Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 2017
PRIVATEBANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
 
001-34066
 
36-3681151
(State or other jurisdiction
of incorporation)
 
(Commission
file number)
 
(I.R.S. employer
identification no.)
120 South LaSalle Street
Chicago, Illinois
 
60603
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (312) 564-2000
Not Applicable
(Former name or former address, if changed since last report)
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2 below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
¨






ITEM 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 20, 2017, PrivateBancorp, Inc. (the “Company”) announced its earnings results for the first quarter ended March 31, 2017. Attached as Exhibit 99.1 is a copy of the press release relating to the Company’s earnings results, which is incorporated herein by reference. Certain supplemental information relating to non-GAAP financial measures is reported in the attached press release in Exhibit 99.1.

ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit
 
Description
 
 
 
99.1
 
First Quarter 2017 Earnings Release dated April 20, 2017 (intended to be deemed furnished with the Commission rather than filed pursuant to General Instruction B.2. to Form 8-K)

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
PRIVATEBANCORP, INC.
 
 
 
 
 
 
 
Dated:
April 20, 2017
 
 
By:
 
[/s/ Kevin M. Killips]
 
 
 
 
 
 
Kevin M. Killips
 
 
 
 
 
 
Chief Financial Officer

INDEX TO EXHIBITS

Exhibit
 
Description
 
 
 
99.1
 
First Quarter 2017 Earnings Release dated April 20, 2017 (intended to be deemed furnished with the Commission rather than filed pursuant to General Instruction B.2. to Form 8-K)



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1



2000175852_privatebancorplogo3qa02.jpg
For further information:

Media Contact:
Amy Yuhn
312-564-1378
ayuhn@theprivatebank.com

Investor Relations Contact:
Jeanette O'Loughlin
312-564-6076
joloughlin@theprivatebank.com

PrivateBancorp Reports First Quarter 2017 Earnings
Earnings per share of $0.70 for first quarter 2017, compared to $0.62 for first quarter 2016
and $0.73 for fourth quarter 2016

CHICAGO, April 20, 2017 - PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income of $58.0 million, or $0.70 per diluted share, for the first quarter 2017, compared to $49.6 million, or $0.62 per diluted share, for the first quarter 2016, and $59.5 million, or $0.73 per diluted share, for the fourth quarter 2016.

“Our first quarter results reflect our consistent focus on building client relationships as loans increased by $535.4 million to $15.6 billion and asset quality remained strong,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “We realized the benefit of a full quarter’s impact of the December interest rate increase and average earning assets of $19.7 billion drove net interest income 15 percent higher from first quarter 2016. Net income was up 17 percent from a year ago to $58.0 million but down from the fourth quarter primarily due to higher employee expenses, as expected. We had a good start to the year.

“We are pleased to have reached a revised agreement with CIBC, which provides our stockholders with a significant increase in value as compared to the initial terms of the transaction,” Richman continued. “PrivateBancorp’s Board and management team continue to believe in the long-term strategic value of this combination and we continue to recommend that PrivateBancorp stockholders approve the transaction. We are excited to join the CIBC family and continue the integration planning process as we work with CIBC to complete the transaction as expeditiously as possible.”

As previously announced, the special meeting of PrivateBancorp stockholders to consider the proposed merger transaction with CIBC is scheduled for May 12, 2017. The transaction is currently expected to close in the second quarter 2017, subject to approval by PrivateBancorp's stockholders and by the banking regulators in Canada and the United States.

First Quarter 2017 Highlights

Total loans grew to $15.6 billion, up $2.1 billion from a year ago and $535.4 million from December 31, 2016, driven primarily by activity in commercial and commercial real estate ("CRE") loans. At March 31, 2017, commercial loans represented 64 percent and CRE and construction loans represented 30 percent of total loans, relatively consistent with the comparative periods. The loan-to-deposit ratio was 93.3 percent at March 31, 2017, compared to 93.0 percent a year ago and 93.7 percent at December 31, 2016.

1



Net interest margin was 3.30 percent, compared to 3.30 percent for the first quarter 2016 and 3.23 percent for the fourth quarter 2016. The sequential improvement in net interest margin primarily reflected the repricing of our variable rate loan portfolio reflecting upward movement in short-term rates, offset in part by increased costs for interest-bearing funds.

Net income for the first quarter 2017 was impacted by higher compensation expense and a lower effective tax rate, both at levels which are not expect to recur in the remainder of 2017. Included in compensation expense in the first quarter was approximately $17 million related to accelerated expense recognition for a portion of the annual equity awards granted during the quarter and higher payroll taxes and 401(k) costs as is typical in the first quarter of the year. The first quarter 2017's effective tax rate was impacted by approximately $7.6 million in tax benefits specific to first quarter activity.

The provision for loan and covered loan losses was $8.4 million for the first quarter 2017, compared to $6.4 million for the first quarter 2016 and $6.0 million for the fourth quarter 2016. The allowance for loan losses as a percentage of total loans was 1.25 percent for the first quarter 2017, compared to 1.23 percent for both the first quarter 2016 and the fourth quarter 2016.

Return on average assets was 1.17 percent and return on average common equity was 12.0 percent for the first quarter 2017.

