10-K

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                                       or

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

             For the transition period from _________ to __________

                        Commission File Number: 000-25887

                              PRIVATEBANCORP, INC.
             (Exact name of Registrant as specified in its charter)

                DELAWARE                                  36-3681151
     (State or other jurisdiction                      (I.R.S. Employer
   of incorporation or organization)                Identification Number)

                Ten North Dearborn Street Chicago, Illinois 60602
                    (Address of principal executive offices)

                                 (312) 683-7100
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, no par value

                   9.50% Cumulative Trust Preferred Securities
                    (and the Guarantee with respect thereto)

Indicate by checkmark whether the Registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of the voting common equity of the Registrant held by
non-affiliates of the Registrant was approximately $107,273,278 based on the
closing price of the common stock of $20.10 on June 30, 2002, as reported by the
NASDAQ National Market.

As of February 28, 2003, the Registrant had outstanding 7,738,164 shares of
common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Proxy Statement for the 2003 Annual Meeting of
Stockholders are incorporated by reference into Part III.



                                    FORM 10-K

                                TABLE OF CONTENTS



                                                                                                                   PAGE
                                                                                                                  NUMBER
                                                                                                                
PART I
   Item 1.     Business...........................................................................................   2
   Item 2.     Properties.........................................................................................  22
   Item 3.     Legal Proceedings..................................................................................  23
   Item 4.     Submission of Matters to a Vote of Security Holders................................................  23

PART II
   Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters..............................  24
   Item 6.     Selected Financial Data............................................................................  25
   Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations .............  28
   Item 7A.    Quantitative and Qualitative Disclosures about Market Risk.........................................  46
   Item 8.     Financial Statements and Supplementary Data........................................................  48
   Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..............  48

PART III
   Item 10.    Directors and Executive Officers...................................................................  49
   Item 11.    Executive Compensation.............................................................................  49
   Item 12.    Security Ownership of Certain Beneficial Owners and Management.....................................  49
   Item 13.    Certain Relationships and Related Transactions.....................................................  49
   Item 14.    Controls and Procedures............................................................................  50

PART IV
   Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K....................................  50

Index to Consolidated Financial Statements........................................................................ F-1


                                        1




                                     PART I

ITEM 1.   BUSINESS

OVERVIEW

         We organized PrivateBancorp as a Delaware corporation in 1989 to serve
as the holding company for a Chicago-based de novo (or start-up) bank designed
to provide highly personalized financial services primarily to affluent
individuals, professionals, entrepreneurs and their business interests. We were
one of the first banks newly formed in the Chicago area at that time. The
organizers had significant senior level banking experience and many potential
client contacts from prior banking positions.

         As the financial industry has consolidated, and smaller, independent
banks have been acquired by national, multi-bank holding companies, 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 have been accustomed to
dealing directly with senior bank executives. These clients typically seek
banking relationships managed by a decision-maker that can deliver a prompt
response to their requests and custom tailor a banking solution to meet their
needs. The St. Louis-based bank also focuses on clients who are seeking a higher
level of service and a broad array of personalized banking and wealth management
products and services. The PrivateBank (St. Louis) clients consist of
individuals, small to medium-size businesses, commercial real estate investors
and professionals.

         We have two banking subsidiaries--The PrivateBank and Trust Company,
which we also refer to as The PrivateBank (Chicago), and The PrivateBank, which
we also refer to as The PrivateBank (St. Louis). Using the European tradition of
"private banking" as our model, we provide our clients with traditional
individual and corporate banking services, including a variety of loan and
deposit products, and wealth management services. Our goal is to be the primary
source of financial products and services for our clients. We strive to develop
a valued relationship with our clients, using an experienced team of managing
directors, to serve each client's individual and corporate banking needs, and by
tailoring our products and services to consistently meet those needs.

         Our managing directors are strategically located in eight Midwestern
United States locations. Currently, we have seven offices in the Chicago
metropolitan area. These offices are strategically located in downtown Chicago;
in the affluent North Shore communities of Wilmette, Winnetka and Lake Forest;
in Oak Brook, centrally located in the fast growing west suburban DuPage County;
and in St. Charles and Geneva, in the far western Fox Valley area. We currently
operate from one location in the St. Louis market where we established The
PrivateBank (St. Louis), a federally chartered savings bank, in June 2000. On
December 30, 2002, we purchased a controlling interest in a Chicago-based
investment adviser, Lodestar Investment Counsel, LLC.

         Since year-end 1995 to December 31, 2002, we have grown our asset base
at a compound annual rate of 35% to $1.5 billion. During the same period, loans
have grown at a compound annual rate of 34% to $965,600, deposits at a compound
annual rate of 32% to $1.2 billion and trust assets under administration at a
compound annual rate of 22% to $757.8 million. Diluted earnings per share (EPS)
have grown at a compound annual rate of 30% to $1.42 (adjusted to reflect the
3-for-2 stock dividend effective January 17, 2003) since year-end 1995.

THE PRIVATEBANK APPROACH

..    We are a client-driven organization and believe we have developed a unique
     approach to private banking designed to provide our clients with superior
     service. We emphasize personalized client relationships and custom-tailored
     financial services, complemented by the convenience of technology. We
     target the affluent segment of the market because we believe that there is
     significant unmet demand for personalized services within this

                                        2



     segment, and also because we believe it offers significant growth
     potential. The key aspects of our private banking approach are:

..    Personal Relationships. Our approach begins with the development of strong,
     dedicated relationships with our clients. Each client is matched with a
     team of individuals headed by a managing director, who is our client's
     central point of contact with us. Our 18 managing directors, who are senior
     financial professionals, 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 that 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. The purpose of this
     approach is to give our clients a sense of security and continuity of
     personal service in their banking relationship. On the basis of this trust
     and confidence, we then 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. While we encourage our clients
     to contact us directly, we also utilize technology to complement and
     enhance client service. We offer products such as PrivateBank Access, our
     Internet banking service, Master Money debit cards and Private Line Access,
     our voice-response communication system, to enhance, not replace, personal
     contact. This technology allows us to afford our clients the convenience of
     accessing our services from remote locations at any time of day.

     Our clients may connect to Trust Plus Online Access, Private NetBanking,
and Business NetBanking directly through the Internet. Clients can also connect
to PrivateLine Access directly through the telephone. Business NetBanking became
available during 2001. Through Trust Plus Online Access, which became available
late in 2000, wealth management clients may access account balance and history
information in a read-only format through the Internet. Business NetBanking
allows clients to access deposit and loan information, initiate stop payments,
initiate bill payments, establish repetitive wire transfers and authorize
transactions that clear through the Automated Clearing House (ACH). Private
NetBanking and Business NetBanking are supported by a help desk that is staffed
60 hours per week. Currently, clients may:

..    access information regarding their wealth management account balances and
     recent transactions;

..    access deposit information;

..    transfer funds among deposit accounts;

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

..    export information to financial software packages;

..    access the Private NetBanking and Business NetBanking help desk which is
     staffed 24 hours a day, seven days a week; and

..    send e-mail messages to bank personnel.

     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 improve
and expand dual-delivery systems providing the quality of service to which our
clients are accustomed.

..    Affluent Target Client. In the Chicago and St. Louis metropolitan areas, we
     target affluent individuals, professionals, owners of closely-held
     businesses, and commercial real estate investors with annual incomes in
     excess of $150,000 and their business interests, because we believe that
     they have significant unmet demand for personalized financial services. We
     offer our services to those members of this segment who are focused on
     building and preserving wealth. Our clients include affluent individuals,
     professionals, entrepreneurs 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. 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. Although we generally
     target individuals with high annual incomes and net

                                        3



     worth, we also recognize the growth potential of certain young
     professionals and extend our services to those individuals whose incomes or
     net worth do not initially meet our criteria.

..    Customized Financial Services. In taking a long-term relationship approach
     with our clients, we are able to differentiate our services from the
     "one-size-fits-all" mentality of other financial institutions. Our clients
     use a wide variety of financial services beyond the traditional banking
     products, and we work with them to identify their particular needs and to
     develop and shape our services tailored to meet those needs. While we offer
     a portfolio of banking products, we believe that it is our personalized
     service that distinguishes us from our competitors. We encourage, not
     discourage, our clients to contact us. 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 many other banks, we do not
     have a lengthy chain of command. Our clients generally 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. Generally, we use an "on call" approach, rather than structured
     meetings, to approve credit. As the amount and the complexity of the credit
     increases, we often use a more traditional approval process.

..    Network of Comprehensive Financial Services. 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 wealth management
     clients. Our clients can either maintain their existing investment
     management relationships when they become wealth management clients, use
     our subsidiary, Lodestar, or use our approved 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, assist our
     clients in selecting 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 an independent insurance brokerage firm. 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 a registered securities
     broker-dealer firm through which we offer our clients on-site securities
     brokerage services.

STRATEGY FOR GROWTH

         We seek to enhance long-term stockholder value through internal growth,
expanded product lines and selective geographic expansion. We expect to continue
to evaluate possible acquisition candidates and new office locations and we
intend to pursue opportunities that we perceive to be attractive to the
long-term value of our franchise. Our growth strategy, which relies on our
development, maintenance, and expansion of our superior management group,
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 and 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. In particular, we seek to develop our
     wealth management business through our existing clients.

..    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, particularly in our newer offices. We
     believe that the growing need for private banking services in these markets
     is still largely unmet and we believe there is a significant opportunity to
     increase our client base in these offices, particularly in the wealth
     management area. Key to this strategy is attracting quality people. We hope
     to capitalize on our reputation and the reputations of our managing
     directors in increasing our market presence. Our managing directors, with
     their personal and professional contacts in the financial and corporate
     arenas, have been instrumental in developing

                                        4



     our business. 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 business 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.

..    Acquisition of Asset Management Firms. We intend to continue to direct our
     energies towards building the breadth and depth of our wealth management
     area. We are very focused on acquiring additional asset management and
     financial planning capabilities as well as other fee income generating
     lines of business. As part of this ongoing strategy, we acquired a
     controlling interest in Lodestar, a Chicago-based investment advisor, in
     December 2002.

..    Expanding into New Product Lines and Services. Our goal is to be the
     primary source of financial products and services for our clients. We
     believe that by broadening our product line and adding additional financial
     services not currently offered by us, we should be able to achieve an
     increase in our franchise value through diversification of our fee income
     and strengthening of our client relationships. To reach this goal, we
     intend to consider acquisitions, joint ventures or strategic alliances with
     other financial service 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 and help us develop new client relationships.

..    Expanding into New Markets. We believe that the trend toward bank
     consolidation and centralized decision-making that has created a demand for
     our private banking services is not unique to Chicago or St. Louis. As we
     identify other markets with over 1 million people in the Midwest that
     present opportunities for growth and development similar to those in the
     Chicago and St. Louis markets, we will consider selective geographic
     expansion through possible acquisitions of existing institutions or by
     establishing new banking offices. We organized The PrivateBank (St. Louis)
     as a federal savings bank to create flexibility in pursuing these
     geographic expansion opportunities.

THE PRIVATEBANK (CHICAGO) AND THE PRIVATEBANK (ST. LOUIS)

         We offer banking services to our clients at a personal level. We
believe 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. We offer 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. We tailor these products to meet the varied needs of our clients.
     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. We provide 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. In certain circumstances, we
     also provide construction lending for residential and commercial
     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 us 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.

                                        5



..    Wealth Management. Our services include investment management, personal
     trust and estate services, custodial services, retirement accounts and
     brokerage and investment services. Our trust personnel work with our
     clients to define objectives, goals and strategies for their investment
     portfolios. We assist the client with the selection of an outside
     investment manager and work to tailor the investment program accordingly.
     During 1999, we introduced PrivateBank Counselor, an asset allocation
     program that combines outside professional portfolio management with an
     investment plan that our wealth management personnel tailor to the
     individual client's personal financial goals. Our wealth management 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 management agent, trustee or executor,
     we often structure and periodically monitor the performance of the
     investment management of our clients' 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 wealth management area, including prompt
     collection and reinvestment of interest and dividend income, weekly
     valuation, tracking of tax information, customized reporting and ease of
     security settlement. We also offer retirement products such as individual
     retirement accounts, 401(k)s, IRA rollovers, 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.
     Wealth management services are currently offered at The PrivateBank (St.
     Louis) through the wealth management department of The PrivateBank
     (Chicago). In December 2002, we acquired a controlling interest in Lodestar
     Investment Counsel, a Chicago-based investment adviser. We expect that this
     acquisition will provide additional sources of revenue in our wealth
     management segment.

..    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 cards,
     and brokerage accounts. Some of our clients also use the 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 as well as domestic and international wire transfers and foreign
     currency exchange. Through our affiliations and contractual arrangements
     with an independent insurance brokerage firm and a registered securities
     broker-dealer firm, we offer insurance products and securities brokerage
     services.

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: (1) commercial real estate; (2) commercial; (3) residential
real estate; (4) personal; (5) home equity; and (6) construction. We have
adopted a loan policy that contains general lending guidelines and is subject to
review and revision by our board of directors. We extend credit consistent with
this comprehensive loan policy.

         The goal of our lending program is to meet the credit needs of our
diverse client base while using sound credit principles to protect our asset
quality. 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 to our clients. When extending credit, our decisions are
based upon our client's ability to repay the loan 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, which ensures that our loan review process remains independent
of the loan production and administration 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 the loan reviewer's findings,
delinquency trends, historical loan loss experience and current economic trends.

         Our legal lending limits, based on our banks' statements of financial
condition, are calculated to not exceed 25% of capital plus unencumbered
reserves. At December 31, 2002, The PrivateBank (Chicago)'s legal lending limit
was $25.5 million and The PrivateBank (St. Louis)'s legal lending limit was
$1.25 million. A bank's legal lending limit is the maximum amount of credit that
the bank may commit to any one individual or business entity after aggregating

                                        6



all related credit.

         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 gain a better understanding of our overall portfolio and credit
culture.

         Our chief credit officer, or his designee, is involved in all credit
decisions when the aggregate credit exposure is in excess of $250,000. The
loan/investment committee of The PrivateBank (Chicago) reviews all credit
decisions over $2.5 million and the loan/investment committee of The PrivateBank
(St. Louis) reviews all credit decisions over $250,000. Prior approval is
required for credit exposure in excess of $5.0 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 obtaining the approval of
credit officers as required by the loan policy. 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. As a thrift,
The PrivateBank (St. Louis) is required to maintain a specific percentage of its
loan portfolio in qualified residential real estate loans. To address this
regulatory requirement, from time to time, The PrivateBank (St. Louis) intends
to purchase qualifying loans from The PrivateBank (Chicago) in exchange for
loans generated in the St. Louis market that do not meet the criteria for
qualified-thrift-loans. We expect to price sales of loans between the banks so
as to allow each bank to achieve equal risk rewards from a yield perspective.
Prior to purchasing any loans, the chief credit officer of The PrivateBank
(Chicago) will apply the same credit policies and procedures as are followed for
any other loan approval. Likewise, The PrivateBank (St. Louis) will apply the
same lending discipline to loans purchased from The PrivateBank (Chicago) as it
does for externally generated loans.

         The following table sets forth our loan portfolio by category as of
December 31, 2002 and 2001:



                                           DECEMBER 31,   PERCENTAGE OF       DECEMBER 31,    PERCENTAGE OF
                                               2002        TOTAL LOANS            2001         TOTAL LOANS
                                           ------------   -------------       ------------    -------------
                                                               (DOLLARS IN THOUSANDS)
                                                                                            
Commercial real estate..................      $ 452,703              47%         $ 310,869               40%
Commercial..............................        165,993              17%           163,279               21%
Construction............................        123,204              13%            92,528               12%
Home equity.............................         80,776               8%            59,795                8%
Residential real estate.................         72,289               8%            89,889               11%
Personal................................         70,676               7%            64,411                8%
                                           ------------   -------------       ------------    -------------
Total loans.............................      $ 965,641             100%         $ 780,771              100%
                                           ============   =============       ============    =============


         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 our 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

                                        7



typically structure mini-permanent and permanent financing as adjustable rate
mortgages, or 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 during the
lock-in period. 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 addresses
selection of appraisers, appraisal standards, environmental issues and specific
requirements for different types of properties, and has been approved by our
board loan/investment committee.

         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. In
general, lines of credit 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.

         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 generally 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.

         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.

                                        8



         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 also 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.

         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. Frequently, 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. Knowing our borrowers is a key factor in originating
personal loans. 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.

         Personal loans are subject to the same approval process as all other
types of loans. Each loan is underwritten to ensure that it has 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 clients 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 and are based on 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 allow borrowers to 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.

                                        9



INVESTMENT ACTIVITIES

         The objective of our investment policy is to maximize income consistent
with asset/liability objectives, liquidity, asset quality and regulatory
constraints. The policy is to be reviewed at least annually by our board of
directors. Our board is provided quarterly 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 of agencies of the United States, bank-qualified tax-exempt
obligations of state and local political subdivisions, mortgage-backed pools,
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 buyer of such funds. The
purchase of federal funds are effectively short-term loans by us from other
banks.

         Our investment portfolio also includes equity investments in the
Federal Home Loan Bank of Chicago and the Federal Home Loan Bank of Des Moines.
We invest in the Federal Home Loan Bank in order to be a member, which qualifies
us to use their services including Federal Home Loan Bank borrowings. In
addition, we have purchased participations in pools of loans from Neighborhood
Housing Services ("NHS"). NHS is a not-for-profit organization that 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.

         Our Investment Committee has responsibility for the oversight of
management of our investment portfolio as well as the implementation of our
investment strategy. Our loan portfolio is primarily floating-rate and when
market rates decline, loans that are tied to floating rates reprice downward
immediately. Our investment portfolio is currently structured to perform well in
a 'rates down' scenario. Alternatively, in a 'rates up' environment, our loan
portfolio performs very well due to the large percentage of floating rate loans.
As currently structured, the investment portfolio will not outperform our loan
portfolio in a rates up environment. During periods of volatility, we actively
monitor the investment securities portfolio to maximize total returns in the
construct of our asset-liability management structure. The Investment Committee
meets periodically with our Asset-Liability Committee to discuss our investment
policies.

WEALTH 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 wealth management clients have long-standing 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 their 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;

..    advising beneficiaries; and

..    preparation of tax returns.

In addition to trust and estate administration, we offer:

..    financial planning accounts;

                                       10



..    investment agency accounts;

..    guardianship administration;

..    Section 1031 exchanges; and

..    custodial accounts.

         The average account value of trusts administered by us was
approximately $2.1 million as of December 31, 2002. We seek to continue to grow
our wealth management business as we expand our client base and our clients
increasingly reach retirement age and focus on their estate plans. Trust assets
under administration totaled $758.0 million at December 31, 2002. This is the
result of continued new business, which more than offset declines in existing
account balances due to deterioration in the equity markets throughout the year.
The acquisition of Lodestar Investment Counsel added $482.0 million of assets
under management as of December 31, 2002. On a consolidated basis, the Wealth
Management Area had approximately $1.2 billion in assets under management at
December 31, 2002. The following table indicates the breakdown of our trust
assets under administration at December 31, 2002 by account classification and
related gross revenue for the twelve months ended December 31, 2002 (not
including Lodestar):

                                                   AT OR FOR THE TWELVE MONTHS
                                                     ENDED DECEMBER 31, 2002
                                                   -----------------------------
                  ACCOUNT TYPE                       MARKET VALUE        REVENUE
                  ------------                     --------------        -------
                                                            (IN THOUSANDS)

Personal trust--managed..........................      $  247,530      $   1,295
Agency--managed..................................         181,599            907
Custody..........................................         277,598            580
Employee benefits--managed.......................          51,148             74
                                                       ----------      ---------
     Total.......................................      $  757,875      $   2,856


         We have chosen to outsource some of the investment management aspects
of our wealth management 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 help them select an investment
management firm to 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 a selected group of approved advisors. We
continue to direct our energies towards building the breadth and depth of our
wealth management area. To that end, The PrivateBank (Chicago) acquired Lodestar
Investment Counsel, a Chicago-based investment adviser with $482 million of
assets under management at December 31, 2002. Lodestar manages equity, balanced,
and fixed income accounts primarily for high net-worth individuals, retirement
plans and charitable organizations with investable assets in excess of $1.0
million, and shares a similar focus on highly personalized client service.

         Our wealth management 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 wealth management 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.

ASSET-LIABILITY MANAGEMENT COMMITTEE

         We have an asset/liability committee ("ALCO") comprised of selected
senior executives who are charged with

                                       11



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 its 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 quarterly 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.

COMPETITION

         We do business in the highly competitive financial services industry.
Our geographic market is primarily the greater Chicago and St. Louis
metropolitan areas. 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 us for one or more of the following: loans, deposits, wealth
management services, or investment products. Some of these firms have business
units that promote 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 and St. Louis
markets focused solely on offering an extended range of traditional banking and
wealth management 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 delivery of the superior levels of personal service and
responsiveness desired by our clients. For commercial and commercial real estate
lending, we compete with a number of major Chicago-area financial institutions
and suburban banks and, in the St. Louis market, with St. Louis-based financial
institutions and banking offices. For wealth management 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 and St. Louis-area financial institutions, some suburban banks, and
brokerage houses. For residential mortgage lending, we compete with banks,
savings and loans, mortgage brokers and numerous other financial services firms
offering mortgage loans in our market areas. 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, federally insured state
chartered banks, national banks and federal savings banks and may be able to
price loans and deposits more aggressively. In addition, the larger banking
organizations, investment banks and brokerage houses have significantly greater
resources than we do. As a result, some of our competitors have advantages over
us in name recognition and market penetration.

EMPLOYEES

         As of December 31, 2002, we had approximately 184 full-time equivalent
employees and an additional 6 full-time employees including our controlling
interest in Lodestar Investment Counsel, LLC. The salaries of all of our
employees are paid by either The PrivateBank (Chicago) or The PrivateBank (St.
Louis), with the exception of Messrs. Mandell and Svec and Lisa M. O'Neill, our
Director of Financial Reporting, a portion of whose salaries are paid by

                                       12



PrivateBancorp.

         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.

AVAILABLE INFORMATION

         Our Internet address is www.privatebankandtrust.com. We make available
at this address, free of charge, our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act as soon as reasonably practicable after we electronically file such material
with, or furnish it to, the SEC.

                                       13



                           SUPERVISION AND REGULATION

GENERAL

         Banking is a highly regulated industry. The following is a summary of
several applicable statutes and regulations. However, 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 the 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, as amended (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
the Federal Reserve.

         Minimum Capital Requirements. The Federal Reserve has adopted
risk-based capital requirements for assessing bank holding company capital
adequacy. These standards define capital and establish minimum capital ratios in
relation to assets, both on an aggregate basis and as adjusted for credit risks
and off-balance sheet exposures. Under the Federal Reserve's risk-based
guidelines applicable to PrivateBancorp, capital is classified into two
categories.

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

..    common stockholders' equity;

..    qualifying noncumulative perpetual preferred stock;

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

..    minority interests in the common equity accounts of consolidated
     subsidiaries.

less:

..    goodwill; and

..    specified intangible assets.

Tier 2, or "supplementary," capital consists of:

..    the allowance for loan and lease losses;

..    perpetual preferred stock and related surplus;

..    hybrid capital instruments;

..    unrealized holding gains on equity securities;

..    perpetual debt and mandatory convertible debt securities;

..    term subordinated debt, including 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

                                       14



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 has
established a minimum ratio of Tier 1 capital to total assets of 3% for strong
bank holding companies (those rated a composite "1" under the Federal Reserve's
rating system). For all other bank holding companies, the minimum ratio of Tier
1 capital to total assets is 4%. In addition, the Federal Reserve continues to
consider the Tier 1 leverage ratio (after deducting all intangibles) 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 state that banking organizations experiencing growth, whether
internally or by making acquisitions, are expected to maintain strong capital
positions substantially above the minimum levels.

         As of December 31, 2002, we had regulatory capital in excess of the
Federal Reserve's minimum requirements. Our total risk-based capital ratio at
December 31, 2002 was 8.29% and our leverage ratio was 5.47%.

         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 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, performing functions or
activities that may be performed by a trust company, or acting as an investment
or financial advisor. The Federal Reserve, as a matter of policy, may require a
bank holding company to be well-capitalized at the time of filing an acquisition
application and upon consummation of the acquisition. 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, except with respect to traditional
banking products, we may not condition a client's purchase of one of our
services on the purchase of another service. The passage of the
Gramm-Leach-Bliley Act, however, allows bank holding companies to become
financial holding companies. Financial holding companies do not face the same
prohibitions to entering into certain business transactions that bank holding
companies currently face. See the discussion of the Gramm-Leach-Bliley Act
below.

         Interstate Banking and Branching Legislation. Under the Interstate
Banking and Branching Efficiency Act, bank holding companies are allowed to
acquire banks across state lines subject to various requirements of the Federal
Reserve. 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. Under the Illinois Banking Act, any person who
acquires more than 10% of our stock may be required to obtain the prior approval
of the commissioner of the Illinois Office of Banks and Real Estate (the
"Commissioner"). Under the Change in Bank Control Act, a person may be required
to obtain the prior regulatory approval of the Federal Reserve before acquiring
the power to directly or indirectly control the management, operations or
policies of PrivateBancorp or before acquiring control of 10% or more of any
class of our outstanding voting stock.

         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

                                       15



holding companies.

         Under a longstanding policy of the Federal Reserve, we are expected to
act as a source of financial strength to our banking subsidiaries and to commit
resources to support them. The Federal Reserve takes the position that in
implementing this policy, it may require us to provide financial support when we
otherwise would not consider ourselves 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 could be dividends that we expect to
receive from our banking subsidiaries, our ability to pay dividends will depend
on the amount of dividends paid by our banking subsidiaries. We cannot be sure
that our banking subsidiaries will pay such dividends to us.

BANK REGULATION

         The PrivateBank (Chicago) is subject to supervision and examination by
the Commissioner and, as a non-member, FDIC-insured bank, to supervision and
examination by the Federal Deposit Insurance Corporation ("FDIC"). As an
affiliate of The PrivateBank (Chicago), we are also subject to examination by
the Commissioner. The PrivateBank (Chicago) is a member of the Federal Home Loan
Bank ("FHLB") of Chicago and may be subject to examination by the FHLB of
Chicago. The Federal Deposit Insurance Act ("FDIA") requires prior FDIC approval
for any merger and/or consolidation by or with another depository institution,
as well as for the establishment or relocation of any bank or branch office. The
FDIA also gives the FDIC the power to issue cease and desist orders. A cease and
desist order could either prohibit a bank from engaging in certain unsafe and
unsound bank activities or could require a bank to take certain affirmative
action. The FDIC also supervises compliance with the federal law and regulations
which, in addition to several other mandates, place restrictions on loans by
FDIC-insured banks to an executive officer, director or principal shareholder of
the bank, the bank holding company which owns the bank, and any subsidiary of
such bank holding company. The FDIC also examines The PrivateBank (Chicago) for
its compliance with statutes which restrict and, in some cases, prohibit certain
transactions between a bank and its affiliates. Among other provisions, these
laws place restrictions upon:

..    extensions of credit to the bank holding 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.

         Also, The PrivateBank (Chicago) is subject to restrictions with respect
to engaging in the issuance, underwriting, public sale or distribution of
certain types of securities and 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),

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

..    the amount of investment in The PrivateBank (Chicago) premises, and

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

         Furthermore, all banks are affected by the credit policies of the
Federal Reserve, which regulates 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.

                                       16



         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 PrivateBancorp and The
PrivateBank (Chicago) 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. The PrivateBank (Chicago) 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 $42.8 million of transaction accounts plus 10%
on the remainder. The first $5.5 million of otherwise reservable balances
(subject to adjustments by the Federal Reserve) are exempted from the reserve
requirements. The PrivateBank (Chicago) 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 FDIC, 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 the safety and soundness
guidelines 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 institution 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 have 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 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 critically
under-capitalized institutions. The capital-based prompt corrective action
provisions of FDICIA and its 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. Also, under
FDICIA, insured depository institutions with assets of $500 million or more at
the beginning of a fiscal year, must submit an annual report for that year,
including financial statements and a management report, to each of the FDIC, any
appropriate federal banking agency, and any appropriate bank supervisor. The
PrivateBank (Chicago) had assets of $500 million or more at the beginning of
fiscal year 2002, and must therefore provide an annual report as required by
FDICIA.

