PrivateBancorp Inc. reported its fourth-straight quarterly profit Tuesday, but weak loan growth and declining revenue have raised questions about whether the Chicago company can maintain the momentum.
The $12.1 billion-asset company earned $5.5 million in the quarter, compared to a loss of $818,000 in the same period in 2010. The improvement was driven largely by a continued decline in problem loans.
But in a research note to investors, Daniel Arnold, an analyst Sandler O'Neill, said that while PrivateBancorp's second-quarter earnings per share of eight cents beat consensus estimates by a penny, "results were weaker than expected."
The company said that average loans decreased by 2.1% from the previous quarter, net revenue fell 3.4%, and assets declined 3.2%, to $12.1 billion.
Arnold said in his note that the decline in loan balances "reversed a three-quarter growth and makes us somewhat cautious about the local economy. [PrivateBancorp's] ability to drive growth in a difficult economic environment is an important component of the company's long-term growth prospects going forward."
Investors appear to have similar concerns. PrivateBancorp's shares fell 6.5% from Monday's closing price, to $13.00.