Operating Performance

Net interest income grew to $161.0 million in the first quarter 2017, increasing 15 percent from the first quarter 2016 and 4 percent from the fourth quarter 2016, primarily driven by growth in average loans of 15 percent compared to first quarter 2016 and 3 percent compared to the fourth quarter 2016 and higher short-term rates. Net interest income for the first quarter 2017 was impacted by one fewer day compared to the first quarter 2016 and two fewer days as compared to the fourth quarter 2016.

Net interest margin was 3.30 percent in the first quarter 2017, consistent with a year ago and increasing seven basis points from the fourth quarter 2016. Loan yields increased 13 basis points from the fourth quarter 2016, primarily attributable to continued upward movement in LIBOR. Approximately 70 percent of the loan portfolio at year end was tied to one-month LIBOR, which was 98 basis points at March 31, 2017, compared to 43 basis points a year ago and 77 basis points at December 31, 2016. The interest rate moves during March 2017 are expected to be more impactful to loan yields during the second quarter 2017. Loan fees tied to early loan repayments were five basis points lower on a sequential basis. Deposit costs increased by eight basis points from the fourth quarter 2016 and 15 basis points year-over year, reflecting deposits repriced to a higher Fed funds effective or target rate and increases in rates paid on other deposit accounts. The impact of higher deposit costs on margin was somewhat reduced by the value of average noninterest-bearing funds in a higher rate environment. Further interest rate increases, or changing expectations about future short-term interest rate movements, may impact deposit market pricing, competitive dynamics, and overall funding costs in future periods.

Noninterest income was $37.3 million in the first quarter 2017, increasing $3.7 million from the first quarter 2016 and down $2.1 million from the fourth quarter 2016. Other income for the fourth quarter 2016 included gains related to loan sales of $1.5 million.

Capital markets revenue of $6.9 million for the first quarter 2017 reflected a negligible credit valuation adjustment (CVA), compared to a negative CVA of $1.9 million for the first quarter 2016 and a positive CVA of $3.1 million for the fourth quarter 2016. Excluding the CVA impact for all periods, capital markets revenue was $6.9 million in the first quarter 2017, compared to $7.1 million for the first quarter 2016 and $5.7 million for the fourth quarter 2016. Results for the first quarter 2017 reflected higher interest rate derivative activity compared to the prior periods. Meaningful interest rate movements in the last six months and changing expectations about the timing and extent of

2


future interest rate movements create potential for increased opportunities in the interest rate derivatives business in 2017.

The continued onboarding of new commercial clients benefited treasury management fees, which increased 13 percent from the first quarter 2016 and 4 percent from the fourth quarter 2016. Syndication fees were $6.0 million for the first quarter 2017, compared to $5.4 million for the first quarter 2016 and $5.1 million for the fourth quarter 2016. Syndication fees vary from quarter to quarter depending on the level and mix of loans originated and distributed.

Asset management revenue was $5.6 million in the first quarter 2017, increasing 18 percent from the first quarter 2016 and 6 percent from the fourth quarter 2016. Assets under management and administration were $9.8 billion at March 31, 2017, compared to $9.6 billion a year ago and $9.7 billion at December 31, 2016, primarily reflecting growth in managed assets of 4 percent from year end. Custody assets declined 2 percent from December 31, 2016, reflecting a continuation of expected outflows from a large corporate trust account.

Expenses

Noninterest expense for the first quarter 2017 increased $19.9 million from the first quarter 2016 and $14.6 million from the fourth quarter 2016. The efficiency ratio was 55.3 percent for the first quarter 2017, compared to 51.9 percent for the first quarter 2016 and 48.9 percent for the fourth quarter 2016.

Compensation expense for the first quarter 2017 increased $14.8 million from the first quarter 2016 and $14.9 million from the fourth quarter 2016, primarily due to the required accelerated expense recognition related to a portion of the annual time-vested equity awards granted in the first quarter 2017. First quarter compensation expense also included seasonally higher payroll taxes and 401(k) costs. Approximately $17 million of compensation expense recorded in the first quarter will not recur for the remainder of 2017. Second quarter compensation will also be influenced by incentive compensation plans tied to company performance and merit increases made in March. Compared to the first quarter 2016, salaries and wages expense increased $2.9 million, primarily reflecting additional hires over the last year and annual salary adjustments made during the first quarter.

Other expenses includes the provision for unfunded commitments, which was $753,000 for the first quarter 2017, compared to $595,000 for the first quarter 2016 and $1.5 million for the fourth quarter 2016.

The effective tax rate for the first quarter 2017 was 27.1 percent, compared to 35.0 percent for the first quarter 2016 and 35.9 percent for the fourth quarter 2016. The lower tax rate in the first quarter 2017 was primarily attributable to net tax benefits from the exercise and vesting of share-based compensation. Such tax benefits totaled $4.9 million, compared to $2.1 million in the first quarter 2016 and $900,000 in the fourth quarter 2016. Most of the Company’s restricted stock awards vest annually in the first quarter. Additionally, the effective tax rate in the first quarter 2017 was impacted by the completion of tax examinations, which added one-time tax benefits of $2.7 million to the current quarter’s results and is expected not to recur.

