PRIVATEBANCORP INC, S-1/A, 1999-06-15

PRIVATEBANCORP INC
S-1/A, 1999-06-15
STATE COMMERCIAL BANKS

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<PAGE>

As filed with the Securities and Exchange Commission on June 15, 1999.

Registration No. 333-77147
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------

AMENDMENT

NO. 1

to
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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PRIVATEBANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)

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6022
(Primary Standard Industrial Classification Code Number)

Delaware 36-3681151
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)

Ten North Dearborn Street, Chicago, Illinois 60602, (312) 683-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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Donald A. Roubitchek
Secretary/Treasurer and Chief Financial Officer
Ten North Dearborn Street, Chicago, Illinois 60602
(312) 683-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies To:
Jennifer R. Evans, Esq. Craig R. Culbertson, Esq.
Vedder, Price, Kaufman & Kammholz Alexander Lourie, Esq.
222 North LaSalle Street Jenner & Block
Chicago, Illinois 60601 One IBM Plaza, 40th Floor
(312) 609-7500 Chicago, Illinois 60611
(312) 222-9350

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effectiveness of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

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- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to completion; dated June 15, 1999.

PROSPECTUS

900,000 Shares

Common Stock

This is the initial public offering of our common stock. We anticipate that
the initial public offering price will be between $16.00 and $18.00 per share.
We have applied to list the common stock on the Nasdaq National Market under
the symbol "PVTB."

Investing in the common stock involves risks. See "Risk Factors" beginning on
page 12.

<TABLE>
<CAPTION>
Per Share Total
--------- --------
<S> <C> <C>
Public Offering Price............................ $ $
Underwriting Discount............................ $ $
Proceeds to PrivateBancorp, Inc.................. $ $
</TABLE>

We have granted the underwriters a 30-day option to purchase up to 135,000
additional shares of our common stock on the same terms and conditions set
forth above to cover over-allotments, if any.

The shares of common stock that are being offered are not savings accounts or
deposits or other obligations of a bank and are not insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation or any governmental agency.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

The underwriters expect to deliver the shares to purchasers on , 1999.

EVEREN Securities, Inc. Stifel, Nicolaus & Company
Incorporated

The date of this prospectus is , 1999
<PAGE>

PrivateBancorp, Inc.

[Map of greater Chicago metropolitan area depicting locations of Company's
banking facilities and main bank office.] and [graphic of services offered]

2
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 11
Special Note Regarding Forward-Looking Statements......................... 17
Pending Acquisition....................................................... 18
Use of Proceeds........................................................... 19
Dividends; No Prior Trading Market........................................ 20
Capitalization............................................................ 21
Dilution.................................................................. 22
Business.................................................................. 23
Selected Consolidated Financial Data...................................... 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 38
Management................................................................ 56
Certain Transactions...................................................... 65
Principal Stockholders.................................................... 66
Supervision and Regulation................................................ 67
Description of Capital Stock.............................................. 74
Shares Eligible for Future Sale........................................... 78
Underwriting.............................................................. 81
Legal Matters............................................................. 83
Experts................................................................... 83
Where You Can Get More Information........................................ 83
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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Our executive offices are located at The PrivateBank and Trust Company, Ten
North Dearborn Street, Chicago, Illinois 60602. Our telephone number is (312)
683-7100.

----------------

You should rely only on the information contained in this document. We have
not authorized anyone to provide you with information that is different. The
information contained in this document may have changed since the date of this
prospectus. This prospectus is not an offer to sell and it is not soliciting an
offer to buy the common stock in any state where offers or sales are not
permitted.

----------------

Until , 1999 (25 days after the date of this prospectus), all dealers
that buy, sell or trade these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligations to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

3
<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary may not contain all the information that may be important to you.
You should read the entire prospectus, including the financial statements and
related notes, before making a decision to invest in the common stock. Unless
we indicate otherwise, all share, per share and financial information in this
prospectus: (a) gives effect to the two-for-one stock split of our common stock
which will be effective immediately prior to the commencement of this offering;
and (b) assumes no exercise of the underwriters' option to purchase up to an
additional 135,000 shares of common stock from us.

PrivateBancorp

PrivateBancorp is a Delaware corporation headquartered in Chicago, Illinois.
We are a bank holding company with one bank subsidiary, The PrivateBank and
Trust Company, which we formed as a de novo, or start-up, bank in 1991.
PrivateBank provides private banking and trust services primarily to
professionals, entrepreneurial individuals and their business interests. Our
managing directors seek to build strong relationships with clients by
emphasizing a consistently superior level of personalized service. We focus on
the personal financial services needs of our clients as well as the banking
needs of their various business and investment ventures. Clients are teamed
with dedicated managing directors so they are dealing directly with our
decision-makers. In this way, we are able to tailor our loan products and other
services to be highly responsive to the individual situation of each client.

Since year-end 1995, we have grown our asset base at a compound annual rate
of 27.3% to $431.1 million as of March 31, 1999. During the same period, loans
have grown at a compound annual rate of 31.6% to $307.8 million, deposits at a
compound annual rate of 27.0% to $384.5 million and trust assets under
administration at a compound annual rate of 40.2% to $637.4 million.

[CHART APPEARS HERE]

4
<PAGE>

Our Market

We have targeted affluent individuals with annual incomes in excess of
$150,000, professionals, owners of closely-held businesses and commercial real
estate investors because we believe that they have significant unmet demand for
personalized services. Demographic data compiled by National Decision Systems,
San Diego, California, indicates that there is significant growth potential in
the affluent segment of the population. In the metropolitan Chicago area, the
number of households with annual incomes greater than $150,000 was estimated at
190,042 in 1998, compared to 63,861 households in 1990. This equates to a
compound annual growth rate of 14.6%, versus a growth rate for the total number
of households in the metropolitan Chicago area of 0.6%. By 2003, the number of
these affluent households in the Chicagoland area is expected to increase to
358,000, representing an annual growth rate of 13.5%, while the aggregate
number of households is expected to increase at an annual growth rate of only
0.3%.

[CHART APPEARS HERE]

- --------

(1) Based on information from the 1990 U.S. census.

(2) Estimated by National Decision Systems based on, among other things, (a) a
time series of estimates made by the U.S. Census Bureau regarding six
counties in the Chicago metropolitan area; and (b) data provided by the
Department of Planning of the City of Chicago.

(3) Generated by National Decision Systems through the application of an
econometric model of the Chicago metropolitan area to the 1998 estimate.
The econometric forecasting model considers the impact of various economic
factors such as employment, inflation, interest rates and housing starts on
future population growth.

5
<PAGE>

The PrivateBank and Trust Approach

We believe that we have developed a unique approach to private banking
designed to provide our clients with unparalleled service. We emphasize
personalized client relationships and custom-tailored financial services,
complemented by the convenience of technology. The key aspects of our private
banking approach are:

. Personal Relationships. Each of our clients is matched with a dedicated
team of individuals, headed by a managing director who becomes the
client's central point of contact with PrivateBank. Through these
dedicated teams, we are able to build strong, ongoing, personal
relationships with our clients.

. Affluent Target Client. We offer our services to those members of the
affluent segment of the population who are focused on building and
preserving wealth. Our clients include affluent professionals,
entrepreneurial individuals and their business interests.

. Customized Financial Services. We provide our clients with a wide
variety of financial services beyond traditional banking products and
are constantly working with our clients to identify their particular
needs and to develop and shape our services to meet those needs.

. Streamlined Decision-Making Process. Unlike many larger banks, we have
not instituted a lengthy chain of command. Our clients deal directly
with their dedicated managing directors, whose broad decision-making
authority allows them to respond quickly and efficiently.

. Enhanced Personal Service through Technology. While we encourage our
clients to contact us directly, we also utilize technology to complement
and enhance our service. Through PrivateBank Access, an internet banking
service, we offer clients the convenience of accessing our services from
remote locations at any time.

. Extensive Financial Network. To better compete with other financial
service providers, we rely on a network of professionals in the
financial and investment communities with whom we have developed
relationships over the years. This network allows us to deliver to our
clients a broad array of diverse, high-quality services, including
investment management, insurance and brokerage.

Strategy for Growth

Our growth strategy entails five key components:

. Increasing the Reach of Our Existing Offices. We hope to expand the
market presence of our existing offices, especially our Oak Brook,
Illinois and Wilmette, Illinois branches. We believe that there is a
growing need for private banking services in these regions which is
largely unmet, and we hope to capitalize on the experience and
reputations of our managing directors in meeting this need.

. Opening Additional Offices in the Chicago Metropolitan Area. The success
of our Oak Brook and Wilmette offices has confirmed a significant demand
by our target clients for specialized private banking services in the
Chicago metropolitan area. We have recently undertaken to establish a
new office in St. Charles, Illinois to meet this demand, and we will
consider opening additional offices as we identify favorable locations
and other qualified senior executives. See "Pending Acquisition."

. Expanding into New Markets. We believe that the demand for our private
banking services is not unique to Chicago. As we identify Midwestern
markets that present similar opportunities for growth and development,
we intend to pursue selective geographic expansion through acquisitions
of existing institutions or by establishing new banking offices.

. Expanding into New Product Lines. We intend to identify additional
financial services not currently offered by PrivateBank in order to
increase our franchise value by diversifying our fee income,
strengthening our client relationships and broadening our product line.
We may expand our product line by acquisition. We will focus on
companies that emphasize quality service and the value of relationships
and complement our products and client base.

6
<PAGE>

Our Experienced Management Team

PrivateBancorp, Inc. was founded in November 1989 by Ralph B. Mandell and
William R. Langley. Together, they had previously headed a $1.2 billion
publicly traded suburban Chicago bank holding company which they successfully
merged into First Chicago Corporation in 1987. As founders of our company, they
assembled a team of senior bankers with diverse experience and varied
backgrounds. Mr. Mandell, with 34 years in banking, has been instrumental in
the development of many of our client relationships, either personally or by
providing his assistance. As chief executive officer, he sets the direction of
our company and instills our sense of corporate culture. Mr. Langley retired
from active management in 1995, but remains on our Board of Directors.

Our current management team consists of ten managing directors, including
Mr. Mandell, and six associate managing directors. Our managing directors are
senior financial professionals with an average of 27 years of banking and
financial experience. Together with our Board of Directors, they currently own
an aggregate of 1,058,740 shares of our common stock, which represents
approximately 30.7% of the shares currently outstanding. In addition to Mr.
Mandell, two other managing directors, Caren L. Reed and Donald A. Roubitchek
who have both been involved with the company since 1990, also serve on our
Board of Directors. Mr. Reed, our vice chairman and chief credit officer, has
spent 43 years in banking and has extensive experience in relationship
management and credit administration. Our quality loan portfolio and credit
culture was developed under his tutelage. Mr. Roubitchek, our chief financial
officer, also serves as our chief administrative and operating officer. Mr.
Roubitchek, with 27 years of experience, has been responsible for managing our
rapid growth.

Of our other three executive officers, Gary S. Collins, a managing director
since 1991, has over 24 years of experience and has been responsible for a
considerable number of client relationships through his expertise in real
estate lending. M. Gail Fitzgerald, a managing director since 1996, has 20
years of trust experience and is our senior trust officer responsible for
managing our trust area. Hugh H. McLean, a managing director since 1996, has
over 19 years of experience. He serves as head of our credit marketing group
and manages our Oak Brook office.

7
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock offered by PrivateBancorp........ 900,000 shares(1)

Common stock to be outstanding after the 4,351,824 shares(2)
offering.....................................

Price to Public............................... $ per share

Use of Proceeds............................... We intend to use the net proceeds from the sale of
shares of common stock offered hereby for general
corporate purposes to support our anticipated future
growth. This may include:

. funding internal growth at the current
locations of our banking subsidiary;

. creating new offices in the Chicago
metropolitan area;

. expanding our presence into new markets
located in the Midwest; and/or

. acquiring businesses that are complementary
to ours.

Proposed Nasdaq National MarketSM............. PVTB
</TABLE>
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(1) We have granted the underwriters an option, exercisable within 30 days
after the date of this prospectus, to purchase up to an additional 135,000
shares of our common stock at the initial public offering price, solely to
cover over-allotments, if any. See "Underwriting."

(2) This number does not include shares reserved for issuance under our stock-
based compensation program and upon the exercise of various other
outstanding stock options. Pursuant to the terms of these programs, we are
permitted, and in some cases obligated, to issue shares of common stock in
addition to the common stock to be outstanding after this offering. If we
issue these shares, the percentage of the common stock you own may be
diluted. The following is a summary of additional shares of common stock
that we have approved for issuance:

. 476,607 shares reserved for issuance under a stock incentive plan
maintained for the benefit of eligible officers and employees. This
number includes (a) 50,119 shares available for future awards, and (b)
426,488 shares issuable upon exercise of currently outstanding options
at a weighted average exercise price of $10.37 per share previously
granted under the plan.

. 206,320 shares reserved for issuance under other outstanding options to
purchase common stock that were previously granted to directors and
officers. The weighted average exercise price of these options is $10.51
per share.

8
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes certain consolidated financial information of
PrivateBancorp. You should read this table in conjunction with our consolidated
financial statements and related notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
----------------- ---------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Statement of
Income Data:
Interest income:
Loans, including fees.. $ 5,636 $ 4,624 $ 19,619 $ 16,729 $ 12,152 $ 10,053 $ 6,418
Federal funds sold and
interest-bearing
deposits.............. 48 498 2,181 875 1,392 1,149 358
Securities............. 1,570 727 3,492 2,519 2,396 1,700 1,265
-------- -------- -------- -------- -------- -------- --------
Total interest
income.............. 7,254 5,849 25,292 20,123 15,940 12,902 8,041
-------- -------- -------- -------- -------- -------- --------
Interest expense:
Interest-bearing
demand deposits....... 142 121 487 377 305 276 210
Savings and money
market deposit
accounts.............. 1,800 1,629 6,651 5,880 4,613 3,484 2,139
Other time deposits.... 1,752 1,346 6,155 3,821 2,973 2,620 782
Funds borrowed......... 144 -- 19 3 143 50 62
-------- -------- -------- -------- -------- -------- --------
Total interest
expense............. 3,838 3,096 13,312 10,081 8,034 6,430 3,193
-------- -------- -------- -------- -------- -------- --------
Net interest income.. 3,416 2,753 11,980 10,042 7,906 6,472 4,848
Provision for loan
losses................. 285 91 362 603 524 930 305
-------- -------- -------- -------- -------- -------- --------
Net interest income
after provision for
loan losses......... 3,131 2,662 11,618 9,439 7,382 5,542 4,543
-------- -------- -------- -------- -------- -------- --------
Non-interest income:
Banking and trust
services.............. 442 273 1,281 1,210 911 674 414
Securities gains....... -- -- 40 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total non-interest
income.............. 442 273 1,321 1,210 911 674 414
-------- -------- -------- -------- -------- -------- --------
Non-interest expense:
Salaries and employee
benefits.............. 1,115 1,102 4,077 3,902 3,411 2,749 2,054
Occupancy.............. 352 334 1,379 1,274 990 946 745
Data processing........ 131 120 508 396 334 282 262
Marketing.............. 153 139 567 500 424 296 272
Amortization of
organization costs.... -- -- -- -- 23 280 280
Professional fees...... 178 94 561 448 326 284 253
Insurance.............. 41 30 134 115 82 238 342
Other expense.......... 285 181 864 627 508 434 321
-------- -------- -------- -------- -------- -------- --------
Total non-interest
expense............. 2,255 2,000 8,090 7,262 6,098 5,509 4,529
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes............... 1,318 935 4,849 3,387 2,195 707 428
Income tax provision... 291 365 1,839 1,242 762 (403) 3
-------- -------- -------- -------- -------- -------- --------
Net income........... $ 1,027 $ 570 $ 3,010 $ 2,145 $ 1,433 $ 1,110 $ 425
======== ======== ======== ======== ======== ======== ========
Per Share Data:
Basic earnings......... $ 0.30 $ 0.18 $ 0.91 $ 0.69 $ 0.49 $ 0.39 $ 0.17
Diluted earnings....... 0.28 0.17 0.86 0.65 0.47 0.38 0.16
Dividends.............. 0.03 0.02 0.08 0.07 0.07 0.03 --
Book value (at end of
period)............... 8.71 7.86 8.53 7.67 6.84 6.47 6.13

Selected Financial
Condition Data
(at end of period):
Total securities(1)..... $105,136 $ 48,322 $116,646 $ 65,336 $ 44,703 $ 38,368 $ 24,669
Total loans............. 307,766 223,746 281,965 218,495 171,343 126,069 98,380
Total assets............ 431,055 331,924 416,308 311,872 246,734 196,917 141,826
Total deposits.......... 384,454 304,660 364,994 285,773 222,571 176,868 122,925
Funds borrowed.......... 10,000 -- 20,000 -- 3,000 700 1,000
Total stockholders'
equity................. 30,054 25,400 29,274 24,688 20,222 18,445 17,471

Trust assets under
administration......... $637,422 $524,019 $611,650 $469,646 $328,662 $212,456 $168,872
</TABLE>
- --------

(1) For all periods after 1994, the entire securities portfolio was classified
"Available for Sale." For 1994, the entire securities portfolio was
classified "Held to Maturity."

9
<PAGE>

<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
-------------- ---------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios
and Other Data(1):
Performance Ratios:
Net interest margin(2)..... 3.57% 3.65% 3.61% 4.01% 3.73% 3.95% 4.09%
Net interest spread(3)..... 3.02 2.96 2.98 3.31 3.03 3.16 3.42
Non-interest income to
average assets............ 0.42 0.34 0.37 0.45 0.42 0.40 0.35
Non-interest expense to
average assets............ 2.13 2.49 2.29 2.71 2.79 3.31 3.79
Net overhead ratio(4)...... 1.71 2.15 1.91 2.26 2.38 2.90 3.44
Efficiency ratio(5)........ 58.45 67.65 60.82 64.53 69.17 77.09 86.07
Return on average
assets(6)................. 0.97 0.71 0.85 0.80 0.66 0.67 0.36
Return on average
equity(7)................. 13.84 9.11 11.27 9.49 7.38 6.22 2.94
Dividend payout ratio...... 8.36 10.63 8.74 10.13 12.88 8.03 --

Asset Quality Ratios:
Non-performing loans to
total loans............... 0.12 0.32 0.36 0.24 0.65 1.90 0.15
Allowance for possible loan
losses to:
total loans............... 1.20 1.40 1.21 1.40 1.43 1.55 1.04
non-performing loans...... 1,025 440 336 578 220 82 711
Net charge-offs to average
total loans............... -- -- -- -- 0.02 -- 0.01
Non-performing assets to
total assets.............. 0.08 0.21 0.24 0.17 0.45 1.22 0.10

Balance Sheet Ratios:
Loans to deposits.......... 80.1 73.4 77.3 76.5 77.0 71.3 80.0
Average interest-earning
assets to
average interest-bearing
liabilities............... 114.2 117.0 116.4 117.7 118.6 120.7 123.8

Capital Ratios:
Total equity to total
assets.................... 6.97 7.65 7.03 7.92 8.20 9.37 12.32
Total risk-based capital
ratio..................... 11.21 11.47 11.53 11.75 12.21 14.56 19.58
Tier 1 risk-based capital
ratio..................... 10.05 10.22 10.40 10.50 10.96 13.31 18.49
Leverage ratio............. 7.53 7.87 7.88 8.70 8.71 9.76 13.03
</TABLE>
- --------
(1) Certain financial ratios for interim periods have been annualized.
(2) Net interest income divided by average interest-earning assets.
(3) Yield on average interest-earning assets less rate on average interest-
bearing liabilities.
(4) Non-interest expense less non-interest income divided by average total
assets.
(5) Non-interest expense divided by the sum of net interest income plus non-
interest income.
(6) Net income divided by average total assets.
(7) Net income divided by average common equity.

10
<PAGE>

RISK FACTORS

Investing in our common stock involves risk. You should carefully consider
the risks and uncertainties described below and elsewhere in this prospectus
before deciding to invest in our common stock. If any of these risks or
uncertainties actually occur, our business could be adversely affected. In that
event, the trading price of our common stock could decline and you could lose
all or a part of your investment. Additional risks not currently known to us,
or which are common to most initial public offerings, or which we currently
consider immaterial, may also hurt our operations. This prospectus also
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the forward-
looking statements as a result of certain factors, including those described
below and elsewhere throughout the prospectus.

We depend on key personnel.

We are a relatively young organization and are relationship-driven. Our
growth and development to date have depended in large part on the efforts of
our ten managing directors, who have primary contact with our clients and are
extremely important in maintaining personalized relationships with our client
base, the key aspect of our business strategy and in increasing our market
presence. The unexpected loss of services of one or more of these key employees
could have a material adverse effect on our operations.

We have entered into employment contracts with Ralph B. Mandell, our
Chairman, President and Chief Executive Officer, as well as a co-founder of our
company, Donald A. Roubitchek, our Secretary/Treasurer and Chief Financial
Officer and two of our managing directors. These agreements are effective
beginning July 1, 1999. We are dependent on the continued services of Messrs.
Mandell and Roubitchek in their roles. We have not entered into employment
agreements with any of our other managing directors, nor have we entered into
any key man life insurance policies. See "Management."

One of our executive officers, Vice Chairman Caren L. Reed, in addition to
his client responsibilities, serves as our chief credit officer. Mr. Reed has
indicated that he intends to retire from active management in December 1999.
Mr. Reed has agreed to continue to serve as our chief credit officer until we
can name a successor so he can assist in the transition process. Our strong
credit quality experience to date could be adversely impacted by Mr. Reed's
retirement.

We may not be able to implement aspects of our growth strategies.

A key component of our growth strategy involves the expansion of our
business and operations, possibly through the addition of new product lines and
the acquisition or establishment of new offices. Implementing this aspect of
our growth strategy depends in part on our ability to successfully identify
acquisition opportunities and strategic partners that will complement our
private banking approach and to successfully integrate their operations with
ours. To open new offices such as the pending St. Charles branch successfully,
we must be able to correctly identify profitable or growing markets, as well as
attract the necessary relationships to make these new facilities cost-
effective. We cannot be sure that we will be able to identify suitable
opportunities for further expansion, or that if we do, that we will be able to
successfully integrate these new operations into our business. If we are unable
to effectively implement our growth strategies, our business may be adversely
affected.

Since our business is concentrated in the Chicago metropolitan area, a downturn
in the Chicago economy may adversely affect our business.

Currently, PrivateBank's lending and deposit gathering activities are
concentrated primarily in the greater Chicago metropolitan area. Our success
depends on the general economic condition of Chicago and its surrounding areas.
Although currently the economy in these areas is favorable, we do not know
whether such conditions will continue. Adverse changes in the economy could
reduce our growth rate, impair our ability to collect loans, and generally
affect our financial condition and results of operations.

11
<PAGE>

Our future success is dependent on our ability to compete effectively in the
highly competitive banking industry.

We face substantial competition in all phases of our operations from a
variety of different competitors. Our future growth and success will depend on
our ability to compete effectively in this highly competitive environment. To
date, we have grown our business successfully by focusing on our market niche
and emphasizing the high level of service and responsiveness desired by our
clients. While it is our intention to continue to operate in our targeted
niche, we compete for loans, deposits and other financial services in our
geographic market with other commercial banks, thrifts, credit unions and
brokerage houses operating in the greater Chicago area. Many of our competitors
offer services which we do not, and many have substantially greater resources,
name recognition and market presence that benefit them in attracting business.
In addition, larger competitors may be able to price loans and deposits more
aggressively than we do. Some of the financial institutions and financial
services organizations with which we compete are not subject to the same degree
of regulation as is imposed on bank holding companies and federally insured,
state-chartered banks and national banks. As a result, these nonbank
competitors have advantages over us in providing certain services. See
"Business--Competition."

Our business may be adversely affected by the highly regulated environment in
which we operate.

We are subject to extensive federal and state legislation, regulation,
examination and supervision. This regulation and supervision is primarily
intended to protect our clients and their deposits, and not our stockholders.
Recently enacted, proposed and future legislation and regulations have had,
will continue to have, or may have a material adverse effect on our business
and operations. Our success depends on our continued ability to maintain
compliance with these regulations, including those pertaining to the Community
Reinvestment Act. Some of these regulations may increase our costs and thus
place other financial institutions in stronger, more favorable competitive
positions. We cannot predict what restrictions may be imposed upon us with
future legislation. See "Supervision and Regulation."

We may be adversely affected by interest rate changes.

Our operating results are largely dependent on our net interest income. When
interest rates are rising, the interest income we earn on loans and interest-
bearing investments may not increase as rapidly as the interest expense paid on
our liabilities. As a result, our earnings may be adversely affected when the
cost of our liabilities increases faster than the income we earn on our assets.
We measure the impact of interest rate changes on our income statement through
the use of gap analysis. We generally tend to operate within guidelines set by
our asset/liability policy for maximum interest rate risk exposure, and attempt
to maximize our returns within an acceptable degree of risk. Our policy calls
for maintaining a gap position at the one year horizon of between 0.70 and
1.30. Given the current interest rate environment in which we operate and
available business opportunities, however, we have recently been operating with
a gap position at the low end of our policy limits. At March 31, 1999, our gap
position was 0.697, below our policy limit. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations--Asset/Liability
Management Policy."

We may be adversely affected by government monetary policy.

The banking industry is affected by the monetary policies of the Federal
Reserve System, which regulates the national money supply in order to mitigate
recessionary and inflationary pressures. In setting its policy, the Federal
Reserve System may utilize techniques such as the following:

. engaging in open market transactions in United States government
securities;

. setting the discount rate on member bank borrowings; and

. determining reserve requirements.

These techniques may have an adverse effect on our deposit levels, net interest
margin, loan demand or our business and operations. See "Supervision and
Regulation."

12
<PAGE>

Our allowance for loan losses may prove to be insufficient to absorb potential
losses in our loan portfolio.

Lending money is a substantial part of our business. However, every loan we
make carries a certain risk of non-payment. This risk is affected by, among
other things:

. the credit risks of a particular borrower;

. changes in economic and industry conditions;

. the duration of the loan; and

. in the case of a collateralized loan, the changes and uncertainties as
to the future value of the collateral.

We maintain an allowance for loan losses which we believe is appropriate to
provide for any potential losses in our loan portfolio. The amount of this
allowance is determined by management through a periodic review and
consideration of several factors, including:

. an ongoing review of the quality, size and diversity of our loan
portfolio;

. evaluation of non-performing loans;

. historical loan loss experience; and

. the amount and quality of collateral, including guarantees, securing the
loans.

Although we believe our loan loss allowance is adequate to absorb probable
losses in our loan portfolio, we cannot predict such losses, and there can be
no assurance that our allowance will be adequate. Excess loan losses could have
a material adverse effect on our financial condition and results of operations.

Regulatory restrictions on dividend payments from our subsidiary may affect our
ability to pay dividends to our stockholders.

We have paid dividends to our stockholders on a regular basis. Although we
intend to continue to pay dividends, our ability to do so may be affected by
many factors. While in the past we have had available cash at the holding
company level to fund dividend payments, we anticipate that in the future we
will rely on income earned by PrivateBank as the primary source for dividend
payments. PrivateBank is subject to certain restrictions on the amount of
dividends it may pay to us without regulatory approval. See "Dividends" and
"Supervision and Regulation--Bank Regulation--Dividends."

Our computer systems could experience a security breach.

As a service to our clients, we offer PrivateBank Access, our internet PC
banking product. Use of this service involves the transmission of confidential
information over public networks. We cannot be sure that advances in computer
capabilities, new discoveries in the field of cryptography or other
developments will not result in a compromise or breach in the commercially
available encryption and authentication technology that we use to protect our
clients' transaction data. If we were to experience such a breach or
compromise, we could suffer losses and our operations could be adversely
affected.

We depend on third parties for our data processing needs; and we are in the
process of converting to a new provider for our loan and deposit processing
requirements.

We rely on outside organizations to handle virtually all of the data
processing aspects of our business. If these outside organizations experience
any type of computer or personnel failure and are unable to properly input or
process our information, our operations may be adversely affected. Situations
which might impair the ability of our outside data processors to meet our needs
include:

. computer system failure;

13
<PAGE>

. loss of the personnel to handle the requirements of all of its
customers;

. loss, misapplication or corruption of our data; and

. lack of preparation for the "year 2000 issue."

If any of these outside organizations cease doing business or are unwilling to
renew our contract, we may be adversely affected. In addition, we are currently
in the process of transferring our loan and deposit processing requirements to
a new third party provider. While we anticipate completing this transition
during the third quarter of 1999, we may experience some delays in this process
which could have an adverse impact on our operations.

We rely on the services of outside investment managers.

In our trust and asset management business, which currently is the source of
substantially all of our fee income, we do not provide investment management
services directly through our own personnel. Rather, we rely on selected
outside investment managers to provide investment advice and asset management
services to our clients. We cannot be sure that we will be able to maintain
these arrangements on favorable terms. Also, many of the investment managers
with whom we work are affiliated with our competitors in the financial services
field. We cannot be sure that our investment managers will continue to work
with us in these arrangements. The loss of any of these outside investment
managers may impact our ability to provide our clients with quality service or
certain types of portfolio management without incurring the cost of replacing
them.

Our business may be negatively impacted by the year 2000 issue.

The "year 2000 issue", a critical issue in the banking industry and the
economy as a whole, has emerged because many existing application software
programs and systems use only the last two digits in referring to a year.
Therefore, these computer programs do not properly recognize a year beginning
with "20" instead of the familiar "19." If not corrected, many computer
applications and other technology-based systems could fail or create erroneous
results. The effects of this problem will vary from system to system, and the
extent of the potential impact of the year 2000 problem is not yet known. The
year 2000 problem may adversely affect a bank's operations. We could experience
interruptions in PrivateBank's business and suffer significant losses if we, or
a supplier or vendor with whom PrivateBank contracts, are unable to achieve
year 2000 readiness before January 1, 2000. We are in the process of working
with our third party service providers and software vendors to assure that both
our holding company and PrivateBank are prepared for the year 2000. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Our Information Systems and the Year 2000."

A trading market for our common stock may not develop, and may be affected by a
significant number of shares which will become eligible for public sale after
the offering.

Our common stock has never been publicly traded, so we cannot predict the
extent to which a trading market will develop. In addition, the market price of
our common stock could drop as a result of sales of a large number of shares of
common stock after this offering. Your ability to resell you shares at or above
the initial public offering price may be adversely affected by these factors.

Immediately after this offering, assuming no prior exercise of outstanding
options, there will be 4,351,824 shares of our common stock outstanding. Unless
held by our affiliates, who are subject to certain trading restrictions under
the securities laws:

. 2,770,550 shares, or 63.6% of the shares outstanding, will immediately
be freely tradable in the public market, including all 900,000 shares
sold in this offering; and

. 81,900 shares, or 1.9% of the total outstanding, will become available
for sale beginning in September 1999.

14
<PAGE>

Our directors and executive officers, who hold an aggregate of 1,005,112
shares, and certain of our stockholders, who hold an aggregate of 472,662
shares, representing in aggregate 33.9% of the total number of shares that will
be outstanding after the offering, have agreed not to offer, sell or contract
to sell any of their shares for a period of 180 days after the date of this
prospectus without the prior written consent of EVEREN Securities, Inc. Upon
expiration of this lock-up period, however, these shares may become available
for resale in the public market. See "Shares Eligible for Future Sale."

Pursuant to the terms of our Stock Incentive Plan, we have awarded an
aggregate of 21,600 shares of restricted stock to certain of our employees who
are not executive officers. Although our employees have full voting rights with
regard to these shares and may receive any dividends we declare, they may not
transfer the shares until they are fully vested. Each restricted stock award
will vest in its entirety on the fifth anniversary of the date of grant and is
subject to forfeiture until vesting. The shares vest on various dates between
2001 and 2004.

A substantial number of shares of our common stock issued pursuant to our
Stock Incentive Plan will also become available for resale in the public market
at prescribed times. In addition, we intend to register under the Securities
Act the shares of common stock reserved for issuance under our stock-based
programs.

Certain provisions of Delaware law and our charter and by-laws may discourage
or prevent a takeover of our company and reduce any takeover premium.

Our Restated Certificate of Incorporation, our By-laws and Delaware law all
contain provisions that could discourage potential acquisition proposals, or
delay or prevent a change in the control of the Company. Provisions in our
charter and By-laws designed to discourage or prevent a takeover include:

. staggered terms for our directors, which makes it difficult to replace
the entire board;

. the ability of the Board of Directors to issue shares of preferred
stock, which could dilute the voting power and equity interest of
holders of the common stock; and

. the requirement that holders of 66 2/3% of our outstanding common stock
must approve any change of these anti-takeover provisions.

Stockholders sometimes realize a significant premium in their stock price
when an offer is made to purchase a company. Because we have adopted these
provisions, such offers will likely be discouraged, and our stockholders may
lose the benefit of any potential premium. There are also state and federal
laws which regulate direct and indirect takeover attempts of financial
institutions.

Our directors and officers may have significant influence on how our common
stock is voted.

Our directors and executive officers will beneficially own approximately
28.9% of the outstanding shares of our common stock at the closing of this
offering, assuming none of them purchases shares in the offering. If our
directors and executive officers vote together, they could influence the
outcome of certain corporate actions requiring stockholder approval, including
the election of directors and the approval or non-approval of significant
corporate transactions, such as the merger or sale of all or substantially all
of our assets.

You will incur immediate and substantial dilution in your shares.

Investors in this offering will experience an immediate and substantial
dilution in the book value of the common stock. If you purchase shares of our
common stock, and we sell 900,000 shares at an assumed offering price of
$17.00, which is the midpoint of the price range on the cover page of this
prospectus, after giving effect to the issuance of 97,059 shares in the pending
acquisition, the pro forma net tangible book value of your shares at March 31,
1999 will be $9.87. This is $7.13 less than your purchase price.

15
<PAGE>

Management will have substantial discretion over the use of the proceeds of
this offering.

We have not designated specific uses for all of the net proceeds of this
offering. We intend to immediately use $8.0 million, or 59%, of the net
proceeds to increase the regulatory capital of our PrivateBank subsidiary to
support the growth of our existing banking operations and the planned
establishment of a new office in St. Charles, Illinois. The unallocated portion
of the proceeds will be available to fund future internal growth or expansion
of our business through establishment of new banking locations and entering
into strategic acquisitions and affiliations, to the extent we identify these
opportunities. Accordingly, you must rely upon the judgment of our management
who will have significant flexibility with respect to applying the net
proceeds. At present, other than the pending acquisition of Towne Square
Financial Corporation, we have no plans, agreements or understandings relating
to any specific acquisitions or alliances. Although part of our business
strategy is to pursue acquisitions and alliances that will broaden our product
offerings and add new markets, we cannot be sure that we will find strategic
acquisition opportunities at favorable prices, that we will have sufficient
capital resources to finance our acquisition strategy, or that any such
acquisitions, if consummated, will be successfully integrated with our business
operations.

16
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make certain forward-looking statements in this prospectus that are based
upon our current expectations and projections about current events. You can
identify these statements from our use of the words "estimate," "project,"
"believe," "intend," "anticipate," "expect" and similar expressions. These
forward-looking statements include:

. statements of our goals, intentions and expectations;

. statements regarding our business plans and growth strategies;

. statements regarding the asset quality of our loan and investment
portfolios;

. estimates of our risks and future costs and benefits; and

. statements regarding the effectiveness of our efforts to make our
operations year 2000 compliant.

These forward-looking statements are subject to significant risks,
assumptions and uncertainties, including, among other things, the following
important factors which could affect the actual outcome of future events:

. fluctuations in market rates of interest and loan and deposit pricing,
which could negatively affect our net interest margin, asset valuations
and expense expectations;

. adverse changes in the economy of the greater Chicago metropolitan area,
our primary market, which might affect our business prospects and could
cause credit-related losses and expenses;

. the extent of continuing client demand for the high level of
personalized service that is the key element of our private banking
approach;

. adverse developments in our loan and investment portfolios;

. unforeseen developments or delays relating to the pending acquisition of
Towne Square Financial Corporation or difficulties relating to the
establishment of a St. Charles office;

. difficulties in identifying attractive acquisition opportunities and
strategic partners that will complement our private banking approach;

. competitive factors in the banking industry, such as the trend towards
consolidation in our market;

. changes in banking legislation or the regulatory requirements of federal
and state agencies applicable to bank holding companies and banks like
ours; and

. our effectiveness and that of our suppliers of data processing equipment
and services, government agencies, and other third parties in testing
and implementing year 2000 compliant hardware, software and systems.

Because of these and other uncertainties, our actual future results may be
materially different from the results indicated by these forward-looking
statements. In addition, our past results of operations do not necessarily
indicate our future results. We discuss these uncertainties and others in the
sections of this prospectus named "Risk Factors," "Business," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

17
<PAGE>

PENDING ACQUISITION

We have recently reached an agreement in principle to acquire Towne Square
Financial Corporation, a recently organized Delaware corporation formed for the
purpose of developing a de novo, or start-up, bank in the community of St.
Charles, Illinois, a far western suburb of Chicago. Our management believes the
transaction affords us an excellent opportunity to expand our franchise in what
we believe is a rapidly growing market. A letter of intent was signed on May
28, 1999, and we anticipate that a definitive merger agreement will be signed
on or before June 21, 1999.

Background

At the time we were introduced to Towne Square in May 1999, the company had
already raised initial seed capital from a group of six organizers and
developed a business plan to start a local bank focused on private banking
services, but had not yet commenced operations nor filed any of the required
regulatory applications relating to organization of a new bank. Because of the
similarity of our banking strategies and the compatibility of our management,
in lieu of pursuing its de novo strategy, Towne Square has agreed to merge with
us in a stock-for-stock transaction. Instead of opening a new bank as Towne
Square had planned, we will establish a new office of PrivateBank in St.
Charles to be managed by Mr. Thomas Castronovo, one of the principal organizers
of Towne Square who will be joining us as a managing director. Mr. Castronovo
has 17 years of prior banking experience and has significant contacts in the
St. Charles community. Under this arrangement, we believe there are significant
opportunities for us in St. Charles and the surrounding Fox River Valley
communities to grow our private banking business.

We expect to file the requisite branch applications with the regulators
during July 1999 and currently anticipate opening the St. Charles office during
the fourth quarter of 1999.

Terms of the Transaction

Pursuant to the contemplated merger, Towne Square will be merged into
PrivateBancorp, Towne Square will cease to exist, and PrivateBancorp will
continue as the surviving corporation. In exchange for their shares of Towne
Square, the stockholders of Towne Square will receive merger consideration
equal to an aggregate of approximately 97,059 shares of PrivateBancorp common
stock, assuming the price of our stock that is used to determine the exchange
ratio for the merger is $17.00. The actual exchange ratio will be calculated
after completion of this offering, with the actual number of shares to be
issued in the merger to be determined by dividing $1,650,000 by the actual
initial public offering price of our stock. Of the shares to be issued in the
merger, approximately 55%, or about 53,000 shares using an exchange ratio based
on a $17.00 price, will be subject to a one year restriction on resale and the
remainder to a three-year resale restriction.

In connection with the transaction, we have agreed to enter into a three-
year employment agreement with Mr. Castronovo providing for, among other
things, a signing bonus in the amount of $150,000 payable in two installments,
one-half at the time we open the St. Charles office and the other half six
months later. It is contemplated that Mr. Castronovo's employment will commence
upon signing the definitive agreement. We have also agreed that Mr. Castronovo
will receive options to purchase 7,000 shares, expected to be granted under our
Stock Incentive Plan at the initial public offering price, and an award of
3,000 shares of restricted stock which will be subject to forfeiture until
fully vested five years after the date of grant. In addition to our employment
of Mr. Castronovo, we have agreed that following consummation of the merger we
will add to our Board of Directors one individual, who must be acceptable to
us, to be designated by the stockholders of Towne Square.

As part of the transaction, Towne Square will agree, and will cause each of
its six organizers also to agree, for a period of at least three years not to
compete with our business in the St. Charles market and to support our efforts
to develop relationships in the community. We will be forming a St. Charles
advisory board, to be comprised of those organizers who are not employees or
directors of PrivateBank, in order to draw on the

18
<PAGE>

experience and contacts of these individuals in the local community to assist
us in the development of our St. Charles office. Also in connection with the
transaction, we will enter into a lease for space in a building recently
acquired by the Towne Square organizers which is where we will locate our St.
Charles office. Although the final terms of the lease are still being
negotiated, it has been agreed that the lease will run for ten years and will
provide for rents not in excess of comparable market rates.

Consummation of the merger is subject to effectiveness of a registration
statement being filed with the SEC relating to the transaction, the approval of
Towne Square's stockholders owning at least a majority of the outstanding
shares of Towne Square, and customary closing conditions. It is currently
anticipated that the transaction will close during the third quarter of 1999
following completion of this offering.

Accounting Treatment; Financial Impact of the Acquisition

Because Towne Square is not yet actively engaged in business, the merger
transaction will not be accounted for as a business combination. Rather, at the
time of closing, we will incur a one-time, nonrecurring charge to earnings in
an amount equal to the excess of the value of our stock issued in the merger
over the net assets of Towne Square on the date of closing. We anticipate that
the net assets of Towne Square, consisting substantially of cash, will
approximate $240,000 at closing. The one-time charge, currently estimated to be
approximately $1.29 million, is expected to be recorded during the third
quarter of 1999 and will adversely affect our 1999 results of operations. The
merger related charge will not be a deductible expense for tax purposes.

In addition to the merger related charge, we will incur additional start-up
costs relating to the opening of the St. Charles office. We currently
anticipate that the total pre-tax start-up costs will be approximately
$430,000, including $75,000 of the signing bonus payable to Mr. Castronovo, and
that the majority of these costs will be expensed during 1999.

USE OF PROCEEDS

The net proceeds which we will receive from the sale of 900,000 shares of
common stock in this offering are estimated to be approximately $13,629,000
(assuming an initial public offering price of $17.00, the midpoint of the
estimated per share range, and no exercise of the over-allotment option) after
deducting underwriting discounts and the aggregate expenses payable by us. Such
expenses are currently estimated to be approximately $600,000.

We intend to contribute $8.0 million of the net proceeds from this offering
to increase the regulatory capital of PrivateBank to support the growth of our
existing banking operations and the planned establishment of a new office in
St. Charles, Illinois. We are raising the remainder of the proceeds to have
funds available for future internal growth or expansion of our business
through:

. establishing new offices within the Chicago metropolitan area;

. expanding our presence into new markets located in the Midwest; and

. acquiring or affiliating with companies in businesses complementary to
ours.

Other than the pending acquisition of Towne Square Financial Corporation, we
have not yet identified any specific acquisition or affiliation candidates.

Until we have designated the specific use by the company of the remaining
proceeds, we intend to deposit these funds in an account of the company at
PrivateBank, where we can use them as a temporary funding source for loans or
investments of PrivateBank.

19
<PAGE>

DIVIDENDS; NO PRIOR TRADING MARKET

Holders of our common stock are entitled to receive dividends that our Board
of Directors may declare from time to time. We may only pay dividends out of
funds which are legally available for that purpose. Because our consolidated
net income consists largely of the net income of PrivateBank, our ability to
pay dividends to our stockholders may become dependent upon our receipt of
dividends from PrivateBank. PrivateBank's ability to pay dividends is regulated
by banking statutes. See "Supervision and Regulation-- Bank Regulation--
Dividends." Our declaration of dividends is discretionary and will depend on
our earnings and financial condition, regulatory limitations, tax
considerations, and other factors. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity."

We have paid quarterly dividends on our common stock since the third quarter
of 1995. While our Board of Directors expects to continue to declare dividends
quarterly, there can be no assurance that we will continue to pay dividends at
these levels or at all. The following table sets forth the history of per share
cash dividends declared and paid on our stock since the beginning of 1997:

<TABLE>
<S> <C>
1997
First Quarter............................. $0.016
Second Quarter............................ 0.016
Third Quarter............................. 0.019
Fourth Quarter............................ 0.019

1998
First Quarter............................. $0.019
Second Quarter............................ 0.020
Third Quarter............................. 0.020
Fourth Quarter............................ 0.020

1999
First Quarter............................. $0.025
Second Quarter (1)........................ $0.025
</TABLE>

As of March 31, 1999, we had 491 stockholders of record. Prior to this
offering, there has been no established public trading market for our common
stock. We have applied for inclusion of our common stock in The Nasdaq National
Market upon completion of this offering.
- --------

(1) Payable on June 30, 1999, to stockholders of record on June 4, 1999.

20
<PAGE>

CAPITALIZATION

The following tables set forth our total capitalization and capital ratios
as of March 31, 1999, and our total capitalization pro forma to give effect to
completion of the pending acquisition and pro forma as adjusted to reflect the
issuance and sale of 900,000 shares of our common stock which we are offering
in this prospectus (assuming the underwriters do not exercise the over-
allotment option) at an assumed initial public offering price of $17.00, the
midpoint of the estimated per share price range.

<TABLE>
<CAPTION>
March 31, 1999
---------------------------
Pro
Pro Forma As
Actual Forma(1) Adjusted
------- -------- --------
(dollars in thousands)
<S> <C> <C> <C>
Stockholders' equity:
Preferred Stock, 1,000,000 shares authorized(2);
none designated or outstanding................... $ -- $ -- $ --
Common stock, without par value, 12,000,000 shares
authorized(2); 3,451,824 shares, $1.00 stated
value, issued and outstanding; 3,548,883 shares
outstanding pro forma, and 4,448,883 shares
outstanding pro forma as adjusted(3)............. 3,452 3,549 4,449
Surplus........................................... 22,600 24,028 36,757
Retained earnings................................. 5,853 4,568 4,568
Accumulated other comprehensive income, net of tax
effect........................................... (58) (48) (58)
Deferred compensation............................. (843) (843) (843)
Loan to executive officer......................... (950) (950) (950)
------- ------- -------
Total stockholders' equity...................... $30,054 $30,294 $43,923
======= ======= =======
</TABLE>
- --------

(1) Gives effect to completion of the pending acquisition of Towne Square
Financial Corporation assuming the issuance of 97,059 shares in the
transaction as if the transaction had been consummated on March 31, 1999,
resulting in a one-time charge to earnings of $1,285,000. See "Pending
Acquisition."

(2) Gives effect to the amendment to PrivateBancorp's Restated Certificate of
Incorporation to increase the authorized shares which was approved by
stockholders on April 22, 1999.

(3) These share amounts do not include an aggregate of 632,808 shares of common
stock issuable upon exercise of outstanding options (after giving effect to
option grants through the date of this prospectus), of which 453,408 shares
are subject to currently exercisable options. The pro forma amounts also
exclude 3,000 shares of restricted stock and 7,000 shares to be subject to
options that are expected to be granted in connection with the pending
acquisition. See "Pending Acquisition."

<TABLE>
<CAPTION>
March 31,
1999
---------
<S> <C>
Capital ratios (at end of period):
Total equity to total assets........................................ 6.97%
Total risk-based capital ratio...................................... 11.21
Tier 1 risk-based capital ratio..................................... 10.05
Leverage ratio...................................................... 7.53
</TABLE>

21
<PAGE>

DILUTION

As of March 31, 1999, we had an aggregate of 3,451,824 shares of common
stock outstanding, and, giving effect to the assumed issuance of 97,059 shares
in the pending Towne Square acquisition, the common stock had a net tangible
pro forma book value of $8.54 per share. "Net tangible pro forma book value per
share" represents our tangible net worth, which is our total assets less our
intangibles and total liabilities as adjusted to give effect to the Towne
Square acquisition, divided by the total number of shares of common stock
outstanding. Net tangible pro forma book value is equal to our reported book
value as adjusted to give effect to the Towne Square acquisition. Without
taking into account any other changes in net tangible book value after March
31, 1999, other than those resulting from application of the net proceeds we
will receive from the sale of 900,000 shares offered hereby at an assumed
initial public offering price of $17.00 (after deduction of the underwriting
discount and estimated offering expenses), the net tangible book value at March
31, 1999, would have been $8.54 per share. This represents an immediate
increase of $1.33 per share to current stockholders and an immediate dilution
in book value of $7.13 per share to new investors. The following table
illustrates this per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price........................ $17.00
Net tangible pro forma book value per share before the
offering.................................................. $8.54
Increase per share attributable to investors in the
offering.................................................. 1.33
-----
Net tangible pro forma book value per share after the
offering.................................................... 9.87
------
Per share book value dilution to investors in the
offering(1)................................................. $ 7.13
======
</TABLE>
- --------

(1) Does not give effect to and assumes no prior exercise of currently
outstanding options to purchase up to an aggregate of 632,808 shares of
common stock, of which 453,408 are currently exercisable. Further adjusted
as of March 31, 1999, to give effect to the exercise of such options in
accordance with their terms, the estimated net tangible pro forma book
value per share before the offering would be $8.48 and after the offering
would be $9.71, and the estimated per share book value dilution to
investors in the offering would be $7.29.

The following table compares, on a pro forma basis at March 31, 1999:

. the total number of shares of common stock purchased from us, giving
effect to the assumed issuance of 97,059 shares in the pending Towne
Square acquisition;

. the total cash consideration paid;

and the average price per share paid by:

. existing stockholders; and

. new investors.

This table assumes the sale of 900,000 shares at $17.00, before the deduction
of the underwriting discount and estimated offering expenses, and assumes no
exercise of stock options outstanding as of March 31, 1999.

<TABLE>
<CAPTION>
Shares Total
Purchased Consideration Average
--------------- ---------------- Price
Percent Percent Per
Number of Total Amount of Total Share
------ -------- ------- -------- -------
(in thousands, except per share amounts)

<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 3,549 79.8% $26,272 63.2% $ 7.40
Investors in the offering(1)........... 900 20.2 15,300 36.8 17.00
----- ----- ------- -----
Total................................ 4,449 100.0% $41,572 100.0%
===== ===== ======= =====
</TABLE>
- --------

(1) If the over-allotment option is exercised in full, the number of shares of
common stock held by investors in the offering will increase to 1,035,000
shares, or 22.6% of the total shares of common stock outstanding after this
offering.

22
<PAGE>

BUSINESS

Overview

We organized PrivateBancorp as a Delaware corporation in 1989 to provide
highly personalized financial services primarily to professionals,
entrepeneurial individuals and their closely-held businesses. We were one of
the first banks newly formed in the Chicago area in recent years. The
organizers had significant senior level banking experience and many potential
client contacts from prior banking positions.

