Building on its strong second half of 2010, PrivateBancorp Inc. in Chicago started 2011 with its third straight profitable quarter.

On Tuesday, the $12.5 billion-asset company reported a $7.5 million profit in the first quarter, compared to a loss of $24.3 million in the same quarter last year.

The results were driven largely by improved credit quality and strong gains in fee income. With loan performance improving, the company was able to cut its provision for loan losses nearly in half, to $36.7 million

The company is also making strong progress in its effort to reshape its loan portfolio and shift its emphasis toward middle-market commercial lending, according to President and Chief Executive Officer Larry D. Richman. Total commercial loans were up 18% year-over-year, he said, while commercial real estate and construction loans decreased 15%. The shift in helped boost its net interest margin by 13 basis points, to 3.46%, and is a large reason why treasury management income was up 32% year-over-year, to nearly $4.8 million.

Shares of PrivateBancorp were up 3% midday Tuesday, to $14.78.

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