                                       17



         As of December 31, 2002, The PrivateBank (Chicago) had capital in
excess of the requirements for a "well-capitalized" institution under the prompt
corrective action provisions of FDICIA.

         Insurance of Deposit Accounts. Under FDICIA, as an FDIC-insured
institution, The PrivateBank (Chicago) is required to pay deposit insurance
premiums based on the risk it poses to the Bank Insurance Fund ("BIF"). The FDIC
has authority to raise or lower assessment rates on insured deposits in order to
achieve statutorily required reserve ratios in the insurance funds and to impose
special additional assessments. Each depository institution is assigned to one
of three capital groups: "well capitalized," "adequately capitalized" or
"undercapitalized." Within each capital group, institutions are assigned to one
of three supervisory subgroups: "A" (institutions with few minor weaknesses),
"B" (institutions which demonstrate weaknesses which, if not corrected, could
result in significant deterioration of the institution and increased risk of
loss to BIF), and "C" (institutions that pose a substantial probability of loss
to BIF unless effective corrective action is taken). 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
2002, The PrivateBank (Chicago) paid deposit insurance premiums in the aggregate
amount of $148,350. During 2001, The PrivateBank (St. Louis) paid deposit
insurance premiums in the aggregate amount of $38,017.

         Deposit insurance may be terminated by the FDIC upon a finding that an
institution has engaged in unsafe or unsound practices, 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. Such terminations can
only occur, if contested, following judicial review through the federal courts.
We do not know of any practice, condition or violation that might lead to
termination of our deposit insurance.

         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, or 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 tested in three areas: (a) lending,
to evaluate the institution's record of making loans in its assessment areas;
(b) investment, 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) service, 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 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.

         The PrivateBank (Chicago) was assigned a "satisfactory" rating in
February 2002 as a result of its last CRA examination.

     Bank Secrecy Act. Under the Bank Secrecy Act ("BSA"), a financial
institution is required to have systems in place to detect certain transactions,
based on the size and nature of the transaction. Financial Institutions are
generally required to report cash transactions involving more than $10,000 to
the United States Treasury. In addition, financial institutions are required to
file suspicious activity reports for transactions that involve more than $5,000
and which the financial institution knows, suspects or has reason to suspect
involves illegal funds, is designed to evade the requirements of the BSA or has
no lawful purpose. The USA PATRIOT Act of 2001, enacted in response to the
September 11, 2001 terrorist attacks, requires bank regulations to consider a
financial institutions compliance with the BSA when reviewing applications.
Finalized rulings regarding customer identification procedures are expected to
be released in 2003 by the United States Treasury Department for this Act.

     Compliance with Consumer Protection Laws. The PrivateBank (Chicago) 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 Mortgage Disclosure Act. Among other things, these acts:

                                       18



..    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 could
result. Such action could in turn 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 civil money
penalties, cease and desist orders, receivership, conservatorship or the
termination of deposit insurance.

         Impact of the Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act (the
"GLB Act") amended or repealed certain provisions of the Glass-Steagall Act and
other legislation that restricted the ability of bank holding companies,
securities firms and insurance companies to affiliate with one another. The GLB
Act has established a comprehensive framework to permit affiliations among
commercial banks, insurance companies and securities firms. Also, a bank holding
company that meets certain criteria may certify that it satisfies certain
criteria and become a financial holding company, and thereby engage in a broader
range of activity than permitted for a bank holding company.

         The GLB Act imposes new requirements on financial institutions with
respect to customer privacy by generally prohibiting disclosure of non-public
personal information to non-affiliated third parties unless the customer has
been given the opportunity to object and has not objected to such disclosure.
Financial institutions are further required to disclose their privacy policies
to customers annually. The FDIC and the other federal regulators have
promulgated implementing regulations outlining the duties or responsibilities of
financial institutions with regard to customer privacy. These regulations do not
supersede state regulations regarding privacy, except to the extent that state
regulations conflict with these regulations. The privacy regulations of the
Illinois Banking Act continue to apply to The PrivateBank, except to the extent
they conflict with the GLB Act and its implementing regulations.

         To the extent the GLB Act permits banks, securities firms and insurance
companies to affiliate, the financial services industry may experience further
consolidation. This consolidation could result in a growing number of larger
financial institutions that offer a wider variety of financial services than we
currently offer and that can aggressively compete in the markets we currently
serve.

         The PrivateBank (St. Louis). The PrivateBank (St. Louis) is a federally
chartered savings bank. Accordingly, it is governed by and subject to extensive
regulation, examination and supervision by the Office of Thrift Supervision
("OTS"), and is required to comply with the rules and regulations of the OTS
under the Home Owners' Loan Act ("HOLA"). As a federally chartered savings bank,
The PrivateBank (St. Louis) has greater flexibility in pursuing interstate
branching than an Illinois state bank. The activities of The PrivateBank (St.
Louis) are also governed by the Federal Deposit Insurance Act. The FDIC has
back-up regulatory authority over The PrivateBank (St. Louis). Although The
PrivateBank (St. Louis) has a different primary federal regulator from The
PrivateBank (Chicago), most, if not all,

                                       19



of the federal statutes and regulations applicable to The PrivateBank (Chicago)
are also applicable to The PrivateBank (St. Louis).

         Under such regulation and supervision, The PrivateBank (St. Louis) is
required to file reports with the OTS and the FDIC concerning its activities and
financial condition in addition to obtaining regulatory approvals prior to
establishing branches or entering into certain transactions such as mergers
with, or acquisitions of, other financial institutions. In addition, the
PrivateBank (St. Louis) is required in many situations to either apply to or
provide notice to the OTS before declaring a dividend. The OTS also conducts
periodic examinations to test The PrivateBank's (St. Louis) compliance with
various regulatory and safety and soundness requirements. This regulation and
supervision establishes a comprehensive framework of supervision and is intended
primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including discretion with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulatory requirements and policies, whether by the OTS, the
FDIC or the Congress, could have a material adverse impact on us, The
PrivateBank (St. Louis) and our operations.

         The PrivateBank (St. Louis) is also required to be a qualified thrift
lender ("QTL"). The HOLA requires savings institutions to meet a QTL test, under
which the institution is required to either qualify as a "domestic building and
loan association" under the Internal Revenue Code or maintain at least 65% of
its "portfolio assets" (total assets less (1) specified liquid assets up to 20%
of total assets; (2) intangibles, including goodwill; and (3) the value of
property used to conduct business) in certain "qualified thrift investments,"
(primarily residential mortgages and related investments, including certain
mortgage-backed securities) in at least nine months out of each twelve month
period. As part of its application process, The PrivateBank (St. Louis)
submitted a three-year business plan to the FDIC and the OTS which commits to
compliance with the QTL test among other objectives, including the maintenance
of sufficient capital. A savings institution that fails the QTL test is subject
to certain operating restrictions, such as not being able to retain or operate
out-of-state branches, and may be required to convert to a bank charter. In
meeting the QTL test, The PrivateBank (St. Louis) may be assisted by The
PrivateBank (Chicago) through the purchase by The PrivateBank (Chicago) of
certain loans and/or assets from The PrivateBank (St. Louis).

                                       20



               SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995

         This report contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We
intend such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and we are including this statement for purposes
of these safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe our future plans, strategies and expectations,
can generally be identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. Our ability to
predict results or the actual effect of future plans or strategies is inherently
uncertain and actual results may differ materially from the results discussed in
forward-looking statements. Factors which might cause such a difference include,
but are not limited to, further decline in market rates of interest and
fluctuations in loan and deposit pricing; greater than anticipated deterioration
in asset quality due to a prolonged economic downturn in the greater Chicago and
St. Louis metropolitan areas or nationally, or other unanticipated
circumstances; legislative or regulatory changes; adverse developments in our
loan or investment portfolios; significant increases in competition;
difficulties in identifying attractive acquisition opportunities or strategic
partners to complement our private banking approach; and the possible dilutive
effect of potential acquisitions or expansion. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.

                               EXECUTIVE OFFICERS

The following persons serve as executive officers of PrivateBancorp:

         Ralph B. Mandell (62), a director since 1989, is a co-founder of
PrivateBancorp and The PrivateBank (Chicago). A Managing Director of The
PrivateBank (Chicago) and a director of The PrivateBank (St. Louis), he has
served as Chairman and Chief Executive Officer of PrivateBancorp and The
PrivateBank (Chicago) 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. Prior to starting The PrivateBank (Chicago) 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.

         Gary S. Collins (44) has been a Managing Director of The PrivateBank
(Chicago) 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 the bank in 1991, he held senior
positions at several Chicago metropolitan area financial institutions, including
First Chicago Bank of Oak Park, First Colonial Bancshares and Avenue Bank of Oak
Park.

         Richard C. Jensen (57), has been a Director since January 2000.
Mr.Jensen has been a Managing Director of The PrivateBank (Chicago) since
November 1999. He became Chairman, Chief Executive Officer and a Managing
Director of The PrivateBank (St. Louis) upon receipt of its banking charter in
June 2000. From May 1998 until joining us, Mr. Jensen served as Chairman and
Chief Executive Officer of Missouri Holding, Inc. From March to May 1998, he
served as President and Chief Executive Officer of Royal Banks of Missouri. For
the previous 18 years, Mr. Jensen served in various executive positions with
National Bank and it predecessor, Boatmen's Bank, in St. Louis.

         Hugh H. McLean (44) has been a Managing Director of The PrivateBank
(Chicago) 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 from 1987 to 1990, where he was employed from 1980 to 1990.

         Kathleen Jackson (51) was named director of wealth management, Managing
Director and senior trust officer in August 2002. Ms. Jackson began her career
in 1978 as an agent with Aetna Life and Casualty. She left Aetna in the
mid-1980's to work in a variety of entrepreneurial endeavors advising financial
services companies on marketing and sales strategies. In 1993, she joined
Experian, a lending provider of direct marketing resources, as director of
marketing. Two years later she joined Bank One Investment Management Company,
Chicago (formerly

                                       21



First Chicago NBD Investment Management Company) as national sales manager. She
was promoted to senior managing director of product management in 1998. In 1999,
she joined The Chicago Trust Company, then a wholly owned subsidiary of
Alleghany Asset Management, as senior vice president responsible for P & L,
strategy and overall leadership of the $2 billion personal trust and investment
services business.

         James A. Ruckstaetter (56) has been a Managing Director since 1999 and
the Chief Credit Officer of The PrivateBank (Chicago) since January, 2002. His
diverse experience includes credit and loan administration, commercial lending
and residential real estate lending. Mr. Ruckstaetter's career spans 30 years
including various executive positions with leading Chicago area financial
institutions. From January 1998 until June 1999, he was President and CEO of Pan
American Bank, a community bank on the west side of Chicago. From September 1994
to December 1997, Mr. Ruckstaetter served as a Senior Vice President
Relationship Manager at Bank of America.

         Gary L. Svec (37), has been the Secretary/Treasurer and Chief Financial
Officer of PrivateBancorp since August 2000. Prior to joining the company,
Mr. Svec served as Vice President and as Investment and Asset/Liability
Specialist for Betzold, Berg, Nussbaum & Heitman, Inc., working with the firm's
financial institutions clients, from August 1995 to August 2000. He also served
as Chief Financial Officer of Betzold Berg Investment Management from
August 1995 to August 1998. From 1988 until July 1995, Mr. Svec was employed by
Crowe, Chizek & Company as an auditor, tax advisor and consultant to their
financial institutions group. Mr. Svec is a certified public accountant.
On January 27, 2003, Mr. Svec announced his intent to resign his position at
PrivateBancorp.

         William A. Goldstein (63), is the Chief Executive Officer of Lodestar
Investment Counsel, LLC, an investment advisory firm recently acquired by the
Company, and has over 39 years of experience in the investment industry. Mr.
Goldstein was appointed to the Board of Directors of The PrivateBank (Chicago)
in January 2003 following completion of the acquisition and is also considered
an executive officer of the Company. Prior to founding Lodestar in 1989, he was
a Principal in the founding of Burton J. Vincent, Chesley & Co. where he served
as Executive Vice President and Director. In 1983 the firm was acquired by
Prescott, Ball & Turben (a subsidiary of Kemper Corporation). There Mr.
Goldstein was Chairman and Director of Prescott Asset Management, and President
of Selected Special Shares, a publicly traded mutual fund.

ITEM 2.   PROPERTIES

         We currently have seven physical banking locations and recently added
the space of Lodestar Investment Counsel, LLC. We have a variety of renewal
options in each of our properties and certain rights to secure additional space.
The main offices of PrivateBancorp and The PrivateBank (Chicago) are located in
the central business and financial district of Chicago. We lease 35,579 square
feet comprising the entire second, seventh, 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.

         We established a north suburban office in the affluent North Shore area
located at 517 Green Bay Road, Wilmette, Illinois, in October 1994. We lease
approximately 5,300 square feet on the first floor of a commercial building.
This lease expires on June 30, 2004.

         In January 1997, we opened a third office of The PrivateBank (Chicago)
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, 2006.

         In January 2000, we opened our Fox Valley office at 24 South Second
Street, St. Charles, Illinois. The Company purchased this building from Towne
Square Realty in June of 2002. The branch currently pays rent to the Holding
company.

         In May 2001, we opened a second branch office in the Fox Valley area at
the Herrington Train Station at 308 Crescent Place in Geneva, Illinois. We lease
approximately 1,700 square feet within the commuter station building. This lease
expires March 1, 2006.

         Our St. Louis office is located at 1401 South Brentwood Boulevard, St.
Louis, Missouri. We lease approximately 12,400 square feet on the first and
second floors of a commercial building. This lease expires

                                       22



on February 4, 2009.

         Our offices in Lake Forest and Winnetka, Illinois, were both acquired
as part of the purchase of Johnson Bank Illinois. Our Lake Forest office is on
the first floor of a two-story office building located at 920 South Waukegan
Road, Lake Forest, Illinois. The lease is for approximately 9,400 square feet
and expires on July 31, 2005. Our Winnetka office leases approximately 5,100
square feet and is located at 1000 Green Bay Road, Winnetka, Illinois. This
lease expires on June 30, 2003.

         On December 31, 2002, The PrivateBank and Trust Company acquired a
controlling interest in an asset management company, Lodestar Investment
Counsel, LLC. Lodestar leases approximately 4,759 square feet in a building
located at 208 South Lasalle Street in downtown Chicago. The lease expires on
December 31, 2007.

ITEM 3.   LEGAL PROCEEDINGS

         From time to time, we may be party to various legal proceedings arising
in the normal course of our business. Since we act 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. Neither PrivateBancorp nor any of our subsidiaries is a
party to any pending material legal proceedings that we believe will have a
material adverse effect on our business, results of operations or financial
condition.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

                                       23



                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the NASDAQ National Market under the symbol
"PVTB." As of February 28, 2003, we had approximately 278 holders of record our
common stock. The table below sets forth the high and low sales prices of our
common stock as reported by NASDAQ for the periods indicated (on a
split-adjusted basis).

                                                            HIGH          LOW
                                                          ---------    ---------
           2002
             First Quarter.............................   $ 16.3333    $ 12.8000
             Second Quarter............................     21.9667      16.3333
             Third Quarter.............................     20.9267      15.4633
             Fourth Quarter............................     26.5533      20.5733

           2001
             First Quarter.............................   $ 10.6267     $ 6.2067
             Second Quarter............................     11.1533       9.0000
             Third Quarter.............................     12.6667      10.0000
             Fourth Quarter............................     13.3333      10.5933

         Holders of our common stock are entitled to receive dividends that the
board of directors may declare from time to time. We may only pay dividends out
of funds that are legally available for that purpose. Because consolidated net
income consists largely of the net income of our subsidiaries, dividend payments
to stockholders are dependent upon our receipt of dividends from our
subsidiaries. See "Supervision and Regulation" for a discussion of regulatory
restrictions on dividend declarations. Our dividend declaration is discretionary
and will depend on our earnings and financial condition, regulatory limitations,
tax considerations and other factors.

         We have paid quarterly dividends on our common stock since the third
quarter of 1995. While the 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 shows the history of
per share cash dividends declared and paid on our common stock for the last two
years.

           2002
              First Quarter.......................................     $ 0.020
              Second Quarter......................................       0.020
              Third Quarter.......................................       0.027
              Fourth Quarter......................................       0.027

           2001
              First Quarter.......................................     $ 0.017
              Second Quarter......................................       0.017
              Third Quarter.......................................       0.020
              Fourth Quarter......................................       0.020

EQUITY COMPENSATION PLAN INFORMATION

         Information regarding our equity compensation plans are included in our
Proxy Statement under the heading "Equity Compensation Plan Information" and is
incorporated herein by reference.

                                       24



ITEM 6.   SELECTED FINANCIAL DATA

The following table summarizes certain selected consolidated financial and other
data of PrivateBancorp at or for the periods indicated. The balance sheet and
statement of income data are derived from our December 31, 2002 consolidated
financial statements that have been audited by Ernst & Young LLP. This
information should be read in conjunction with our audited consolidated
financial statements and related notes included pursuant to Item 8 of this
report. See "Index to Consolidated Financial Statements" on page F-1.



                                                                                 YEAR ENDED DECEMBER 31,
                                                               --------------------------------------------------------------
                                                                  2002(1)         2001        2000          1999         1998
                                                               -----------      --------     --------     --------     --------
                                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                                       
SELECTED STATEMENT OF INCOME DATA:
INTEREST INCOME:
Loans, including fees........................................  $    52,560    $   50,975    $  48,633    $  26,597    $  19,619
Federal funds sold and interest-bearing deposits.............          126           244        1,058          330        2,181
Securities...................................................       19,156        14,377        7,455        5,141        3,492
                                                               -----------    ----------    ---------    ---------    ---------
     Total interest income...................................       71,842        65,596       57,146       32,068       25,292
                                                               -----------    ----------    ---------    ---------    ---------
INTEREST EXPENSE:
Interest-bearing demand deposits.............................          636           923          869          604          487
Savings and money market deposit accounts....................        7,328        11,365       13,711        7,671        6,651
Time deposits................................................       16,014        17,291       14,635        7,399        6,155
Funds borrowed...............................................        5,325         6,327        4,116          931           19
Long term debt - trust preferred securities..................        1,939         1,731           --           --           --
                                                               -----------    ----------    ---------    ---------    ---------
    Total interest expense...................................       31,242        37,637       33,331       16,605       13,312
                                                               -----------    ----------    ---------    ---------    ---------
     Net interest income.....................................       40,600        27,959       23,815       15,463       11,980
Provision for loan losses....................................        3,862         3,179        1,690        1,208          362
                                                               -----------    ----------    ---------    ---------    ---------
     Net interest income after provision for loan losses.....       36,738        24,780       22,125       14,255       11,618
                                                               -----------    ----------    ---------    ---------    ---------
NON-INTEREST INCOME:
Banking, trust services and other income.....................        7,081         4,028        3,077        1,947        1,280
Securities gains.............................................           11         2,095           92           57           40
Trading losses...............................................         (943)           --           --           --           --
                                                               -----------    ----------    ---------    ---------    ---------
  Total non-interest income..................................        6,149         6,123        3,169        2,004        1,320
                                                               -----------    ----------    ---------    ---------    ---------
NON-INTEREST EXPENSE:
Salaries and employee benefits...............................       13,979         9,111        8,174        5,156        4,077
Severance charge.............................................           --            --          562           --           --
Occupancy expense, net.......................................        4,891         4,158        2,987        1,563        1,379
Data processing..............................................        1,509         1,295          820          478          508
Marketing....................................................        1,648         1,208        1,202          692          567
Professional fees............................................        3,689         2,939        2,135        1,295          561
Goodwill amortization........................................           --           824          731           --           --
Insurance....................................................          455           354          303          214          134
Towne Square Financial Corporation acquisition...............           --            --           --        1,300           --
Other expense................................................        2,436         2,763        1,692        1,389          863
                                                               -----------    ----------    ---------    ---------    ---------
     Total non-interest expense..............................       28,607        22,652       18,606       12,087        8,089
                                                               -----------    ----------    ---------    ---------    ---------
     Income before income taxes..............................       14,280         8,251        6,688        4,172        4,849
Income tax provision.........................................        3,273         2,051        2,263        1,257        1,839
                                                               -----------    ----------    ---------    ---------    ---------
     Net income..............................................  $    11,007    $    6,200    $   4,425    $   2,915    $   3,010
                                                               ===========    ==========    =========    =========    =========

PER SHARE DATA (2):
Basic earnings...............................................  $      1.49    $     0.88    $    0.64    $    0.49    $    0.61
Diluted earnings.............................................  $      1.42          0.85         0.62         0.46         0.57
Dividends....................................................         0.09          0.07         0.07         0.07         0.05
Book value (at end of period)................................        11.56          8.65         7.82         6.84         5.69

SELECTED FINANCIAL CONDITION DATA (AT END OF PERIOD):
Total securities(3)..........................................  $   487,020    $  332,933    $ 172,194    $  71,134    $ 116,891
Total loans..................................................      965,641       780,771      598,724      397,277      281,965
Total assets.................................................    1,543,414     1,176,768      829,509      518,697      416,308
Total deposits...............................................    1,205,271       850,495      670,246      453,092      364,994
Funds borrowed...............................................      209,954       231,488       96,879       15,000       20,000
Total stockholders' equity...................................       89,092        62,304       54,249       47,080       29,274
Trust assets under administration............................    1,239,779       722,713      777,800      729,904      611,650


                                       25





                                                                                YEAR ENDED DECEMBER 31,
                                                                 ---------------------------------------------------
                                                                 2002       2001         2000        1999      1998
                                                                 ----       ----         ----        ----      ----
                                                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                               
SELECTED FINANCIAL RATIOS AND OTHER DATA:(3)
Performance Ratios:
Net interest margin(4).......................................     3.44%      3.27%        3.63%       3.79%     3.64%
Net interest spread(5).......................................     3.25       2.87         3.02        3.15      2.98
Non-interest income to average assets........................     0.47       0.64         0.45        0.45      0.37
Non-interest expense to average assets (10)..................     2.17       2.37         2.64        2.71      2.29
Net overhead ratio(6)(10)....................................     1.70       1.73         2.19        2.26      1.91
Efficiency ratio(7)(10)......................................    57.63      63.17        66.76       65.76     60.82
Return on average assets(8)(10)..............................     0.83       0.65         0.63        0.65      0.85
Return on average equity(9)(10)..............................    15.17      10.59         8.81        7.66     11.27
Dividend payout ratio........................................     6.27       8.39        10.43       13.78      8.74

Asset Quality Ratios:
Non-performing loans to total loans........................       0.14%      0.41%        0.24%       0.21%     0.36%
Non-accrual loans to total loans.............................     0.08       0.09         0.00        0.00      0.00
Allowance for probable loan losses to:
Total loans..................................................     1.20       1.06         1.02        1.14      1.21
Non-performing loans.........................................      828        262          423         548       336
Net charge-offs to average total loans.......................     0.07       0.15         0.18         .03        --
Non-performing assets to total assets........................     0.09       0.27         0.17        0.16      0.24

Balance Sheet Ratios:
Loans to deposits............................................     80.1%      91.8%        89.3%       87.7%     77.3%
Average interest-earning assets to average interest-
 bearing liabilities.........................................    107.9      109.8        112.2       116.3     116.4

Capital Ratios:
Average equity to average assets.............................     5.50%      6.13%        7.13%       8.51%     7.03%
Total risk-based capital ratio...............................     8.29       9.71         8.15       13.96     11.53
Tier 1 risk-based capital ratio..............................     6.91       8.18         6.47       12.84     10.40
Leverage ratio...............................................     5.47       6.64         5.54       10.77      7.88

Ratio of Earnings to Fixed Charges(11):
Including deposit interest...................................     1.46x      1.22x        1.20x       1.25x     1.36x
Excluding deposit interest...................................     2.97       2.02         2.62        5.48    256.21


(1)  Audited by Ernst & Young LLP. Prior year results audited by Arthur Andersen
     LLP.
(2)  Per share data has been adjusted to reflect the 3-for-2 dividend of our
     common stock effective January 17, 2003.
(3)  For all periods, the entire securities portfolio was classified "Available
     for Sale."
(4)  Net interest income divided by average interest-earning assets.
(5)  Yield on average interest-earning assets less rate on average
     interest-bearing liabilities.
(6)  Non-interest expense less non-interest income divided by average total
     assets.
(7)  Non-interest expense divided by the sum of net interest income, on a tax
     equivalent basis, plus non-interest income.
(8)  Net income divided by average total assets.
(9)  Net income divided by average common equity.
(10) 2000 performance ratios presented in the table above include a third
     quarter one-time severance and recruitment of new executive officers
     charge, and 1999 performance ratios include one-time charges related to the
     Towne Square Financial Corporation acquisition and St. Louis start-up costs
     incurred in the third and fourth quarter, respectively, in the following
     amounts (in thousands):

                                                             PRE-TAX   AFTER-TAX
                                                             -------   ---------
          Severance charges................................  $   562   $    377
          Towne Square Corporation acquisition.............    1,433      1,382
          St. Louis start-up costs.........................      324        214

                                       26



     2000 and 1999 performance ratios excluding the special charges described
     above are as follows:

                                                         YEAR ENDED DECEMBER 31,
                                                         -----------------------
                                                            2000            1999
                                                            ----            ----

          Non-interest expense to average assets.........    2.56%         2.32%
          Net overhead ratio.............................    2.11          1.87
          Efficiency ratio...............................   64.75         57.52
          Return on average assets.......................    0.68          1.01
          Return on average equity.......................    9.56         11.86

(11) In computing the ratio of earnings to fixed charges: (a) earnings have been
     based on income before income taxes and fixed charges, and (b) fixed
     charges consist of interest and amortization of debt discount and expense
     including amounts capitalized and the estimated interest portion of rents.

                                       27



ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

OVERVIEW

         PrivateBancorp was organized as a Delaware corporation in 1989 to serve
as the holding company for a Chicago-based de novo (start-up) bank. Our flagship
downtown Chicago location opened in 1991. We expanded to Wilmette in north
suburban Cook County in 1994 and the Oak Brook facility in west suburban DuPage
County was established in 1997. We established the St. Charles office in January
2000, in connection with our purchase of Towne Square Financial Corporation (a
company which was in the process of forming a de novo, or start-up bank) on
August 3, 1999. On February 11, 2000, we consummated our acquisition of Johnson
Bank Illinois adding two additional locations of in Lake Forest and Winnetka,
Illinois. During the second quarter 2000, we received regulatory approval to
create a new banking subsidiary and on June 23, 2000, PrivateBancorp capitalized
The PrivateBank (St. Louis). In May 2001, The PrivateBank (Chicago) opened a
second branch in the Fox Valley area in Geneva, Illinois. In December 2002, The
PrivateBank and Trust Company acquired a controlling interest in Lodestar
Investment Counsel, a Chicago-based investment advisor with $482.0 million of
assets under management at December 31, 2002. Lodestar manages equity, balanced,
and fixed income accounts primarily for high net-worth individuals, retirement
plans and charitable organizations with investable assets in excess of $1.0
million, and shares a similar focus on highly personalized client service.

         Since year-end 1995 to December 31, 2002, we have grown our asset base
at a compound annual rate of 35% to $1.5 billion. During the same period, loans
have grown at a compound annual rate of 34% to $965,600, deposits at a compound
annual rate of 32% to $1.2 billion and trust assets under administration at a
compound annual rate of 22% to $757.8 million. Diluted earnings per share (EPS)
have grown at a compound annual rate of 30% to $1.42 (split-adjusted) since
year-end 1995.

         For financial information regarding our four separate lines of
business, The PrivateBank (Chicago), The PrivateBank (St. Louis), Wealth
Management Services and Holding Company Activities, see "Note 2 -- Operating
Segments" to our consolidated financial statements as of and for the year ended
December 31, 2002, included on page F-11.