We believe that as the financial industry has consolidated, many financial
institutions have focused on a mass market approach using automated customer
service which de-emphasizes personal contact. We believe that the
centralization of decision-making power at these large institutions has
resulted in disruption of client relationships as frontline bank employees who
have limited decision-making authority fill little more than a processor role
for their customers. At many of these large institutions, services are provided
by employees in the "home office" who evaluate requests without the benefit of
personal contact with the customer or an overall view of the customer's
relationship with the institution.

We believe that this trend has been particularly frustrating to affluent
individuals, professionals, owners of closely-held businesses and commercial
real estate investors who traditionally were accustomed to dealing directly
with senior bank executives. These customers typically seek banking
relationships managed by a decision maker who can deliver a prompt response to
their requests and custom tailor a banking solution to meet their needs. As
smaller, independent banks have been acquired by national, multi-bank holding
companies, we believe that the personal relationships that these customers
maintained with the management of such banks have eroded, and their
individualized banking services have been lost.

Through our banking subsidiary, The PrivateBank and Trust Company, we
provide our clients with traditional personal and commercial banking services,
lending programs, and trust and asset management services. Using the European
tradition of "private banking" as our model, we strive to develop a unique
relationship with each of our clients, utilizing a team of highly qualified
account executives to serve the client's individual and corporate banking
needs, and tailoring our products and services to meet such needs. Our managing
directors are strategically located in three Chicago-area offices: Downtown
Chicago, Wilmette, Illinois, and Oak Brook, Illinois. We opened our flagship
Chicago location in 1991. We expanded to our Wilmette office in north suburban
Cook County in 1994 after identifying a senior banking officer with existing
relationships and client contacts in this North Shore area. We opened the Oak
Brook facility in west suburban DuPage County in 1997 with the addition of a
managing director who has extensive relationships in that market.

Since our start in 1991, we have experienced rapid internal growth. From
year-end 1995 to March 31, 1999, our compound annual growth rate in loans was
31.6%, in assets was 27.3%, in deposits was 27.0% and in trust assets under
administration was 40.2%. At March 31, 1999, we had total loans of $307.8
million, total assets of $431.1 million, total deposits of $384.5 million,
total stockholders' equity of $30.1 million and total trust assets under
administration of $637.4 million.

Our Market

In response to the need for individualized banking services, we created The
PrivateBank and Trust Company as the first Chicago-based institution dedicated
primarily to providing banking services to professionals, entrepreneurial
individuals, and their business interests. We targeted the affluent segment of
the market because we believe that there is significant unmet demand for
personalized services within this segment, and also because we recognize its
significant growth potential. According to National Decision Systems, San
Diego, California, the number of households in the metropolitan Chicago area
with annual incomes greater than $150,000 was estimated at 190,042 in 1998,
compared to 63,861 households in 1990. This equates to a compound annual growth
rate of 14.6%, versus an annual growth rate for the total number of households
in the

23
<PAGE>

metropolitan Chicago area of 0.6%. By 2003, the number of these affluent
households in the Chicagoland area is expected to increase to approximately
358,000, representing an annual growth rate of 13.5%, while the aggregate
number of households is expected to increase at an annual growth rate of 0.3%.
The following graph illustrates the size and relative growth of this market:

[Perfromance Graph Appears Here]

(1) Based on information from the 1990 U.S. census.

(2) Estimated by National Decision Systems based on, among other things, (a) a
time series of estimates made by the U.S. Census Bureau regarding six of
the counties in the Chicago metropolitan area; and (b) data provided by the
Department of Planning of the City of Chicago.

The PrivateBank and Trust Approach

. Personal Relationships. Our approach begins with the development of
strong, dedicated relationships with our clients. Each client of
PrivateBank is matched with a team of individuals headed by a managing
director. This managing director becomes our client's central point of
contact with PrivateBank. Our ten managing directors, who are senior
financial professionals with an average of

24
<PAGE>

27 years of banking and financial experience, act as the financial
partners of our clients, working with them to identify and service their
banking needs. By dedicating a team of executives to each client, we are
able to build ongoing relationships which allow our managing directors
to use their increasing knowledge of the client's financial history and
goals to quickly adapt our services to the client's individual needs.
Our clients interact with the same persons at PrivateBank for all types
of banking services, enabling them to gain a sense of security and
continuity of personal service in their banking relationship. On the
basis of this trust and confidence, we seek to expand the scope of
services provided to each client, often including banking needs related
to the business affairs of our clients. Satisfied clients provide our
most fertile source of new business and new client referrals as well.

. Affluent Target Client. We believe that the affluent segment of the
population, meaning that segment with annual incomes over $150,000, is
increasing and is diverse in terms of its overall wealth and financial
needs. PrivateBank offers its services to those members of this segment
who are focused on building and preserving wealth. Our clients include
professionals, entrepreneurial individuals and their business interests.
We target service industries such as the accounting, legal and medical
professions, as well as owners of closely-held businesses, commercial
real estate investors and corporate executives. Although we generally
target individuals with high annual incomes and net worths, we recognize
the growth potential of certain young professionals and extend our
services to those individuals whose income or net worth do not initially
meet our criteria. We believe that this segment of the market is most
suited to our business and that these individuals are most likely to
develop long-term relationships with us.

. Customized Financial Services. We realize that many of our clients
require a custom solution to their financial needs. In taking a long-
term, relationship approach to our clients, we are able to differentiate
ourselves from the "one-size-fits-all" mentality of other financial
institutions. We offer our clients a wide variety of financial services
beyond the traditional banking products and are constantly working to
develop and shape our services to meet their growing needs. We take the
time to identify our clients' particular needs and tailor our services
to meet those needs on an individual customized basis, while maintaining
highly competitive rates and fees that take into account the size and
profitability of each client relationship. While we are proud of our
portfolio of products, we believe that it is our service that
distinguishes us from our competition. We encourage our clients to
contact us rather than discourage them. We use regular contact as a way
to strengthen our relationships, increase services to existing clients
and earn referral business.

. Streamlined Decision-Making Process. Unlike most larger banks, we have
not instituted a lengthy chain of command. Our clients deal directly
with their dedicated managing directors, who are given broad decision-
making authority. This allows our managing directors to respond quickly
and efficiently to our clients' needs. We are able to use a streamlined
approach because our organization has many qualified, experienced credit
officers. Officers with credit approval authority make themselves
available on short notice to help consult on or approve credits when
time is of the essence. We use an "on call" approach, rather than
structured meetings, to approve credit. As the amount of the credit and
the complexity increases, we resort to a more traditional process.

. Enhanced Personal Service through Technology. While we encourage our
clients to contact us directly, we also utilize technology to complement
and enhance our service. We created products such as PrivateBank Access,
our internet banking service, MasterMoney debit cards and Private Line
Access, our voice-response communication system, to enhance, not
replace, personal contact. This technology allows us to offer our
clients the convenience of accessing our services from remote locations
at any time of day.

We believe that our PrivateBank Access product is likely to grow in
importance. Our clients may connect to PrivateBank Access directly
through our internet website, without the need for the diskettes or
software downloads found in some competing PC banking systems.
Currently, our product:

. accesses deposit and loan information;

25
<PAGE>

. allows transfers of funds among accounts;

. includes a bill payment service with a variety of options;

. allows information to be exported to financial software packages;

. includes a help desk which is staffed 92 hours per week; and

. sends e-mail messages from clients to PrivateBank personnel.

We are working to supplement our website to enhance our service to
clients. Some features we are planning include:

. applications for our banking products;

. access to trust account information;

. current deposit rate schedules; and

. current mortgage rate schedules.

As technology changes, we intend to modify and enhance our electronic
banking products. We believe that in the future, a growing number of
our clients will desire both personal and electronic services. We
intend to work to offer dual-delivery systems providing the quality of
service to which PrivateBank clients are accustomed.

. Extensive Financial Network. In order to compete with other financial
service providers, we rely on a network of professionals in the
financial and investment communities with whom we have developed
strategic alliances over the years. This enables us to offer our clients
a broad array of high quality services. For example, we work with
selected investment management firms in providing services to our trust
clients. Our clients can either maintain existing investment management
relationships when they become our trust clients, or use our preferred
providers of investment management services. We believe this choice
distinguishes our service from the rigid policies set by some of our
competitors. We, in turn, help our clients select a complete package of
services best suited to their individual needs without incurring the
overhead associated with directly employing diversified portfolio
managers. We also have a contractual fee sharing agreement with Mesirow
Financial, Inc., an independent insurance brokerage company in the
Chicago area. Through this affiliation, we offer a full range of
personal and corporate insurance products to our clients. To complement
our existing financial products and services, we have a contractual
arrangement with Sterling Investment Services, Inc., a registered
securities broker-dealer firm, through which we offer our clients on-
site securities brokerage services.

Strategy for Growth

Our growth strategy entails five key components:

. Developing Our Existing Relationships. An important part of our future
growth will be the continued development of our existing client
relationships. As the needs of our clients change and grow, we seek to
grow with them and continue to provide them with our custom-tailored,
flexible services. For example, we strive to follow our clients from the
purchase of their homes, through the financing of their own business, to
the development and planning of their estate, continuing the
relationship tradition with their children and grandchildren. We believe
we have a significant opportunity to further develop our existing client
relationships in each of our offices.

. Increasing the Reach of Our Existing Offices. In addition to increasing
the services provided to our existing clients, we seek to expand the
market presence of our existing offices, especially our Oak Brook and
Wilmette branches. We believe that the growing need for private banking
services in these regions is largely unmet and we have a significant
opportunity to increase our client base in these branches. We hope to
capitalize on our reputation and the reputations of our managing
directors in

26
<PAGE>

increasing our market presence. Our managing directors, with their
personal and professional contacts in the financial and corporate
arenas, have been instrumental in developing our business to date. We
encourage our senior executives to attend and host business receptions,
charitable activities and promotional gatherings so that we may interact
with our clients in a unique and personal manner. We also hope to grow
our branch offices through referrals from our existing clients.
Referrals have been a significant source of new business for us. We
value this system of networking because it allows us to further develop
and strengthen our personal and professional relationships with both new
and existing clients.

. Opening Additional Offices in the Chicago Metropolitan Area. Our
experience in our Oak Brook and Wilmette offices demonstrates to us that
there exists significant demand by our target client for specialized
private banking services in the Chicago metropolitan area. We built
these offices around senior executive officers whom we recruited for
their strong banking experience and extensive personal and professional
contacts in those areas. To increase our market penetration, we have
recently negotiated the acquisition of Towne Square Financial
Corporation and plan to establish a new office of PrivateBank in St.
Charles, Illinois, a far western suburb of Chicago located in the
rapidly growing Fox River Valley area. We have recruited one of the
organizers of Towne Square, who is an experienced banker with
significant contacts in St. Charles and the surrounding communities, to
join us as a managing director to head this office. See "Pending
Acquisition." We will consider opening additional offices as we identify
locations and other senior executives that will maintain our standards
for high-quality personalized service.

. Expanding into New Markets. We believe the trend toward bank
consolidation and centralized decision-making that has created a demand
for our private banking services is not unique to Chicago. We believe
there is similar demand in other markets within the Midwest and we are
interested in expanding in markets that present opportunities for growth
and development similar to those in the Chicago market. We intend to
pursue selective geographic expansion through possible acquisitions of
existing institutions or by establishing new banking offices.

. Expanding into New Product Lines. We desire to be the primary source of
financial products and services for our clients. By broadening our
product line with additional financial services not currently offered by
PrivateBank, we believe we can increase our franchise value through
diversification of our fee income and strengthening of our client
relationships. To achieve this goal, we intend to consider acquisitions,
joint ventures or strategic alliances with other companies that
emphasize quality service and the value of relationships. Our targets
are businesses that complement our services and enable us to broaden our
product line to better serve our clients.

Our Services

We offer banking services to our clients at a personal level. This is not
the same as personal banking service. We define private banking as offering
banking products and services to our clients when they want it, how they want
it and where they want it. We tailor our products and services to fit our
clients instead of making our clients fit our products and services. Our
services fall into four general categories:

. Commercial Services. PrivateBank offers a full range of lending products
to businesses owned by or affiliated with our clients. We offer lines of
credit for working capital, term loans for equipment and other
investment purposes, and letters of credit to support the commitments
our clients make. PrivateBank tailors these products to meet the varied
needs of the client. Non-credit products we offer include lockbox, cash
concentration accounts, merchant credit card processing, electronic
funds transfer, other cash management products and insurance. We strive
to offer banking packages that are competitive and allow us to provide
service to our clients beyond what is expected in our industry.

. Real Estate Services. PrivateBank provides real estate loan products to
businesses and individuals. Our commercial real estate lending products
are designed for real estate investors. We provide a full range of fixed
and floating rate permanent and mini-permanent mortgages for our clients
to finance a variety of properties such as apartment buildings, office
buildings, strip shopping centers, and other income properties. We also
provide some construction lending for residential and commercial

27
<PAGE>

developments. We believe that our lending products are competitively
priced with terms that are tailored to our clients' individual needs.

Our residential mortgage products range from 30-year fixed rate
products to personal construction lending. The home mortgage market is
very competitive and we believe that our service is what separates
PrivateBank from our competition. Many mortgage lenders cannot work
with borrowers who have non-traditional income sources or non-
traditional properties, such as co-ops. Our mortgage lending staff is
trained to work with successful individuals who have complex personal
financial profiles. We have developed a proficiency for mortgages in
excess of $1.0 million per loan and will work with our clients and our
market sources to place these loans into the secondary market. Our
experience has been that residential lending is an excellent vehicle to
attract new clients.

. Trust and Asset Management. PrivateBank's trust services include
investment management, personal trust and estate services, custodial
services, retirement accounts and brokerage and investment services. Our
investment management professionals work with our clients to define
objectives, goals and strategies for their investment portfolios.
PrivateBank assists the client with the selection of an investment
manager and works to tailor the investment program accordingly. Our
trust and estate account administrators work with our clients and their
attorneys to establish their estate plans. We work closely with our
clients and their beneficiaries to ensure that their needs are met and
to advise them on financial matters. When serving as trustee or
executor, we often structure and oversee investment portfolios. We also
provide our clients with custodial services for safekeeping of their
assets. Consistent with our private banking approach, we emphasize a
high level of personal service in our trust area, including prompt
collection and reinvestment of interest and dividend income, weekly
valuation, tracking of tax information, customized reporting and ease of
security settlement. PrivateBank also offers retirement products such as
individual retirement accounts and administrative services for
retirement vehicles such as profit sharing plans and employee stock
option plans, as well as a full line of brokerage and investment
products.

. Individual Banking Services. Our typical private banking client has
several of the following products: interest bearing checking with credit
line, money market deposit accounts, certificates of deposit, ATM/debit
card, and brokerage accounts. Some of our clients have recently selected
our PrivateBank Access Internet PC banking product. In addition to
residential mortgages, we provide clients a variety of secured and
unsecured personal loans and lines of credit. Through our affiliations
with Mesirow and Sterling, we offer insurance products and securities
brokerage services. We strive to accommodate the individual needs of
each of our clients by offering the convenience of highly personalized
services, including domestic and international wire transfers and
foreign currency exchange.

Lending Activities

We work with our clients to provide a full range of commercial, real estate
and personal lending products and services. Our loans are concentrated in six
major areas: (a) commercial real estate; (b) residential real estate; (c)
commercial; (d) personal; (e) home equity; and (f) construction. We have
adopted a loan policy that contains general lending guidelines and is subject
to review and revision by the Board of Directors. We extend credit consistent
with this comprehensive loan policy. We believe the credit quality of our loan
portfolio is excellent.

The goal of our lending program is to meet the credit needs of our diverse
client base while using sound credit principles to protect the quality of our
assets. Our business and credit strategy is relationship-driven and we strive
to provide a reliable source of credit, a variety of lending alternatives, and
sound financial advice. When extending credit, our decision is based upon our
client's ability to repay us from non-speculative sources. The quality and
integrity of the borrower is crucial in the loan approval process. We monitor
the performance of our loan portfolio through regular contacts with our
clients, continual portfolio review, careful monitoring of delinquency reports
and reliance on our loan review function.

We have retained an independent, outside resource to perform our loan review
function. Using an outside resource ensures that our loan review process
remains independent of the loan production and administration

28
<PAGE>

processes. Our loan reviewer examines individual credits to critique individual
problems and the entire portfolio to comment on systemic weaknesses. The
reviewer reports directly to the audit committee of our Board of Directors on a
quarterly basis. In addition to loan review, the loan/investment committee of
our Board reviews the adequacy of the allowance for loan losses on a quarterly
basis. The committee assesses management's loan loss provisions based on loan
review's findings, delinquency trends, historical loan loss experience and
current economic trends.

Our legal lending limit, based on PrivateBank's financials, is calculated at
20% of capital plus unencumbered reserves. At March 31, 1999, our legal lending
limit was approximately $6.5 million. This is the maximum amount of credit that
we may commit to any one individual or business entity after aggregating all
related credit. Immediately after the offering, our legal lending limit will
increase by $1.6 million based on our intention to contribute $8.0 million of
the proceeds to the capital of PrivateBank.

In addition to our chief credit officer, certain individuals have been
designated acting chief credit officers, credit officers, officers with lending
authority, and residential real estate lending officers. No single individual
has sole authority to approve a loan. As the size of aggregate credit exposure
increases, additional officers are required to approve the loan requests. This
serves several purposes: (a) larger credits get more scrutiny, (b) most senior
credit officers become involved in the decision-making process for the vast
majority of dollars loaned without approving a proportionate number of loan
requests, and (c) we become more consistent in administration of credit as
credit officers experience the dynamics of our overall portfolio and credit
culture. We also believe that our past credit approval practices will mitigate
the effect of the impending retirement of our chief credit officer because our
credit culture is firmly in place.

Our chief credit officer, or his designate, is involved in all credit
decisions when the aggregate credit exposure is in excess of $250,000. Our
loan/investment committee reviews all credit decisions over $1 million. Prior
approval is required for credit exposure in excess of $4 million and for all
credits related to our board members or our managing directors. Loans are
approved at the bank level by a management loan committee or by small group
presentations to credit officers. We believe that this process allows us to be
more responsive to our clients' needs by being able to approve credit without
waiting for scheduled committee meetings. We also use management committee
meetings to discuss complex credits or when we feel that a particular credit
may be informative to everyone in the loan approval process.

Our lending policy sets guidelines for advance rates on certain types of
collateral including accounts receivable, inventory, equipment and real estate.
Maximum advance rates on real estate are dependent upon the type of real estate
taken as collateral. For example, higher loan-to-value ratios are acceptable
for owner-occupied residential properties than non-owner occupied residential
or commercial properties. Vacant land commands the lowest advance rate
guidelines. We accept primary and secondary liens on properties when appraised
values are adequate. Our lending policy also contains advance rate guidelines
for securities and other financial instruments taken as collateral, including
stocks, bonds, commercial paper, and bank deposit instruments.

Specific collateral requirements are based upon the facts and circumstances
of each individual credit decision. The financial strength and ascertainable
character of each borrower and guarantor is also a factor in the credit
approval process. Because we tend to lend to clients whom we know well, we
believe we are in a good position to assess our borrowers' strengths and
weaknesses and to make well-informed credit decisions on this basis. We make
loans based upon borrowers' available assets and the condition of their
financial statements. We do not sell credit life insurance to our borrowers.

29
<PAGE>

The following table sets forth our loan portfolio by category as of March
31, 1999:

<TABLE>
<CAPTION>
Percentage
March of total
31, 1999 loans
-------- ----------
<S> <C> <C>
Commercial real estate................................ $108,599 35.3%
Residential real estate............................... 62,208 20.2
Commercial............................................ 53,834 17.5
Personal.............................................. 45,122 14.7
Home equity........................................... 19,860 6.4
Construction.......................................... 18,143 5.9
-------- -----
Total loans......................................... $307,766 100.0%
======== =====
</TABLE>

Commercial Real Estate Loans. Our commercial real estate portfolio is
comprised primarily of loans secured by multi-family housing units located in
the Chicago metropolitan area. Other types of commercial real estate collateral
include: commercial properties owned by clients housing their manufacturing,
warehousing or service businesses, investments in small retail centers, and
investments in other business properties.

Risks inherent in real estate lending are related to the market value of the
property taken as collateral, the underlying cash flows and documentation. It
is important to accurately assess property values through careful review of
appraisals. Some examples of risky commercial real estate lending include loans
secured by properties with widely fluctuating market values or income
properties occupied by renters with unstable sources of income, and not
perfecting liens on property taken as collateral. We mitigate these risks by
understanding real estate values in areas in which we lend, investigating the
sources of cash flow servicing the debt on the property and adhering to loan
documentation policy.

Commercial real estate loan products include mini-permanent and permanent
financing, transaction loans to purchase properties prior to permanent
financing, and lines of credit secured by commercial real estate portfolios. We
typically structure mini-permanent and permanent financing as adjustable rate
mortgages ("ARMs"). ARM structure allows our clients to lock in an interest
rate for a fixed period of time in order to avoid interest rate risk. The vast
majority of our ARM loans have initial fixed pricing for between one to five
years. Each ARM loan has language defining repricing beyond the initial fixed
pricing term. Transaction loans to purchase commercial property typically have
maturities of one year or less. Lines of credit secured by commercial real
estate portfolios are typically granted for one year with annual extensions
after a successful underwriting review. Interest rates for our lines of credit
typically are based on a floating rate formula.

In our credit analysis process for commercial real estate loans, we
typically review the appraised value of the property, the ability of the
property as collateral to service debt, the significance of any outside income
of the borrower or income from other properties owned by the borrowers, and the
strength of guarantors, if any. Our real estate appraisal policy has been
approved by our board loan/investment committee. It addresses selection of
appraisers, appraisal standards, environmental issues and specific requirements
for different types of properties.

Residential Real Estate Loans. Our residential real estate portfolio
consists primarily of first and second mortgage loans for 1-4 unit residential
properties. We do not originate long-term fixed rate loans for our own
portfolio due to interest rate risk considerations. However, we do originate
these loans for sale into the secondary market. This is a significant business
activity in our residential real estate lending unit. For our own portfolio, we
originate ARM loans typically structured with 30 year maturities and initial
rates fixed for between one to five years with annual repricing beyond the
initial term.

Our credit review process mirrors the standards set by traditional secondary
market sources. We review appraised value and debt service ratios, and we
gather data during the underwriting process in accordance with the various laws
and regulations governing residential real estate lending. Our real estate
appraisal policy sets specific standards for valuing residential property.

30
<PAGE>

We require pre-approval from secondary market sources before we approve
loans to be sold into the secondary market. Our internal approval process is
less stringent for loans pre-approved by our secondary market sources. This
allows us to be responsive to the tight time commitments dictated for locking
in rates in the secondary market.

We believe that we have a competitive advantage in our ability to offer
financing for our clients who have non-traditional income sources or require
large mortgage loans. We have developed secondary market sources for mortgages,
including several able to provide financing in amounts in excess of $1.0
million per loan which is occasionally required by our clients. By offering our
own ARM loans, we can offer credit to individuals who are self-employed or have
significant income from partnerships or investments. The secondary market often
will not take the time or will be unable to make exceptions for otherwise
qualified borrowers. We have experience in making loans to qualified borrowers
secured by co-ops. We believe that we are one of a limited number of financial
institutions in the Chicago area making these loans.

Commercial Loans. Our commercial loan portfolio is comprised of lines of
credit for working capital, term loans for equipment and expansion, and letters
of credit. These loans are made to businesses affiliated with our clients, or
to clients directly for business purposes. The vast majority of our commercial
loans are personally guaranteed. Unsecured loans are made to businesses when a
guarantor, as a secondary source of repayment, has a significant ability to
repay and a significant interest in the business entity. Commercial loans can
contain risk factors unique to the business of each borrower. In order to
mitigate these risks, we seek to gain an understanding of the business of each
borrower, place appropriate value on collateral taken and structure the loan
properly to make sure that collateral values are maintained while loans are
committed. Appropriate documentation of commercial loans is also important to
protect our interests.

Our lines of credit typically are limited to a percentage of the value of
the assets securing the line, and priced by a floating rate formula. Lines of
credit typically are reviewed annually and are supported by accounts
receivable, inventory and equipment. Depending on the risk profile of the
borrower, we may require periodic aging of receivables, and inventory and
equipment listings to verify the quality of the borrowing base prior to
advancing funds. Our term loans are typically also secured by the assets of our
clients' businesses. Term loans typically have maturities between one to five
years, with either floating or fixed rates of interest. Commercial borrowers
are required to provide updated personal and corporate financial statements at
least annually. Letters of credit are an important product to many of our
clients. We issue standby or performance letters of credit, and can service the
international needs of our clients through correspondent banks. We use the same
underwriting standards for letters of credit as we do for funded loans.

Our credit approval process for commercial loans is comprehensive. We
typically review the current and future cash needs of the borrower, the
business strategy, management's ability, the strength of the collateral, and
the strength of the guarantors. While our loan policy has guidelines for
advances on different types of collateral, we establish eligible asset values
on a case-by-case basis for each borrower. Our officer on the account must be
able to validate his or her position during the approval process.

Personal Loans. Our personal loan portfolio consists of loans to secure
funds for personal investment, loans to acquire personal assets such as
automobiles and boats, and personal lines of credit. Quite often, our borrowers
prefer not to liquidate assets to secure funds for investment or personal
acquisitions. They will use these assets as collateral for personal loans, or
if their financial statements and personal reputations are sufficient, we will
grant unsecured credit. A key factor in originating personal loans is knowing
our borrowers. When personal loans are unsecured, we believe that the character
and integrity of the borrower becomes as important as the borrower's financial
statement.

Our clients request a combination of lines of credit, floating-rate term
loans and fixed-rate term loan products. Many of our clients use their personal
investment portfolios as collateral for personal loans. Personal lines of
credit are used for a variety of purposes such as the comfort of having funds
available for future uses or establishing a line of credit as overdraft
protection. We respond quickly to the needs of our clients within the limits
set by our loan policy.

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<PAGE>

Personal loans are subject to the same approval process as all other types
of loans. Each client is underwritten to ensure that they have adequate
collateral coverage and/or cash flow. Annual financial statements are required
of each personal borrower.

Home Equity Loans. Our home equity loan portfolio consists of traditional
home equity lines of credit prevalent in the market today. In general, we
advance up to 80% on the value of a home, less the amount of prior liens.
However, we may vary from that percentage depending on the value of the home,
type of dwelling, and the personal financial situation of the borrower. Home
equity loans are funded either through draws requested by our client or by
special home equity credit drafts that function as bank checks. Home equity
loans are approved using the same standards as residential mortgage loans. Our
borrower's personal cash flow is compared to debt service requirements to
determine our borrower's ability to repay. Home equity loans are competitively
priced based using a floating rate formula.

Construction Loans. Our construction loan portfolio consists of single
residential properties, multi-family properties, and commercial projects. As
construction lending has greater inherent risk, we closely monitor the status
of each construction loan throughout its term. Typically, we require full
investment of the borrower's equity in construction projects prior to injecting
our funds. Generally, we do not let our borrowers recoup their equity from the
sale proceeds of finished units (if applicable) until we have recovered our
funds on the overall project. We use a title company to disburse periodic draws
from the construction line to ensure that there will be no title problems at
the end of the project.

Our construction loans are often the highest yielding loans in our portfolio
due to the inherent risks and the monitoring requirements. These loans
typically have floating rates, commitment fees and release fees. During our
credit approval process, factors unique to construction loans are considered.
These include assessment of the market for the finished product, reasonableness
of the construction budget, ability of the borrower to fund cost overruns, and
the borrower's ability to liquidate and repay the loan at the point when the
loan-to-value ratio is the greatest. We seek to manage these risks by, among
other things, ensuring that the collateral value of the property throughout the
construction process does not fall below acceptable levels, ensuring that funds
disbursed are within parameters set by the original construction budget, and
properly documenting each construction draw. Due to our more stringent
standards for underwriting and monitoring construction loans and the credit
profile of our borrowers, we are comfortable with the risk associated with this
portfolio and are committed to construction lending as an integral part of our
lending program.

Investment Activities

The objective of our investment policy is to maximize income consistent with
liquidity, asset quality, regulatory constraints and asset/liability
objectives. The policy is reviewed at least annually by our Board of Directors.
The Board is provided monthly information recapping purchases and sales with
the resulting gains or losses, average maturity, federal taxable equivalent
yields and appreciation or depreciation by investment categories.

We invest primarily in direct obligations of the United States, obligations
guaranteed as to principal and interest by the United States, obligations of
agencies of the United States, bank-qualified obligations of state and local
political subdivisions and collateralized mortgage obligations. We also may
invest from time to time in corporate debt or other securities as permitted by
our investment policy. In addition, we enter into federal funds transactions
with our principal correspondent banks, and primarily act as a net seller of
such funds. The sale of federal funds are effectively short-term loans from us
to other banks.

Our investment accounts also include minimal equity investments in the
Federal Home Loan Bank of Chicago ("FHLB") and Neighborhood Housing Service
("NHS"). We invest in FHLB in order to be a member, which qualifies us to use
their services, including FHLB borrowings. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation--Liquidity and Capital
Resources." NHS is a not-for-profit organization which helps provide affordable
housing to low and moderate income residents in the Chicago area. The size of
our investment is proportionate to the volume of loans in certain credit
programs offered by NHS. NHS is an important vehicle in our Community
Reinvestment Act ("CRA") lending program.

32
<PAGE>

Rather than incurring the costs of employing a full-time investment manager
with the requisite expertise to establish a diverse investment program, we have
engaged two outside investment advisory firms to help us execute our strategy.
One firm is responsible for helping us select taxable investment products to
meet our investment portfolio objectives. This firm employs a team of
professionals who bring us recommendations on a regular basis. Our other
advisor is a leading investment manager of tax-exempt portfolios and is well-
known to us through his work with our trust clients.

Asset/Liability Management Committee

We have an asset/liability committee ("ALCO") comprised of selected senior
executives who are charged with the dual goals of optimization and
stabilization of net interest income over time while adhering to prudent
banking practices. ALCO oversees asset growth, liquidity and capital, and
directs our overall acquisition and allocation of funds. At our monthly
meetings, ALCO reviews issues including:

. data on economic conditions;

. current interest rate outlook;

. current forecast on loans and deposits;

. mix of interest rate sensitive assets and liabilities;

. bank liquidity position;

. investment portfolio purchases and sales; and

. other matters as presented.

ALCO is also responsible for monitoring compliance with our investment
policy. On a monthly basis, ALCO reports to the loan/investment committee who
reviews the portfolio of reports we prepare for our Board of Directors and all
the decisions made by ALCO affecting net interest income.

Trust and Asset Management

We offer our clients a wide variety of trust and asset management services
designed to meet their individual needs and investment goals. Many of our trust
clients have longstanding relationships with our managing directors. In
administering a trust, we work closely with our client, the beneficiaries and
the trustees' attorneys and accountants on personal and tax matters to assist
the client in accomplishing the stated objectives. As fiduciaries of a trust or
estate our responsibilities may include:

. administering the account pursuant to the applicable document;

. collecting, holding and valuing assets;

. monitoring investment portfolios;

. paying debts, expenses and taxes;

. distributing property; and

. advising beneficiaries.

In addition to trust and estate administration, we offer:

. institutional accounts;

. guardianship administration;

. investment agency accounts;

. Section 1031 exchanges; and

. custodial accounts.

33
<PAGE>

Over the past three years, the average account value of new trusts
administered by PrivateBank was approximately $3.0 million. We believe that our
trust business will continue to grow as we expand our client base and our
clients increasingly reach retirement age and focus on their estate plans.

Our investment management philosophy for our trust assets under
administration is built on two principles: (a) the preservation of capital, and
(b) achievement of maximum total return consistent with each individual
client's objectives. We have chosen to outsource the investment management
aspect of our business so that we may offer our clients diversity and
flexibility of investment representation and to allow us to impartially
evaluate investment performance. This structure also allows our clients to
independently designate one or more specific advisors enabling them to maintain
existing relationships they may have within the financial community. If the
client does not have such a relationship in place, we then help them select an
investment management firm that will best service their needs. Based on the
client's investment strategy and objectives and the account attributes, one or
more investment managers will be selected from our list of approved advisors.

Our trust policy has established controls over our trust activities to
safeguard the assets of our clients against operational and administrative
risk. We have a system of internal controls that is designed to keep our
operating risk at appropriate levels. Our system of internal controls includes
policies and procedures relating to authorization, approval, documentation and
monitoring of transactions. Administrative risk is the risk of loss that may
occur as a result of breaching a fiduciary duty to a client. To manage this
risk, our trust policy has established corporate policies and procedures to
ensure that obligations to clients are discharged faithfully and in compliance
with applicable legal and regulatory requirements. These policies and
procedures provide guidance and establish standards related to the creation,
sale, and management of investment products, trade execution, and counterparty
selection.

Properties

We currently have three physical banking locations and are planning to
establish a new office location in St. Charles, Illinois, subject to necessary
regulatory approvals. See "Pending Acquisition."

The main offices of PrivateBancorp and PrivateBank are located in the
central business and financial district of Chicago. We lease 20,923 square feet
comprising the entire eighth, ninth, and tenth floors and part of the eleventh
floor of a building located at Ten North Dearborn Street. This lease expires on
or about August 31, 2006.

PrivateBank established a north suburban office in the affluent North Shore
area located at 517 Green Bay Road, Wilmette, Illinois, in October 1994.
PrivateBank leases approximately 5,300 square feet on the first floor of a
commercial building. This lease expires on June 30, 1999 and has been renewed
for an additional five-year term.

In January 1997, we opened a second branch office of PrivateBank in rapidly
growing, west suburban DuPage County at 1603 West Sixteenth Street, Oak Brook,
Illinois. We lease approximately 4,200 square feet on the first floor of a two-
story office building. This lease expires on December 14, 2001.

We have a variety of renewal options in each of our properties and certain
rights to secure additional space.

Competition

We do business in the highly competitive financial services industry.
PrivateBank's geographic market is primarily the greater Chicago metropolitan
area. The financial services industry is comprised of commercial banks,
thrifts, credit unions, investment banks, brokerage houses, money managers, and
other providers of financial products and services. These firms compete with
PrivateBank for one or more of the following: loans, deposits, trust services,
or investment products. Some of these firms have business units that promote

34
<PAGE>

themselves as "private banks." The typical private banking competitor is a unit
of a large commercial bank catering to the upper echelon of that bank's
customer base.

We view ourselves as the only private bank in the Chicago market focused
solely on offering an extended range of traditional banking and trust products
to affluent professionals, entrepreneurial individuals and their business
interests. While our products may be similar to those of our competitors, we
attempt to distinguish ourselves by emphasizing consistent, superior levels of
personal service. For commercial and commercial real estate lending, we compete
with a number of major Chicago-area financial institutions and suburban banks.
For trust services, we compete with the largest Chicago-area banks and some
investment managers. For private banking services, we compete with the private
banking departments of major Chicago-area financial institutions, some suburban
banks, and brokerage houses. For residential mortgage lending, our products
compete with banks, savings and loans, mortgage brokers and numerous other
financial services firms offering mortgage loans in our market area. Several of
our competitors are national or international in scope.

Some of our competitors are not subject to the same degree of regulation as
that imposed on bank holding companies and Illinois banking organizations. In
addition, the larger banking organizations, investment banks and brokerage
houses have significantly greater resources than us. As a result, such
competitors have advantages over PrivateBank in name recognition and market
penetration.

Legal Proceedings

From time to time, we may be party to various legal proceedings arising in
the normal course of our business. Since PrivateBank acts as a depository of
funds, we may be named from time to time as a defendant in various lawsuits
(such as garnishment proceedings) involving claims to the ownership of funds in
particular accounts. We are not currently subject to any pending or threatened
material legal proceedings.

Employees

As of March 31, 1999, we had 75 full-time equivalent employees. The majority
of our employees are located at the main office in downtown Chicago.
PrivateBank pays the salaries of all of our employees with the exception of
Messrs. Mandell and Roubitchek, a portion of whose salaries are paid by the
Company.

We provide our employees with a comprehensive program of benefits, some of
which are on a contributory basis, including comprehensive medical and dental
plans, life insurance plans, and 401(k) plans. We consider our relationship
with our employees to be good.

35
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial and other
data of PrivateBancorp. The selected statements of condition and statements of
income data, insofar as they relate to the five years in the five-year period
ended December 31, 1998, have been derived from our consolidated financial
statements. The following information should be read in conjunction with our
audited Consolidated Financial Statements and the Notes thereto, included
elsewhere herein. The selected financial data for the three months ended March
31, 1999 and 1998, are derived from our unaudited interim consolidated
financial statements. Such unaudited interim financial statements include all
adjustments (consisting only of normal, recurring accruals) that we consider
necessary for a fair presentation of the financial position and the results of
operations as of the dates and for the periods indicated. Information for any
interim period is not necessarily indicative of results that may be anticipated
for the full year. You should also read the following information in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in this prospectus.

<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
------------- ---------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------- ------- ------- ------- ------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Statement of
Income Data:
Interest income:
Loans, including fees... $5,636 $4,624 $19,619 $16,729 $12,152 $10,053 $6,418
Federal funds sold and
interest-bearing
deposits............... 48 498 2,181 875 1,392 1,149 358
Securities.............. 1,570 727 3,492 2,519 2,396 1,700 1,265
------ ------ ------- ------- ------- ------- ------
Total interest income. 7,254 5,849 25,292 20,123 15,940 12,902 8,041
------ ------ ------- ------- ------- ------- ------
Interest expense:
Interest-bearing demand
deposits............... 142 121 487 377 305 276 210
Savings and money
market deposit
accounts............... 1,800 1,629 6,651 5,880 4,613 3,484 2,139
Other time deposits..... 1,752 1,346 6,155 3,821 2,973 2,620 782
Funds borrowed.......... 144 -- 19 3 143 50 62
------ ------ ------- ------- ------- ------- ------
Total interest
expense.............. 3,838 3,096 13,312 10,081 8,034 6,430 3,193
------ ------ ------- ------- ------- ------- ------
Net interest income... 3,416 2,753 11,980 10,042 7,906 6,472 4,848
Provision for loan
losses.................. 285 91 362 603 524 930 305
------ ------ ------- ------- ------- ------- ------
Net interest income
after provision for
loan losses.......... 3,131 2,662 11,618 9,439 7,382 5,542 4,543
------ ------ ------- ------- ------- ------- ------
Non-interest income:
Banking and trust
services............... 442 273 1,281 1,210 911 674 414
Securities gains........ -- -- 40 -- -- -- --
------ ------ ------- ------- ------- ------- ------
Total non-interest
income............... 442 273 1,321 1,210 911 674 414
------ ------ ------- ------- ------- ------- ------
Non-interest expense:
Salaries and employee
benefits............... 1,115 1,102 4,077 3,902 3,411 2,749 2,054
Occupancy............... 352 334 1,379 1,274 990 946 745
Data processing......... 131 120 508 396 334 282 262
Marketing............... 153 139 567 500 424 296 272
Amortization of
organization costs..... -- -- -- -- 23 280 280
Professional fees....... 178 94 561 448 326 284 253
Insurance............... 41 30 134 115 82 238 342
Other expense........... 285 181 864 627 508 434 321
------ ------ ------- ------- ------- ------- ------
Total non-interest
expense.............. 2,255 2,000 8,090 7,262 6,098 5,509 4,529
------ ------ ------- ------- ------- ------- ------
Income before income
taxes.................. 1,318 935 4,849 3,387 2,195 707 428
Income tax provision.. 291 365 1,839 1,242 762 (403) 3
------ ------ ------- ------- ------- ------- ------
Net income............ $1,027 $ 570 $ 3,010 $ 2,145 $ 1,433 $ 1,110 $ 425
====== ====== ======= ======= ======= ======= ======
Per Share Data:
Basic earnings.......... $ 0.30 $ 0.18 $ 0.91 $ 0.69 $ 0.49 $ 0.39 $ 0.17
Diluted earnings........ 0.28 0.17 0.86 0.65 0.47 0.38 0.16
Dividends............... 0.03 0.02 0.08 0.07 0.07 0.03 --
Book value (at end of
period)................ 8.71 7.86 8.53 7.67 6.84 6.47 6.13
</TABLE>

36
<PAGE>

<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
-------------------- ------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- -------- -------- -------- -------- --------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial
Condition Data
(at end of period):
Total securities(1)..... $ 105,136 $ 48,322 $116,646 $ 65,336 $ 44,703 $ 38,368 $ 24,669
Total loans............. 307,766 223,746 281,965 218,495 171,343 126,069 98,380
Total assets............ 431,055 331,924 416,308 311,872 246,734 196,917 141,826
Total deposits.......... 384,454 304,660 364,994 285,773 222,571 176,868 122,925
Funds borrowed.......... 10,000 -- 20,000 -- 3,000 700 1,000
Total stockholders'
equity................. 30,054 25,400 29,274 24,688 20,222 18,445 17,471

Trust assets under
administration......... $ 637,422 $ 524,019 $611,650 $469,646 $328,662 $212,456 $168,872

Selected Financial
Ratios and Other
Data(2):
Performance Ratios:
Net interest margin(3). 3.57% 3.65% 3.61% 4.01% 3.73% 3.95% 4.09%
Net interest spread(4). 3.02 2.96 2.98 3.31 3.03 3.16 3.42
Non-interest income to
average assets........ 0.42 0.34 0.37 0.45 0.42 0.40 0.35
Non-interest expense to
average assets........ 2.13 2.49 2.29 2.71 2.79 3.31 3.79
Net overhead ratio(5).. 1.71 2.15 1.91 2.26 2.38 2.90 3.44
Efficiency ratio(6).... 58.45 67.65 60.82 64.53 69.17 77.09 86.07
Return on average
assets(7)............. 0.97 0.71 0.85 0.80 0.66 0.67 0.36
Return on average
equity(8)............. 13.84 9.11 11.27 9.49 7.38 6.22 2.94
Dividend payout ratio.. 8.36 10.63 8.74 10.13 12.88 8.03 --

Asset Quality Ratios:
Non-performing loans to
total loans........... 0.12 0.32 0.36 0.24 0.65 1.90 0.15
Allowance for possible
loan losses to:
total loans........... 1.20 1.40 1.21 1.40 1.43 1.55 1.04
non-performing loans.. 1,025 440 336 578 220 82 711
Net charge-offs to
average total loans... -- -- -- -- 0.02 -- 0.01
Non-performing assets
to total assets....... 0.08 0.21 0.24 0.17 0.45 1.22 0.10

Balance Sheet Ratios:
Loans to deposits...... 80.1 73.4 77.3 76.5 77.0 71.3 80.0
Average interest-
earning assets to
average interest-
bearing liabilities... 114.2 117.0 116.4 117.7 118.6 120.7 123.8

Capital Ratios:
Total equity to total
assets................ 6.97 7.65 7.03 7.92 8.20 9.37 12.32
Total risk-based
capital ratio......... 11.21 11.47 11.53 11.75 12.21 14.56 19.58
Tier 1 risk-based
capital ratio......... 10.05 10.22 10.40 10.50 10.96 13.31 18.49
Leverage ratio......... 7.53 7.87 7.88 8.70 8.71 9.76 13.03
</TABLE>
- --------

(1) For all periods after 1994, the entire securities portfolio was classified
"Available for Sale." For 1994, the entire securities portfolio was
classified "Held to Maturity."

(2) Certain financial ratios for interim periods have been annualized.

(3) Net interest income divided by average interest-earning assets.

(4) Yield on average interest-earning assets less rate on average interest-
bearing liabilities.

(5) Non-interest expense less non-interest income divided by average total
assets.

(6) Non-interest expense divided by the sum of net interest income plus non-
interest income.

(7) Net income divided by average total assets.

(8) Net income divided by average common equity.

37
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with "Selected
Consolidated Financial Data" and our Consolidated Financial Statements and
Notes thereto, each appearing elsewhere in this prospectus. In addition to
historical information, the following "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements that involve risks and uncertainties. Our actual results could
differ significantly from those anticipated in these forward-looking statements
as a result of certain factors, including those discussed in "Risk Factors"
contained elsewhere in this prospectus.

Overview

PrivateBancorp was organized in 1989 to serve as the holding company for a
de novo bank, The PrivateBank and Trust Company which provides personal and
commercial banking services to affluent individuals, professionals and their
business interests in the Chicago metropolitan area. We opened our flagship
Chicago location in 1991, and our full-service offices in the affluent
communities of Wilmette, Illinois, a North Shore suburb of Chicago, in 1994,
and Oak Brook, Illinois, located in the rapidly growing western suburbs, in
1997.

In June 1999, we reached an agreement in principle to acquire Towne Square
Financial Corporation which we believe provides us an attractive opportunity to
establish a new office in St. Charles, Illinois, a far western suburb. Upon
consummation of the transaction, we will incur a one-time, merger-related
charge to earnings, currently estimated to be approximately $1.29 million. See
"Pending Acquisition" for a discussion of the anticipated financial impact of
this transaction and start-up costs associated with the planned opening of the
St. Charles branch.

Since inception, we have experienced rapid internal growth as a result of:

. developing new banking relationships through the lending expertise of
our senior banking officers;
. developing new clients primarily through referrals from professional
advisors and existing clients;
. expanding our products offered and cross-marketing our existing
products;
. expanding our business lines through strategic partnerships; and
. opening new branches.

The profitability of our operations depends on our net interest income,
provision for possible loan losses, non-interest income, and non-interest
expense. Net interest income is the difference between the income we receive on
our loan and investment portfolios and our cost of funds, which consists of
interest paid on deposits and borrowings. The provision for possible loan
losses reflects the cost of credit risk in our loan portfolio. Non-interest
income consists primarily of trust fee income, and to a lesser extent, \net
securities gains and fees for ancillary banking services. Non-interest expense
includes salaries and employee benefits as well as occupancy, data processing,
marketing, professional fees, insurance, and other expenses.

Net interest income is dependent on the amounts and yields of interest-
earning assets as compared to the amounts and rates on interest-bearing
liabilities. Net interest income is sensitive to changes in market rates of
interest and our asset/liability management procedures in coping with such
changes. The provision for loan losses is dependent on increases in the loan
portfolio, management's assessment of the collectibility of the loan portfolio,
loss, experience as well as economic and market factors. We earn trust fees for
managing and administering investment funds for a variety of individuals,
families and fiduciary relationships. Non-interest expenses are heavily
influenced by the growth of operations. Growth in the number of client
relationships directly affects the majority of our expense categories.

38
<PAGE>

Our primary financial objectives are to continue to grow our loan portfolio
while maintaining high asset quality, and to increase non-interest income while
maintaining strong expense controls. We have maintained high asset quality
while managing rapid internal growth since our inception. We believe our
history of strong credit quality is testament to our sound credit practices, as
well as evidence that our affluent target client is a better than average
credit risk, resulting in lower loan charge-offs and lower loan loss provisions
than at traditional banks. The following table shows our growth in loans and
our credit quality history:

<TABLE>
<CAPTION>
December 31,
March --------------------------------------
31, 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Average loans, net of
unearned discount....... $288,322 $233,987 $195,237 $140,767 $111,637
Net charge-offs to
average loans........... -- -- -- 0.02% --
Non-performing loans to
total loans............. 0.12% 0.36% 0.24% 0.65% 1.90%
</TABLE>

Our non-interest income from fees and deposit service charges are below peer
group levels. This is largely the result of the profile of our typical client.
Our clients tend to have larger deposit account balances than customers of
traditional banks. Because average balances tend to be high, we do not earn
high service charge income typical of community banks. In 1998, we entered into
an alliance with Mesirow Financial to provide insurance services to our
clients. It is expected that fees related to the sale of insurance services
will increase in 1999 and future years.

Higher account balances result in relatively low levels of transactions per
account dollar and therefore our accounts are less costly to maintain. We
believe that as we continue to grow, we will continue to experience lower
overhead costs than other banks with similar aggregate levels of loans and
deposits. We intend to continue to improve our operating efficiency by growing
net interest income and non-interest income at a faster rate than non-interest
expense, and developing new sources of non-interest income. The following table
highlights our improving efficiency measures:

<TABLE>
<CAPTION>
December 31,
March 31, ----------------------
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Non-interest expense to average assets.... 2.13% 2.29% 2.71% 2.79% 3.31%
Net overhead ratio........................ 1.71 1.91 2.26 2.38 2.90
Efficiency ratio.......................... 58.5 60.8 64.5 69.2 77.1
</TABLE>

Results of Operations

Net income

In 1998, we earned $3.0 million as compared to $2.1 million in 1997. This
40.3% increase in earnings was primarily the result of growth in the balance
sheet, particularly in the loan portfolio. Also contributing to improved
performance were increases in the investment portfolio, a reduced provision for
loan losses, increases in trust fees, and improved operating expense levels
which grew at a slower rate than the combined income components.

Diluted earnings per share for 1998 were $0.86, as compared to $0.65 for
1997, an increase of 30.3%. The growth rate of diluted earnings per share was
lower than the growth rate in earnings due to an increase in the number of
shares outstanding between the years and the value of existing stock options.
Return on average assets for 1998 was 0.85%, as compared to 0.80% for 1997.
Return on average equity for 1998 was 11.27%, as compared to 9.49% for 1997.

In 1997, we earned $2.1 million as compared to $1.4 million in 1996. This
49.7% increase was primarily the result of growth in the loan portfolio and
other balance sheet categories. Fees from banking and trust services grew by
32.8% in 1997 over 1996, while the provision for loan losses and other expense
grew by a combined 18.8%. Diluted earnings per share for 1997 were $0.65, as
compared to $0.47 for 1996. Return on

39
<PAGE>

average assets for 1997 was 0.80%, as compared to 0.66% for 1996. Return on
average equity for 1997 was 9.49%, as compared to 7.38% for 1996.

During the first quarter of 1999, we earned $1.0 million as compared to
$570,000 during the first quarter of 1998. This 80.1% increase was primarily
the result of improvements in net interest income and non-interest income which
more than offset increases in the provision for loan losses and non-interest
expenses. Tax strategies implemented in late 1998 resulted in a reduced tax
provision in the first quarter of 1999 as compared to the first quarter of
1998, despite higher pre-tax earnings. Diluted earnings per share for the first
quarter of 1999 was $0.28 as compared to $0.17 for the first quarter of 1998.
Annualized return on average assets and annualized return on average equity for
the first quarter of 1999 were 0.97% and 13.84%, respectively, as compared to
0.71% and 9.11% for the first quarter of 1998, respectively.

Net interest income and net interest margin.

In 1998, net interest income increased from 1997 by $1.9 million, or 19.3%,
to $12.0 million. During the same period, the net interest margin decreased
from 4.01% to 3.61%. Net interest income is affected by both the volume of
assets and liabilities we hold, and the corresponding rates earned and paid.

