interest income from taxable securities and loans and a surge in income from capital markets products.

Net interest income, or the difference between how much it costs a bank to borrow money and how much it receives from lending money, increased to $63.9 million from $36 million. Net interest income was boosted as the bank’s interest on taxable securities increased to $14.5 million from $4.3 million during the first quarter last year. Interest income from loans also swelled, increasing 22 percent to $92.9 million from $76.1 million during the first quarter a year ago.

Non-interest income, or money derived from fees and other charges, more than doubled to $23.6 million in the first quarter, from $8.5 million during the same quarter last year. Non-interest income surged thanks to growth in income from capital markets products, which increased to $11.2 million from $391,000 last year. The growth was due to clients increasing their use of derivatives for interest rate management, the company said .

Despite the improved performance, PrivateBancorp’s president and chief executive Larry Richman cautioned that 2009 will continue to present challenges because of the weak economy. In particular, credit quality will remain a challenge, Richman said in a statement. Credit quality has been a challenge for nearly all banks as unemployment rates continue to rise and customers continue to fall behind on repaying loans.

While most banks are still sharply increasing loan-loss provisions, PrivateBancorp’s moved only slightly higher in the first quarter. The Chicago-based bank’s provision for loan losses increased to $17.8 million, from $17.1 million during the first quarter last year. The bank, however, took $119.3 million in provisions during the fourth quarter because of mounting loan losses.

In premarket activity, shares of PrivateBancorp climbed $1.20, or 7 percent, to $18.30. The stock has ranged from $9.08 to $49.50 over the past year.