         The profitability of our operations depends on our net interest income,
provision for loan losses, non-interest income, and non-interest expense. 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 as well as
to the execution of our asset/liability management strategy. The provision for
loan losses is affected by changes in the loan portfolio, management's
assessment of the collectability of the loan portfolio, loss experience, as well
as economic and market factors.

         Non-interest income consists primarily of net security gains and Wealth
Management fee income, and to a lesser extent, fees for ancillary banking
services. 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 many retail banks.

         Non-interest expenses are heavily influenced by the growth of
operations. Our growth directly affects the majority of our expense categories.

CRITICAL ACCOUNTING POLICIES

         The Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with our consolidated
financial statements included herein. Reference should also be made to our
critical accounting policies set out in the notes to consolidated financial
statements, beginning on page F-8. Certain critical policies involve estimates
and assumptions by management. By their nature, changes in these assumptions and
estimates could significantly affect our financial position or results of
operations. Actual results could differ from those estimates. Estimates and
judgments regarding the determination of the adequacy of the reserve for loan
losses, as described in both Management's Discussion and Analysis and in the
financial statement notes, is of particular significance to us. In addition,
effective January 1, 2002, we adopted FAS No. 142, which requires that

                                       28



goodwill is no longer amortized but is tested annually for impairment.

                       CONSOLIDATED RESULTS OF OPERATIONS

NET INCOME

         Our net income for the year ended December 31, 2002 was $11.0 million,
or $1.42 per diluted share, compared to $6.2 million, or $0.85 per diluted
share, for the year ended December 31, 2001. Our 2002 earnings per share
increased 67% as compared to the prior year earnings per share. Net income for
the year ended December 31, 2001 was $6.2 million, or $0.85 per diluted share,
compared to $4.4 million, or $0.62 per diluted share, for the year ended
December 31, 2000. Excluding one-time charges, our earnings were $4.8 million,
or $0.66 per diluted share, in 2000. Our 2001 earnings per share increased 29%
as compared to the prior year earnings per share, adjusted to exclude the 2000
one-time charges. Net income for the year ended December 31, 2000 included a
previously announced one-time charge of $377,000 after-tax, or $0.05 per diluted
share, comprised of severance packages for two departing executives as well as
amounts incurred to secure their replacements.

         The increase in earnings from operations is primarily attributable to
growth in the balance sheet, particularly in loans and investment securities,
funded by growth in deposits and improvement in our net interest margin.
Increased fee income, mainly from income from the sale of residential real
estate loans in the secondary market, also contributed to the improvement in
income.

NET INTEREST INCOME

         Net interest income is the difference between interest income and fees
on earning assets and interest expense and amortization of fees on deposits and
borrowings. Net interest margin represents the net interest income on a tax
equivalent basis as a percentage of average earning assets during the period.
Net interest margin reflects the spread between average yields earned on
interest earning assets and the average rates paid on interest bearing deposits
and borrowings. Interest income includes loan origination fees recorded from
loans. Interest expense includes amortization of prepaid fees on brokered
deposits and issuance costs of trust preferred securities. The volume of
non-interest bearing funds, largely comprised of demand deposits and capital,
also affects the net interest margin.

         Net interest income was $40.6 million for the year ended December 31,
2002, compared to $28.0 million for 2001, an increase of 45%. Net interest
income is affected by both the volume of assets and liabilities held and the
corresponding rates earned and paid. The increase in net interest income for
2002 is primarily attributable to growth in earning assets. Average earning
assets for 2002 were $1.3 billion compared to $908.6 million for 2001, an
increase of 43%. Our net interest margin was 3.44% for the year ended December
31, 2002, compared to 3.27% for the prior year. Increased volumes of interest
earning assets at lower rates were offset by reduced interest rates on
liabilities. While our cost of funds was significantly less during 2002 than
2001, 2.68% compared to 4.55%, respectively, our loans repriced less quickly, we
received 7.61% in loan interest in 2001 compared to 6.12% in 2002. The effect of
non-interest bearing funds was 0.19% at December 31, 2002 compared to 0.41% at
December 31, 2001.

         Net interest income was $28.0 million for the year ended December 31,
2001, compared to $23.8 million for
                                       29



2000, an increase of 17%. Net interest income is affected by both the volume of
assets and liabilities held and the corresponding rates earned and paid. The
increase in net interest income for 2001 is primarily attributable to growth in
earning assets. Average earning assets for 2001 were $908.6 million compared to
$671.5 million for 2000, an increase of 35%. Our net interest margin was 3.27%
for the year ended December 31, 2001, compared to 3.63% for the prior year.

         During 2001, we experienced net interest margin pressure as compared to
2000 due to the decrease in market interest rates that occurred throughout 2001.
In addition, during 2001 our floating rate assets repriced faster than our
deposits and floating rate deposits. Also, we continued to utilize brokered
deposit transactions as part of our asset-liability management strategy. These
brokered deposits have staggered maturities and provide a lower costing source
of funding compared to traditional deposits.

         For 2003, we expect our net interest margin to improve if market
interest rates increase relative to 2002 levels. Alternatively, if market
interest rates decrease, we expect our net interest margin to continue to
experience pressure. A changing interest rate environment has an effect on our
net interest margin. A large portion of our loan portfolio is based on floating
interest rates and will likely reprice faster than our deposits and floating
rate borrowings.

         The following table presents a summary of our net interest income and
related net interest margin, calculated on a tax equivalent basis (dollars in
thousands):



                                                                       YEAR ENDED DECEMBER 31,
                                            ----------------------------------------------------------------------------
                                                            2002                                    2001
                                            ------------------------------------    ------------------------------------
                                              AVERAGE                                 AVERAGE
                                            BALANCE (1)   INTEREST       RATE       BALANCE (1)   INTEREST       RATE
                                            -----------  ----------   ----------    -----------  ----------   ----------
                                                                                                 
Federal funds sold and other short-term
 investments ............................   $     2,822   $     126         4.47%   $     4,862  $      244         5.02%
Investment securities(2)
  Investment securities(taxable) ........       272,076      13,282         4.88%       162,192      10,901         6.68%
  Investment securities(non-taxable) ....       119,408       8,768         7.34%        71,315       5,253         7.37%
Loans, net of unearned discount(3) ......       858,783      52,560         6.07%       670,235      50,975         7.61%
                                            -----------  ----------   ----------    -----------  ----------   ----------
  Total earning assets ..................   $ 1,253,089      74,736         5.93%   $   908,605  $   67,373         7.41%
                                            ===========  ==========                 ===========  ==========
Deposits--interest bearing:
  Interest-bearing demand accounts ......   $    57,242  $      636         1.11%   $    44,231  $      923         2.09%
  Savings and money market deposits .....       410,522       7,328         1.78%       326,198      11,365         3.48%
  Time deposits .........................       537,296      16,014         2.97%       318,510      17,291         5.43%
                                            -----------  ----------   ----------    -----------  ----------
  Total interest-bearing deposits .......     1,005,060      23,978         2.39%       688,939      29,579         4.29%
  Funds borrowed ........................       136,292       5,325         3.85%       120,585       6,327         5.25%
  Long term debt - trust preferred
   securities ...........................        20,000       1,939         9.70%        17,918       1,731         9.66%
                                            -----------  ----------   ----------    -----------  ----------
    Total interest bearing liabilities ..   $ 1,161,352  $   31,242         2.68%   $   827,442  $   37,637         4.55%
                                            ===========  ==========                 ===========  ==========
Tax equivalent net interest income ......                $   43,494                              $   29,736
                                                         ==========                              ==========
Non-interest-bearing demand accounts.....      $74,743                              $    53,230
Net interest spread......................                                   3.25%                                   2.87%
Net interest margin......................                                   3.44%                                   3.27%


                                                    YEAR ENDED DECEMBER 31,
                                             ------------------------------------
                                                             2000
                                             ------------------------------------
                                               AVERAGE
                                             BALANCE (1)     INTEREST       RATE
                                             -----------   ----------   ----------
                                                                    
Federal funds sold and other short-term
 investments ............................    $    17,032   $    1,058         6.11%

Investment securities(2)
  Investment securities(taxable) ........         77,043        5,725         7.32%
  Investment securities(non-taxable) ....         37,101        2,615         7.05%
Loans, net of unearned discount(3) ......        540,297       48,633         8.92%
                                             -----------   ----------   ----------
  Total earning assets ..................    $   671,473   $   58,031         8.57%
                                             ===========   ==========
Deposits--interest bearing:
  Interest-bearing demand accounts ......    $    37,415   $      869         2.32%
  Savings and money market deposits .....        267,597       13,711         5.12%
  Time deposits .........................        235,049       14,635         6.23%
                                             -----------   ----------
  Total interest-bearing deposits .......        540,061       29,215         5.39%
  Funds borrowed ........................         58,500        4,116         6.96%
  Long term debt - trust preferred
   securities ...........................             --           --           --
                                             -----------   ----------   ----------
    Total interest bearing liabilities ..    $   598,221   $   33,331         5.55%
                                             ===========   ==========
Tax equivalent net interest income ......                  $   24,700
                                                           ==========
Non-interest-bearing demand accounts.....    $   48,940
Net interest spread......................                                     3.02%
Net interest margin......................                                     3.63%


(1)  Average balances were generally computed using daily balances.
(2)  Interest income on tax advantaged investment securities reflects a tax
     equivalent adjustment based on a marginal federal corporate tax rate of
     34%. The total tax equivalent adjustment reflected in the above table is
     approximately $2,894,000, $1,777,000, and $885,000, in the years ending
     2002, 2001 and 2000, respectively.
(3)  Non-accrual loans are included in the average balances and do not have a
     material effect on the average yield. Interest on non-accruing loans was
     not material for the periods presented.

                                       30



         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 a mix
of both, for the periods indicated, calculated on a tax equivalent basis. 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.



                                                                                  YEAR ENDED DECEMBER 31,
                                           ---------------------------------------------------------------------------------------
                                                         2002 COMPARED TO 2001                               2001 COMPARED TO 2000
                                           ------------------------------------------------    -----------------------------------
                                             CHANGE       CHANGE       CHANGE                    CHANGE       CHANGE       CHANGE
                                             DUE TO       DUE TO       DUE TO       TOTAL        DUE TO       DUE TO       DUE TO
                                              RATE        VOLUME        MIX         CHANGE        RATE        VOLUME        MIX
                                           ---------    ---------    ---------    ---------    ---------    ---------    ---------
                                                                                  (DOLLARS IN THOUSANDS)
                                                                                                    
Federal funds sold and other short-
 term investments ......................   $     (23)   $    (101)   $       7    $    (117)   $    (186)   $    (744)   $     116
Investment securities (taxable) ........      (2,983)       7,385       (2,021)       2,381         (461)       6,233         (595)
Investment securities (non-taxable) ....         (16)       3,543          (12)       3,515          119        2,412          106
Loans, net of unearned discount ........      (9,919)      14,235       (2,730)       1,586       (7,078)      11,590       (2,170)
                                           ---------    ---------    ---------    ---------    ---------    ---------    ---------
Total interest income ..................     (12,941)      25,062       (4,756)       7,365       (7,606)      19,491       (2,543)
                                           ---------    ---------    ---------    ---------    ---------    ---------    ---------
Interest bearing deposits ..............     (13,117)      13,562       (6,046)      (5,601)      (5,941)       8,025       (1,720)
Funds borrowed .........................      (1,592)         812         (221)      (1,001)        (995)       4,345       (1,139)
Trust Preferred Securities .............           7          201            1          209                        --        1,731-
                                           ---------    ---------    ---------    ---------    ---------    ---------    ---------
Total interest expense .................     (14,702)      14,575       (6,266)      (6,393)      (6,936)      12,370       (1,128)
                                           ---------    ---------    ---------    ---------    ---------    ---------    ---------
Net interest income ....................   $  (1,761)      10,487       (1,510)      13,758    $    (670)   $   7,121    $  (1,415)
                                           =========    =========    =========    =========    =========    =========    =========


                                             TOTAL
                                             CHANGE
                                           ---------
                                        
Federal funds sold and other short-
 term investments ......................   $    (814)
Investment securities (taxable) ........       5,177
Investment securities (non-taxable) ....       2,637
Loans, net of unearned discount ........       2,342
                                           ---------
Total interest income ..................       9,342
                                           ---------
Interest bearing deposits ..............         364
Funds borrowed .........................       2,211
Trust Preferred Securities .............       1,731
                                           ---------
Total interest expense .................       4,306
                                           ---------
Net interest income ....................   $   5,036
                                           =========


PROVISION FOR LOAN LOSSES

         We provide for an adequate allowance for loan losses that are probable
and reasonably estimable in the portfolio. The provision for loan losses
reflects management's latest assessment of the inherent losses in the loan
portfolio. Our allowance for probable loan losses is reassessed monthly to
determine the appropriate level of the reserve. Our analysis is influenced by
the following factors: the volume and quality of loans and commitments in the
portfolio, loss experience, and economic conditions. A discussion of the
allowance for loan losses and the factors on which provisions are based begins
on page 36.

         Our provision for loan losses was $3.9 million for the year ended
December 31, 2002, compared to $3.2 million for the comparable period in 2001.
Net charge-offs for the year ended December 31, 2002 were $583,000 and net
charge-offs for the year ended December 31, 2001 were $981,000. Our provision
for loan loss was $1.7 million in 2000 and we recognized $956,000 of net
charge-offs during 2000.

NON-INTEREST INCOME

         Non-interest income increased slightly, by $26,000 or 0.42%, to $6.1
million for the year ended December 31, 2002. The relatively flat growth in
non-interest income in 2002 is attributable primarily to the recognition of net
investment securities gains of $11,000 during 2002 which included a charge of
$1.0 million related to an other than temporary impairment write-down on the
Company's interest-only collateralized mortgage obligation ("CMO") portfolio due
to accelerated mortgage prepayments experienced during the second half of the
year. The remaining carrying value of the Company's interest-only collateralized
mortgage obligation ("CMO") portfolio at December 31, 2002 was $1.1 million. The
fair market value adjustment on a previously disclosed $25.0 million 10-year for
3-month LIBOR interest rate swap resulted in trading losses of $943,000 for the
year ended December 31, 2002. Banking service charge income increased by
$444,000 over the prior year. Trust fee revenue increased 8% to $2.9 million in
2002 compared to $2.7 million in 2001. Trust assets under administration
increased 66% to $1.2 billion at year-end 2002, compared to $722.7 million at
December 31, 2001, primarily due to the acquisition of a controlling interest in
the assets of Lodestar Investment Counsel. Lodestar's assets under
administration at December 31, 2002 were $482.0 million. Trust assets for The
PrivateBank (Chicago), not including Lodestar, were $757.9 million at December
31, 2002.

                                       31




         The following table presents the breakdown of banking, trust services
and other income for the periods presented:



                                                                  FOR THE YEAR ENDED DECEMBER 31,
                                                                 ---------------------------------
                                                                    2002        2001        2000
                                                                 ---------   ---------   ---------
                                                                          (IN THOUSANDS)
                                                                                
            Trust services ...................................   $   2,878   $   2,671   $   2,292
            Residential real estate secondary market fees ....       2,248         319          --
            Banking and other services .......................       1,354         910         877
            BOLI .............................................         601         128          --
                                                                 ---------   ---------   ---------
            Total banking, trust services & other income......   $   7,081   $   4,028   $   3,169
                                                                 =========   =========   =========


         Non-interest income increased approximately $2.9 million or 93%, to
$6.1 million for the year ended December 31, 2001, compared to $3.2 million for
2000. The increase in non-interest income was attributable primarily to $2.1
million of net gains on the sale of investment securities. Volatility in
interest rates during 2001 provided us with the opportunity to sell
available-for-sale securities for gains and replace the sold securities with
securities that reflect better risk reward parameters and greater return
opportunities. Banking service charge income increased by $153,000 over the
prior year. Trust fee revenue increased 17% to $2.7 million in 2001 compared to
$2.3 million in 2000. Trust assets under administration decreased 7% to $722.7
million at year-end 2001, compared to $777.8 million at December 31, 2000
attributable primarily to declines in equity valuations since the prior year,
which was partially offset by increases in new business generated during the
year.

NON-INTEREST EXPENSE



                                                                      YEAR ENDED DECEMBER 31,
                                                                 ---------------------------------
                                                                    2002        2001        2000
                                                                 ---------   ---------   ---------
                                                                          (IN THOUSANDS)
                                                                                
            Salaries and employee benefits ...................   $  13,979   $   9,111   $   8,174
            Severance charge..................................          --          --         562
            Occupancy.........................................       4,891       4,158       2,987
            Data processing...................................       1,509       1,295         820
            Marketing.........................................       1,648       1,208       1,202
            Professional fees.................................       3,689       2,939       2,135
            Goodwill amortization.............................          --         824         731
            Insurance.........................................         455         354         303
            Other expense.....................................       2,436       2,763       1,692
                                                                 ---------   ---------   ---------
             Total non-interest expense ......................   $  28,607   $  22,652   $  18,606
                                                                 =========   =========   =========


         Non-interest expense increased $6.0 million or 26% to $28.6 million for
the year ended December 31, 2002 compared to $22.6 million for 2001. The growth
in non-interest expense during 2002 represents the continued focus on expansion
at the Company. Increases in expenses for salaries and benefits, occupancy,
professional services, data processing and insurance reflect the impact of
growing our personnel, expanding to new locations and broadening the types of
products we offered in 2002.

         Non-interest expense increased $4.1 million or 22% to $22.7 million for
the year ended December 31, 2001 compared to $18.6 million for 2000. The 2000
results reflect a one-time severance charge of $562,000 relating to severance
packages for two departing executives and costs incurred in connection with the
recruitment and hiring of their replacements. Excluding one-time charges,
non-interest expense increased 26% from $18.0 million during 2000 to $22.7
million during 2001. Increases in expenses for salaries and benefits, occupancy,
professional services, data processing and insurance reflect the impact of our
personnel growth, the opening of our new banking office in Geneva, and
broadening our array of products in 2001. We also incurred charges of $561,000
during 2001 related to the completion of system-related conversions. During
2001, the Lake Forest and the Winnetka offices (formerly known as Johnson Bank
Illinois) contributed $3.1 million to operating expenses, including $824,000 of
goodwill

                                       32



expense. Non-interest expense for the year ended December 31, 2001 includes
operating expenses of $1.2 million and $2.7 million related to the St. Charles
and St. Louis offices, respectively.

         The following table shows our operating efficiency over the last three
years:



                                                                            DECEMBER 31,
                                                                 ---------------------------------
                                                                    2002        2001        2000  (1)
                                                                 ---------   ---------   ---------
                                                                                    
            Non-interest expense to average assets............        2.17%       2.37%       2.56%
            Net overhead ratio(2).............................        1.70        1.73        2.11
            Efficiency ratio(3)...............................       57.63       63.17       64.75


- ----------
(1)  Excludes the one-time severance charge incurred in 2000 in the amount of
     $562,000.
(2)  Non-interest expense less non-interest income divided by average total
     assets.
(3)  Non-interest expense divided by the sum of net interest income, on a tax
     equivalent basis, plus non-interest income.

         Our efficiency ratio (on a tax-equivalent basis), which measures the
percentage of net revenue that is expended as non-interest expense for the year
ended December 31, 2002 improved slightly to 57.6% as compared to an efficiency
ratio of 63.2% for the year ended December 31, 2001.

         The improvement in our efficiency ratio during 2002 as compared to
prior years demonstrates that our business development efforts at our new
offices are generating revenue sufficient to offset the related operating
expenses. On a tax-equivalent basis, this ratio indicates that during 2002, we
spent 57.6 cents to generate each dollar of revenue, compared to 63.2 cents in
the prior year. The PrivateBank (St. Louis) became profitable during the fourth
quarter of 2001. Our newest location in Geneva is not yet profitable as the
costs of business development continued to exceed the related operating expenses
in 2002. However, the location has exceeded its growth targets for loans and
deposits during 2002. We expect to continue to report improvements in our
efficiency ratio as income sources contribute to our profitability in excess of
the operating expense growth impact.

         Our efficiency ratio for 2000 was negatively impacted due to the
start-up nature of the St. Charles office and the St. Louis office. Our St.
Charles office first broke even on a monthly basis in July 2000, within one year
of the acquisition date.

         Salary and employee benefit expense increased 53% to $13.9 million for
the year ended December 31, 2002 from $9.1 million for the year ended
December 31, 2001. During 2002, we added 29 full time equivalent employees to
our organization, an increase of 18% to 190 full-time equivalent employees from
160.5 at December 31, 2001. This includes the addition of 14 Managing Directors
and Associate Managing Directors.

         Salary and employee benefit expense increased 11% to $9.1 million for
the year ended December 31, 2001 from $8.2 million for the year ended December
31, 2000. Full-time equivalent employees increased 17% to 160.5 at December 31,
2001 from 137 at December 31, 2000. The increase in salary and benefits is due
primarily to the full effect of the Johnson Bank Illinois acquisition, the
opening and staffing of The PrivateBank (St. Louis), and the addition of two
senior officers responsible for establishing the Geneva office. Our main office
in Chicago also experienced personnel growth during 2001.

         Professional fees, which include legal, accounting, consulting services
and investment management fees, increased 26% to $3.7 million for the year ended
December 31, 2002 from $2.9 for 2001. The increase between years is primarily
due to higher legal, accounting and information-system consultation services as
well as consulting services related to the remodeling of four floors at the
downtown Chicago location. During the fourth quarter of 2002, the bank also
commenced the implementation of a new telephone system. In addition, the
increase in wealth management-related business has resulted in increased
investment management fees paid to third parties during the years ended
December 31, 2002 and 2001.

         During 2002, expenditures for information technology totaled $1.9
million, up from $1.1 million at December 31, 2001, representing investments in
software and hardware to upgrade the overall information technology
infrastructure. The new infrastructure has improved information systems
performance as well as strengthened the

                                       33



organization's Business Continuity Strategy. The Information Technology Steering
Committee, established in 2001, monitored and provided oversight for our
information technology strategic plan.

         In 2002, we also hired additional Information Technology staff, which
has provided greater technical support to the organization and ensured that the
new technological infrastructure is fully leveraged. Information technology
expenditures will continue in 2003 but are not expected to exceed technology
initiatives undertaken during 2002.

         The other expense category of non-interest expense consists primarily
of postage, telephone, delivery, office supplies, training and other
miscellaneous expenses. During 2002 these expenses decreased slightly relative
to 2001 by 12%. During 2001 these expenses increased relative to 2000 by 63% due
to the continued implementation of our expansion strategy. These expenses have
stabilized during 2002.

INCOME TAXES

         The following table shows our income before income taxes, applicable
income taxes and effective tax rate for the years ended December 31, 2002, 2001,
and 2000, respectively.



                                                                      YEAR ENDED DECEMBER 31,
                                                                 ---------------------------------
                                                                    2002        2001        2000
                                                                 ---------   ---------   ---------
                                                                       (DOLLARS IN THOUSANDS)
                                                                                
            Income before taxes...............................   $  14,280   $   8,251   $   6,688
            Income tax provision..............................       3,273       2,051       2,263
            Effective tax rate................................        22.9%       24.9%       33.8%


         The effective income tax rate varies from statutory rates principally
due to certain interest income which is tax-exempt for federal or state
purposes, and certain expenses which are disallowed for tax purposes. The
decrease in the effective tax rate for 2002 as compared to 2001 reflects the
impact of growth in tax-exempt municipal securities. The average balance of
municipal securities was $119.4 million, $71.3 million, and $37.1 million for
the years ended December 31, 2002, 2001 and 2000, respectively. Decreases in the
effective tax rate for the year ended December 31, 2001 as compared to 2000
reflect a higher amount of interest income that was tax exempt in 2001 relative
to 2000.

                                       34



                               FINANCIAL CONDITION

TOTAL ASSETS

         Total assets were $1.5 billion at December 31, 2002, an increase of
$366.6 million, or 31%, from $1.2 billion at December 31, 2001. The balance
sheet growth during 2002 was accomplished mainly through loan growth throughout
the company and growth in the investment securities portfolio. The growth in
assets experienced during 2002 was funded primarily through growth in deposits,
including brokered deposits.

LOANS

         Total loans increased to $965.6 million at December 31, 2002, an
increase of $184.8 or 24%, from $780.8 at December 31, 2001. The primary source
of loan growth for 2002 was increased volume in the commercial real estate and
construction loan categories. The historically low market interest rates also
impacted the increased demand for home equity loans. The PrivateBank (St. Louis)
had loans outstanding of $104.7 million as of December 31, 2002, growth of $31.2
million since December 31, 2001. The remaining loan growth of $153.6 million
experienced by the Company since December 31, 2001 was generated by the
PrivateBank (Chicago). All of the PrivateBank (Chicago) offices posted strong
gains in loan volume during 2002.

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



                                                            YEAR ENDED DECEMBER 31,
                                             2002        2001        2000        1999        1998
                                          ---------   ---------   ---------   ---------   ---------
                                                               (IN THOUSANDS)
                                                                           
            Commercial real estate ....   $ 452,703   $ 310,869   $ 206,464   $ 146,368   $  94,392
            Commercial ................     165,993     163,279     137,343      67,026      46,800
            Residential real estate ...      72,289      89,889      85,347      72,927      54,171
            Personal ..................      70,676      64,411      62,414      57,497      44,094
            Home equity ...............      80,776      59,795      46,013      24,396      20,100
            Construction ..............     123,204      92,528      61,143      29,018      22,408
                                          ---------   ---------   ---------   ---------   ---------
                Total loans ...........   $ 965,641   $ 780,771   $ 598,724   $ 397,277   $ 281,965
                                          =========   =========   =========   =========   =========


         The following table classifies the loan portfolio, by category, at
December 31, 2002, by date at which the loans mature:



                             ONE YEAR   FROM ONE TO  AFTER FIVE                MORE THAN ONE YEAR
                             OR LESS    FIVE YEARS    YEARS        TOTAL       FIXED      VARIABLE (1)
                            ---------   -----------  ----------  ---------   ---------   -------------
                                                        (IN THOUSANDS)
                                                                       
Commercial real estate ..   $ 275,542   $  124,948   $   52,213  $ 452,703   $ 112,615   $      64,546
Commercial ..............     149,188       14,176        2,629    165,993      16,805              --
Residential real estate .      28,833       34,979        8,477     72,289      10,961          32,495
Personal ................      60,120        1,299        9,257     70,676      10,556              --
Home equity .............      80,776           --           --     80,776          --              --
Construction ............     123,182            9           13    123,204          22              --
                            ---------   ----------   ----------  ---------   ---------   -------------
  Total loans ...........   $ 717,641   $  175,411   $   72,589  $ 965,641   $ 150,959   $      97,041
                            =========   ==========   ==========  =========   =========   =============


(1)  Includes adjustable rate mortgage products.

                                       35



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.



                                                                         DECEMBER 31,
                                                -------------------------------------------------------------
                                                   2002         2001         2000         1999         1998
                                                ---------    ---------    ---------    ---------    ---------
                                                                       (IN THOUSANDS)
                                                                                     
Balance at beginning of period ..............   $   8,306    $   6,108    $   4,510    $   3,410    $   3,050
Johnson Bank acquisition - loan loss reserve           --           --          864           --           --
Loans charged-off:
Commercial real estate ......................          --           --           --           --           --
Commercial ..................................        (658)        (939)        (723)          --           --
Residential real estate .....................          --           --           --           --           --
Personal ....................................         (92)        (113)        (249)        (108)          (2)
Home equity .................................          --           --           --           --           --
Construction ................................          --           --           --           --           --
                                                ---------    ---------    ---------    ---------    ---------
  Total loans charged-off ...................        (750)      (1,052)        (972)        (108)          (2)
                                                ---------    ---------    ---------    ---------    ---------
Loans Recovered:
Commercial ..................................         117           43            8           --           --
Personal ....................................          49           28            8           --           --
                                                ---------    ---------    ---------    ---------    ---------
  Total loans recovered .....................         167           71           16           --           --
                                                ---------    ---------    ---------    ---------    ---------
Provision for loan losses ...................       3,862        3,179        1,690        1,208          362
                                                ---------    ---------    ---------    ---------    ---------
Balance at end of period ....................   $  11,585    $   8,306    $   6,108    $   4,510    $   3,410
                                                =========    =========    =========    =========    =========
Average total loans .........................   $ 858,783    $ 669,114    $ 541,436    $ 332,502    $ 234,486
                                                =========    =========    =========    =========    =========
Net charge-offs to average total loans ......        0.07%        0.15%        0.18%         .03%          --


         The following table shows our allocation of the allowance for loan
losses by specific category at the dates shown. We considered various
qualitative and quantitative factors about the loan portfolio that we deemed
relevant in determining the level of the allowance for loan losses.



