Private Money Swapped for Public Money (PVTB)

Privatebancorp (NASDAQ:PVTB) certainly gave investors and traders a few things to mull over after the close on Wednesday. First, the bank holding company released third quarter earnings that beat the estimates of investment research analysts. Privatebancorp reported earning $0.27 per share compared to $0.10 during the same period in 2011 and a sequential increase of 8 cents from the previous quarter of this year. For the nine-month year-over-year comparison, the bank nearly doubled its earnings from $0.32 to $0.61 per share. The consensus among analysts expected third-quarter earnings to come in at $0.22 per share. Projections for the next quarter have the company earning $0.23 per share. In the conference call following the report, the bank noted that its lending has increased by $600 million so far this year while deposits and fee income continue to grow.

The bank also announced plans to repay its outstanding TARP  (Troubled Asset Relief Program) balance through the repurchase of $243.8 million in preferred securities currently held by the US Treasury. The funds necessary for the repurchase will come through a combination of a $75 million common stock offering and a $125 million debt offering plus cash. The redemption of the preferred securities is subject to approval by the Federal Reserve. In addition, the bank wants to buy back common stock warrants it issued to the US Treasury under the Capital Purchase Program.

Investors and traders went to bed last night trying to figure out what all the headlines meant for trading Privatebancorp shares this morning. It appeared from the opening bell they liked what they saw. The stock gapped up 68 cents from the previous day’s closing price to start the trading session at $16.60. Almost one third of the day’s total volume traded in the first 30 minutes. Except for a brief dip to an intraday low of $16.39, share prices climbed throughout most of the day even though volume waned as the hours ticked away. The high for the day was reached around lunchtime when shares traded for $17.32. By the closing bell, Privatebancorp shares chalked up a gain of nearly 6% to finish the session at $16.87. Over 5.5 million shares exchanged hands during the day, which outpaced the volume on an average day by twelve-fold.

Does the gapping action today represent the last gasp of buyers or the continuation of a strong uptrend in share prices? This is another question that investors and traders will ponder in the coming days.

Over the last 12 months the bank’s share prices have more than doubled from an annual low of $8.42 set almost one year ago. Last month, the stock established a new 52-week high when it traded for 17.42.

Currently, 11 investment research analysts cover the stock with a consensus rating of “hold”. Analysts have placed an average price target of $16.72 on the stock.

Privatebancorp is a holding company for PrivateBank and Trust Company, which has branch operations in Chicago, Atlanta, St. Louis, Milwaukee and Kansas City. The bank offers a full range of banking products to business owners, entrepreneurs and individuals. Outside of its loan business, which includes residential and commercial property plus individual and business credit, the bank invests in mortgage backed securities and collateral mortgage obligations. The Chicago-based bank was founded in 1989.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ( or his Google+ page (