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Strong Buy 
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Strong Sell 
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Average rating: 5.00 (Strong Buy) 1.00 - 5.00 (Strong Sell) Total: 1 members

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Dec. 7 2003, 10:35 AM ET
Nearest price: 21.85 (12/08/03)
by elevenwall (profile)
(all of elevenwall's ratings)
Strong Sell
I think PVTB is overvalued. At $42, I place a strong sell and/or sell short rating on the stock. The recent secondary offering was accretive to tangible book value (it is now trading at 300% of tangible book value). However, it will be dilutive to earnings. In the most recent quarter, 50% of PVTB's pre-tax income was a result of the 7% annualized dividend yield on its FHLB of Chicago stock. PVTB owns just over $206 million of FHLB stock on which the FHLB of Chicago increased in the most recent quarter the dividend. I think the FHLB of Chicago is a risky investment...that is another story, but they are trying to copy the Fannie model. PVTB will probably have a decent Q4 earnings number but into next year, I don't see much potential for earnings growth. They claim to be a "private bank", but only about 8% of revenue is coming from the asset management business. Additionally, PVTB only gets about 0.50% average fee on the assets they manage (they only manage aboiut about $1.3 billion, of which $543 million was acquired via the buyout of Lodestar last year). Think this one through carefully before buying and/or holding...they have benefited significantly from all of the commerical real estate loans they have originated in the last year as interest rates were declining. Now that we are in a stable/slightly higher interest rate environoment, they aren't just going to be able to go out and grab loan production (remember, they have been getting origination fees while their loan portfolio has nearly doubled in the last nine quarters). I would cover this one around $36 per share.

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