                                                                        DECEMBER 31,
                           ----------------------------------------------------------------------------------------------------
                                   2002                      2001                      2000                      1999
                           ----------------------    ----------------------    ----------------------    ----------------------
                                          % OF                      % OF                      % OF                      % OF
                                        LOANS TO                  LOANS TO                  LOANS TO                  LOANS TO
                            AMOUNT    TOTAL LOANS     AMOUNT    TOTAL LOANS     AMOUNT    TOTAL LOANS     AMOUNT    TOTAL LOANS
                           --------   -----------    --------   -----------    --------   -----------    --------   -----------
                                                                                                    
Commercial real estate .   $  3,483            47%   $  2,407            40%   $  1,575            35%   $  1,154            37%
Commercial .............      1,962            17%      1,923            21%      1,727            23%        930            17%
Residential real estate         344             8%        500            11%        429            14%        423            18%
Personal ...............        583             7%        676             8%        658            10%        568            15%
Home equity ............        569             8%        475             8%        412             8%        237             6%
Construction ...........      1,540            13%      1,225            12%        810            10%        369             7%
Unallocated ............      3,104            --       1,100            --         497            --         829            --
                           --------   -----------    --------   -----------    --------   -----------    --------   -----------
  Total ................   $ 11,585           100%   $  8,306           100%   $  6,108           100%   $  4,510           100%
                           ========   ===========    ========   ===========    ========   ===========    ========   ===========


                                 DECEMBER 31,
                           ----------------------
                                   1998
                           ----------------------
                                          % OF
                                        LOANS TO
                            AMOUNT    TOTAL LOANS
                           --------   -----------
                                        
Commercial real estate .   $    732            33%
Commercial .............        693            17%
Residential real estate         277            19%
Personal ...............        545            16%
Home equity ............        201             7%
Construction ...........        236             8%
Unallocated ............        726            --
                           --------   -----------
  Total ................   $  3,410           100%
                           ========   ===========


         Loan quality is continually monitored by management and reviewed by the
loan/investment committees of the board of directors of the banks on a monthly
basis. The amount of additions to the allowance for loan losses, which is
charged to earnings through the provision for loan losses, is determined based
on a variety of factors, including assessment of the credit risk of the
portfolio, delinquent loans, evaluation of current economic conditions in the
market area, actual charge-offs during the year and historical loss experience.
The unallocated portion of the reserve involves the exercise of judgment by
management and reflects various considerations, including management's view that
the reserve should have a margin that recognizes the imprecision inherent in the
process of estimating credit losses.

                                       36



         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 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.

         The allowance for loan losses as a percentage of total loans was 1.20%
as of December 31, 2002, compared to 1.06% as of December 31, 2001. Net
charge-offs for the years ended December 31, 2002 and 2001 were $583,000 and
$981,000, respectively. Net charge-offs to average total loans were 0.07% for
2002 compared to 0.15% for 2001.

NON-PERFORMING LOANS

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



                                                                      DECEMBER 31,
                                               --------------------------------------------------------
                                                 2002        2001        2000        1999        1998
                                               --------    --------    --------    --------    --------
                                                                (DOLLARS IN THOUSANDS)
                                                                                
Nonaccrual loans ...........................   $    749    $    664    $     24    $    600    $     --
Loans past due 90 days or more .............        650       2,504       1,421         223       1,016
                                               --------    --------    --------    --------    --------
  Total non-performing loans ...............      1,399       3,168       1,445         823       1,016
                                               --------    --------    --------    --------    --------
  Total non-performing assets ..............   $  1,399    $  3,168    $  1,445    $    823    $  1,016
                                               ========    ========    ========    ========    ========
Non-accrual loans to total loans ...........       0.08%       0.09%       0.00%       0.15%         --
Total non-performing loans to total loans ..       0.14%       0.41%       0.24%       0.21%       0.36%
Total non-performing assets to total assets.       0.09%       0.27%       0.17%       0.16%       0.24%


         It is our policy to discontinue the accrual of interest income on any
loan for which there exists 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 there were 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 process which exhibit a higher than normal credit risk. Loans in
this category include those with characteristics such as past maturity more than
90 days, those that have recent adverse operating cash flow or balance sheet
trends, or loans that have general risk characteristics that management believes
might jeopardize the future timely collection of principal and interest
payments. The balance in this category at any reporting period can fluctuate
widely based on the timing of cash collections, renegotiations and renewals. The
principal amount of loans in this category as of December 31, 2002 was $650,000.
At December 31, 2002, there were no significant loans which were classified by
any bank regulatory agency that are not included above as nonaccrual, past due
or restructured.

         Nonaccrual loans were $749,000 as of December 31, 2002 compared to
$664,000 at December 31, 2001. Included in nonaccrual loans is a single $430,000
loan relationship at The PrivateBank (Chicago).

         Nonperforming loans include nonaccrual loans and accruing loans that
are 90 days or more delinquent. Nonperforming loans were $1.4 million as of
December 31, 2002, compared to $3.2 million at December 31, 2001. Nonperforming
loans were 0.14%, and 0.41% of total loans at December 31, 2002 and December 31,
2001, respectively. Nonperforming assets were 0.09% and 0.27% of total assets as
of December 31, 2002 and December 31, 2001, respectively.

                                       37



         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 and
St. Louis metropolitan areas and our involvement in lending secured by real
estate, we had no concentrations of loans exceeding 10% of total loans at
December 31, 2002 or December 31, 2001.

INVESTMENT SECURITIES

         Investments are comprised of federal funds sold, debt securities and,
to a lesser extent, equity investments. Federal funds sold are overnight
investments in which, except for cash reserves, all remaining funds are
invested. Our debt securities portfolio is primarily comprised of U.S.
government agency obligations, municipal bonds, mortgage-backed pools and
collateralized mortgage obligations.

         All securities are classified as available-for-sale and may be sold as
part of our asset/liability management strategy in response to changes in
interest rates, liquidity needs or significant prepayment risk. Securities
available-for-sale are carried at fair value, with related unrealized net gains
or losses, net of deferred income taxes, recorded as an adjustment to equity
capital. At December 31, 2002, reported stockholders' equity reflected
unrealized securities gains net of tax of $8.8 million. This represented an
improvement of $8.5 million from unrealized securities gains net of tax of
$323,000 at December 31, 2001.

         Securities available-for-sale increased to $487.0 million at
December 31, 2002, up 46% from $332.9 million as of December 31, 2001. The
growth in the investment security portfolio since December 31, 2001 resulted
from the continued implementation of our asset/liability management strategy.
The Company held no U.S. government agency obligations in 2002 or 2001.
U.S. government agency mortgage backed securities and collateralized mortgage
obligations increased by $57.0 million from December 31, 2001 to December 31,
2002. Corporate collateralized mortgage obligations decreased by $4.8 million
to $18.7 million. The net decrease in collateralized CMO's reflects the
write-down of specific CMO's due to accelerated mortgage prepayments experienced
during the second half of the year. Tax-exempt municipal securities increased to
$134.8 million at December 31, 2002 as compared to the year-end 2001 amount of
$106.9 million, an increase of $28.0 million, providing net interest margin
protection in a falling interest-rate environment. Investments in Federal Home
Loan Bank Stock increased by $62.6 million as a result of purchases made to take
advantage of the favorable dividend yield in addition to the liquid nature of
the investment. The FHLB can redeem and we can sell, at any time, any FHLB
stock we own, in excess of the required minimum of $3.8 million and $5.8 million
outstanding as of December 31, 2002 and 2001, respectively.

         The following table presents the components of our available-for-sale
investment securities portfolio for the years presented:



                                                                    DECEMBER 31,
                                                         ---------------------------------
                                                            2002        2001        2000
                                                         ---------   ---------   ---------
                                                                   (IN THOUSANDS)
                                                                        
Available-for-Sale
U.S. government agency obligations ...................   $      --   $      --   $   4,399
U.S. government agency mortgage backed securities and
 collateralized mortgage obligations .................     158,394     101,376      84,347
Corporate collateralized mortgage obligations ........      18,675      23,462      10,123
Tax exempt municipal securities ......................     134,836     106,925      36,644
Taxable municipal securities .........................       4,697       6,051       1,141
Federal Home Loan Bank stock .........................     155,606      92,964      35,175
Other ................................................      14,812       2,155         365
                                                         ---------   ---------   ---------

Total ................................................   $ 487,020   $ 332,933   $ 172,194
                                                         =========   =========   =========


                                       38



         The following tables show the effective maturities of investment
securities (based upon the amortized cost), by category, as of December 31,
2002, and the weighted average yield (computed on a tax equivalent basis) for
each range of maturities of securities, by category, as of December 31, 2002.
For the mortgage backed securities and collateralized mortgage obligations
categories, the effective maturity and weighted average yield are based upon
mortgage prepayment estimates. Actual mortgage prepayments may vary due to
changes in interest rates, economic conditions and other factors.




                                                      WITHIN        FROM ONE TO        FROM FIVE          AFTER
                                                     ONE YEAR        FIVE YEARS      TO TEN YEARS       TEN YEARS
                                                  --------------   --------------   --------------   --------------
                                                                          (IN THOUSANDS)
                                                                                         
U.S. government agency obligations ............   $           --   $           --   $           --   $           --
U.S. government agency mortgage backed
 securities and collateralized
 mortgage obligation ..........................           57,321           78,546           14,852            4,791
Corporate collateralized mortgage Obligations .           11,750            6,416               --               --
Tax exempt municipal securities(2) ............              338            1,762            9,896          114,508
Taxable municipal securities ..................               --               --              964            3,619
Federal Home Loan Bank stock(1) ...............               --               --               --               --
Other .........................................               --           10,795               --            2,176
                                                  --------------   --------------   --------------   --------------
Total .........................................   $       69,409   $       97,519   $       25,712   $      125,094
                                                  ==============   ==============   ==============   ==============


                                                  SECURITIES WITH
                                                     NO STATED
                                                      MATURITY             TOTAL
                                                 ------------------   --------------
                                                                
U.S. government agency obligations ............  $               --   $           --
U.S. government agency mortgage backed
 securities and collateralized
 mortgage obligation ..........................                  --          155,510
Corporate collateralized mortgage Obligations .                  --           18,166
Tax exempt municipal securities(2) ............                              126,504
Taxable municipal securities ..................                  --            4,583
Federal Home Loan Bank stock(1) ...............             155,606          155,606
Other .........................................                 308           13,279
                                                 ------------------   --------------
Total .........................................  $          155,914   $      473,648
                                                 ==================   ==============





                                                      WITHIN        FROM ONE TO        FROM FIVE          AFTER
                                                     ONE YEAR        FIVE YEARS      TO TEN YEARS       TEN YEARS
                                                  --------------   --------------   --------------   --------------
                                                                          (IN THOUSANDS)
                                                                                                   
U.S. government agency obligations.............               --               --               --               --
U.S. government agency mortgage
 backed securities and collateralized
 mortgage obligations..........................             5.29%            4.58%            5.51%            5.54%
Corporate collateralized mortgage obligations..             5.46             5.21               --               --
Tax exempt municipal securities(2).............             5.69             6.78             6.75             7.28
Taxable municipal securities...................               --               --             6.10             7.66
Federal Home Loan Bank stock(1)................               --               --               --               --
Other..........................................                              5.32                              9.71
                                                  --------------   --------------   --------------   --------------
Total..........................................             5.33%            4.74%            6.01%            7.26%
                                                  ==============   ==============   ==============   ==============


                                                  SECURITIES WITH
                                                     NO STATED
                                                      MATURITY             TOTAL
                                                 ------------------   --------------
                                                                          
U.S. government agency obligations............                   --              --
U.S. government agency mortgage
 backed securities and collateralized
 mortgage obligations..........................                  --             4.96%
Corporate collateralized mortgage obligations..                  --             5.37%
Tax exempt municipal securities(2).............                  --             7.23%
Taxable municipal securities...................                  --             7.33%
Federal Home Loan Bank stock(1)................                5.00             5.00%
Other..........................................                1.33             5.95%
                                                 ------------------   --------------
Total..........................................                4.99%            5.64%
                                                 ==================   ==============


(1)  The Company is required to maintain a ratio of 20:1 of FHLB borrowings to
     FHLB stock. As of December 31, 2002, the Company had $77.8 million dollars
     in advances from the FHLB ($66.3 million from the FHLB of Chicago and $11.5
     million from the FHLB of Des Moines, IA). The remaining $151.0 million of
     FHLB stock can be redeemed at any time. However, the FHLB may delay the
     sale of the stock for up to six months if certain conditions are met.

(2)  The weighted average yield reflects a tax-equivalent adjustment based on a
     marginal federal corporate tax rate of 35%.

DEPOSITS AND FUNDS BORROWED

         Total deposits of $1.2 billion as of December 31, 2002 represented an
increase of $354.5 million, or 42%, from $850.5 million as of December 31, 2001.
Overall, each deposit category as a percentage of total deposits remained
relatively constant in 2002 as compared to 2001, with the exception of continued
growth in brokered deposits. During 2002, we continued to utilize brokered
deposits as an alternative source of liquidity as compared to traditional core
deposits. We expect to continue to rely on brokered deposits in 2003 as a source
of liquidity. Non-interest-bearing deposits were $89.0 million as of December
31, 2002, a $15.9 million increase over the $73.1 million reported as of
December 31, 2001. Interest-bearing demand deposits increased $12.8 million to
$64.9 million at December 31, 2002 compared to $52.1 million at December 31,
2001. Savings and money market deposit accounts increased by $126.0 million to
$488.9 million at December 31, 2002 as compared to $363.0 million at December
31, 2001. Other time deposits increased by approximately $59.3 million to $282.6
million as compared to $223.4 million at year-end 2001. Brokered deposits,
increased to $279.8 million at December 31, 2002 from $138.9 million at December
31, 2001.

                                       39



         The following table presents the balances of deposits by category and
each category as a percentage of total deposits at December 31, 2002 and 2001.



                                                                     DECEMBER 31,
                            -----------------------------------------------------------------------------------------------
                                        2002                             2001                             2000
                            -----------------------------    -----------------------------    -----------------------------
                                               PERCENT                          PERCENT                          PERCENT
                               BALANCE         OF TOTAL         BALANCE         OF TOTAL         BALANCE         OF TOTAL
                            -------------   -------------    -------------   -------------    -------------   -------------
                                                                (DOLLARS IN THOUSANDS)
                                                                                                      
Demand ..................   $      88,986               7%   $      73,146               9%   $      61,789               9%
Savings .................           6,344               1%          12,158               1%           8,242               1%
Interest-bearing demand .          64,893               5%          52,061               6%          51,301               8%
Money market ............         482,597              40%         350,829              41%         297,043              44%
Brokered deposits .......         279,806              23%         138,911              17%          43,842               7%
Other time deposits .....         282,645              24%         223,390              26%         208,029              31%
                            -------------   -------------    -------------   -------------    -------------   -------------
  Total deposits ........   $   1,205,271             100%   $     850,495             100%   $     670,246             100%
                            =============   =============    =============   =============    =============   =============


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

                                       DECEMBER 31,
                                  ---------------------
                                     2002        2001
                                  ---------   ---------
                                     (IN THOUSANDS)
Three months or less ..........   $ 162,619   $ 162,036
Over three through six months .      57,568      65,897
Over six through twelve months      132,036      87,043
Over twelve months ............     146,646      17,055
                                  ---------   ---------
  Total .......................   $ 498,869   $ 332,031
                                  =========   =========

         Over the past several years, 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, those deposits will be
replaced with traditional deposits, brokered deposits, borrowed money or
capital, or we will liquidate assets to reduce our funding needs.

         The scheduled maturities of time deposits (including brokered deposits)
as of December 31, 2002, for the years 2003 through 2007 and thereafter, are as
follows:

         For year ending December 31,
                         2003................................        $ 473,794
                         2004................................           66,138
                         2005................................            4,445
                         2006................................            2,605
                         2007 and thereafter.................           15,469
                                                                     ---------
                           Total ............................        $ 562,451
                                                                     =========

                                       40



         We continued to utilize brokered deposits as a source of funding for
growth in our loan and investment portfolios in 2002. In the past we have issued
certain brokered deposits that included call option provisions, which can
provide us with the opportunity to repay the certificates of deposit on a
specified date prior to the contractual maturity date. As of December 31, 2002,
there were no outstanding brokered deposits containing call provisions. The
following table presents the maturity and rate of our brokered deposits, net of
unamortized prepared brokered commissions as of December 31, 2002.

        Brokered Deposits net of unamortized prepaid brokered commissions
                       at December 31, 2002 (in thousands)



MATURITY DATE            RATE (1)               AMOUNT
- -------------           ---------             ---------
                                        
     11/13/07               3.400%            $   7,000
     10/18/04               2.300%                7,668
      8/30/04               2.500%               25,000
      4/21/04               2.100%               10,000
      4/19/04               2.250%                5,000
     12/31/03               1.800%                  953
     10/17/03               2.050%                3,000
     10/17/03               1.850%                6,699
     10/17/03               2.050%                5,000
       9/5/03               3.800%                2,394
      7/24/03               2.400%               17,425
      7/21/03               2.450%               15,312
      7/17/03               2.250%               20,000
      6/27/03               7.050%                4,548
      6/23/03               7.200%                2,594
      4/21/03               2.200%               11,063
      4/16/03               2.000%               10,000
      2/24/03               2.350%                5,037
      2/19/03               2.000%               10,000
      1/31/03               1.850%               13,867
      1/30/03               2.150%               20,000
      1/27/03               2.650%               10,000
      1/20/03               2.750%               19,970
      1/17/03               1.900%               12,858
      1/16/03               2.500%               10,000
      1/10/03               2.600%               25,000
                                              ---------
Total brokered deposits                       $ 280,388
Unamortized prepaid broker commissions             (582)
                                              ---------
Total brokered deposits, net of unamortized
 prepaid brokered commissions                 $ 279,806
                                              =========


(1)  Represents the coupon rate of each brokered deposit.

                                       41



         A summary of all funds borrowed and outstanding and the rate in effect
while such borrowings were outstanding, at the period end, is presented below:



               FUNDS BORROWED:                       CURRENT RATE      MATURITY       12/31/02       12/31/01       12/31/00
               -----------------------------------   ------------    ------------   ------------   ------------   ------------
                                                                                                   
               Subordinated note                             3.75%        2/11/07   $      5,000   $      5,000   $      5,000
               FHLB fixed advance(1)                         6.50%       10/23/05         26,616         24,886         25,000
               FHLB fixed advance                            6.21%       12/05/03         30,000         30,000         30,000
               FHLB fixed advance                            1.73%       11/07/03          6,000             --             --
               FHLB fixed advance                            2.21%       07/17/03          1,000             --             --
               FHLB fixed advance                            2.74%       07/17/03          1,000             --             --
               FHLB fixed advance                            2.46%       06/16/03            500             --             --
               FHLB fixed advance                            2.70%       05/08/03          1,000             --             --
               Borrowing under revolving line of
               credit facility                               3.50%        4/11/03         25,000             --             --
               FHLB fixed advance                            2.98%       03/10/03          1,000             --             --
               FHLB fixed advance                            2.38%       01/13/03          1,000             --             --
               FHLB fixed advance                            5.89%       12/20/02             --          1,000          1,000
               FHLB fixed advance                            2.39%       11/12/02             --          5,000             --
               FHLB fixed advance                            5.33%       07/22/02             --          1,000             --
               FHLB fixed advance                            5.91%       06/21/02             --            500            500
               FHLB fixed advance                            4.21%       05/13/02             --          1,000             --
               FHLB fixed advance                            5.02%       03/06/02             --          1,000             --
               FHLB fixed advance                            3.10%       02/11/02             --          5,000         18,000
               FHLB fixed advance                            4.30%       02/01/02             --         25,000             --
               FHLB fixed advance                            5.21%       01/22/02             --          1,000             --
               FHLB fixed advance                            6.49%       11/30/01             --             --          2,000
               FHLB floating rate advance(2)                 6.77%         5/1/01             --             --         10,000
               FHLB open line advance                        1.48%          daily          9,700         25,000             --
               Fed funds purchased                           1.49%          daily         98,000        103,000          2,700
               Demand repurchase agreements (3)              1.40%          daily          4,138          3,102          2,679
                                                                                    ------------   ------------   ------------
               Total funds borrowed                                                 $    209,954   $    231,488   $     96,879
                                                                                    ============   ============   ============


(1)  This FHLB advance is subject to a fair value hedge utilizing an interest
     rate swap with a fair value of $2.9 million. The contractual par amount on
     the advance is $25.0 million.
(2)  The rate on this FHLB floating rate advance is set at one-month LIBOR minus
     five basis points.
(3)  Demand repurchase agreements are a form of retail repurchase agreements
     offered to certain clients of The PrivateBank (Chicago). Funds are swept
     each business day from the client's demand deposit account. These amounts
     are not deposits and are not insured, but are secured by a pool of
     securities pledged specifically for this purpose.

         Membership in the Federal Home Loan Bank System gives us the ability to
borrow funds from the Federal Home Loan Bank of Chicago and from the Federal
Home Loan Bank of Des Moines for short- or long-term purposes under a variety of
programs. We have periodically used services of the FHLB for short-term funding
needs and other correspondent services.

         During 2002, we decreased our use of Federal Home Loan Bank advances to
fund loan growth. Management anticipates that our reliance on Federal Home Loan
Bank borrowings as a funding source will likely remain at current levels in 2003
to the extent that rates on Federal Home Loan Bank advances continue to be more
attractive than deposit pricing. Federal Home Loan Bank borrowings totaled $77.8
million at December 31, 2002 compared to $120.4 million at December 31, 2001.

                                       42



         At December 31, 2002 and 2001, we had $3.3 million in FHLB letters of
credit outstanding. We pay 0.125% per annum for FHLB letters of credit. The
following table shows the maximum availability for and usage of FHLB advances
and letters of credit for The PrivateBank (Chicago) and The PrivateBank (St.
Louis).

                                         MAXIMUM
DATE                                   AVAILABILITY       USAGE
- ----                                  -------------   -------------
                                             (IN THOUSANDS)
As of December 31, 2002-
  The PrivateBank (Chicago) .......   $      69,072          67,998
  The PrivateBank (St. Louis) .....          14,738          11,500

As of December 31, 2001-
  The PrivateBank (Chicago) .......   $     109,146   $     108,298
  The PrivateBank (St. Louis) .....          16,295          10,500

         We accept 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 December 31, 2002 and 2001, we had
approximately $149.0 million and $166.2 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.

         On February 11, 2002, the Company renewed the term on an $18.0 million
revolving credit facility with a commercial bank originally entered into on
February 11, 2000. On April 11, 2002, the loan agreement was amended and the
revolving line was increased to $25.0 million. Effective December 31, 2002, the
revolving line was increased to $35.0 million. The interest rate on borrowings
under this revolving line resets quarterly, and is based on, at our option,
either the lender's prime rate or three-month LIBOR plus 120 basis points with a
floor of 3.50%. The Company has elected to pay interest based on the three-month
LIBOR rate plus 120 basis points. The initial rate of interest on the revolver
was 7.20%, and most recently reset to 3.50% on December 31, 2002. The collateral
for this borrowing consists of the common stock of The PrivateBank (Chicago) and
The PrivateBank (St. Louis), which is held in custody by the lender. As of
December 31, 2002, the outstanding balance was $25.0 million.

         On February 11, 2000, the Company entered into a subordinated note
issued to Johnson International, Inc. and subsequently sold to a third party, in
the principal amount of $5.0 million. The interest on the subordinated note is
reset each quarter based on the three-month LIBOR rate. The note is payable in
full on or before February 11, 2007, and provides for certain rate escalation
beginning after February 11, 2002. On February 11, 2002, the interest rate
increased from LIBOR +50 basis points to LIBOR +200 basis points. This pricing
is in effect until February 11, 2004, at which point the pricing increases to
LIBOR +350 until maturity on February 11, 2007. The average rate of interest on
the subordinated note was 3.56% during 2002 compared to 4.86% during 2001 and
most recently reset to 3.75% on December 31, 2002. The Company has the right to
repay the subordinated note at any time after giving at least 30 days, but not
more than 60 days advance notice.

         On February 8, 2001, we issued $20.0 million in trust preferred
securities at a fixed rate of 9.50% which mature on December 31, 2030. At our
option, the securities may be redeemed prior to maturity on or after December
31, 2005. The trust preferred securities are presented in our consolidated
balance sheet as "Long-term debt-trust preferred securities." Upon receipt of
the net proceeds of $18.9 million, after deducting underwriting commissions and
offering expenses and including the underwriters' over-allotment shares, we
repaid the full amount of borrowings under a revolving line of credit with a
commercial bank in the amount of $18.0 million.

RISK MANAGEMENT

         We are exposed to market risk from changes in interest rates that could
affect our results of operations and financial condition. We manage our exposure
to these market risks through our regular operating and financing activities.
During 2001, we began to hedge interest rate risk through the use of derivative
financial instruments. We use derivative financial instruments as risk
management.

                                       43



INTEREST RATE RISK

         We use a combination of financial instruments, including medium-term
and short-term financings and variable-rate debt instruments and, to a lesser
extent, interest rate swaps to manage the interest rate mix of our total debt
portfolio and related cash flows. To manage this mix in a cost-effective manner,
in 2001 we entered into our first interest rate swap transaction in which we
agreed to receive a fixed rate in exchange for payment of a floating rate based
on an agreed-upon notional amount. The fair value of the swap associated with
this fair value hedge was $2.9 million on December 31, 2002. As market interest
rates continued to decline to historic lows in the second half of 2002, the
value of the Company's long-term tax-exempt bank-qualified municipal bond
portfolio increased. In order to protect this gain should rates rise, the
Company entered into a $25 million swap agreement whereby we sold the 10-year
swap and bought 3-month LIBOR to act as an economic hedge to a portion of our
long municipal bonds. At December 31, 2002 the market value of the interest rate
swap associated with this economic hedge was a liability of $1.1 million. The
loss on the swap is recognized in earnings and resulted from declines in market
rates of interest since the third quarter 2002.

         During 2002, we continued to actively manage our interest rate exposure
in our balance sheet. The declines in market rates gave us the opportunity to
make changes to our investment security portfolio as part of the implementation
of our asset/liability management strategies. Throughout 2002, we continued to
replace specific investment securities with alternative investment securities
with greater risk reward parameters on a selective basis. The improvements in
net interest margin resulting from the improved mix of investment securities
coupled with our lower yielding sources of funding offset the yield compression
experienced in our loan portfolio, which is more than half floating-rate based.

         We have not changed our interest rate risk management strategy from the
prior year and do not foresee or expect any significant changes in our exposure
to interest rate fluctuations, but we are considering expanding our use of
interest rate swaps on our debt obligations in the near future.

CAPITAL RESOURCES

         Stockholders' equity at December 31, 2002 rose to $89.1 million, an
increase of $26.8 million from the 2001 year-end level of $62.3 million, due
primarily to the increase in net income from the year ended December 31, 2002 as
well as the increase in the fair value of investment securities classified as
available for sale net of tax and increases in shares issued.

         We are subject to regulatory capital requirements administered by
federal banking agencies. Capital adequacy guidelines and prompt corrective
action regulations involve quantitative measures of assets, liabilities and
certain off-balance-sheet items calculated under regulatory accounting
practices. Capital amounts and classifications are also subject to qualitative
judgments by regulators about components, risk weightings and other factors, and
the regulators can lower classifications in certain areas. Failure to meet
various capital requirements can initiate regulatory action that could have a
direct material effect on the financial statements.

         The prompt corrective action regulations provide five classifications:
well-capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If a banking subsidiary is not
"well capitalized," regulatory approval is required to accept brokered deposits.
If undercapitalized, capital distributions are limited as is asset growth and
expansion and plans for capital restoration are required.

