PrivateBancorp Reports First Quarter 2014 Earnings Earnings per share of $0.44 for first quarter 2014, up 26 percent from first quarter 2013 and 2 percent from fourth quarter 2013

CHICAGO, April 17, 2014 /PRNewswire/ -- PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $34.5 million or $0.44 per diluted share for the first quarter 2014, compared to $27.3 million or $0.35 per diluted share for the first quarter 2013 and $33.7 million or $0.43 per diluted share for the fourth quarter 2013.

"We have built a strong commercial banking platform that drove us to our ninth-consecutive quarter of net income growth," said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. "First quarter net income increased 27 percent from a year ago, largely on the significant improvement in credit quality we have achieved over the last year. Our loan growth continued as commercial and industrial loans drove a $281 million net increase in total loans from the prior quarter. We have a strong team in place and I am confident in our ability to both capture new market share and to expand our business with our growing client base in this gradually improving economy."

First Quarter 2014 Highlights

  • Return on average common equity improved to 10.5 percent and return on average assets improved to 1.0 percent for the first quarter 2014.
  • Net revenue was $135.8 million, up $1.5 million from the first quarter 2013 and comparable to the fourth quarter 2013, as loan growth and lower funding costs offset the impact of declining loan yields and lower noninterest income.
  • Operating profit of $60.0 million was $4.7 million higher than first quarter 2013 and comparable to the fourth quarter 2013. The increase relative to the first quarter 2013 was driven by lower noninterest expense, primarily the result of a decline in credit costs.
  • Total loans grew to $10.9 billion, up 9 percent from a year ago and 3 percent from December 31, 2013, primarily driven by commercial and industrial loans to new clients.
  • Total deposits were $11.9 billion, compared to $11.4 billion as of March 31, 2013, and $12.0 billion as of December 31, 2013. The loan-to-deposit ratio was 92 percent, as compared to 88 percent as of March 31, 2013, and 89 percent as of December 31, 2013.
  • Net interest margin was 3.23 percent, up 5 basis points from the fourth quarter 2013. The benefits of lower funding costs, reduced liquidity and interest recoveries on non-accrual loans overcame the impact of continued pricing pressure.
  • Provision for loan losses was $3.4 million, compared to $10.1 million for the first quarter 2013 and $4.9 million for the fourth quarter 2013, reflecting above average recoveries for the second consecutive quarter.

Operating Performance

Net interest income was $108.8 million in the first quarter 2014, an increase of 6 percent compared to the first quarter 2013, and comparable to the fourth quarter 2013, despite two fewer days in the first quarter. Compared to the previous periods, interest income benefited from higher average loan balances, while the competitive lending environment continued to put pressure on loan yields. Interest expense declined compared to the previous periods, reflecting lower deposit costs and a full quarter's benefit of the prepayment of a subordinated debt facility in the fourth quarter 2013. Net interest margin was 3.23 percent in the first quarter 2014, compared to 3.18 percent in the fourth quarter 2013. Lower funding costs, reduced excess liquidity and interest recoveries on nonaccrual loans in the quarter offset continued pricing pressure.

Noninterest income was $26.2 million in the first quarter 2014, down $4.2 million compared to the first quarter 2013, primarily due to lower mortgage banking revenue and other income, as the prior year quarter included a $1.1 million gain on loan sale. Noninterest income was $26.7 million in the fourth quarter 2013.

Asset management revenue was $4.3 million for the first quarter 2014, compared to $4.4 million for the first quarter 2013 and $4.6 million for the fourth quarter 2013. The prior periods included fees generated by the investment management subsidiary sold at year-end. Assets under management and administration were $6.0 billion as of March 31, 2014, compared to $5.5 billion a year ago and $5.7 billion as of December 31, 2013, benefiting from growth in both managed and custody assets.

Capital markets revenue of $4.1 million declined from $5.7 million in the fourth quarter 2013. Excluding the impact of CVA in the quarter, capital markets revenue was $4.1 million, a decrease of $952,000 from the previous quarter, reflecting lower demand given the outlook for interest rates. Treasury management fees of $6.6 million grew 4 percent from the previous quarter, benefiting in part from new credit relationships. Syndication fees were $3.3 million, up $1.2 million compared to the fourth quarter 2013, as syndication activity increased from a typically slow fourth quarter.