Credit Quality

The allowance for loan losses was $194.6 million, or 1.25 percent of total loans, at March 31, 2017, compared to $185.8 million, or 1.23 percent of total loans, at December 31, 2016. The provision for loan losses was $8.4 million for the first quarter 2017, compared to $6.4 million for the first quarter 2016 and $6.1 million for the fourth quarter 2016. Specific reserve levels increased $8.2 million, resulting from impaired loan development and higher reserves required on impaired loans from prior periods. The provision for loan loss will fluctuate from period to period depending on the level of loan growth and unevenness in credit quality due to the size of individual credits. Annualized recoveries to average loans were 0.01 percent for the first quarter 2017, compared to annualized net charge-offs to average loans of 0.05 percent for the first quarter 2016 and 0.02 percent for the fourth quarter 2016.

3



Nonperforming assets were 0.46 percent of total assets at March 31, 2017, compared to 0.47 percent at December 31, 2016. At March 31, 2017, nonperforming loans were $85.0 million, or 0.55 percent of total loans, compared to $83.7 million, or 0.56 percent of total loans, at December 31, 2016. OREO declined $1.3 million from December 31, 2016, to $8.9 million at March 31, 2017. Restructured loans accruing interest increased $21.9 million from year end, primarily related to three credits.

Balance Sheet

Total assets were $20.4 billion at March 31, 2017, compared to $17.7 billion at March 31, 2016, and $20.1 billion at December 31, 2016. Total loans of $15.6 billion increased 16 percent from March 31, 2016, and 4 percent from December 31, 2016. Continued client development efforts generated loans to new clients of $608.0 million for the first quarter 2017. At March 31, 2017, commercial loans represented 64 percent of total loans, and commercial real estate and construction loans represented 30 percent of total loans, relatively consistent with the prior comparative periods. Total liabilities were $18.4 billion at March 31, 2017, compared to $15.9 billion at March 31, 2016, and $18.1 billion at December 31, 2016.

Total deposits were $16.7 billion at March 31, 2017, increasing 16 percent from March 31, 2016, and 4 percent from December 31, 2016. Total brokered deposits, as defined for regulatory reporting purposes, increased $481.4 million from year end, including an increase in traditional brokered deposits and CDARS totaling $275.4 million. During the quarter, we reduced FHLB borrowing by $350.0 million.

Capital

As of March 31, 2017, the total risk-based capital ratio was 12.59 percent, the Tier 1 risk-based capital ratio was 10.83 percent, and the leverage ratio was 10.33 percent. The common equity Tier 1 ratio was 9.95 percent and the tangible common equity ratio was 9.35 percent at the end of the first quarter 2017.

Pending Transaction with CIBC

On March 30, 2017, PrivateBancorp entered into a revised merger agreement with CIBC, a leading Canadian bank. PrivateBancorp stockholders of record as of March 31, 2017 will be entitled to vote on the revised merger agreement at the special meeting of stockholders, scheduled for May 12, 2017. The completion of the transaction remains subject to the receipt of PrivateBancorp stockholder approval and CIBC’s receipt of required regulatory approvals. The transaction is currently expected to close during the second quarter. During the first quarter 2017, merger-related expenses were $1.6 million.

No Quarterly Conference Call

PrivateBancorp does not intend to conduct an earnings conference call to discuss this quarterly earnings report.

About PrivateBancorp, Inc.

PrivateBancorp, Inc., through its subsidiary The PrivateBank, 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 it serves. As of March 31, 2017, the Company had 36 offices in 13 states and $20.4 billion in assets. The Company’s website is www.theprivatebank.com.


4


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 or conditions to differ from those reflected in forward-looking statements include:

the possibility that the transaction with CIBC does not close when expected or at all because required regulatory, stockholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; or the possibility that, as a result of the announcement and pendency of the proposed transaction, we experience difficulties in employee retention and/or clients or vendors seek to change their existing business relationships with us, or competitors change their strategies to compete against us, any of which may have a negative impact on our business or operations;
unanticipated changes in monetary policies of the Federal Reserve or significant adjustments in the pace of, or market expectations for, future interest rate changes;
uncertainty regarding U.S. regulatory reform proposals, geopolitical developments and the U.S. and global economic outlook that may continue to impact market conditions or affect 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;
competitive pressures in the financial services industry relating to both pricing and loan structures, which may impact our growth rate;
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;
availability of sufficient and cost-effective sources of liquidity or funding as and when needed;
unanticipated losses of one or more large depositor relationships, or other significant deposit outflows;
loss of key personnel or an inability to recruit appropriate talent cost-effectively;
greater-than-anticipated costs to support the growth of our business, including investments in technology, process improvements or other infrastructure enhancements, or greater-than-anticipated compliance or regulatory costs and burdens; or
failures or disruptions to, or compromises of, our data processing or other information or operational systems, including the potential impact of disruptions or security breaches at our third-party service providers.

Forward-looking statements are subject to risks, assumptions and uncertainties and could be significantly affected by many factors, including those set forth in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as those set forth in our subsequent periodic and current reports filed with the SEC. These factors should be considered in evaluating forward-looking statements and undue reliance should not be placed on our forward-looking statements. 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 of the non-U.S. GAAP financial measure 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.