Earning assets, on average, grew by $80.3 million in 1998, while yields
dropped from 8.03% in 1997 to 7.65% in 1998. Rates earned on assets were
affected by a general reduction in interest rate levels. During 1998, the
Federal Open Market Committee lowered the target federal funds rate on three
separate occasions, by a total of 75 basis points. Similar reductions in
Treasury rates, which are used as indices for several loan products, affected
the average yield on our loan portfolio.

In 1998, average interest-bearing liabilities grew by $71.8 million, while
average rates paid on interest bearing liabilities dropped from 4.72% in 1997
to 4.67% in 1998. Due to rate compression and competitive pressures, we were
unable to reduce rates paid as quickly or as significantly as experienced on
the asset side of the balance sheet. The volume of non-interest bearing funds,
largely comprised of demand deposits and capital, also affects the net interest
margin. In 1998, the effect of non-interest bearing funds on the net interest
margin added 63 basis points to the margin. In 1997, the effect was an addition
of 70 basis points to the net interest margin.

In 1997, net interest income increased from 1996 by $2.1 million, or 27.0%,
to $10.0 million. During the same period, net interest margin increased from
3.73% to 4.01%. Average earning assets grew by $45.7 million, while yields
increased from 7.66% in 1996 to 8.03% in 1997. Yields on assets were affected
by a slight increase in interest rate levels throughout the year. In 1996,
loans comprised 68.5% of earning assets as compared to 77.7% of earning assets
in 1997. Comparatively, this had a positive effect on asset yields in 1997. In
1997, interest-bearing liabilities, on average, grew by $40.2 million while
average rates paid on interest-bearing liabilities increased from 4.63% in 1996
to 4.72% in 1997. Rates paid increased slightly in all categories in 1997. The
effect of non-interest-bearing funds on the net interest margin was 70 basis
points in both 1996 and 1997.

Net interest income increased by 24.1% from $2.8 million in the first
quarter of 1998, to $3.4 million in the first quarter of 1999. Lower interest
rate levels and an increased percentage of assets funded by interest-bearing
liabilities compressed the net interest margin from 3.65% in the first quarter
of 1998, to 3.57% in the first quarter of 1999. The increase in average assets
of more than $100 million reflects increases in both loans and investment
securities. The average balance of federal funds sold in the first quarter of
1999 was significantly less than in the first quarter of 1998. The cost of
interest-bearing liabilities in the first quarter of 1999 was 4.38%, as
compared to 4.83% in the first quarter of 1998.

40
<PAGE>

Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates
and Interest Differential

The following table sets forth the average balances, the interest earned or
paid thereon, and the effective interest rate yield or cost for each major
category of interest-earning assets, interest-bearing liabilities and
stockholders' equity for the three months ended March 31, 1999 and 1998, and
for the years ended December 31, 1998, 1997 and 1996 on a tax-equivalent
basis, assuming a 34% tax rate.

<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------
1999 1998 1998
-------------------------- -------------------------- ----------------------
Average Average Average Average Average
Balance Yield/ Balance Yield/ Balance
(1) Interest Cost (1) Interest Cost (1) Interest
-------- -------- ------- -------- -------- ------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold. $ 4,167 $ 48 4.61% $ 36,775 $ 498 5.42% $ 40,230 $ 2,181
Taxable investment
securities......... 112,724 1,570 6.28 48,339 727 6.16 57,427 3,491
Loans, net of
unearned discount.. 288,322 5,636 7.88 219,133 4,624 8.55 233,987 19,620
-------- ------ -------- ------ -------- -------
Total earning
assets.......... 405,213 7,254 7.40 304,247 5,849 7.79 331,644 25,292
-------- ------ -------- ------ -------- -------
Cash and due from
banks--non-interest
bearing............ 11,664 8,784 9,989
Allowance for
possible loan
losses............. (3,470) (3,082) (3,218)
Premises and
equipment, net..... 1,569 1,885 1,781
Other assets....... 4,898 3,704 4,187
-------- -------- --------
Total assets.... $419,874 $315,538 $344,383
======== ======== ========
Liabilities and
Stockholders'
Equity
Deposits-interest
bearing:
Interest-bearing
demand accounts... $ 27,199 142 2.12% $ 21,742 121 2.26% $ 22,073 487
Savings and money
market deposits... 177,600 1,800 4.11 142,077 1,629 4.65 151,558 6,651
Time deposits..... 139,512 1,752 5.10 96,226 1,346 5.68 111,407 6,155
-------- ------ -------- ------ -------- -------
Total interest-
bearing
deposits........ 344,311 3,694 4.36 260,045 3,096 4.83 285,038 13,293
-------- ------ -------- ------ -------- -------
Funds borrowed..... 10,485 144 5.07 -- -- 373 19
Term-debt and
subordinated debt.. -- -- -- -- -- --
-------- ------ -------- ------ -------- -------
Total interest-
bearing
liabilities..... 354,796 3,838 4.38 -- 3,096 285,411 13,312
-------- ------ -------- ------ -------- -------
Non-interest
bearing deposits... 32,990 28,594 31,335
Other liabilities.. 3,487 3,620 3,246
Stockholders'
equity............. 28,601 23,279 24,391
-------- -------- --------
Total
liabilities and
stockholders'
equity.......... $419,874 $315,538 $344,383
======== ======== ========
Net interest
income/spread...... $3,416 3.02% $2,753 2.96% $11,980
====== ==== ====== ==== =======
Net interest
margin............. 3.57% 3.65%
==== ====
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
1997 1996
-------------------------- --------------------------
Average Average Average Average Average
Yield/ Balance Yield/ Balance Yield/
Cost (1) Interest Cost (1) Interest Cost
------- --------- -------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold. 5.35% $ 15,917 $ 875 5.43% $ 26,287 $ 1,393 5.22%
Taxable investment
securities......... 6.20 40,164 2,519 6.27 38,569 2,396 6.21
Loans, net of
unearned discount.. 8.40 195,237 16,729 8.60 140,767 12,151 8.51
--------- -------- --------- --------
Total earning
assets.......... 7.65 251,318 20,123 8.03 205,623 15,940 7.66
--------- -------- --------- --------
Cash and due from
banks--non-interest
bearing............ 7,642 6,183
Allowance for
possible loan
losses............. (2,791) (2,198)
Premises and
equipment, net..... 1,995 1,280
Other assets....... 2,690 2,113
--------- ---------
Total assets.... $260,854 $213,001
========= =========
Liabilities and
Stockholders'
Equity
Deposits-interest
bearing:
Interest-bearing
demand accounts... 2.21% $ 17,722 377 2.13% $ 14,523 305 2.10%
Savings and money
market deposits... 4.39 127,560 5,880 4.61 102,759 4,613 4.48
Time deposits..... 5.53 68,252 3,821 5.60 53,601 2,973 5.54
--------- -------- --------- --------
Total interest-
bearing
deposits........ 4.67 213,534 10,078 4.72 170,883 7,891 4.61
--------- -------- --------- --------
Funds borrowed..... 5.06 49 3 5.83 2,483 143 5.67
Term-debt and
subordinated debt.. -- -- -- -- -- -- --
--------- -------- --------- --------
Total interest-
bearing
liabilities..... 4.67 213,583 10,081 4.72 173,366 8,034 4.63
--------- -------- --------- --------
Non-interest
bearing deposits... 25,053 20,783
Other liabilities.. 1,645 1,073
Stockholders'
equity............. 20,573 17,779
--------- ---------
Total
liabilities and
stockholders'
equity.......... $260,854 $213,001
========= =========
Net interest
income/spread...... 2.98% $10,042 3.31% $ 7,906 3.03%
======= ======== ======= ======== =======
Net interest
margin............. 3.61% 4.01% 3.73%
======= ======= =======
</TABLE>
- ----
(1) Average balances were generally computed using daily balances.

41
<PAGE>

The following table shows the dollar amount of changes in interest income
and interest expense by major categories of interest-earning assets and
interest-bearing liabilities attributable to changes in volume or rate or both,
for the periods indicated. Volume variances are computed using the change in
volume multiplied by the previous year's rate. Rate variances are computed
using the changes in rate multiplied by the previous year's volume. The change
in interest due to both rate and volume has been allocated between the factors
in proportion to the relationship of the absolute dollar amounts of the change
in each.

<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
----------------------- -------------------------------------------
1998 Compared to 1997 Compared to
1999 Compared to 1998 1997 1996
----------------------- --------------------- ---------------------
Change Change Change Change Change Change
Due to Due to Total Due to Due to Total Due to Due to Total
Rate Volume Change Rate Volume Change Rate Volume Change
------- ------ ------ ------ ------ ------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal funds sold...... $ (72) $ (378) $ (450) $ (11) $1,317 $1,306 $ 52 $ (570) $ (518)
Investment securities... 26 817 843 (30) 1,002 972 23 100 123
Loans, net of unearned
discount............... (2,155) 3,167 1,012 (414) 3,305 2,891 96 4,482 4,578
------- ------ ------ ----- ------ ------ ---- ------ ------
Total interest income.. (2,201) 3,606 1,405 (455) 5,624 5,169 171 4,012 4,183
------- ------ ------ ----- ------ ------ ---- ------ ------
Interest-bearing demand
accounts............... (44) 65 21 14 96 110 4 68 72
Savings and money market
deposits............... (995) 1,166 171 (292) 1,063 771 126 1,141 1,267
Time deposits........... (842) 1,248 406 (56) 2,390 2,334 27 821 848
Funds borrowed.......... -- 144 144 -- 16 16 4 (144) (140)
------- ------ ------ ----- ------ ------ ---- ------ ------
Total interest expense. (1,881) 2,623 742 (334) 3,565 3,231 161 1,886 2,047
------- ------ ------ ----- ------ ------ ---- ------ ------
Net interest income..... $ (320) $ 983 $ 663 $(121) $2,059 $1,938 $ 10 $2,126 $2,136
======= ====== ====== ===== ====== ====== ==== ====== ======
</TABLE>

Provision for loan losses.

The provision for loan losses decreased 60.0% from $603,000 in 1997 to
$362,000 in 1998. Throughout 1998, the allowance for loan losses was reassessed
to determine the appropriate level to be maintained. This analysis was
influenced by the following factors: the volume and quality of loans and
commitments in the portfolio, loss experience, and economic conditions. The
reduced provision, despite an increasing portfolio, reflects management's
assessment of the overall risk in the loan portfolio.

The provision for loan losses increased from $524,000 in 1996 to $603,000 in
1997. This 15.1% increase was less than the rate of increase of the loan
portfolio. The quality of the loan portfolio in 1997 continued to be as strong
as experienced in 1996.

The provision for loan losses in the first quarter of 1999, was $285,000 as
compared to $91,000 in the first quarter of 1998. The reason for this increase
was the sharp increase in loan balances of $25.8 million during the first three
months of 1999 as compared to $5.3 million in the first three months of 1998.

Non-interest income.

Our total non-interest income increased 9.2% from $1.2 million in 1997 to
$1.3 million in 1998. The largest component of other income is trust fees.
Trust fees increased 9.7% from $937,000 in 1997 to $1.0 million in 1998,
reflecting growth in trust assets under administration of $141.6 million, or
30.1%, to $611.6 million at year end 1998. Trust assets have more than doubled
since mid-1996. This growth is in part attributable to our success in
attracting larger blocks of business and the favorable stock market. During
1997, we earned fees of $119,000 while administering a problem account. This
account was transferred to another trust institution late in 1997. Without this
income in 1997, the increase in trust income in 1998 over 1997 would have been
$210,000, or 25.7%. In 1998, we realized gains from securities sales of
$40,000.

Our non-interest income increased 32.8% from $911,000 in 1996 to $1.2
million in 1997. During this period, trust fees increased 62.4% from $577,000
in 1996 to $937,000 in 1997. Without fees earned on the

42
<PAGE>

transferred trust account (on which we earned $59,000 in 1996), our annual
increase from 1996 to 1997 would have been 57.9%. In 1997, other income was
enhanced by consulting fees of $132,000 which were of a non-recurring nature.

Non-interest income increased by 61.9% to $442,000 in the first quarter of
1999, as compared to $273,000 in the first quarter of 1998. The major component
of non-interest income, trust fees grew to $320,000 in the first quarter of
1999, as compared to $229,000 in the first quarter of 1998. This 39.7% increase
follows similar increases in trust assets under administration.

Non-interest expense.

<TABLE>
<CAPTION>
Three Months
Ended March Year Ended December
31, 31,
------------- --------------------
1999 1998 1998 1997 1996
------ ------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits............... $1,115 $1,102 $4,077 $3,902 $3,411
Occupancy.................................... 352 334 1,379 1,274 990
Data processing.............................. 131 120 508 396 334
Marketing.................................... 153 139 567 500 424
Amortization of organization costs........... -- -- -- -- 23
Professional fees............................ 178 94 561 448 326
Insurance.................................... 41 30 134 115 82
Other expense................................ 285 181 864 627 508
------ ------ ------ ------ ------
Total non-interest expense................. $2,255 $2,000 $8,090 $7,262 $6,098
====== ====== ====== ====== ======
</TABLE>

Total non-interest expense increased 11.4% from $7.3 million in 1997, to
$8.1 million in 1998. Non-interest expense as a percentage of average assets
declined from 2.7% in 1997 to 2.3% in 1998, reflecting the increased efficiency
of our infrastructure in supporting our growth rate. Similar improvements in
efficiency have been achieved in each year of the Company's existence. Non-
interest expense increased 19.1% from $6.1 million in 1996, to $7.3 million in
1997. Non-interest expense as a percentage of average assets declined from 2.8%
in 1996 to 2.7% in 1997.

The efficiency ratio, which measures the percentage of net revenue that is
paid as non-interest expense, has improved each year from 69% in 1996, to 65%
in 1997, to 61% in 1998. This is an indication that expenses have not grown as
quickly as revenues. It also supports the statement that the Company was able
to grow into the infrastructure established in its early years.

Salaries and employee benefits increased 4.5% to $4.1 million in 1998 from
$3.9 million in 1997. Growth from 1996 to 1997 was $491,000, or 14.4%. Staff
levels have been kept under control with the number of full time equivalent
employees increasing from 59.0 at year-end 1996, to 66.5 at year-end 1997 and
70.5 at year-end 1998. Except for staffing of the Oak Brook facility at year-
end 1996, there have been no additions at the executive level for the periods
discussed. Staff additions have been necessary to support growth of the
business.

Occupancy costs related to our facilities showed increases of $105,000, or
8.2% from 1997 to 1998, and $284,000, or 28.7% from 1996 to 1997. The majority
of our increase in operating expenses in 1997 was related to the opening of our
Oak Brook office in January 1997, and a full year's rent paid in 1997 for an
additional floor of the Chicago office.

Insurance costs related to our property, liability, and bond coverages
increased by $19,000, or 16.5%, from 1997 to 1998. The increased costs are
primarily related to increases in coverage commensurate with our growth.
Deposit insurance was an insignificant expense in each of the years.

Data processing increases for 1997 and 1998 are volume-related. During the
third quarter of 1999, we will be converting the processing of our loan and
deposit applications to a different service bureau. This is the result

43
<PAGE>

of our current processor's announcement that it will be terminating operations
in 2000. We expect our data processing expense to increase in 1999 as a result
of this conversion, and remain at higher levels in the years to follow.

Professional fees which include legal, accounting and consulting services
increased by $113,000, or 25.2% from 1997 to 1998, and $122,000, or 37.4% from
1996 to 1997. Reasons for these increases include increased usage of audit and
accounting services, consulting services related to regulatory compliance, and
in 1998, increases in investment advisory services related to our investment
portfolio.

Other expenses include office supplies, postage, telephone, delivery,
training, director fees, filing fees and duplicating. The majority of increases
in these items are related to growth of the Company.

Non-interest expense increased by 12.8% to $2.3 million in the first quarter
of 1999, as compared to $2.0 million in the first quarter of 1998. This
percentage increase was well below increase percentages earned in net interest
income and non-interest income. Most notable were increases in professional
fees related to bank investment portfolio consultants, year 2000 consultants
and internal audit expenses.

Provision for income taxes.

Our consolidated income tax rate varies from statutory rates principally due
to certain interest income which is tax-exempt for federal and state purposes,
and our expenses which are disallowed for tax purposes. Increases in our income
tax provision for the three years ended December 31, 1998 are primarily related
to increases in pre-tax earnings.

Income taxes in the first quarter of 1999, included the effect of federally
non-taxable interest earned on our municipal bond portfolio and the result of a
tax-advantaged investment program initiated in February 1999.

Financial Condition

Loans.

Our loan clients include individuals, partnerships and corporations. Loan
types include commercial real estate, which is concentrated in apartment
buildings, residential real estate, commercial, personal, home equity, and
construction. Loan quality has remained high with low levels of delinquencies
and minimal charge-offs.

The following table sets forth our loan portfolio by category as of March
31, 1999, and as of December 31 for the previous five fiscal years:

<TABLE>
<CAPTION>
December 31,
March -------------------------------------------
31, 1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial real estate..... $108,599 $ 94,392 $ 55,429 $ 39,452 $ 29,114 $22,402
Residential real estate.... 62,208 54,171 56,307 45,012 25,973 21,696
Commercial................. 53,834 46,800 33,862 28,004 22,906 18,092
Personal................... 45,122 44,094 42,077 35,339 28,150 20,466
Home equity................ 19,860 20,100 20,680 20,683 18,707 11,504
Construction............... 18,143 22,408 10,140 2,853 1,219 747
Bankers' acceptances....... -- -- -- -- -- 3,473
-------- -------- -------- -------- -------- -------
Total loans.............. $307,766 $281,965 $218,495 $171,343 $126,069 $98,380
======== ======== ======== ======== ======== =======
</TABLE>

44
<PAGE>

The following table classifies the loan portfolio, by category, at March 31,
1999, by date at which the loans mature:

<TABLE>
<CAPTION>
More than one
After year
One year From one five ----------------
or less to five years years Total Fixed Variable
-------- ------------- -------- -------- ------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial real estate.. $ 16,388 $ 53,400 $ 38,811 $108,599 $36,538 $ 55,673
Residential real estate. 3,142 4,639 54,427 62,208 13,476 45,590
Commercial.............. 32,233 21,236 365 53,834 4,741 16,860
Personal................ 38,018 6,191 913 45,122 1,092 6,012
Home equity............. 1,032 9,941 8,887 19,860 -- 18,828
Construction............ 11,932 5,906 305 18,143 1,993 4,218
-------- -------- -------- -------- ------- --------
Total loans........... $102,745 $101,313 $103,708 $307,766 $57,840 $147,181
======== ======== ======== ======== ======= ========
</TABLE>

Asset Quality.

The following table classifies our non-performing loans as of the dates
shown:

<TABLE>
<CAPTION>
December 31,
March 31, ----------------------------------
1999 1998 1997 1996 1995 1994
--------- ------ ---- ------ ------ ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans................. $-- $ -- $-- $ -- $2,298 $--
Loans past due 90 days or more... 361 1,016 527 1,116 100 144
---- ------ ---- ------ ------ ----
Total non-performing loans..... 361 1,016 527 1,116 2,398 144
---- ------ ---- ------ ------ ----
Other real estate owned.......... -- -- -- -- -- --
---- ------ ---- ------ ------ ----
Total non-performing assets.... $361 $1,016 $527 $1,116 $2,398 $144
==== ====== ==== ====== ====== ====
Total non-performing loans to
total loans..................... 0.12% 0.36% 0.24% 0.65% 1.90% 0.15%
Total non-performing assets to
total assets.................... 0.08 0.24 0.17 0.45 1.22 0.10
</TABLE>

It is our policy to discontinue the accrual of interest income on any loan
for which we have reasonable doubt as to the payment of interest or principal.
Nonaccrual loans are returned to an accrual status when the financial position
of the borrower indicates there is no longer any reasonable doubt as to the
payment of principal or interest.

Other than those loans reflected in the table above, we had no significant
loans for which the terms had been renegotiated or restructured, or for which
we had serious doubts as to the ability of the borrower to comply with
repayment terms. We did not have any Other Real Estate Owned as of any of the
dates shown.

Potential Problem Loans. In addition to those loans reflected in the table
above, we have identified some loans through our problem loan identification
system which exhibit a higher than normal credit risk. Loans in this category
include those with characteristics such as those past maturity more than 90
days, those that have recent adverse operating cash flow or balance sheet
trends, or have general risk characteristics that the managing director
believes might jeopardize the future timely collection of principal and
interest payments. The principal amount of loans in this category as of March
31, 1999 was $960,000. At March 31, 1999, there were no significant loans which
were classified by any bank regulatory agency that are not included above as
nonaccrual, past due or restructured.

Loan Concentrations. Loan concentrations are considered to exist when there
are amounts loaned to a multiple number of borrowers engaged in similar
activities which would cause them to be similarly impacted by economic or other
conditions. Other than loans made to borrowers residing in the Chicago
metropolitan area and our involvement in lending secured by real estate, we had
no concentrations of loans exceeding 10% of total loans at March 31, 1999.

45
<PAGE>

Allowance for Loan Losses.

We believe our loan loss experience to date reflects the high credit quality
of our loan portfolio. The following table shows changes in the allowance for
loan losses resulting from additions to the allowance and loan charge-offs for
each of the periods shown. All charge-offs have been of loans in the personal
loan category. There were no recoveries on loans previously charged off in any
of the periods. Charge-offs as a percentage of average total loans have been
negligible.

<TABLE>
<CAPTION>
December 31,
March 31, -------------------------------------------
1999 1998 1997 1996 1995 1994
--------- -------- -------- -------- -------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of
period.................. $ 3,410 $ 3,050 $ 2,450 $ 1,955 $ 1,025 $ 728

Loans charged-off:
Commercial real estate... -- -- -- -- -- --
Residential real estate.. -- -- -- -- -- --
Commercial............... -- -- -- -- -- --
Personal................. -- 2 3 29 -- 8
Home equity.............. -- -- -- -- -- --
Construction............. --
-------- -------- -------- -------- -------- -------
Total loans charged-
off................... -- 2 3 29 -- 8
-------- -------- -------- -------- -------- -------
Provision for loan
losses.................. 285 362 603 524 930 305
-------- -------- -------- -------- -------- -------
Balance at end of period. $ 3,695 $ 3,410 $ 3,050 $ 2,450 $ 1,955 $ 1,025
======== ======== ======== ======== ======== =======
Average total loans...... $288,987 $234,486 $195,605 $141,043 $111,855 $80,717
======== ======== ======== ======== ======== =======
</TABLE>

The following table shows our allocation of the allowance for loan losses by
specific category at the end of each of the periods shown. We considered
various qualitative and quantitative factors about the loan portfolio which we
deemed relevant.

<TABLE>
<CAPTION>
December 31,
March 31, ------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
% of % of % of % of % of % of
Total Total Total Total Total Total
Amount Allowance Amount Allowance Amount Allowance Amount Allowance Amount Allowance Amount Allowance
------ --------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial real
estate.......... $ 928 25.1% $ 732 21.5% $ 429 14.1% $ 295 12.0% $ 226 11.6% $ 174 17.0%
Residential real
estate.......... 303 8.2 277 8.1 306 10.0 254 10.4 142 7.3 125 12.2
Commercial....... 833 22.5 693 20.3 464 15.2 422 17.2 913 46.7 271 26.4
Personal......... 509 13.8 545 16.0 1,037 34.0 973 39.7 392 20.1 290 28.3
Home equity...... 217 5.9 201 5.9 201 6.6 184 7.5 164 8.4 105 10.2
Construction..... 185 5.0 236 6.9 106 3.5 28 1.1 13 0.7 7 0.7
Unallocated...... 720 19.5 726 21.3 507 16.6 294 12.0 105 5.4 53 5.2
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total........... $3,695 100.0% $3,410 100.0% $3,050 100.0% $2,450 100.0% $1,955 100.0% $1,025 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Control of our loan quality is continually monitored by management and is
reviewed by the loan/investment committee of the Board of Directors of
PrivateBank on a monthly basis. The amount of additions to the allowance for
loan losses which are charged to earnings through the provision for loan losses
are determined based on a variety of factors, including assessment of the
credit risk of the portfolio, delinquent loans, an evaluation of current and
prospective economic conditions in the market area, actual charge-offs during
the year and historical loss experience.

We maintain an allowance for loan losses sufficient to absorb credit losses
inherent in our loan portfolio. The allowance for loan losses represents our
estimate of probable losses in the portfolio at each balance sheet date and is
supported by all available

46
<PAGE>

and relevant information. The allowance contains provisions for probable
losses that have been identified relating to specific borrowing relationships
as well as probable losses inherent in our loan portfolio and credit
undertakings that are not specifically identified. We believe that the
allowance for loan losses is adequate to provide for estimated probable credit
losses inherent in our loan portfolio.

Investment Securities.

Investments are substantially comprised of federal funds sold and
securities. "Federal funds sold" are overnight investments in which, except
for cash reserves, all remaining funds are invested. Our securities portfolio
is primarily comprised of U.S. Treasury securities and agency obligations,
municipal bonds, collateralized mortgage obligations, and corporate
securities. In the fourth quarter of 1998, we invested in municipal bonds to
take advantage of their favorable taxable equivalent yields. Equity securities
consist of minimal investments in the FHLB and NHS.

All of our investment securities are classified as "available for sale" to
give us the flexibility to alter the composition of our portfolio, and are
carried at fair value. The table below shows the estimated fair value of
investment securities at the dates indicated, presented by category.

<TABLE>
<CAPTION>
December 31,
March 31, ------------------------
1999 1998 1997 1996
--------- -------- ------- -------
(in thousands)
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Treasury securities and U.S. Government
agency obligations......................... $ 5,058 $ 6,095 $ 6,066 $ 7,095
State and political subdivision obligations. 40,608 37,804 -- --
Collateralized mortgage obligations......... 47,536 61,414 40,308 14,171
Corporate debt securities................... 10,280 10,263 18,269 21,951
Equity securities........................... 1,654 1,315 740 1,400
-------- -------- ------- -------
Total investment securities............... $105,136 $116,891 $65,383 $44,617
======== ======== ======= =======
</TABLE>

Maturities of investment securities, by category, as of March 31, 1999, are
shown in the following table.

<TABLE>
<CAPTION>
Within From one From five to After Equity
one year to five years ten years ten years securities Total
-------- ------------- ------------ --------- ---------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities
and U.S. Government
agency obligations..... $4,039 $1,019 $ -- $ -- $ -- $ 5,058
State and political
subdivision
obligations............ 451 2,598 2,764 34,795 -- 40,608
Collateralized mortgage
obligations............ -- -- 4,707 42,829 -- 47,536
Corporate debt
securities............. -- -- -- 10,280 -- 10,280
Equity securities....... -- -- -- -- 1,654 1,654
------ ------ ------ ------- ------ --------
Total investment
securities........... $4,490 $3,617 $7,471 $87,904 $1,654 $105,136
====== ====== ====== ======= ====== ========
</TABLE>

The weighted average yield (computed on a tax equivalent basis) for each
range of maturities of securities, by category, is shown below as of March 31,
1999:

<TABLE>
<CAPTION>
Within From one From five to After Equity
one year to five years ten years ten years securities Total
-------- ------------- ------------ --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities
and U.S. Government
agency obligations..... 6.02% 5.80% -- -- -- 5.97%
State and political
subdivisions
obligations............ 4.82 5.27 5.98% 7.09% -- 6.88
Collateralized mortgage
obligations............ -- -- 5.22 5.88 -- 5.81
Corporate debt
securities............. -- -- -- 7.05 -- 7.05
Equity securities....... -- -- -- -- 6.10% 6.10
---- ---- ---- ---- ---- ----
Total investment
securities........... 5.90% 5.42% 5.50% 6.50% 6.10% 6.36%
==== ==== ==== ==== ==== ====
</TABLE>

47
<PAGE>

Deposits.

In 1998, total deposits increased by $79.2 million, or 27.7%, to $365.0
million. Over each of the past three years, our deposits have grown at rates in
excess of 25% per year. We rely upon our clients to provide funds to support
our lending and investment activities. Our deposit mix is substantially
comprised of interest-bearing deposits. As a client service, we facilitate
quick and convenient transfers of funds to checking accounts on an as-needed
basis. This contributes to our clients keeping account balances that we believe
to be in excess of those at most other financial institutions. While these
larger, interest-bearing accounts tend to increase our cost of funds, we are
able to support our asset base with a smaller number of accounts to service, at
a lower cost per dollar of deposits, than at similar banks of similar asset
size. For the period ended March 31, 1999, the average aggregate balance per
client relationship was approximately $94,000.

The following table presents the balances of deposits by category, and each
category as a percentage of total deposits, at March 31, 1999 and at December
31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------
March 31, 1999 1998 1997 1996
----------------- ----------------- ----------------- -----------------
Percent Percent Percent Percent
Balance of Total Balance of Total Balance of Total Balance of Total
-------- -------- -------- -------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Demand.................. $ 32,582 8.5% $ 39,490 10.8% $ 34,234 12.0% $ 21,177 9.5%
Savings................. 499 0.1 482 0.1 640 0.2 258 0.1
Interest-bearing demand. 27,390 7.1 26,508 7.3 26,084 9.1 17,263 7.8
Money market............ 180,372 46.9 170,231 46.6 134,985 47.3 122,589 55.1
Certificates of deposit. 143,611 37.4 128,283 35.2 89,830 31.4 61,284 27.5
-------- ----- -------- ----- -------- ----- -------- -----
Total deposits........ $384,454 100.0% $364,994 100.0% $285,773 100.0% $222,571 100.0%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>

The aggregate amounts of time deposits, in denominations of $100,000 or
more, by maturity, are shown below as of the dates indicated:

<TABLE>
<CAPTION>
December 31,
March ------------------------
31, 1999 1998 1997 1996
-------- -------- ------- -------
(in thousands)
<S> <C> <C> <C> <C>
Three months or less................... $ 89,109 $ 67,922 $37,389 $26,833
Over three through six months.......... 16,478 18,974 16,200 7,638
Over six through twelve months......... 14,348 17,664 16,100 9,353
Over twelve months..................... 1,248 904 941 400
-------- -------- ------- -------
Total................................ $121,183 $105,464 $70,630 $44,224
======== ======== ======= =======
</TABLE>

Over the past several years, in a low interest rate, relatively flat yield
curve environment, our clients have chosen to keep the maturities of their
deposits short. We expect these short-term certificates of deposit to be
renewed on terms and with maturities similar to those currently in place. In
the event that certain of these certificates of deposits are not renewed and
the funds are withdrawn from the bank, we will replace those deposits with
other forms of borrowed money or capital as discussed below, or liquidate
assets to reduce our funding needs.

Liquidity and Capital Resources

The following table reflects various measures of our capital at March 31,
1999, and at December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
December 31,
March 31, -------------------
1999 1998 1997 1996
--------- ----- ----- -----
<S> <C> <C> <C> <C>
Total equity to total assets............... 6.97% 7.03% 7.92% 8.20%
Total risk-based capital ratio............. 11.21 11.53 11.75 12.21
Tier 1 risk-based capital ratio............ 10.05 10.40 10.50 10.96
Leverage ratio............................. 7.53 7.88 8.70 8.71
</TABLE>

48
<PAGE>

At March 31, 1999, we exceeded the minimum levels of all regulatory capital
requirements, and PrivateBank was considered "well-capitalized" under
regulatory standards. Based on guidelines established by the Federal Reserve
Bank, a bank holding company is required to maintain a leverage ratio (Tier 1
capital/total assets less intangibles) of 4.0%, a ratio of Tier 1 capital to
risk-based assets of 4.0% and a ratio of total capital to risk-based assets of
8.0%.

Since inception, we have raised over $22 million in a series of common stock
offerings to provide the necessary capital to support our growth. The proceeds
of these common stock offerings have been the principal source of funds at the
holding company level. We have regularly infused capital into our bank
subsidiary as and when needed to maintain adequate capital ratios and have
tended to retain the balance of the holding company funds on deposit in a non-
interest bearing account at PrivateBank to be available for its funding and
liquidity purposes. The following table shows the funds we have raised through
private placements of our common stock:

<TABLE>
<CAPTION>
Number of Price Per Gross Proceeds Net Proceeds
Shares Sold Share to Company to Company
Date of Offering ----------- --------- -------------- ------------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
4Q 1989................. 80,800 $ 6.25 $ 505 $ 505
1Q 1991................. 1,334,400 6.25 8,340 8,340
3Q 1992................. 412,208 6.88 2,834 2,781
2Q 1994................. 1,023,264 7.81 7,994 7,877
2Q 1997................. 208,256 10.94 2,278 2,251
4Q 1998................. 46,000 16.00 736 736
</TABLE>

Liquidity management at PrivateBank involves planning to meet anticipated
funding needs at a reasonable cost. Liquidity management is guided by policies,
formulated and monitored by our senior management and the Bank's
asset/liability committee, which takes into account the marketability of
assets, the sources and stability of funding and the level of unfunded
commitments. PrivateBank's principal sources of funds are deposits, short-term
borrowings and capital contributions by the Company out of the proceeds of our
common stock offerings.

PrivateBank's core deposits, the most stable source of liquidity for
PrivateBank due to the nature of long-term relationships generally established
with clients, are available to provide long-term liquidity. At March 31, 1999,
61.1% of our total assets were funded by core deposits. At December 31, 1998,
62.5% of our total assets were funded by core deposits. At December 31, 1997
and 1996, 69.5% and 72.8% of total assets were funded by core deposits,
respectively.

We periodically use services of the FHLB for short-term funding needs and
other correspondent services. At March 31, 1999, we had a short-term advance of
$10.0 million outstanding at 5.00% with a maturity of April 5, 1999, and at
December 31, 1998, we had a short-term advance of $20.0 million at 5.20% which
matured on January 7, 1999. In addition, we periodically use the FHLB to supply
letters of credit as collateral to support public fund deposits. At March 31,
1999, we had FHLB letters of credit of $17.3 million outstanding. At December
31, 1998, we had no FHLB letters of credit outstanding. We pay 0.125% per annum
for FHLB letters of credit. The following table shows our maximum availability
for and usage of FHLB advances and letters of credit.

<TABLE>
<CAPTION>
Availability Usage
Date ------------ -------
(in thousands)
<S> <C> <C>
March 31, 1999.............. $52,117 $27,340
December 31, 1998........... 45,842 20,000
December 31, 1997........... 32,673 7,905
December 31, 1996........... 25,214 10,890
</TABLE>

Liquid assets refers to money market assets such as federal funds sold, as
well as available-for-sale securities. Net liquid assets represent the sum of
the liquid asset categories less the amount of assets pledged to

49
<PAGE>

secure public funds. At March 31, 1999, net liquid assets were approximately
$83.1 million. At December 31, 1998, net liquid assets totaled approximately
$104.5 million, compared to approximately $76.2 million at December 31, 1997
and $55.4 million at December 31, 1996.

PrivateBank accepts deposits from a variety of municipal entities.
Typically, these municipal entities require that banks pledge marketable
securities to collateralize these public deposits. The State of Illinois also
accepts FHLB letters of credit as collateral. At March 31, 1999 and December
31, 1998, 1997 and 1996, PrivateBank had approximately $9.7 million, $15.0
million, $13.1 million and $11.5 million, respectively, of securities
collateralizing such public deposits. Deposits requiring pledged assets are not
considered to be core deposits, and the assets that are pledged as collateral
for these deposits are not deemed to be liquid assets.

Our Information Systems and the Year 2000

The year 2000 issue is a computer programming concern that centers on the
inability of certain computer systems to recognize the year 2000 and other year
2000-sensitive dates. Many existing computer programs and systems were
originally programmed to accept only six-digit date fields. In these systems,
the calendar year is identified by the last two digits only. This problem may
leave these programs and computers unable to distinguish between dates in the
twentieth and twenty-first centuries. For example, some computers will treat
"00" as the year 1900, rather than 2000. These computers may also be unable to
correctly identify the year 2000 as a leap year. The inability of these
computer systems to recognize dates could result in the failure of critical
applications of the generation of inaccurate results. Therefore, these systems
must be replaced or upgraded to become compliant with the year 2000 and to
avoid these errors.

Like most providers of financial services, we are particularly sensitive to
the year 2000 issue because our operations depend on computer-generated
financial information. Software, hardware and equipment both within and outside
of our direct control, and third parties with whom we electronically or
operationally interact may be adversely affected by this issue. These third
parties include our clients as well as third party vendors providing data
processing services, information systems management, computer system
maintenance and credit bureau information. In addition, under certain
circumstances, failure to address adequately the year 2000 issue could
adversely affect the viability of our suppliers and creditors and the
creditworthiness of our borrowers. If not adequately addressed, the year 2000
issue could have a significant adverse effect on our products, services and
competitive condition and ultimately our financial condition and results of
operations.

Regulatory Oversight. Regulators of financial institutions have increased
their focus on year 2000 compliance issues, have issued guidance concerning the
responsibilities of senior management and directors and are conducting periodic
examinations to ascertain the state of year 2000 compliance readiness. The
Federal Financial Institutions Examination Council ("FFIEC") has issued a
number of interagency statements on Year 2000 Project Management Awareness.
These statements require financial institutions to, among other things, examine
the year 2000 implications of their reliance on vendors and with respect to
data exchange and the potential impact of the year 2000 issue on their
customers, suppliers and borrowers. These statements also require each
federally regulated financial institution to survey its exposure, measure its
risk and prepare a plan to address the year 2000 issue. In addition, the
federal banking regulators have issued safety and soundness guidelines to be
followed by insured depository institutions to ensure resolution of any year
2000 problems. The federal banking agencies have asserted that year 2000
testing and certification is a key safety and soundness issue in conjunction
with regulatory examinations. Consequently, an institution's failure to
appropriately and timely address the year 2000 issue could result in
supervisory action, including the reduction of the institution's supervisory
ratings, which almost certainly would involve the denial of future applications
for approval of mergers or acquisitions until compliance is achieved. In
certain egregious situations, civil money penalties may be imposed.

Our Readiness. At the direction of our Board of Directors, we have
established a year 2000 readiness committee and have engaged consultants
qualified to help us address our year 2000 issues. Our consultants are
experienced with technology issues and year 2000 compliance, and have worked
closely with our year 2000

50
<PAGE>

readiness committee. We have also engaged an outside auditor to perform an
independent review of our year 2000 preparedness. The scope of their review
encompasses all of our year 2000 initiatives. Based on the report of our
outside auditor, we believe we do not currently have any significant weaknesses
in our year 2000 compliance program.

Following the guidelines established by the FFIEC, we have broken down our
compliance efforts into six stages: awareness, assessment, renovation,
validation, implementation and contingency planning.

. Awareness. During our awareness phase, we educated ourselves on the
issues and risks associated with the year 2000 problem. We also
identified the aspects of our operations which are year 2000 sensitive.

. Assessment. During this stage, we were able to determine the scope of
our entire year 2000 readiness project. We reviewed our systems,
equipment, vendors, client exposure, counterparties and fiduciary risk.
As part of this stage, we established a formal liquidity risk management
plan, which included a contingency plan to aid in mitigating risks
involved with potential withdrawal of client funds before or after the
year 2000 rollover date. This plan has been approved by our Board of
Directors.

. Renovation. For most companies, this phase is time consuming and
complicated. It involves upgrading or replacing all sensitive systems
and equipment. Because we rely on third party vendors for virtually all
of our systems and for our data processing needs, our internal
renovations were minimal. However, we have undertaken efforts to ensure
that our third party vendors are also year 2000 compliant. We have
polled each of our "mission critical" third party vendors regarding
their compliance efforts, and as of May 28, 1999, we had received
responses from 100% of them. We have also completed an assessment of the
financial and operational capabilities of each of our "mission critical"
vendors. In response to our inquiries, 100% of these vendors claim to be
year 2000 compliant. Based on these responses, we believe each of them
has taken appropriate steps to prepare for the year 2000, and that we
will have no material exposure from our vendors involving the year 2000
issue. Our year 2000 project manager continues to monitor the readiness
and financial status of all of our vendors at least on a quarterly
basis. However, we cannot be sure that each of our third party vendors
will complete their compliance efforts in a timely manner.

. Validation. We have completed the validation, or testing, phase of our
readiness project. Using a comprehensive test plan developed with our
consultants, we have tested, either individually or in collaboration
with our third party vendors, each system and piece of equipment
currently in place in our offices for year 2000 readiness and
compatibility with other systems with which they interface. Our plan,
which we modeled on FFIEC recommendations, indicates, on a system-by-
system basis, the methods used to validate each system and includes
procedures for documenting test results. Our consultants have monitored
the maintenance of process controls throughout the testing process. Our
internal auditors have reviewed the results of our year 2000 testing.

We are currently in the process of transferring our loan and deposit
processing to a new provider. Our conversion date is scheduled for the
end of August 1999. We have been working with our new vendor since
early April 1999. The pre-conversion preparation process is
approximately 50% complete. Through the use of proxy testing, we will
be validating the results of our new vendor's year 2000 readiness. This
validation process has not yet begun but will be completed before the
actual conversion date.

. Implementation. We have completed the testing and have implemented
necessary changes to computer hardware, network equipment and operating
systems owned by us and located in our offices. We are currently using
most of these systems in their year 2000 compliant version. As we
continue to evaluate and modify these systems as needed, we will use our
best efforts to maintain our year 2000 compliance. Because virtually all
of our year 2000-related software modifications are handled by third-
party processing services, and because we have no control over the
renovation of software code, we will continue to monitor software
application upgrade releases from our vendors and the year 2000
implications of such releases. We will continue to implement such
changes as are necessary based on the results of our validation efforts
and our ongoing monitoring efforts.

51
<PAGE>

. Contingency. The final stage of our readiness project involves the
creation of a business continuity plan which outlines how our operations
will continue in the event that we are unable to ensure that all of our
operations will be compliant, or if we experience a failure of any of
our systems. Our business continuity plan is completed and we expect to
have our business resumption validation procedures completed prior to
June 30, 1999. In our business continuity plan, we identify possible
scenarios which could be the result of year 2000 failures. These
scenarios include malfunction of automated systems, loss of electrical
power and extraordinary needs for cash. In each case, our plan considers
solutions including use of electronic and manual alternatives to our
primary operating systems, operating from alternative physical sites and
acquiring replacements for equipment. During the third quarter of 1999,
where practical, we will selectively test our business resumption
validation procedures.

The Costs of Our Compliance Efforts. We estimate that the entire cost of our
year 2000 readiness project will be approximately $650,000. These costs
include:

. upgrades of existing systems and equipment;

. acquisitions of new systems and equipment;

. consultant fees and expenses; and

. allocated personnel costs.

Through March 31, 1999, we have spent approximately $400,000 toward our year
2000 readiness.

The Risks Involved in Our Efforts. Although we are working closely with our
consultants, our third party vendors and our regulators to upgrade our systems
and operations, there can be no assurance that all of our operations will be
year 2000 compliant. In the event of system failure, either internally, or on
the part of one or more of our vendors, our operations may be adversely
affected. We may experience an interruption in our business and incur
significant losses.

Asset/Liability Management Policy

As a continuing part of our financial strategy, we attempt to manage the
impact of fluctuations in market interest rates on our net interest income.
This effort entails providing a reasonable balance between interest rate risk,
credit risk, liquidity risk and maintenance of yield. Asset/liability
management policy is established by our Board of Directors and monitored by
management. Our asset/liability policy sets standards within which we are
expected to operate. These standards include guidelines for exposure to
interest rate fluctuations, liquidity, loan limits as a percentage of funding
sources, exposure to correspondent banks and brokers, and reliance on non-core
deposits. Our policy also states the reporting requirements to our Board of
Directors. Our investment policy complements our asset/liability policy by
establishing criteria by which we may purchase securities. These criteria
include approved types of securities, brokerage sources, terms of investment,
quality standards, and diversification.

52
<PAGE>

The following table illustrates our estimated interest rate sensitivity and
periodic and cumulative gap positions calculated as of March 31, 1999.

<TABLE>
<CAPTION>
Time to Maturity or Repricing
---------------------------------------
0-90 91-365 1-5 Over 5
Days Days Years Years Total
-------- --------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans...................... $163,231 $ 22,535 $107,224 $ 14,732 $307,722
Investments................ 9,717 27,096 30,736 37,682 105,231
Federal funds sold......... 7,759 -- -- -- 7,759
-------- --------- -------- -------- --------
Total interest-earning
assets.................. $180,707 $ 49,631 $137,960 $ 52,414 $420,712
======== ========= ======== ======== ========
Interest-Bearing Liabilities:
Interest-bearing demand.... $ -- -- -- 27,390 $ 27,390
Savings and money market... 138,109 42,263 -- 499 180,871
Time deposits.............. 100,815 $ 39,452 $ 3,344 -- 143,611
Funds borrowed............. 10,000 -- -- -- 10,000
-------- --------- -------- -------- --------
Total interest-bearing
liabilities............. $248,924 $ 81,715 $ 3,344 $ 27,889 $361,872
======== ========= ======== ======== ========

Cumulative:
Rate sensitive assets
(RSA)..................... $180,707 $ 230,338 $368,298 $420,712

Rate sensitive liabilities
(RSL)..................... $248,924 $ 330,639 $333,983 $361,872

GAP (GAP = RSA-RSL)...... $(68,217) $(100,301) $ 34,315 $ 58,840

RSA/RSL...................... 72.6% 69.7% 110.3% 116.3%
RSA/Total assets............. 41.9 53.4 85.4 97.6
RSL/Total assets............. 57.7 76.7 77.4 84.0

GAP/Total assets............. 15.8% 23.3% 8.0% 13.7%
GAP/RSA...................... 16.2 23.8 8.2 14.0
</TABLE>

We measure the impact of interest rate changes on our income statement
through the use of gap analysis. The gap represents the net position of assets
and liabilities subject to repricing in specified time periods. During any
given time period, if the amount of rate sensitive liabilities exceeds the
amount of rate sensitive assets, a company would generally be considered
negatively gapped and would benefit from falling rates over that period of
time. Conversely, a positively gapped company would generally benefit from
rising rates.

We have structured the assets and liabilities of our company to mitigate the
risk of either a rising or falling interest rate environment. We manage our gap
position at the one year horizon. Depending upon our assessment of economic
factors such as the magnitude and direction of projected interest rates over
the short- and long-term, we operate within guidelines set by our
asset/liability policy and attempt to maximize our returns within an acceptable
degree of risk. Our policy states that we shall maintain a gap position at the
one year horizon of between 0.70 and 1.30. Our position at March 31, 1999 was
0.697 and was outside of the guidelines of our policy. We have continued to
maintain our gap position near the low end set by our policy guidelines and
expect to continue to operate in this manner as long as the general rate
structure of the economy and our business opportunities remain consistent.
Therefore, generally speaking, a short-term rise in interest rates would hurt
earnings, while a short-term drop in interest rates would help earnings.

Interest rate changes do not affect all categories of assets and liabilities
equally or simultaneously. There are other factors which are difficult to
measure and predict that would influence the effect of interest rate
fluctuations on our income statement. For example, a rapid drop in interest
rates might cause our loans to repay at a more rapid pace and certain mortgage-
related investments to prepay more quickly than projected. This could mitigate
some of the benefits of falling rates as are expected when negatively gapped.
Conversely, a rapid rise in rates could give us an opportunity to increase our
margins and stifle the rate of repayment on our mortgage-related loans which
would increase our returns.

53
<PAGE>

The following table shows the "rate shock" results of a simulation model
that attempts to measure the effect of rising and falling interest rates over a
two-year horizon in a rapidly changing rate environment.

<TABLE>
<CAPTION>
+200 Basis -200 Basis
Points Points
---------- ----------
<S> <C> <C>
Percentage change in net interest income due to an
immediate 200 basis point change in interest rates
over a two-year time horizon...................... -8.7% +10.3%
</TABLE>

This table shows that if there was an instantaneous, parallel shift in the
yield curve of +200 basis points, we would suffer a decline in net interest
income of 8.7% over a two year horizon. Conversely, a like shift of -200 basis
points would increase net interest income by 10.3% over a two year horizon. We
used a sensitivity model which simulated these interest rate changes on our
earning assets and interest-bearing liabilities. This process allows us to
explore the complex relationships among the financial instruments in various
interest rate environments.

The preceding sensitivity analysis is based on numerous assumptions
including: the nature and timing of interest rate levels including the shape of
the yield curve, prepayments on loans and securities, changes in deposit
levels, pricing decisions on loans and deposits, reinvestment/replacement of
asset and liability cash flows and others. While assumptions are developed
based upon current economic and local market conditions, we cannot make any
assurances as to the predictive nature of these assumptions including how
client preferences or competitor influences might change.

Interest rate exposure is measured by the potential impact on our income
statement of possible changes in interest rates. We use information from our
gap analysis and rate shock calculations as input to help manage our exposure
to changing interest rates. During the past year, we have managed our balance
sheet in a negatively gapped position, reflecting our outlook that the U.S.
economy will be stable with general interest rate levels stable to falling. We
recognized opportunities to extend maturities on assets to take advantage of
higher interest rates at longer maturities.

We use our rate shock information to tell us how much exposure we have to
rapidly changing rates. Based on historical information and our assessment of
future interest rate trends, we do not believe there is a substantial risk of
rapidly rising rates, which would negatively impact our income statement.
Conversely, we also believe there is minimal likelihood of rapidly falling
rates, which would positively impact our income statement.

We feel that more likely scenarios include gradual changes in interest rate
levels. We continue to monitor our gap and rate shock reports to detect changes
to our exposure to fluctuating rates. We have the ability to shorten or
lengthen maturities on newly acquired assets, sell investment securities, or
seek funding sources with different maturities in order to change our asset and
liability structure for the purpose of mitigating the effect of interest rate
risk.

Inflation

Our consolidated financial statements and the related notes thereto,
presented elsewhere in this prospectus, have been prepared in accordance with
generally accepted accounting principles and practices within the banking
industry. Under these principles and practices, we are required to measure our
financial position in terms of historical dollars, without considering changes
in the relative purchasing power of money over time due to inflation.

Unlike many industrial companies, virtually all of our assets and
liabilities are monetary in nature. As a result, interest rates have a more
significant impact on our performance than the general level of inflation. Over
short periods of time, interest rates may not necessarily move in the same
direction or in the same magnitude as inflation.

