Shares of PrivateBancorp Inc. are down 3.9 percent Thursday morning after a BMO Capital Markets report downgraded it to “market perform” from “outperform.”
The “market perform” designation means that it’s now forecast to perform about in line with the market.
Credit-quality problems at the Chicago-based bank don’t seem to be getting worse and the bank will sustain “modest profitability” in the near term, wrote BMO analyst Lana Chan. But she doesn’t expect PrivateBancorp, which grew rapidly in 2008 after dozens of former LaSalle Bank lenders joined iy, to return to “fully normalized” profits until 2013 at the earliest given Chicago’s still-stressed real estate market.
Also, shareholders face a risk of having their stakes diluted if PrivateBancorp raises capital to repay its proceeds from the Treasury’s Troubled Asset Relief Program, she said.
But Chan noted that PrivateBancorp has significantly outperformed the bank group and broader market year to date, up 67 percent compared with a 13 percent advance in the Standard & Poor’s 500 and a 19 percent rise in the S&P Bank Index.
PrivateBancorp said it doesn’t comment on analyst reports or market activity.