5



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


6

2000175852_privatebancorplogo3qa02.jpg


Consolidated Income Statements
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q17
 
4Q16
 
3Q16
 
2Q16
 
1Q16
Interest Income
 
 
 
 
 
 
 
 
 
Loans, including fees
$
165,180

 
$
158,061

 
$
148,759

 
$
144,164

 
$
140,067

Federal funds sold and interest-bearing deposits in banks
549

 
422

 
380

 
335

 
340

Securities:
 
 
 
 
 
 
 
 
 
Taxable
18,436

 
16,891

 
15,283

 
15,158

 
15,210

Exempt from Federal income taxes
2,412

 
2,375

 
2,322

 
2,296

 
2,333

Other interest income
290

 
163

 
139

 
170

 
150

Total interest income
186,867

 
177,912

 
166,883

 
162,123

 
158,100

Interest Expense
 
 
 
 
 
 
 
 
 
Deposits
18,405

 
16,300

 
15,238

 
13,895

 
13,141

Short-term borrowings
2,324

 
1,118

 
1,070

 
995

 
230

Long-term debt
5,120

 
5,113

 
5,065

 
5,216

 
5,211

Total interest expense
25,849

 
22,531

 
21,373

 
20,106

 
18,582

Net interest income
161,018

 
155,381

 
145,510

 
142,017

 
139,518

Provision for loan and covered loan losses
8,408

 
6,048

 
15,691

 
5,569

 
6,402

Net interest income after provision for loan and covered loan losses
152,610

 
149,333

 
129,819

 
136,448

 
133,116

Non-interest Income
 
 
 
 
 
 
 
 
 
Asset management
5,590

 
5,266

 
5,590

 
5,539

 
4,725

Mortgage banking
2,450

 
3,259

 
5,060

 
4,607

 
2,969

Capital markets products
6,924

 
8,824

 
5,448

 
5,852

 
5,199

Treasury management
9,247

 
8,849

 
8,617

 
8,290

 
8,186

Loan, letter of credit and commitment fees
5,551

 
5,312

 
5,293

 
5,538

 
5,200

Syndication fees
5,962

 
5,137

 
4,721

 
5,664

 
5,434

Deposit service charges and fees and other income
1,502

 
2,765

 
2,885

 
1,060

 
1,358

Net securities gains
57

 

 

 
580

 
531

Total non-interest income
37,283

 
39,412

 
37,614

 
37,130

 
33,602

Non-interest Expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
73,139

 
58,223

 
55,889

 
55,326

 
58,339

Net occupancy and equipment expense
8,037

 
7,836

 
7,099

 
7,012

 
7,215

Technology and related costs
6,680

 
6,660

 
6,282

 
5,487

 
5,293

Marketing
4,770

 
4,580

 
4,587

 
3,925

 
4,404

Professional services
4,851

 
3,535

 
2,865

 
9,490

 
2,994

Outsourced servicing costs
994

 
930

 
1,379

 
2,052

 
1,840

Net foreclosed property (income) expenses
(189
)
 
1,633

 
965

 
360

 
566

Postage, telephone, and delivery
852

 
823

 
818

 
945

 
840

Insurance
4,178

 
4,066

 
3,931

 
3,979

 
3,820

Loan and collection expense
1,968

 
2,611

 
1,972

 
2,017

 
1,532

Other expenses
5,129

 
4,947

 
6,133

 
3,623

 
3,650

Total non-interest expense
110,409

 
95,844

 
91,920

 
94,216

 
90,493

Income before income taxes
79,484

 
92,901

 
75,513

 
79,362

 
76,225

Income tax provision
21,532

 
33,353

 
26,621

 
28,997

 
26,673

Net income available to common stockholders
$
57,952

 
$
59,548

 
$
48,892

 
$
50,365

 
$
49,552

Per Common Share Data
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.72

 
$
0.75

 
$
0.61

 
$
0.63

 
$
0.63

Diluted earnings per share
$
0.70

 
$
0.73

 
$
0.60

 
$
0.62

 
$
0.62

Cash dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

Weighted-average common shares outstanding
79,516

 
79,189

 
79,007

 
78,849

 
78,550

Weighted-average diluted common shares outstanding
81,300

 
81,083

 
80,673

 
80,317

 
79,856



7

2000175852_privatebancorplogo3qa02.jpg


Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
3/31/17
 
12/31/16
 
9/30/16
 
6/30/16
 
3/31/16
 
Unaudited
 
Audited
 
Unaudited
 
Unaudited
 
Unaudited
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
166,012

 
$
161,168

 
$
166,607

 
$
155,292

 
$
133,001

Federal funds sold and interest-bearing deposits in banks
335,943

 
587,563

 
245,193

 
230,036

 
337,465

Loans held-for-sale
42,276

 
103,284

 
75,438

 
61,360

 
64,029

Securities available-for-sale, at fair value
2,112,165

 
2,013,525

 
1,961,099

 
1,864,636

 
1,831,848

Securities held-to-maturity, at amortized cost
1,801,973

 
1,738,123

 
1,633,235

 
1,435,334

 
1,456,760

Federal Home Loan Bank ("FHLB") stock
38,163

 
54,163

 
30,213

 
21,113

 
38,113

Loans – excluding covered assets, net of unearned fees
15,591,656

 
15,056,241

 
14,654,570

 
14,035,808

 
13,457,665

Allowance for loan losses
(194,615
)
 