54
<PAGE>

Recent Accounting Pronouncements

We follow generally accepted accounting principles in the preparation of our
financial statements. There have been several recent authoritative accounting
pronouncements issued by the Financial Accounting Standards Board that we have
adopted or will adopt in the future:

. Effective January 1, 1999, Reporting on the Costs of Start-Up Activities
(AICPA Statement of Position 98-5) requires start-up costs and
organizational costs to be charged to expense when incurred. This new
accounting standard will apply to start-up costs associated with our
planned St. Charles office, currently anticipated to approximate
$430,000 pre-tax. See "Pending Acquisition."

. Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (SFAS No. 125) requires that after a
transfer of financial assets, we must continue to recognize the
financial and servicing assets we control and the liabilities incurred
until control has been surrendered and liabilities extinguished. Our
adoption of SFAS No. 125 had no effect on our reported consolidated
financial position and results of operations.

. Reporting Comprehensive Income (SFAS No. 130) establishes standards for
reporting and display of comprehensive income and its components. Our
adoption of SFAS No. 130 had no effect on the reported consolidated
financial position and results of operations.

. Accounting for Derivatives Instruments and for Hedging Activities (SFAS
No. 133) will be effective for our fiscal quarters beginning after June
15, 1999. SFAS No. 133 requires that all derivatives be recognized as
assets or liabilities on the balance sheet and be measured at fair
value. Currently, however, we do not own any derivative instruments.
Accordingly, this statement is not expected to affect our reported
consolidated financial position and results of operations.

55
<PAGE>

MANAGEMENT

Directors and Executive Officers

Our directors and executive officers, their ages, and their principal
position(s) with the company are shown in the table below. All of our directors
are also directors of PrivateBank except Mr. Farrell and Mr. Gottlieb. Our
officers are elected annually by our Board to serve for the terms provided in
our By-laws.

<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Ralph B. Mandell(3)(4)........... 58 Chairman, President and CEO

Caren L. Reed(5)................. 64 Vice Chairman

Donald A. Roubitchek(5).......... 48 Chief Financial Officer and Director

Donald L. Beal(2)(5)............. 53 Director

Naomi T. Borwell(1)(4)........... 71 Director

William A. Castellano(1)(3)(4)... 58 Director

Robert F. Coleman(2)(3)(6)....... 54 Director

W. James Farrell(4).............. 57 Director

John E. Gorman(2)(3)(5).......... 54 Director

Alvin J. Gottlieb(4)............. 72 Director

James M. Guyette(1)(2)(3)(6)..... 54 Director

Philip M. Kayman(6).............. 57 Director

William R. Langley(2)(3)(4)...... 58 Director

Thomas F. Meagher(1)(6).......... 68 Director

Michael B. Susman(1)(5).......... 61 Director

Gary S. Collins.................. 41 Managing Director of PrivateBank

M. Gail Fitzgerald............... 56 Managing Director of PrivateBank

Hugh H. McLean................... 40 Managing Director of PrivateBank
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Planning Committee.
(4) Serves as a Class I director with a term expiring in 2002.
(5) Serves as a Class II director with a term expiring in 2000.
(6) Serves as a Class III director with a term expiring in 2001.

Ralph B. Mandell, a director since 1989, is a co-founder of PrivateBancorp
and PrivateBank. He has served as Chairman and Chief Executive Officer of
PrivateBancorp and PrivateBank since 1994 and assumed the additional title of
President of both entities in March 1999. From inception until 1994, Mr.
Mandell had the title of Co-Chairman and Co-Chief Executive Officer. Prior to
starting PrivateBank and PrivateBancorp, Mr. Mandell was the Chief Operating
Officer of First United Financial Services, Inc., from 1985 to 1989, and served
as its President from 1988 to 1989. First United, a company that was traded on
the Nasdaq National Market, was sold to First Chicago Corporation in 1987. He
also served as President of Oak Park Trust & Savings Bank from 1985 until 1988.
Prior thereto, Mr. Mandell had served as Executive Vice President of Oak Park
Trust & Savings Bank since 1979.

Caren L. Reed, a director since 1990, is one of PrivateBank's founding
directors. He currently serves as Vice Chairman of PrivateBancorp and
PrivateBank, and functions as Chief Credit Officer. From 1990 to March 1999,
Mr. Reed also held the title of President of PrivateBancorp and PrivateBank.
Prior to joining

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<PAGE>

PrivateBank, Mr. Reed was an Executive Vice President of Continental Bank,
Chicago with a career spanning 34 years. His responsibilities included North
American Banking, Multinational Banking-Europe, U.S. Capital Markets, and the
London Merchant Bank.

Donald A. Roubitchek has been a director since 1997. He has been the
Secretary/Treasurer and Chief Financial Officer of PrivateBancorp, and Managing
Director and Chief Operating Officer of PrivateBank, since inception. He has 27
years' experience in the banking industry and a concentrated background in
finance. Prior to joining PrivateBank, Mr. Roubitchek served in various
capacities with LaSalle Community Banks, and its predecessor, Lakeview Bank.

Donald L. Beal, a director since 1991, has been the owner of Kar-Don, Inc.
d/b/a Arrow Lumber Company, located in Chicago, Illinois, since 1980. Prior to
that, Mr. Beal served as Vice President of Hyde Park Bank & Trust with
responsibilities including commercial lending and personal banking. Mr. Beal is
also the sole owner of Ashland Investment, Inc. In 1994, Ashland Investment
filed for Chapter 11 relief under the federal bankruptcy laws and emerged from
bankruptcy after reorganization in April 1995.

Naomi T. Borwell has been a director since 1990. She is a private investor.
Mrs. Borwell is a former director of First Chicago Bank of Oak Park and First
United Trust Company.

William A. Castellano has been a director since 1991. From 1996 to present
he has been Chairman and founder of both Workspace, Inc. and Worknet, Inc.,
located in Oakbrook Terrace, Illinois. Workspace provides office furniture to
businesses, and Worknet provides computer networking services to businesses. He
was the founder of and served as the Chief Executive Officer to Chrysler
Systems Leasing from 1977 to 1991.

Robert F. Coleman, a director since 1990, is a principal of Robert F.
Coleman & Associates, a law firm located in Chicago, Illinois. He concentrates
his practice on business and professional litigation.

W. James Farrell, a director since 1990, has been an executive with Illinois
Tool Works, Inc. ("ITW"), a manufacturer of fasteners, components, assemblies
and systems, since 1965, and became its Chairman and CEO in 1997. He currently
serves as a director of ITW as well as The Quaker Oats Company, Morton
International, Inc., Premark International, Inc. and Allstate Insurance
Company, each of which is traded on the New York Stock Exchange.

John E. Gorman has been a director since 1994. Since 1982, Mr. Gorman has
been a General Partner of the Jorman Group, a privately-owned organization with
diversified business holdings.

Alvin J. Gottlieb, a director since 1990, is a private investor. Since 1961,
Mr. Gottlieb has served in various capacities on the Board of Directors of
Gottlieb Memorial Hospital, located in Melrose Park, Illinois, and he currently
holds the position of Vice Chairman.

James M. Guyette has been a director since 1990. Since 1997, he has been
President and Chief Executive Officer of Rolls Royce North America, Inc. Mr.
Guyette served as Executive Vice President of UAL Corporation from 1985 to 1995
when he retired after more than 25 years of employment with that company. He is
currently a director of Rolls-Royce plc (London) and Pembroke Capital (Dublin),
and formerly a director of First United Financial Services and United Airlines
Employees Credit Union.

Philip M. Kayman, a director since 1990, has been a senior partner with the
law firm of Neal Gerber & Eisenberg in Chicago, Illinois since the firm's
founding in 1986. He also served as Interim Senior Vice President of Hyatt
Hotels Corporation from 1997 to 1998.

William R. Langley, a director since 1989, is a co-founder of PrivateBancorp
and PrivateBank. Mr. Langley held the title of Co-Chairman of PrivateBancorp,
and was active in day-to-day management of the company until 1995 when he
retired. Prior to the formation of PrivateBancorp, Mr. Langley had served as
Chief Executive Officer of First United Financial Services, Inc. from 1985 to
1987 and as Chairman from 1987 to 1989. First United, a company that was traded
on the Nasdaq National Market, was sold to First Chicago Corporation in 1987.
Prior to that, he served as Chairman and President of Oak Park Trust and
Savings Bank, where he had been employed since 1973.

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<PAGE>

Thomas F. Meagher has been a director since 1996. Mr. Meagher has been the
Chairman of Howell Tractor and Equipment Co., a distributor of heavy equipment
located in Elk Grove Village, Illinois, since 1980. He has had an extensive
career in the transportation industry and currently serves on the Board of
Directors of Trans World Airlines, Inc., a New York Stock Exchange company.

Michael B. Susman has been a director since 1990. He has been a partner in
the law firm of Spitzer, Addis, Susman & Krull, located in Chicago, Illinois,
since 1974.

Gary S. Collins has been a Managing Director of PrivateBank since 1991. As a
specialist in real estate lending, Mr. Collins has spent more than 20 years
managing diverse real estate transactions and the full range of mortgage
financing. Before joining PrivateBank in 1991, he held senior positions at
several Chicagoland financial institutions, including First Chicago Bank of Oak
Park, First Colonial Bancshares and Avenue Bank of Oak Park.

M. Gail Fitzgerald has been a Managing Director of PrivateBank since 1996.
She serves as the bank's director of Trust and Investment Services. Ms.
Fitzgerald has over 20 years' banking experience, most of which is in the trust
area. She served as Trust Division President of Firstar Bank of Illinois from
1995 to 1996. She also served as Chairman, President, and Chief Executive
Officer of First Colonial Trust Company in Illinois from 1993 to 1995 and
Senior Vice President of First Chicago Trust Company of Illinois from 1988 to
1993.

Hugh H. McLean has been a Managing Director of PrivateBank since 1996. He
serves as head of credit marketing and manager of the Oak Brook office. Prior
to joining the bank, he served as a regional manager with Firstar Bank Illinois
and its predecessor from 1990 to 1996, and as head of a commercial banking
division at American National Bank and Trust Company in Chicago, Illinois, from
1987 to 1990, where he was employed from 1980 to 1990.

Board of Directors

Our Board of Directors currently consists of 15 members divided into three
classes of directors who are elected to hold office for staggered three-year
terms as provided in our Restated Certificate of Incorporation and Amended and
Restated By-laws. Although our charter documents have fixed the size of our
Board at 16 members, there currently is one Class III director vacancy due to
the recent resignation of a director. Those persons currently serving as Class
I directors have been elected to hold office until the annual stockholders'
meeting to be held in 2002; Class II directors have been elected to hold office
until the annual stockholders' meeting to be held in 2000; and Class III
directors have been elected to hold office until the annual stockholders'
meeting to be held in 2001.

Committees of the Board of Directors

We have appointed certain members of our Board to serve on various
committees of the Board of Directors. The Board of Directors has established
three standing committees: (a) the Compensation Committee; (b) the Audit
Committee; and (c) the Planning Committee.

Compensation Committee. The Compensation Committee is responsible for
reviewing the performance of our Chief Executive Officer; reviewing and
recommending the compensation of the company's officers, including the Chief
Executive Officer; recommending and approving stock option grants and
restricted stock awards to management; reviewing and recommending non-cash
compensation programs including stock option grants, 401(k) contributions and
annual bonuses; reviewing and recommending director compensation; and advising
the Chief Executive Officer on miscellaneous compensation issues. The members
of the Compensation Committee are Messrs. Guyette (Chairman), Castellano,
Meagher and Susman and Mrs. Borwell.

Audit Committee. The Audit Committee reports to the Board of Directors in
discharging its responsibilities relating to our accounting, reporting and
financial control practices. The Audit Committee has general

58
<PAGE>

responsibility for oversight of financial controls, as well as our accounting,
regulatory, year 2000 and audit activities, and annually reviews the
qualifications of the independent auditors. The Audit Committee is composed
entirely of outside directors. The members of the Audit Committee are Messrs.
Coleman (Chairman), Beal, Gorman, Guyette and Langley.

Planning Committee. The Planning Committee is responsible for studying
strategic issues prior to submission to the entire Board of Directors for
approval. The Planning Committee consists of Messrs. Mandell (Chairman),
Castellano, Coleman, Gorman, Guyette and Langley.

We have not designated a nominating committee. The entire Board of Directors
acts to nominate persons for election as directors.

Director Compensation

In 1992, we commenced a program of compensating those of our outside
directors who are also outside directors of PrivateBank with stock option
awards in lieu of cash retainers. Our philosophy has been to increase our
directors' equity stake in the company and further enhance the alignment of
their interests with those of our stockholders. The director options have been
granted each year in amounts determined at the discretion of the Board. The
options are fully vested at the end of the year of grant, subject to a full
year of service. In each case, the options have been granted at an exercise
price equal to or greater than the estimated fair market value of our common
stock at the date of grant. Partial awards have been made for partial year
service. As of March 31, 1999, there were outstanding options granted to non-
employee directors pursuant to this program to purchase an aggregate of 179,920
shares of common stock at an average weighted per share exercise price of
$11.13. In March 1999, the Board granted each non-employee director of
PrivateBank an option to purchase 1,500 shares of common stock at the initial
public offering price of shares sold in this offering.

In addition to stock options, non-employee members of PrivateBancorp's Board
of Directors receive fees of $200 for each board meeting attended. The
directors also receive $100 per meeting for attendance at meetings of any
committees of the Board on which they serve. Those directors who serve on the
board of PrivateBank are also entitled to the same meeting fees. During 1998,
the Boards of Directors of each of PrivateBancorp and PrivateBank met monthly.
Total board and committee meeting fees paid in 1998 was $58,800.

We intend to reevaluate the structure of our director compensation program
following the offering and anticipate that we may seek stockholder approval of
a stock-based director compensation plan at our next stockholders' meeting.

Compensation Committee Interlocks and Insider Participation

Messrs. Guyette and Castellano and Ms. Borwell each serve on the
Compensation Committee of our Board of Directors. During our last fiscal year,
each of these individuals has engaged in certain transactions as clients of
PrivateBank, in the ordinary course of PrivateBank's business, including
borrowings, all of which transactions are or were on substantially the same
terms (including interest rates and collateral on loans) as those prevailing at
the time for comparable transactions with unaffiliated persons. In the opinion
of our management, none of these transactions involved more than the normal
risk of collectibility or presented any other unfavorable features. See
"Certain Transactions."

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<PAGE>

Executive Compensation

The following table summarizes the compensation paid by PrivateBancorp and
PrivateBank to the Chairman, President and Chief Executive Officer and the five
other most highly paid executive officers (the "Named Executive Officers")
during 1998.

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
---------------------------- ---------------------
Other Annual Securities All Other
Compen- Restricted Underlying Compen-
Name and Principal Salary Bonus sation(1) Stock(2) Options(3) sation
Position Year ($) ($) ($) ($) (#) ($)
------------------ ---- ------- ------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ralph B. Mandell........ 1998 210,000 100,000 18,845 77,000(4) 6,400 34,723(5)
Chairman, President and
CEO

Caren L. Reed........... 1998 146,000 45,000 14,795 -- 4,800 3,200(6)
Vice Chairman

Donald A. Roubitchek.... 1998 138,000 37,000 1,776 22,000(7) 6,400 3,200(6)
Chief Financial Officer

Hugh H. McLean.......... 1998 115,000 35,000 11,756 22,000(7) 5,600 3,005(6)
Managing Director

M. Gail Fitzgerald...... 1998 112,000 40,000 3,206 22,000(7) 5,600 3,067(6)
Senior Trust Officer
and Managing Director

Gary S. Collins......... 1998 112,000 29,000 9,429 22,000(7) 5,600 2,749(6)
Managing Director
</TABLE>
- --------

(1) Represents automobile allowances, life insurance premiums and club
membership dues and fees paid by the company.

(2) Reflects restricted stock awards under our Stock Incentive Plan.
PrivateBancorp has paid regular dividends on all shares of restricted stock
outstanding. These shares of restricted stock are subject to forfeiture
until the fifth anniversary of the grant date.
(3) Options to purchase shares of common stock were granted in 1998 at an
exercise price of $17.1875 (representing 125% of fair market value at the
date of grant) and vest at the end of five years; however, these options
may vest before the fifth anniversary subject to performance-based
acceleration terms providing for complete vesting upon the third or fourth
anniversary of their grant date if the cumulative annualized growth rate of
the fair market value of the common stock (including dividends paid) equals
at least 15% as of such anniversary date.
(4) Represents award of 5,600 shares of restricted stock at a value of $13.75
per share.

(5) Represents (a) matching contributions to the company's 401(k) plan, and (b)
dollar value benefit of accrued imputed interest (assuming full forgiveness
of cumulative accrued interest) relating to a loan from PrivateBancorp in
connection with Mr. Mandell's 1998 stock purchase transaction. See "Certain
Transactions."

(6) Represents matching contributions to the company's 401(k) plan made by the
company for the benefit of the executive officer.
(7) Represents award of 1,600 shares of restricted stock at a value of $13.75
per share.

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<PAGE>

The table below summarizes certain information about the options which we
granted in 1998 to each Named Executive Officer. All options were granted at
per share exercise prices equal to 125% of the fair market value per share on
the date of grant.

Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------
Potential
Realizable Value
at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Shares Granted to Exercise Appreciation for
Underlying Employees or Base Option Term ($)
Options in Fiscal Price Expiration ----------------
Name Granted Year ($/Sh) Date 5% 10%
---- ---------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Ralph B. Mandell........ 6,400 11.19% 17.1875 6/24/08 $33,343 $118,249
Caren L. Reed........... 4,800 8.39% 17.1875 6/24/08 25,007 88,687
Donald A. Roubitchek.... 6,400 11.19% 17.1875 6/24/08 29,175 118,249
Gary S. Collins......... 5,600 9.79% 17.1875 6/24/08 29,175 103,468
M. Gail Fitzgerald...... 5,600 9.79% 17.1875 6/24/08 29,175 103,468
Hugh H. McLean.......... 5,600 9.79% 17.1875 6/24/08 29,175 103,468
</TABLE>

The following table summarizes for each Named Executive Officer the number
of shares of common stock subject to outstanding options and the value of such
options that were unexercised at December 31, 1998.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Shares Options at Money Options at December
Acquired on December 31, 1998 (#) 31, 1998 ($)(2)
Exercise Value ---------------------------- ----------------------------
Name (#) Realized ($) Exercisable/Unexercisable(1) Exercisable/Unexercisable(1)
---- ----------- ------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Ralph B. Mandell........ -- -- 71,840/10,400 656,190/32,750
Caren L. Reed........... 65,600 533,500 3,840/ 8,000 37,440/26,200
Donald A. Roubitchek.... -- -- 36,736/ 8,400 333,661/16,375
Gary S. Collins......... -- -- 30,016/ 7,200 272,956/13,100
M. Gail Fitzgerald...... -- -- 8,000/13,600 53,000/53,000
Hugh H. McLean.......... -- -- 8,000/13,600 53,000/53,000
</TABLE>
- --------
(1) The numbers and amounts in the above table represent shares of common stock
subject to options granted that were unexercised as of December 31, 1998.
(2) The estimated fair market value of our common stock at December 31, 1998
was $16.00.

Employment Agreements

We have entered into employment agreements, to be effective as of July 1,
1999, with two of our executive officers: Ralph B. Mandell, our Chairman,
President and Chief Executive Officer, and Donald A. Roubitchek, our Chief
Financial Officer. Under the provisions of his agreement, which has a term of
two years, Mr. Mandell is entitled to an annual base salary of $230,000. Mr.
Roubitchek's agreement has a term of one year and provides for an annual base
salary of $145,000. Both Mr. Mandell and Mr. Roubitchek may receive
discretionary bonuses to the extent determined by the Board of Directors and
are entitled to participate in benefit plans and other fringe benefits
available to our managing directors.

Under each agreement, the executive officer's employment may be terminated
by the company at any time for "cause," as defined in the agreements, in which
case, or if the executive resigns from the company without "good reason," the
agreement immediately terminates, and the officer would be entitled only to
unpaid

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<PAGE>

benefits accrued during the term of his employment. If the executive chooses to
resign with good reason, or the company chooses to terminate his employment
without cause, the officer is also entitled to receive severance in the amount
equal to 18 months of his then current base annual salary for Mr. Mandell and
12 months for Mr. Roubitchek, plus a pro rata bonus for the year of termination
based on the prior year's bonus amount, if any. The agreements also provide for
death benefits equal to six months of then current annual base salary.

In the event that Mr. Mandell is terminated after a change in control of the
company, he will be entitled to a lump sum payment equal to three times the sum
of (1) his annual base salary; (2) the greater of (a) his bonus amount, if any,
for the prior year or (b) his average bonus, if any, for the three preceding
years; and (3) the sum of the contributions that would have been made by the
company under any benefit plan and the annual value of any other executive
perquisites. Mr. Roubitchek will be entitled to a lump sum payment equal to
twice the sum of these amounts for him. The agreements entitle the executives
to receive gross up payments to cover any federal excise taxes payable by them
in the event the change in control benefits are deemed to constitute "excess
parachute payments" under Section 280G of the Internal Revenue Code. A change
in control is defined under the agreements as an occurrence of any one of the
following events as determined by our Board:

. if any person, as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act, becomes the beneficial owner of 10% or more of
the total voting power of our then outstanding voting capital stock;
provided, however, that if that person becomes a beneficial owner of 10%
or more of our voting capital stock as a result of an acquisition of
stock directly from the company, or a decrease in the number of
outstanding shares due to a repurchase of shares by the company, it
shall not be considered a change in control;

. if during any period of two consecutive years, those individuals who at
the beginning of the period constitute our Board of Directors cease to
make up a majority of the Board;

. the consummation of a reorganization, merger or consolidation of the
company, or the sale of all or substantially all of our assets;
provided, that so long as more than 50% of the voting stock of the
successor entity is held by stockholders who had been beneficial owners
of our stock immediately before the transaction, and at least a majority
of the board of the successor entity is made up of members of our Board,
the merger or sale shall not be considered a change in control; and

. the approval by our stockholders of a plan of complete liquidation or
dissolution.

The agreements also contain non-compete provisions, which prohibit the
executive from soliciting, either for his own account or for the benefit of any
entity located within a twenty-five mile radius of the company or any of our
subsidiaries, any of our clients or employees. These non-compete provisions
remain in effect for a period of one year after the termination of employment.
The non-compete provisions do not apply in the event of a change in control.

Stock Incentive Plan

We maintain a Stock Incentive Plan pursuant to which we may grant our
executive officers and key employees stock options and restricted stock awards.
We also have a director compensation program for our non-employee directors.
See "Management--Director Compensation." The purpose of the Stock Incentive
Plan is to enhance our ability to attract and retain officers, executives and
key employees and to align the interests of such individuals with those of our
stockholders. The Stock Incentive Plan is administered, construed and
interpreted by the Compensation Committee of the Board of Directors. The
Compensation Committee may at any time alter, amend or terminate the Stock
Incentive Plan provided that no action of the Board may adversely affect a
participant's rights under any previously-granted stock option or restricted
stock award without the consent of the participant. Any amendment to the Stock
Incentive Plan which increases the number of shares of Common Stock which may
be awarded or changes the class of persons eligible to receive awards must be
approved by the company's stockholders within twelve months prior to or after
the effective

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<PAGE>

date of such amendment. Deductions by the company for compensation amounts
under the Stock Incentive Plan are not expected to be limited by Section 162(m)
of the Internal Revenue Code.

There are currently 476,607 shares of common stock remaining available for
issuance under the Stock Incentive Plan. Of such shares, 426,488 are subject to
options that are currently outstanding and 50,119 remain available for future
grant as options or restricted stock awards.

In the event of any change to the outstanding shares of stock of the company
by reason of stock dividend or distribution, recapitalization, merger or
consolidation, the Compensation Committee will adjust the number of shares of
stock which may be issued under the Stock Incentive Plan and will provide for
an equitable adjustment of any outstanding options or restricted stock grants.
The plan also provides for accelerated vesting in the event of a change in
control of the company, as defined in the plan.

No individual participant in the Stock Incentive Plan may receive options to
purchase more than 100,000 shares of common stock during any calendar year. As
of March 31, 1999, there were outstanding options to purchase an aggregate of
426,488 shares of common stock under the Stock Incentive Plan, at exercise
prices ranging from $6.25 to $18.00. In March 1999, we granted a total of
60,600 stock options, effective upon completion of this offering, at the
initial public offering price. These options vest 50% after two years, 75%
after three years, and are fully vested after four years. A total of 20,400
shares of restricted stock were also granted in March 1999 which will be fully
vested after five years, at which time these shares will no longer be subject
to forfeiture. In connection with the pending acquisition of Towne Square, we
have agreed to grant Mr. Castronovo options to purchase 7,000 shares of our
stock at the initial public offering price and to award him 3,000 shares of
restricted stock. See "Pending Acquisition."

All stock options granted pursuant to the Stock Incentive Plan are evidenced
by agreements stating the number of shares covered thereby, the exercise price,
the period or periods of time within which each option will become fully or
partially exercisable, and whether an option is an "incentive stock option" as
such term is defined in Section 422 of the Internal Revenue Code or a non-
qualified stock option. The Compensation Committee has the authority to
determine exercisability of an option and may in its discretion accelerate the
time or times for exercise. No stock option may be exercisable after the
expiration of 10 years from the date it is granted, and, in the case of an
incentive stock option granted to a 10% stockholder, the option must be
exercised within five years from the date it is granted. The price to be paid
for the shares upon the exercise of each option may not be less than the fair
market value of such shares on the date on which the option is granted, as
determined by the Compensation Committee. An incentive stock option granted to
a 10% stockholder must have an exercise price of at least 110% of the fair
market value of the stock subject to the option as of the date of grant. The
aggregate fair market value (determined as of the time the option is granted)
of stock with respect to which incentive stock options are exercisable for the
first time by an optionee during any calendar year (under all option plans of
the company) may not exceed $100,000, provided that, to the extent that such
limitation is exceeded, any excess options shall be deemed not to be incentive
stock options.

All restricted stock awards granted pursuant to the Stock Incentive Plan are
evidenced by a written grant document in a form approved by the Compensation
Committee. The grant document specifies the period or periods of time within
which each grant of restricted stock will no longer be subject to restrictions
on sale, transfer or alienation of the stock. The grant document shall also
specify the treatment of the stock upon termination of employment before the
restrictions are lifted.

Certain Federal Income Tax Consequences

The following summary discusses certain of the federal income tax
consequences associated with (a) the grant of a stock option under our Stock
Incentive Plan, and (b) the exercise of such option. This summary is limited
and does not describe state or local income or other tax consequences.

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<PAGE>

Non-Qualified Stock Options.

The grant of a non-qualified stock option (including any option exceeding
the limitations on incentive stock options described above) will not be a
taxable event to the optionee. Upon the exercise of a non-qualified stock
option, the optionee generally must recognize ordinary compensation income
equal to the difference between the exercise price and the fair market value of
the common stock on the date of exercise. This compensation income will be
subject to applicable withholding. At the time of exercise, the company will
generally be entitled to a tax deduction in the amount of such compensation
income. The optionee's tax basis for the stock received pursuant to the
exercise will equal the sum of the recognized compensation income and the
exercise price.

Incentive Stock Options.

The grant of an incentive stock option will not be a taxable event to the
optionee. In addition, in contrast to the exercise of a non-qualified stock
option, the timely exercise of an incentive stock option will not cause the
optionee to recognize taxable income for regular income tax purposes (although
the employee could be subject to an alternative minimum tax liability as
described below). Also, the company shall not be entitled to a tax deduction
for either the grant or the exercise.

Upon exercise of an incentive stock option by an optionee, the alternative
minimum taxable income of such optionee must be determined as if such incentive
stock option were a non-qualified stock option (see "Non-Qualified Stock
Options," above). Accordingly, such optionee will be required to include as
alternative minimum taxable income the excess (if any) of the value of shares
received upon exercise as of the date such shares are vested over the amount
paid for such shares. Such employee would then be required to pay the greater
of such optionee's regular or alternative minimum tax liability computed with
respect of such year.

If optionee engages in the disqualifying disposition of the stock subject to
an incentive stock option, however, the exercise of the incentive stock option
may give rise to taxable compensation income to the optionee and a tax
deduction to the company. The optionee's sale or exchange of shares required
upon the exercise of an incentive stock option more than one year after the
transfer of the shares to such optionee and more than two years after the date
of grant of the incentive stock option will result in any difference between
the net sale proceeds and the exercise price being treated as long-term capital
gain or loss to the optionee. If such sale or exchange takes place within two
years after the date of the grant of the incentive stock option or within one
year from the date of transfer of the shares to the optionee, the sale or
exchange will generally be a "disqualifying disposition" and will have the
following results: any excess of (x) the lesser of (1) the fair market value of
the shares at the time of exercise and (2) the amount realized on the
disqualifying disposition of the shares over (y) the option exercise price of
such shares, will be ordinary income to the optionee, subject to applicable
withholding taxes, and the company will be entitled to a tax deduction in the
amount of such income. Any further gain or loss after the date of exercise will
generally qualify as capital gain or loss and will not result in any deduction
by the company.

Withholding Taxes.

To the extent that any amount recognized by an optionee upon exercise of an
option is subject to withholding taxes, the company may require the optionee to
pay, in addition to the amount required to exercise the option, the appropriate
amount of withholding. To the extent compensation income is recognized by an
optionee in connection with the exercise of a non-qualified stock option, the
company generally would be entitled to a matching compensation deduction
(assuming the requisite withholding requirements are satisfied).

Restricted Stock Awards.

Ordinarily, the award of restricted stock under the Stock Incentive Plan
will not be a taxable event to the grantee. The grantee will incur ordinary
compensation income, however, when the restrictions on the stock are

64
<PAGE>

lifted, in an amount equal to the fair market value of the stock at the time
the restrictions are lifted. Similarly, while the company will not be entitled
to a tax deduction for the restricted stock at the time of grant, at the time
the restrictions are lifted, the company will generally be entitled to a tax
deduction in the amount of the then-current fair market value of the stock. Any
dividends paid on restricted stock will be taxable income to the grantee at the
time issued.

As an exception to the above paragraph, under Internal Revenue Code (S)83(b)
a grantee may elect to include in current gross income restricted stock at the
time it is granted. If the grantee makes such an election, the fair market
value of the restricted stock at the time of grant, without regard to any
restrictions, shall be includable in the grantee's gross income. If the
restricted stock is subsequently forfeited by the grantee, either by
termination of employment before restrictions are lifted or otherwise, no
deduction to the grantee's income may be made. If the granted makes an election
under (S)83(b), the company will generally be entitled to a tax deduction at
the time of the grant for the then-current fair market value of the restricted
stock, without regard to restrictions.

CERTAIN TRANSACTIONS

Some of our executive officers and directors are, and have been during the
preceding three years, clients of PrivateBank, and some of our executive
officers and directors are direct or indirect owners of 10% or more of the
stock of corporations which are, or have been in the past, clients of
PrivateBank. As such clients, they have had transactions in the ordinary course
of business of PrivateBank, including borrowings, all of which transactions are
or were on substantially the same terms (including interest rates and
collateral on loans) as those prevailing at the time for comparable
transactions with nonaffiliated persons. In the opinion of our management, none
of the transactions involved more than the normal risk of collectibility or
presented any other unfavorable features. At March 31, 1999, PrivateBank had
$12,148,755 in loans outstanding to certain directors and executive officers
and their business interests of the company and certain executive officers of
PrivateBank.

In May 1998, Ralph B. Mandell, our Chairman, President and Chief Executive
Officer, purchased 72,720 shares of newly issued common stock at $13.75 per
share from PrivateBancorp. The purpose of the transaction was to enhance Mr.
Mandell's interest in the long-term performance of the company and further
align his interests with those of our stockholders. At the request of the Board
of Directors of the company, one of the underwriters, EVEREN Securities, Inc.,
provided a fairness opinion to the company relating to the sale price
established by our Board in connection with the transaction. As part of the
transaction, we loaned Mr. Mandell approximately 95% of the purchase price on a
full recourse basis. The loan matures in five years but becomes payable prior
to the fifth year in the event Mr. Mandell sells any of the 72,720 shares or
Mr. Mandell's employment is terminated. Interest accrues at 5.69% per annum,
compounded annually (the applicable Federal rate), on the principal amount of
the loan; however, provided Mr. Mandell does not sell any of the shares
purchased and remains in our employ, 25% of the accumulated interest on the
loan will be forgiven on the loan's second anniversary, 50% of the accumulated
interest on the loan will be forgiven on its third anniversary, 75% of the
accumulated interest on the loan will be forgiven on its fourth anniversary,
and 100% of the accumulated interest on the loan will be forgiven on the loan's
fifth anniversary. Mr. Mandell pledged all of the shares of common stock
purchased in the transaction as collateral for the loan he received from us,
but he is entitled to vote, and receive dividends on, the shares.

During 1998, we incurred professional fees for services provided by the law
firm Spitzer, Addis, Susman & Krull. Michael B. Susman, who is one of our
directors, is a partner of that firm.

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PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of the common stock
as of March 31, 1999, and as adjusted to give effect to the offering assuming
900,000 shares are sold in the offering (assuming no exercise of the over-
allotment option and no additional purchases of shares in the offering by the
persons shown), with respect to (a) each of our directors and Named Executive
Officers; and (b) all of our directors and Named Executive Officers as a group.

<TABLE>
<CAPTION>
Shares
Subject to
Exercisable
Options to Percentage Percentage
Shares of Purchase Total Ownership Ownership
Common Common Beneficial Before After
Stock(1) Stock(2) Ownership Offering(3) Offering(3)
--------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Directors
Ralph B. Mandell** (4).. 221,320 75,840 297,160 8.42% 6.71%
Caren L. Reed** (5)..... 9,600 7,040 16,640 * *
Donald A. Roubitchek**
(6).................... 31,920 38,736 70,656 2.02% 1.61%
Donald L. Beal (7)...... 17,464 12,720 30,184 * *
Naomi T. Borwell (8).... 164,800 12,720 177,520 5.12% 4.07%
William A. Castellano
(9).................... 132,400 12,720 145,120 4.19% 3.32%
Robert F. Coleman (10).. 26,400 12,720 39,120 1.13% *
W. James Farrell........ 10,400 6,240 16,640 * *
John E. Gorman.......... 49,000 8,400 57,400 1.66% 1.32%
Alvin J. Gottlieb....... 105,600 6,240 111,840 3.23% 2.57%
James M. Guyette........ 12,000 12,720 24,720 * *
Philip M. Kayman........ 12,800 12,720 25,520 * *
William R. Langley...... 89,600 68,240 157,840 4.48% 3.57%
Thomas F. Meagher....... 12,500 6,480 18,980 * *
Michael B. Susman....... 22,400 12,720 35,120 1.01% *

Other Named Executive
Officers
Gary S. Collins (11).... 28,180 31,616 59,796 1.72% 1.36%
M. Gail Fitzgerald (12). 13,200 8,000 21,200 * *
Hugh H. McLean (13)..... 45,528 12,000 57,528 1.66% 1.32%
Directors and executive
officers
as a group (18
persons)............... 1,005,112 357,872 1,362,984 35.78% 28.94%
</TABLE>
- --------
*Less than 1%
**Denotes person who serves as director and as an executive officer.
(1) Unless otherwise noted, represents all shares held individually, held in
individual retirement accounts or revocable trusts for the benefit of the
director or executive officer, and held jointly with spouse.
(2) Includes options which are currently exercisable or exercisable within 60
days of the date of this prospectus.

(3) Beneficial ownership percentages are calculated in accordance with SEC
Rule 13d-3 promulgated under the Securities Exchange Act of 1934. Does not
give effect to the planned issuance of shares in the pending acquisition.
See "Pending Acquisition."

(4) Includes 26,600 shares of restricted stock granted to Mr. Mandell under
our Stock Incentive Plan. These shares vest at various dates between 2001
and 2004, and are subject to forfeiture until such time as they vest. Also
included are 72,720 shares which have been pledged as collateral to secure
a loan from the company to Mr. Mandell. See "Certain Transactions." Also
includes 23,600 shares held by Mr. Mandell's spouse. Mr. Mandell's
business address is c/o The PrivateBank & Trust Company, Ten North
Dearborn Street, Chicago, Illinois 60602.

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<PAGE>

(5) Includes 9,600 shares of restricted stock granted to Mr. Reed under our
Stock Incentive Plan. These shares vest at various dates between 2001 and
2002, and are subject to forfeiture until such time as they vest.
(6) Includes 13,200 shares of restricted stock granted to Mr. Roubitchek under
our Stock Incentive Plan. These shares vest at various dates between 2001
and 2004, and are subject to forfeiture until such time as they vest. Also
includes 400 shares held by Mr. Roubitchek's children.
(7) Includes 10,364 shares held by Mr. Beal's spouse and children.
(8) Ms. Borwell's address is 1040 N. Lake Shore Drive, Chicago, Illinois
60611.
(9) Includes 14,000 shares held by Mr. Castellano's children.
(10) Includes 800 shares held by Mr. Coleman's spouse and 3,200 shares held by
the Robert F. Coleman & Associates Retirement Savings Plan of which Mr.
Coleman is a participant.
(11) Includes 10,400 shares of restricted stock granted to Mr. Collins under
our Stock Incentive Plan. These shares vest at various dates between 2001
and 2004, and are subject to forfeiture until such time as they vest. Also
includes 4,170 shares owned by Mr. Collins' spouse and children.
(12) Includes 6,800 shares of restricted stock granted to Ms. Fitzgerald under
our Stock Incentive Plan. These shares vest at various dates between 2002
and 2004, and are subject to forfeiture until such time as they vest.
(13) Includes 7,800 shares of restricted stock granted to Mr. McLean under our
Stock Incentive Plan. These shares vest at various dates between 2002 and
2004, and are subject to forfeiture until such time as they vest.

SUPERVISION AND REGULATION

General

Banking is a highly regulated industry. We have attempted to summarize
several applicable statutes and regulations, but you should understand that
these summaries are not complete, and you should refer to the statutes and
regulations for more information. Also, these statutes and regulations are
likely to change in the future, and we cannot predict what effect these
changes, if made, will have on our operations. Finally, please remember that
supervision, regulation and examination of banks and bank holding companies by
bank regulatory agencies are intended primarily for the protection of
depositors rather than stockholders of banks and bank holding companies.

Bank Holding Company Regulation

PrivateBancorp is registered as a "bank holding company" with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") pursuant to the
Bank Holding Company Act of 1956 (the Bank Holding Company Act of 1956 and the
regulations issued thereunder are collectively referred to as the "BHC Act"),
and we are subject to regulation, supervision and examination by, and we are
required to file reports and additional information with the Federal Reserve.

Minimum Capital Requirements. The Federal Reserve has adopted risk-based
capital requirements for assessing bank holding company capital adequacy. These
standards revise the normal definition of capital and establish minimum capital
standards in relation to assets and off-balance sheet exposures, as adjusted
for credit risks. At December 31, 1998, our consolidated assets were
approximately $416 million. Under the Federal Reserve's risk-based guidelines
applicable to the company, capital is classified into two categories.

For bank holding companies, Tier 1, or "core", capital consists of:

. common stockholders' equity;

. perpetual preferred stock (subject to some limitations); and

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. minority interests in the common equity accounts of consolidated
subsidiaries

less:

. goodwill;

. specified intangible assets; and

. specified investments in other corporations.

Tier 2 capital consists of:

. the allowance for loan and lease losses;

. perpetual preferred stock and related surplus;

. hybrid capital instruments;

. perpetual debt securities;

. mandatory convertible debt securities;

. term subordinated debt and related surplus; and

. intermediate-term preferred stock, including related securities.

Under the Federal Reserve's capital guidelines, bank holding companies are
required to maintain a minimum ratio of qualifying total capital to risk-
weighted assets of 8%, of which at least 4% must be in the form of Tier 1
capital. The Federal Reserve also requires a minimum leverage ratio of Tier 1
capital to total assets of 3%. Bank holding companies not rated in the highest
category under the regulatory rating system are required to maintain a leverage
ratio of one percent to two percent above the stated minimum. The 3% Tier 1
capital to total assets ratio is the minimum leverage standard for bank holding
companies, and the Federal Reserve uses this minimum standard in conjunction
with the risk-based ratio in determining the overall capital adequacy of
banking organizations. In addition, the Federal Reserve continues to consider
the Tier 1 leverage ratio in evaluating proposals for expansion or new
activities.

In its capital adequacy guidelines, the Federal Reserve emphasizes that the
foregoing standards are supervisory minimums and that banking organizations
generally are expected to operate well above the minimum ratios. These
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum levels.

As of March 31, 1999, we had regulatory capital in excess of the Federal
Reserve's minimum requirements. Our total risk-based capital ratio at March 31,
1999 was 11.21% and our leverage ratio was 7.53%.

Acquisitions. The BHC Act requires prior Federal Reserve approval for, among
other things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than 5% of the voting shares or substantially all
the assets of any bank or bank holding company, or for a merger or
consolidation of a bank holding company with another bank holding company. With
limited exceptions, the BHC Act prohibits a bank holding company from acquiring
direct or indirect ownership or control of voting shares of any company which
is not a bank or bank holding company and from engaging directly or indirectly
in any activity other than banking or managing or controlling banks or
performing services for its authorized subsidiaries. A bank holding company
may, however, engage in or acquire an interest in a company that engages in
activities which the Federal Reserve has determined, by regulation or order, to
be so closely related to banking or managing or controlling banks as to be a
proper incident thereto, such as owning and operating a savings association,
trust company, or investment or financial advisory business. Under the BHC Act
and Federal Reserve regulations, we are prohibited from engaging in tie-in
arrangements in connection with an extension of credit, lease, sale of
property, or furnishing of services. That means that, in most circumstances, we
may not condition a client's purchase of one of our services on the purchase of
another service.

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<PAGE>

Interstate Banking and Branching Legislation. Under the Interstate Banking
and Efficiency Act, adequately capitalized and adequately managed bank holding
companies are allowed to acquire banks across state lines subject to various
limitations. In addition, under the Interstate Banking Act, banks are
permitted, under some circumstances, to merge with one another across state
lines and thereby create a main bank with branches in separate states. After
establishing branches in a state through an interstate merger transaction, a
bank may establish and acquire additional branches at any location in the state
where any bank involved in the interstate merger could have established or
acquired branches under applicable federal and state law.

Ownership Limitations. Any person, including that person's associates,
affiliates and groups acting in concert with him or her, who purchases or
subscribes for 5% or more of our common stock may be required to obtain prior
approval of the Commissioner and the Federal Reserve. Under the Illinois
Banking Act, any person who thereafter acquires more than 10% of our stock may
be required to obtain the prior approval of the Commissioner. Under the Change
in Bank Control Act, a person may be required to obtain the prior regulatory
approval of the Federal Deposit Insurance Corporation ("FDIC") and the Federal
Reserve before acquiring the power to directly or indirectly control the
management, operations or policies of PrivateBancorp or PrivateBank or before
acquiring control of 25% or more of any class of PrivateBancorp's or
PrivateBank's outstanding voting stock. In addition, any corporation,
partnership, trust or organized group that acquires a controlling interest in
PrivateBancorp or PrivateBank may have to obtain approval of the Federal
Reserve to become a bank holding company and thereafter be subject to
regulation as a bank holding company.

Dividends. The Federal Reserve has issued a policy statement on the payment
of cash dividends by bank holding companies. In the policy statement, the
Federal Reserve expressed its view that a bank holding company experiencing
earnings weaknesses should not pay cash dividends exceeding its net income or
which could only be funded in ways that weakened the bank holding company's
financial health, such as by borrowing. Additionally, the Federal Reserve
possesses enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or unsound
practices or violations of applicable statutes and regulations. Among these
powers is the ability to prohibit or limit the payment of dividends by banks
and bank holding companies.

Under a longstanding policy of the Federal Reserve, PrivateBancorp is
expected to act as a source of financial strength to PrivateBank and to commit
resources to support PrivateBank. The Federal Reserve takes the position that
in implementing this policy, it may require PrivateBancorp to provide financial
support when the company otherwise would not consider itself able to do so.

In addition to the restrictions on dividends imposed by the Federal Reserve,
Delaware law also places limitations on our ability to pay dividends. For
example, we may not pay dividends to our stockholders if, after giving effect
to the dividend, we would not be able to pay our debts as they become due.
Because a major source of our revenue is dividends which we receive and expect
to receive from PrivateBank, our ability to pay dividends will depend on the
amount of dividends paid by PrivateBank. We cannot be sure that PrivateBank
will, in any circumstances, pay such dividends to us.

Bank Regulation

Under Illinois law, PrivateBank is subject to supervision and examination by
the commissioner of the Illinois Office of Banks and Real Estate (the
"Commissioner"). As an affiliate of PrivateBank, PrivateBancorp is also subject
to examination by the Commissioner. PrivateBank is a member of the Federal Home
Loan Bank ("FHLB") of Chicago and may be subject to examination by the FHLB of
Chicago. In addition, the deposits of PrivateBank are insured by the Bank
Insurance Fund ("BIF") thereby rendering PrivateBank subject to the provisions
of the Federal Deposit Insurance Act ("FDIA") and, as a state nonmember bank,
to supervision and examination by the FDIC. The FDIA requires the FDIC approval
of any merger and/or consolidation by or with an insured bank, as well as the
establishment or relocation of any bank or branch office. The FDIC also
supervises compliance with the provisions of federal law and regulations which
place restrictions on loans by FDIC-insured banks to their directors, executive
officers and other controlling persons.

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<PAGE>

Furthermore, all banks are affected by the credit policies of other monetary
authorities, including the Federal Reserve, which regulate the national supply
of bank credit. Such regulation influences overall growth of bank loans,
investments, and deposits and may also affect interest rates charged on loans
and paid on deposits. The Federal Reserve's monetary policies have had a
significant effect on the operating results of commercial banks in the past and
we expect this trend to continue in the future.

Dividends. The Illinois Banking Act provides that an Illinois bank may not
pay dividends of an amount greater than its current net profits after deducting
losses and bad debts while such bank continues to operate a banking business.
For the purpose of determining the amount of dividends that an Illinois bank
may pay, bad debts are defined as debts upon which interest is past due and
unpaid for a period of six months or more unless such debts are well-secured
and in the process of collection.

In addition to the foregoing, the ability of the company and PrivateBank to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under the Federal Deposit
Insurance Corporation Improvements Act of 1991 ("FDICIA"), as described below.

Federal Reserve System. PrivateBank is subject to Federal Reserve
regulations requiring depository institutions to maintain noninterest-earning
reserves against their transaction accounts (primarily NOW and regular checking
accounts). The Federal Reserve regulations generally require 3% reserves on the
first $47.8 million of transaction accounts plus 10% on the remainder. The
first $4.7 million of otherwise reservable balances (subject to adjustments by
the Federal Reserve) are exempted from the reserve requirements. PrivateBank is
in compliance with that requirement.

Standards for Safety and Soundness. The FDIA, as amended by FDICIA and the
Riegle Community Development and Regulatory Improvement Act of 1994, requires
the Federal Reserve, together with the other federal bank regulatory agencies,
to prescribe standards of safety and soundness, by regulations or guidelines,
relating generally to operations and management, asset growth, asset quality,
earnings, stock valuation, and compensation. The FDIC and the other federal
bank regulatory agencies have adopted a set of guidelines prescribing safety
and soundness standards pursuant to FDICIA. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, and compensation, fees and benefits. In general, the guidelines
require, among other things, appropriate systems and practices to identify and
manage the risks and exposures specified in the guidelines. The guidelines
prohibit excessive compensation as an unsafe and unsound practice and describe
compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director or principal stockholder. In addition, the FDIC adopted regulations
that authorize, but do not require, the FDIC to order an institution that has
been given notice by the FDIC that it is not satisfying any of the safety and
soundness standards to submit a compliance plan. If, after being so notified,
an institution fails to submit an acceptable compliance plan or fails in any
material respect to implement an accepted compliance plan, the FDIC must issue
an order directing action to correct the deficiency and may issue an order
directing other actions of the types to which an undercapitalized association
is subject under the "prompt corrective action" provisions of FDICIA. If an
institution fails to comply with such an order, the FDIC may seek to enforce
its order in judicial proceedings and to impose civil money penalties. The FDIC
and the other federal bank regulatory agencies also proposed guidelines for
asset quality and earning standards.

Prompt Corrective Action. FDICIA requires the federal banking regulators,
including the Federal Reserve and the FDIC, to take prompt corrective action
with respect to depository institutions that fall below minimum capital
standards and prohibits any depository institution from making any capital
distribution that would cause it to be undercapitalized. Institutions that are
not adequately capitalized may be subject to a variety of supervisory actions,
including restrictions on growth, investment activities, capital distributions
and affiliate transactions, and will be required to submit a capital
restoration plan which, to be accepted by the regulators, must be guaranteed in
part by any company having control of the institution (for example, the company
or a

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<PAGE>

stockholder controlling the company). In other respects, FDICIA provides for
enhanced supervisory authority, including greater authority for the appointment
of a conservator or receiver for under-capitalized institutions. The capital-
based prompt corrective action provisions of FDICIA and their implementing
regulations apply to FDIC-insured depository institutions. However, federal
banking agencies have indicated that, in regulating bank holding companies, the
agencies may take appropriate action at the holding company level based on
their assessment of the effectiveness of supervisory actions imposed upon
subsidiary insured depository institutions pursuant to the prompt corrective
action provisions of FDICIA.

As of March 31, 1999, PrivateBank had capital in excess of the requirements
for a "well-capitalized" institution.

Insurance of Deposit Accounts. Under FDICIA, as an FDIC-insured institution,
PrivateBank is required to pay deposit insurance premiums based on the risk it
poses to the insurance fund. The FDIC has authority to raise or lower
assessment rates on insured deposits in order to achieve designated reserve
ratios in the insurance funds and to impose special additional assessments. The
FDICIA assessment rate schedule for BIF-insured deposits provides for an
assessment range of zero to 0.27% (subject to a $2,000 minimum) of deposits
depending on capital and supervisory factors. Each depository institution is
assigned to one of three capital groups: "well capitalized," "adequately
capitalized" or "less than adequately capitalized." Within each capital group,
institutions are assigned to one of three supervisory subgroups: "healthy,"
"supervisory concern" or "substantial supervisory concern." Accordingly, there
are nine combinations of capital groups and supervisory subgroups to which
varying assessment rates would be applicable. An institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned. During 1998, PrivateBank paid deposit insurance premiums in the
aggregate amount of $33,572.

Deposit insurance may be terminated by the FDIC upon a finding that an
institution has engaged in unsafe or unsound practice, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC. We do not know any
practice, condition or violation that might lead to termination of our deposit
insurance.