         The following table reflects various consolidated measures of our
capital at December 31, 2002 and 2001:

                                                        DECEMBER 31,
                                                     -----------------
                                                     2002         2001
                                                     ----         ----
          Leverage ratio..........................   5.47%        6.64%
          Tier 1 risk-based capital ratio.........   6.91         8.18
          Total risk-based capital ratio..........   8.29         9.71
          Total equity to total assets............   5.77         5.29

                                       44



         As of December 31, 2002, all of the Company's $20.0 million of trust
preferred securities are included in Tier 1 capital. The Tier 1 qualifying
amount is limited to 25% of Tier 1 capital under Federal Reserve regulations.
The entire amount of trust preferred securities qualifies as Tier 1 capital.

         A portion of the subordinated note in the amount of $5.0 million that
was issued to Johnson International as consideration in connection with the
Johnson Bank Illinois acquisition qualifies as Tier 2 capital for regulatory
capital purposes.

         To be considered "well capitalized," an entity must maintain a leverage
ratio of at least 5.0%, a Tier 1 risk-based capital ratio of at least 6.0%, and
a total risk-based capital ratio of at least 10.0%. To be "adequately
capitalized," an entity must maintain a leverage ratio of at least 4.0%, a Tier
1 risk-based capital ratio of at least 4.0%, and a total risk-based capital
ratio of at least 8.0%. At December 31, 2002, we continued to exceed the minimum
levels of all regulatory capital requirements, and were considered "adequately
capitalized" under regulatory standards. At December 31, 2002, our total
risk-based capital ratio was 8.29%. With the exception of the total risk-based
capital ratio, we exceeded the "well-capitalized" levels of our regulatory
capital requirements. At December 31, 2002, The PrivateBank (Chicago) and The
PrivateBank (St. Louis) were considered "well-capitalized" under all applicable
regulatory standards, including total risk-based capital ratio.

LIQUIDITY

         Liquidity measures our ability to meet maturing obligations and our
existing commitments, to withstand fluctuations in deposit levels, to fund our
operations and to provide for our clients' credit needs. Our liquidity
principally depends on our cash flows from our operating activities, investment
in and maturity of assets, changes in balances of deposits and borrowings and
our ability to borrow funds in the money or capital markets. Liquidity
management 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 banks' asset/liability committees, which take into
account the marketability of assets, the sources and stability of funding and
the level of unfunded commitments. Our principal sources of funds are deposits,
short-term borrowings and capital contributions by PrivateBancorp to the banks
funded by proceeds from draws on our line of credit or through new capital.

         Our core deposits, the most stable source of liquidity due to the
nature of long-term relationships generally established with our clients, are
available to provide long-term liquidity. At December 31, 2002, 56% of our total
assets were funded by core deposits, even with December 31, 2001 levels. Core
deposits are defined to include all deposits including time deposits but
excluding brokered deposits and public funds. Time deposits are included as core
deposits since these deposits have historically not been volatile deposits for
us.

         Over the past several years, 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 deposit are not
renewed and the funds are withdrawn from the bank, unless those deposits are
replaced with traditional deposits, brokered deposits, borrowed money or
capital, we will liquidate assets to reduce our funding needs.

         We have continued to use Federal Home Loan Bank advances and brokered
deposits as alternative methods of funding loan growth. During 1999, we first
utilized brokered deposits as a funding tool to enhance liquidity in
anticipation of increasing loan demand. During 2002 and 2001 we expanded our
brokered deposits program in order to fund liquidity of The PrivateBank
(Chicago). In 2003 we expect to continue to rely on brokered deposits together
with increased Federal Home Loan Bank advances as alternative methods of funding
loan growth. We will first look toward internally generated deposits as funding
sources, but plan to supplement our funding needs with non-traditional funding
sources as needed. The PrivateBank (St. Louis) also purchases brokered deposits
in the absence of traditional deposit growth sufficient to fund the expected
loan growth in that market.

         Liquid assets refer 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 secure public
funds. At December 31, 2002, net liquid assets at The PrivateBank (Chicago) were
$300.6 million as compared to $240.3 million at December 31, 2001. At December
31, 2002, net liquid assets at The PrivateBank (St. Louis) were $22.1 million as
compared to $18.2 million at December 31, 2001.

                                       45



         Net cash inflows provided by operations were $17.4 million for the year
ended December 31, 2002 compared to a net inflow of $9.6 million a year earlier.
Net cash outflows from investing activities were $338.5 million for the year
ended December 31, 2002, compared to a net cash outflow of $363.0 million a year
earlier. Cash inflows from financing activities for the year ended December 31,
2002 were $333.0 million compared to a net inflow of $335.7 million in 2001.

         In the event of short-term liquidity needs, The PrivateBank (Chicago)
and The PrivateBank (St. Louis) may purchase federal funds from correspondent
banks. In addition, we currently have available borrowing capacity of $10
million under the $35.0 million credit facility at the holding company. We
utilize this credit facility from time to time for general business purposes.

IMPACT OF INFLATION

         Our consolidated financial statements and the related notes thereto
included in this report 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.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         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 is monitored by management.
Our asset/liability management 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.
The policy also states our reporting requirements to our board of directors. The
investment policy complements the 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.

         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 generally 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
December 31, 2002 was 0.85 and was within 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
will hurt our earnings, while a short-term drop in interest rates would help our
earnings.

         Interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously. There are other factors that 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 that 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

                                       46



increase our returns.

         The following tables illustrate the estimated interest rate sensitivity
and periodic and cumulative gap positions calculated as of December 31, 2002 and
2001.



                                                                       DECEMBER 31, 2002
                                                                 TIME TO MATURITY OR REPRICING
                                                                    (DOLLARS IN THOUSANDS)
                                                                91-365                     OVER 5
                                                   0-90 DAYS     DAYS       1-5 YEARS      YEARS          TOTAL
                                                                                          
            INTEREST-EARNING ASSETS
            Loans                                  $ 635,664   $    77,465   $   175,066   $    79,197   $   967,392
            Investments                              163,621        21,138        26,576       261,208       472,543
            Short-term investments                       258             -             -             -           258
                                                   ---------   -----------   -----------   -----------   -----------
            Total interest-earning assets          $ 799,543   $    98,603   $   201,642   $   340,405   $ 1,440,193
                                                   =========   ===========   ===========   ===========   ===========

            INTEREST-BEARING LIABILITIES
            Interest-bearing demand                $       -   $         -   $         -   $    64,892   $    64,892
            Savings and money market                 486,819         1,262             -           859       488,940
            Time deposits                            191,238       205,474        91,872        73,868       562,452
            Funds borrowed                           143,838        31,500        53,000             -       228,338
                                                   ---------   -----------   -----------   -----------   -----------
            Total interest-bearing  liabilities    $ 821,895   $   238,236   $   144,872   $   139,619   $ 1,344,622
                                                   =========   ===========   ===========   ===========   ===========

            CUMULATIVE
              Rate sensitive assets (RSA)          $ 799,543   $   898,146   $ 1,099,788   $ 1,440,193
              Rate sensitive liabilities (RSL)       821,895     1,060,131     1,205,003     1,344,622

            GAP (GAP=RSA-RSL)                        (22,352)     (161,985)     (105,215)       95,571
            RSA/RSL                                    97.28%        84.72%        91.27%       107.11%
            RSA/Total assets                           51.80%        58.19%        71.26%        93.31%
            RSL/Total assets                           53.25%        68.69%        78.07%        87.12%
            GAP/Total assets                            1.45%        10.50%         6.82%         6.19%
            GAP/Total RSA                               2.80%        18.04%         9.57%         6.64%




                                                                       DECEMBER 31, 2001
                                                                 TIME TO MATURITY OR REPRICING
                                                                    (DOLLARS IN THOUSANDS)
                                                                  91-365                     OVER 5
                                                   0-90 DAYS       DAYS       1-5 YEARS      YEARS          TOTAL
                                                                                          
            INTEREST-EARNING ASSETS
            Loans                                  $ 467,083   $    66,521   $   204,859   $    53,643   $   792,106
            Investments                               95,269         8,516        45,147       183,511       332,443
            Short-term investments                       518             -             -             -           518
                                                   ---------   -----------   -----------   -----------   -----------
            Total interest-earning assets          $ 562,870   $    75,037   $   250,006   $   237,154   $ 1,125,067
                                                   =========   ===========   ===========   ===========   ===========

            INTEREST-BEARING LIABILITIES
            Interest-bearing demand                $       -   $         -   $         -   $    52,061   $    52,061
            Savings and money market                 205,926       144,903             -         4,450       355,279
            Time deposits                            173,401       171,111        20,978         4,519       370,009
            Funds borrowed                           168,102         8,500        75,000             -       251,602
                                                   ---------   -----------   -----------   -----------   -----------
            Total interest-bearing liabilities     $ 547,429   $   324,514   $    95,978   $    61,030   $ 1,028,951
                                                   =========   ===========   ===========   ===========   ===========
            CUMULATIVE
              Rate sensitive assets (RSA)          $ 562,870   $   637,907   $   887,913   $ 1,125,067
              Rate sensitive liabilities (RSL)       547,429       871,943       967,921     1,028,951

            GAP (GAP=RSA-RSL)                         15,441      (234,036)      (80,008)       96,116
            RSA/RSL                                   102.82%        73.16%        91.73%       109.34%
            RSA/Total assets                           47.83%        54.21%        75.45%        95.61%
            RSL/Total assets                           46.52%        74.10%        82.25%        87.44%
            GAP/Total assets                            1.31%        19.89%         6.80%         8.17%
            GAP/Total RSA                               2.74%        36.69%         9.01%         8.54%


                                       47



         The following table shows the impact of an immediate 200 basis point
change in interest rates as of December 31, 2002 and December 31, 2001. The
effects are determined through the use of a simulation model based on our
earning asset and interest-bearing liability portfolios, assuming the size of
these portfolios remains constant from the balance sheet date throughout the
one-year measurement period. The simulation assumes that assets and liabilities
accrue interest on their current pricing basis. Assets and liabilities then
reprice based on their terms and remain at that interest rate through the end of
the measurement period. The model attempts to illustrate the potential change in
net interest income if the foregoing occurred.



                                                                     DECEMBER 31, 2002             DECEMBER 31, 2001
                                                                ---------------------------   ---------------------------
                                                                 +200 BASIS     -200 BASIS     +200 BASIS     -200 BASIS
                                                                   POINTS         POINTS         POINTS         POINTS
                                                                ------------   ------------   ------------   ------------
                                                                                                          
Percentage change in net interest income due to
 an immediate 200 basis point change in
 interest rates over a one-year time horizon.................            2.9%         -10.5%           3.0%          -4.7%


         This table shows that if there had been an instantaneous parallel shift
in the yield curve of -200 basis points on December 31, 2002 and December 31,
2001, we would suffer a decline in net interest income of -10.5% and -4.7%,
respectively over each one-year period. Conversely, a shift of +200 basis points
would increase net interest income 2.9% over a one-year horizon based on
December 31, 2002 balances, as compared to 3.0% measured on the basis of the
December 31, 2001 portfolio.

         Changes in the effect on net interest income from a 200 basis point
movement at December 31, 2002, compared to December 31, 2001 are due to the
timing and nature of the repricing of rate sensitive assets to rate sensitive
liabilities within the one year time frame. Although we are negatively gapped
within one year, the asset sensitive position of the balance sheet in the first
90 days of the simulation, coupled with the timing of repricing within the 91 to
365 day bucket, leads to the increase in net interest income from a +200 basis
point move. The difference in the effect on net interest income at December 31,
2002 as compared to December 31, 2001 is due to the differences in the timing,
balances, and current rates versus simulated rates of repricing assets and
liabilities.

         Management's likely reaction to changes in interest rates is
incorporated in assumptions made in these calculations. Differences in these
assumptions between the reporting periods have also had the effect of reducing
the impact of a changing interest rate environment.

         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 our 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.

         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.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See "Index to Consolidated Financial Statements" on page F-1.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

         Effective May 23, 2002, we changed our independent public accountants
from Arthur Andersen LLP to Ernst

                                       48



& Young LLP. This change was previously reported in our current report on Form
8-K, as filed with the Securities and Exchange Commission on May 24, 2002.

         On May 23, 2002, the Audit Committee of the Board of directors of the
Company approved a change in auditors. The Board of Directors ratified the Audit
Committee's engagement of Ernst & Young LLP to serve as the Company's
independent public accountants, effective immediately. Andersen had been the
Company's independent public accountants since 1991.

         Andersen's reports on the consolidated financial statements of the
Company and its subsidiaries for the two fiscal years ended December 31, 2001
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.

         During the Company's two fiscal years ended December 31, 2001 and the
subsequent interim period through May 23, 2002, there were no disagreements
between the Company and Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Andersen's satisfaction, would have caused
them to make reference to the subject matter of the disagreement in connection
with their reports on the Company's consolidated financial statements for such
years; and there were no reportable events as described in Item 304 (a)(1)(v) of
Regulation S-K.

         The Company provided Andersen with a copy of the foregoing disclosures.
A copy of Andersen's letter, dated May 24, 2002, stating its agreement with such
statements was filed with the SEC as an exhibit to the Company's Current Report
on Form 8-K dated May 24, 2002.

         During the Company's two fiscal years ended December 31, 2001 and the
subsequent interim period through May 23, 2002, the Company did not consult with
Ernst & Young LLP with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated financial
statements, or any other matters or reportable events as set forth in Items
304(a)(2)(i) and (ii) of Regulation S-K.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

         Information regarding directors of the Company is included in the
Company's Proxy Statement for its 2003 Annual Meeting of Stockholders (the
"Proxy Statement") under the heading "Election of Directors" and the information
included therein is incorporated herein by reference. Information regarding the
executive officers of the Company is included in "Part I., Item 1. Business."

ITEM 11.  EXECUTIVE COMPENSATION

         Information regarding compensation of executive officers and directors
is included in the Company's Proxy Statement under the headings "Board of
Directors' Compensation," "Executive Compensation," and "Employment Agreements"
and the information included therein is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information regarding security ownership of certain beneficial owners
and management is included in the Company's Proxy Statement under the heading
"Security Ownership of Certain Beneficial Owners, Directors and Executive
Officers" and the information included therein is incorporated herein by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information regarding certain relationships and related transactions is
included in the Company's Proxy Statement under the heading "Transactions with
Related Persons" and the information included therein is incorporated herein by
reference.

                                       49





ITEM 14.  CONTROLS AND PROCEDURES

         Within 90 days prior to the date of filing this annual report, the
Company's Chief Executive Officer and Chief Financial Officer carried out an
evaluation under their supervision, with the participation of other members of
management as they deemed appropriate, of the effectiveness of the design and
the operation of the Company's disclosure controls and procedures as
contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date of that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective, in all
material respects, in timely alerting them to material information relating to
the Company (and its consolidated subsidiaries) required to be included in the
periodic reports the Company is required to file and submit to the SEC under the
Exchange Act.

         There have been no significant changes to the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date that the internal controls were most recently evaluated.
There were no significant deficiencies or material weaknesses identified in that
evaluation and, therefore, no corrective actions were taken.

                                     PART IV

ITEM. 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)    INDEX TO FINANCIAL STATEMENTS

         The consolidated financial statements of the Company and its
subsidiaries as required by Item 8 are filed as a part of this document. See
"Index to Consolidated Financial Statements" on page F-1.

(a)(2)    Financial Statement Schedules

         All financial statement schedules called for by Item 8 and Item 14 of
Form 10-K have been omitted because the information requested is either not
applicable or has been included in the consolidated financial statements or
notes thereto.

(a)(3)    EXHIBITS

                                  EXHIBIT INDEX

EXHIBIT NO.    DESCRIPTION OF EXHIBITS
- -----------    -----------------------
3.1            Amended and Restated Certificate of Incorporation of
               PrivateBancorp, Inc. (Filed as an exhibit to the Company's Form
               S-1 Registration Statement (File No. 333-77147) and incorporated
               herein by reference).
3.2            [Intentionally left blank]
3.3            Amended and Restated By-laws of PrivateBancorp, Inc. (Filed as an
               exhibit to the Company's Annual Report on Form 10-K for the
               fiscal year ended December 31, 2000 and incorporated herein by
               reference).
4.1            Subordinated Note of PrivateBancorp Inc., dated February 11,
               2000, principal amount of $5 million due February 11, 2007,
               issued to Johnson International, Inc. (Filed as an exhibit to the
               Company's Annual Report on Form 10-K for the fiscal year ended
               December 31, 1999 and incorporated herein by reference).
4.2            Certain instruments defining the rights of the holders of
               long-term debt of the Company and certain of its subsidiaries,
               none of which authorize a total amount of indebtedness in excess
               of 10% of the total assets of the Company and its subsidiaries on
               a consolidated basis, have not been filed as Exhibits. The
               Company hereby agrees to furnish a copy of any of these
               agreements to the SEC upon request.
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 (Filed as
               an exhibit to the Company's Form S-1 Registration Statement (File
               No. 333-77147) and incorporated herein by reference).
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 (Filed as an exhibit to the
               Company's Form S-1 Registration Statement (File No. 333-77147)
               and incorporated herein by reference).


                                       50



EXHIBIT NO.    DESCRIPTION OF EXHIBITS
- -----------    -----------------------
10.3           First Amendment to lease dated May 31, 2001 by and between
               Columbia Lisle Limited Partnership and The PrivateBank and Trust
               Company (Filed as an exhibit to the Company's Form 10-Q for the
               quarter ended September 30, 2001 and incorporated herein by
               reference).
10.4           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 (Filed as an exhibit
               to the Company's Form S-1 Registration Statement (File No.
               333-77147) and incorporated herein by reference).
10.5           Building Lease by and between Towne Square Realty, L.L.C. and The
               PrivateBank and Trust Company dated August 6, 1999 (Filed as an
               exhibit to the Company's Annual Report on Form 10-K for the
               fiscal year ended December 31, 1999 and incorporated herein by
               reference).
10.6           First Amendment to lease dated January 1, 2002 by and between
               Towne Square Realty, L.L.C. and The PrivateBank and Trust
               Company.
10.7           Sublease Agreement for banking facility located at 1401 South
               Brentwood Blvd., St. Louis, Missouri, dated as of December
               13,1999, by and between Union Planters Bank, National
               Association, St. Louis Brentwood Associates, L.P. and
               PrivateBancorp, Inc. (Filed as an exhibit to the Company's
               Quarterly Report on Form 10-Q for the quarter ended March 31,
               2000 and incorporated herein by reference).
10.8           Lease Agreement by and between Shodeen Management Company as
               agent for the beneficiaries of a land trust with Harris Bank St.
               Charles, pursuant to Trust Agreement dated March 4, 1994, and
               known as Trust No. 2321, and The PrivateBank and Trust Company
               dated January 9, 2001, for banking facility located at 312
               Crescent Place, Geneva, Illinois (Filed as an exhibit to the
               Company's Quarterly Report on Form 10-Q for the quarter ended
               March 31, 2001 and incorporated herein by reference).
10.9           Lease Agreement dated August 31, 1995 between 208 South LaSalle
               Associates, L.P. and Lodestar Financial Services, Inc.+
10.10          First Amendment to lease dated February 15, 2000 between
               LaSalle-Adams, L.L.C. and Lodestar Financial Services, Inc.+
10.11          Second Amendment to lease dated August 12, 2002 between
               LaSalle-Adams, L.L.C. and Lodestar Investment Counsel, Inc.+
10.12          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 filed as Exhibit 10.6 to the Company's Form S-1
               Registration Statement (File No. 333-77147) and incorporated
               herein by reference).
10.13          PrivateBancorp, Inc. Amended and Restated Stock Incentive Plan
               (filed as Appendix A to the Company's Proxy Statement for its
               2000 Annual Meeting of Stockholders and incorporated herein by
               reference).*
10.14          Employment Agreement by and between Ralph B. Mandell and
               PrivateBancorp, Inc. dated July 1, 2001 (Filed as an exhibit to
               the Company's Quarterly Report on Form 10-Q for the quarter ended
               September 30, 2001 and incorporated herein by reference).*
10.15          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 (Filed as
               an exhibit to the Company's Form S-1 Registration Statement (File
               No. 333-77147) and incorporated herein by reference).
10.16          Employment Agreement by and between Richard C. Jensen and
               PrivateBancorp, Inc. dated as of July 27, 2000 (Filed as an
               exhibit to the Company's Form S-1 Registration Statement (File
               No. 333-52676) and incorporated herein by reference ).*
10.17          Form of Indemnification Agreement by and between PrivateBancorp,
               Inc. and its directors and executive officers (Filed as an
               exhibit to the Company's Form S-1 Registration Statement (File
               No. 333-77147) and incorporated herein by reference).*
10.18          Agreement and Plan of Reorganization by and between
               PrivateBancorp, Inc. and Towne Square Financial Corporation dated
               as of June 24, 1999 (Filed as an exhibit to the Company's Form
               S-1 Registration Statement (File No. 333-77147) and incorporated
               herein by reference).
10.19          Stock Purchase Agreement dated as of October 4, 1999 by and among
               PrivateBancorp, Inc., Johnson International, Inc. and Johnson
               Bank Illinois (Filed as an exhibit to the Company's Quarterly
               Report on Form 10-Q for the quarter ended September 30, 1999 and
               incorporated herein by reference).
10.20          Loan Agreement dated as of February 11, 2000, between
               PrivateBancorp, Inc. and LaSalle Bank National Association (Filed
               as an exhibit to the Company's Annual Report on Form 10-K for the
               fiscal year ended December 31, 1999 and incorporated herein by
               reference).
10.21          Amendment No. 1 to Loan Agreement dated as of February 11, 2002
               between PrivateBancorp, Inc. and LaSalle Bank National
               Association. (Filed as an exhibit to the Company's Quarterly
               Report on Form 10-Q for the quarter ended March 31, 2002 and
               incorporated herein by reference).
10.22          Amendment No. 2 to Loan Agreement dated as of April 11, 2002
               between PrivateBancorp, Inc. and LaSalle Bank National
               Association. (Filed as an exhibit to the Company's Quarterly
               Report on Form 10-Q for the quarter ended June 30, 2002 and
               incorporated herein by reference).

                                       51



EXHIBIT NO.    DESCRIPTION OF EXHIBITS
- -----------    -----------------------
10.23          Amendment No. 3 to Loan Agreement dated as of December 24, 2002
               between PrivateBancorp, Inc. and LaSalle Bank National
               Association.+
10.24          Letter Agreement dated September 26, 2000 by and between
               PrivateBancorp, Inc., The PrivateBank and Trust Company and
               Donald A. Roubitchek (Filed as an exhibit to the Company's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2000 and incorporated herein by reference).*
10.25          Employment Agreement by and between William Goldstein and
               Lodestar Investment Counsel LLC, dated as of December 30, 2002.+
12.1           Calculation of Ratio of Earnings to Fixed Charges.+
21.1           Subsidiaries of the Registrant.+
23.1           Consent of Ernst & Young LLP.+
24.1           Powers of Attorney (set forth on signature page).
99.1           Certification of Chief Executive Officer pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.+
99.2           Certification of Chief Financial Officer pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.+

+      Filed herewith.
*      Indicates management contracts or compensatory plans or arrangements
       required to be filed as an exhibit.

(b)      REPORTS ON FORM 8-K

         The following Current Reports on Form 8-K were filed by the Company
during the last quarter of fiscal 2002:

       Form 8-K dated October 17, 2002.
       Form 8-K dated October 21, 2002.
       Form 8-K dated December 30, 2002.

                                       52



                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 3, 2003                          PRIVATEBANCORP, INC.

                                              By:  /s/ RALPH B. MANDELL
                                              -------------------------

                                                   Ralph B. Mandell,
                                                   Chairman, President and Chief
                                                   Executive Officer

                                       53




                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Ralph B. Mandell and Gary L. Svec, and
each of them, the true and lawful attorney-in-fact and agents of the
undersigned, with full power of substitution and resubstitution, for and in the
name, place and stead of the undersigned, to sign any and all amendments to this
Annual Report on Form 10-K, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully as to all intents and purposes as
each of the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

SIGNATURE                      TITLE                             DATE

/s/   RALPH B. MANDELL         Chairman, President, Chief        March 3, 2003
- ----------------------         Executive Officer and Director

Ralph B. Mandell

/s/   CAREN L. REED            Director                          March 3, 2003
- -------------------

Caren L. Reed

/s/   GARY L. SVEC             Chief Financial Officer           March 3, 2003
- ------------------

Gary L. Svec

/s/   LISA M. O'NEILL          Controller                        March 3, 2003
- ---------------------

Lisa M. O'Neill

/s/   DONALD L. BEAL           Director                          March 3, 2003
- --------------------

Donald L. Beal

/s/   NAOMI T. BORWELL         Director                          March 3, 2003
- ----------------------

Naomi T. Borwell

/s/   WILLIAM A. CASTELLANO    Director                          March 3, 2003
- ---------------------------

William A. Castellano

/s/   ROBERT F. COLEMAN        Director                          March 3, 2003
- -----------------------

Robert F. Coleman

/s/   JOHN E. GORMAN           Director                          March 3, 2003
- --------------------

John E. Gorman

/s/   ALVIN J. GOTTLIEB        Director                          March 3, 2003
- -----------------------

Alvin J. Gottlieb

                                       54



/s/   JAMES M. GUYETTE         Director                          March 3, 2003
- ----------------------

James M. Guyette

/s/   RICHARD C. JENSEN        Director                          March 3, 2003
- -----------------------

Richard C. Jensen

/s/   PHILIP M. KAYMAN         Director                          March 3, 2003
- ----------------------

Philip M. Kayman

/s/   WILLIAM R. LANGLEY       Director                          March 3, 2003
- ------------------------

William R. Langley

/s/   THOMAS F. MEAGHER        Director                          March 3, 2003
- -----------------------

Thomas F. Meagher

/s/   WILLIAM J. PODL          Director                          March 3, 2003
- ---------------------

William J. Podl

/s/   MICHAEL B. SUSMAN        Director                          March 3, 2003
- -----------------------

Michael B. Susman

                                       55



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                              PRIVATEBANCORP, INC.



                                                                                                                   Page
                                                                                                                   ----
                                                                                                                 
Report of Ernst & Young LLP, Independent Public Accountants.......................................................  F-2

2001 Report of Arthur Andersen LLP, Independent Public Accountants................................................  F-3

Consolidated Balance Sheets as of December 31, 2002 and 2001......................................................  F-4

Consolidated Statements of Income for the years ended December 31, 2002, 2001, and 2000...........................  F-5

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2002,
     2001, and 2000...............................................................................................  F-6

Consolidated Statements of Cash Flow for the years ended December 31, 2002, 2001, and 2000........................  F-7

Notes to Consolidated Financial Statements........................................................................  F-8

Selected Quarterly Financial Data (unaudited).....................................................................  F-34


                                       F-1




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Shareholders and Board of Directors
PrivateBancorp, Inc.

We have audited the accompanying consolidated balance sheet of PrivateBancorp,
Inc. and subsidiaries as of December 31, 2002, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
year then ended. 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 audit. The financial statements of
PrivateBancorp, Inc. as of December 31, 2001, and for the two years in the
period ended December 31, 2001, were audited by other auditors who have ceased
operations. Those auditors expressed an unqualified opinion on those financial
statements in their report dated January 17, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of PrivateBancorp,
Inc. and subsidiaries as of December 31, 2002, and the consolidated results of
their operations and their cash flows for the year ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 1 to the financial statements, in 2002 the Company changed
its method of accounting for goodwill.

January 20, 2003

                                       F-2



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
PrivateBancorp, Inc.:

We have audited the accompanying consolidated balance sheets of PRIVATEBANCORP,
INC. (the Company) (a Delaware corporation) AND SUBSIDIARIES as of December 31,
2001 and 2000, 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, 2001. 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 auditing standards generally accepted
in the United States. 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 financial statements referred to above present fairly, in
all material respects, the financial position of PrivateBancorp, Inc. and
Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

/s/ Arthur Andersen LLP

Chicago, Illinois
January 17, 2002

    Note: This is a duplicate of the opinion issued by former auditors Arthur
     Andersen LLP on 2001 financials. This opinion was not reissued for the
                                   2002 audit.

