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PrivateBancorp to Redeem $75M Trust Preferred Securities - Analyst Blog

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PrivateBancorp, Inc. ( PVTB ) announced it decision to redeem $75.0 million of its $143.8 million issued and outstanding 10.00% trust preferred securities (TruPS). Notably the securities were issued by PrivateBancorp Capital Trust IV.

PrivateBancorp stated that the redemption price will be $25.00 per TruPS covering accumulated and unpaid distributions, which fall due till the redemption date scheduled on Oct 8, 2014. The total amount is projected to be around $480,000.

The securities to be redeemed will be partially funded through PrivateBancorp's redemption of around $75.0 million of outstanding 10.00% Junior Subordinated Debentures due 2068. The company will incur around $2.4 million in interest expense, which will reflect unamortized debt issuance costs pertaining to the proportionate amount of debentures to be redeemed.

TruPS redemption is viewed as a positive step for the banks, enabling them to bring down interest expenses in the long run, as these securities demand higher rates than other securities and often the banks replace TruPS with equity or other low-cost debt. Further, according to the Dodd-Frank Act, banks are no longer allowed to consider these securities as regulatory capital beginning 2013.

Currently, PrivateBancorp carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the banking space include S&T Bancorp Inc. ( STBA ), First Security Group, Inc. ( FSGI ) and Northrim Bancorp Inc. ( NRIM ). All three sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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