Expenses

Noninterest expense was $75.8 million in the first quarter 2014, a decline of 4 percent from the first quarter 2013 and comparable to the fourth quarter 2013. Noninterest expense largely benefited from continued declines in credit-related costs. Net foreclosed property expense declined $3.8 million from the first quarter 2013 and $777,000 from the fourth quarter 2013, a result of reduced foreclosed property ("OREO"). Loan and collection expense was down $1.7 million from the first quarter 2013 and $1.3 million from the fourth quarter 2013, a result of reduced mortgage activity and lower workout-related costs.

Salary and employee benefits expense increased 3 percent from the first quarter 2013 and 5 percent from the fourth quarter 2013. Compared to the previous quarter, salary and benefits expense included seasonally higher payroll taxes and benefits, annual salary adjustments that went into effect during the quarter and a lower bonus accrual. Marketing expense, while up slightly compared to the first quarter 2013, declined $1.2 million compared to the fourth quarter 2013, reflecting seasonally lower advertising activity. The efficiency ratio was 55.8 percent in the first quarter 2014, compared to 58.8 percent in the first quarter 2013 and 55.7 percent in the fourth quarter 2013.

Credit Quality

Credit quality was in line with the previous quarter. Nonperforming assets were 0.82 percent of total assets at March 31, 2014, down from 1.51 percent at March 31, 2013, and 0.87 percent at December 31, 2013, largely due to OREO dispositions. At March 31, 2014, OREO was $23.6 million, down $50.3 million from March 31, 2013, and $5.0 million from December 31, 2013.

The allowance for loan losses as a percentage of total loans was 1.34 percent at March 31, 2014, and December 31, 2013. Provision for loan losses was $3.4 million for the first quarter 2014 compared to $4.9 million for the fourth quarter 2013. The current period provision was impacted by loan growth, changes in the composition of the loan portfolio and larger than average recoveries exceeding charge-offs. In the first quarter 2014, total charge-offs were $4.9 million, compared to $19.5 million for the first quarter 2013 and $11.4 million for the fourth quarter 2013.

Credit quality results exclude covered assets acquired through an FDIC-assisted transaction that are subject to a loss sharing agreement.

Balance Sheet

Total assets were $14.3 billion at March 31, 2014, up compared to $13.4 billion at March 31, 2013, and $14.1 billion at December 31, 2013. Total loans of $10.9 billion grew $891.2 million, or 9 percent, from March 31, 2013, and $281.0 million, or 3 percent, from the previous quarter end, benefiting largely from net loan growth of commercial and industrial and construction loans. At March 31, 2014, total commercial loans comprised 68 percent of total loans, up from 65 percent a year ago, and total commercial real estate and construction loans comprised 26 percent of total loans, down slightly from 27 percent at March 31, 2013. The Company's investment securities portfolio was $2.6 billion at March 31, 2014, up 8 percent from March 31, 2013, and 3 percent from December 31, 2013.

Total liabilities were $13.0 billion at March 31, 2014, up compared to $12.1 billion at March 31, 2013, and $12.8 billion compared to December 31, 2013. Total deposits were $11.9 billion at March 31, 2014, an increase of $493.9 million, or 4 percent, from March 31, 2013, and a decline of $127.5 million, or 1 percent, from December 31, 2013. At March 31, 2014, the loan-to-deposit ratio was 91.9 percent. Noninterest bearing demand deposits comprised 26 percent of total deposits at March 31, 2014, as compared to 24 percent at March 31, 2013, and 26 percent at December 31, 2013.

Capital

As of March 31, 2014, the total risk-based capital ratio was 13.39 percent, the Tier 1 risk-based capital ratio was 11.19 percent, and the leverage ratio was 10.60 percent. The Tier 1 common capital ratio was 9.33 percent (excluding the effect of the final Basel III capital rules that go into effect January 2015) and the tangible common equity ratio was 8.74 percent at the end of the first quarter 2014.