The Economic Growth and Regulatory Paperwork Reduction Act of 1996 provides
that beginning with semi-annual periods after December 31, 1996, BIF deposits
will also be assessed to pay interest on the bonds issued in the late 1980s by
the Financing Corporation (the "FICO Bonds") to recapitalize the now defunct
Federal Savings & Loan Insurance Corporation. For purposes of the assessments
to pay interest on the FICO Bonds, BIF deposits will be assessed at a rate of
20% of the assessment rate applicable to SAIF deposits until December 31, 1999.
After the earlier of December 31, 1999 or the date on which the last savings
association ceases to exist, full pro rata sharing of FICO assessments will
begin. It has been estimated that the rates of assessment for the payment of
interest on the FICO Bonds will be approximately 1.3 basis points for BIF-
assessable deposits and approximately 6.4 basis points for SAIF-assessable
deposits. The payment of the assessment to pay interest on the FICO Bonds
should not materially affect the Bank.

Community Reinvestment. Under the CRA, a financial institution has a
continuing and affirmative obligation to help meet the credit needs of its
entire community, including low- and moderate-income neighborhoods. The CRA
does not establish specific lending requirements or programs for financial
institutions, nor does it limit an institution's discretion to develop the
types of products and services that it believes are best suited to its
particular community. However, institutions are rated on their performance in
meeting the needs of their communities. Performance is judged in three areas:
(a) a lending test, to evaluate the institution's record of making loans in its
assessment areas; (b) an investment test, to evaluate the institution's record
of investing in community development projects, affordable housing, and
programs benefiting low or moderate income individuals and business; and (c) a
service test, to evaluate the institution's delivery of services through its
branches, ATMs and other offices. The CRA requires each federal banking agency,
in connection with its examination of a financial institution, to assess and
assign one of four ratings to the institution's record of meeting the credit
needs of its community and to take such record into account in its evaluation
of certain

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<PAGE>

applications by the institution, including applications for charters, branches
and other deposit facilities, relocations, mergers, consolidations,
acquisitions of assets or assumptions of liabilities, and savings and loan
holding company acquisitions. The CRA also requires that all institutions make
public disclosure of their CRA ratings.

PrivateBank was assigned a "satisfactory" rating in January 1999 as a result
of its last CRA examination. This is the second highest rating a bank may
receive.

Compliance with Consumer Protection Laws. PrivateBank is subject to many
federal consumer protection statutes and regulations including the CRA, the
Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity
Act, the Fair Housing Act, the Real Estate Settlement Procedures Act and the
Home Disclosure Act. Among other things, these acts:

. require banks to meet the credit needs of their communities;

. require banks to disclose credit terms in meaningful and consistent
ways;

. prohibit discrimination against an applicant in any consumer or business
credit transaction;

. prohibit discrimination in housing-related lending activities;

. require banks to collect and report applicant and borrower data
regarding loans for home purchases or improvement projects;

. require lenders to provide borrowers with information regarding the
nature and cost of real estate settlements;

. prohibit certain lending practices and limit escrow account amounts with
respect to real estate transactions; and

. prescribe possible penalties for violations of the requirements of
consumer protection statutes and regulations.

From time to time we have been made aware of certain deficiencies in our
consumer compliance program. Management believes that any deficiencies have
already been or are in the process of being corrected. In the event that
consumer compliance deficiencies were to continue over time, enforcement or
administrative actions by the appropriate federal banking regulators may affect
the implementation of our growth strategies.

Enforcement Actions. Federal and state statutes and regulations provide
financial institution regulatory agencies with great flexibility to undertake
an enforcement action against an institution that fails to comply with
regulatory requirements, particularly capital requirements. Possible
enforcement actions range from the imposition of a capital plan and capital
directive to receivership, conservatorship or the termination of deposit
insurance.

Other. PrivateBank is also subject to state and federal restrictions upon:

. extensions of credit to the company and any non-banking affiliates,

. the purchase of assets from affiliates,

. the issuance of guarantees, acceptances or letters of credit on behalf
of affiliates, and

. investments in stock or other securities issued by affiliates or
acceptance thereof as collateral for an extension of credit.

PrivateBancorp and PrivateBank are subject to restrictions with respect to
engaging in the issuance, underwriting, public sale or distribution of certain
types of securities. In addition, PrivateBank must maintain reserves against
deposits and is subject to restrictions upon:

. the nature and amount of loans which it may make to a single borrower
(and, in some instances, a group of affiliated borrowers),

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. the nature and amount of securities in which it may invest,

. the amount of investment in PrivateBank premises, and

. the manner in and extent to which it may borrow money.

Pending Legislation. Because of the concerns relating to competitiveness and
the safety and soundness of the banking industry, Congress is considering a
number of wide-ranging proposals for altering the structure, regulation and
competitive relationships of the nation's financial institutions. We cannot
predict whether or in what form any of these proposals will be adopted or the
extent to which the proposals will affect our operations, if at all.

Monetary Policy and Economic Conditions

The earnings of banks and bank holding companies are sensitive to changes in
prevailing interest rates and are affected by general economic conditions and
the fiscal and monetary policies of federal regulatory agencies, including the
Federal Reserve. Through changes in the discount rate, availability of
borrowing at the "discount window," open market transactions, and imposition of
changes in the reserve requirements, the Federal Reserve exerts considerable
influence over the cost and availability of funds obtainable for lending or
investing. Monetary policies are used in varying combinations to influence
overall growth and distributions of bank loans, investments and deposits, and
such use may affect interest rates charged on loans or paid on deposits.
Monetary and fiscal policies have affected the operating results of commercial
banks in the past and are expected to do so in the future. We cannot fully
predict the nature or the extent of any effects which fiscal or monetary
policies may have on our business and earnings.

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DESCRIPTION OF CAPITAL STOCK

The information in this prospectus gives effect to a 2-for-1 stock split and
to an amendment to PrivateBancorp's Restated Certificate of Incorporation to
increase the authorized shares approved by stockholders on April 22, 1999. The
amendment will be filed with the Secretary of State of the State of Delaware
prior to the sale of the shares of common stock offered herein.

Common Stock

We are authorized to issue 12,000,000 shares of common stock, without par
value, of which 3,451,824 shares were outstanding prior to the offering. As of
March 31, 1999, 632,808 shares of common stock were reserved for issuance upon
the exercise of currently outstanding options. The outstanding shares of common
stock currently are, and the shares of common stock to be issued in the
offering will be (when issued and delivered in accordance with the terms and
conditions of the offering), fully paid and nonassessable. Each share of common
stock has the same relative rights as, and is identical in all respects with,
each other share of common stock. Each holder of record of common stock is
entitled to one vote per share on all matters voted upon by our stockholders.
Upon completion of the public offering, holders of shares of common stock will
have no preemptive, redemption or cumulative voting rights. In the event of
liquidation, the holders of shares of common stock are entitled to share
ratably in any of our assets retained after payment in full of creditors and,
if any preferred stock is then authorized, issued and outstanding, after
payment to holders of such preferred stock but only to the extent of any
liquidation preference.

Dividends. The holders of our common stock are entitled to receive and share
equally in such dividends, if any, declared by the Board of Directors out of
funds legally available therefor. We may pay dividends if, as and when declared
by our Board of Directors. The payment of dividends by the company is subject
to limitations imposed by the Delaware General Corporation Law ("DGCL"). See
"Dividends." If we issue preferred stock, the holders thereof may have a
priority over the holders of the common stock with respect to dividends.

Voting Rights. The holders of our common stock possess voting rights in the
company. Stockholders elect our Board of Directors and act on such other
matters as are required to be presented to them under the DGCL or our Restated
Certificate of Incorporation, or as are otherwise presented to them by the
Board of Directors. Each holder of common stock will be entitled to one vote
per share and will not have any right to cumulate votes in the election of
directors. Accordingly, holders of more than fifty percent of the outstanding
shares of common stock will be able to elect all of the Directors to be elected
each year. Although there are no present plans to do so, if we issue preferred
stock, holders of the preferred stock may also possess voting rights. Certain
matters require a two-thirds stockholder vote. See "Certain Anti-Takeover
Effects of the Company's Restated Certificate of Incorporation and Amended and
Restated By-laws and Delaware Law."

Liquidation. In the event of any liquidation, dissolution or winding up of
the company, the holders of our common stock would be entitled to receive,
after payment or provision for payment of all of our debts and liabilities, all
of our assets available for distribution. If preferred stock is issued, the
holders thereof may have a priority over the holders of the common stock in the
event of any liquidation or dissolution.

Preemptive Rights and Redemption. Holders of our common stock will not be
entitled to preemptive rights with respect to any shares which we may issue in
the future. The common stock is not subject to mandatory redemption by us.

Preferred Stock

Our Board of Directors is authorized, pursuant to the Restated Certificate
of Incorporation, to issue 1,000,000 shares of preferred stock, without par
value, in one or more series with respect to which the Board, without
stockholder approval, may determine voting, conversion and other rights which
could adversely affect the rights of the holders of our common stock.
Currently, no shares of our authorized preferred stock are issued or
outstanding. Stockholders will not have preemptive rights to subscribe for
shares of preferred stock.

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<PAGE>

The rights of the holders of the common stock would generally be subject to
the prior rights of the preferred stock with respect to dividends, liquidation
preferences and other matters. The dividend rights, dividend rates, conversion
rights, conversion prices, voting rights, redemption rights and terms
(including sinking fund provisions, if any), the redemption price or prices and
the liquidation preferences of any series of the authorized preferred stock and
the numbers of such shares of preferred stock in each series will be
established by the Board of Directors as such shares are to be issued. It is
not possible to state the actual effect of the preferred stock on the rights of
holders of common stock until the Board of Directors determines the rights of
the holders of a series of the preferred stock. However, such effects might
include:

. restrictions on dividends;

. dilution of the voting power to the extent that the preferred stock were
given voting rights;

. dilution of the equity interest and voting power if the preferred stock
were convertible into common stock; and

. restrictions upon any distribution of assets to the holders of common
stock upon liquidation or dissolution until the satisfaction of any
liquidation preference granted to holders of the preferred stock.

Furthermore, although we have no present intention to do so, the Board of
Directors could direct us to issue, in one or more transactions, shares of
preferred stock or additional shares of common stock or rights to purchase such
shares (subject to the limits imposed by applicable laws and the rules of any
stock exchange or automated dealer quotation system to the extent that such
rules may become applicable to, or may be observed by, us) in amounts which
could make more difficult and, therefore, less likely, a takeover, proxy
contest, change in our management or any other extraordinary corporate
transaction which might be opposed by the incumbent Board of Directors. Any
issuance of preferred stock or of common stock could have the effect of
diluting the earnings per share, book value per share and voting power of
common stock held by our stockholders.

Certain Anti-Takeover Effects of the Restated Certificate of Incorporation,
Amended and Restated
By-laws and Delaware Law

General. Certain provisions of our Restated Certificate of Incorporation,
Amended and Restated By-laws and the DGCL may have the effect of impeding the
acquisition of control of the company by means of a tender offer, a proxy
fight, open-market purchases or otherwise in a transaction not approved by our
Board of Directors. These provisions may have the effect of discouraging a
future takeover attempt which is not approved by our Board of Directors but
which individual stockholders may deem to be in their best interests or in
which stockholders may receive a substantial premium for their shares over then
current market prices. As a result, stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. Such
provisions will also render the removal of our current Board of Directors or
management more difficult.

The provisions of the Restated Certificate of Incorporation and Amended and
Restated By-laws described below are designed to reduce, or have the effect of
reducing, our vulnerability to an unsolicited proposal for the restructuring or
sale of all or substantially all of our assets or an unsolicited takeover
attempt which is unfair to our stockholders. The following description of
certain of the provisions of our Restated Certificate of Incorporation and
Amended and Restated By-laws is general, and you should read it with our
Restated Certificate of Incorporation and Amended and Restated By-laws.

Authorized Shares. Our Restated Certificate of Incorporation authorizes the
issuance of 12,000,000 shares of common stock and 1,000,000 shares of preferred
stock. We have authorized these amounts to provide our Board of Directors with
flexibility to effect, among other things, transactions, financings,
acquisitions, stock dividends, stock splits and employee stock options.
However, these authorized shares may also be used by the Board of Directors
consistent with its fiduciary duty to deter future attempts to gain control of
the company.

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<PAGE>

The Board of Directors also has sole authority to determine the terms of any
one or more series of preferred stock, including voting rights, conversion
rates, and liquidation preferences. As a result of the ability to fix voting
rights for a series of preferred stock, the Board of Directors has the power to
the extent consistent with its fiduciary duty to issue a series of preferred
stock to persons friendly to management in order to attempt to block a merger
or other transaction by which a third party seeks control, and thereby assist
the incumbent Board of Directors and management to retain their respective
positions.

Classified Board of Directors; Filling of Board Vacancies and Qualifying
Shares. Our Board of Directors is divided into three classes, each of which
contains approximately one-third of the whole number of the members of the
Board of Directors. Each class serves a staggered three-year term, with
approximately one-third of the total number of Directors being elected each
year. Under the DGCL, members of a staggered board may only be removed for
cause unless the Certificate of Incorporation provides otherwise. Our Restated
Certificate of Incorporation does not provide for removal of directors without
cause. The staggered board is intended to provide for continuity of the Board
of Directors and to make it more difficult and time consuming for a stockholder
group to fully use its voting power to gain control of the Board of Directors
without the consent of the incumbent Board of Directors.

Our Amended and Restated By-laws provide that there shall be sixteen
Directors. Our Amended and Restated By-laws also provide that any vacancy
occurring on the Board of Directors, including a vacancy created by an increase
in the number of directors, will be filled by a majority vote of the directors
then in office. Directors so chosen shall hold office until their successors
are elected and qualified or until their earlier resignation or removal.

No Cumulative Voting; Limitation on Action by Written Consent and
Stockholder Meetings. Our Restated Certificate of Incorporation does not
provide for cumulative voting. Our Restated Certificate of Incorporation and
Amended and Restated By-laws also provide that any action required or permitted
to be taken by the stockholders must be effected at an annual or special
meeting and may not be effected by written consent in lieu of a meeting. Our
Amended and Restated By-laws provide that special meetings of the stockholders
may only be called by the Chairman of the Board, the President or the Secretary
at the written request of a majority of the Board of Directors.

Delaware Business Combination Statute. Section 203 of the DGCL provides
that, subject to certain exceptions specified therein, an "interested
stockholder" of a Delaware corporation shall not engage in any business
combination, including mergers or consolidations or acquisitions of additional
shares of the corporation, with the corporation for a three-year period
following the time that such stockholder becomes an interested stockholder
unless (a) prior to such time, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder, (b) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares), or (c) at or subsequent to such time the business combination
is approved by the board of directors of the corporation and authorized at an
annual or special meeting of stockholders, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Except as otherwise specified in Section 203, an interested
stockholder is defined to include any person that is (x) the owner of 15% or
more of the outstanding voting stock of the corporation, or (y) is an affiliate
or associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date of determination, and the affiliates and
associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. We have not elected to
be exempt from the restrictions imposed under Section 203. The provisions of
Section 203 may encourage persons interested in acquiring us to negotiate in
advance with our Board of Directors since the stockholder approval requirement
would be avoided if a majority of the directors then in office approves either
the business combination or the transaction which results in any such person
becoming an interested

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<PAGE>

stockholder. Such provisions also may have the effect of preventing changes in
our management. It is possible that such provisions could make it more
difficult to accomplish transactions which our stockholders may otherwise deem
to be in their best interests.

Amendment of the Restated Certificate of Incorporation and By-laws. Our
Restated Certificate of Incorporation provides that the affirmative vote of the
holders of at least 66 2/3% of our outstanding voting stock, voting together as
a single class, is required to amend, repeal, or adopt any provision
inconsistent with, the provisions of our Restated Certificate of Incorporation
classifying directors, eliminating cumulative voting, prohibiting stockholder
action without a meeting or specifying the vote required to amend such
provisions. Our By-laws may be amended by the stockholders or the Board of
Directors; however, the affirmative vote of the holders of at least 66 2/3% of
the outstanding voting stock, voting together as a single class, is required to
amend, repeal, or adopt any provision inconsistent with, the provisions of the
Amended and Restated By-laws describing how special meetings of the
stockholders must be called, prohibiting stockholder action without a meeting,
regarding properly bringing business before a stockholder meeting, stating the
number of and classifying directors, relating to filling director vacancies,
and specifying the vote required to amend such provisions.

Certain By-Law Provisions. Our Amended and Restated By-laws also require a
stockholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at an annual stockholder meeting, to
provide us advance notice of at least 120 days. The notice provision requires a
stockholder who desires to raise new business at an annual stockholder meeting
to provide us certain information concerning the nature of the new business,
the stockholder and such stockholder's interest in the business matter.
Similarly, a stockholder wishing to nominate any person for election as a
director must provide us with certain information concerning the nominee and
such proposing stockholder.

The provisions described above are intended to reduce our vulnerability to
takeover attempts and certain other transactions which have not been negotiated
with and approved by our Board of Directors.

Attempts to take over corporations have become increasingly common. An
unsolicited, nonnegotiated proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Accordingly, the Board
of Directors believes it is in the best interests of the company and our
stockholders to encourage potential acquirors to negotiate directly with
management and that these provisions will encourage such negotiations and
discourage nonnegotiated takeover attempts. It is also the view of the Board of
Directors that these provisions should not discourage persons from proposing a
merger or other transaction at a price that reflects our true value and that
otherwise is in the best interest of all stockholders.

Limitation of Director Liability and Indemnification

Our Restated Certificate of Incorporation provides that no director will be
personally liable to the company or our stockholders for monetary damages for
breach of fiduciary duty as a director; provided, however, that directors will
have liability (a) for any breach of a director's duty of loyalty to the
company or our stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the DGCL, or (d) for any transaction from which the director
derived an improper personal benefit.

Our Amended and Restated By-laws provide that we will indemnify any person
made or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director,
officer, employee or agent of the company, or is or was serving at our request
as a director, trustee, officer, employee or agent of another corporation or
other enterprise against expenses actually and reasonably incurred by such
person in connection with such action, suit or proceeding. To the extent that a
person seeking indemnification has been successful on the merits or otherwise
in defense of any action, suit, or proceeding, such person will be indemnified
for his or her expenses which were actually and reasonably incurred. Any
indemnification payment must be authorized upon a determination that the
individual seeking indemnification met the necessary standard of conduct for
such indemnification. Such determination will be made by a majority vote of a
quorum

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<PAGE>

consisting of directors not involved with the action, suit or proceeding; a
written opinion of independent legal counsel, if the described quorum cannot be
obtained or if the majority vote of the described quorum directs; a vote of the
stockholders; or a decision of the court in which the action was brought. To
qualify for indemnification, such person must have acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, our best
interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was lawful. Expenses may be paid
by us as they are incurred, in advance of a final disposition, as authorized by
the Board of Directors and upon receipt of an undertaking by the person seeking
indemnification to repay the advanced amount if it is later determined that he
or she was not entitled to indemnification. The indemnification and advancement
of expenses provided by the Amended and Restated By-laws are not to be deemed
exclusive of any other rights to which any person seeking indemnification may
be entitled as a matter of law or under our Restated Certificate of
Incorporation, the Amended and Restated By-laws, any agreement, vote of
stockholders, any insurance purchased by us, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while holding
such office, and will continue as to a person who has ceased to be such
director, trustee, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.

We have entered into indemnification agreements with our directors and
executive officers to indemnify them against certain liabilities. Consistent
with the provisions of our Restated Certificate of Incorporation and Amended
and Restated By-laws, under the terms of the agreements, we will indemnify our
directors and executive officers to the fullest extent permitted under
applicable law against all expenses, liabilities and losses incurred in
connection with any legal proceeding brought against any of them by reason of
their status as directors, officers, employees, agents or fiduciaries of the
company. The expenses, liabilities and losses which we are obligated to pay may
include judgments, fines and amounts paid in settlement of such legal
proceedings by our directors and executive officers so long as they acted in
good faith and in a manner which they reasonably believed was in the best
interests of the company.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Illinois Stock
Transfer Company, Chicago, Illinois.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 4,351,824 of common stock
issued and outstanding (4,486,824 shares if the underwriters exercise their
over-allotment option in full), assuming no exercise of any options. Of these
shares, 2,770,550 shares, including the 900,000 shares to be sold in this
offering (assuming no exercise of the over-allotment option), will be freely
tradeable in the public market without restriction or registration under the
Securities Act, unless held by our "affiliates" as that term is defined under
the Securities Act. The remaining 1,581,274 shares are subject to certain
restrictions on trading, as described below. All shares sold in the Towne
Square transaction will be subject to contractual holding periods of one to
three years. See "Pending Acquisition."

Restricted stock awards granted to our employees.

Pursuant to the terms of our Stock Incentive Plan, we have awarded 21,600
shares of restricted stock to certain of our employees who are not executive
officers. Although our employees have full voting rights with regard to these
shares and may receive any dividends we declare, they may not transfer the
shares until they are fully vested. Each restricted stock award will vest in
its entirety on the fifth anniversary of the date of grant. Unless earlier
forfeited, the awards will vest according to the following schedule:

<TABLE>
<CAPTION>
Year Shares Vested
---- -------------
<S> <C>
2001....................... 4,800
2002....................... 9,600
2003....................... 1,600
2004....................... 5,600
</TABLE>

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<PAGE>

Shares held by our executive officers and directors.

Our executive officers and directors currently hold 1,005,112 shares of our
common stock, representing 23.1% of the shares that will be outstanding upon
completion of this offering. Of these shares, 74,400 shares were granted to our
officers pursuant to restricted stock awards and are subject to forfeiture
until the fifth anniversary of the date of grant. These restricted stock awards
will vest between the years 2001 and 2004. The remaining shares held by our
officers and directors may be sold in the public market under the provisions of
Rule 144 of the Securities Act, upon the expiration of certain holding periods
specified in Rule 144.

Lock-up Agreements. Our directors and officers and certain of our
stockholders have entered into lock-up agreements with the underwriters
pursuant to which they have agreed not to offer, sell or contract to sell any
of their shares of common stock for a period of 180 days from the date of this
prospectus without the underwriters' prior written consent. An aggregate of
1,477,774 shares of our common stock are subject to these agreements. Upon the
expiration of this 180-day period, our directors and officers and stockholders
may resell their shares, if vested, subject to the restrictions discussed
below.

Shares Subject to Rule 144.

In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares for at least one year, including an affiliate, is
entitled to sell, within a three-month period, that number of shares which does
not exceed the greater of:

. one percent of the outstanding shares of our common stock (approximately
43,518 shares immediately following the offering); or

. the average weekly reported trading volume of our common stock during
the four calendar weeks preceding the sale.

Sales made under Rule 144 are also subject to certain requirements pertaining
to:

. the manner of such sales;

. notices of such sales; and

. the availability of current public information about us.

Under Rule 144(k), a person other than an affiliate may sell shares freely,
without regard to the above restrictions, if that person has held the shares
for a period of two years or more. Affiliates, such as our directors and
officers, are always subject to these manner of sale and volume restrictions,
regardless of the length of time that they have held their shares.

Currently there are 101,900 shares of our common stock held by non-
affiliates which are subject to the provisions of Rule 144. Of such shares,
20,000 are subject to the lock-up agreements discussed above. Non-affiliates
may sell the remaining shares pursuant to the Rule 144 restrictions beginning
in September 1999, except for 20,000 of these shares that are subject to a
lock-up agreement. All of these shares will be freely tradable by non-
affiliates by December 2000.

Registration Rights of Certain of Our Stockholders.

Pursuant to the terms of our private placement offering materials, we have
granted certain "piggyback" registration rights to holders of 2,769,872 shares
of our common stock. These stockholders, including some of our affiliates, are
entitled to have their shares registered for sale under the Securities Act in
the event that we determine to register shares of our common stock in
connection with an underwritten public offering or otherwise. These rights are
subject to certain limitations and conditions, including:

. our ability to preclude or limit the number of shares which these
stockholders may include in the underwritten offering or registration;

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<PAGE>

. the right of the managing underwriter, in its sole discretion, to limit
the number of shares to be underwritten; and

. the requirement that each participating stockholder bear a pro rata
portion of the underwriting discounts and commissions.

Of the shares entitled to these registration rights, all shares held by non-
affiliates are currently tradable pursuant to the terms of Rule 144(k), as
described above. Those shares held by our affiliates are subject to the manner
of sale and volume restrictions of Rule 144, as set forth above. None of the
registration rights with respect to these shares have been exercised in
connection with this offering.

Shares Reserved For Issuance Pursuant to Options.

Effective upon completion of this offering, we will have an aggregate of
632,808 shares reserved for issuance pursuant to outstanding stock options
granted to certain key employees, officers and directors. Options to purchase
453,408 shares are currently exercisable. In addition, there are 50,119 shares
remaining available for future awards under our Stock Incentive Plan, out of
which the option grant and restricted stock award are expected to be made to
Tom Castronovo in connection with the Towne Square Financial Corporation
transaction. We intend to register under the Securities Act the shares of
common stock reserved for issuance under our stock plans, whereupon all of
these shares will be freely tradeable, subject to compliance by affiliates with
the Rule 144 volume and manner of sale limitations.

Our Nasdaq Symbol.

We have applied to have our common stock approved for quotation and trading
on The Nasdaq National MarketSM under the symbol "PVTB."

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UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below, for whom EVEREN Securities, Inc. and Stifel, Nicolaus
& Company, Incorporated are acting as representatives (the "Representatives"),
have severally agreed to purchase from us, and we have agreed to sell to them,
the respective number of shares of common stock set forth opposite each
underwriter's name below:

<TABLE>
<CAPTION>
Number
of
Underwriters Shares
------------ -------
<S> <C>
EVEREN Securities, Inc...........................................
Stifel, Nicolaus & Company, Incorporated.........................
-------
Total........................................................ 900,000
=======
</TABLE>

The Underwriting Agreement provides that the obligations of the several
underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The nature of the underwriters'
obligation is such that they are committed to purchase and pay for all shares
of common stock (other than those covered by the over-allotment options
discussed below) if any are purchased.

The underwriters propose to offer the shares of our common stock directly to
the public at the initial public offering price set forth on the cover page of
this prospectus, and to certain securities dealers (who may include the
underwriters) at such price, less a concession not in excess of $ per
share of common stock. The underwriters may allow, and such selected dealers
may reallow, a concession not in excess of $ per share of common stock
to certain brokers and dealers. After this offering, the price to the public,
concession, allowance and reallowance may be changed by the Representatives.
The Representatives have informed us that they do not intend to confirm sales
to any account over which they exercise discretionary authority.

We have granted the underwriters an option to purchase up to 135,000
additional shares of common stock at the same price per share as we will
receive for the 900,000 shares that the underwriters have agreed to purchase.
This option is exercisable during the 30-day period after the date of this
prospectus, solely to cover over-allotments, if any. To the extent that the
underwriters exercise this option, each of the underwriters will be committed,
subject to certain conditions, to purchase such additional shares of common
stock in approximately the same proportions as set forth in the above table. If
purchased, the underwriters will sell the additional shares on the same terms
as the 900,000 shares are being sold. If the underwriters exercise the over-
allotment in full, the total public offering price will be $ , total
underwriting discounts and commissions will be $ , and total proceeds
to us will be $ .

The offering of the common stock is made for delivery when, as and if
accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject any order for the purchase of common stock.

Subject to certain exceptions, we have agreed not to issue, and each of our
officers and directors (and certain stockholders of the company) has agreed not
to offer, sell or otherwise dispose of any of our shares of common stock or our
other equity securities for a period of 180 days after the date of this
prospectus (other than shares sold pursuant to this prospectus and shares
issuable in the transaction with Towne Square Financial Corporation) without
the prior written consent of EVEREN Securities.

Subject to certain exceptions for registration statements on Form S-8, we
have agreed not to file a registration statement relating to any of our shares
of common stock or other equity securities for a period of 180 days after the
date of this prospectus (other than the shares to be issued in this offering
and the shares issuable in the transaction with Towne Square Financial
Corporation) without the prior written consent of EVEREN Securities.

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<PAGE>

We have agreed to indemnify the underwriters against certain liabilities
under the Securities Act, or to contribute to payments the underwriters may be
required to make in respect thereof.

Prior to this offering, there has been no public market for our common
stock. Consequently, we negotiated the initial public offering price with the
underwriters. Among the factors considered in such negotiations were:

. prevailing market conditions;

. an assessment of our management;

. our results of operations in recent periods;

. the present stage of our development;

. the market capitalizations and stages of development of other companies
which we and the Representatives believe to be comparable to us; and

. estimates of our business potential.

There can be no assurance that an active trading market will develop for our
common stock or that our common stock will trade in the public market
subsequent to this offering at or above the initial public offering price. The
initial public offering price should not be considered an indication of the
actual value of our common stock. Such price is subject to change as a result
of market conditions and other factors. We cannot assure you that our common
stock can be resold at or above the initial public offering price.

In order to facilitate this offering, certain persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise
affect the price of our common stock during and after the offering, such as the
following:

. the underwriters may over-allot or otherwise create a short position in
the common stock for their own account by selling more shares of common
stock than we have been sold to them;

. the underwriters may elect to cover any such short position by
purchasing shares of common stock in the open market or by exercising
the over-allotment option;

. the underwriters may stabilize or maintain the price of our common stock
by bidding for or purchasing shares of common stock in the open market;

. the underwriters may engage in passive market making transactions; and

. the underwriters may impose penalty bids, under which selling
concessions allowed to syndicate members of other broker-dealers
participating in this offering are reclaimed if shares of common stock
previously distributed in the offering are repurchased in connection
with stabilization transactions or otherwise.

The effect of these transactions may be to stabilize or maintain the market
price at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of our common stock
to the extent that it discourages resales thereof. No representation is made as
to the magnitude or effect of any such stabilization or other transactions.
Such transactions may be effected on the Nasdaq National Market or otherwise
and, if commenced, may be discontinued at any time.

EVEREN Securities has provided in the past, and both Representatives may
provide in the future, investment banking services to PrivateBancorp for which
they have received and would expect to receive customary fees and commissions.

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LEGAL MATTERS

Certain legal matters in connection with this offering, including the
validity of the common stock, are being passed upon for the company by Vedder,
Price, Kaufman & Kammholz, Chicago, Illinois. Certain legal matters are being
passed upon for the underwriters by Jenner & Block, Chicago, Illinois.

EXPERTS

The consolidated financial statements for each of the three years in the
three-year period ended December 31, 1998, included in this prospectus, have
been audited by Arthur Andersen LLP, independent certified public accountants,
as indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

WHERE YOU CAN GET MORE INFORMATION

We have filed a registration statement on Form S-1 under the Securities Act
with the SEC in connection with the common stock offered by this prospectus.
This prospectus omits certain information, exhibits and undertakings set forth
in the registration statement which we have filed with the SEC. You may inspect
and copy those materials upon payment of prescribed rates, at the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional office of the SEC at the following locations: Seven World Trade
Center, Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. This
information is also available on the Internet at the SEC's website. The address
for the web site is: http://www.sec.gov. For further information about the
company, reference is hereby made to the registration statement and the
exhibits thereto. Statements contained in this prospectus concerning the
provisions of any contract, agreement or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract,
agreement or other document filed as an exhibit to the registration statement
for a full statement of the provisions thereof. Each such statement in this
prospectus is qualified in all respects by such reference.

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<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PRIVATEBANCORP, INC.

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Arthur Andersen LLP, Independent Public Accountants............. F-2

Consolidated Balance Sheets as of March 31, 1999 (unaudited) and December
31, 1998 and 1997........................................................ F-3

Consolidated Statements of Income for the three months ended March 31,
1999 and 1998 (unaudited) and for the years ended December 31, 1998, 1997
and 1996................................................................. F-4

Consolidated Statements of Changes in Stockholders' Equity for the three
months ended March 31, 1999 (unaudited) and for the years ended December
31, 1998, 1997 and 1996.................................................. F-5

Consolidated Statements of Cash Flows for the three months ended March 31,
1999 and 1998 (unaudited) and for the years ended December 31, 1998, 1997
and 1996................................................................. F-6

Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

The accompanying consolidated financial statements give effect to the
changes in the capitalization of PrivateBancorp, Inc. which will take place
prior to the effective date of the initial public offering. After the events
discussed in Note 19 to PrivateBancorp, Inc.'s consolidated financial
statements are effected, we expect to be in a position to render the following
audit report:

Arthur Andersen LLP

Chicago, Illinois
January 29, 1999

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
PrivateBancorp, Inc.:

We have audited the accompanying consolidated balance sheets of
PRIVATEBANCORP, INC. (a Delaware corporation) AND SUBSIDIARY as of December 31,
1998 and 1997, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
PrivateBancorp, Inc. and Subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles.

F-2
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

As of March 31, 1999 and December 31, 1998 and 1997

<TABLE>
<CAPTION>
March 31, December 31, December 31,
1999 1998 1997
------------ ------------ ------------
(unaudited)
ASSETS
<S> <C> <C> <C>
Cash and due from banks-noninterest
bearing............................. $ 8,220,209 $ 11,894,781 $ 9,229,704
Federal funds sold................... 7,759,124 3,619,437 16,976,417
------------ ------------ ------------
Total cash and cash equivalents.. 15,979,333 15,514,218 26,206,121
------------ ------------ ------------
Available-for-sale securities, at
fair value.......................... 105,135,775 116,890,739 65,383,252
------------ ------------ ------------
Loans................................ 307,766,039 281,964,896 218,494,547
Less: Allowance for loan losses.... (3,695,000) (3,410,000) (3,050,000)
------------ ------------ ------------
Net loans.......................... 304,071,039 278,554,896 215,444,547
------------ ------------ ------------
Bank premises and equipment, net..... 1,528,416 1,587,720 1,904,338
------------ ------------ ------------
Accrued interest receivable.......... 2,685,131 2,264,195 1,581,728
------------ ------------ ------------
Other assets......................... 1,654,854 1,496,071 1,352,145
------------ ------------ ------------
Total assets..................... $431,054,548 $416,307,839 $311,872,131
============ ============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Demand deposits:
Noninterest-bearing................ $ 28,178,279 $ 39,490,083 $ 34,233,722
Interest-bearing................... 31,793,923 26,508,202 26,083,741
Savings and money market deposit
accounts............................ 180,871,333 170,713,032 135,624,494
Other time deposits.................. 143,610,570 128,282,346 89,831,506
------------ ------------ ------------
Total deposits................... 384,454,105 364,993,663 285,773,463
Accrued interest payable............. 994,331 720,874 453,056
Funds borrowed....................... 10,000,000 20,000,000 --
Other liabilities.................... 5,552,114 1,319,654 957,857
------------ ------------ ------------
Total liabilities................ 401,000,550 387,034,191 287,184,376
------------ ------------ ------------
Stockholders' equity:
Preferred stock, 1,000,000 shares
authorized........................
Common stock, without par value;
12,000,000 shares authorized;
3,451,824, 3,431,424 and 3,217,184
shares issued and outstanding in
1999, 1998 and 1997, respectively. 3,451,824 3,431,424 3,217,184
Surplus............................ 22,600,302 22,273,902 19,782,477
Retained earnings.................. 5,853,156 4,912,359 2,165,310
Accumulated other comprehensive
income, net of tax effect......... (58,045) 149,471 29,117
Deferred compensation.............. (843,498) (543,767) (506,333)
Loan to executive officer.......... (949,741) (949,741) --
------------ ------------ ------------
Total stockholders' equity....... 30,053,998 29,273,648 24,687,755
------------ ------------ ------------
Total liabilities and
stockholders' equity............ $431,054,548 $416,307,839 $311,872,131
============ ============ ============
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-3
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended March 31, 1999 and 1998, and
for the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
--------------------- -----------------------------------
1999 1998 1998 1997 1996
---------- ---------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Interest income:
Loans, including fees. $5,635,595 $4,624,309 $19,619,603 $16,729,277 $12,151,454
Federal funds sold and
interest-bearing
deposits............. 48,268 498,263 2,181,013 874,981 1,392,465
Securities............ 1,570,161 726,566 3,491,622 2,518,675 2,396,461
---------- ---------- ----------- ----------- -----------
Total interest
income............. 7,254,024 5,849,138 25,292,238 20,122,933 15,940,380
---------- ---------- ----------- ----------- -----------
Interest expense:
Deposits:
Interest-bearing
demand............. 142,080 121,077 487,073 376,833 304,807
Savings and money
market deposit
accounts........... 1,800,196 1,628,727 6,651,280 5,879,689 4,613,396
Other time.......... 1,751,289 1,346,153 6,154,468 3,821,473 2,972,891
Funds borrowed........ 144,420 -- 19,136 2,903 143,026
---------- ---------- ----------- ----------- -----------
Interest expense.... 3,837,985 3,095,957 13,311,957 10,080,898 8,034,120
---------- ---------- ----------- ----------- -----------
Net interest income. 3,416,039 2,753,181 11,980,281 10,042,035 7,906,260
Provision for loan
losses................. 285,000 91,370 361,986 602,991 523,679
---------- ---------- ----------- ----------- -----------
Net interest income
after provision for
loan losses.......... 3,131,039 2,661,811 11,618,295 9,439,044 7,382,581
---------- ---------- ----------- ----------- -----------
Non-interest Income:
Banking and trust
services............. 441,456 273,243 1,280,585 1,210,273 910,786
Securities gains...... -- -- 39,894 -- --
---------- ---------- ----------- ----------- -----------
Total non-interest
income............. 441,456 273,243 1,320,479 1,210,273 910,786
---------- ---------- ----------- ----------- -----------
Non-interest Expense:
Salaries and employee
benefits............. 1,115,449 1,101,860 4,076,523 3,901,662 3,410,676
Occupancy............. 352,051 333,527 1,379,059 1,274,058 990,098
Data processing....... 131,039 120,490 508,181 395,665 334,211
Marketing............. 152,990 138,793 566,960 500,482 424,235
Amortization of
organizational costs. -- -- -- -- 23,295
Professional fees..... 177,796 93,843 560,715 448,441 325,663
Insurance............. 41,415 30,015 134,365 114,955 82,001
Other................. 284,040 181,668 863,539 626,412 508,292
---------- ---------- ----------- ----------- -----------
Total non-interest
expense............ 2,254,780 2,000,196 8,089,342 7,261,675 6,098,471
---------- ---------- ----------- ----------- -----------
Income before income
taxes.............. 1,317,715 934,858 4,849,432 3,387,642 2,194,896
Income tax provision.... 291,132 364,594 1,839,294 1,242,347 761,873
---------- ---------- ----------- ----------- -----------
Net income............ $1,026,583 $ 570,264 $ 3,010,138 $ 2,145,295 $ 1,433,023
---------- ---------- ----------- ----------- -----------
Basic earnings per
share.................. $ .30 $ .18 $ .91 $ .69 $ .49
========== ========== =========== =========== ===========
Diluted earnings per
share.................. $ .28 $ .17 $ .86 $ .65 $ .47
========== ========== =========== =========== ===========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-4
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended March 31, 1999 and
for the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Year Ended December 31,
Three Months Ended -----------------------------------------------------------------------
March 31, 1999 1998 1997 1996
----------------------- ----------------------- ----------------------- -----------------------
Compre- Compre- Compre- Compre-
hensive hensive hensive hensive
Total Income Total Income Total Income Total Income
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock:
Balance at beginning
of year.............. $ 3,431,424 $ 3,217,184 $ 2,958,272 $ 2,850,672
Issuance of stock..... 20,400 214,240 258,912 107,600
----------- ----------- ----------- -----------
Balance at end of
year................. 3,451,824 3,431,424 3,217,184 2,958,272
----------- ----------- ----------- -----------
Surplus:
Balance at beginning
of year.............. 22,273,902 19,782,477 17,301,302 16,652,652
Issuance of common
stock................ 326,400 2,283,360 2,476,534 648,650
Other................. -- 208,065 4,641 --
----------- ----------- ----------- -----------
Balance at end of
year................. 22,600,302 22,273,902 19,782,477 17,301,302
----------- ----------- ----------- -----------
Retained Earnings
(Deficit):
Balance at beginning
of year.............. 4,912,359 2,165,310 237,373 (1,011,042)
Net income............ 1,026,583 $1,026,583 3,010,138 $3,010,138 2,145,295 $2,145,295 1,433,023 $1,433,023
---------- ---------- ---------- ----------
Dividends paid--
$0.03, $0.08, $0.07
and $0.07 per share
in 1999, 1998, 1997
and 1996,
respectively......... (85,786) (263,089) (217,358) (184,608)
----------- ----------- ----------- -----------
Balance at end of
year................. 5,853,156 4,912,359 2,165,310 237,373
----------- ----------- ----------- -----------
Accumulated Other
Comprehensive Income--
Unrealized Gains
(Losses) on Securities
Available for Sale:
Balance at beginning
of year.............. 149,471 29,117 (56,847) (47,750)
Other comprehensive
income--unrealized
gains (losses) on
securities available
for sale, net of tax
provision (benefit)
of $(132,674),
$76,523, $47,698 and
$(4,685) for the
three months ended
March 31, 1999, and
in 1998, 1997, and
1996, respectively... (207,516) (207,516) 120,354 120,354 85,964 85,964 (9,097) (9,097)
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
Comprehensive income.. $ 819,067 $3,130,492 $2,231,259 $1,423,926
========== ========== ========== ==========
Balance at end of
year................. (58,045) 149,471 29,117 (56,847)
----------- ----------- ----------- -----------
Deferred Compensation:
Balance at beginning
of year.............. (543,767) (506,333) (217,750) --
Awards granted........ (346,800) (187,000) (402,500) (277,500)
Amortization of
deferred
compensation......... 47,068 149,566 98,917 33,500
Other................. -- -- 15,000 26,250
----------- ----------- ----------- -----------
Balance at end of
year................. (843,498) (543,767) (506,333) (217,750)
----------- ----------- ----------- -----------
31,003,739 30,223,389 24,687,755 20,222,350
Loan to Executive
Officer:
Loan to
stockholder/chief
executive officer.... (949,741) (949,741) -- --
----------- ----------- ----------- -----------
Total stockholders'
equity at end of
year............... $30,053,998 $29,273,648 $24,687,755 $20,222,350
=========== =========== =========== ===========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-5
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 1999 and 1998 and
For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Year Ended December 31,
March 31, March 31, -----------------------------------------
1999 1998 1998 1997 1996
------------ ------------ ------------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows From
Operating Activities:
Net income............. $ 1,026,583 $ 570,264 $ 3,010,138 $ 2,145,295 $ 1,433,023
------------ ------------ ------------- ------------ ------------
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization........ 135,526 122,731 507,853 472,669 329,013
Amortization of
organization costs.. -- -- -- -- 23,295
Amortization of
deferred
compensation........ 47,068 31,938 149,566 98,917 33,500
Provision for loan
losses.............. 285,000 91,370 361,986 602,991 523,679
Gain on sales of
securities.......... (45,564) -- (39,894) -- --
Increase in deferred
loan fees........... -- -- 347,766 85,684 48,883
(Increase) in
deferred income
taxes............... -- -- (290,700) (440,387) (201,729)
(Increase) in accrued
interest receivable. (420,805) (167,272) (682,467) (145,916) (291,010)
Increase in accrued
interest payable.... 273,457 84,944 267,818 60,881 35,506
Decrease in other
assets.............. (28,012) (366,903) 70,251 77,449 105,579
Increase in other
liabilities......... 4,232,460 368,143 569,862 414,712 691
------------ ------------ ------------- ------------ ------------
Total adjustments.. 4,479,130 164,951 1,262,041 1,227,000 607,407
------------ ------------ ------------- ------------ ------------
Net cash provided
by operating
activities........ 5,505,713 735,215 4,272,179 3,372,295 2,040,430
------------ ------------ ------------- ------------ ------------
Cash Flows From
Investing Activities:
Proceeds from
maturities, pay
downs, and sales of
securities............ 14,917,259 32,628,772 85,390,763 11,255,315 25,658,276
Purchase of securities
available for sale.... (3,456,295) (15,400,000) (136,661,479) (31,888,325) (31,992,943)
Net loan principal
advanced.............. (25,801,143) (5,252,823) (63,820,101) (47,240,005) (45,352,131)
Bank premises and
equipment
expenditures.......... (75,075) (47,393) (191,235) (659,401) (901,638)
------------ ------------ ------------- ------------ ------------
Net cash provided
by (used in)
investing
activities........ (14,415,254) 11,928,556 (115,282,052) (68,532,416) (52,588,436)
------------ ------------ ------------- ------------ ------------
Cash Flows From
Financing Activities:
Net increase in total
deposits.............. 19,460,442 18,886,537 79,220,200 63,202,205 45,702,759
Proceeds from funds
borrowed.............. -- -- 20,000,000 -- 3,000,000
Principal reductions
of funds borrowed..... (10,000,000) -- -- (3,000,000) (700,000)
Issuance of common
stock................. -- 124,200 1,360,859 2,347,946 505,000
Dividends paid......... (85,786) (60,629) (263,089) (217,358) (184,608)
------------ ------------ ------------- ------------ ------------
Net cash provided
by financing
activities........ 9,374,656 18,950,108 100,317,970 62,332,793 48,323,151
------------ ------------ ------------- ------------ ------------
Net Increase (Decrease)
in Cash and Cash
Equivalents............ 465,115 31,613,879 (10,691,903) (2,827,328) (2,224,855)
Cash and Cash
Equivalents at
Beginning of Year...... 15,514,218 26,206,121 26,206,121 29,033,449 31,258,304
------------ ------------ ------------- ------------ ------------
Cash and Cash
Equivalents at End of
Year................... $ 15,979,333 $ 57,820,000 $ 15,514,218 $ 26,206,121 $ 29,033,449
============ ============ ============= ============ ============
Cash Paid During Year
For:
Interest............... $ 3,564,874 $ 3,011,013 $ 13,044,139 $ 10,004,288 $ 7,998,614
Income taxes........... 233,880 $ 88,676 1,826,826 1,562,726 977,432
============ ============ ============= ============ ============
Non-Cash Transactions:
Loan to executive
officer for purchase
of common stock....... $ -- $ -- $ 949,741 $ -- $ --
============ ============ ============= ============ ============
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-6
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1998 and 1997

1. Accounting Policies:

The consolidated financial statements of PrivateBancorp, Inc. (the
"Company") and Subsidiary have been prepared in conformity with generally
accepted accounting principles and reporting practices prescribed for the
banking industry. A description of the significant accounting policies follows:

a. Consolidation

The consolidated financial statements of the Company and Subsidiary include
the accounts of the Company and its wholly owned subsidiary, The PrivateBank
and Trust Company (the "Bank"). Significant intercompany accounts and
transactions have been eliminated in the preparation of these statements.

b. Statement of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold. Generally, federal
funds are sold for one-day periods, but not longer than thirty days.

c. Securities

Securities for which management has the intent and ability to hold to
maturity are reported at cost, adjusted for amortization of premium and
accretion of discount. Securities available for sale are reported at fair
value, with unrealized gains and losses and applicable income taxes reported as
other comprehensive income in a separate component of stockholders' equity. At
December 31, 1998 and 1997, all securities held were classified as available
for sale.

Premium and discount on securities are included in interest income on
securities over the period from acquisition to maturity or earlier call date
using the straight-line method, the results of which are not materially
different from those obtained using the level-yield method. The specific
identification method is used to record gains and losses on security
transactions.

d. Loans

Loans are generally reported at the principal amount outstanding, net of
unearned income. Loans originated and intended for sale in the secondary market
are classified as held for sale and reported at the lower of cost or market
value.

Loan origination and commitment fees, offset by certain direct loan
origination costs, are being deferred and the net amount amortized as an
adjustment of the related loan's yield. The Company is generally amortizing
these amounts over the contractual life of the related loans.

Loans are placed on nonaccrual status when, in the opinion of management,
there are doubts as to the collectibility of interest or principal, or when
principal or interest is past due 90 days or more and the loan is not well
secured and in the process of collection. All loans classified as nonaccrual
are considered to be impaired. Any shortfall in the estimated value of an
impaired loan compared with the recorded investment of the loan is identified
as an allocated portion of the allowance for loan losses and is one of the
factors

F-7
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

considered by management in their overall assessment of the adequacy of the
allowance for loan losses. Interest previously accrued but not collected is
reversed and charged against interest income at the time the related loan is
placed on nonaccrual status. Interest payments received on impaired loans are
recorded as reductions of principal if principal payment is doubtful.

e. Allowance for Loan Losses

The allowance for loan losses is determined by management based on factors
such as past loan loss experience, known and inherent risks in the loan
portfolio, the estimated value of any underlying collateral, prevailing
economic conditions and other factors and estimates which are subject to change
over time. Management adjusts the allowance for loan losses by recording a
provision for loan losses in an amount sufficient to maintain the allowance at
a level commensurate with the risks in the loan portfolio. Loans are charged
off when deemed to be uncollectible by management.

f. Bank Premises and Equipment

Bank premises and equipment are stated at cost less accumulated depreciation
and amortization. For financial reporting purposes, depreciation is computed
using the straight-line method over the estimated useful lives of the assets.

g. Organization Costs

Organization costs incurred by the Company in performing activities
necessary to organize the Bank were amortized on a straight-line basis over a
five-year period beginning February 6, 1991, when the Bank commenced
operations.

h. Income Taxes

The Company accounts for income taxes under an asset and liability approach
with the objective of recognizing the amount of taxes payable or refundable for
the current year and deferred tax assets and liabilities for the future tax
consequences that have been recognized in the Company's financial statements or
tax returns. The measurement of tax assets and liabilities is based on tax
rates in enacted tax laws. Deferred tax assets are reduced, if necessary, by
the amount of such benefits that are not expected to be realized based on
available evidence.

i. Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities

In June, 1996, the Financial Accounting Standards Board (FASB) issued SFAS
No. 125 "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." Under SFAS No. 125, after a transfer of
financial assets, an entity recognizes the financial and servicing assets it
controls and the liabilities it has incurred, derecognizes financial assets
when control has been surrendered and derecognizes liabilities when
extinguished. In December, 1996, the FASB issued SFAS No. 127 "Deferral of
Effective Date of Certain Provisions of FASB Statement No. 125" which delayed
the effectiveness of selected provisions of SFAS No. 125 from January 1, 1997
to January 1, 1998. Management adopted SFAS No. 125 upon its effectiveness on
January 1, 1997 and January 1, 1998 as appropriate. The adoption of these
statements had no effect on the Company's reported consolidated financial
position and the results of operations.