(185,765
)
 
(180,268
)
 
(168,615
)
 
(165,356
)
Loans, net of allowance for loan losses and unearned fees
15,397,041

 
14,870,476

 
14,474,302

 
13,867,193

 
13,292,309

Covered assets
21,181

 
22,063

 
23,889

 
25,151

 
25,769

Allowance for covered loan losses
(4,931
)
 
(4,766
)
 
(4,879
)
 
(5,525
)
 
(5,526
)
Covered assets, net of allowance for covered loan losses
16,250

 
17,297

 
19,010

 
19,626

 
20,243

Other real estate owned, excluding covered assets
8,888

 
10,203

 
12,035

 
14,532

 
14,806

Premises, furniture, and equipment, net
45,050

 
46,967

 
44,760

 
43,394

 
41,717

Accrued interest receivable
57,316

 
57,986

 
48,512

 
47,209

 
47,349

Investment in bank owned life insurance
58,449

 
58,115

 
57,750

 
57,380

 
57,011

Goodwill
94,041

 
94,041

 
94,041

 
94,041

 
94,041

Other intangible assets
748

 
1,269

 
1,809

 
2,349

 
2,890

Derivative assets
21,511

 
27,965

 
62,094

 
80,995

 
66,406

Other assets 
220,392

 
211,628

 
179,462

 
174,701

 
169,384

Total assets 
$
20,416,218

 
$
20,053,773

 
$
19,105,560

 
$
18,169,191

 
$
17,667,372

Liabilities
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
5,258,941

 
$
5,196,587

 
$
4,857,470

 
$
4,511,893

 
$
4,338,177

Interest-bearing
11,449,774

 
10,868,642

 
10,631,384

 
10,045,501

 
10,126,692

Total deposits
16,708,715

 
16,065,229

 
15,488,854

 
14,557,394

 
14,464,869

Short-term borrowings
1,195,318

 
1,544,746

 
1,233,318

 
1,287,934

 
602,365

Long-term debt
338,335

 
338,310

 
338,286

 
338,262

 
688,238

Accrued interest payable
9,590

 
9,063

 
7,953

 
7,967

 
6,630

Derivative liabilities
15,420

 
18,122

 
19,236

 
27,940

 
22,498

Other liabilities
153,849

 
158,628

 
135,559

 
118,544

 
114,781

Total liabilities 
18,421,227

 
18,134,098

 
17,223,206

 
16,338,041

 
15,899,381

Equity
 
 
 
 
 
 
 
 
 
Common stock
79,765

 
79,313

 
79,101

 
78,918

 
78,894

Treasury stock

 

 

 

 
(4,389
)
Additional paid-in capital
1,117,982

 
1,101,946

 
1,091,275

 
1,082,173

 
1,078,470

Retained earnings
793,927

 
736,798

 
678,059

 
629,976

 
580,418

Accumulated other comprehensive income, net of tax
3,317

 
1,618

 
33,919

 
40,083

 
34,598

Total equity
1,994,991

 
1,919,675

 
1,882,354

 
1,831,150

 
1,767,991

Total liabilities and equity 
$
20,416,218

 
$
20,053,773

 
$
19,105,560

 
$
18,169,191

 
$
17,667,372


8

2000175852_privatebancorplogo3qa02.jpg


Selected Financial Data
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
1Q17
 
4Q16
 
3Q16
 
2Q16
 
1Q16
 
Selected Statement of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
$
161,018

 
$
155,381

 
$
145,510

 
$
142,017

 
$
139,518

 
Net revenue (1)(2)
$
199,546

 
$
196,027

 
$
184,331

 
$
180,341

 
$
174,337

 
Operating profit (1)(2)
$
89,137

 
$
100,183

 
$
92,411

 
$
86,125

 
$
83,844

 
Provision for loan and covered loan losses
$
8,408

 
$
6,048

 
$
15,691

 
$
5,569

 
$
6,402

 
Income before income taxes
$
79,484

 
$
92,901

 
$
75,513

 
$
79,362

 
$
76,225

 
Net income available to common stockholders
$
57,952

 
$
59,548

 
$
48,892

 
$
50,365

 
$
49,552

 
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.72

 
$
0.75

 
$
0.61

 
$
0.63

 
$
0.63

 
Diluted earnings per share
$
0.70

 
$
0.73

 
$
0.60

 
$
0.62

 
$
0.62

 
Dividends declared
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.01

 
Book value (period end) (1)
$
24.93

 
$
24.04

 
$
23.64

 
$
23.04

 
$
22.29

 
Tangible book value (period end) (1)(2)
$
23.75

 
$
22.85

 
$
22.43

 
$
21.83

 
$
21.07

 
Market value (period end)
$
59.37

 
$
54.19

 
$
45.92

 
$
44.03

 
$
38.60

 
Book value multiple (period end)
2.38

x
2.25

x
1.94

x
1.91

x
1.73

x
Share Data:
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
79,516

 
79,189

 
79,007

 
78,849

 
78,550

 
Weighted-average diluted common shares outstanding
81,300

 
81,083

 
80,673

 
80,317

 
79,856

 
Common shares issued (period end)
80,024

 
79,849

 
79,640

 
79,464

 
79,443

 
Common shares outstanding (period end)
80,024

 
79,849

 
79,640

 
79,464

 
79,322

 
Performance Ratio:
 
