Earnings estimates for
) have advanced over the past 30 days following its impressive
third quarter results and the repayment of its Troubled Asset
Relief Program (TARP) dues. This major regional bank has delivered
positive earnings surprises for the last ten quarters with an
average beat of 183.6%.
Shares have surged approximately 42.3% year-to-date. Strong
estimate revisions helped PVTB achieve Zacks #1 Rank (Strong Buy)
status on October 17.
Solid Third Quarter
On October 10, Privatebancorp reported third quarter earnings per
share of 27 cents, topping the Zacks Consensus Estimate by 22.7%
and the year-ago earnings by 92.9%. The upsurge was primarily due
to the strengthening of the top line, aided by an increase in both
net interest income and non-interest income. These positives were
partly offset by higher non-interest expenses.
Net interest income climbed 4% year over year to $105.4 million,
aided by higher interest income. Non-interest income rose slightly
to $27.8 million. However, the net interest margin contracted 14
basis points to 3.35%. The company's non-interest expenses rose
8.9% to $81.7 million over the same period, mainly driven by higher
salaries and employee benefits expenses.
Credit metrics continued to improve at Privatebancorp. The
provision for loan and covered loan losses was $13.5 million, down
58.6% from the year-ago quarter. Non-performing assets dipped 34.0%
year over year to $277.7 million. Moreover, net charge offs
declined 45.0% year over year to $23.1 million.
On October 24, Privatebancorp became one of the latest banks to
repay the bailout money it had taken from the government during the
2008 financial crisis. The company repurchased all preferred stock
worth $243.8 million, which were issued to the U.S. Department of
the Treasury as part of the company's participation in TARP.
Moreover, Privatebancorp paid $2.3 million in accrued and unpaid
dividends, out of which $813,000 will be recorded as expenses in
the fourth quarter of 2012.
Additionally, a one-time, non-cash after-tax charge of about $2.23
associated with the repurchase will be recorded in the fourth
quarter of 2012. This relates to the unaccreted discount recorded
at the date of issuance.
Earnings Estimates on the Rise
The Zacks Consensus Estimate for 2012 is up 11.3% to 89 cents in
the past 30 days as all 14 estimates were revised higher. The Zacks
Consensus Estimate for 2013 advanced 8.0% to $1.21 within the same
timeframe as 13 of 14 estimates increased.
The Zacks Consensus Estimate for 2012 reflects year-over-year
growth of about 106.2%, while the expected growth rate for 2013 is
Shares of Privatebancorp currently trade at 18.5x 12-month forward
earnings, a 38% premium to the peer group average of 13.4x. Its
price to book ratio of 1.1 is at a 10% premium to the industry
median of 1.0.
The company has a trailing 12-month ROE of 5.8%, compared with the
peer group average of 8.2%. Considering the recent share price
fluctuations and consistent growth trends, there is a strong
possibility of considerable upside from current levels.
Chart Resonates Growth Potential
Privatebancorp has been continuously outperforming its 200-day
moving average over the past six months, showing a steady growth
trend. The year-to-date return for the stock came in at 42.3%
compared with the S&P 500's return of 12.3%.
Privatebancorp operates as the holding company for The PrivateBank
and Trust Company, which provides various business and personal
financial services. The company was founded in 1989 and conducts
business through 35 branch locations in Atlanta, Chicago,
Cleveland, Denver, Des Moines, Detroit, Kansas City, Milwaukee,
Minneapolis and St. Louis metropolitan areas. With a market cap of
about $1.2 billion, Privatebancorp competes with Enterprise
Financial Services Corp. (
), among others.
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