F-8
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

j. Earnings per Share

The Company accounts for and reports earnings per share using a dual
presentation of basic and diluted earnings per share. Basic earnings per common
share are determined by dividing earnings by the weighted average number of
common shares. Dilutive stock options are included as share equivalents using
the treasury stock method in determining diluted earnings per share.

k. Comprehensive Income

In June, 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components. The statement requires that components of
comprehensive income, as defined, be reported in a financial statement that is
displayed with the same prominence as other financial statements. Management
adopted SFAS No. 130 in 1998 upon its effectiveness, using the statement of
changes in stockholders' equity approach. The adoption of this statement had no
effect on the Company's reported consolidated financial position and the
results of operations. The 1997 and 1996 consolidated financial statements have
been restated to conform to the SFAS No. 130 principles.

l. Derivatives

In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives
Instruments and for Hedging Activities." It requires that all derivatives be
recognized as assets or liabilities on the balance sheet and be measured at
fair value. If certain conditions are met, a derivative may be specifically
designated as a hedging instrument. The statement is effective for fiscal
quarters beginning after June 15, 1999. As the Company and Bank do not own any
derivative instruments, this statement is expected to have no effect on the
Company's reported consolidated financial position and the results of
operations.

m. Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the reporting
period. Actual results could differ from these estimates.

n. Reclassifications

Certain reclassifications have been made to prior periods' consolidated
financial statements to place them on a basis comparable with the current
period's consolidated financial statements.

o. Interim Financial Information

The accompanying financial statements as of March 31, 1999 and for the three
months ended March 31, 1999 and 1998 are unaudited and in the opinion of
management, reflect all adjustments that are necessary for a fair presentation
of the Company's financial position, results of operations and cash flows for
the periods then ended. All such adjustments are of a normal and recurring
nature.

F-9
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

2. Operations:

The Company was incorporated under the laws of the State of Delaware on
November 7, 1989. The Bank commenced operations on February 6, 1991, after
having received the approval of various banking regulatory authorities.

The Bank, through its downtown Chicago main office as well as two suburban
branches, provides personal and commercial banking services primarily to
affluent individuals, professionals and their business interests in the Chicago
metropolitan area. In addition to loans and deposits, the Company's services
include trust, investment and insurance products.

3. Earnings Per Share and Stock Split:

The following table contains a reconciliation of the numerators and
denominators used in the computation of basic and diluted earnings per share
for the years ended December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------- ---------
<S> <C> <C> <C>
Year Ended December 31, 1998
Basic Earnings Per Share--Income
available to common stockholders. $3,010,138 3,313,092 $.91
====
Effect of Dilutive Stock Options.. -- 201,436
---------- ---------
Diluted Earnings Per Share--Income
available to common stockholders. $3,010,138 3,514,528 $.86
========== ========= ====
Year Ended December 31, 1997
Basic Earnings Per Share--Income
available to common stockholders. $2,145,295 3,124,464 $.69
====
Effect of Dilutive Stock Options.. -- 161,408
---------- ---------
Diluted Earnings Per Share--Income
available to common stockholders. $2,145,295 3,285,872 $.65
========== ========= ====
Year Ended December 31, 1996
Basic Earnings Per Share--Income
available to common stockholders. $1,433,023 2,939,040 $.49
====
Effect of Dilutive Stock Options.. -- 113,984
---------- ---------
Diluted Earnings Per Share--Income
available to common stockholders. $1,433,023 3,053,024 $.47
========== ========= ====
</TABLE>

On June 25, 1998, the Company's stockholders approved an eight-for-one
common stock split to be distributed in the form of a stock dividend. As a
result of this action, 1,446,473 shares were issued to stockholders of record
on June 25, 1998. Additionally, stated value was changed from $20 to $2.50 per
share, leaving the Company's common stock account unchanged. All references to
number of shares, per share amounts and stock option data in the consolidated
financial statements have been adjusted to reflect the stock split on a
retroactive basis.

F-10
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

4. Securities:

The amortized cost and the estimated fair value of securities as of December
31, 1998 and 1997, were as follows:

<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
December 31, 1998--
Available for Sale--
U.S. Treasuries......... $ 6,020,730 $ 73,333 $ -- $ 6,094,063
States and political
subdivisions........... 37,709,337 227,188 (132,097) 37,804,428
Collateralized mortgage
obligations............ 61,357,858 117,435 (61,016) 61,414,277
Corporate securities.... 10,242,935 19,565 -- 10,262,500
------------ -------- --------- ------------
Total debt securities... 115,330,860 437,521 (193,113) 115,575,268
Equity securities....... 1,315,471 -- -- 1,315,471
------------ -------- --------- ------------
$116,646,331 $437,521 $(193,113) $116,890,739
============ ======== ========= ============
December 31, 1997--
Available for Sale--
U.S. Treasury and U.S.
Government agencies.... $ 35,948,802 $ 22,365 $ (9,917) $ 35,961,250
Collateralized mortgage
obligations............ 10,501,933 4,256 (93,456) 10,412,733
Corporate securities.... 18,145,287 125,650 (1,368) 18,269,569
------------ -------- --------- ------------
Total debt securities... 64,596,022 152,271 (104,741) 64,643,552
Equity securities....... 739,700 -- -- 739,700
------------ -------- --------- ------------
$ 65,335,722 $152,271 $(104,741) $ 65,383,252
============ ======== ========= ============
</TABLE>

The amortized cost and estimated fair value of securities at December 31,
1998, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because obligors may have the right to call or
prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
Amortized Estimated
Cost Fair Value
------------ ------------
<S> <C> <C>
Due within one year............................ $ 6,196,706 $ 6,235,547
Due after one year through five years.......... 2,624,825 2,659,654
Due after five years through ten years......... 8,781,479 8,817,549
Due after ten years............................ 97,727,850 97,862,518
Equity securities.............................. 1,315,471 1,315,471
------------ ------------
$116,646,331 $116,890,739
============ ============
</TABLE>

During 1998, securities were sold for total proceeds of $13,886,279,
resulting in a net gain of $39,894. No securities were sold in 1997 or 1996.

The other comprehensive income--unrealized gain on securities available for
sale is presented on a net basis on the Consolidated Statements of Changes in
Stockholders' Equity. The following table discloses

F-11
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

changes in other comprehensive income for 1998 on a gross basis. As there were
no sales of securities in 1997 or 1996, the gross and net presentations for
these years are the same.

<TABLE>
<CAPTION>
1998
-----------------------------
Before tax Tax Net of Tax
amount Expense Amount
---------- ------- ----------
<S> <C> <C> <C>
Unrealized Gains on Securities Available
for Sale--
Unrealized holding gains................. $236,771 $92,032 $144,739
Less: reclassification adjustment for
gain included in net income............. 39,894 15,509 24,385
-------- ------- --------
Net unrealized gains....................... $196,877 $76,523 $120,354
======== ======= ========
</TABLE>

At December 31, 1998, securities carried at $35,319,869 were pledged to
secure public and trust deposits and for other purposes as required or
permitted by law.

Equity securities consist of Federal Home Loan Bank of Chicago capital stock
and Neighborhood Housing Services certificates. These securities do not have a
readily determinable fair value for purposes of SFAS No. 115 since their
ownership is restricted and they lack a market. Accordingly, such securities
are carried at an amount equal to cost.

In the opinion of management, there were no investments in securities at
December 31, 1998, which constituted an unusual credit risk for the Company.

5. Loans:

Amounts outstanding by selected loan categories at December 31, 1998 and
1997, were as follows:

<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Real estate--
Residential................................... $ 47,746,331 $ 54,129,790
Commercial.................................... 94,392,491 55,429,205
Construction.................................. 22,407,610 10,140,104
Commercial...................................... 46,799,787 33,862,056
Personal........................................ 64,194,340 62,756,792
Held for sale................................... 6,424,337 2,176,600
------------ ------------
$281,964,896 $218,494,547
============ ============
</TABLE>

Loans held for sale are residential real estate loans intended to be sold in
the secondary market. Under the Bank's sales program, such loans are sold at
face value. No lower-of-cost-or-market adjustments were required at December
31, 1998 or 1997.

There were no loans on which the accrual of interest has been discontinued
(impaired loans) at December 31, 1998 and 1997, respectively, as well as at any
time during 1998. The average balance of impaired loans and the related amount
of interest income recognized while such loans were impaired amounted to $2,272
and $0 in 1997.

F-12
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

6. Allowance for Loan Losses:

The changes in the allowance for loan losses for the three years ended
December 31, 1998 were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Beginning balance..................... $3,050,000 $2,450,000 $1,955,000
Loans charged off..................... (1,986) (2,991) (28,679)
Provision for loan losses............. 361,986 602,991 523,679
---------- ---------- ----------
Ending balance........................ $3,410,000 $3,050,000 $2,450,000
========== ========== ==========
</TABLE>

There were no impaired loans at December 31, 1998 and 1997.

7. Bank Premises and Equipment:

Bank premises and equipment at December 31, 1998 and 1997, consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Furniture, fixtures and equipment.................. $2,408,164 $2,230,145
Leasehold improvements............................. 1,344,354 1,331,138
---------- ----------
3,752,518 3,561,283
Accumulated depreciation and amortization.......... 2,164,798 1,656,945
---------- ----------
$1,587,720 $1,904,338
========== ==========
</TABLE>

Included in occupancy expense in the consolidated statements of income is
depreciation and amortization expense of $507,853, $472,669 and $329,013 for
1998, 1997 and 1996, respectively.

The Bank leases its main banking facility and branch facilities under
noncancellable operating lease agreements. The minimum annual rental
commitments under these leases, at December 31, 1998, are as follows:

<TABLE>
<S> <C>
1999.......................... $ 338,527
2000.......................... 319,907
2001.......................... 330,456
2002.......................... 244,404
2003.......................... 254,952
2004 and thereafter........... 689,022
----------
$2,177,268
==========
</TABLE>

Total rent expense included in the consolidated statements of income was
$635,761, $601,461, and $494,757 for 1998, 1997, and 1996, respectively.

F-13
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

8. Income Taxes:

The components of total income tax provision in the consolidated statements
of income for the years ended December 31, 1998, 1997, and 1996 are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- --------
<S> <C> <C> <C>
Income tax provision--
Current--
Federal............................. $1,758,748 $1,609,697 $963,602
State............................... 371,246 73,037 --
---------- ---------- --------
2,129,994 1,682,734 963,602
---------- ---------- --------
Deferred--
Federal............................. (255,235) (298,018) (201,729)
State............................... (35,465) (142,369) --
---------- ---------- --------
(290,700) (440,387) (201,729)
---------- ---------- --------
Total............................. $1,839,294 $1,242,347 $761,873
========== ========== ========
</TABLE>

The tax effect of fair value adjustments on securities available for sale is
recorded directly to other comprehensive income in a separate component of
stockholders' equity. The net tax provision (benefit) recorded directly to
other comprehensive income amounted to $76,523, $47,698, and $(4,685) in 1998,
1997 and 1996, respectively.

A summary reconciliation of the differences between the total income tax
provision (benefit) and the amounts computed at the statutory federal tax rate
of 34% for the years ended December 31, 1998, 1997, and 1996 is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- --------
<S> <C> <C> <C>
Income tax provision at statutory
federal income tax rate................ $1,648,806 $1,151,798 $746,265
Increase (decrease) in taxes resulting
from:
Tax exempt income..................... (67,264) -- --
State income taxes.................... 221,615 6,525 --
Other................................. 36,137 84,024 15,608
---------- ---------- --------
Total............................... $1,839,294 $1,242,347 $761,873
========== ========== ========
</TABLE>

F-14
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

A net deferred tax asset is included in other assets in the consolidated
balance sheet as a result of temporary differences between the carrying amounts
of assets and liabilities in the financial statements and their related tax
bases. The components of the net deferred tax asset as of December 31, 1998 and
1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Gross deferred tax assets--
Allowance for loan losses....................... $1,182,193 $1,041,960
Leasehold improvements.......................... 231,316 159,524
Amortization of restricted stock................ 109,240 51,298
Other........................................... 51,829 36,434
---------- ----------
1,574,578 1,289,216
Valuation allowance............................... -- --
---------- ----------
Gross deferred tax assets......................... 1,574,578 1,289,216
Gross deferred tax liabilities.................... (215,233) (144,048)
---------- ----------
Net deferred tax asset............................ $1,359,345 $1,145,168
========== ==========
</TABLE>

9. Funds Borrowed:

As of December 31, 1998, funds borrowed consisted of a $20 million FHLB term
note, with an interest rate of 5.20%. The term note matured on January 7, 1999.
There were no funds borrowed as of December 31, 1997.

10. Employee Benefit and Incentive Plans:

a. Savings and Profit Sharing Plan

The Bank maintains The PrivateBank and Trust Company Savings and Profit
Sharing Plan (the "Plan") pursuant to Section 401(k) of the Internal Revenue
Code, whereby eligible employees may contribute a percentage of compensation,
but not in excess of the maximum amount allowed under the Code. The Bank can
make discretionary contributions to the Plan as determined and approved by the
Bank's Board of Directors. Total discretionary contributions to the Plan
amounted to $61,462, $47,001, and $43,130 in 1998, 1997 and 1996, respectively.

b. Stock Options

Pursuant to initial stockholder stock option agreements as amended, the
Company granted to each initial stockholder an option to purchase up to the
number of shares equal to that number of shares purchased by the investor in
the initial offering at an exercise price of $6.25 per share. All 80,800 shares
reserved for issuance to these initial stockholders were issued by the Company
in January and February, 1996, upon the exercise of these option agreements.

The Company has stock options outstanding under its Stock Incentive Plan, a
director stock option program and certain compensation replacement options.

As in effect as of December 31, 1998, the Stock Incentive Plan allows up to
15% of the then number of common shares issued and outstanding, plus an
additional 136,000 shares, to be issued under the Plan either pursuant to the
exercise of stock options granted thereunder or as restricted stock awards. The
option price may not be less than the fair market value on the date of grant.
All options have a term of 10 years. Options granted

F-15
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

in 1998 are first exercisable five years from the date of grant or up to two
years earlier if certain conditions for total stockholder return are met.
Options granted in 1997 and prior are first exercisable beginning at least two
years following the date of grant.

Since 1992 the Company has compensated non-employee directors with annual
option grants. The option price of the director options is fair market value
on the date of grant, and the exercise period is 10 years from the date of
grant.

In 1992, the Company granted compensation replacement options to certain
officers of the Company who agreed to reduced cash compensation. The option
price is the fair market value on the date of grant. The compensation
replacement options are exercisable during a 10-year period from the date of
grant.

The following table summarizes the status of the Company's stock option
agreements and stock option program as of December 31, 1998 and 1997, and
changes during the years then ended:

<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
Weighted Weighted
Average Average
Shares Exercise Price Shares Exercise Price
------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of year................ 543,168 $ 7.57 523,264 $ 7.38
Granted............... 80,960 17.19 35,360 11.00
Exercised............. (81,920) 7.02 (15,456) 6.25
Forfeited............. -- --
------- ------ ------- ------
Outstanding at end of
year................... 542,208 $ 9.09 543,168 $ 7.57
======= ====== ======= ======
Options exercisable at
year-end............... 433,808 425,168
======= =======
Weighted average fair
value of options
granted during the
year................... $17.19 $11.00
</TABLE>

The range of exercise prices and weighted average remaining contractual
life for stock options outstanding as of December 31, 1998, was $6.25-$17.19
and 7 years, respectively.

The Company applies APB Opinion 25 in accounting for stock-based
compensation. Accordingly, no compensation expense has been recognized for its
stock option program. Had compensation expense for stock options been
determined based on the fair value at the grant dates for awards under the
stock option program consistent with the method of FASB Statement No. 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net income--
As reported........................... $3,010,138 $2,145,295 $1,433,023
Pro forma............................. 2,869,569 1,996,145 1,282,268
========== ========== ==========
Basic earnings per share--
As reported........................... $ .91 $ .69 $ .49
Pro forma............................. .87 .64 .44
Diluted earnings per share--
As reported........................... $ .86 $ .65 $ .47
Pro forma............................. .82 .61 .42
========== ========== ==========
</TABLE>

F-16
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

In determining the fair value of each option grant for purposes of the above
pro forma disclosures, the Company used an option pricing model with the
following assumptions for grants in 1998 and 1997, respectively: dividend yield
of 0.6% and 0.7% for 1998 and 1997 respectively; risk-free interest rate of
6.0% for both years; and expected lives for both years of 10 years for the
Stock Incentive Plan options, 10 years for the compensation replacement options
and 10 years for the various director options.

c. Restricted Stock

In 1998 and 1997, the Company issued 13,600 and 36,800 shares, respectively,
of restricted stock under the Stock Incentive Plan. These shares had a fair
value of $13.75 and $10.94 per share, respectively, as of the grant date.
During 1997, 1,600 restricted shares were forfeited. These shares carry voting
and dividend rights. Sale of the shares is restricted prior to vesting. Subject
to continued employment, vesting occurs five years from the date of grant.
Shares issued under the plan are recorded at their fair market value on the
date of grant with a corresponding charge to deferred compensation. The
deferred compensation, a component of stockholders' equity, is being amortized
as compensation expense on a straight-line basis over the vesting period.
Included in salaries and employee benefits in the consolidated statements of
income is compensation expense for restricted shares of $149,566, $98,917, and
$33,500 for 1998, 1997, and 1996 respectively.

11. Related-Party Transactions:

An analysis of loans made to directors and executive officers of the Company
and the Bank follows:

<TABLE>
<S> <C>
Balance, December 31, 1997................................... $11,308,339
Additions.................................................. 3,226,741
Collections................................................ (3,791,197)
-----------
Balance, December 31, 1998................................... $10,743,883
===========
</TABLE>

Directors and executive officers of the Company and Bank were clients of and
had transactions with the Bank in the ordinary course of business during the
period presented above and additional transactions may be expected in the
future. In management's opinion, all outstanding loans, commitments and deposit
relationships included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others, and did not involve more than a normal
risk of collectibility or other unfavorable features.

In addition to the loans reflected above, in June, 1998, the Company made a
$949,741 loan to the chief executive officer of the Company and the Bank, the
proceeds of which were put towards the purchase of $1 million of common stock
of the Company. The loan has a five year term but is payable sooner under
certain conditions. The loan bears interest at the rate of 5.69% per annum.
Provided that the officer remains employed by the Bank, the loan agreement
calls for forgiveness of 0% up to 100% of the interest based on how many years
the loan remains outstanding. The loan is reflected in the consolidated
financial statements as a reduction in stockholders' equity.

The Company is the general partner in a partnership for investment purposes.
Through a contractual arrangement, the Bank's trust department maintains the
partnership's records and earns an administrative fee from the partnership.

During 1998, the Bank began offering insurance products to its clients
through a strategic alliance with a Chicago based financial services firm which
is a stockholder of the Company. In addition, this financial

F-17
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

services firm serves as an insurance agency in coordinating certain insurance
coverage for the Company and Bank. During 1998, the Bank earned commission
revenue of $5,761 for referred business and paid $131,690 in fees to this
financial services firm for insurance and related services.

During 1998 and 1997, the Bank acquired selected furniture with a total cost
of $2,655 and $71,875, respectively, through related parties.

The Bank incurred professional fees in 1998, 1997 and 1996 for services
provided by one law firm, whose partner is a director of the Company and the
Bank.

12. Credit-Related Instruments:

The Company has, through its subsidiary Bank, credit-related instruments
with off-balance-sheet risk in the normal course of business to meet the
financing needs of its clients. These financial instruments include commitments
to extend credit and standby letters of credit. These instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized in
the consolidated financial statements. Credit risk represents the accounting
loss that would be recognized at the reporting date if counterparties failed to
completely perform as contracted.

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments, assuming that the amounts are fully advanced and that collateral
or other security is of no value. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet
instruments. At December 31, 1998 and 1997, the Bank had the following
categories of credit-related financial instruments (at contract amount):

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Commitments to extend credit..................... $97,487,444 $67,184,442
Standby letters of credit........................ 10,147,140 2,971,656
</TABLE>

Commitments to extend credit are agreements to lend to a client as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each client's
creditworthiness on a cash-by-case basis. The amount of collateral obtained, if
deemed necessary, upon extension of credit is based on management's credit
evaluation of the counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment and income-producing
commercial properties.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a client to a third party. Those guarantees are
primarily issued to support commercial business activities of Bank clients. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to clients. The Bank holds
collateral supporting those commitments for which collateral is deemed
necessary.

13. Concentrations of Credit Risk:

Loan concentrations are defined as amounts loaned to a multiple number of
borrowers engaged in similar activities, which would cause them to be similarly
impacted by economic or other conditions. The Bank grants

F-18
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

loans to clients located primarily in the metropolitan Chicago area. There are
no other significant concentrations of loans and commitments to make loans
other than the categories of loans disclosed in Note 5.

14. Estimated Fair Value of Financial Instruments:

The following presents the carrying value and estimated fair value of the
various classes of financial instruments, all nontrading, held by the Company,
through its subsidiary Bank, at December 31, 1998 and 1997. This information is
presented solely for compliance with SFAS No. 107 and is subject to change over
time based on a variety of factors. Because no active market exists for a
significant portion of the financial instruments presented below and the
inherent imprecision involved in the estimation process, management does not
believe the information presented reflects the amounts that would be received
if the Company's assets and liabilities were sold nor does it represent the
fair value of the Company as an entity.

Where possible, the Company has utilized quoted market prices to estimate
fair value. Since quoted market prices were not available for a significant
portion of the financial instruments, the fair values were approximated using
discounted cash flow techniques. Fair value estimates are made at a specific
point in time, based on judgments regarding future expected loss experience,
current economic conditions, risk conditions, risk characteristics of various
financial instruments and other factors. These estimates do not reflect any
premium or discount that could result from offering for sale at one time the
Company's entire holdings of a particular financial instrument. These estimates
are subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------- -------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets--
Cash and cash
equivalents.......... $ 15,514,218 $ 15,514,218 $ 26,206,121 $ 26,206,121
Securities............ 116,890,739 116,890,739 65,383,252 65,383,252
Net loans............. 278,554,896 281,547,896 215,444,547 216,343,547
Accrued interest
receivable........... 2,264,195 2,264,195 1,581,728 1,581,728
Liabilities--
Deposits with no
stated maturity...... 236,711,317 236,711,317 195,941,957 195,941,957
Time deposits......... 128,282,346 128,506,346 89,831,506 89,905,506
------------ ------------ ------------ ------------
Total deposits...... 364,993,663 365,217,663 285,773,463 285,847,463
------------ ------------ ------------ ------------
Accrued interest
payable................ 720,874 720,874 453,056 453,056
Funds borrowed.......... 20,000,000 20,000,000 -- --
============ ============ ============ ============
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments. These assumptions were based on
subjective estimates of market conditions and perceived risks of the financial
instruments at a certain point in time.

a. Cash and Cash Equivalents, Accrued Interest Receivable and Interest Payable

For these short-term instruments, the carrying value approximates fair value
because these instruments are short-term in nature and do not present
unanticipated credit concerns.

F-19
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

b. Securities

For securities held to maturity or available for sale, fair values are based
on quoted market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
instruments.

c. Net Loans

The fair value of performing loans is calculated by discounting scheduled
cash flows through the estimated maturity using estimated market discount rates
that reflect the credit and interest rate risk inherent in the loan. The
estimate of maturity is based on the Company's and the industry's historical
experience with repayments for each loan classification, modified, as required,
by an estimate of the effect of current economic and lending conditions.

Fair value for significant nonaccrual (impaired) loans is based on estimated
cash flows which are discounted using a rate commensurate with the risk
associated with the estimated cash flows. Assumptions regarding credit risk,
cash flows and discount rates are judgmentally determined using available
market information and specific borrower information.

d. Deposit Liabilities

The fair value of deposits with no stated maturity, such as non-interest-
bearing deposits, interest-bearing deposits, savings and money market deposit
accounts, is equal to the amount payable on demand as of year-end. The fair
value of certificates of deposit is based on the discounted value of
contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturities.

e. Funds Borrowed

Rates currently available to the Company and Bank for debt with similar
terms and remaining maturities are used to estimate fair value of existing
debt.

f. Unrecognized Financial Instruments

The fair value of unrecognized financial instruments, including commitments
to extend credit, standby letters of credit and financial guarantees, is
insignificant and, therefore, not presented.

15. Regulatory Requirements:

The Bank is subject to federal and state laws, which restrict the payment of
dividends to the Company. Based on these restrictions, at January 1, 1999, the
Bank could have declared approximately $6,954,418 in dividends without
requesting approval of the applicable federal or state regulatory agency.

The Bank is required to maintain noninterest-bearing cash balances with the
Federal Reserve based on the types and amounts of deposits held. During 1998
and 1997, the average balances maintained to meet the requirement were $829,000
and $649,000, respectively.

The Company and Bank are subject to various regulatory capital requirements
as established by the applicable federal or state banking regulatory
authorities. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and Bank must meet specific capital
guidelines that

F-20
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

involve quantitative measures of the Bank's assets, liabilities and certain
off-balance sheet items. The quantitative measures for capital adequacy
require the Company and Bank to maintain minimum amounts and ratios of total
and Tier 1 capital to risk weighted assets and of Tier 1 capital to average
assets (leverage). The Company's and Bank's capital components,
classification, risk weightings and other factors are also subject to
qualitative judgments by regulators. Failure to meet minimum capital
requirements can initiate certain actions by regulators that, if undertaken,
could have a material effect on the Company's financial statements. Management
believes that as of December 31, 1998, the Company and Bank meet all minimum
capital adequacy requirements to which they are subject.

The most recent notification from the Federal Deposit Insurance Corporation
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action and management believes that no events or changes in
conditions have occurred subsequent to such notification to change the Bank's
category.

The following table presents selected capital information for the Company
(Consolidated) and Bank as of December 31, 1998 and 1997:

<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
For Capital Corrective
Adequacy Action
Actual Purposes Provisions
------------- -------------- ---------------
Amount Ratio Amount Ratio Amount Ratio
------- ----- ------- ----- ------- ------
(000's) (000's) (000's)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998--
Total risk-based capital--
Consolidated............ $34,978 11.53% $24,274 8.00%
Bank.................... 31,473 10.41 24,188 8.00 $30,235 10.00%
Tier 1 risk-based
capital--
Consolidated............ 31,568 10.40% 12,137 4.00%
Bank.................... 28,063 9.29 12,094 4.00 18,141 6.00%
Tier 1 (leverage)
capital--
Consolidated............ 31,568 7.88% 16,018 4.00%
Bank.................... 28,063 7.27 15,456 4.00 19,320 5.00%
As of December 31, 1997--
Total risk-based capital--
Consolidated............ $28,159 11.75% $19,165 8.00%
Bank.................... 25,837 10.79 19,164 8.00 23,955 10.00%
Tier 1 risk-based
capital--
Consolidated............ 25,164 10.50% 9,582 4.00%
Bank.................... 22,843 9.54 9,582 4.00 14,373 6.00%
Tier 1 (leverage)
capital--
Consolidated............ 25,164 8.70% 11,563 4.00%
Bank.................... 22,843 8.16 11,208 4.00 14,011 5.00%
</TABLE>

16. Operating Segments:

As noted in Note 2, the Bank provides personal and commercial banking
services to affluent individuals, professionals and their business interests
in the Chicago metropolitan area. Such services include loans, deposit
instruments, investments, and trust services. For purposes of making operating
decisions and assessing performance, management treats the Company and Bank as
one operating segment.

F-21
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

The financial information contained in the Company's consolidated financial
statements, such as net interest income, other income, net income and total
assets, is used by management as a key input in evaluating the performance of
the Company and Bank on an aggregate basis.

17. Contingent Liabilities

Because of the nature of its activities, the Company is from time to time
involved in legal actions that arise in the normal course of business. In the
judgment of management, after consultation of legal counsel, none of the
litigation to which the Company or its subsidiary is a party will have a
material effect, either individually or in the aggregate, on the consolidated
financial position or results of operations.

18. Privatebancorp, Inc. (Parent Company Only)--Condensed Financial Statements:

PRIVATEBANCORP, INC. (PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

As of December 31, 1998 and 1997

<TABLE>
<CAPTION>
ASSETS 1998 1997
------ ----------- -----------
<S> <C> <C>
Cash and due from banks--bank subsidiary............... $ 668,753 $ 1,766,193
Investment in bank subsidiary.......................... 28,269,290 22,871,969
Other assets........................................... 353,350 67,149
----------- -----------
Total assets....................................... $29,291,393 $24,705,311
=========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Other liabilities...................................... $ 17,745 $ 17,556
----------- -----------
Total liabilities...................................... 17,745 17,556
Stockholders' equity................................... 29,273,648 24,687,755
----------- -----------
Total liabilities and stockholders' equity......... $29,291,393 $24,705,311
=========== ===========
</TABLE>

F-22
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

PRIVATEBANCORP, INC. (PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF INCOME

For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Operating income:
Interest income--other................... $ 31,523 $ -- $ --
Total.................................. 31,523 -- --
---------- ---------- ----------
Operating expense:
Amortization of deferred compensation.... 149,566 98,917 33,500
Amortization of organization costs....... -- -- 23,295
Other.................................... 225,853 67,974 23,788
---------- ---------- ----------
Total.................................. 375,419 166,891 80,583
---------- ---------- ----------
(Loss) before income taxes and equity
in undistributed net income of bank
subsidiary............................ (343,896) (166,891) (80,583)
Income tax (benefit)....................... (134,119) (56,743) (34,546)
---------- ---------- ----------
(Loss) before equity in undistributed
net income of bank subsidiary......... (209,777) (110,148) (46,037)
---------- ---------- ----------
Equity in undistributed net income of bank
subsidiary................................ 3,219,915 2,255,443 1,479,060
---------- ---------- ----------
Net income............................. $3,010,138 $2,145,295 $1,433,023
========== ========== ==========
</TABLE>

The Parent Company Only Statements of Changes in Stockholders' Equity are
the same as the Consolidated Statements of Changes in Stockholders' Equity.

F-23
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1998 and 1997

PRIVATEBANCORP, INC. (PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $ 3,010,138 $ 2,145,295 $ 1,433,023
----------- ----------- -----------
Adjustments to reconcile net income to
net cash provided by operating
activities--
Equity in net income of bank
subsidiary......................... (3,219,915) (2,255,443) (1,479,060)
Amortization of organization costs.. -- -- 23,295
Amortization of deferred
compensation....................... 149,566 98,917 33,500
(Increase) decrease in other assets. (135,187) (57,731) 2,474
Increase (decrease) in other
liabilities........................ 189 49,593 (27,398)
----------- ----------- -----------
Total adjustments................. (3,205,347) (2,164,664) (1,447,189)
----------- ----------- -----------
Net cash (used in) operating
activities....................... (195,209) (19,369) (14,166)
----------- ----------- -----------
Cash flows from investing activities:
Net (increase) in capital investments
in bank subsidiary................... (2,000,000) (2,000,000) --
----------- ----------- -----------
Net cash (used in) investing
activities........................... (2,000,000) (2,000,000) --
----------- ----------- -----------
Cash flows from financing activities:
Issuance of common stock.............. 1,360,859 2,347,946 505,000
Dividends paid........................ (263,090) (217,358) (184,608)
----------- ----------- -----------
Net cash provided by financing
activities....................... 1,097,769 2,130,588 320,392
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ (1,097,440) 111,219 306,226
Cash and cash equivalents at beginning
of year................................ 1,766,193 1,654,974 1,348,748
----------- ----------- -----------
Cash and cash equivalents at end of
year................................... $ 668,753 $ 1,766,193 $ 1,654,974
=========== =========== ===========
Other cash flow disclosures:
Income tax payment (receipt).......... $ 1,826,826 $ 1,562,726 $ 977,432
=========== =========== ===========
Non-cash transactions:
Loan to executive officer for purchase
of common stock...................... $ 949,741 $ -- $ --
=========== =========== ===========
</TABLE>

F-24
<PAGE>

PRIVATEBANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

December 31, 1998 and 1997

19. Subsequent Event:

During March and April, 1999, the Company's Board of Directors and
stockholders approved an increase in the number of authorized shares to
12,000,000 shares of common stock and 1,000,000 shares of preferred stock. The
Board also approved a change in the per share stated value of the common stock
from $2.50 to $1.00 per share, and declared a two-for-one common stock split to
be effected in the form of a stock dividend. Such change in authorized shares,
change in stated value and stock split will become effective prior to the
effectiveness of the registration statement covering the Company's initial
public offering. All references to number of shares, per share amounts and
stock option data in the consolidated financial statements have been adjusted
to reflect the stock split on a retroactive basis.

F-25
<PAGE>

[Logo of
PrivateBancorp, Inc.]

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than the
underwriting discount, payable by the Company in connection with the sale of
the common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
Amount
--------
<S> <C>
SEC registration fee............................................ $ 5,180
NASD filing fee................................................. 2,363
Nasdaq listing fee.............................................. 63,725
Printing expenses............................................... 100,000
Accounting fees and expenses.................................... 80,000
Legal fees and expenses......................................... 250,000
Blue Sky fees and expenses...................................... 2,500
Transfer agent and Registrar's fees............................. 5,000
Postage and other miscellaneous costs........................... 91,232
--------
Total....................................................... $600,000
========
</TABLE>

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law grants each corporation
organized thereunder the powers to indemnify any individual made party or
threatened to be made party to any threatened, pending or completed action,
suit or proceeding because the individual is or was a director, officer,
employee or agent of the corporation, against actual and reasonable expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
incurred with respect to an action, suit or proceeding if the individual acted
in good faith, and the individual reasonably believed: (a) that the
individual's conduct was in the corporation's best interests; (b) that the
individual's conduct was at least not opposed to the corporation's best
interests; and (c) in the case of any criminal proceeding, that the individual
had no reasonable cause to believe the individual's conduct was unlawful.
However, there will be limited or no indemnification for directors, officers,
employees or agents adjudged to be liable to the corporation where such
individuals are parties to any action by or in the right of the corporation.

Article Ninth of the Company's Restated Certificate of Incorporation
provides as follows:

Ninth: The Corporation shall indemnify, to the full extent that it shall
have power under applicable law to do so and in a manner permitted by such
law, any person made or threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Corporation against liabilities and expenses
reasonably incurred or paid by such person in connection with such action,
suit or proceeding. The Corporation may indemnify, to the full extent that
it shall have power under applicable law to do so and in a manner permitted
by such law, any person made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is
or was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against liabilities and expenses reasonably incurred or paid by such person
in connection with such action, suit or proceeding. The words "liabilities"
and "expenses" shall include, without limitation: liabilities, losses,
damages, judgments, fines, penalties, amounts paid in settlement, expenses,
attorneys' fees and costs. The indemnification provided by this Article
NINTH shall not be deemed exclusive of any other rights to which any person
indemnified may be

II-1
<PAGE>

entitled under any statute, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be such director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.

The Corporation may purchase and maintain insurance on behalf of any
person referred to in the preceding paragraph against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article NINTH or otherwise.

For purposes of this Article NINTH, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation
if its separate existence had continued.

The provisions of this Article NINTH shall be deemed to be a contract
between the Corporation and each director or officer who serves in any such
capacity at any time while this Article and the relevant provisions of the
General Corporation Law of the State of Delaware or other applicable law,
if any, are in effect, and any repeal or modification of any such law or of
this Article shall not affect any rights or obligations then existing with
respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought or threatened based in
whole or in part upon any such state of facts.

For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner not opposed to the best interests of the
Corporation.

Article XI of the Amended and Restated By-laws of the Company provides as
follows:

Section 11.1 Third-Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, including all appeals
(other than an action by or in the right of the Corporation) by reason of
the fact that the person is or was a director, officer, employee, or agent
of the Corporation, or is or was serving at the request of the Corporation
as a director, trustee, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgment, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in connection with the
action, suit, or proceeding; if the person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or on a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner that he or she reasonably believed to
be in or not opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.

II-2
<PAGE>

Section 11.2 Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit, including all appeals, by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer, employee,
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, trustee, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses, including attorneys' fees, actually and reasonably
incurred by the person in connection with the defense or settlement of the
action or suit, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation. However, no indemnification shall be made in respect of any
claim, issue, or matter as to which the person is adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
Corporation unless and only to the extent that the court of common pleas or
the court in which the action or suit was brought determines on application
that, despite the adjudication of liability but in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for expenses that the court of common pleas or other court shall
deem proper.

Section 11.3 Rights After Successful Defense. To the extent that a
director, trustee, officer, employee, or agent has been successful on the
merits or otherwise in defense of any action, suit, or proceeding referred
to in Section 11.1 or 11.2, above, or in defense of any claim, issue, or
matter in that action, suit, or proceeding, he or she shall be indemnified
against expenses, including attorneys' fees, actually and reasonably
incurred by him or her in connection with the action, suit, or proceeding.

Section 11.4 Other Determination of Rights. Unless ordered by a court,
any indemnification made under Section 11.1 or 11.2, above, shall be made
by the Corporation only as authorized in the specific case on a
determination that indemnification of the director, trustee, officer,
employee, or agent is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in Section 11.1 or 11.2,
above. The determination shall be made (a) by a majority vote of a quorum
consisting of directors who were not and are not parties to or threatened
with the action, suit, or proceeding; (b) if the described quorum is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion; (c) by the
stockholders; or (d) by the court in which the action, suit, or proceeding
was brought.

Section 11.5 Advances of Expenses. Expenses of each person seeking
indemnification under Section 11.1 or 11.2, above, may be paid by the
Corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding, as authorized by the Board of Directors in
the specific case, on receipt of an undertaking by or on behalf of the
director, trustee, officer, employee, or agent to repay the amount if it is
ultimately determined that he or she is not entitled to be indemnified by
the Corporation.

Section 11.6 Nonexclusiveness; Heirs. The indemnification provided by
this Article shall not be deemed exclusive of, and shall be in addition to,
any other rights to which those seeking indemnification may be entitled as
a matter of law or under the Certificate of Incorporation, these By-Laws,
any agreement, vote of stockholders, any insurance purchased by the
Corporation, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding that office,
and shall continue as to a person who has ceased to be a director, trustee,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of that person.

The effect of the foregoing provisions of the Delaware General Corporation
Law, the Company's Restated Certificate of Incorporation and Amended and
Restated By-laws would be to permit such indemnification of officers and
directors by the Company for liabilities arising under the Securities Act of
1933.

II-3
<PAGE>

directors, officers, employees, agents or fiduciaries of the company. The
expenses, liabilities and losses which we are obligated to pay may include
judgments, fines and amounts paid in settlement of such legal proceedings by
our directors and executive officers so long as they acted in good faith and in
a manner which they reasonably believed was in the best interests of the
company.

The Company has purchased $10 million of insurance policies which insure the
Company's directors and officers against liability which they may incur as a
result of actions taken in such capacities. In addition, the Company maintains
trust errors and omissions coverage up to a limit of $10 million.

Under its agreement with the Underwriters, the Company has agreed to
indemnify the Underwriters against certain civil liabilities under the
Securities Act.

Item 15. Recent Sales of Unregistered Securities.

Since January 1, 1996, we have sold the following unregistered securities:

In April 1996, the Company issued an aggregate of 25,200 shares of
common stock in restricted stock grants to certain key employees pursuant
to the Stock Incentive Plan. Such shares are subject to forfeiture under
certain circumstances, and will fully vest on April 24, 2001.

In April 1997, the Company issued an aggregate of 36,800 shares of
common stock in restricted stock grants to certain key employees pursuant
to the Stock Incentive Plan. Such shares are subject to forfeiture under
certain circumstances, and will fully vest on April 24, 2002.

In May 1997, the Company sold an aggregate of 208,256 shares of common
stock in a private placement offering to accredited investors and received
net proceeds of $2,251,347 from the sale.

In May 1998, the Company issued 72,720 shares of the Company's common
stock in a sale to Mr. Mandell, the Company's Chairman of the Board,
President and Chief Executive Officer, for a total purchase price of
$999,900.

In June 1998, the stockholders of the Company approved an eight-for-one
stock split to be distributed in the form of a seven-for-one stock
dividend. As a result, 2,892,946 shares of common stock were issued to
stockholders of record on June 25, 1998, in reliance on the no-sale theory.

In June 1998, the Company issued an aggregate of 13,600 shares of common
stock in restricted stock grants to certain key employees pursuant to the
Stock Incentive Plan. Such shares are subject to forfeiture under certain
circumstances, and will fully vest on June 25, 2003.

In December 1998, the Company sold 26,000 shares of common stock to a
corporation and 20,000 shares of common stock to an individual. The Company
received aggregate consideration of $736,000 in connection with these
sales.

In March 1999, the Company issued an aggregate of 20,400 shares of
common stock in restricted stock grants to certain key employees pursuant
to the Stock Incentive Plan. Such shares are subject to forfeiture under
certain circumstances, and will fully vest on March 25, 2004.

From time to time, the Company has granted options to certain employees
and directors. Since January 1, 1996, the options to purchase an aggregate
of 280,520 shares of the Company's common stock have been granted pursuant
to the Company's Stock Plans.

Except as otherwise noted, each of these sales was deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, Regulation D, or Rule 701 of the Securities Act, as
transactions by an issuer not involving a public offering, or transactions
pursuant to compensatory benefit plans and contracts relating to compensation.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to,
or for sale in connection with, any distribution thereof, and appropriate
legends were affixed to share certificates and instruments issued in such
transactions.

II-4
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

(a) The exhibits filed as a part of this Registration Statement are as
follows:
<TABLE>
<C> <S> <C>
1.1 Form of Underwriting Agreement by and between
PrivateBancorp, Inc. and EVEREN Securities, Inc. and
Stifel, Nicolaus & Company, Incorporated.*
3.1 Restated Certificate of Incorporation of PrivateBancorp,
Inc.
3.2 Form of Amendment to Restated Certificate of Incorporation
of PrivateBancorp, Inc.
3.3 Amended and Restated By-laws of PrivateBancorp, Inc.
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Vedder, Price, Kaufman & Kammholz re: legality.
10.1 Lease Agreement for banking facility located at Ten North
Dearborn, Chicago, Illinois dated January 1, 1992, as
amended, by and between General American Life Insurance
Company as successor-in-interest to LaSalle National
Trust, N.A., as successor trustee to LaSalle National
Bank, not personally but as Trustee under Trust Agreement
dated November 6, 1985 and known as Trust No. 110519 and
The PrivateBank and Trust Company.
10.2 Lease Agreement for banking facility located at 1603 West
Sixteenth Street, Oak Brook, Illinois dated October ,
1996 by and between Columbia Lisle Limited Partnership and
The PrivateBank and Trust Company.
10.3 Lease Agreement for banking facility located at 517 Green
Bay Road, Wilmette, Illinois dated as of May 2, 1994 by
and between Gunnar H. Hedlund, Doris S. Hedlund, Robert P.
Hedlund and Gerald A. Hedlund, LaSalle National Trust,
N.A., as successor trustee to LaSalle National Bank, not
personally but solely as Trustee under Trust Agreement
dated December 28, 1972 and known as Trust No. 45197 and
The PrivateBank and Trust Company.
10.4 Stock Purchase Agreement dated as of May 28, 1998 by and
among PrivateBancorp, Inc., Delaware Charter Guarantee and
Trust Co., Trustee FBO Ralph B. Mandell, IRA and The Ralph
B. Mandell Revocable Trust UTA dated June 5, 1997.
10.5 Pledge Agreement dated as of May 28, 1998 by and between
the Ralph B. Mandell Revocable Trust UTA dated June 5,
1997 and PrivateBancorp, Inc. (included as Exhibit B to
Stock Purchase Agreement dated as of May 28, 1998 by and
among PrivateBancorp, Inc., Delaware Charter Guarantee and
Trust Co., Trustee FBO Ralph B. Mandell, IRA and The Ralph
B. Mandell Revocable Trust UTA dated June 5, 1997 filed as
Exhibit 10.4 herewith).
10.6 PrivateBancorp, Inc. Amended and Restated Stock Incentive
Plan.+
10.7 Employment Agreement by and between Ralph B. Mandell and
PrivateBancorp, Inc. effective as of July 1, 1999.*
10.8 Employment Agreement by and between Donald A. Roubitchek
and PrivateBancorp, Inc. effective as of July 1, 1999.*
10.9 Outsourcing Agreement by and between The PrivateBank and
Trust Company and Marshall & Ilsley Corporation, acting
through its division M&I Data Services, dated as of April
9, 1999.*
10.10 Form of Indemnification Agreement by and between
PrivateBancorp, Inc. and its directors and executive
officers.*
10.11 Agreement and Plan of Reorganization by and between
PrivateBancorp, Inc. and Towne Square Financial
Corporation dated as of June , 1999.+
21.1 Subsidiary of the Registrant.
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in
Exhibit 5.1).
24.1 Powers of Attorney (set forth on signature page).
27.1 Financial Data Schedule.*
</TABLE>
- --------

*Filed herewith.

+To be filed by amendment.

II-5
<PAGE>

Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to Item 14 of this Registration Statement, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement on Form S-1 to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
State of Illinois, on June 15, 1999.

PrivateBancorp, Inc.

/s/ Ralph B. Mandell
By: _________________________________
Ralph B. Mandell,
Chairman, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----

<S> <C> <C>
/s/ Ralph B. Mandell Chairman, President, Chief June 15, 1999
____________________________________ Executive Officer and
Ralph B. Mandell Director
/s/ Caren L. Reed* Vice Chairman and Director June 15, 1999
____________________________________
Caren L. Reed
/s/ Donald A. Roubitchek Chief Financial Officer and June 15, 1999
____________________________________ Director
Donald A. Roubitchek
/s/ Jeanene V. Meisser Controller June 15, 1999
____________________________________
Jeanene V. Meisser
/s/ Donald L. Beal* Director June 15, 1999
____________________________________
Donald L. Beal
/s/ Naomi T. Borwell* Director June 15, 1999
____________________________________
Naomi T. Borwell
/s/ William A. Castellano* Director June 15, 1999
____________________________________
William A. Castellano
/s/ Robert F. Coleman* Director June 15, 1999
____________________________________
Robert F. Coleman
/s/ W. James Farrell* Director June 15, 1999
____________________________________
W. James Farrell
/s/ John E. Gorman* Director June 15, 1999
____________________________________
John E. Gorman
/s/ Alvin J. Gottlieb* Director June 15, 1999
____________________________________
Alvin J. Gottlieb
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----

<S> <C> <C>
/s/ James M. Guyette* Director June 15, 1999
____________________________________
James M. Guyette
/s/ Philip M. Kayman* Director June 15, 1999
____________________________________
Philip M. Kayman
/s/ William R. Langley* Director June 15, 1999
____________________________________
William R. Langley
/s/ Thomas F. Meagher* Director June 15, 1999
____________________________________
Thomas F. Meagher
/s/ Michael B. Susman* Director June 15, 1999
____________________________________
Michael B. Susman
</TABLE>
- --------

*Signed pursuant to power of attorney.

/s/ Ralph B. Mandell

By: ______________________

Ralph B. Mandell

II-8
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
-------
<C> <S> <C>
1.1 Form of Underwriting Agreement by and between PrivateBancorp,
Inc. and EVEREN Securities, Inc. and Stifel, Nicolaus &
Company, Incorporated.*

3.1 Restated Certificate of Incorporation of PrivateBancorp, Inc.

3.2 Form of Amendment to Restated Certificate of Incorporation of
PrivateBancorp, Inc.
3.3 Amended and Restated By-laws of PrivateBancorp, Inc.

4.1 Specimen Common Stock Certificate.*

5.1 Opinion of Vedder, Price, Kaufman & Kammholz re: legality.

10.1 Lease Agreement for banking facility located at Ten North
Dearborn, Chicago, Illinois dated January 1, 1992, as amended,
by and between General American Life Insurance Company as
successor-in-interest to LaSalle National Trust, N.A., as
successor trustee to LaSalle National Bank, not personally but
as Trustee under Trust Agreement dated November 6, 1985 and
known as Trust No. 110519 and The PrivateBank and Trust
Company.

10.2 Lease Agreement for banking facility located at 1603 West
Sixteenth Street, Oak Brook, Illinois dated October , 1996
by and between Columbia Lisle Limited Partnership and The
PrivateBank and Trust Company.

10.3 Lease Agreement for banking facility located at 517 Green Bay
Road, Wilmette, Illinois dated as of May 2, 1994 by and
between Gunnar H. Hedlund, Doris S. Hedlund, Robert P. Hedlund
and Gerald A. Hedlund, LaSalle National Trust, N.A., as
successor trustee to LaSalle National Bank, not personally but
solely as Trustee under Trust Agreement dated December 28,
1972 and known as Trust No. 45197 and The PrivateBank and
Trust Company.

10.4 Stock Purchase Agreement dated as of May 28, 1998 by and among
PrivateBancorp, Inc., Delaware Charter Guarantee and Trust
Co., Trustee FBO Ralph B. Mandell, IRA and The Ralph B.
Mandell Revocable Trust UTA dated June 5, 1997.

10.5 Pledge Agreement dated as of May 28, 1998 by and between the
Ralph B. Mandell Revocable Trust UTA dated June 5, 1997 and
PrivateBancorp, Inc. (included as Exhibit B to Stock Purchase
Agreement dated as of May 28, 1998 by and among
PrivateBancorp, Inc., Delaware Charter Guarantee and Trust
Co., Trustee FBO Ralph B. Mandell, IRA and The Ralph B.
Mandell Revocable Trust UTA dated June 5, 1997 filed as
Exhibit 10.4 herewith).

10.6 PrivateBancorp, Inc. Amended and Restated Stock Incentive
Plan.+

10.7 Employment Agreement by and between Ralph B. Mandell and
PrivateBancorp, Inc. effective as of July 1, 1999.*

10.8 Employment Agreement by and between Donald A. Roubitchek and
PrivateBancorp, Inc. effective as of July 1, 1999.*

10.9 Outsourcing Agreement by and between The PrivateBank and Trust
Company and Marshall & Ilsley Corporation, acting through its
division M&I Data Services, dated as of April 9, 1999.*

10.10 Form of Indemnification Agreement by and between
PrivateBancorp, Inc. and its directors and executive
officers.*

10.11 Agreement and Plan of Reorganization by and between
PrivateBancorp, Inc. and Towne Square Financial Corporation
dated as of June , 1999.+

</TABLE>

II-9
<PAGE>

<TABLE>
<CAPTION>
Exhibit
-------
<C> <S> <C>
21.1 Subsidiary of the Registrant.

23.1 Consent of Arthur Andersen LLP.*

23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in
Exhibit 5.1).

24.1 Powers of Attorney (set forth on signature page).

27.1 Financial Data Schedule.*
</TABLE>
- --------

* Filed herewith.