                                       F-3



                              PRIVATEBANCORP, INC.

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2002 AND 2001
                      (In thousands, except per share data)



                                                                                                      DECEMBER 31,
                                                                                             --------------------------
                                                                                                 2002           2001
                                                                                             -----------    -----------
                                                                                                      
ASSETS
Cash and due from banks...................................................................   $    34,529    $    22,283
Fed Funds sold and other short-term investments...........................................           258            518
                                                                                             -----------    -----------
     Total cash and cash equivalents......................................................        34,787         22,801
                                                                                             -----------    -----------
Loans held for sale.......................................................................        14,321         11,335
Available-for-sale securities, at fair value..............................................       487,020        332,933
Loans net of unearned discount............................................................       965,641        780,771
     Allowance for loan losses............................................................       (11,585)        (8,306)
                                                                                             -----------    -----------
     Net loans............................................................................       954,056        772,465
                                                                                             -----------    -----------
Goodwill and other intangibles............................................................        21,742         10,805
Premises and equipment, net...............................................................         6,851          3,814
Accrued interest receivable...............................................................         9,427          7,262
Other assets..............................................................................        15,210         15,353
                                                                                             -----------    -----------
     Total assets.........................................................................   $ 1,543,414    $ 1,176,768
                                                                                             ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits:
     Noninterest-bearing..................................................................   $    88,986    $    73,146
     Interest-bearing.....................................................................        64,893         52,061
Savings and money market deposit accounts.................................................       488,941        362,987
Brokered deposits.........................................................................       279,806        138,911
Other time deposits.......................................................................       282,645        223,390
                                                                                             -----------    -----------
     Total deposits.......................................................................     1,205,271        850,495
                                                                                             -----------    -----------
Funds borrowed............................................................................       209,954        231,488
Trust preferred securities................................................................        20,000         20,000
Accrued interest payable..................................................................         4,986          2,112
Other liabilities.........................................................................        14,111         10,369
                                                                                             -----------    -----------
     Total liabilities....................................................................   $ 1,454,322    $ 1,114,464
                                                                                             ===========    ===========
STOCKHOLDERS' EQUITY
Preferred Stock, 1,000,000 shares authorized..............................................            --             --
Common stock, without par value, $1 stated value; 12,000,000 shares
 authorized; 7,704,203 and 7,206,420 shares issued and outstanding as of
 December 31, 2002 and December 31, 2001, respectively....................................         7,704          7,206
Surplus...................................................................................        45,367         39,114
Retained earnings.........................................................................        27,784         17,468
Accumulated other comprehensive income....................................................         8,826            323
Deferred compensation.....................................................................          (589)          (857)
Loans to officers.........................................................................            --           (950)
                                                                                             -----------    -----------
     Total stockholders' equity...........................................................        89,092         62,304
                                                                                             -----------    -----------
     Total liabilities and stockholders' equity...........................................   $ 1,543,414    $ 1,176,768
                                                                                             ===========    ===========


   Note: All previously reported share and per share data has been restated to
     reflect the 3-for-2 stock split which occurred on January 17, 2003. The
     accompanying notes to consolidated financial statements are an integral
                            part of these statements.

                                       F-4



                              PRIVATEBANCORP, INC.

                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                      (In thousands, except per share data)



                                                                                         YEAR ENDED DECEMBER 31,
                                                                                -----------------------------------------
                                                                                   2002           2001            2000
                                                                                ----------   -------------   ------------
                                                                                                    
INTEREST INCOME
Loans, including fees........................................................   $   52,560   $      50,975   $     48,633
Federal funds sold and interest bearing deposits.............................          126             244          1,058
Securities:
      Taxable................................................................       13,282          10,901          5,725
      Exempt from Federal Income taxes.......................................        5,874           3,476          1,730
                                                                                ----------   -------------   ------------
         Total interest income...............................................       71,842          65,596         57,146
                                                                                ----------   -------------   ------------
INTEREST EXPENSE
Deposits:
      Interest-bearing demand................................................          636             923            869
      Savings and money market deposit accounts..............................        7,328          11,365         13,711
      Time deposits..........................................................       16,014          17,291         14,635
Funds borrowed...............................................................        5,325           6,327          4,116
Trust preferred securities...................................................        1,939           1,731             --
                                                                                ----------   -------------   ------------
      Total interest expense.................................................       31,242          37,637         33,331
                                                                                ----------   -------------   ------------
      Net interest income....................................................       40,600          27,959         23,815
Provision for loan losses....................................................        3,862           3,179          1,690
                                                                                ----------   -------------   ------------
      Net interest income after provision for loan losses....................       36,738          24,780         22,125
                                                                                ==========   =============   ============
NON-INTEREST INCOME
      Banking, wealth management services and other income...................        7,081           4,028          3,077
      Securities net gains...................................................           11           2,095             92
      Trading losses on interest rate swap...................................         (943)             --             --
                                                                                ----------   -------------   ------------
         Total non-interest income...........................................        6,149           6,123          3,169
                                                                                ----------   -------------   ------------
NON-INTEREST EXPENSE
      Salaries and employee benefits.........................................       13,979           9,111          8,174
      Severance charge.......................................................           --              --            562
      Occupancy expense, net.................................................        4,891           4,158          2,987
      Professional fees......................................................        3,689           2,939          2,135
      Marketing..............................................................        1,648           1,208          1,202
      Data processing........................................................        1,509           1,295            820
      Goodwill amortization..................................................           --             824            731
      Insurance..............................................................          455             354            303
      Other..................................................................        2,436           2,763          1,692
                                                                                ----------   -------------   ------------
         Total non-interest expense..........................................       28,607          22,652         18,606
                                                                                ----------   -------------   ------------
      Income before income taxes.............................................       14,280           8,251          6,688
      Income tax provision...................................................        3,273           2,051          2,263
                                                                                ----------   -------------   ------------
         Net income..........................................................   $   11,007   $       6,200   $      4,425
                                                                                ==========   =============   ============
Basic earnings per share.....................................................   $     1.49   $        0.88   $       0.64
Diluted earnings per share...................................................   $     1.42   $        0.85   $       0.62


   Note: All previously reported share and per share data has been restated to
     reflect the 3-for-2 stock split which occurred on January 17, 2003. The
     accompanying notes to consolidated financial statements are an integral
                            part of these statements.

                                       F-5



                              PRIVATEBANCORP, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
                                 (In thousands)



                                                                              ACCUMULATED
                                                                                 OTHER                         LOANS
                                          COMMON                 RETAINED    COMPREHENSIVE     DEFERRED          TO         TOTAL
                                           STOCK      SURPLUS    EARNINGS        INCOME      COMPENSATION     OFFICERS      EQUITY
                                         ---------   ---------   ---------   -------------   -------------    ---------   ---------
                                                                                                     
     Balance 1/1/00                      $   6,885   $  37,466   $   7,425   $      (2,812)  $        (759)   $  (1,125)  $  47,080
     Net income                                                      4,425                                                    4,425
     Change in unrealized gain on
      available-for-sale securities,
       net of tax                                                                    2,694                                    2,694
                                         ------------------------------------------------------------------------------------------
     Total Comprehensive Income                  -           -       4,425           2,694               -            -       7,119
                                         ------------------------------------------------------------------------------------------
     Dividends declared ($.07 per
      share)                                                          (462)                                                    (462)
     Issuance of Stock                          50         330                                                                  380
     Awards granted, net of forfeitures                                                               (270)                    (270)
     Amortization of deferred
      compensation                                                                                     227                      227
     Repayment of loans to officers                                                                                 175         175
                                         ------------------------------------------------------------------------------------------
     Balance 12/31/00                    $   6,935   $  37,796   $  11,388   $        (118)  $        (802)   $    (950)  $  54,249
                                         ==========================================================================================
     Balance 1/1/01                      $   6,935   $  37,796   $  11,388   $        (118)  $        (802)   $    (950)  $  54,249
     Net income                                                      6,200                                                    6,200
     Change in unrealized gain on
      available-for-sale securities,
      net of tax                                                                       441                                      441
                                         ------------------------------------------------------------------------------------------
     Total Comprehensive Income                  -           -       6,200             441               -            -       6,641
                                         ------------------------------------------------------------------------------------------
     Dividends declared ($.07 per
      share)                                                          (520)                                                    (520)
     Issuance of Stock                         271       1,318                                                                1,589
     Awards granted, net of forfeitures                                                               (331)                    (331)
     Amortization of deferred
      compensation                                                     400                             276                      676
                                         ------------------------------------------------------------------------------------------
     Balance 12/31/01                    $   7,206   $  39,114   $  17,468   $         323   $        (857)   $    (950)  $  62,304
                                         ==========================================================================================
     Balance 1/1/02                      $   7,206   $  39,114   $  17,468   $         323   $        (857)   $    (950)  $  62,304
     Net income                                                     11,007                                                   11,006
     Change in unrealized gain on
      available-for-sale securities,
      net of tax                                                                     8,503                                    8,503
                                         ------------------------------------------------------------------------------------------
     Total Comprehensive Income                  -           -      11,007           8,503               -            -      19,509
                                         ------------------------------------------------------------------------------------------
     Dividends declared ($.09 per
     share)                                                           (691)                                                    (691)
     Issuance of Stock                         498       6,253                                                                6,751
     Awards granted, net of forfeitures                                                                (38)                     (38)
     Amortization of deferred
      compensation                                                                                     306                      306
     Repayment of loans to officers                                                                                 950         950
                                         ------------------------------------------------------------------------------------------
     Balance 12/31/02                    $   7,704   $  45,367   $  27,784   $       8,826   $        (589)   $       -   $  89,092
                                         ==========================================================================================


   Note: All previously reported share and per share data has been restated to
     reflect the 3-for-2 stock split which occurred on January 17, 2003. The
     accompanying notes to consolidated financial statements are an integral
                            part of these statements.

                                       F-6



                              PRIVATEBANCORP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   YEARS ENDED DECEMBER 31, 2002 2001AND 2000
                                 (In thousands)



                                                                                   YEAR ENDED DECEMBER 31,
                                                                           --------------------------------------
                                                                              2002          2001          2000
                                                                           ----------    ----------    ----------
                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES ...................................
     Net income ........................................................   $   11,007    $    6,200    $    4,425
Adjustments to reconcile net income to net cash provided by operating
 activities:
     Depreciation and amortization .....................................        1,444         1,649         1,030
     Goodwill amortization .............................................           --           824           731
     Johnson Bank Illinois fair value accretion, net ...................          (89)         (291)         (304)
     Amortization of deferred compensation .............................          306           276           227
     Provision for loan losses .........................................        3,862         3,179         1,690
     Gain on sale of securities ........................................          (11)       (2,095)          (92)
     Trading losses on interest rate swap ..............................          943            --            --
     Net proceeds on loans held for sale ...............................       (2,986)      (10,629)         (705)
     Increase in deferred loan fees ....................................        1,040           315           259
     Increase in accrued interest receivable ...........................       (2,165)       (1,739)       (1,894)
     Increase (decrease) in accrued interest payable ...................        2,874        (1,440)        1,886
     (Increase) decrease in other assets ...............................       (2,507)        7,607         2,502
     Increase in other liabilities .....................................        3,710         5,705         2,107
                                                                           ----------    ----------    ----------
         Total adjustments .............................................        6,421         3,361         7,437
                                                                           ----------    ----------    ----------
         Net cash provided by operating activities .....................       17,428         9,561        11,862
                                                                           ----------    ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from maturities, paydowns, and sales of securities .......      123,296       148,419        48,075
     Purchase of securities available-for-sale .........................     (265,432)     (306,395)     (124,624)
     Johnson Bank Illinois acquisition, net of cash received ...........           --            --       (15,763)
     Capitalization of The PrivateBank (St. Louis) .....................           --            --        (8,000)
     Investment in Lodestar Investment Counsel, LLC ....................       (5,427)           --            --
     Net loan principal advanced .......................................     (186,405)     (193,784)     (129,615)
     Investment in Bank Owned Life Insurance ...........................           --       (10,000)           --
     Premises and equipment expenditures ...............................       (4,492)       (1,236)       (2,341)
                                                                           ----------    ----------    ----------
         Net cash used in investing activities .........................     (338,460)     (362,996)     (232,268)
                                                                           ----------    ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase in total deposits ....................................      354,788       180,261       125,606
     Proceeds from participated loans ..................................           --            --        12,862
     Proceeds from exercise of stock options ...........................        1,235         1,258           109
     Issuance of Trust Preferred Securities ............................           --        20,000            --
     Dividends paid ....................................................         (691)         (520)         (462)
     Repayment of loans to officers ....................................          950            --           175
     Net (decrease) increase in funds borrowed .........................      (23,264)      134,724        78,446
                                                                           ----------    ----------    ----------
         Net cash provided by financing activities .....................      333,018       335,723       216,736
                                                                           ----------    ----------    ----------
Net increase (decrease) in cash and cash equivalents ...................       11,986       (17,712)       (3,670)
Cash and cash equivalents at beginning of year .........................       22,801        40,513        44,183
                                                                           ----------    ----------    ----------
Cash and cash equivalents at end of year ...............................   $   34,787    $   22,801    $   40,513
                                                                           ==========    ==========    ==========
CASH PAID DURING YEAR FOR:
     Interest ..........................................................   $   28,368    $   39,076    $   30,835
     Income taxes ......................................................        1,325         1,757         1,800


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

                                       F-7



                      PRIVATEBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

a.                  NATURE OF OPERATIONS

          PrivateBancorp, Inc. (the "Company") was incorporated under the laws
of the State of Delaware on November 7, 1989. The Company is a bank holding
company with two bank subsidiaries, The PrivateBank and Trust Company (The
PrivateBank (Chicago)), which was formed as a de novo, or start up bank, on
February 6, 1991, and The PrivateBank (The PrivateBank (St. Louis)), which was
formed as a de novo, or start up, federal savings bank on June 26, 2001. On
February 11, 2000, the Company completed its acquisition of Johnson Bank
Illinois. At closing, Johnson Bank Illinois was merged into The PrivateBank
(Chicago). The two acquired offices, located on Chicago's North Shore in Lake
Forest and Winnetka, became additional offices of The PrivateBank (Chicago). On
December 30, 2002, The PrivateBank (Chicago) acquired a controlling interest in
Lodestar Investment Counsel LLC, a Chicago-based investment advisor with $482
million of assets under management at December 31, 2002. Lodestar manages
equity, balanced, and fixed income accounts primarily for high net-worth
individuals, retirement plans and charitable organizations with investable
assets in excess of $1.0 million, and shares a similar focus on highly
personalized client service.

          The banks provide private banking and wealth management services
primarily to affluent individuals, professionals, entrepreneurs and their
business interests. The banks focus on the personal financial services needs of
their clients as well as the banking needs of their clients' various business
and investment interests.

b.                  CONSOLIDATION

          The consolidated financial statements of the Company and subsidiaries
include the accounts of the Company and its wholly owned subsidiaries, The
PrivateBank (Chicago), which includes Lodestar Investment Counsel, and The
PrivateBank (St. Louis). Significant intercompany accounts and transactions have
been eliminated in the preparation of these statements.

c.                  STATEMENT OF CASH FLOWS

          For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, federal funds sold and other
short-term investments. Generally, federal funds are sold for one-day periods,
but not longer than 30 days. Short-term investments mature in less than 30 days.

d.                  SECURITIES

          Available for sale securities are intended to be invested for an
indefinite period but may be sold in response to events we expect to occur in
the foreseeable future. Securities available-for-sale are reported at fair
value, with unrealized gains and losses, net of taxes, reported as adjustments
to other comprehensive income in a separate component of stockholders' equity.
Any decline in fair value of securities that is deemed other than temporary is
charged against current period earnings. At December 31, 2002 and 2001, all
securities were classified as available for sale.

          Premium amortization and discount accretion on securities are included
in interest income on securities using the effective interest rate method. The
specific identification method is used to record gains and losses on security
transactions.

e.                  LOANS

          Loans are generally reported at the principal amount outstanding, net
of unearned income. Loan origination and commitment fees, offset by certain
direct loan origination costs, are 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.

                                       F-8



          Loans are placed on nonaccrual status when, in the opinion of
management, there are doubts as to the collectability 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 considered by management in its overall assessment of the
adequacy of the allowance for loan losses. Interest previously accrued in the
current year but not collected is reversed and charged against interest income
at the time the related loan is placed on nonaccrual status. Unpaid interest
accrued in prior years is charged against the allowance for loan losses.
Interest payments received on impaired loans are recorded as reductions of
principal if principal payment is doubtful.

f.                  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.

g.                  LOANS HELD FOR SALE

          Loans are classified as held for investment purposes or held for sale
when the Company enters into interest rate lock agreements with the potential
borrowers. Loans originated and intended for sale in the secondary market are
classified as held for sale and reported at the lower of aggregate cost or
market value, with unrealized losses, if any, recorded in a valuation allowance
by a charge to income. Fair value is determined based on quoted market rates or,
in the case where a firm commitment has been made to sell the loan, the firm
committed price. Gains and losses on the disposition of loans held for sale are
determined on the specific identification method.

h.                  BROKERED DEPOSITS

          The Company utilizes brokered deposits (prepackaged jumbo certificates
of deposit) as liquidity and asset-liability management tools in the normal
course of business. Certain brokered deposits issued by the Company contain a
purchased option to call (redeem) the brokered deposit prior to maturity at a
specified date. Upon issuance of brokered deposits, the Company recognizes a
contra liability account that reflects the fees paid to brokers for raising the
funds in the retail market. The deferred broker commissions are amortized to
interest expense as an adjustment to the brokered deposit yield over the
contractual maturity of the brokered deposit. In the event the Company notifies
the certificate holders of its intent to exercise the call option on the
callable brokered deposit, the remaining unamortized broker commissions are
amortized to the call date.

i.                  DERIVATIVE FINANCIAL INSTRUMENTS

          The Company adopted FAS No. 133, "Accounting for Derivative
Instruments and Related Hedging Activities" and its related amendments on
January 1, 2001. FAS No. 133 requires all derivative instruments to be
recognized as either assets or liabilities in the balance sheet at fair value.
The accounting for changes in the fair value of a derivative instrument depends
on whether it has been designated and qualifies as part of a hedging
relationship and further, on the type of hedge relationship. For those
derivative instruments that are designated and qualify as hedging instruments, a
company must designate the hedging instrument based on the exposure being
hedged, as a fair value or cash flow hedge. In November 2001, the Company
entered into its first interest rate swap which is recorded on the balance sheet
at fair value. The interest rate swap was entered into for asset liability
management purposes and not for trading purposes. The interest rate swap has
been designated as a fair value hedge of a fixed-rate $25.0 million advance with
the Federal Home Loan Bank of Chicago (FHLB). Changes in the fair value of the
interest rate swap are reported through income. Changes in the fair value of the
borrowings from the date of designation are recorded through income.
Documentation and evaluation of hedge effectiveness was performed at inception
and on a recurring periodic basis.

          The Company entered into a $25 million swap during the third quarter
of 2002, swapping the 10-year rate for

                                       F-9



3-month LIBOR to act as an economic hedge of a portion of the Company's
available-for-sale municipal securities portfolio. The December 31, 2002 fair
market value adjustment on this swap resulted in the trading loss of $943,000
with a corresponding derivative liability of the same amount. This swap does not
qualify for hedge accounting treatment, therefore, the market-to-market
adjustment flows through earnings.

j.                  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. At December 31, 2002, the range of estimated useful lives of depreciable
assets was between 3 and 39.5 years.

k.                  INCOME TAXES

          In accordance with FAS No. 109, "Accounting for Income Taxes," an
asset and liability approach to accounting for income taxes is followed. The
objective is to recognize the amount of taxes payable or refundable for the
current year, and to recognize deferred tax assets and liabilities resulting
from temporary differences between the amounts reported in the financial
statements and the tax bases of assets and liabilities. The measurement of tax
assets and liabilities is based on enacted tax laws and applicable tax rates.

l.                  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. All
previously reported share and per share data in this report has been restated to
reflect the 3-for-2 stock split which occurred on January 17, 2003.

m.                  COMPREHENSIVE INCOME

          Components of comprehensive income are reported in the Consolidated
Statement of Stockholders' Equity that is displayed with the same prominence as
other financial statements.

n.                  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.

o.                  INTANGIBLE ASSETS

          During 2001, the PrivateBank (Chicago) recorded approximately $12.2
million in goodwill in connection with the Johnson Bank Illinois acquisition.
During 2002, the Company recorded $8.4 million of goodwill and $2.5 million in
customer intangibles in connection with the Lodestar Investment Counsel
acquisition. Intangible assets are amortized over an estimated useful life of 15
years. Effective January 1, 2002, the Company adopted FAS No. 142, which
requires that goodwill and intangible assets that have indefinite lives no
longer be amortized but be reviewed for impairment annually, or more frequently
if certain indicators arise. Prior to the adoption of FAS No. 142, goodwill was
being amortized using the straight-line method over a period of 15 years.
Goodwill at December 31, 2002 totaled $19.2 million, an $8.4 million increase
from December 31, 2001 due to the acquisition of Lodestar Investment Counsel,
LLC. The Company did not incur any goodwill impairment in 2002 in adopting FAS
142. Amortization expense on intangible assets is expected to total $167,000
each year in 2003, 2004, 2005, 2006 and 2007.

                                      F-10



          The following table shows the proforma effects of applying FAS No. 142
to the 2001 and 2000 periods (in thousands, except per share data):



                                                                         DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                                             2002           2001           2000
                                                                         ------------   ------------   ------------
                                                                                       (in thousands)
                                                                                              
               Reported net income ...................................   $     11,007   $      6,200   $      4,425
               Add: Goodwill amortization (net of tax) ...............             --            544            482
                                                                         ------------   ------------   ------------
               Adjusted net income ...................................   $     11,007   $      6,744   $      4,907
                                                                         ============   ============   ============
               Basic earnings per share:
               Reported basic earnings per share .....................   $       1.49   $       0.88   $       0.64
               Add: Goodwill amortization (net of tax) ...............             --            .08            .10
                                                                         ------------   ------------   ------------
               Adjusted basic earnings per share .....................   $       1.49   $       0.96   $       0.74
                                                                         ============   ============   ============
               Diluted earnings per share:

               Reported diluted earnings per share ...................   $       1.42   $       0.85   $       0.62
               Add: Goodwill amortization (net of tax) ...............             --            .07            .10
                                                                         ------------   ------------   ------------
               Adjusted diluted earnings per share ...................   $       1.42   $       0.92   $       0.72
                                                                         ============   ============   ============


p.                  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.

q.                  STOCK-BASED COMPENSATION

          The Company accounts for its stock options in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB No. 25). Under APB No. 25, as the exercise price of the Company's
employees' stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized. Compensation expense for
restricted shares granted is ratably recognized over the period of service,
usually the vesting period, based on the fair value of the stock on the date of
grant.

          Pursuant to FAS No. 123, Accounting for Stock-Based Compensation (FAS
No. 123), pro forma net income and pro forma earnings per share are presented in
the following table as if the fair value method of accounting for stock-based
compensation plans had been utilized.

                                           2002          2001          2000
                                        -----------   -----------   -----------
                                              (dollars in thousands)
Net income--
       As reported...................   $    11,007   $     6,200   $     4,425
       Pro forma.....................        10,551         5,493         3,824
Basic earnings per share--
       As reported...................   $      1.49   $      0.88   $      0.64
       Pro forma.....................          1.43          0.78          0.55
Diluted earnings per share--
       As reported...................   $      1.42   $      0.85   $      0.62
       Pro forma.....................          1.36          0.75          0.54

Note:  The pro forma  results  above  may not be  representative  of the  effect
reported in net income for futures years.

          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 2002, 2001 and 2000, respectively: dividend
yield of 0.35%, 0.55%, and 1.10% for 2002, 2001 and 2000, respectively;
risk-free interest rate of 5.07% for 2002 and 2001 and 5.9% for 2000; and
expected lives of 10 years for the Stock Incentive Plan options, for the
compensation replacement options and for the various director options. The
valuation utilizes an

                                      F-11



 expected volatility of approximately 50% and 54% for 2002
and 2001, respectively.

r.                  ADVERTISING COSTS

          All advertising costs incurred by the Company are expensed in the
period in which they are incurred.

s.                  NEW ACCOUNTING PRONOUNCEMENTS

          In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (FAS) Nos. 141, Business Combinations
and No. 142, Goodwill and Other Intangible Assets. FAS No. 141 applies to all
business combinations completed after June 30, 2001. All future business
combinations must be recorded using the purchase method of accounting. As the
Company contemplates further acquisitions as part of its growth strategy, this
Statement will likely have an impact on the Company's future financial
statements.

          FAS No. 142 supercedes APB Opinion No. 17 Intangible Assets and
addresses the mandatory accounting of intangible assets and goodwill. Adoption
of this Statement was required beginning January 1, 2002 in relation to all of
the Company's goodwill and intangible assets. The Statement discontinues the
regular amortization of goodwill and a transitional impairment test of goodwill
was required as of January 1, 2002. An annual impairment test of goodwill is
required every year thereafter. Impairment losses from goodwill recognized in
the initial application of this Statement are to be reported as resulting from a
change in accounting principal. Impairment losses in subsequent years should be
recorded as operating expenses.

          In August 2001, the FASB issued FAS No. 144, Accounting for the
Impairment or Disposal of Long-lived Assets. FAS No. 144 supersedes FAS No. 121
and the accounting and reporting provisions of APB Opinion No. 30. The Statement
addresses the accounting for a segment of a business accounted for as a
discontinued operation and the accounting for the disposition of long-lived
assets. The provisions of this Statement are effective for financial statements
issued for fiscal years beginning after December 15, 2001. The Company adopted
the Statement in the first quarter of 2002 with no material effect on the
Company's results of operations.

          In October 2002, the FASB issued FAS No. 147, Acquisitions of Certain
Financial Institutions (FAS No. 147), which provides guidance on the accounting
for the acquisition of a financial institution and supersedes the specialized
accounting guidance provided in FAS No. 72, Accounting for Certain Acquisitions
of Banking or Thrift Institutions. FAS No. 147 became effective upon issuance
and requires companies to cease amortization of unidentified intangible assets
associated with certain branch acquisitions and reclassify these assets to
goodwill. FAS No. 147 also modifies FAS No. 144 to include in its scope
long-term customer-relationship intangible assets and thus subject those
intangible assets to the same undiscounted cash flow recoverability test and
impairment loss recognition and measurement provisions required for other
long-lived assets.

          While FAS No. 147 may affect how future business combinations, if
undertaken, are accounted for and disclosed in the financial statements, the
issuance of the new guidance had no effect on the Company's results of
operations, financial position, or liquidity as the Company does not have any
assets subject to the specialized accounting guidance provided in FAS No. 72 or
FAS No. 147.

          In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others. This interpretation expands the
disclosures to be made by a guarantor in its financial statements about its
obligations under certain guarantees and requires the guarantor to recognize a
liability for the fair value of an obligation assumed under a guarantee. FIN 45
clarifies that a guarantor is required to recognize, at the inception of the
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The disclosure requirements of FIN 45 are effective for
the Company as of December 31, 2002, and require disclosure of the nature of the
guarantee, the maximum potential amount of future payments that the guarantor
could be required to make under the guarantee, and the current amount of the
liability, if any, for the guarantor's obligations under the guarantee. The
recognition requirements of FIN 45 are to be applied prospectively to guarantees
issued or modified after December 31, 2002. Significant guarantees that have
been entered into by the Company are disclosed in Note 14 to the consolidated
financial statements. The Company does not expect the requirements of FIN 45 to
have a material impact on its results of operations, financial position, or
liquidity.