 
 
 
 
 
 
 
 
 
Return on average common equity
11.95
%
 
12.40
%
 
10.40
%
 
11.20
%
 
11.40
%
 
Return on average assets
1.17
%
 
1.21
%
 
1.04
%
 
1.14
%
 
1.15
%
 
Return on average tangible common equity (1)(2)
12.63
%
 
13.12
%
 
11.04
%
 
11.91
%
 
12.16
%
 
Net interest margin (1)(2)
3.30
%
 
3.23
%
 
3.18
%
 
3.28
%
 
3.30
%
 
Fee revenue as a percent of total revenue (1)
18.78
%
 
20.23
%
 
20.54
%
 
20.47
%
 
19.16
%
 
Non-interest income to average assets
0.75
%
 
0.80
%
 
0.80
%
 
0.84
%
 
0.78
%
 
Non-interest expense to average assets
2.22
%
 
1.95
%
 
1.96
%
 
2.12
%
 
2.09
%
 
Net overhead ratio (1)
1.47
%
 
1.15
%
 
1.16
%
 
1.29
%
 
1.32
%
 
Efficiency ratio (1)(2)
55.33
%
 
48.89
%
 
49.87
%
 
52.24
%
 
51.91
%
 
Balance Sheet Ratios:
 
 
 
 
 
 
 
 
 
 
Loans to deposits (period end) (3)
93.31
%
 
93.72
%
 
94.61
%
 
96.42
%
 
93.04
%
 
Average interest-earning assets to average interest-bearing liabilities
154.27
%
 
155.71
%
 
153.16
%
 
151.10
%
 
153.64
%
 
Capital Ratios (period end):
 
 
 
 
 
 
 
 
 
 
Total risk-based capital (1)
12.59
%
 
12.49
%
 
12.41
%
 
12.42
%
 
12.56
%
 
Tier 1 risk-based capital (1)
10.83
%
 
10.73
%
 
10.64
%
 
10.66
%
 
10.76
%
 
Tier 1 leverage ratio (1)
10.33
%
 
10.28
%
 
10.43
%
 
10.56
%
 
10.50
%
 
Common equity Tier 1 (1)
9.95
%
 
9.83
%
 
9.71
%
 
9.70
%
 
9.76
%
 
Tangible common equity to tangible assets (1)(2)
9.35
%
 
9.14
%
 
9.40
%
 
9.60
%
 
9.51
%
 
Total equity to total assets
9.77
%
 
9.57
%
 
9.85
%
 
10.08
%
 
10.01
%
 
(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.

9

2000175852_privatebancorplogo3qa02.jpg


Selected Financial Data (continued)
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q17
 
4Q16
 
3Q16
 
2Q16
 
1Q16
Additional Selected Information:
 
 
 
 
 
 
 
 
 
Decrease (increase) credit valuation adjustment on capital markets derivatives (1)
$

 
$
3,112

 
$
910

 
$
(1,033
)
 
$
(1,904
)
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
Salaries and wages
$
31,886

 
$
30,974

 
$
30,923

 
$
30,335

 
$
28,963

Share-based costs
16,317

 
5,034

 
4,728

 
4,618

 
6,357

Incentive compensation and commissions
14,348

 
17,144

 
15,604

 
15,882

 
13,307

Payroll taxes, insurance and retirement costs
10,588

 
5,071

 
4,634

 
4,491

 
9,712

Total salaries and employee benefits
$
73,139

 
$
58,223

 
$
55,889

 
$
55,326

 
$
58,339

Loan and collection expense:
 
 
 
 
 
 
 
 
 
Loan origination and servicing expense
$
1,241

 
$
1,281

 
$
1,716

 
$
1,666

 
$
1,297

Loan remediation expense
727

 
1,330

 
256

 
351

 
235

Total loan and collection expense
$
1,968

 
$
2,611

 
$
1,972

 
$
2,017

 
$
1,532

Transaction related expenses
$
1,562

 
$
329

 
$
106

 
$
6,270

 
$

Assets under management and administration (AUMA):
 
 
 
 
 
 
 
 
 
Personal managed
$
2,134,372

 
$
2,046,758

 
$
2,068,772

 
$
2,017,797

 
$
1,867,572

Corporate and institutional managed
2,765,198

 
2,643,041

 
2,653,264

 
2,526,043

 
1,592,394

Total managed assets
4,899,570

 
4,689,799

 
4,722,036

 
4,543,840

 
3,459,966

Custody assets
4,894,402

 
4,975,269

 
5,326,757

 
6,145,445

 
6,161,827

Total AUMA
$
9,793,972

 
$
9,665,068

 
$
10,048,793

 
$
10,689,285

 
$
9,621,793

Basic and Diluted Earnings per Common Share
 
 
 