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call Thursday, April 17, 2014, at 10 a.m. CDT. The call may be accessed by telephone at (888) 782-9127 (U.S. and Canada) or (706) 634-5643 (International) and entering passcode #15890768. A live webcast of the call can be accessed on the Company website at: investor.theprivatebank.com by visiting the Investor Relations tab under the About Us section. A rebroadcast will be available beginning approximately two hours after the call until midnight April 30, 2014, by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode #15890768.

About PrivateBancorp, Inc.

PrivateBancorp, Inc., through its subsidiaries, delivers customized business and personal financial services to middle-market companies, as well as business owners, executives, entrepreneurs and families in all of the markets and communities we serve. As of March 31, 2014, the Company had 33 offices in 10 states and $14.3 billion in assets. The Company's website is www.theprivatebank.com.  

Forward-Looking Statements

Statements made in this press release that are not historical facts may constitute forward-looking statements within the meaning of federal securities laws. Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results to differ from those reflected in forward-looking statements include:

  • continued uncertainty regarding U.S. and global economic outlook that may impact market conditions or prolong weakness in demand for certain banking products and services;
  • unanticipated developments in pending or prospective loan transactions or greater than expected paydowns or payoffs of existing loans;
  • unanticipated changes in interest rates;
  • competitive pressures in the financial services industry that may affect the pricing of the Company's loan and deposit products as well as its services;
  • unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than we have anticipated in our allowance for loan losses or changes in value of our investments;
  • lack of sufficient or cost-effective sources of liquidity or funding as and when needed;
  • loss of key personnel or an inability to recruit and retain appropriate talent;
  • potential impact of adapting to the new capital standards and capital stress testing requirements;
  • greater than anticipated impact on costs, revenues and offered products and services associated with the implementation of other regulatory changes; or
  • failures or disruptions to our data processing or other information or operational systems, including the potential impact of disruptions or breaches at our third party service providers.

These factors should be considered in evaluating forward-looking statements and undue reliance should not be placed on our forward-looking statements. Readers should also consider the risks, assumptions and uncertainties set forth in the "Risk Factors" section of our Form 10-K for the year ended December 31, 2013, as well as those set forth in our subsequent periodic and current reports filed with the SEC. Forward-looking statements speak only as of the date they are made and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Non-U.S. GAAP Financial Measures

This press release contains both financial measures based on accounting principles generally accepted in the United States (U.S. GAAP) and non-U.S. GAAP based financial measures. We believe that presenting these non-U.S. GAAP financial measures will provide information useful to investors in understanding our underlying operational performance, our business, and performance trends and facilitates comparisons with the performance of others in the banking industry. If non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measure, as well as the reconciliation to the comparable U.S. GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with U.S. GAAP, nor are they necessarily comparable to non-U.S. GAAP performance measures that may be presented by other companies.

Editor's Note: Financial highlights attached. Full financial supplement available on the Company's website at investor.theprivatebank.com.

 

 


Consolidated Income Statements









(Amounts in thousands, except per share data)







(Unaudited)











1Q14


4Q13


3Q13


2Q13


1Q13

Interest Income










Loans, including fees

$

110,199



$

110,723



$

108,912



$

107,407



$

106,787


Federal funds sold and interest-bearing deposits in banks

142



221



111



112



208


Securities:










Taxable

13,255



13,038



12,931



12,519



12,822


Exempt from Federal income taxes

1,529



1,604



1,562



1,532



1,502


Other interest income

33



34



61



62



90


Total interest income

125,158



125,620



123,577



121,632



121,409


Interest Expense










Interest-bearing demand deposits

942



1,021



1,032



1,034



1,115


Savings deposits and money market accounts

3,974



4,169



3,895



3,887



4,399


Brokered and time deposits

4,806



5,062



5,014



4,956



5,129


Short-term and secured borrowings

196



161



161



410



118


Long-term debt

6,488



6,751



7,640



7,613



7,608


Total interest expense

16,406



17,164



17,742



17,900



18,369


Net interest income

108,752



108,456



105,835



103,732



103,040


Provision for loan and covered loan losses

3,707



4,476



8,120



8,843



10,357


Net interest income after provision for loan and covered loan losses

105,045



103,980



97,715



94,889



92,683


Non-interest Income










Asset management

4,347



4,613



4,570



4,800



4,394


Mortgage banking

1,632



1,858



2,946



3,198



4,170


Capital markets products

4,083



5,720



3,921



6,048



5,039


Treasury management

6,599



6,321



6,214



6,209



5,924


Loan, letter of credit and commitment fees

4,634



4,474



4,384



4,282



4,077


Syndication fees

3,313



2,153



4,322



3,140



3,832


Deposit service charges and fees and other income

1,297



1,322



1,298



1,196



2,391


Net securities gains

331



279



118



136



641


Total non-interest income

26,236



26,740



27,773



29,009



30,468


Non-interest Expense










Salaries and employee benefits

44,620



42,575



41,360



39,854



43,140


Net occupancy expense

7,776



7,548



7,558



7,387



7,534


Technology and related costs

3,283



3,443



3,343



3,476



3,464


Marketing

2,413



3,592



2,986



3,695



2,317


Professional services

2,759



2,393



2,465



1,782



1,899


Outsourced servicing costs

1,464



1,612



1,607



1,964



1,634


Net foreclosed property expenses

2,823



3,600



4,396



5,555



6,643


Postage, telephone, and delivery

825



845



852



981



843


Insurance

2,903



2,934



2,590



2,804



2,539


Loan and collection expense

1,056



2,351



1,345



2,280



2,777


Other expenses

5,828



4,934



2,767



7,477



6,173


Total non-interest expense

75,750



75,827



71,269



77,255



78,963


Income before income taxes

55,531



54,893



54,219



46,643



44,188


Income tax provision

21,026



21,187



21,161



17,728



16,918


Net income available to common stockholders

$

34,505



$

33,706



$

33,058



$

28,915



$

27,270


Per Common Share Data










Basic earnings per share

$

0.44



$

0.43



$

0.42



$

0.37



$

0.35


Diluted earnings per share

$

0.44



$

0.43



$

0.42



$

0.37



$

0.35


Cash dividends declared

$

0.01



$

0.01



$

0.01



$

0.01



$

0.01


Weighted-average common shares outstanding

76,675



76,533



76,494



76,415



76,143


Weighted-average diluted common shares outstanding

77,417



76,967



76,819



76,581



76,203



 



Consolidated Balance Sheets









(Dollars in thousands)










3/31/14


12/31/13


9/30/13


6/30/13


3/31/13


(Unaudited)


(Audited)


(Unaudited)


(Unaudited)


(Unaudited)

Assets










Cash and due from banks

$

233,685



$

133,518



$

247,460



$

150,683



$

118,583


Federal funds sold and interest-bearing deposits in banks

117,446



306,544



180,608



147,699



203,647


Loans held-for-sale

26,262



26,816



27,644



34,803



38,091


Securities available-for-sale, at fair value

1,577,406



1,602,476



1,611,022



1,580,179



1,457,433


Securities held-to-maturity, at amortized cost

1,023,214



921,436



931,342



955,688



959,994


Federal Home Loan Bank ("FHLB") stock

30,005



30,005



34,063



34,063



34,288


Loans – excluding covered assets, net of unearned fees

10,924,985



10,644,021



10,409,443



10,094,636



10,033,803


Allowance for loan losses

(146,768)



(143,109)



(145,513)



(148,183)



(153,992)


Loans, net of allowance for loan losses and unearned fees

10,778,217



10,500,912



10,263,930



9,946,453



9,879,811


Covered assets

94,349



112,746



140,083



158,326



176,855


Allowance for covered loan losses

(16,571)



(16,511)



(21,653)



(24,995)



(24,089)