                                      F-12



          In December 2002, the FASB issued FAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure (FAS No. 148), which
provides guidance on how to transition from the intrinsic value method of
accounting for stock-based employee compensation under APB No. 25 to FAS No.
123's fair value method of accounting, if a company so elects. The statement
also amends the disclosure provisions of FAS No. 123 and APB No. 25 to require
disclosure in the summary of significant accounting policies of the effects of
an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial
statements. While FAS No. 148 does not amend FAS No. 123 to require companies to
account for employee stock options using the fair value method, the disclosure
provisions of FAS No. 148 are applicable to all companies with stock-based
employee compensation, regardless of whether they account for that compensation
using the fair value method of FAS No. 123 or the intrinsic value method of APB
No. 25. Although the recognition provisions of FAS No. 148 are not applicable to
the Company at this time, as it continues to account for stock-based
compensation using the intrinsic value method, the Company has provided the
required disclosures in Note 1 to the consolidated financial statements.

          In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. The objective of this
interpretation is to provide guidance on how to identify a variable interest
entity (VIE) and determine when the assets, liabilities, noncontrolling
interest, and results of operations of a VIE need to be included in a company's
consolidated financial statements. Because the Company does not have any
interest in VIEs, the Company does not expect the adoption of FIN 46 to have a
material impact on its results of operations, financial position, or liquidity.

NOTE 2--OPERATING SEGMENTS

          For purposes of making operating decisions and assessing performance,
management regards The PrivateBank (Chicago), The PrivateBank (St. Louis),
Wealth Management and the Holding Company as four operating segments. The
Company's investment portfolios are included in total assets and reported in the
results of The PrivateBank (Chicago) and The PrivateBank (St. Louis). The
business segments summarized below and in the following tables are primarily
managed with a focus on various performance objectives including total assets,
total deposits, borrowings, gross loans, total capital and net income.

THE PRIVATEBANK (CHICAGO)

          The PrivateBank (Chicago), through its main office located in downtown
Chicago as well as six full-service Chicago suburban locations, provides
personal and commercial banking services primarily to affluent individuals,
professionals, entrepreneurs and their business interests. Until June 23, 2000,
the date The PrivateBank (St. Louis) was established, operations in St. Louis
consisted of a loan production office of The PrivateBank (Chicago) and those
activities are reflected in the segment reporting for The PrivateBank (Chicago).
The PrivateBank (Chicago)'s commercial lending products include lines of credit
for working capital, term loans for equipment and letters of credit to support
the commitments made by its clients. Non-credit products include lock-box, cash
concentration accounts, merchant credit card processing, electronic funds
transfer, other cash management products and insurance. The PrivateBank
(Chicago) offers a full range of real estate lending products including fixed
and floating rate permanent and mini-permanent mortgages, construction and
commercial real estate loans. Personal loans include installment loans and lines
of credit, home equity loans and a wide variety of home mortgage loans.

          Individual banking services include interest bearing checking, money
market accounts, certificates of deposit, ATM/debit cards and investment
brokerage accounts. Additionally, The PrivateBank (Chicago) offers secured and
unsecured personal loans and lines of credit. Through The PrivateBank
(Chicago)'s affiliations with Mesirow Financial, Inc. and Sterling Investment
Services, Inc., clients have access to insurance products and securities
brokerage services. The PrivateBank (Chicago) also offers domestic and
international wire transfers and foreign currency exchange.

          During the second quarter of 2002, the PrivateBank (Chicago)
introduced an Index Powered Certificate of Deposit product ("IPCD") with a
five-year term. This non-fee based, FDIC-insured product is a five-year
certificate of deposit with a yield based on the performance of the S&P 500. The
PrivateBank (Chicago) balance sheet reflects the goodwill and intangibles of
$21.7 million at December 31, 2002 compared with $10.8 million at December 31,
2001.

                                      F-13



                                                  THE PRIVATEBANK (CHICAGO)
                                             -----------------------------------
                                                          DECEMBER 31,
                                               2002         2001         2000
                                             ---------   -----------   ---------
                                                        (in millions)

           Total assets...................   $ 1,390.3   $   1,077.7   $   800.6
           Total deposits.................     1,101.0         800.6       655.9
           Total borrowings...............       150.0         183.4        65.0
           Total gross loans..............       863.0         708.3       574.9
           Total capital..................       124.3          82.9        69.3
           Net interest income............        39.0          27.8        23.5
           Net income.....................        13.5           9.2         7.1

THE PRIVATEBANK (ST. LOUIS)

          The PrivateBank (St. Louis), a federal savings bank, was established
as a new bank subsidiary of PrivateBancorp, Inc. on June 23, 2000. The revenues
and expenses for 2000 associated with the St. Louis loan production office that
was operated by The PrivateBank (Chicago) prior to June 23, 2000 are included in
The PrivateBank (Chicago) segment.

          The PrivateBank (St. Louis) offers a full range of real estate lending
products including fixed and floating rate permanent and mini-permanent
mortgages and construction loans. Personal loans include installment loans and
lines of credit, home equity loans and a wide variety of home mortgage loans.
Commercial lending products provided by The PrivateBank (St. Louis) include
lines of credit for working capital, term loans for equipment and letters of
credit to support the commitments made by its clients. Non-credit products
include lock-box, cash concentration accounts, merchant credit card processing,
electronic funds transfer, other cash management products and insurance.
Individual banking services include interest bearing checking, money market
deposit accounts, certificates of deposit, ATM/debit cards and investment
brokerage accounts. The PrivateBank (St. Louis) also offers domestic and
international wire transfers and foreign currency exchange.

                                                     THE PRIVATEBANK (ST. LOUIS)
                                                     ---------------------------
                                                            DECEMBER 31,
                                                      2002     2001      2000
                                                     -------  -------  ---------
                                                            (in millions)

           Total assets............................  $ 149.9  $  96.6  $   28.2
           Total deposits..........................    105.1     50.2      14.7
           Total borrowings........................     30.0     38.1       3.5
           Total gross loans.......................    104.7     73.5      25.2
           Total capital...........................     13.4      7.6       7.1
           Net interest income (1).................      4.0      1.8       0.4
           Year-to-date net income (loss) (1)......      0.8     (0.5)     (0.9)

(1) For 2000, results are reported beginning June 23, 2000, when the subsidiary
bank was established, through December 31, 2000.

WEALTH MANAGEMENT

          Wealth Management includes investment management, personal trust and
estate services, custodial services, retirement accounts and brokerage and
investment services. Investment management professionals work with wealth
management clients to define objectives, goals and strategies of the clients'
investment portfolios. Wealth Management personnel assist trust clients with the
selection of an outside portfolio manager to direct account investments. Trust
and estate account administrators work with clients and their attorneys to
establish estate plans. Consistent with the Company's philosophy, Wealth
Management emphasizes a high level of personal service, including prompt
collection and reinvestment of interest and dividend income, weekly valuation,
tracking of tax

                                      F-14



information, customized reporting and ease of security settlement.



                                                      WEALTH MANAGEMENT
                                             -----------------------------------
                                                        DECEMBER 31,
                                             -----------------------------------
                                                2002         2001        2000
                                             ----------   ---------   ----------
                                                       (in thousands)
                                                             
          Wealth Management assets under
           administration ................   $  1,239.8   $   722.7   $    777.8
          Trust fee revenue ..............          2.9         2.7          2.3
          Net income (loss) ..............          0.4         0.5         (0.1)


HOLDING COMPANY ACTIVITIES

          Holding Company Activities consist of parent company only matters. The
Holding Company's most significant assets are its net investments in its two
banking subsidiaries, The PrivateBank (Chicago) and The PrivateBank (St. Louis).
During the first quarter 2001, the Holding Company issued $20.0 million of
subordinated debentures that are accounted for as long-term debt and also
qualify as Tier 1 and Tier 2 capital (See Note 17). The Tier 1 qualifying amount
is limited to 25% of Tier 1 capital under Federal Reserve regulations. The
excess amount qualifies as Tier 2 capital. Holding Company Activities are
reflected primarily by interest expense on borrowings and operating expenses.
Recurring holding company operating expenses consist of compensation
(amortization of restricted stock awards, other salary expense) and
miscellaneous professional fees. In May of 2002, PrivateBancorp, Inc. acquired
an office building located in St. Charles, Illinois, for $1.8 million from Towne
Square Realty. The St. Charles location of The PrivateBank (Chicago) continues
to lease space in the building and pays rent to the Holding Company at the same
terms and conditions as was paid to the prior owner.



                                                         HOLDING COMPANY ACTIVITIES
                                                         --------------------------
                                                                DECEMBER 31,
                                                           2002     2001     2000
                                                         -------  --------  -------
                                                                (in millions)
                                                                   
          Total assets ...............................   $ 141.3  $   92.4  $  77.9
          Total capital ..............................      89.1      62.3     54.2
          Total borrowings ...........................      30.0      10.0     23.0
          Long term debt--Trust Preferred Securities .      20.0      20.0       --
          Interest expense ...........................       2.5       2.1      1.2
          Net loss ...................................      (3.7)     (2.5)    (1.9)


          The following tables reconciles the significant differences between
the sum of the reportable segments and the reported consolidated balance of
total assets:



                                              TOTAL ASSETS
                                         ----------------------
                                              DECEMBER 31,
                                            2002        2001
                                         ----------  ----------
                                             (in millions)
                                               
Sum of reportable segments ...........   $  1,681.5  $  1,266.7
Adjustments  .........................       (138.1)      (89.9)
                                         ==========  ==========
Consolidated PrivateBancorp, Inc. ....   $  1,543.4  $  1,176.8
                                         ==========  ==========


          The adjustments to total assets presented in the table above represent
the elimination of the net investment in The PrivateBank (Chicago) and The
PrivateBank (St. Louis) in consolidation, the elimination of the Company's cash
that is maintained in an account at The PrivateBank (Chicago), the
reclassification of the unearned discount of loans

                                      F-15



and the reclassification related to deferred taxes.

NOTE 3--EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per
share (in thousands, except per share data):



                                                                       WEIGHTED
                                                                        AVERAGE        PER
                                                          INCOME        SHARES        SHARE
                                                        (NUMERATOR)  (DENOMINATOR)    AMOUNT
                                                        -----------  -------------  ---------
                                                                           
YEAR ENDED DECEMBER 31, 2002
Basic Earnings Per Share--
             Income available to common stockholders .  $    11,007          7,371  $    1.49
                                                                                    =========
Effect of Dilutive Stock Options .....................           --            404
                                                        -----------  -------------
Diluted Earnings Per Share--
             Income available to common stockholders .  $    11,007          7,775  $    1.42
                                                        ===========  =============  =========
YEAR ENDED DECEMBER 31, 2001
Basic Earnings Per Share--
             Income available to common stockholders .  $     6,200          7,057  $    0.88
                                                                                    =========
Effect of Dilutive Stock Options .....................           --            217
                                                        -----------  -------------
Diluted Earnings Per Share--
             Income available to common stockholders .  $     6,200          7,274  $    0.85
                                                        ===========  =============  =========
YEAR ENDED DECEMBER 31, 2000
Basic Earnings Per Share--
             Income available to common stockholders .  $     4,425          6,916  $    0.64
                                                                                    =========
Effect of Dilutive Stock Options .....................           --            275
                                                        -----------  -------------
Diluted Earnings Per Share--
             Income available to common stockholders .  $     4,425          7,191  $    0.62
                                                        ===========  =============  =========


          During 2002, the entire amount of unexercised option shares of 818,798
are included in the diluted earnings per share calculation. The 2001 diluted
earnings per share calculation includes all unexercised option shares as all
options of the Company were dilutive as of December 31, 2001. The exercise
prices for previously granted stock options ranged from $4.58 to $15.00 in 2002,
from $11.15 to $12.00 in 2001, and $9.04 to $9.67 in 2000.

NOTE 4--SECURITIES

          The par value and amortized cost of securities as of December 31, 2002
and December 31, 2001 were as follows (in thousands):



                                                      INVESTMENT SECURITIES--AVAILABLE FOR SALE
                                                                  DECEMBER 31, 2002
                                                  ------------------------------------------------
                                                                 GROSS         GROSS
                                                              UNAMORTIZED   UNACCRETED   AMORTIZED
                                                  PAR VALUE     PREMIUM      DISCOUNT      COST
                                                  ---------   -----------   ----------   ---------
                                                                             
U.S. Government Agency Mortgage Backed
 Securities and Collateralized Mortgage
 Obligations ..................................   $ 147,546   $     7,967   $       (3)  $ 155,510
Corporate Collateralized Mortgage Obligations .      17,902           264           --      18,166
Tax Exempt Municipal Securities ...............     140,025         5,751      (19,272)    126,504
Taxable Municipal Securities ..................       4,615            --          (33)      4,582
Federal Home Loan Bank Stock ..................     155,606            --         --       155,606
Other .........................................      12,849           557         (126)     13,280
                                                  ---------   -----------   ----------   ---------
                                                  $ 478,543   $    14,539   $  (19,434)  $ 473,648
                                                  =========   ===========   ==========   =========

                                      F-16





                                                      INVESTMENT SECURITIES--AVAILABLE FOR SALE
                                                                  DECEMBER 31, 2001
                                                  ------------------------------------------------
                                                                 GROSS         GROSS
                                                              UNAMORTIZED   UNACCRETED   AMORTIZED
                                                  PAR VALUE     PREMIUM      DISCOUNT      COST
                                                  ---------   -----------   ----------   ---------
                                                                             
U.S. Government Agency Mortgage Backed
 Securities and Collateralized Mortgage
 Obligations ..................................   $  97,825   $     3,906   $     (315)  $ 101,416
Corporate Collateralized Mortgage Obligations .      22,676           370           --      23,046
Tax Exempt Municipal Securities ...............     110,530         5,231       (8,781)    106,980
Taxable Municipal Securities ..................       6,020            48           36       6,032
Federal Home Loan Bank Stock ..................      92,964            --           --      92,964
Other .........................................       2,112            20         (127)      2,005
                                                  ---------   -----------   ----------   ---------
                                                  $ 332,127   $     9,575   $   (9,259)  $ 332,443
                                                  =========   ===========   ==========   =========


          The amortized cost and the estimated fair value of securities as of
December 31, 2002 and December 31, 2001, were as follows (in thousands):



                                                     INVESTMENT SECURITIES--AVAILABLE- FOR- SALE
                                                                 DECEMBER 31, 2002
                                                  ------------------------------------------------
                                                                GROSS         GROSS      ESTIMATED
                                                  AMORTIZED   UNREALIZED    UNREALIZED      FAIR
                                                    COST         GAINS        LOSSES       VALUE
                                                  ---------   -----------   ----------   ---------
                                                                             
U.S. Government Agency Mortgage Backed
Securities and Collateralized Mortgage
 Obligations ..................................   $ 155,510   $     3,132   $     (248)  $ 158,394
Corporate Collateralized Mortgage Obligations .      18,166           509           --      18,675
Tax Exempt Municipal Securities ...............     126,504         8,332           --     134,836
Taxable Municipal Securities ..................       4,582           114           --       4,697
Federal Home Loan Bank Stock ..................     155,606            --           --     155,606
Other .........................................      13,280         1,533           --      14,812
                                                  ---------   -----------   ----------   ---------
                                                  $ 473,648   $    13,620   $     (248)  $ 487,020
                                                  =========   ===========   ==========   =========




                                                     INVESTMENT SECURITIES--AVAILABLE- FOR- SALE
                                                                 DECEMBER 31, 2001
                                                  ------------------------------------------------
                                                                 GROSS         GROSS     ESTIMATED
                                                  AMORTIZED   UNREALIZED    UNREALIZED     FAIR
                                                     COST        GAINS        LOSSES       VALUE
                                                  ---------   -----------   ----------   ---------
                                                                             
U.S. Government Agency Mortgage Backed
 Securities and Collateralized Mortgage
 Obligations ..................................   $ 101,416   $       483   $     (523)  $ 101,376
Corporate Collateralized Mortgage Obligations .      23,046           416           --      23,462
Tax Exempt Municipal Securities ...............     106,980           645         (700)    106,925
Taxable Municipal Securities ..................       6,032            19           --       6,051
Federal Home Loan Bank Stock ..................      92,964            --           --      92,964
Other .........................................       2,005           150           --       2,155
                                                  ---------   -----------   ----------   ---------
                                                  $ 332,443   $     1,713   $   (1,223)  $ 332,933
                                                  =========   ===========   ==========   =========


                                      F-17



          The amortized cost and estimated fair value of securities at December
31, 2002, by expected maturity, are shown below (in thousands). 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.

                                                     AMORTIZED     ESTIMATED
                                                        COST      FAIR VALUE
                                                     ----------   -----------
          Due within one year ....................   $   69,409   $    71,105
          Due after one year through five years ..       97,519       100,227
          Due after five years through ten years .       25,712        26,390
          Due after ten years ....................      125,094       133,384
          Securities with no stated maturity .....      155,914       155.914
                                                    -----------   -----------
                                                    $  473,648    $   487,020
                                                    ===========   ===========

          During 2002 and 2001, securities were sold for total proceeds of
$88,965,364 and $131,289,933 respectively, resulting in net gains of
approximately $11,302 and $2,095,000, respectively. Gross gains and gross losses
for 2002 were $1,499,364 and $1,488,062, respectively. Taxes related to gross
gains and gross losses on investment securities for 2002 were $509,784 and
$505,941, respectively.

          At December 31, 2002, securities carried at $184.9 million were
pledged to secure public funds, trust deposits and other collateralized deposits
for other purposes as required or permitted by law.

          In the opinion of management, there were no investments in securities
at December 31, 2002, which constituted an unusual credit risk for the Company.
As market interest rates continued to decline to historic lows late in the third
quarter of 2002, in order to protect a portion of the portfolio appreciation
should rates rise, the Company entered into a $25 million swap. The Company
swapped the 10-year rate for 3-month LIBOR to act as an economic hedge to a
portion of the available-for-sale municipal securities in the portfolio. The
December 31, 2002 fair market value adjustment on this swap resulted in the
trading loss of $943,000. Net securities gains of $11,000 during the year
included a charge of $1.0 million related to an other-than-temporary impairment
write-down on the Company's interest-only collateralized mortgage obligation
(CMO) portfolio. At December 31, 2002, the remaining book value of the
interest-only CMO portfolio was $1.1 million.

          Change in fair value of securities available for sale is presented on
a net basis on the Consolidated Statement of Changes in Stockholders' Equity.
The following table discloses the changes in other comprehensive income as of
December 31, 2002 and 2001 on a gross basis (in thousands):



                                                      DECEMBER 31, 2002
                                             ------------------------------------
                                               AMOUNT         TAX        AMOUNT
                                             BEFORE TAX     EXPENSE    NET OF TAX
                                             ----------   ----------   ----------
                                                              
Change in unrealized gains on
 securities available for sale ...........   $   12,893   $    4,382   $    8,511
Less: reclassification adjustment for gain
 included in net income ..................           11            3            8
                                             ----------   ----------   ----------
Net unrealized gains .....................   $   12,882   $    4,379   $    8,503
                                             ==========   ==========   ==========




                                                      DECEMBER 31, 2001
                                             ------------------------------------
                                               AMOUNT         TAX        AMOUNT
                                             BEFORE TAX     EXPENSE    NET OF TAX
                                             ----------   ----------   ----------
                                                              
Change in unrealized gains on
 securities available for sale ...........   $    2,682   $      667   $    2,015
Less: reclassification adjustment for gain
 included in net income ..................        2,095          521        1,574
                                             ----------   ----------   ----------
Net unrealized gains .....................   $      587   $      146   $      441
                                             ==========   ==========   ==========


                                      F-18



NOTE 5--LOANS

          Amounts outstanding by selected loan categories at December 31, 2002
and 2001, including net unamortized deferred loan fees of $3.1 million and $2.5
million, respectively, were as follows (in thousands):

                                          2002           2001
                                      ------------   ------------
          Real estate--
                Residential  ......   $     72,289   $     89,889
                Commercial   ......        452,703        310,869
                Construction ......        123,204         92,528
          Commercial ..............        165,993        163,279
          Personal (1) ............        151,452        124,206
                                      ------------   ------------
                                      $    965,641   $    780,771
                                      ============   ============

(1) Includes Home Equity loans and overdrafts

          As of December 31, 2002, $749,000 of loans were designated as
nonaccrual loans, of which, $375,000 is specifically reserved for. The average
balance of impaired loans amounted to $1.7 million in 2002 and $1.5 million in
2001. The gross interest income that would have been recorded if the non-accrual
loans had been current in accordance with their original terms was $104,233 in
2002, $108,913 in 2001, and $47,283 in 2000. Please refer to page 37 in this
form 10-K for additional disclosure on loans past due 90 days or more.

NOTE 6--ALLOWANCE FOR LOAN LOSSES

          The changes in the allowance for loan losses for the three years ended
December 31 were as follows (in thousands):



                                                    2002          2001         2000
                                                 ----------    ----------    ----------
                                                                    
Beginning balance ............................   $    8,306    $    6,108    $    4,510
Johnson Bank acquisition - loan loss reserve .           --            --           864
Loans charged off ............................         (750)       (1,052)         (972)
Loans recovered ..............................          167            71            16
Provision for loan losses ....................        3,862         3,179         1,690
                                                 ----------    ----------    ----------
Ending balance ...............................   $   11,585    $    8,306    $    6,108
                                                 ==========    ==========    ==========


NOTE 7--PREMISES AND EQUIPMENT

          Bank and building premises and equipment at December 31, 2002 and
2001, consisted of the following (in thousands):

                                                         2002          2001
                                                      ----------    ----------
          Land ...................................... $      110    $       --
          Building ..................................      1,640            --
          Furniture, fixtures and equipment .........      6,856         5,640
          Leasehold improvements ....................      5,220         3,794
                                                      ----------    ----------
                                                          13,826         9,434
          Accumulated depreciation and amortization .     (6,975)       (5,620)
                                                      ----------    ----------
                                                      $    6,851    $    3,814
                                                      ==========    ==========

          Included in occupancy expense in the consolidated statements of income
is depreciation and amortization expense of $1.5, $1.6, and $1.0 million for
2002, 2001 and 2000, respectively.

                                      F-19



          Each of the banks leases their main banking facilities and certain
branch facilities under noncancellable operating lease agreements. The minimum
annual rental commitments under these leases, at December 31, 2002, are as
follows:

                    2003 ....................... $ 1,570,943
                    2004 .......................   1,533,409
                    2005 .......................   1,523,068
                    2006 .......................   1,137,240
                    2007 .......................     624,030
                    2008 and thereafter ........     792,998
                                                 -----------
                   Total Rental Commitments ...  $ 6,898,186
                                                 ===========

          Total rent expense included in the consolidated statements of income
was $1.9 million, $1.8 million, and $1.7 million for 2002, 2001 and 2000,
respectively.

NOTE 8--INCOME TAXES

          The components of total income tax provision in the consolidated
statements of income for the years ended December 31, 2002, 2001, and 2000 are
as follows (in thousands):

                                    2002          2001         2000
                                 ----------    ----------    ----------
Income tax provision--
      Current--
           Federal ...........   $    1,630   $     2,226   $     2,179
           State .............          108            --            --
                                 ----------    ----------    ----------
                                      1,738         2,226         2,179
      Deferred--
           Federal ...........        1,535          (175)         (164)
           State .............           --            --           248
                                 ----------    ----------    ----------
                                      1,535          (175)           84
                                 ----------    ----------    ----------
           Total .............   $    3,273    $    2,051    $    2,263
                                 ==========    ==========    ==========

          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, 2002, 2001 and 2000 is as follows
(in thousands):



                                                        2002          2001          2000
                                                     ----------    ----------    ----------
                                                                        
Income tax provision at statutory federal income
 tax rate ........................................   $    4,855    $    2,805    $    2,274
Increase (decrease) in taxes resulting from:
      Tax exempt income ..........................       (1,865)       (1,182)         (586)
      Bank owned life insurance ..................         (204)          (44)           --
      Zone academy bond credits ..................         (237)           --            --
      State income taxes .........................           10            --            17
      Other ......................................          714           472           558
                                                     ----------    ----------    ----------
           Provision for income taxes ............   $    3,273    $    2,051    $    2,263
                                                     ==========    ==========    ==========


                                      F-20



          The net deferred tax liability is included in other liabilities in the
consolidated balance sheet as of December 31, 2002. Conversely, the net deferred
tax asset as of December 31, 2001 is included in other assets in the
consolidated balance sheet. Deferred tax assets and liabilities result from
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 balances as of December 31, 2002 and 2001 are as follows (in
thousands):



                                                                        2002          2001
                                                                     ----------    ----------
                                                                             
Gross deferred tax assets--
      Allowance for loan losses ..................................   $    3,611    $    2,482
      Leasehold improvements .....................................          588           490
      Trading swap fair value adjustment .........................          321            --
      Amortization of restricted stock ...........................          262           238
      Unrealized loss on securities available for sale ...........           --             5
      Illinois net deduction carryforward ........................          652           161
      Valuation allowance on Illinois net deduction carryforward .         (652)         (161)
      Other ......................................................          256           267
                                                                     ----------    ----------
Gross deferred tax assets, net of valuation allowance ............        5,038         3,482
                                                                     ----------    ----------
Gross deferred tax liabilities--
      Federal Home Loan Bank Stock Dividends .....................       (3,886)       (1,018)
      Unrealized gain on securities available for sale ...........       (4,547)         (171)
      Goodwill amortization ......................................         (280)           --
      Other ......................................................         (259)         (311)
                                                                     ----------    ----------
Gross deferred tax liabilities ...................................       (8,972)       (1,500)
                                                                     ----------    ----------
Net deferred tax (liability) asset ...............................   $   (3,934)   $    1,982
                                                                     ==========    ==========


NOTE 9--ACQUISITIONS

          On December 30, 2002, The PrivateBank (Chicago) acquired Lodestar
Investment Counsel, a Chicago-based investment advisor with $482 million of
assets under management at December 31, 2002. Lodestar manages equity, balanced,
and fixed income accounts primarily for high net-worth individuals, retirement
plans and charitable organizations with investable assets in excess of $1.0
million, and shares a similar focus on highly personalized client service.

          The consideration paid by the Company included cash and stock. The
Company issued 282,437 shares of common stock outstanding following completion
of the acquisition and related transactions. All assets and liabilities were
adjusted to fair value as of the effective date of the acquisition creating
goodwill of $8.4 million and customer intangibles of $2.5 million.

                                      F-21



NOTE 10--DEPOSITS AND FUNDS BORROWED

          The maturity distribution of time deposits of $100,000 or greater and
a summary of all funds borrowed and outstanding and the rate in effect on such
borrowings at December 31, 2002, 2001 and 2000 is presented in the table below:



          TIME DEPOSITS $100,000 AND GREATER:       12/31/02     12/31/01     12/31/00
          -------------------------------------   ----------   ----------   -----------
                                                                   
          Three months or less                    $  162,619   $  162,036   $  103,755
          Over three through six months               57,568       65,897       55,623
          Over six through twelve months             132,036       87,043       47,379
          Over twelve months                         146,646       17,055       18,627
                                                  ----------   ----------   ----------
          Total ...............................   $  498,869      332,031   $  225,384
                                                  ==========   ==========   ===========




FUNDS BORROWED:                      CURRENT RATE    MATURITY     12/31/02     12/31/01      12/31/00
- ----------------------------------   -------------   --------  -------------  -----------   ----------
                                                                             
Subordinated note                            3.75%    2/11/07  $       5,000  $     5,000   $    5,000
FHLB fixed advance(1)                        6.50%   10/23/05         26,616       24,886       25,000
FHLB fixed advance                           6.21%   12/05/03         30,000       30,000       30,000
FHLB fixed advance                           1.73%   11/07/03          6,000           --           --
FHLB fixed advance                           2.21%   07/17/03          1,000           --           --
FHLB fixed advance                           2.74%   07/17/03          1,000           --           --
FHLB fixed advance                           2.46%   06/16/03            500           --           --
FHLB fixed advance                           2.70%   05/08/03          1,000           --           --
Borrowing under revolving line of
 credit facility                             3.50%    4/11/03         25,000           --           --
FHLB fixed advance                           2.98%   03/10/03          1,000           --           --
FHLB fixed advance                           2.38%   01/13/03          1,000           --           --
FHLB fixed advance                           5.89%   12/20/02             --        1,000        1,000
FHLB fixed advance                           2.39%   11/12/02             --        5,000           --
FHLB fixed advance                           5.33%   07/22/02             --        1,000           --
FHLB fixed advance                           5.91%   06/21/02             --          500          500
FHLB fixed advance                           4.21%   05/13/02             --        1,000           --
FHLB fixed advance                           5.02%   03/06/02             --        1,000           --
FHLB fixed advance                           3.10%   02/11/02             --        5,000       18,000
FHLB fixed advance                           4.30%   02/01/02             --       25,000           --
FHLB fixed advance                           5.21%   01/22/02             --        1,000           --
FHLB fixed advance                           6.49%   11/30/01             --           --        2,000
FHLB floating rate advance(2)                6.77%     5/1/01             --           --       10,000
FHLB open line advance                       1.48%      daily          9,700       25,000           --
Fed funds purchased                          1.49%      daily         98,000      103,000        2,700
Demand repurchase agreements (3)             1.40%      daily          4,138        3,102        2,679
                                                               -------------  -----------   ----------
TOTAL FUNDS BORROWED                                           $     209,954  $   231,488   $   96,879
                                                               =============  ===========   ==========


(1)  This FHLB advance is subject to a fair value hedge utilizing an
     interest rate swap with a fair value of $2.9 million. The contractual par
     amount on the advance is $25.0 million.
(2)  The rate on this FHLB floating rate advance is set at one-month LIBOR
     minus five basis points.
(3)  Demand repurchase agreements are a form of retail repurchase agreements
     offered to certain clients of The PrivateBank (Chicago). Funds are swept
     each business day from the client's demand deposit account. These amounts
     are not deposits and are not insured, but are secured by a pool of
     securities pledged specifically for this purpose.