 
 
 
 
 
 
(Amounts in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
1Q17
 
4Q16
 
3Q16
 
2Q16
 
1Q16
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Net income
$
57,952

 
$
59,548

 
$
48,892

 
$
50,365

 
$
49,552

Net income allocated to participating stockholders (2)
(707
)
 
(475
)
 
(379
)
 
(381
)
 
(425
)
Net income allocated to common stockholders
$
57,245

 
$
59,073

 
$
48,513

 
$
49,984

 
$
49,127

Weighted-average common shares outstanding
79,516

 
79,189

 
79,007

 
78,849

 
78,550

Basic earnings per common share
$
0.72

 
$
0.75

 
$
0.61

 
$
0.63

 
$
0.63

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Diluted earnings applicable to common stockholders (3)
$
57,260

 
$
59,084

 
$
48,520

 
$
49,990

 
$
49,134

Weighted-average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
79,516

 
79,189

 
79,007

 
78,849

 
78,550

Dilutive effect of stock awards
1,784

 
1,894

 
1,666

 
1,468

 
1,306

Weighted-average diluted common shares outstanding
81,300

 
81,083

 
80,673

 
80,317

 
79,856

Diluted earnings per common share
$
0.70

 
$
0.73

 
$
0.60

 
$
0.62

 
$
0.62

(1) 
Refer to Glossary of Terms for definition.
(2) 
Participating stockholders are those that hold certain share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents. Such shares or units are considered participating securities (i.e., certain of the Company’s deferred, restricted stock and performance share units, and nonvested restricted stock awards).
(3) 
Net income allocated to common stockholders for basic and diluted earnings per share may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common stockholders and participating securities for the purposes of calculating diluted earnings per share.

10

2000175852_privatebancorplogo3qa02.jpg


Loan Portfolio Composition (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3/31/17
 
% of Total
 
12/31/16
 
% of Total
 
9/30/16
 
% of Total
 
6/30/16
 
% of Total
 
3/31/16
 
% of Total
 
Unaudited
 
 
 
Audited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
 
Unaudited
 
 
Commercial and industrial
$
7,865,161

 
50
%
 
$
7,506,977

 
50
%
 
$
7,446,754

 
51
%
 
$
7,141,069

 
51
%
 
$
6,812,596

 
51
%
Commercial - owner-occupied CRE
2,246,424

 
14
%
 
2,142,068

 
14
%
 
2,062,614

 
14
%
 
1,889,400

 
13
%
 
1,865,242

 
14
%
Total commercial
10,111,585

 
64
%
 
9,649,045

 
64
%
 
9,509,368

 
65
%
 
9,030,469

 
64
%
 
8,677,838

 
65
%
Commercial real estate
3,218,566

 
21
%
 
3,127,373

 
21
%
 
2,946,687

 
20
%
 
2,860,618

 
20
%
 
2,705,694

 
20
%
Commercial real estate - multi-family
1,059,403

 
7
%
 
993,352

 
6
%
 
883,850

 
6
%
 
787,792

 
6
%
 
764,292

 
5
%
Total commercial real estate
4,277,969

 
28
%
 
4,120,725

 
27
%
 
3,830,537

 
26
%
 
3,648,410

 
26
%
 
3,469,986

 
25
%
Construction
330,775

 
2
%
 
417,955

 
3
%
 
496,773

 
3
%
 
552,183

 
4
%
 
537,304

 
4
%
Residential real estate
618,658

 
4
%
 
581,757

 
4
%
 
525,836

 
4
%
 
497,709

 
4
%
 
477,263

 
4
%
Home equity
112,954

 
1
%
 
119,049

 
1
%
 
124,367

 
1
%
 
127,967

 
1
%
 
126,096

 
1
%
Personal
139,715

 
1
%
 
167,710

 
1
%
 
167,689

 
1
%
 
179,070

 
1
%
 
169,178

 
1
%
Total loans
$
15,591,656

 
100
%
 
$
15,056,241

 
100
%
 
$
14,654,570

 
100
%
 
$
14,035,808

 
100
%
 
$
13,457,665

 
100
%
Total new loans to new clients (2)
$
607,610

 
 
 
$
652,251

 
 
 
$
456,360

 
 
 
$
421,860

 
 
 
$
396,599

 
 
(1) 
Refer to Glossary of Terms for definition.
(2) 
Amounts are unaudited.
 