Covered assets, net of allowance for covered loan losses

77,778



96,235



118,430



133,331



152,766


Other real estate owned, excluding covered assets

23,565



28,548



35,310



57,134



73,857


Premises, furniture, and equipment, net

39,556



39,704



36,445



37,025



38,373


Accrued interest receivable

39,273



37,004



35,758



38,325



39,205


Investment in bank owned life insurance

54,184



53,865



53,539



53,216



52,873


Goodwill

94,041



94,041



94,484



94,496



94,509


Other intangible assets

8,136



8,892



10,486



11,266



12,047


Derivative assets

44,528



48,422



57,771



57,361



90,303


Other assets

137,486



157,328



130,848



144,771



126,450


Total assets

$

14,304,782



$

14,085,746



$

13,869,140



$

13,476,493



$

13,372,230


Liabilities










Demand deposits:










Noninterest-bearing

$

3,103,736



$

3,172,676



$

3,106,986



$

2,736,868



$

2,756,879


Interest-bearing

1,466,095



1,470,856



1,183,471



1,234,134



1,390,955


Savings deposits and money market accounts

4,786,398



4,799,561



4,778,057



4,654,930



4,741,864


Brokered time deposits

1,097,865



1,119,777



1,303,596



1,190,796



983,625


Time deposits

1,432,067



1,450,771



1,460,446



1,491,604



1,518,980


Total deposits

11,886,161



12,013,641



11,832,556



11,308,332



11,392,303


Short-term and secured borrowings

333,400



8,400



131,400



308,700



107,775


Long-term debt

627,793



627,793



499,793



499,793



499,793


Accrued interest payable

6,251



6,326



6,042



5,963



6,787


Derivative liabilities

40,522



48,890



55,933



62,014



84,370


Other liabilities

67,409



78,792



69,728



58,651



49,137


Total liabilities

12,961,536



12,783,842



12,595,452



12,243,453



12,140,165


Equity










Common stock:










Voting

75,428



75,240



75,240



75,238



73,144


Nonvoting

1,585



1,585



1,585



1,585



3,536


Treasury stock

(1,697)



(6,415)



(7,303)



(9,001)



(9,631)


Additional paid-in capital

1,021,436



1,022,023



1,019,143



1,016,615



1,014,443


Retained earnings

233,347



199,627



166,700



134,423



106,288


Accumulated other comprehensive income, net of tax

13,147



9,844



18,323



14,180



44,285


Total equity

1,343,246



1,301,904



1,273,688



1,233,040



1,232,065


Total liabilities and equity

$

14,304,782



$

14,085,746



$

13,869,140



$

13,476,493



$

13,372,230



 

 













Selected Financial Data









(Amounts in thousands, except per share data)








(Unaudited)












1Q14


4Q13


3Q13


2Q13


1Q13


Selected Statement of Income Data:











Net interest income

$

108,752



$

108,456



$

105,835



$

103,732



$

103,040



Net revenue (1)(2)

$

135,788



$

136,036



$

134,426



$

133,546



$

134,292



Operating profit (1)(2)

$

60,038



$

60,209



$

63,157



$

56,291



$

55,329



Provision for loan and covered loan losses

$

3,707



$

4,476



$

8,120



$

8,843



$

10,357



Income before income taxes

$

55,531



$

54,893



$

54,219



$

46,643



$

44,188



Net income available to common stockholders

$

34,505



$

33,706



$

33,058



$

28,915



$

27,270



Per Common Share Data:











Basic earnings per share

$

0.44



$

0.43



$

0.42



$

0.37



$

0.35



Diluted earnings per share

$

0.44



$

0.43



$

0.42



$

0.37



$

0.35



Dividends declared

$

0.01



$

0.01



$

0.01



$

0.01



$

0.01



Book value (period end) (1)

$

17.21



$

16.75



$

16.40



$

15.88



$

15.87



Tangible book value (period end) (1)(2)

$

15.90



$

15.43



$

15.05



$

14.52



$

14.49



Market value (close)

$

30.51



$

28.93



$

21.40



$

21.22



$

18.89



Book value multiple

1.77


x

1.73


x

1.31


x

1.34


x

1.19


x

Share Data:











Weighted-average common shares outstanding

76,675



76,533



76,494



76,415



76,143



Weighted-average diluted common shares outstanding

77,417



76,967



76,819



76,581



76,203



Common shares issued (period end)

78,108



77,982



77,993



78,015



78,050



Common shares outstanding (period end)

78,049



77,708



77,680



77,630



77,649



Performance Ratio:











Return on average common equity

10.48

%


10.28

%


10.43

%


9.28

%


9.01

%


Return on average assets

1.00

%


0.96

%


0.96

%


0.86

%


0.81

%


Return on average tangible common equity (1)(2)

11.50

%


11.33

%


11.55

%


10.30

%


10.04

%


Net interest margin (1)(2)

3.23

%


3.18

%


3.18

%


3.22

%


3.19

%


Fee revenue as a percent of total revenue (1)

19.24

%


19.61

%


20.72

%


21.77

%


22.45

%


Non-interest income to average assets

0.76

%


0.76

%


0.81

%


0.87

%


0.91

%


Non-interest expense to average assets

2.19

%


2.16

%


2.07

%


2.31

%


2.35

%


Net overhead ratio (1)

1.43

%


1.40

%


1.26

%


1.44

%


1.44

%


Efficiency ratio (1)(2)

55.79

%


55.74

%


53.02

%


57.85

%


58.80

%


Balance Sheet Ratios:











Loans to deposits (period end) (3)

91.91

%


88.60

%


87.97

%


89.27

%


88.08

%


Average interest-earning assets to average interest-bearing liabilities

143.43

%


144.87

%


140.72

%


139.76

%


141.21

%


Capital Ratios (period end):











Total risk-based capital (1)

13.39

%


13.30

%


13.48

%


13.70

%


13.58

%


Tier 1 risk-based capital (1)

11.19

%


11.08

%


11.05

%


11.04

%


10.90

%


Tier 1 leverage ratio (1)

10.60

%


10.37

%


10.32

%


10.25

%


9.86

%


Tier 1 common equity to risk-weighted assets (1)(2)(4)

9.33

%


9.19

%


9.11

%


9.05

%


8.89

%


Tangible common equity to tangible assets (1)(2)

8.74

%


8.57

%


8.49

%


8.43

%


8.48

%


Total equity to total assets

9.39

%


9.24

%


9.18

%


9.15

%


9.21

%




(1)  

Refer to Glossary of Terms for definition.

(2)   

This is a non-U.S. GAAP financial measure. Refer to "Non-U.S. GAAP Financial Measures" for a reconciliation from non-U.S. GAAP to U.S. GAAP.

(3)    

Excludes covered assets. Refer to Glossary of Terms for definition.

(4)    

For purposes of our presentation, we calculate this ratio under currently effective requirements and without giving effect to the final Basel III capital rules adopted and issued by the Federal Reserve Board in July 2013, which are effective January 1, 2014 with compliance required January 1, 2015.


 


 

Selected Financial Data (continued)









(Dollars in thousands)








(Unaudited)





















1Q14


4Q13


3Q13


2Q13


1Q13

Additional Selected Information:










(Increase) decrease credit valuation adjustment on capital markets derivatives (1)

$

(66)



$

619



$

(521)



$

1,882



$

246


Salaries and employee benefits:










  Salaries and wages

$

24,973



$

23,971



$

23,639



$

23,397



$

24,015


  Share-based costs

3,685



3,316



3,261



3,236



2,863


  Incentive compensation, retirement costs and other employee benefits

15,962



15,288



14,460



13,221



16,262


  Total salaries and employee benefits

$

44,620



$

42,575



$

41,360



$

39,854



$

43,140












Provision (release) for unfunded commitments

$

496



$

1,019



$

(1,346)



$

467



$

1,723












Assets under management and administration (AUMA) (1)

$

6,036,381



$

5,731,980



$

5,570,614



$

5,427,498



$

5,515,199


Custody assets included in AUMA

$

2,663,502



$

2,506,291



$

2,427,093



$

2,351,163



$

2,438,600


(1) 

Refer to Glossary of Terms for definition.

 

SOURCE PrivateBancorp, Inc.



RELATED LINKS
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