+ To be filed by amendment.

II-10

<PAGE>

900,000 Shares

PrivateBancorp, Inc.

Common Stock
(No Par Value)

UNDERWRITING AGREEMENT

________, 1999

EVEREN Securities, Inc.
Stifel, Nicolaus & Company, Incorporated
As Representatives of
the Several Underwriters
c/o EVEREN Securities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601-1994

Ladies and Gentlemen:

PrivateBancorp, Inc., a Delaware corporation (the "Company"), confirms
its agreement with the several underwriters listed in Schedule I hereto (the
"Underwriters"), for whom EVEREN Securities, Inc., and Stifel, Nicolaus &
Company, Incorporated (collectively, the "Representatives") have been duly
authorized to act as representatives, as follows:

<PAGE>

1. The Shares. Subject to the terms and conditions set forth in this agreement
(the "Agreement"), the Company proposes to issue and sell 900,000 shares of its
authorized but unissued Common Stock, no par value (the "Common Stock"), to the
several Underwriters. Such 900,000 shares of Common Stock proposed to be sold by
the Company are hereinafter referred to as the "Firm Shares." The Company also
proposes to grant to the Underwriters an option to purchase up to 135,000
additional shares of Common Stock (the "Additional Shares") if requested by the
Underwriters as provided in Section 3 hereof. The Firm Shares and the Additional
Shares are herein collectively called the "Shares."

2. Registration Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-1 (File No. 333-77147) including a prospectus,
relating to the Shares, that may have been amended; each such amendment was so
prepared and filed. The registration statement, as amended at the time when it
became or becomes effective, including all financial schedules and exhibits
thereto and all of the information (if any) deemed to be part of the
registration statement at the time of its effectiveness pursuant to Rule 430A
under the Act ("Rule 430A"), is hereinafter referred to as the "Registration
Statement"; the prospectus in the form first provided to the Underwriters by the
Company in connection with the offering and sale of the Shares (whether or not
required to be filed pursuant to Rule 424(b) under the Act ("Rule 424(b)")) is
hereinafter referred to as the "Prospectus," except that if any revised
prospectus shall be provided to the Underwriters by the Company for use in
connection with the offering of the Shares that differs from the Prospectus
(whether or not any such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) under the Act), the term "Prospectus" shall
refer to the revised prospectus from and after the time it is first provided to
the Underwriters for such use; and each preliminary prospectus included in the
Registration Statement prior to the time it became or becomes effective is
herein referred to as a "Preliminary Prospectus."

3. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this Agreement, and subject to the terms and conditions
hereof, (i) the Company agrees to issue and sell to the Underwriters, at a price
of $_____ per Share (the "Purchase Price"), 900,000 Firm Shares; and (ii) each
Underwriter agrees, severally and not jointly, to purchase from the Company, at
the Purchase Price, the aggregate number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto.

On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, (i) the Company
agrees to sell to the Underwriters, at the Purchase Price, up to 135,000
Additional Shares; and (ii) the Underwriters shall have the right to purchase,
severally and not jointly, from time to time, up to an aggregate of 135,000
Additional Shares at the Purchase Price. Additional Shares may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. If any Additional
Shares are to be purchased, each Underwriter, severally and not jointly, agrees
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I bears to the total number of Firm Shares.

For a period of 180 days from the effective date of the Registration
Statement, the Company will not, without the prior written consent of EVEREN
Securities, Inc. on behalf of the Underwriters (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such

<PAGE>

transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise;
provided, however, that this clause shall not apply to the transactions
expressly contemplated hereby, the issuance of shares of Common Stock pursuant
to the transactions with Town Square Financial Corporation as described in the
Prospectus, the granting of options for shares of Common Stock or sales of
shares of Common Stock to the Company's employees pursuant to the exercise of
options under those employee benefit plans described in the Prospectus.

For a period of 180 days from the effective date of the Registration
Statement, the Company will not, without the prior written consent of EVEREN
Securities, Inc. on behalf of the Underwriters, file a registration statement
relating to shares of capital stock (including the Common Stock) or securities
convertible into or exercisable or exchangeable for, capital stock or warrants,
options or rights to purchase or acquire, capital stock, with the exception of
the filing of Registration Statements on Form S-8 with respect to the Company's
employee benefit plans described in the Prospectus.

4. Agreements of the Company as to Delivery and Payment. The Company agrees
with each Underwriter that:

(a) Delivery to the Underwriters of and payment for the Firm Shares
shall be made at 10:00 A.M., New York City time, on the third (or if the
Firm Shares are priced, as contemplated by Rule 15c6-1(c) under the
Securities Exchange Act of 1934, as amended, after 4:30 p.m. New York City
time, on the fourth) full business day (such time and date being referred
to as the "Closing Date") following the date of the initial public offering
of the Firm Shares as advised to you by the Company, at such place as you
shall designate.

(b) Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place as
the Representatives shall designate, at 10:00 A.M., New York City time, on
such date or dates (individually, an "Option Closing Date" and
collectively, the "Option Closing Dates"), which may be the same as the
Closing Date but shall in no event be earlier than the Closing Date, as
shall be specified in a written notice from the Representatives to the
Company of the Underwriters' determination to purchase a number, specified
in said notice, of Additional Shares. Any such notice may be given at any
time within 30 days after the date of this Agreement.

(c) Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than
two business days prior to the Closing Date or the applicable Option
Closing Date, as the case may be, and shall be made available for
inspection not later than 9:30 A.M., New York City time, on the business
day next preceding the Closing Date or the applicable Option Closing Date,
as the case may be, with any transfer taxes payable upon initial issuance
or the transfer thereof duly paid by the Company for the respective
accounts of the Underwriters against payment of the Purchase Price therefor
by certified or official bank check or checks payable in New York Clearing
House or similar next-day funds to the order of the Company.

5. Further Agreements of the Company. The Company also agrees with each
Underwriter that:

(a) it will, if the Registration Statement has not heretofore become
effective under the Act, file an amendment to the Registration Statement
or, if necessary pursuant to Rule 430A, a post-effective amendment to the
Registration Statement, as soon as practicable after the execution and
delivery of this Agreement, and will use its best efforts to cause the
Registration Statement or such post-effective amendment to become effective
at the earliest possible time; and the Company will comply fully and in a
timely manner with the applicable provisions of Rule 424(b) and Rule 430A;

(b) it will advise you promptly and, if requested by you, confirm such
advice in writing, (i) when the Registration Statement has become
effective, if and when the Prospectus is sent for filing pursuant to

<PAGE>

Rule 424 under the Act and when any post-effective amendment to the
Registration Statement becomes effective, (ii) of the receipt of any
comments from the Commission that relate to the Registration Statement or
requests by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or
the initiation or, to the best knowledge of the Company, threat of any
proceedings for such purpose by the Commission or any state securities
commission or other regulatory authority, and (iv) of the happening of any
event or information becoming known during the period referred to in
paragraph (e) below that makes any statement of a material fact made in the
Registration Statement untrue or that requires the making of any additions
to or changes in the Registration Statement (as amended or supplemented
from time to time) in order to make the statements therein not misleading
or that makes any statement of a material fact made in the Prospectus (as
amended or supplemented from time to time) untrue or that requires the
making of any additions to or changes in the Prospectus (as amended or
supplemented from time to time) in order to make the statements therein,
not misleading; if at any time the Commission shall issue or institute
proceedings (or threaten to institute any such proceedings) to issue any
stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue
or institute proceedings (or threaten to institute proceedings) to issue an
order suspending the qualification or exemption of the Shares under any
applicable state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;

(c) it will furnish to you without charge one signed copy of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits filed therewith, and will furnish
to you and each Underwriter designated by you such number of conformed
copies of the Registration Statement as so filed and of each amendment to
it, without exhibits, as you may reasonably request, provided that the
copies of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to its Electronic Data
Gathering Analysis and Retrieval System ("EDGAR"), except to the extent
permitted by Regulation S-T;

(d) it will not file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
make any amendment or supplement to the Prospectus of which you shall not
previously have been advised and provided a copy a reasonable period of
time prior to the filing thereof or to which you or your counsel shall
reasonably object; and it will prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus that may be necessary or
advisable in connection with the distribution of the Shares by you in your
or your counsel's opinion, and will use its best efforts to cause the same
to become effective as promptly as possible;

(e) promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as a prospectus is required by
the Act to be delivered in connection with the sales by an underwriter or a
dealer (in the opinion of your counsel), it will furnish to each
Underwriter and dealer without charge as many copies of the Prospectus (and
any amendment or supplement of the Prospectus) as such Underwriter or
dealer may reasonably request for the purposes contemplated by the Act,
provided that the Prospectus (and any amendment or supplement to the
Prospectus) furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T; and
the Company consents to the use of the Prospectus and any amendment or
supplement thereto by any Underwriter or any dealer, both in connection
with the offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by the Act to be delivered in
connection therewith;

(f) if during the period specified in paragraph 5(e) any event shall
occur or information become

<PAGE>

known as a result of which in the opinion of your counsel it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances existing as of the date
the Prospectus is delivered to a purchaser, not misleading, or it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and, subject to paragraph 5(d) above, it will file
with the Commission at the sole expense of the Company an appropriate
amendment or supplement to the Prospectus so that the statements of any
material facts in the Prospectus, as so amended and supplemented, will not
in light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law and it will furnish to the
Underwriters and to such dealers as the Underwriters shall specify, at the
sole expense of the Company, such number of copies thereof as such
Underwriters or dealers may reasonably request;

(g) prior to any public offering of the Shares, it will cooperate with
you and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request (provided, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified or to take any action which would subject it to
general consent to service of process in any jurisdiction in which it is
not now so subject); the Company will continue such qualification in effect
so long as required by law for the distribution of the Shares and will file
such consents to service of process or other documents as may be necessary
in order to effect such registration or qualification (provided, that the
Company shall not be obligated to take any action that would subject it to
general consent to service of process in any jurisdiction in which it is
not now so subject);

(h) it will not, prior to the exercise in full or termination or
expiration of the option to purchase the Additional Shares, incur any
liability or obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business, except as
contemplated by the Prospectus;

(i) it will not acquire any capital stock of the Company prior to the
exercise in full or termination or expiration of the option to purchase the
Additional Shares nor will the Company declare or pay any dividend or make
any other distribution upon the Common Stock payable to stockholders of
record on a date prior to the exercise in full or termination or expiration
of the option to purchase the Additional Shares, except in either case as
contemplated by the Prospectus including the payment of regular dividends
consistent with past practices;

(j) it will mail and make generally available to its security holders
and furnish to the Underwriters as soon as reasonably practicable a
consolidated earnings statement covering a period of at least 12 months
beginning after the "effective date" (as defined in Rule 158 under the Act)
of the Registration Statement (but in no event commencing later than 90
days after such date) that will satisfy the provisions of Section 11(a) of
the Act and Rule 158 thereunder and to advise you in writing when such
statement has been made so available;

(k) during the period of five years after the date of this Agreement,
it will furnish to you a copy (i) as soon as practicable after the filing
thereof, of each report filed by the Company with the Commission, any
securities exchange or the National Association of Securities Dealers, Inc.
(the "NASD"); (ii) as soon as practicable after the release thereof, of
each material press release in respect of the Company; (iii) as soon as
available, of each report of the Company mailed to stockholders; and (iv)
as soon as available, such other publicly available information concerning
the Company as you may reasonably request;

(l) whether or not the transactions contemplated hereby are
consummated or this Agreement becomes effective as to all of its provisions
or is terminated, to pay all costs, fees, expenses and taxes incident to
the performance by the Company of its obligations hereunder, including,
without limitation, (i) the preparation, printing, filing and distribution
under the Act of the Registration Statement (including financial statements
and exhibits), each preliminary Prospectus and all amendments and
supplements to

<PAGE>

any of them prior to or during the period specified in paragraph (e) above
of this Section 5; (ii) any required registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of the
several states; (iii) filings and clearance with the NASD in connection
with the offering and sale of the Shares; (iv) the listing of the Shares on
the Nasdaq National Market; (v) furnishing such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus and all amendments
and supplements thereto as may be requested for use in connection with the
offering or sale of the Shares by the Underwriters or by dealers to whom
the Shares may be sold; (vi) obtaining the opinions to be provided pursuant
to Section 8(g) of this Agreement; and (vii) the performance by the Company
of all of its other obligations under this Agreement; if the sale of the
Shares provided for herein is not consummated because the Underwriters
exercise their right to terminate this Agreement pursuant to Section 9
hereof and any of the following have occurred during the term of this
Agreement: (a) there has been any material adverse change in the condition
(financial or otherwise), earnings, affairs, business or prospects of the
Company, or (b) the Company shall refuse or be unable to comply with any
provision hereof (except as the result of a breach of this Agreement by the
Underwriters), the Company will promptly reimburse the Underwriters upon
demand for all reasonable out-of-pocket expenses (including the fees and
disbursements of counsel for the Underwriters) that shall have been
incurred by the Underwriters in connection with the proposed purchase and
sale of Shares;

(m) it intends to use the net proceeds received by it from the sale of
the Shares being sold by it in the manner specified in the Prospectus and
it will file such reports with the Commission with respect to the
application of the proceeds therefrom as may be required in accordance with
Rule 463 under the Act and will furnish you copies of any such reports as
soon as practicable after the filing thereof;

(n) if, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A, then immediately following the execution and delivery of this
Agreement, it will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b), copies of an
amended prospectus, or, if required by such Rule 430A, a post-effective
amendment to the Registration Statement (including an amended prospectus),
containing all information so omitted;

(o) it will use its best efforts to cause the Shares to be approved
for quotation, subject to notice of issuance or sale, on Nasdaq; it will
comply with all registration, filing and reporting requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "Exchange Act") and the
Nasdaq National Market;

(p) it will use its best efforts to do and perform all things required
to be done and performed under this Agreement by it prior to or after the
Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.

6. Representations and Warranties.

(a) The Company represents and warrants to each Underwriter as of the
date hereof, the Closing Date and each Option Closing Date that:

(i) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus relating to the proposed offering of
the Shares nor instituted or threatened any proceedings for that purpose.
The Registration Statement, on the date it became or becomes effective,
each Preliminary Prospectus, on the date of the filing thereof with the
Commission, and the Prospectus and any amendment or supplement thereto, on
the date of filing thereof with the Commission (or if not filed, on the
date provided by the Company to the Underwriters in connection with the
offering and sale of the Shares) and at the Closing Date and each Option
Closing Date conformed or will conform with the requirements of the Act.
The Registration Statement, on the date it became or becomes effective, did
not or will not

<PAGE>

contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstance under which they were made, not
misleading, and each Preliminary Prospectus, on the date of the filing
thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission (or
if not filed, on the date provided by the Company to the Underwriters in
connection with the offering and sale of the Shares) and at the Closing
Date and each Option Closing Date did not and will not include an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing shall not apply to statements in or omissions from the
Registration Statement and the Prospectus made or omitted in reliance upon,
and in conformity with, information relating to the Underwriters furnished
in writing to the Company by or on behalf of the Underwriters with your
consent expressly for use therein. The Company hereby acknowledges for all
purposes under this Agreement that (A) the statements set forth under the
caption "Underwriting" in the Prospectus, (B) the statement relating to the
delivery of Shares set forth on the cover page of the Prospectus and (C)
the Prospectus delivery statement set forth on page 3 of the Prospectus
constitute the only written information furnished to the Company by or on
behalf of the Underwriters for use in the preparation of the Registration
Statement or the Prospectus or any amendment or supplement thereto.

(ii) The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of Delaware and is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHC Act"), supervised by the Board of Governors of
the Federal Reserve System (the "FRB"). The PrivateBank and Trust Company,
an Illinois banking corporation (the "Bank"), constitutes the only
subsidiary of the Company. The Bank has been duly organized and is a
validly existing banking corporation in good standing under the laws of
Illinois. The Company and the Bank each have full power and authority,
corporate or otherwise, to own or lease their respective properties and
assets and to conduct their respective businesses as described in the
Registration Statement and the Prospectus, and are each duly qualified to
do business and in good standing in each jurisdiction in which it owns or
leases real property or in which they conduct their respective businesses
or the ownership or leasing of property requires such qualification, except
where the failure to be so qualified, either individually or in the
aggregate, would not have a material adverse effect on the condition
(financial or otherwise), business, assets, prospects, net worth or results
of operations of the Company and the Bank, taken as a whole (a "Material
Adverse Effect"). The accounts of the Bank are insured by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation (the "FDIC") up
to the maximum applicable amount in accordance with the rules and
regulations of the FDIC, and no proceedings for the termination or
revocation of such membership are pending, or to the best knowledge of the
Company, threatened.

(iii) The capitalization of the Company is, and upon consummation of
the transactions contemplated hereby and by the Prospectus will be, as set
forth in the Registration Statement and the Prospectus under the caption
"Capitalization." All of the outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, are fully paid
and non-assessable and conform to the description thereof in the
Registration Statement and the Prospectus and were not issued in violation
of any preemptive rights or other rights to subscribe for or purchase
securities. Except as set forth in the Registration Statement and the
Prospectus with respect to the Company's Stock Incentive Plan and the non-
qualified options granted to certain directors and management of the
Company, no options, warrants or other rights to purchase from the Company,
agreements or other obligations of the Company to issue or other rights to
convert any obligation into, or exchange any securities for, shares of
capital stock of or ownership interests in the Company are outstanding. The
descriptions of the Company's Stock Incentive Plan, the non-qualified
options granted to certain directors and management of the Company, and the
options or rights granted by the Company and exercised thereunder, as set
forth in the Registration Statement and the Prospectus, accurately and
fairly present the information required to be shown under the Act with
respect to such options and rights.

<PAGE>

(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as described
therein, (A) neither the Company nor the Bank has incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business; (B) neither
the Company nor the Bank has purchased any of their outstanding capital
stock or declared, paid or otherwise made any dividend or distribution of
any kind on their capital stock or otherwise; and (C) there has not been
any material adverse change in the condition (financial or otherwise),
business, affairs, prospects or results of operations or any material
change in the capital stock, short-term debt or long-term debt of either
the Company or the Bank.

(v) The Shares to be sold by the Company pursuant to this Agreement
have been duly and validly authorized and, when issued, delivered and paid
for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus.

(vi) This Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms except as enforceability of the
Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
by general equity principles.

(vii) Neither the Company nor the Bank is in violation of their
respective charters or by-laws. Neither the Company nor the Bank is in
violation of or in breach of or in default in (nor has any event occurred
that with notice or lapse of time, or both, would be a breach of or a
default in) the performance of any obligation, agreement or condition
contained in any agreement, lease, contract, permit, license, franchise
agreement, mortgage, loan agreement, debenture, note, deed of trust, bond,
indenture or other evidence of indebtedness or any other instrument or
obligation (collectively, "Obligations and Instruments") to which either
the Company or the Bank is a party or by which the Company or the Bank or
any of their respective properties or assets is bound or affected (except
for such contravention or default as would not have a Material Adverse
Effect). Neither the Company nor the Bank is in violation of any statute,
law, code, ordinance, bylaw, judgment, decree, order, rule or regulation
(collectively, "Laws") applicable to either the Company or the Bank or any
of their respective properties or assets that, alone, or together with
other violations of Laws would result in a Material Adverse Effect. To the
best knowledge of the Company, no other party under any contract or other
agreement to which the Company or the Bank is a party is in material
default thereunder except for such defaults as would not individually or in
the aggregate result in a Material Adverse Effect.

(viii) The execution, delivery and performance of this Agreement and
delivery of the Shares by the Company and compliance by the Company with
all the provisions hereof and the consummation of the transactions
contemplated hereby will not, alone or upon notice or the passage of time
or both (A) to the best knowledge of the Company, after due inquiry,
require any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body or third
party (except such as may be required under the Act and the securities or
Blue Sky laws of the various states or by the NASD); (B) result in the
creation or imposition of any lien, charge or encumbrance upon any of the
properties or assets of the Company or the Bank pursuant to the terms and
provisions of any Obligation or Instrument; (C) conflict with or constitute
a breach or default under any Obligation or Instrument to which the Company
or the Bank is a party or by which the Company or any of its properties or
assets is bound, (except for such creation, conflict, breach or default as
would not have a Material Adverse Effect); or (D) assuming compliance with
the Act and all applicable state securities or Blue Sky laws, violate or
conflict with any Laws applicable to the Company or the Bank or any of
their respective properties or assets (except for such violation or
conflict as could not have a Material Adverse Effect). No action, suit or
proceeding before any court or arbitrator or any governmental body, agency
or official (domestic or foreign) is pending against or, to the best
knowledge of the Company or the Bank, threatened against the Company, that,
if adversely determined, could reasonably be expected to, in any manner,
invalidate this Agreement.

<PAGE>

(ix) Except as set forth in the Prospectus, there is no action, suit,
proceeding, inquiry or investigation, governmental or otherwise before any
court, arbitrator or governmental agency or body (collectively,
"Proceedings") pending to which either the Company or the Bank is a party
or to which any of their respective properties or assets are subject, that,
if determined adversely to the Company or the Bank, might result in a
Material Adverse Effect, or that might materially and adversely affect the
properties or assets thereof, or that seeks to restrain, enjoin, prevent
the consummation of or otherwise challenge the issuance or sale of any of
the Shares to be sold hereunder, and, to the best knowledge of the Company
after due inquiry, no such Proceedings are threatened or contemplated.

(x) There is no contract, document, agreement or transaction to which
either the Company or the Bank is a party, or that involved or involves the
Company or the Bank or any of their respective properties or assets that
are required to be described in or filed as exhibits to the Registration
Statement or the Prospectus by the Act that have not been so described or
filed.

(xi) No action has been taken with respect to the Company, and, to the
best knowledge of the Company, no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency, that suspends
the effectiveness of the Registration Statement, prevents or suspends the
use of any Preliminary Prospectus or the Prospectus or suspends the sale of
the Shares in any jurisdiction referred to in Section 5(g) hereof.

(xii) No injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued with
respect to the Company that might prevent the issuance of the Shares,
suspend the effectiveness of the Registration Statement, prevent or suspend
the use of any Preliminary Prospectus or the Prospectus or suspend the sale
of the Shares in any jurisdiction referred to in Section 5(g) hereof; and
every request of the Commission, or any securities authority or agency of
any jurisdiction, for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) has been complied
with in all material respects;

(xiii) Neither the Company nor the Bank has violated any foreign,
federal, state or local law or regulation relating to the protection of
human health and safety, or wastes, pollutants or contaminants
("Environmental Laws") that, in each case or in the aggregate, might result
in a Material Adverse Effect. None of the property leased by the Company or
the Bank is contaminated with any waste or hazardous substances, nor may
the Company or the Bank be deemed an "owner or operator" of a "facility" or
"vessel" that owns, possesses, transports, generates, discharges or
disposes of a "hazardous substance" as those terms are defined in (S)9601
of the Comprehensive Response Compensation and Liability Act of 1980,
U.S.C. (S)9601 et seq.

(xiv) The Company and the Bank are each in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Neither the
Company nor the Bank maintains or contributes to, or since the inception of
the respective companies, has maintained or contributed to, any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) other than the
Bank's Savings and Profit Sharing Plan (which is maintained pursuant to
Section 401(k) of the Internal Revenue Code of 1986, as amended) described
in the Prospectus.

(xv) No labor dispute with the employees of the Company exists, or to
the best knowledge of the Company is imminent, that could result in a
Material Adverse Effect. Neither the Company nor the Bank has violated any
federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable foreign, federal or state
wage and hour laws.

(xvi) The Company and the Bank hold such permits, licenses, franchises
and authorizations of governmental or regulatory authorities or third
parties ("Permits"), as are necessary to own, lease and operate their
respective properties and assets and to conduct their respective
businesses, except where

<PAGE>

the failure to have any such Permit would not have a Material Adverse
Effect. The Company and the Bank have fulfilled and performed all of their
respective material obligations with respect to such Permits and no event
has occurred that allows, or after notice or lapse of time, or both would
allow, revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permit. Except as
described in the Prospectus, such Permits contain no restrictions that are
materially burdensome to the Company or the Bank.

(xvii) Neither the Company nor the Bank is conducting and neither
intends to conduct their respective business in a manner in which it would
become, an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").

(xviii) The Company and the Bank have good and marketable title, free
and clear of all liens, claims, encumbrances and restrictions (except liens
for taxes not yet due and payable) to all property and assets described in
the Registration Statement as being owned by either of them respectively.
All leases to which the Company or the Bank is a party are subsisting,
valid and binding, and no default of the Company or the Bank or, to the
best knowledge of the Company, any other person has occurred or is
continuing thereunder that might result in a Material Adverse Effect. The
Company and the Bank enjoy peaceful and undisturbed possession under all
such leases to which either is a party as lessee with such exceptions as do
not materially interfere with the use made thereof by the Company or the
Bank.

(xix) The Company and the Bank maintain reasonably adequate insurance
for the conduct of their respective businesses in accordance with prudent
business practices with reputable third-party insurers.

(xx) Arthur Andersen LLP, the accounting firm that has certified or
reviewed, or shall certify or review, the financial statements and
supporting schedules filed or to be filed with the Commission as part of
the Registration Statement and the Prospectus, is an independent public
accounting firm with respect to the Company as required by the Act.

(xxi) The consolidated financial statements of the Company, together
with related notes and schedules of the Company included in the
Registration Statement and the Prospectus, are accurate and present fairly
the financial position, results of operations and cash flows of the Company
at the indicated dates and for the indicated periods. The audited
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made; any unaudited
financial statements have been prepared on a basis substantially consistent
with that of the audited consolidated financial statements included in the
Registration Statement and the Prospectus. The summary and selected
financial and operating data included in the Registration Statement and the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with the audited and any unaudited financial
statements, as the case may be, included therein. The pro forma information
included in the Prospectus present fairly the information shown therein,
have been prepared in accordance with GAAP and the Commission's rules and
guidelines with respect to pro forma financial statements and other pro
forma information and have been properly compiled on the pro forma basis
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate under the
circumstances.

(xxii) Neither the filing of the Registration Statement or any
amendment thereto nor the offer or sale of the Shares as contemplated by
this Agreement gives rise to any rights, nor do any rights exist, for or
relating to registration under the Act of any securities of the Company
that have not been waived. There are no preemptive rights with respect to
the offer and sale of the Shares as contemplated by this Agreement.

<PAGE>

(xxiii) All material disclosure regarding Year 2000 compliance that is
required to be disclosed under the Act has been included in the Prospectus.
Neither the Company nor the Bank has reason to believe that it will incur
material operating expenses or costs to insure that its information systems
will be Year 2000 compliant, other than as disclosed in the Prospectus.

(xxiv) The Company and the Bank have filed or caused to be filed, or
has properly filed extensions for, all foreign, federal, state and local
income, value added and franchise tax returns and have paid all taxes and
assessments shown thereon as due, except for such taxes and assessments as
are disclosed or adequately reserved against and that are being contested
in good faith by appropriate proceedings, promptly instituted and
diligently conducted. All material tax liabilities are adequately provided
for on the books of the Company or the Bank, and there is no material tax
deficiency that has been or might be asserted against the Company or the
Bank that is not so provided for.

(xxv) The Company and the Bank own or possess, or can acquire on
reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"Patents and Proprietary Rights") currently employed by them in connection
with the businesses they now operate except where the failure to so own,
possess or acquire such Patents and Proprietary Rights would not have a
Material Adverse Effect. Neither the Company nor the Bank has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Patent or Proprietary Rights
that, if the subject of any unfavorable decision, ruling or finding, singly
or in the aggregate, could result in a Material Adverse Effect.

(xxvi) The Company and the Bank are conducting and intend to conduct
their respective businesses so as to comply in all material respects with
applicable federal, state, local and foreign government Laws, except where
the failure to comply would not have a Material Adverse Effect. Except as
set forth in the Registration Statement and the Prospectus, neither the
Company nor the Bank is charged with or, to the Company's best knowledge,
under investigation with respect to, any material violation of any such
Laws;

(xxvii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or that might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.

(xxviii) None of the Company, the Bank nor, to the best knowledge of
the Company, any employee or agent of the Company or the Bank has made any
payment of funds of the Company or the Bank or received or retained any
funds in violation of any Law (including, without limitation, the Foreign
Corrupt Practices Act) or of a character required to be disclosed in the
Prospectus. Neither the Company nor the Bank has, at any time during the
past five years, (A) made any unlawful contributions to any candidate for
any political office, or failed fully to disclose any contribution in
violation of any Law, or (B) made any unlawful payment to state, federal or
foreign government officer or officers, or other person charged with
similar public or quasi-public duty.

(xxix) The Company and the Bank maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or
specific authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, and (C) access to assets is permitted only
in accordance with management's general or specific authorization.

(xxx) The Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offering and
sale of the Shares other than any Preliminary Prospectus or the Prospectus
or other materials permitted by the Act to be distributed by the Company.
<PAGE>

(xxxi) Other than as contemplated by this Agreement or described in
the Registration Statement, the Company has not incurred any liability for
any finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.

(xxxii) The Bank is in good standing with the Office of Banks and Real
Estate (the "OBRE"), and the activities of the Company and the Bank are
permitted under applicable federal and state banking Laws. The Company has
all necessary approvals, including the approvals of the OBRE and the FRB,
to own the capital stock of the Bank. Neither the Company nor the Bank is a
party or subject to any agreement or memorandum with, or directive or order
issued by, the FRB, the OBRE, the Office of the Illinois Commissioner of
Banks and Real Estate (the "Commissioner"), the FDIC or other bank
regulatory authority having jurisdiction over it (the "Banking
Regulators"), which imposes any restrictions or requirements not generally
applicable to bank holding companies or commercial banks. Neither the
Company nor the Bank is subject to any directive from any Banking
Regulators to make any material change in the method of conducting their
respective businesses, and no such directive is pending or threatened by
any of such Banking Regulators.

(b) Any certificate signed by any officer of the Company and delivered to
you or to counsel for the Underwriters shall be deemed a representation and
warranty made by the Company to each Underwriter as to the matters covered
thereby, and shall be deemed incorporated herein in its entirety and shall be
effective as if such representation and warranty were made herein.

7. Indemnification.

(a) The Company agrees to indemnify and hold harmless each of the
Underwriters and each person, if any, who controls each of the Underwriters
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act (the "indemnified parties") from and against any and all losses,
claims, damages, liabilities and judgments caused by, arising out of,
related to or based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A,
if applicable, or the Prospectus or any Preliminary Prospectus or caused by
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company shall not be liable in any
such case to the extent that such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission made or omitted in
reliance upon, and in conformity with, information relating to the
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters with your consent expressly for use therein.

(b) In case any action shall be brought against any of the indemnified
parties, based upon any Preliminary Prospectus, the Registration Statement
or the Prospectus or any amendment or supplement thereto and with respect
to which indemnity may be sought against the Company such indemnified
parties shall promptly notify the Company in writing (but the failure so to
notify shall not relieve the Company of any liability that it may otherwise
have to such indemnified parties under this Section 7 (although the
Company's liability to an indemnified party may be reduced on a monetary
basis to the extent, but only to the extent, it has been prejudiced by such
failure on the part of such indemnified party)) and the Company shall
promptly assume the defense thereof, including the employment of counsel
satisfactory to such indemnified party and payment of all fees and
expenses. The indemnified parties shall each have the right to employ
separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
indemnified parties unless (i) the employment of such counsel shall have
been specifically authorized by the Company, (ii) the Company
<PAGE>

shall have failed to assume promptly the defense or to employ counsel
reasonably satisfactory to such indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include both
the indemnified parties and the Company, and an indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to one or more of the indemnified parties that are different from
or additional to those available to the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of
such indemnified party, it being understood, however, that the Company
shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the indemnified parties, which firm shall be
designated in writing by EVEREN Securities, Inc., and that all such fees
and expenses shall be reimbursed promptly as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without their written consent, which consent shall not be unreasonably
withheld, but if settled with the written consent of the Company, the
Company agrees to indemnify and hold harmless the indemnified parties from
and against any and all loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 10 business days
after delivery by registered or certified mail to the proper address for
notice to such indemnifying party of the aforesaid request (whether or not
such delivery is accepted) and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional and complete release in writing of such indemnified party
from any and all liability on claims that are the subject matter of such
proceeding, which such settlement shall be in form and substance
satisfactory to the indemnified party. The indemnification provided in this
Section 7 will be in addition to any liability which the Company may
otherwise have.

(c) The Underwriters agree, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to the Underwriters
but only with reference to information stated in or omitted from the
Registration Statement, the Prospectus or any Preliminary Prospectus in
reliance upon, and in conformity with, information relating to the
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters with your consent expressly for use therein. In case any
action shall be brought against the Company, any of the Company's
directors, any such officers or any person controlling the Company based on
the Registration Statement, the Prospectus or any Preliminary Prospectus
and in respect of which indemnity may be sought against the Underwriters,
the Underwriters shall have the rights and duties given to the Company by
Section 7(b) hereof (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any
person controlling the Company shall have the rights and duties given to
the "indemnified parties" by Section 7(b) hereof.

(d) If the indemnification provided for in this Section 7 is for any
reason unavailable to an indemnified party or insufficient to hold such
indemnified party harmless in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of
<PAGE>

such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided in clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering and sale of the
Shares (before deducting expenses) received by the Company on the one hand,
and the total underwriting discounts and commissions received by the
Underwriters on the other, bears to the total price to the public of the
Shares, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or the alleged
omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.

The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligation in this Section 7(d) to contribute are several in proportion to
the respective amount of Shares purchased hereunder by each Underwriter and
not joint.

8. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Shares on the
Closing Date and the Additional Shares on any Option Closing Date are
subject to the fulfillment of each of the following conditions on or prior
to the Closing Date and each Option Closing Date:

(a) All the representations and warranties of the Company contained in
this Agreement and in any certificate delivered hereunder shall be true and
correct on the Closing Date and each Option Closing Date with the same
force and effect as if made on and as of the Closing Date or Option Closing
Date, as applicable, except to the extent such representations and
warranties are stated to be made as of a specific date, in which case, such
representations and warranties shall be true and correct as of such date.
The Company shall not have failed at or prior to the Closing Date or Option
Closing Date, as applicable, to perform or comply in all respects with any
of the agreements herein contained and required to be performed or complied
with by the Company at or prior to the Closing Date.

(b) If the Registration Statement is not effective at the time of the
execution and delivery of this Agreement, the Registration Statement shall
have become effective (or, if a post-effective amendment is required to be
filed pursuant to Rule 430A under the Act, such post-effective amendment
shall have become effective) not later than 9:30 A.M., New York City time,
on the date immediately following the date

<PAGE>

of this Agreement or such later time as you may approve in writing or, if
the Registration Statement has been declared effective prior to the
execution and delivery hereof in reliance on Rule 430A, the Prospectus
shall have been filed as required hereby, if necessary; and at the Closing
Date and each applicable Option Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or, to the best knowledge of the Underwriters or the Company,
threatened by the Commission; every request for additional information on
the part of the Commission shall have been complied with to the
Underwriters' satisfaction; no stop order suspending the sale of the Shares
in any jurisdiction referred to in Section 5(g) shall have been issued and
no proceeding for that purpose shall have been commenced or shall be
pending or threatened.

(c) The Shares shall have been qualified for sale, if applicable,
under the Blue Sky laws of such states as shall have been specified by the
Representatives.

(d) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of
this Agreement and all corporate proceedings and other legal matters
incident thereto, and the form of the Registration Statement and the
Prospectus (except financial statements) shall have been approved by
counsel for the Underwriters exercising reasonable judgment, and neither
the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, shall contain an untrue statement of material fact, or
omit to state a fact that is material and is required to be stated therein
or is necessary to make the statements therein not misleading.

(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material change, or any material development
involving a prospective change, in or affecting particularly the business
or properties of the Company or the Bank whether or not arising in the
ordinary course of business, that, in the judgment of the Representatives,
makes it impractical or inadvisable to proceed with the public offering or
purchase of the Shares as contemplated hereby.

(f) You shall have received an agreement from each of the officers
and directors of the Company and from ______________ (collectively, the
"Additional Stockholders"), whereby each such Additional Stockholder agrees
to be bound by an agreement to the same effect as the covenants set forth
in the third paragraph of Section 3 of this Agreement (the "Lock-Up
Agreements").

(g) You shall have received an opinion (satisfactory to you and your
counsel) dated the Closing Date or the Option Closing Date, as the case may
be, of Vedder, Price, Kaufman & Kammholz, counsel for the Company, to the
effect that:

(i) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of Delaware. The
Bank has been duly organized and is validly existing as a an Illinois
banking corporation in good standing under the laws of Illinois. Each
of the Company and the Bank has all necessary power and authority,
corporate or otherwise, to own, lease and operate their respective
properties and assets and to conduct their respective businesses as
described in the Registration Statement and the Prospectus, and each
is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which its ownership or lease of
real property or the conduct of its business makes such qualification
necessary and in which the failure to so qualify could have a Material
Adverse Effect.

(ii) The Company has all necessary corporate power and authority
to enter into and perform this Agreement, and the performance of the
Company's obligations hereunder has been duly authorized by all
necessary corporate action; this Agreement has been duly executed and
delivered by and on behalf of the Company, and, assuming due
authorization, execution and delivery of this Agreement by the

<PAGE>

Underwriters, constitutes a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except as
enforceability of the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general equity principles; no approval,
consent, order, authorization, designation, declaration or filing by
or with any regulatory, administrative or other governmental body or,
to the best of such counsel's knowledge, after due inquiry, third
party, is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated
herein (other than as may be required by the NASD or as required by
state securities or Blue Sky laws, as to which such counsel need
express no opinion) except such as have been obtained or made, with
counsel specifying the same.

(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization;" and
all of the shares of outstanding capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-
assessable and were not issued in violation of any preemptive rights
or, to the best of such counsel's knowledge, other rights to subscribe
for or purchase securities. Except as set forth in the Registration
Statement and the Prospectus, to the best of such counsel's knowledge,
no options, warrants or other rights to convert any obligation into,
or exchange any securities for, shares of capital stock or ownership
interests in the Company are outstanding.

(iv) To the best of such counsel's knowledge, after due inquiry,
neither the filing of the Registration Statement or any amendment
thereto nor the offer and sale of the Shares as contemplated by this
Agreement gives rise to any rights, nor do any rights exist, for or
relating to the registration under the Act of any securities of the
Company that have not been waived.

(v) The Registration Statement has become effective under the
Act, the Prospectus has been filed as required by this Agreement, if
necessary, and to the best of such counsel's knowledge, after
telephonic inquiry of the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending or have been initiated or
threatened by the Commission. The Registration Statement (including
the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A, if applicable), the
Prospectus and each amendment or supplement thereto (except for the
financial statements and other statistical or financial data included
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Act.

(vi) Neither the Company nor the Bank is an "investment company"
or a company controlled by an "investment company" within the meaning
of the Investment Company Act.

(vii) To the best of such counsel's knowledge, all of the issued
and outstanding capital stock of the Bank is owned by the Company,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.

(viii) The statements made in the Registration Statement under
the captions, "Capitalization," "Description of Capital Stock,"
"Management-Stock Incentive Plan" and "Legal Matters," to the extent
that they constitute summaries of documents referred to therein or
matters of law or legal conclusions, have been reviewed by such
counsel and are accurate in all material respects.

(ix) The descriptions in the Registration Statement and
Prospectus of contracts, instruments and other documents filed as
exhibits to the Registration Statement are accurate in all material
respects; such counsel does not know of any Proceedings required to be
described in the Prospectus that are not described, or of any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that were not described and filed as
required.
<PAGE>

(x) The certificates for the Shares to be delivered hereunder are
in due and proper form, and when duly countersigned by the Company's
transfer agent and delivered to you or upon your order against payment
of the agreed consideration therefor in accordance with the provisions
of this Agreement, the Shares sold by the Company hereunder and
represented thereby will be duly authorized and validly issued, fully
paid and nonassessable.

(xi) Neither the filing of the Registration Statement or any
amendment nor the execution and performance of this Agreement will
contravene any of the provisions of, or result in a default under
(nor, to the best of such counsel's knowledge, has any event occurred
which with notice or lapse of time, or both, would constitute a breach
or default under), any Obligations and Instruments known to us to
which the Company is a party or by which its property is bound (except
for such contravention or default which would not have a Material
Adverse Effect); or violate any of the provisions of the Certificate
of Incorporation or by-laws of the Company or violate any Laws
applicable to the Company known to such counsel.

(xii) To the best of such counsel's knowledge, all offers and
sales of the Company's outstanding capital stock by or on behalf of
the Company were at the time of issuance exempt from the registration
requirements of the Act and were duly registered or the subject of an
available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.

(xiii) Neither the Company nor the Bank is in violation of their
respective Charter. To the best of such counsel's knowledge, neither
the Company nor the Bank is in violation of any material provision of
their respective by-laws that would have a Material Adverse Effect.

(xiv) The execution and delivery of this Agreement, the issuance
and sale of the Shares by the Company as contemplated herein and the
fulfillment of the terms hereof by the Company will not violate the
Certificate of Incorporation or by-laws of the Company.

In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company
and representatives of the Underwriters and their counsel, at which
the contents of the Registration Statement and the Prospectus and
related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth above)
and has not made any independent check or verification thereof, on the
basis of the foregoing (relying as to materiality upon the statements
of officers and other representatives of the Company), no facts have
come to such counsel's attention that lead such counsel to believe
that either the Registration Statement or any amendment (including any
post-effective amendment) thereto at the time such Registration
Statement or amendment became effective, and as of the Closing Date
and any applicable Option Closing Date, contained or contains an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
herein not misleading, or that the Prospectus or any amendment or
supplement thereto as of their respective dates and as of the Closing
Date and any applicable Option Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, except that such counsel need express no
opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement or the
Prospectus.

(h) You shall have received an opinion of Jenner & Block, counsel for
the Underwriters, dated the Closing Date or the Option Closing Date, as the
case may be, in form and substance reasonably satisfactory to you.
<PAGE>

(i) You shall have received, in connection with the execution of this
Agreement and on the Closing Date and each Option Closing Date, a "cold comfort"
letter from Arthur Andersen LLP dated as of each such date in form and substance
satisfactory to you with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus.

(j) You shall have received from the Company a certificate, signed by Ralph
B. Mandell and Donald R. Roubitchek in their capacities as Chief Executive
Officer and Chief Financial Officer of the Company, respectively, addressed to
the Underwriters and dated the Closing Date or Option Closing Date, as
applicable, to the effect that:

(i) such officer does not know of any Proceedings instituted,
threatened or contemplated against the Company of a character required
to be disclosed in the Prospectus that are not so disclosed; such
officer does not know of any material contract required to be filed as
an exhibit to the Registration Statement which is not so filed;

(ii) such officer has carefully examined the Registration
Statement and the Prospectus and all amendments or supplements thereto
and, in such officer's opinion, such Registration Statement or such
amendment as of its effective date and as of the Closing Date, and the
Prospectus or such supplement as of its date and as of the Closing
Date, did not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and, in such
officer's opinion, since the effective date of the Registration
Statement, no event has occurred or information become known that
should have been set forth in an amendment to the Registration
Statement or a supplement to the Prospectus which has not been so set
forth in such amendment or supplement;

(iii) the representations and warranties of the Company set forth
in Section 6(a) of this Agreement are true and correct as of the date
of this Agreement and as of the Closing Date or the Option Closing
Date, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date; and

(iv) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and, to the best knowledge of
the respective signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Act.

The delivery of the certificate provided for in this subparagraph
shall be and constitute a representation and warranty of the Company
as to the facts required in the immediately foregoing clauses (iii)
and (iv) of this subparagraph to be set forth in said certificate.

(k) The Shares shall have been approved for trading upon official notice of
issuance on The Nasdaq National Market.

(l) You and your counsel shall have received on or before the Closing Date
or the Option Closing Date, as the case may be, such further documents,
opinions, certificates and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company as you and they shall have
reasonably requested from the Company.

9. Effective Date of Agreement, Termination and Defaults. This Agreement shall
become effective upon, and shall not be deemed delivered until, the later of (i)
execution of this Agreement and (ii) when notification of the effectiveness of
the Registration Statement has been released by the Commission.

<PAGE>

This Agreement may be terminated at any time prior to the Closing Date and
any exercise of the option to purchase Additional Shares may be cancelled at any
time prior to any Option Closing Date by the Underwriters by written notice to
the Company if any of the following has occurred: (i) since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or development involving a prospective
material adverse change in the condition, financial or otherwise, of the Company
or the earnings, affairs, management, or business of the Company, whether or not
arising in the ordinary course of business, that would, in the Representatives'
sole judgment, make it impracticable to market the Shares on the terms and in
the manner contemplated in the Prospectus; (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States that, in
the Representatives' judgment, is material and adverse and would, in the
Representatives' judgment, make it impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus; (iii) the suspension or
material limitation of trading in securities on New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market; (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority that in
the Representatives' opinion materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company or
the Bank; (v) the declaration of a banking moratorium by either federal or
Illinois state authorities; (vi) the taking of any action by any Federal, state
or local government or agency in respect of its monetary or fiscal affairs that
in the Representatives' opinion has a material adverse effect on the financial
markets in the United States; or (vii) there shall be any change in financial
markets or in political, economic or financial conditions which, in the opinion
of the Representatives, either renders it impracticable or inadvisable to
proceed with the offering and sale of the Shares on the terms set forth in the
Prospectus or materially adversely affects the market for the Shares.

If on the Closing Date or on any Option Closing Date, as the case may be,
any of the Underwriters shall fail or refuse to purchase the Firm Shares or
Additional Shares, as the case may be, which it has agreed to purchase hereunder
on such date, and the aggregate number of Firm Shares or Additional Shares, as
the case may be, that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed, in the aggregate, 10% of the
total number of Shares that all Underwriters are obligated to purchase on such
date, each non-defaulting Underwriter shall be obligated, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule I hereto
bears to the total number of Firm Shares or Additional Shares, as the case may
be, that all the non-defaulting Underwriters have agreed to purchase, or in such
other proportion as you may specify, to purchase the Firm Shares or Additional
Shares, as the case may be, that such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date. If, on the Closing Date
or on the Option Closing Date, as the case may be, any of the Underwriters shall
fail or refuse to purchase the Firm Shares or Additional Shares, as the case may
be, in an amount that exceeds, in the aggregate, 10% of the total number of the
Shares, and arrangements satisfactory to you and the Company for the purchase of
such Shares are not made within 48 hours after such default, this Agreement
shall terminate without liability on the part of the non-defaulting Underwriters
and the Company, except as otherwise provided in this Section 9. In any such
case that does not result in termination of this Agreement, either you or the
Company may postpone the Closing Date or the Option Closing Date, as the case
may be, for not longer than seven days, in order that the required changes, if
any, in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Underwriter from liability in respect of any default of any
such Underwriter under this Agreement.

The indemnity and contribution provisions and other agreements,
representations and warranties of the Company set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any

<PAGE>

investigation, or statement as to the results thereof, made by or on behalf of
any of the Underwriters or by or on behalf of the Company, (ii) acceptance of
the Shares and payment therefor hereunder or (iii) termination of this
Agreement. Notwithstanding any termination of this Agreement, the Company shall
be liable for and shall pay all expenses it has agreed to pay pursuant to
Section 5(l).

Except as otherwise provided, this Agreement has been and is made solely
for the benefit of, and shall be binding upon, the Company, the Underwriters,
any indemnified person referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
terms "successors and assigns" shall not include a purchaser of any of the
Shares from any of the several Underwriters merely because of such purchase.

10. Effectiveness of Registration Statement. You and the Company will use your,
its and their best efforts to cause the Registration Statement to become
effective, if it has not yet become effective, and to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting thereof.

11. Miscellaneous. All communications hereunder will be in writing and, if sent
to the Underwriters will be mailed, delivered or telegraphed and confirmed to
you c/o EVEREN Securities, Inc., 77 West Wacker Drive, Chicago, Illinois 60601-
1994, Attention: Syndicate Department, with a copy to Jenner & Block, One IBM
Plaza, Chicago, Illinois 60611, Attention: Craig R. Culbertson and Alexander
Lourie; if sent to the Company will be mailed, delivered or telegraphed and
confirmed to the Company at its corporate headquarters with a copy to Vedder,
Price, Kaufman & Kammholz, 222 North LaSalle Street, Chicago, Illinois 60601,
Attention: Jennifer R. Evans.

THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW THEREOF.

This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.

Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters, including you.

Very truly yours,

PRIVATEBANCORP, INC., a Delaware corporation

By:
Name:
Title:

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.

EVEREN Securities, Inc.

Stifel, Nicolaus & Company, Incorporated

<PAGE>

Acting as Representatives of the
several Underwriters named in Schedule I.

By: EVEREN Securities, Inc.

By:
Name _________________
Title _________________

By: Stifel, Nicolaus & Company, Incorporated

By:
Name _________________
Title _________________

<PAGE>

Schedule I

<TABLE>
<CAPTION>
Number of
Firm Shares
to be
Underwriter Purchased
- ----------- -----------
<S> <C>

EVEREN Securities, Inc.........................................
Stifel, Nicolaus & Company, Incorporated.......................
-------
TOTAL..................................................... 900,000
=======
</TABLE>

<PAGE>

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

[LOGO OF PRIVATEBANCORP INC. APPEARS HERE]

SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS

-------------------
CUSIP 742962 10 3
-------------------

THIS CERTIFIES THAT

FULL PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
______________________ ______________________
_____________________________ PRIVATEBANCORP, INC. _____________________________
______________________ ______________________

transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed.

IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and sealed with the Seal of the
Corporation.

Dated:

/s/ Donald A. Roubitchek /s/ R. B. Marshall
SECRETARY CHAIRMAN

Countersigned:
ILLINOIS STOCK TRANSFER COMPANY,
Transfer Agent

By
Authorized Officer

The Shares represented by this Certificate are transferable, at the offices of
Illinois Stock Transfer Company, Chicago, Illinois.
<PAGE>

or regulations

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF TRANSFER MIN ACT - _________ Custodian _________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minor Act
survivorship and not as tenants in common
_____________________________
(State)
</TABLE>

Additional abbreviations may also be used though not in the above list.
- --------------------------------------------------------------------------------

For value received _______________________ hereby sell, assign and transfer unto

________________________________________________________________________________
TAXPAYER IDENTIFICATION NUMBER PLEASE PRINT OR TYPE -
NAME AND ADDRESS OF ASSIGNEE

________________________________________________________________________________
SHARES

________________________________________________________________________

________________________________________________________________________________

================================================================================
TAXPAYER IDENTIFICATION NUMBER PLEASE PRINT OR TYPE -
NAME AND ADDRESS OF ASSIGNEE

________________________________________________________________________________
SHARES

________________________________________________________________________

================================================================================

of the common stock evidenced by this Certificate, and do hereby irrevocably
constitute and appoint

____________________________________________________________________ Attorney to
transfer the said stock on the books of the Corporation, with full power of
substitution in the premises.