Commercial Loan Portfolio Composition by Industry Segment
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
(Classified pursuant to the North American Industrial Classification System standard industry descriptions and represents our client's primary business activity)
 
March 31, 2017
 
December 31, 2016
 
Amount
 
% of Total
 
Amount
 
% of Total
Healthcare
$
2,079,774

 
21
%
 
$
2,016,041

 
21
%
Manufacturing
1,973,573

 
19
%
 
1,843,901

 
19
%
Finance and insurance
1,848,267

 
18
%
 
1,669,453

 
17
%
Wholesale trade
967,257

 
10
%
 
860,657

 
9
%
Professional, scientific and technical services
625,507

 
6
%
 
617,264

 
6
%
Real estate, rental and leasing
599,313

 
6
%
 
583,701

 
6
%
Administrative, support, waste management and remediation
521,305

 
5
%
 
537,491

 
6
%
Architecture, engineering and construction
311,808

 
3
%
 
298,191

 
3
%
Telecommunication and publishing
265,485

 
3
%
 
250,941

 
3
%
Retail
241,004

 
2
%
 
231,739

 
2
%
All other (1)
678,292

 
7
%
 
739,666

 
8
%
Total commercial (2)
$
10,111,585

 
100
%
 
$
9,649,045

 
100
%
(1) 
All other consists of numerous smaller balances across a variety of industries with no category greater than 2% of total loans.
(2) 
Includes owner-occupied commercial real estate of $2.2 billion at March 31, 2017 and $2.1 billion at December 31, 2016.
 

11

2000175852_privatebancorplogo3qa02.jpg


Commercial Real Estate and Construction Loan Portfolio by Collateral Type
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
March 31, 2017
 
December 31, 2016
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial Real Estate
 
 
 
 
 
 
 
Multi-family
$
1,059,403

 
25
%
 
$
993,352

 
24
%
Retail
861,577

 
20
%
 
822,811

 
20
%
Office
719,125

 
17
%
 
716,775

 
17
%
Healthcare
395,321

 
9
%
 
371,961

 
9
%
Industrial/warehouse
577,544

 
13
%
 
493,257

 
12
%
Land
204,198

 
5
%
 
232,756

 
6
%
Residential 1-4 family
39,582

 
1
%
 
56,730

 
1
%
Mixed use/other
421,219

 
10
%
 
433,083

 
11
%
Total commercial real estate
$
4,277,969

 
100
%
 
$
4,120,725

 
100
%
Construction
 
 
 
 
 
 
 
Multi-family
$
64,079

 
19
%
 
$
121,983

 
29
%
Healthcare
24,067

 
7
%
 
22,027

 
5
%
Retail
44,698

 
14
%
 
61,791

 
15
%
Office
15,118

 
5
%
 
18,800

 
4
%
Condominiums
37,039

 
11
%
 
36,846

 
9
%
Industrial/warehouse
43,813

 
13
%
 
77,079

 
18
%
Residential 1-4 family
37,008

 
11
%
 
26,013

 
6
%
Mixed use/other
64,953

 
20
%
 
53,416

 
14
%
Total construction
$
330,775

 
100
%
 
$
417,955

 
100
%



12

2000175852_privatebancorplogo3qa02.jpg


Asset Quality (excluding covered assets (1))
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
1Q17
 
4Q16
 
3Q16
 
2Q16
 
1Q16
Credit Quality Key Ratios
 
 
 
 
 
 
 
 
 
Net (recoveries) charge-offs (annualized) to average loans
-0.01
 %
 
0.02
%
 
0.12
%
 
0.07
%
 
0.05
%
Nonperforming loans to total loans
0.55
 %
 
0.56
%
 
0.60
%
 
0.47
%
 
0.44
%
Nonperforming loans to total assets
0.42
 %
 
0.42
%
 
0.46
%
 
0.36
%
 
0.33
%
Nonperforming assets to total assets
0.46
 %
 
0.47
%
 
0.52
%
 
0.44
%
 
0.42
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
Total loans
1.25
 %
 
1.23
%
 
1.23
%
 
1.20
%
 
1.23
%
Nonperforming loans
229
 %
 
222
%
 
206
%
 
258
%
 
280
%
Nonperforming assets
 
 
 
 
 
 
 
 
 
Loans past due 90 days and accruing
$

 
$

 
$

 
$

 
$

Nonaccrual loans
85,039

 
83,688

 
87,372

 
65,424

 
59,070

OREO
8,888

 
10,203

 
12,035

 
14,532

 
14,806

Total nonperforming assets
$
93,927

 
$
93,891

 
$
99,407

 
$
79,956

 
$
73,876

Restructured loans accruing interest
$
87,908

 
$
66,002

 
$
64,265

 
$
43,177

 
$
28,835

Loans past due and still accruing
 
 
 
 
 
 
 
 
 
30-59 days
$
12,290

 
$
9,847

 
$
2,242

 
$
3,827

 
$
14,772

60-89 days
2,644

 
741

 
3,132

 
10,695

 
960

Total loans past due and still accruing
$
14,934

 
$
10,588

 
$
5,374

 
$
14,522

 
$
15,732

Special mention loans
$
100,660

 
$
179,611

 
$
145,204

 
$
154,691

 
$
121,239

Potential problem loans
$
198,669

 
$
123,345

 
$
133,533

 
$
98,817

 
$
136,322

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming Loans Rollforward
 
 
 
 
 
 
 
 
 
Beginning balance
$
83,688

 
$
87,372

 
$
65,424

 
$
59,070

 
$
53,749

Additions:
 
 
 
 
 
 
 
 
 
New nonaccrual loans
14,797

 
5,388

 
40,513

 
17,076

 
24,720

Reductions:
 
 
 
 
 
 
 
 
 
Return to performing status
(3,883
)
 

 
(1,161
)
 

 
(907