On Sep 12, Zacks Investment Research upgraded PrivateBancorp, Inc. (PVTB) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Trust preferred securities (TruPS) redemption following strong second-quarter results was the driving factor. On Sep 8, PrivateBancorp announced the redemption of $75.0 million of its $143.8 million issued and outstanding 10.00% TruPS at the redemption price of $25.00 per TruPS covering accumulated and unpaid distributions.
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.
Impressive net interest and non interest income along with a fall in provision for loan and covered loan losses and lower non-interest expenses drove PrivateBancorp's second-quarter 2014 results reported on Jul 17. The company reported earnings per share of 52 cents, beating the Zacks Consensus Estimate by 18.2% and marking the sixth consecutive earnings beat. Also, earnings came in higher than the prior-year quarter figure of 37 cents.
Shares of this Chicago-based business and personal financial services provider have recorded a year-to-date return of 7.8%. Further, PrivateBancorp has outpaced the Zacks Consensus Estimate in the last four quarters, with an average beat of 10.97%.
Analysts’ bullish stance on the stock was reflected in the estimate revisions over the past 60 days. For 2014, the Zacks Consensus Estimate advanced 7.9% to $1.91 per share. It moved up 4.2% to $1.99 per share for 2015.
Other Stocks to Consider
Some other stocks in the same sector worth considering include LNB Bancorp Inc. (LNBB), MidWest One Financial Group, Inc. (MOFG) and German American Bancorp Inc. (GABC). All three carry a Zacks Rank #1.
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