Dated ________________________ 19 __ ________________________________________
Signature(s)

________________________________________
Signature(s)

NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME OF THE STOCKHOLDER(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

IMPORTANT
---------
_______________________________________
A NOTARY SEAL IS NOT ACCEPTABLE. Medallion Signature(s) guarantee:
THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
SUCH AS A COMMERCIAL BANK, TRUST
COMPANY, SAVINGS AND LOAN, CREDIT
UNION OR BROKER.

<PAGE>

EMPLOYMENT AGREEMENT
--------------------

THIS AGREEMENT, made and entered into as of July 1, 1999 (the "Effective
Date"), by and between PrivateBancorp, Inc. (hereinafter called the "Employer"),
and Ralph B. Mandell (hereinafter called the "Executive").

WITNESSETH THAT:

WHEREAS, the Employer desires to employ or to continue to employ the
Executive as its Chairman and Chief Executive Officer, and the Executive
desires to continue in such employment;

NOW, THEREFORE, the Employer and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:

I. Employment and Term.

A. Employment. The Employer shall employ the Executive as the Chairman and
Chief Executive Officer of the Employer, and the Executive shall so serve, for
the term set forth in Paragraph 1(b).

B. Term. The initial term of the Executive's employment under this
Agreement shall commence on July 1, 1999 and end on June 30, 2001, subject to
any extension of such term as may be mutually agreed upon and subject to earlier
termination as provided in Paragraph 7. Commencing ninety (90) days prior to
each anniversary date hereof, either the Board of Directors of the Employer, or
a duly authorized committee thereof (the "Board"), on behalf of the Employer,
and the Executive agree to negotiate in good faith regarding the possible
renewal of this Agreement for a successive term. Anything in this Agreement to
the contrary, if at any time during the Executive's period of employment under
this Agreement there is a Change in Control (as defined in Paragraph 7), the
term of this Agreement shall automatically extend to a date which is three (3)
years from the date of the Change in Control (and shall be further extended
pursuant to the foregoing provisions of this Paragraph 1(b), unless written
notice to the contrary is given in accordance with this Paragraph 1(b)).
<PAGE>

II. Duties and Responsibilities.

A. The duties and responsibilities of Executive are and shall continue to
be of an executive nature as shall be required by the Employer in the conduct of
its business. Executive's powers and authority shall be as prescribed by the
by-laws of the Employer and shall include all those presently delegated to him,
together with the performance of such other duties and responsibilities as from
time to time may be assigned to him by the Board of Directors of the Employer
consistent with the position(s) of Chief Executive Officer Executive recognizes,
that during the period of his employment hereunder, he owes an undivided duty of
loyalty to the Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities and to use his
best efforts to promote and develop the business of the Employer. Executive
will not perform any duties for any other business without the prior written
consent of the Employer, and may engage in charitable, civic or community
activities, provided that such duties or activities do not materially interfere
with the proper performance of his duties under this Agreement. During the
period of employment, Executive agrees to serve as a director on the Board of
Directors of the Employer and/or any of its affiliates, as well as to serve as a
member of any committee of any said Board, to which he may be elected or
appointed.

B. Notwithstanding that this Agreement provides for the employment of
Executive in his present capacity as the Employer's Chief Executive Officer,
nothing herein contained shall assure Executive, nor in any manner be construed
to constitute an agreement by the Employer to continue the employment of
Executive after the expiration of this Agreement in such capacity or in any
other capacity.

III. Salary.

A. Base Salary. For services performed by the Executive for the Employer
pursuant to this Agreement during the period of employment as provided in
Paragraph 1(b) hereof, the Employer shall pay the Executive a base salary at the
rate of Two hundred thirty thousand dollars ($230,000) per year, payable in
substantially equal installments in accordance with the Employer's regular
payroll practices. The Executive's base salary (with any increases under
paragraph (b), below) shall not be subject to reduction without the Executive's
written consent. Any compensation which may be paid to the Executive under any
additional compensation or incentive plan of the Employer or which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the base salary to which the Executive shall be
entitled under this Agreement. Executive's base salary shall be subject to
review from time to time, and the Employer may (but is not required to) increase
the base salary as the Board, in its discretion, may determine.
<PAGE>

IV. Annual Bonuses. For each fiscal year during the term of employment, the
Executive shall be eligible to receive a bonus in the amount, if any, as may be
determined from time to time by the Board in its discretion.

V. Equity Incentive Compensation. During the term of employment hereunder the
Executive shall be eligible to participate in the PrivateBancorp, Inc. Stock
Incentive Plan, and in any other equity-based incentive compensation plan or
program adopted by PrivateBancorp, Inc. ("PrivateBancorp"), including (but not
by way of limitation) any plan providing for the granting of (a) options to
purchase stock, (b) restricted stock or (c) similar equity-based units or
interests to officers of the Employer.

VI. Other Benefits. In addition to the compensation described in Paragraphs 3,
4 and 5, above, the Executive shall also be entitled to the following:

A. Participation in Benefit Plans. The Executive shall be entitled to
participate in all of the various retirement, welfare, fringe benefit, and
expense reimbursement plans, programs and arrangements of the Employer to the
extent the Executive is eligible for participation under the terms of such
plans, programs and arrangements, including, but not limited to non-qualified
retirement programs and deferred compensation plans.

B. Vacation. The Executive shall be entitled to such number of days of
vacation with pay during each calendar year during the period of employment in
accordance with the Employer's applicable personnel policy as in effect from
time to time.

C. Executive Perquisites. The Employer shall furnish Executive with such
perquisites which may from time to time be provided by the Employer which are
suitable to the Executive's position and adequate for the performance of his
duties hereunder and reasonable in the circumstances.

D. Expense Reimbursement. The Employer shall reimburse Executive's
reasonable expenses incurred in performing services hereunder, which are
incurred and accounted for in accordance with Employer's policies and procedures
applicable thereto.

VII. Termination. Unless earlier terminated in accordance with the following
provisions of this Paragraph 7, the Employer shall continue to employ the
Executive and the Executive shall remain employed by the Employer during the
entire term of this Agreement as set forth in Paragraph 1(b). Paragraph 8
hereof sets forth certain obligations of the Employer in the event that the
Executive's employment hereunder is terminated. Certain capitalized terms used
in this Paragraph 7 and in Paragraph 8 hereof are defined in Paragraph 7(d),
below.

A. Death or Disability. Except to the extent otherwise provided in
Paragraph 8 with respect to death benefits and certain post-Date of Termination
payment obligations of the Employer, this Agreement shall terminate immediately
as of the Date of Termination in the event of the Executive's death or in the
event that the Executive becomes disabled. The Executive will be deemed to be
disabled upon the earlier of (i) the end of a six (6) consecutive month period,
or of an aggregate period of nine (9) months out of any consecutive twelve (12)
months, during which, by reason of physical or mental injury or disease, the
Executive has been unable to perform substantially all of his
<PAGE>

usual and customary duties under this Agreement or (ii) the date that a
reputable physician selected by the Board, and as to whom the Executive has no
reasonable objection, determines in writing that the Executive will, by reason
of physical or mental injury or disease, be unable to perform substantially all
of the Executive's usual and customary duties under this Agreement for a period
of at least six (6) consecutive months. If any question arises as to whether the
Executive is disabled, upon reasonable request therefor by the Board, the
Executive shall submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such disability. The Board
shall promptly give the Executive written notice of any such determination of
the Executive's disability and of any decision of the Board to terminate the
Executive's employment by reason thereof. In the event of disability, until the
Date of Termination, the base salary payable to the Executive under Paragraph 3
hereof shall be reduced dollar-for-dollar by the amount of disability benefits,
if any, paid to the Executive in accordance with any disability policy or
program of the Employer.

B. Discharge for Cause. In accordance with the procedures hereinafter set
forth, the Board may discharge the Executive from his employment hereunder for
Cause (as hereinafter defined). Except to the extent otherwise provided in
Paragraph 8 with respect to certain post-Date of Termination obligations of the
Employer, this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any discharge
of the Executive for Cause shall be communicated by a Notice of Termination to
the Executive given in accordance with Paragraph 15 of this Agreement.

C. Termination for Other Reasons. The Employer may discharge the Executive
without Cause by giving written notice to the Executive in accordance with
Paragraph 15. The Executive may resign from his employment with or without Good
Reason, without liability to the Employer, by giving written notice to the
Employer in accordance with Paragraph 15 at least thirty (30) days prior to the
Date of Termination; provided, however, that no resignation shall be treated as
a resignation for Good Reason unless the written notice thereof is given within
sixty (60) days after the occurrence which constitutes "Good Reason" or during
the ninety (90) day period described in the final sentence of Paragraph 7(d)(v).
Except to the extent otherwise provided in Paragraph 8 with respect to certain
post-Date of Termination obligations of the Employer, this Agreement shall
terminate immediately as of the Date of Termination in the event the Executive
is discharged without Cause or resigns.

D. Definitions. For purposes of this Agreement, the following capitalized
terms shall have the meanings set forth below:

1. "Accrued Obligations" shall mean, as of the Date of Termination,
the sum of (A) the Executive's base salary under Paragraph 3 through the Date of
Termination to the extent not theretofore paid, (B) the amount of any deferred
compensation and other cash compensation accrued by the Executive as of the Date
of Termination to the extent not theretofore paid, (C) any vacation pay, expense
reimbursements and other cash entitlements accrued by the Executive as of the
Date of Termination to the extent not theretofore paid, (D) any grants and
awards vested or accrued under any equity-based incentive compensation plan or
program and (E) all other benefits which have accrued as of the Date of
Termination. For the purpose of this Paragraph 7(d)(i), except as provided in
the applicable plan, program or policy, amounts shall be deemed to accrue
ratably over the period
<PAGE>

during which they are earned, but no discretionary compensation shall be deemed
earned or accrued until it is specifically approved by the Board in accordance
with the applicable plan, program or policy.

2. "Cause" shall mean (A) the Executive's willful and continued (for a
period of not less than ten (10) business days after written notice thereof)
failure to perform substantially the duties of his employment (other than as a
result of physical or mental incapacity, or while on vacation); or (B) the
Executive's willful engaging in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Employer; or (C) the Executive's
conviction of a felony involving moral turpitude, but specifically excluding any
conviction based entirely on vicarious liability (with "vicarious liability"
meaning liability based on acts of the Employer for which the Executive is
charged solely as a result of his offices with the Employer and in which he was
not directly involved and did not have prior knowledge of such actions or
intended actions); provided, however, that no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Employer; and
provided further that no act or omission by the Executive shall constitute Cause
hereunder unless the Employer has given detailed written notice thereof to the
Executive, and the Executive has failed to remedy such act or omission.

3. "Change in Control" shall mean the occurrence of any one of the
following events:

a. Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than (i) a trustee or
other fiduciary holding securities under an employee benefit plan of
PrivateBancorp or any of its subsidiaries, or (ii) a Corporation owned directly
or indirectly by the stockholders of PrivateBancorp in substantially the same
proportions as their ownership of stock of PrivateBancorp, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of PrivateBancorp representing 10% or more of the
total voting power of the then outstanding shares of capital stock of
PrivateBancorp entitled to vote generally in the election of directors (the
"Voting Stock"), provided, however, that the following shall not constitute a
change in control: (1) such person becomes a beneficial owner of 10% or more of
the Voting Stock as the result of an acquisition of such Voting Stock directly
from PrivateBancorp, or (2) such person becomes a beneficial owner of 10% or
more of the Voting Stock as a result of the decrease in the number of
outstanding shares of Voting Stock caused by the repurchase of shares by
PrivateBancorp; provided, further, that in the event a person described in
clause (1) or (2) shall thereafter increase (other than in circumstances
described in clause (1) or (2)) beneficial ownership of stock representing more
than 1% of the Voting Stock, such person shall be deemed to become a beneficial
owner of 10% or more of the Voting Stock for purposes of this paragraph (A),
provided such person continues to beneficially own 10% or more of the Voting
Stock after such subsequent increase in beneficial ownership, or

b. During any period of two consecutive years, individuals (the
"Incumbent Board"), who at the beginning of such period constitute the board of
directors of PrivateBancorp, and any new director, whose election by the board
of directors of PrivateBancorp or nomination for election by PrivateBancorp's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election
<PAGE>

or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or

c. Consummation of a reorganization, merger or consolidation or
the sale or other disposition of all or substantially all of the assets of
PrivateBancorp (a "Business Combination"), in each case, unless (1) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Voting Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the total
voting power represented by the voting securities entitled to vote generally in
the election of directors of the Corporation resulting from the Business
Combination (including, without limitation, a Corporation which as a result of
the Business Combination owns PrivateBancorp's or all or substantially all of
PrivateBancorp's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to the
Business Combination of the Voting Stock of PrivateBancorp, and (2) at least a
majority of the members of the board of directors of the Corporation resulting
from the Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or action of the Incumbent Board,
providing for such Business Combination; or

d. the stockholders of PrivateBancorp approve a plan of complete
liquidation or dissolution of PrivateBancorp.

The board of directors of PrivateBancorp has final authority to construe and
interpret the provisions of the foregoing paragraphs (A), (B), (C) and (D) and
to determine the exact date on which a change in control has been deemed to have
occurred thereunder.

4. "Date of Termination" shall mean (A) in the event of a discharge of
the Executive for or without Cause, the date the Executive receives a Notice of
Termination, or any later date specified in such Notice of Termination, as the
case may be, (B) in the event of a resignation by the Executive, the date
specified in the written notice to the Employer, which date shall be no less
than thirty (30) days from the date of such written notice, (C) in the event of
the Executive's death, the date of the Executive's death, and (D) in the event
of termination of the Executive's employment by reason of disability pursuant to
Paragraph 7(a), the date the Executive receives written notice of such
termination.

5. "Good Reason" shall mean the occurrence, other than in connection
with a discharge, of any of the following without the Executive's consent: (A)
Executive is not re-elected or is removed from the positions with the Employer
set forth in Paragraph 1(a), other than as a result of Executive's election or
appointment to positions of equal or superior scope and responsibility; or (B)
Executive shall fail to be vested by the Employer with the power and authority
of any of said positions, excluding for this purpose any isolated action not
taken in bad faith and which is remedied by the Employer promptly after receipt
of written notice thereof given by the Executive in accordance with Paragraph
15; or (C) any failure by the Employer to comply with any of the provisions of
this Agreement, other than any isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Employer promptly after
receipt of written notice thereof given by the Executive in accordance with
Paragraph 15; or (D) the Employer giving notice to the Executive
<PAGE>

pursuant to Paragraph 1(b) that the term of this Agreement shall not be extended
upon the expiration of the then-current term; or (E) the Employer requiring the
Executive to be based at an office or location which is more than 80 miles from
the Executive's office as of the Effective Date. In addition, any termination by
the Executive during the ninety (90) day period beginning on the first
anniversary of the date of a Change in Control shall be deemed to be for "Good
Reason."

6. "Notice of Termination" shall mean a written notice which (A)
indicates the specific termination provision in this Agreement relied upon, (B)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (C) if the Date of Termination is to be other than the date of
receipt of such notice, specifies the termination date.

VIII. Obligations of the Employer Upon Termination. The following provisions
describe the obligations of the Employer to the Executive under this Agreement
upon termination of employment. However, except as explicitly provided in this
Agreement, nothing in this Agreement shall limit or otherwise adversely affect
any rights which the Executive may have under applicable law, under any other
agreement with the Employer or any of its affiliates or subsidiaries, or under
any compensation or benefit plan, program, policy or practice of the Employer or
any of its affiliates or subsidiaries.

A. Death, Disability, Discharge for Cause, or Resignation Without Good
Reason. In the event this Agreement terminates pursuant to Paragraph 7(a) by
reason of the death or disability of the Executive, or pursuant to Paragraph
7(b) by reason of the discharge of the Executive by the Employer for Cause, or
pursuant to Paragraph 7(c) by reason of the resignation of the Executive other
than for Good Reason, the Employer shall pay to the Executive, or his heirs or
estate, in the event of the Executive's death, all Accrued Obligations in a lump
sum in cash within thirty (30) days after the Date of Termination; provided,
however, that any portion of the Accrued Obligations which consists of bonus,
deferred compensation, incentive compensation, insurance benefits or other
employee benefits shall be determined and paid in accordance with the terms of
the relevant plan or policy as applicable to the Executive. In addition, in the
event this Agreement terminates pursuant to Paragraph 7(a) by reason of death of
the Executive, the Employer shall pay to the Executive's heirs or estate death
benefits in a lump sum amount equal to six (6) months of his then current annual
base salary.

B. Discharge Without Cause or Resignation with Good Reason. In the event
that this Agreement terminates pursuant to Paragraph 7(c) by reason of the
discharge of the Executive by the Employer other than for Cause or disability or
by reason of the resignation of the Executive for Good Reason:

1. The Employer shall pay all Accrued Obligations to the Executive in
a lump sum in cash within thirty (30) days after the Date of Termination;
provided, however, that any portion of the Accrued Obligations which consists of
bonus, deferred compensation, incentive compensation, insurance benefits or
other employee benefits shall be determined and paid in accordance with the
terms of the relevant plan or policy as applicable to the Executive;

2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of
<PAGE>

his prior year's bonus amount (if any) based on the number of days elapsed
during the year through the Date of Termination;

3. Continuation for a period of eighteen (18) months (the "Severance
Period") of his then current annual base salary, payable in substantially equal
installments in accordance with the Employer's regular payroll practices; and

4. Continuation for the Severance Period of the Executive's right to
maintain COBRA continuation coverage under the applicable plans at premium rates
on the same "cost-sharing" basis as the applicable premiums paid for such
coverage by active employees as of the Date of Termination.

In the event that upon the expiration of the Severance Period, Executive is not
employed or otherwise providing compensated services of any type (including
self-employment), and has not done so during the final ninety (90) days of the
Severance Period, the Employer may, in its sole discretion (which discretion
need not be applied in a consistent manner from one Executive to another), agree
to extend the Severance Period for up to an additional six (6) months (the
"Extended Severance Period"). The payments to Executive described in
subparagraph (iii) above and the reduce COBRA continuation premium described in
subparagraph (iv) above shall continue during the Extended Severance Period,
subject to earlier termination effective as of the first day of the month
following the date the on which the Executive becomes employed or provides
compensated services of any type (including self-employment).

The Executive shall provide such information as the Employer may reasonably
request to determine Executive's continued eligibility for the payments and
benefits provided by this Paragraph 8(b).

C. Effect of Change in Control. In the event that a Change in Control
occurs and this Agreement thereafter terminates pursuant to Paragraph 7(c) by
reason of the discharge of the Executive by the Employer other than for Cause or
disability or by reason of the resignation of the Executive for Good Reason:

2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of his prior year's bonus amount (if any) based
on the number of days elapsed during the year through the Date of Termination;

3. The Employer shall pay the Executive a lump sum payment within
thirty (30) days after such termination of employment in the amount of three (3)
times the sum of the following:
<PAGE>

a. the amount of Executive's annual base salary determined as
of the Date of Termination, or the date immediately preceding the date of the
Change in Control, whichever is greater; plus

b. the greater of (A) the Executive's bonus amount, if any, for
the calendar year immediately preceding that in which the Date of Termination
occurs, or (B) the average of the sum of the bonus amounts earned by Executive
with respect to the three (3) calendar years immediately preceding the calendar
year in which Executive's Date of Termination occurs, or if such sum would be
greater, with respect to the three (3) calendar years immediately preceding the
calendar year of the date of the Change in Control; plus

c. the sum of:

(1) the annual value of the contributions that would have
been expected to be made or credited by the Employer to, and benefits expected
to be accrued under, the qualified and non-qualified employee profit sharing,
401(k), pension and any other benefit plans maintained by the Employer to or for
the benefit of Executive; plus

(2) the annual value of the Other Benefits described in
Paragraph 6(a) and (c) above.

For purposes of paragraph (C)(I) above, the annual value of the contributions
and accruals to or under the employee benefit plans shall be determined on the
basis of the actual rate of contributions or accruals, as applicable, and the
provisions of the plans as in effect during the calendar year immediately
preceding the date of the Change in Control, or if the value so determined would
be greater, during the calendar year immediately preceding the Date of
Termination; it being understood that any forgiveness of accumulated interest
under the terms of that certain loan agreement between the Employer and the
Executive shall not be deemed a contribution or accrual to or under an employee
benefit plan for purposes hereof. The "annual value" of the executive
perquisites described in Paragraph 6(c) for purposes of paragraph (C)(II) above
shall be 7.5% of the annual base salary amount applicable under clause (iii)(A)
above.

Executive shall also be entitled to out-placement counseling from a firm
selected by Employer for a period beginning on the date of termination of
employment and ending on the date Executive is first employed or otherwise
providing compensated services of any type (including, but not limited to, self-
employment), provided, that in no event shall Executive be entitled to out-
placement counseling after the date which is two (2) years from the date of
termination of employment.

Notwithstanding the foregoing, if a Change in Control occurs and this Agreement
terminated prior to the Change in Control pursuant to Paragraph 7(c) by reason
of the discharge of the Executive by the Employer other than for Cause or
disability or by reason of the resignation of the Executive for Good Reason,
then Executive shall be deemed for purposes of this Paragraph 8(c) to have so
terminated pursuant to Paragraph 7(c) immediately following the date the Change
in Control occurs if it is reasonably demonstrated by Executive that such
earlier termination was (i) at the request of a third party who had taken steps
reasonably calculated to effect the Change in Control, or (ii) otherwise arose,
or the circumstances that precipitated the termination otherwise arose, in
connection with or in anticipation of the Change in Control.
<PAGE>

D. Effect on Other Amounts. The payments provided for in this Paragraph 8
shall be in addition to all other sums then payable and owing to Executive shall
be subject to applicable federal and state income and other withholding taxes
and shall be in full settlement and satisfaction of all of Executive's claims
and demands. Upon such termination of this Agreement, Employer shall have no
rights or obligations under this Agreement, other than its obligations under
this Paragraph 8, and Executive shall have no rights and obligations under this
Agreement, other than Executive's obligations under Paragraphs 12 and 13 hereof
(to the extent applicable).

E. Conditions. Any payments of benefits made or provided pursuant to this
Paragraph 8 are subject to the Executive's:

1. compliance with the provisions of Paragraphs 12 and 13 hereof (to
the extent applicable);

2. delivery to the Employer of an executed Release and Severance
Agreement, which shall be substantially in the form attached hereto as Exhibit
A, with such changes therein or additions thereto as needed under then
applicable law to give effect to its intent and purpose; and

3. delivery to the Employer of a resignation from all offices,
directorships and fiduciary positions with the Employer, its affiliates and
employee benefit plans.

Notwithstanding the due date of any post-employment payments, any amounts due
under this Paragraph 8 shall not be due until after the expiration of any
revocation period applicable to the Release and Severance Agreement.

IX. Certain Additional Payments by the Employer.

A. Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Employer to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Paragraph 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, (the "Code") or if any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payment.

"Accounting Firm") in consultation with counsel acceptable to Executive, which
shall provide detailed supporting calculations both to the Employer and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Employer. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change in Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder) in consultation with counsel
acceptable to Executive. All fees and expenses of the Accounting Firm and such
counsel shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 9, shall be paid by the Employer to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any good faith determination by the Accounting Firm shall be binding
upon the Employer and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Employer exhausts its remedies pursuant to paragraph (c), below, and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Employer to or for the
benefit of the Executive.

C. The Executive shall notify the Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Employer of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after the Executive is
informed in writing of such claim and shall apprise the Employer of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)-
day period following the date on which Executive gives such notice to the
Employer (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Employer notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

1. Give the Employer any information reasonably requested by the
Employer relating to such claim,

2. Take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Employer,

3. Cooperate with the Employer in good faith in order effectively to
contest such claim, and

4. Permit the Employer to participate in any proceedings relating to
such claim;
<PAGE>

provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this paragraph (c), the Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner; and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Employer shall
determine; provided, however, that if the Employer directs the Executive to pay
such claim and sue for a refund, the Employer shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Employer's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

D. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to paragraph (c), above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Employer's complying with the requirements of said paragraph (c)) promptly
pay to the Employer the amount of such refund (together with any interest paid
or credited thereon, after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Employer pursuant to said paragraph
(c), a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Employer does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance shall
be forgiven and shall not be required to be repaid; and the amount of such
advance shall offset, to the extent thereof, the amount of the Gross-Up Payment
required to be paid.

X. Dispute Resolution. In the event any dispute arises and the parties after
good faith efforts are unable to agree as to the calculation of the amounts
payable under this Agreement, it shall be settled in accordance with the
majority opinion of a committee consisting of an accountant chosen by the
Employer, an accountant chosen by Executive and an independent accountant
acceptable to both Executive and the Employer, as the case may be. The
committee's determination shall be binding and conclusive on the parties hereto.
The Employer shall pay all fees and expenses of the dispute resolution.

to the prime rate (as from time to time published in The Wall Street Journal
(Midwest Edition) plus four percent (4%) per annum. The Employer agrees that
Executive and any successor shall be entitled to recover all costs of enforcing
any provision of this Agreement, including reasonable attorneys' fees and costs
of litigation.

XII. Confidential Information. Executive shall not at any time during or
following his employment hereunder, directly or indirectly, disclose or use on
his behalf or another's behalf, publish or communicate, except in the course of
his employment and in the pursuit of the business of the Employer or any of its
subsidiaries or affiliates, any proprietary information or data of the Employer
or any of its subsidiaries or affiliates, which is not generally known in the
banking business and which the Employer may reasonably regard as confidential
and proprietary. Executive recognizes and acknowledges that all knowledge and
information which he has or may acquire in the course of his employment, such
as, but not limited to the business, developments, procedures, techniques,
activities or services of the Employer or the business affairs and activities of
any customer, prospective customer, individual firm or entity doing business
with the Employer are its sole valuable property, and shall be held by Executive
in confidence and in trust for their sole benefit. All records of every nature
and description which come into Executive's possession, whether prepared by him,
or otherwise, shall remain the sole property of the Employer and upon
termination of his employment for any reason, said records shall be left with
the Employer as part of its property.

XIII. Non-Competition. Executive acknowledges that the Employer and its
affiliates and subsidiaries by nature of their respective businesses have a
legitimate and protectable interest in their clients, customers and employees
with whom they have established significant relationships as a result of a
substantial investment of time and money, and but for his employment hereunder,
he would not have had contact with such clients, customers and employees.
Executive agrees that during the period of his employment with the Employer and
for a period of one (1) year after termination of his employment for any reason
(other than termination of employment by resignation for Good Reason prior to a
Change in Control or for any reason upon or after a Change in Control) (the
"Non-Compete Period"), he will not (except in his capacity as an employee of the
Employer) directly or indirectly, for his own account, or as an agent, employee,
director, owner, partner, or consultant of any corporation, firm, partnership,
joint venture, syndicate, sole proprietorship or other entity which has a place
of business (whether as a principal, division, subsidiary, affiliate, related
entity, or otherwise) located within the Market Area (as hereinafter defined):

A. solicit or induce, or attempt to solicit or induce any client or
customer of the Employer or any of its subsidiaries or affiliates not to do
business with the Employer or any of its subsidiaries or affiliates; or

B. solicit or induce, or attempt to solicit or induce, any employee or
agent of the Employer or any of its subsidiaries or affiliates to terminate his
or her relationship with the Employer or any of its subsidiaries or affiliates.

For purposes of this Agreement, "Market Area" shall be an area encompassed
within a twenty-five (25) mile radius surrounding any place of business of the
Employer or of any of its subsidiaries or affiliates (existing or planned as of
the Date of Termination of employment).
<PAGE>

Non-Compete Period and an area encompassing a twenty-five (25) mile radius
surrounding the Executive's primary employment location in year two (2) of the
Non-Compete Period. For purposes of this Agreement, "Executive's primary
employment location" shall be defined to mean that place of employment where
Executive spends the greatest amount of his/her working time.

The foregoing provisions shall not be deemed to prohibit (i) Executive's
ownership, not to exceed ten percent (10%) of the outstanding shares, of capital
stock of any corporation whose securities are publicly traded on a national or
regional securities exchange or in the over-the-counter market or (ii) Executive
serving as a director of other corporations and entities to the extent these
directorships do not inhibit the performance of his duties hereunder or conflict
with the business of the Employer.

XIV. Remedies. Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the provisions of
Paragraphs 12 and 13 will not cause him/her undue hardship and that said
provisions are reasonably necessary and commensurate with the need to protect
the Employer and its legitimate and proprietary business interests and property
from irreparable harm. Executive acknowledges and agrees that (a) a breach of
any of the covenants and provisions contained in Paragraphs 12 or 13 above, will
result in irreparable harm to the business of the Employer, (b) a remedy at law
in the form of monetary damages for any breach by him of any of the covenants
and provisions contained in Paragraphs 12 and 13 is inadequate, (c) in addition
to any remedy at law or equity for such breach, the Employer shall be entitled
to institute and maintain appropriate proceedings in equity, including a suit
for injunction to enforce the specific performance by Executive of the
obligations hereunder and to enjoin Executive from engaging in any activity in
violation hereof and (d) the covenants on his part contained in Paragraphs 12
and 13, shall be construed as agreements independent of any other provisions in
this Agreement, and the existence of any claim, setoff or cause of action by
Executive against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense or bar to the specific enforcement by
the Employer of said covenants. In the event of a breach or a violation by
Executive of any of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation thereunder), shall
be tolled during the period of the continuance of any actual breach or
violation.

XV. Notices. Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to any party (a)
upon delivery to the address of such party specified below if delivered
personally or by courier; (b) upon dispatch if transmitted by telecopy or other
means of facsimile, provided a copy thereof is also sent by regular mail or
courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S.
mail, postage prepaid, for delivery as certified mail, return receipt requested,
addressed, in any case to the party at the following address(es) or telecopy
numbers:

A. If to Executive, at the address set forth on the signature page hereof.
<PAGE>

B. If to the Employer:

PrivateBancorp, Inc.
Ten North Dearborn Street
Suite 900
Chicago, IL 60602
Attn: Mr. Donald A. Roubitchek
Telecopy No.: (312) 683-7111

with a copy to:

Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601-1003
Attn: Mr. Robert J. Stucker
Telecopy No.: (312) 609-5005

or to such other address(es) or telecopy number(s) as any party may designate by
Written Notice in the aforesaid manner.

XVI. Indemnification.

A. In the event that legal action is instituted against Executive during or
after the term hereof by a third party (or parties) based on the performance or
nonperformance by Executive of his duties hereunder, the Employer will assume
the defense of such action by its attorneys or attorneys selected by Executive
reasonably satisfactory to the Employer and advance the costs and expenses
thereof (including reasonable attorneys' fees) without prejudice to or waiver by
the Employer of its rights and remedies against Executive. In the event that
there is a final judgment entered against Executive in any such litigation, and
the Employer's Board of Directors determines that Executive should, in
accordance with its charter, By-Laws, or insurance reimburse such entities,
Executive shall be liable to the Employer for all such costs and expenses paid
or incurred by them in the defense of any such litigation (the "Reimbursement
Amount"). The Reimbursement Amount shall be paid by Executive within thirty (30)
days after rendition of the final judgment. The Employer shall be entitled to
set off the reimbursement amount against all sums which may be owed or payable
by the Employer to Executive hereunder or otherwise. The parties shall cooperate
in the defense of any asserted claim, demand or liability against Executive or
the Employer or its subsidiaries or affiliates. The term "final judgment" as
used herein shall be defined to mean the decision of a court of competent
jurisdiction, and in the event of an appeal, then the decision of the appellate
court, after petition for rehearing has been denied, or the time for filing the
same (or the filing of further appeal) has expired.

B. The rights to indemnification under this Section 16 shall be in
addition to any rights which Executive may now or hereafter have under the
charter or By-laws of the Employer or any of its affiliates or subsidiaries,
under any insurance contract maintained by the Employer or any of its affiliates
or subsidiaries, or any agreement between Executive and the Employer or any of
its affiliates or subsidiaries.
<PAGE>

XVII. Full Settlement; No Mitigation. The Employer's obligation to make the
payments and provide the benefits provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Employer may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not the Executive obtains other employment.

XVII. Payment in the Event of Death. In the event payment is due and owing by
the Employer to Executive under this Agreement upon the death of Executive,
payment shall be make to such beneficiary as Executive may designate in writing,
or failing such designation, then the executor of his estate, in full settlement
and satisfaction of all claims and demands on behalf of Executive, shall be
entitled to receive all amounts owing to Executive at the time of death under
this Agreement. Such payments shall be in addition to any other death benefits
of the Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.

XIX. Entire Understanding. This Agreement constitutes the entire understanding
between the parties relating to Executive's employment hereunder and supersedes
and cancels all prior written and oral understandings and agreements with
respect to such matters, except to the extent to which Executive may have
entered into certain Split-Dollar Life Insurance Agreements, which agreement(s)
shall remain in full force and effect, and except for the terms and provisions
of any employee benefit or other compensation plans (or any agreements or awards
thereunder), referred to in this Agreement, or as otherwise expressly
contemplated by this Agreement.

XX. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the successors and
assigns of the Employer. The Employer shall require any successor (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
substantial portion of its assets, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Employer in accordance with the operation of
law, and such successor shall be deemed the "Employer" for purposes of this
Agreement.

XXI. Tax Withholding. The Employer shall provide for the withholding of any
taxes required to be withheld by federal, state, or local law with respect to
any payment in cash, shares of stock and/or other property made by or on behalf
of the Employer to or for the benefit of the Executive under this Agreement or
otherwise. The Employer may, at its option: (a) withhold such taxes from any
cash payments owing from the Employer to the Executive, (b) require the
Executive to pay to the Employer in cash such amount as may be required to
satisfy such withholding obligations and/or (c) make other satisfactory
arrangements with the Executive to satisfy such withholding obligations.
<PAGE>

XXII. No Assignment. Except as otherwise expressly provided herein, this
Agreement is not assignable by any party and no payment to be made hereunder
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or other charge.

XXIII. Execution in Counterparts. This Agreement may be executed by the parties
hereto in two (2) or more counterparts, each of which shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

XXIV. Jurisdiction and Governing Law. Except as provided in Paragraph 10,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the State of Illinois, and this Agreement shall be construed and
interpreted in accordance with and governed by the laws of the State of
Illinois, without regard to the choice of laws provisions of such laws.

XXV. Severability. If any provision of this Agreement shall be adjudged by any
court of competent jurisdiction to be invalid or unenforceable for any reason,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement. Furthermore, if the scope of any restriction or requirement contained
in this Agreement is too broad to permit enforcement of such restriction or
requirement to its full extent, then such restriction or requirement shall be
enforced to the maximum extent permitted by law, and the Executive consents and
agrees that any court of competent jurisdiction may so modify such scope in any
proceeding brought to enforce such restriction or requirement.

XXVI. Waiver. The waiver of any party hereto of a breach of any provision of
this Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach.

XXVII. Amendment. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.

XXVIII. Construction. The language used in this Agreement will be deemed to be
the language chosen by Employer and Executive to express their mutual intent and
no rule of strict construction shall be applied against any person. Wherever
from the context it appears appropriate, each term stated in either the singular
of plural shall include the singular and the plural, and the pronouns stated in
either the masculine, the feminine or the neuter gender shall include the
masculine, feminine or neuter. The headings of the Paragraphs of this Agreement
are for reference purposes only and do not define or limit, and shall not be
used to interpret or construe the contents of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.

ATTEST: EMPLOYER

_________________________________ By:________________________________________
<PAGE>

Title:_____________________________________

EXECUTIVE

Address:_________________________
___________________________________________
_________________________________
Name: Ralph B. Mandell
-------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
<PAGE>

Exhibit A to Employment Agreement
---------------------------------

RELEASE AND SEVERANCE AGREEMENT
-------------------------------

THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this ____ day
of _________, _____ by and between PrivateBancorp, Inc. and its subsidiary
(collectively ("PBI") and ______________________________ (hereinafter
"EXECUTIVE").

EXECUTIVE'S employment with PBI terminated on __________, ______; and
EXECUTIVE has voluntarily agreed to the terms of this RELEASE AND SEVERANCE
AGREEMENT in exchange for severance benefits under the Employment Agreement
("Employment Agreement") to which EXECUTIVE otherwise would not be entitled.

NOW THEREFORE, in consideration for severance benefits provided under the
Employment Agreement, EXECUTIVE on behalf of himself and his spouse, heirs,
executors, administrators, children, and assigns does hereby fully release and
discharge PBI, its officers, directors, employees, agents, subsidiaries and
divisions, benefit plans and their administrators, fiduciaries and insurers,
successors, and assigns from any and all claims or demands for wages, back pay,
front pay, attorney's fees and other sums of money, insurance, benefits,
contracts, controversies, agreements, promises, damages, costs, actions or
causes of action and liabilities of any kind or character whatsoever, whether
known or unknown, from the beginning of time to the date of these presents,
relating to his employment or termination of employment from PBI, including but
not limited to any claims, actions or causes of action arising under the
statutory, common law or other rules, orders or regulations of the United States
or any State or political subdivision thereof including the Age Discrimination
in Employment Act and the Older Workers Benefit Protection Act.

EXECUTIVE acknowledges that EXECUTIVE'S obligations pursuant to Paragraphs
12 and 13, to the extent applicable, of the Employment Agreement relating to the
use or disclosure of confidential information shall continue to apply to
EXECUTIVE.

This Release and Settlement Agreement supersedes any and all other
agreements between EXECUTIVE and PBI except agreements relating to proprietary
or confidential information belonging to PBI, and any other agreements, promises
or representations relating to severance pay or other terms and conditions of
employment are null and void.

This release does not affect EXECUTIVE'S right to any benefits to which
EXECUTIVE may be entitled under any employee benefit plan, program or
arrangement sponsored or provided by PBI, including but not limited to the
Employment Agreement and the plans, programs and arrangements referred to
therein.
<PAGE>

EXECUTIVE and PBI acknowledge that it is their mutual intent that the Age
Discrimination in Employment Act waiver contained herein fully comply with the
Older Workers Benefit Protection Act. Accordingly, EXECUTIVE acknowledges and
agrees that:

(a) The Severance benefits exceed the nature and scope of that to
which he would otherwise have been legally entitled to receive.

(b) Execution of this Agreement and the Age Discrimination in
Employment Act waiver herein is his knowing and voluntary act;

(c) He has been advised by PBI to consult with his personal attorney
regarding the terms of this Agreement, including the aforementioned waiver;

(d) He has had at least twenty-one (21) calendar days within which to
consider this Agreement;

(e) He has the right to revoke this Agreement in full within seven (7)
calendar days of execution and that none of the terms and provisions of
this Agreement shall become effective or be enforceable until such
revocation period has expired;

(f) He has read and fully understands the terms of this agreement; and

(g) Nothing contained in this Agreement purports to release any of
EXECUTIVE's rights or claims under the Age Discrimination in Employment Act
that may arise after the date of execution.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
indicated above.

PRIVATEBANCORP, INC., EXECUTIVE
for itself and its Subsidiary

By:_____________________________________ _____________________________________
Ralph B. Mandell
Its:____________________________________

<PAGE>

EMPLOYMENT AGREEMENT
--------------------

THIS AGREEMENT, made and entered into as of July 1, 1999 (the "Effective
Date"), by and between PrivateBancorp, Inc. (hereinafter called the "Employer"),
and Donald A. Roubitchek (hereinafter called the "Executive").

WITNESSETH THAT:

WHEREAS, the Employer desires to employ or to continue to employ the
Executive as its Chief Financial Officer, and the Executive desires to continue
in such employment;

NOW, THEREFORE, the Employer and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:

I. Employment and Term.

A. Employment. The Employer shall employ the Executive as the Chief
Financial Officer of the Employer, and the Executive shall so serve, for the
term set forth in Paragraph 1(b).

B. Term. The initial term of the Executive's employment under this
Agreement shall commence on July 1, 1999 and end on June 30, 2000, subject to
any extension of such term as may be mutually agreed upon and subject to earlier
termination as provided in Paragraph 7. Commencing ninety (90) days prior to
each anniversary date hereof, either the Board of Directors of the Employer, or
a duly authorized committee thereof (the "Board"), on behalf of the Employer,
and the Executive agree to negotiate in good faith regarding the possible
renewal of this Agreement for a successive term. Anything in this Agreement to
the contrary, if at any time during the Executive's period of employment under
this Agreement there is a Change in Control (as defined in Paragraph 7), the
term of this Agreement shall automatically extend to a date which is two (2)
years from the date of the Change in Control (and shall be further extended
pursuant to the foregoing provisions of this Paragraph 1(b), unless written
notice to the contrary is given in accordance with this Paragraph 1(b)).
<PAGE>

II. Duties and Responsibilities.

A. The duties and responsibilities of Executive are and shall continue to
be of an executive nature as shall be required by the Employer in the conduct of
its business. Executive's powers and authority shall be as prescribed by the by-
laws of the Employer and shall include all those presently delegated to him,
together with the performance of such other duties and responsibilities as from
time to time may be assigned to him by the Board of Directors of the Employer
consistent with the position(s) of Chief Financial Officer Executive recognizes,
that during the period of his employment hereunder, he owes an undivided duty of
loyalty to the Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities and to use his
best efforts to promote and develop the business of the Employer. Executive will
not perform any duties for any other business without the prior written consent
of the Employer, and may engage in charitable, civic or community activities,
provided that such duties or activities do not materially interfere with the
proper performance of his duties under this Agreement. During the period of
employment, Executive agrees to serve as a director on the Board of Directors of
the Employer and/or any of its affiliates, as well as to serve as a member of
any committee of any said Board, to which he may be elected or appointed.

B. Notwithstanding that this Agreement provides for the employment of
Executive in his present capacity as the Employer's Chief Financial Officer,
nothing herein contained shall assure Executive, nor in any manner be construed
to constitute an agreement by the Employer to continue the employment of
Executive after the expiration of this Agreement in such capacity or in any
other capacity.

III. Salary.

A. Base Salary. For services performed by the Executive for the Employer
pursuant to this Agreement during the period of employment as provided in
Paragraph 1(b) hereof, the Employer shall pay the Executive a base salary at the
rate of One hundred forty-five thousand dollars ($145,000) per year, payable in
substantially equal installments in accordance with the Employer's regular
payroll practices. The Executive's base salary (with any increases under
paragraph (b), below) shall not be subject to reduction without the Executive's
written consent. Any compensation which may be paid to the Executive under any
additional compensation or incentive plan of the Employer or which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the base salary to which the Executive shall be
entitled under this Agreement. Executive's base salary shall be subject to
review from time to time, and the Employer may (but is not required to) increase
the base salary as the Board (or a duly authorized committee thereof), in its
discretion, may determine.
<PAGE>

VI. Other Benefits. In addition to the compensation described in Paragraphs 3,
4 and 5, above, the Executive shall also be entitled to the following:

VII. Termination. Unless earlier terminated in accordance with the following
provisions of this Paragraph 7, the Employer shall continue to employ the
Executive and the Executive shall remain employed by the Employer during the
entire term of this Agreement as set forth in Paragraph 1(b). Paragraph 8 hereof
sets forth certain obligations of the Employer in the event that the Executive's
employment hereunder is terminated. Certain capitalized terms used in this
Paragraph 7 and in Paragraph 8 hereof are defined in Paragraph 7(d), below.

B. Discharge for Cause. In accordance with the procedures hereinafter set
forth, the Board may discharge the Executive from his employment hereunder for
Cause (as hereinafter defined). Except to the extent otherwise provided in
Paragraph 8 with respect to certain post-Date of Termination obligations of the
Employer, this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any discharge of
the Executive for Cause shall be communicated by a Notice of Termination to the
Executive given in accordance with Paragraph 15 of this Agreement.

D. Definitions. For purposes of this Agreement, the following capitalized
terms shall have the meanings set forth below:

3. "Change in Control" shall mean the occurrence of any one of the
following events:

or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or

d. the stockholders of PrivateBancorp approve a plan of complete
liquidation or dissolution of PrivateBancorp.

2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of
<PAGE>

his prior year's bonus amount (if any) based on the number of days elapsed
during the year through the Date of Termination;

3. Continuation for a period of twelve (12) months (the "Severance
Period") of his then current annual base salary, payable in substantially equal
installments in accordance with the Employer's regular payroll practices;

5. Outplacement counseling, the scope and provider of which shall be
selected by the Employer for a period beginning on the Date of Termination and
ending on the date the Executive is first employed elsewhere or otherwise is
provided compensated services of any type (including self-employment), provided
that in no event shall such outplacement services be provided for a period
greater than one (1) year.

The Executive shall provide such information as the Employer may reasonably
request to determine Executive's continued eligibility for the payments and
benefits provided by this Paragraph 8(b).

2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of
<PAGE>

his prior year's bonus amount (if any) based on the number of days elapsed
during the year through the Date of Termination;

3. The Employer shall pay the Executive a lump sum payment within
thirty (30) days after such termination of employment in the amount of two (2)
times the sum of the following:

a. the amount of Executive's annual base salary determined as of
the Date of Termination, or the date immediately preceding the date of the
Change in Control, whichever is greater; plus

c. the sum of:

(2) the annual value of the Other Benefits described in
Paragraph 6(a) and (c) above.

For purposes of paragraph (C)(I) above, the annual value of the contributions
and accruals to or under the employee benefit plans shall be determined on the
basis of the actual rate of contributions or accruals, as applicable, and the
provisions of the plans as in effect during the calendar year immediately
preceding the date of the Change in Control, or if the value so determined would
be greater, during the calendar year immediately preceding the Date of
Termination. The "annual value" of the executive perquisites described in
Paragraph 6(c) for purposes of paragraph (C)(II) above shall be 7.5% of the
annual base salary amount applicable under clause (iii)(A) above.

terminated pursuant to Paragraph 7(c) immediately following the date the Change
in Control occurs if it is reasonably demonstrated by Executive that such
earlier termination was (i) at the request of a third party who had taken steps
reasonably calculated to effect the Change in Control, or (ii) otherwise arose,
or the circumstances that precipitated the termination otherwise arose, in
connection with or in anticipation of the Change in Control.

E. Conditions. Any payments of benefits made or provided pursuant to this
Paragraph 8 are subject to the Executive's:

1. compliance with the provisions of Paragraphs 12 and 13 hereof (to
the extent applicable);

3. delivery to the Employer of a resignation from all offices,
directorships and fiduciary positions with the Employer, its affiliates and
employee benefit plans.

IX. Certain Additional Payments by the Employer.

thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.

B. Subject to the provisions of paragraph (c), below, all determinations
required to be made under this Paragraph 9, including whether and when a Gross-
Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
the independent public accountants then regularly retained by the Employer (the
"Accounting Firm") in consultation with counsel acceptable to Executive, which
shall provide detailed supporting calculations both to the Employer and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Employer. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change in Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder) in consultation with counsel
acceptable to Executive. All fees and expenses of the Accounting Firm and such
counsel shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 9, shall be paid by the Employer to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any good faith determination by the Accounting Firm shall be binding
upon the Employer and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Employer exhausts its remedies pursuant to paragraph (c), below, and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Employer to or for the
benefit of the Executive.

1. Give the Employer any information reasonably requested by the
Employer relating to such claim,
<PAGE>

3. Cooperate with the Employer in good faith in order effectively to
contest such claim, and

4. Permit the Employer to participate in any proceedings relating to
such claim;

XI. Enforcement. In the event the Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, the Employer agrees to pay
interest on such amounts at a rate equal to the prime rate (as from time to time
published in The Wall Street Journal (Midwest Edition) plus four percent (4%)
per annum. The Employer agrees that Executive and any successor shall be
entitled to recover all costs of enforcing any provision of this Agreement,
including reasonable attorneys' fees and costs of litigation.

other means of facsimile, provided a copy thereof is also sent by regular mail
or courier; or (c) within forty-eight (48) hours after deposit thereof in the
U.S. mail, postage prepaid, for delivery as certified mail, return receipt
requested, addressed, in any case to the party at the following address(es) or
telecopy numbers:

A. If to Executive, at the address set forth on the signature page hereof.

B. If to the Employer:

PrivateBancorp, Inc.
Ten North Dearborn Street
Suite 900
Chicago, IL 60602
Attn: Mr. Ralph B. Mandell
Telecopy No.: (312) 683-7111

with a copy to:

Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601-1003
Attn: Mr. Robert J. Stucker
Telecopy No.: (312) 609-5005

or to such other address(es) or telecopy number(s) as any party may designate by
Written Notice in the aforesaid manner.

XVI. Indemnification.

and in the event of an appeal, then the decision of the appellate court, after
petition for rehearing has been denied, or the time for filing the same (or the
filing of further appeal) has expired.

B. The rights to indemnification under this Section 16 shall be in addition
to any rights which Executive may now or hereafter have under the charter or By-
laws of the Employer or any of its affiliates or subsidiaries, under any
insurance contract maintained by the Employer or any of its affiliates or
subsidiaries, or any agreement between Executive and the Employer or any of its
affiliates or subsidiaries.

XVIII. Payment in the Event of Death. In the event payment is due and owing
by the Employer to Executive under this Agreement upon the death of Executive,
payment shall be make to such beneficiary as Executive may designate in writing,
or failing such designation, then the executor of his estate, in full settlement
and satisfaction of all claims and demands on behalf of Executive, shall be
entitled to receive all amounts owing to Executive at the time of death under
this Agreement. Such payments shall be in addition to any other death benefits
of the Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.

XXVI. Waiver. The waiver of any party hereto of a breach of any provision of
this Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach.

XXVII. Amendment. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.

XXVIII. Construction. The language used in this Agreement will be deemed to be
the language chosen by Employer and Executive to express their mutual intent
and no rule of strict construction shall be applied against any person.
Wherever from the context it appears appropriate, each term stated in either the
singular of plural shall include the singular and the plural, and the pronouns
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine or neuter. The headings of the Paragraphs of this
Agreement are for reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this Agreement.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.

ATTEST: EMPLOYER

______________________________________ By:____________________________________

Title:_________________________________

EXECUTIVE

Address:______________________________ _______________________________________

______________________________________ Name: Donald A. Roubitchek
---------------------------------
______________________________________ Title: Chief Financial Officer
--------------------------------
<PAGE>