          On February 11, 2002, the Company renewed the term on an $18.0 million
revolving credit facility with a commercial bank originally entered into on
February 11, 2000. On April 11, 2002, the loan agreement was amended and the
revolving line was increased to $25.0 million. On December 24, 2002, the loan
agreement was amended to increase the revolving line was increased to $35.0
million and matures on April 11, 2003. The interest rate on borrowings under
this revolving line resets quarterly, and is based on, at our option, either the
lender's prime rate or three-month LIBOR plus 120 basis points with a floor of
3.50%. The Company has elected to pay interest based on the three-month LIBOR
rate plus 120 basis points. The initial rate of interest on the revolver was
7.20%, and most recently reset to 3.50% on December 31, 2002. The collateral for
this borrowing consists of the common stock of The PrivateBank (Chicago) and The
PrivateBank (St. Louis), which is held in custody by the lender. As of December

                                      F-22



31, 2002, the outstanding balance was $25.0 million.

          On February 11, 2000, the Company entered into a subordinated note
issued to Johnson International, Inc. and subsequently sold to a third party, in
the principal amount of $5.0 million. The interest on the subordinated note is
reset each quarter based on the three-month LIBOR rate. The note is payable in
full on or before February 11, 2007, and provides for certain rate escalation
beginning after February 11, 2002. On February 11, 2002, the interest rate
increased from LIBOR +50 basis points to LIBOR +200 basis points. This pricing
is in effect until February 11, 2004, at which point the pricing increases to
LIBOR +350 until maturity on February 11, 2007. The average rate of interest on
the subordinated note was 3.56% during 2002 compared to 4.86% during 2001 and
most recently reset to 3.75% on December 31, 2002. The Company has the right to
repay the subordinated note at any time after giving at least 30 days, but not
more than 60 days advance notice.

          The scheduled maturities of time deposits (including brokered
deposits) as of December 31, 2002, for the years 2003 through 2007 and
thereafter, are as follows:

          For year ending December 31,
                  2003                  $  473,794
                  2004                      66,138
                  2005                       4,445
                  2006                       2,605
                  2007 and thereafter       15,469
                                        ----------
                       Total            $  562,451
                                        ==========

NOTE 11--LONG TERM DEBT - TRUST PREFERRED SECURITIES

          Effective February 8, 2001, PrivateBancorp Capital Trust I, a newly
created Delaware business trust and wholly-owned finance subsidiary of the
Company, issued 2,000,000 shares (including the underwriters' over-allotment) of
9.50% trust preferred securities, which represent preferred undivided interests
in the assets of the trust. The sole assets of the trust are 9.50% junior
subordinated debentures issued by the Company with a maturity date of
December 31, 2030.

          Subject to certain limitations, the Company has the right to defer
payment of interest on the debentures at any time, or from time to time, for a
period not to exceed 20 consecutive quarters. The trust preferred securities are
subject to mandatory redemption, in whole or in part, upon repayment of the
debentures at maturity or their earlier redemption. At the option of the
Company, the debentures may be redeemed in whole or in part prior to maturity on
or after December 31, 2005, if certain conditions are met, and only after the
Company has obtained Federal Reserve approval, if then required under applicable
guidelines or regulations.

          The Company has guaranteed the payment of distributions and payments
upon liquidation or redemption of the trust preferred securities, in each case
to the extent of funds held by the trust. The Company and the trust believe
that, taken together, the obligations of the Company under the guarantee, the
debentures and other related agreements provide, in the aggregate, a full,
irrevocable and unconditional guarantee, on a subordinated basis, of all of the
obligations of the trust under the trust preferred securities.

          The trust preferred securities are recorded as long-term debt of the
Company. The trust received net proceeds of approximately $18.9 million after
deducting underwriting commissions and offering expenses and including the
underwriters' over-allotment shares. A portion of the preferred securities is
eligible for treatment as Tier 1 capital as allowed by the Federal Reserve.

NOTE 12--EMPLOYEE SAVINGS AND INCENTIVE PLANS

a.                  SAVINGS AND RETIREMENT PLAN

          The Company maintains The PrivateBancorp, Inc. Savings and Retirement
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 banks can make
discretionary

                                      F-23



contributions to the Plan as determined and approved by the bank's
Board of Directors. Total discretionary contributions to the Plan amounted to
$239,867, $112,387, and $100,634 in 2002, 2001 and 2000, respectively.

b.                  STOCK OPTIONS

          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, 2002, the Stock Incentive Plan allows
12,540 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 other than those granted in 1998 are first
exercisable beginning at least two years following the date of grant. Options
granted 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.

          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, 2002 and 2001,
adjusted to reflect our 3-for-2 stock split effective January 17, 2003, and
changes during the years then ended:



                                                           2002                            2001
                                              -----------------------------    ----------------------------
                                                   WEIGHTED AVERAGE                WEIGHTED AVERAGE
                                               SHARES       EXERCISE PRICE      SHARES      EXERCISE PRICE
                                              ---------    ----------------    --------    ----------------
                                                                               
Outstanding at beginning of year .......      1,014,953    $           7.99    1,091,037   $           7.19
Granted ................................         21,750               15.00      182,850               9.55
Exercised ..............................       (212,796)               5.79     (238,647)              5.29
Forfeited ..............................         (5,109)               9.02      (20,288)             10.63
                                              ---------                        ---------
Outstanding at end of year .............        818,798    $           8.77    1,014,953   $           7.99
                                              =========                        =========
Options exercisable at year-end ........        356,915                          668,430
Weighted average fair value of options
 granted during the year ...............      $   15.00                        $    9.55


          The range of exercise prices and weighted average remaining
contractual life for stock options outstanding as of December 31, 2002, was
$4.58 to $15.00 and six years, respectively.

          The following table presents the range of exercise prices for the
stock option grants outstanding at December 31, 2002.

                         EXERCISE PRICE RANGE          STOCK OPTIONS OUTSTANDING
                    ------------------------------     -------------------------
                    $4.58 - $6.25..................             264,240
                    $7.29 - $9.67..................             300,435
                    $11.15 - $15.00................             254,123

c.                  RESTRICTED STOCK

                    In 2002 and 2001, the Company issued the following
                    restricted share grants:

                                      F-24



             GRANT DATE      SHARES GRANTED       PRICE
          ----------------   --------------     --------
          2001:

          January 2001 ...              450      8.50000
          February 2001 ..           34,800      9.41666
          April 2001 .....              750      9.33333
          June 2001 ......            2,250      11.1533
          December 2001 ..            1,500      11.3866
          December 2001 ..            3,750      11.3866

             GRANT DATE      SHARES GRANTED      PRICE
          ----------------   --------------     --------
          2002:

          January 2002....            2,550      15.0000

          During 2002, no restricted shares were forfeited. Restricted 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 $306,026,
$275,771, and $227,000 for 2002, 2001 and 2000, respectively.

NOTE 13--RELATED-PARTY TRANSACTIONS

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

          Balance, December 31, 2001 ...   $ 11,529,908
                  Additions ............     11,236,239
                  Collections ..........     (7,935,626)
                                           ------------
          Balance, December 31, 2002 ...   $ 14,830,521
                                           ============

          Directors and executive officers of the Company and the banks were
clients of and had transactions with the banks 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 collectability or other unfavorable features.

          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 the Company. The purpose of the transaction was to enhance
Mr. Mandell's interest in our long-term performance and further align his
interests with those of our stockholders. As part of the transaction, we loaned
Mr. Mandell approximately 95% of the purchase price on a full recourse basis.
The loan matured on December 30, 2002 when Mr. Mandell repaid the outstanding
loan balance in full. 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. The loan was repaid in full in December, 2002.

          The Company is the general partner in a partnership for investment
purposes. Through a contractual arrangement, The PrivateBank (Chicago)'s wealth
management department maintains the partnership's records and

                                      F-25



earns an administrative fee from the partnership.

          During 2002, the PrivateBank (Chicago) acquired phone equipment and
related services with a total cost of $176,244 through an information technology
company, Worknet, Inc,. William Castellano, who is one of the Company's
directors, is an affiliate of that Company.

          During 2002, 2001 and 2000, The PrivateBank (Chicago) incurred
professional fees for services provided by the law firm Spitzer, Addis, Susman &
Krull in the amount of approximately $309,378, $263,264, and $186,000,
respectively. Michael B. Susman, who is one of the Company's directors, is a
partner of that firm.

NOTE 14-- DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH OFF
        BALANCE SHEET RISK

DERIVATIVE FINANCIAL INSTRUMENTS

          The Company entered into an interest rate swap agreement on November
23, 2001 in order to hedge a 6.5% fixed-rate $25.0 million FHLB advance maturing
on October 23, 2005. An interest rate swap is an agreement in which two parties
agree to exchange, at specified intervals, interest payment streams calculated
on an agreed-upon notional principal amount with at least one stream based on a
specified floating rate index. The Company paid $1.9 million in order to swap
the interest on a 6.5% fixed-rate for a 90-day LIBOR-based rate. A basis
difference of $1.9 million arises due to the fact that the fair value hedge was
initiated one year following the issuance of the FHLB advance. The basis
difference impacts the carrying value of the FHLB advance and is being amortized
to interest expense over the debt's remaining term outstanding.

          As the swap qualifies as a fair value hedge, changes in the fair value
of the interest rate swap and the changes in the fair value of the advance from
the date of designation are recorded through income. The interest rate swap is
recorded in other assets of the consolidated balance sheet at its fair value of
$2.9 million.

          In the third quarter of 2002, the Company entered into a $25 million
swap in order to protect a portion of the municipal investment security
portfolio appreciation should rates rise. The Company swapped the 10-year rate
for 3-month LIBOR to act as an economic hedge to a portion of the
available-for-sale municipal securities in the portfolio. The December 31, 2002
fair market value adjustment on this swap resulted in a trading loss of
$943,000, which is recorded in other liabilities on the consolidated balance
sheet.

          Interest rate swaps are subject to credit risk for non-performance by
counterparties. Exposure to credit risk is mitigated by credit approvals, credit
limits and monitoring procedures.

CREDIT RISK AND MARKET RISK

          By their nature, all financial instruments involve risk, including
credit risk for non-performance by counterparties. The contract or notional
amounts of these instruments reflect the extent of involvement we have in
particular classes of financial instruments. The maximum potential loss may
exceed any amounts recognized in the Consolidated Balance Sheets. However, the
Company's maximum exposure to credit loss in the event of non-performance by the
other party to the financial instruments for commitments to extend credit and
financial guarantees is limited to the amount drawn and outstanding on those
instruments.

          Exposure to credit risk is controlled through credit approvals, credit
limits, obtaining collateral and continuous monitoring procedures and reserves
for losses are established when deemed necessary.

          All financial instruments inherently expose the holders to market
risk, including changes in interest rates. The Company manages its exposure to
these market risks through our regular operating and financing activities and,
commencing in 2001, when appropriate, through the use of derivative financial
instruments.

FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK

          The Company has, through its subsidiaries, entered into 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

                                      F-26



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
loss that would be recognized at the reporting date if counterparties failed to
completely perform as contracted.

          Our 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 banks use the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments. At December 31, 2002 and 2001, the banks had the following
categories of credit-related financial instruments:

                                                2002         2001
                                             ----------   ----------
                                                 (in thousands)
          Commitments to extend credit ...   $  388,696   $  224,144
          Standby letters of credit ......       37,936       19,950

          Note: all commitments are floating and are shown at contract amount

          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 banks evaluate each client's
creditworthiness on a case-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
banks 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.

          The following table summarizes the maturity of standby letters of
credit and commitments to extend credit:



                                                                EXPIRING IN:
                                      TOTAL        2003      2004-2005    2006-2007       >2008
                                   ----------   ----------   ----------   ----------   ----------
                                                             (in thousands)
                                                                        
Standby letters of credit ......       37,936       27,592        5,430        4,914           --
Commitments to extend credit ...      388,696      211,925      126,058       17,376       33,337
                                   ----------   ----------   ----------   ----------   ----------
     Total .....................   $  426,632   $  239,517   $  131,488   $   22,290   $   33,337
                                   ==========   ==========   ==========   ==========   ==========


NOTE 15--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 banks grant loans to
clients located primarily in the metropolitan Chicago and St. Louis areas. There
are no other significant concentrations of loans and commitments to make loans
other than the categories of loans disclosed in Note 5.

NOTE 16--ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

          The following presents the carrying value and estimated fair value of
the various classes of financial instruments held by the Company and its
subsidiaries at December 31, 2002 and 2001. This information is presented solely
for compliance with FAS No. 107 "Disclosures about Fair Value of Financial
Instruments," 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

                                      F-27



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.

                                      F-28





                                                DECEMBER 31, 2002        DECEMBER 31, 2001
                                             ----------------------   -----------------------
                                             CARRYING    ESTIMATED     CARRYING     ESTIMATED
                                               VALUE     FAIR VALUE      VALUE     FAIR VALUE
                                             ---------   ----------   ----------   ----------
                                                             (in thousands)
                                                                       
Assets--
     Cash and cash equivalents .........    $   34,787   $   34,787   $    22,801  $   22,801
     Securities ........................       487,020      487,020       332,933     332,933
     Loans held for sale ...............        14,321       14,321        11,335      11,335
     Net loans .........................       954,056      988,352       772,465     780,705
     Accrued interest receivable........         9,427        9,427         7,262       7,262
     Interest Rate Swap ................         2,925        2,925         1,704       1,704
     Bank Owned Life Insurance .........        10,729       10,729        10,128      10,128

Liabilities--
     Deposits with no stated maturity ..       642,820      642,820       480,486     480,486
     Time deposits .....................       562,451      535,576       370,009     370,935
                                            ----------   ----------   ----------   ----------
     Total deposits ....................     1,205,271    1,205,272       850,495     851,421
     Accrued interest payable ..........         4,986        4,986         2,112       2,112
     Funds borrowed ....................       209,954      209,377       231,488     232,827
     Long term debt - Trust Preferred
      Securities .......................        20,000       21,980        20,000      21,879


          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.

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.                  LOANS HELD FOR SALE

          Loans held for sale are carried at fair value. Fair value is
determined based on quoted market rates or, in the case where a firm commitment
has been made to sell the loan, the firm committed price.

d.                  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 determined using available market
information and specific borrower information.

e.                  INTEREST RATE SWAPS

          The fair value of interest swaps executed by the Company is determined
based on the fair market value as quoted by broker-dealers.

                                      F-29



f.                  BANK OWNED LIFE INSURANCE

          The fair value of bank owned life insurance is equal to its cash
surrender value.

g.                  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 and brokered deposits are
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.

h.                  FUNDS BORROWED

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

i.                  OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

          The Company's commitments to originate loans, and for unused lines and
outstanding letters of credit are primarily at market-based interest rates and
therefore there is no fair value adjustment.

NOTE 17--REGULATORY REQUIREMENTS

          The banks are subject to federal and state laws, which restrict the
payment of dividends to the Company. Based on these restrictions, at January 1,
2003, The PrivateBank (Chicago) could have declared approximately $30,295,618 in
dividends without requesting approval of the applicable federal or state
regulatory agency. As of January 1, 2003, The PrivateBank (St. Louis) could not
have declared dividends due to net losses in 2000 and 2001.

          The PrivateBank (Chicago) is required to maintain noninterest-bearing
cash balances with the Federal Reserve based on the types and amounts of
deposits held. During 2002 and 2001, the average balances maintained to meet the
requirement were $6,122,000 and $3,037,720, respectively.

          The Company and the banks 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 the banks must meet
specific capital guidelines that involve quantitative measures of the banks'
assets, liabilities and certain off-balance sheet items. The quantitative
measures for capital adequacy require the Company and the banks 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 the banks'
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. Prompt
corrective action provisions are not applicable to bank holding companies.
Management believes that as of December 31, 2002, the Company and the banks meet
all minimum capital adequacy requirements to which they are subject.

          The most recent notification from the Federal Deposit Insurance
Corporation categorized The PrivateBank (Chicago) as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, an institution must maintain ratios as set forth in the following
table. Management believes that no events or changes in conditions have occurred
subsequent to such notification to change the bank's category.

                                      F-30



          The following table presents selected capital information for the
Company (Consolidated), The PrivateBank (Chicago) and The PrivateBank (St.
Louis) as of December 31, 2002 and 2001 (dollars in thousands):



                                                                                        TO BE WELL
                                                                                     CAPITALIZED UNDER
                                                                   FOR CAPITAL       PROMPT CORRECTIVE
                                                 ACTUAL         ADEQUACY PURPOSES    ACTION PROVISIONS
                                           ------------------   ------------------   ------------------
                                             AMOUNT     RATIO     AMOUNT     RATIO     AMOUNT     RATIO
                                           ----------   -----   ----------   -----   ----------   -----
                                                                                
As of December 31, 2002--
     Total risk-based capital--
         Consolidated ..................   $   94,109    8.29%  $   90,845    8.00%
         The PrivateBank (Chicago) .....      104,249   10.26       81,305    8.00   $  101,631   10.00%
         The PrivateBank (St. Louis) ...       14,230   12.05        9,445    8.00       11,807   10.00
     Tier 1 risk-based capital--
         Consolidated ..................   $   78,524    6.91   $   45,422    4.00
         The PrivateBank (Chicago) .....       93,918    9.24       40,652    4.00   $   60,978    6.00
         The PrivateBank (St. Louis) ...       12,976   10.99        4,723    4.00        7,084    6.00
     Tier 1 (leverage) capital--
         Consolidated ..................   $   78,524    5.47   $   57,455    4.00
         The PrivateBank (Chicago) .....       93,918    7.25       51,842    4.00   $   64,802    5.00
         The PrivateBank (St. Louis) ...       12,976    9.47        5,482    4.00        6,852    5.00

As of December 31, 2001--
     Total risk-based capital--
         Consolidated ..................   $   84,482    9.71%  $   69,617    8.00%
         The PrivateBank (Chicago) .....       79,222   10.02       63,233    8.00   $   79,042   10.00%
         The PrivateBank (St. Louis) ...        8,455   10.86        6,228    8.00        7,786   10.00
     Tier 1 risk-based capital--
         Consolidated ..................   $   71,176    8.18   $   34,809    4.00
         The PrivateBank (Chicago) .....       71,725    9.07       31,617    4.00   $   47,425    6.00
         The PrivateBank (St. Louis) ...        7,646    9.82        3,114    4.00        4,671    6.00
     Tier 1 (leverage) capital--
         Consolidated ..................   $   71,176    6.64   $   42,904    4.00
         The PrivateBank (Chicago) .....       71,125    7.25       39,565    4.00   $   49,456    5.00
         The PrivateBank (St. Louis) ...        7,646    9.43        3,242    4.00        4,053    5.00


NOTE 18--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 with legal counsel, none of the
litigation to which the Company or its subsidiaries is a party will have a
material effect, either individually or in the aggregate, on the consolidated
financial position or results of operations.

                                      F-31



NOTE 19--PRIVATEBANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL
STATEMENTS

                            CONDENSED BALANCE SHEETS
                        AS OF DECEMBER 31, 2002 AND 2001


                                                             2002         2001
                                                          ----------   ----------
                                                               (in thousands)
                                                                 
          ASSETS
          Cash and due from banks--bank subsidiaries ..   $      723   $      361
          Investment in bank subsidiaries .............      135,901       90,499
          Other assets ................................        3,125        1,939
                                                          ----------   ----------
          Total assets ................................   $  139,749   $   92,799
                                                          ==========   ==========

          LIABILITIES AND STOCKHOLDERS' EQUITY
          Funds borrowed ..............................   $   30,000   $   10,000
          Long term debt -- trust preferred
           securities .................................       20,000       20,000
          Other liabilities ...........................          657          495
                                                          ----------   ----------
          Total liabilities ...........................       50,657       30,495
                                                          ----------   ----------
          Stockholders' equity ........................       89,092       62,304
                                                          ----------   ----------
          Total liabilities and stockholders' equity ..   $  139,749   $   92,799
                                                          ==========   ==========


                         CONDENSED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



                                                                  2002        2001        2000
                                                                --------    --------    --------
                                                                         (IN THOUSANDS)
                                                                               
OPERATING INCOME:
      Interest income .......................................         --    $     --    $      5
      Interest expense ......................................      2,553       2,127       1,230
                                                                --------    --------    --------
      Net interest expense ..................................     (2,553)     (2,127)     (1,225)
                                                                --------    --------    --------
NON INTEREST INCOME:
      Other income ..........................................        115          12           6
                                                                --------    --------    --------
OPERATING EXPENSE:
      Amortization of deferred compensation .................        306         276         227
      Other .................................................      2,731       1,652       1,359
                                                                --------    --------    --------
         Total ..............................................      3,037       1,928       1,586
                                                                --------    --------    --------
      Loss before income taxes and equity in undistributed
       net income of bank subsidiaries ......................     (5,475)     (4,043)     (2,805)
      Income tax benefit ....................................     (1,772)     (1,547)       (913)
                                                                --------    --------    --------
      Loss before equity in undistributed net income of
       bank subsidiaries ....................................     (3,703)     (2,496)     (1,892)
                                                                --------    --------    --------
      Equity in undistributed net income of bank subsidiaries     14,710       8,696       6,317
                                                                --------    --------    --------
      Net income ............................................   $ 11,007    $  6,200    $  4,425
                                                                ========    ========    ========


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

                                      F-32



                       CONDENSED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



                                                                     2002          2001          2000
                                                                  ----------    ----------    ----------
                                                                              (in thousands)
                                                                                     
Cash flows from operating activities:
      Net income ..............................................   $   11,007    $    6,200    $    4,425
      Adjustments to reconcile net income to net cash used in
       operating activities--
      Equity in net income of bank subsidiaries ...............      (14,710)       (8,696)       (6,317)
      Amortization of deferred compensation ...................          306           276           227
      Decrease (increase) in other assets .....................          275          (646)         (407)
      Increase in other liabilities ...........................          416           386           607
      Other, net ..............................................        1,198          (269)           --
                                                                  ----------    ----------    ----------
          Total adjustments ...................................      (12,515)       (8,949)       (5,890)
                                                                  ----------    ----------    ----------
          Net cash used in operating activities ...............       (1,508)       (2,749)       (1,465)
                                                                  ----------    ----------    ----------
Cash flows from investing activities:

      Net capital investments in bank subsidiaries ............      (23,750)       (5,000)      (29,200)
      Proceeds from bank subsidiary for Lodestar acquisition ..        5,589            --            --
      Purchase of premises ....................................       (1,750)           --            --
                                                                  ----------    ----------    ----------
      Net cash used in investing activities ...................      (19,911)       (5,000)      (29,200)
Cash flows from financing activities:

      Funds borrowed ..........................................       20,000         5,000        23,000
      Issuance of Long term debt -- Trust Preferred
       Securities . ...........................................           --        20,000            --
      Repayment of funds borrowed .............................           --       (18,000)           --
      Proceeds from exercise of stock options .................        1,522         1,259           110
      Repayment of loan to executive officer ..................          950            --           175
      Dividends paid ..........................................         (691)         (520)         (462)
                                                                  ----------    ----------    ----------
      Net cash provided by financing activities ...............       21,781         7,739        22,823
                                                                  ----------    ----------    ----------
Net increase (decrease) in cash and cash equivalents ..........          362           (10)       (7,842)
Cash and cash equivalents at beginning of year ................          361           371         8,213
                                                                  ----------    ----------    ----------
Cash and cash equivalents at end of year ......................   $      723    $      361    $      371
                                                                  ==========    ==========    ==========
Other cash flow disclosures:
      Income taxes paid .......................................   $    1,325    $    1,757    $    1,917


NOTE 20--CAPITAL TRANSACTIONS

          During 2002, the Company contributed capital of $19.25 million to the
PrivateBank (Chicago) and $4.5 million to the PrivateBank (St. Louis). On June
23, 2000, the Company established The PrivateBank (St. Louis) as a federal
savings bank in St. Louis, Missouri. The PrivateBank (St. Louis) was capitalized
with $8.0 million of borrowed funds drawn from the Company's revolving credit
facility. This facility, entered into with a commercial bank in February 2000
and was amended on December 24, 2002, and as amended, matures on April 11, 2003
and allows for up to $35.0 million in borrowings. The interest rate on
borrowings under the revolving line is based on, at the borrower's option,
either the lender's prime rate or a 90-day LIBOR-based rate. The PrivateBank
(St. Louis) is a wholly-owned subsidiary of the Company, and its financial
condition and results of operations are included in the Company's consolidated
financial statements.

                                      F-33



                      PRIVATEBANCORP, INC. AND SUBSIDIARIES
                           SUPPLEMENTAL FINANCIAL DATA

                  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following are the consolidated results of operations on a quarterly basis:



                                                                          2002
                                                ----------------------------------------------------------
                                                   FOURTH          THIRD          SECOND          FIRST
                                                -----------     -----------     -----------    -----------
                                                 (dollars in thousands except ratios and per share data)
                                                                                   
SUMMARY INCOME STATEMENT
INTEREST INCOME
Loans, including fees .......................   $    14,043     $    13,704     $    12,665    $    12,148
Federal funds sold and
     interest bearing deposits ..............            63              38               8             17
Securities ..................................         5,507           4,557           4,886          4,206
                                                -----------     -----------     -----------    -----------
Total interest income .......................        19,613          18,299          17,559         16,371
Interest expense ............................         7,800           7,856           7,579          8,007
                                                -----------     -----------     -----------    -----------
Net interest income .........................        11,813          10,443           9,980          8,364
Provision for loan loss .....................           914             828           1,609            511
                                                -----------     -----------     -----------    -----------
Net interest income after
    provision for loan loss .................        10,899           9,615           8,371          7,853
                                                -----------     -----------     -----------    -----------
NON-INTEREST INCOME
Banking, wealth management
     services and other income ..............         1,975           1,763           1,802          1,542
Securities gains (losses), net ..............          (313)            280             274           (230)
Trading losses on swap ......................          (282)           (662)             --             --
                                                -----------     -----------     -----------    -----------
Total non-interest income ...................         1,380           1,381           2,076          1,312
                                                -----------     -----------     -----------    -----------
NON-INTEREST EXPENSE
Salaries and employee
      benefits ..............................         3,903           3,393           3,469          3,214
Goodwill ....................................            --              --              --             --
Occupancy expense ...........................         1,319           1,227           1,206          1,139
Other non-interest expense ..................         2,712           2,468           2,438          2,119
                                                -----------     -----------     -----------    -----------
Total non-interest expense ..................         7,934           7,088           7,113          6,472
                                                -----------     -----------     -----------    -----------
Income before income taxes ..................         4,345           3,908           3,334          2,693
Provision for income taxes ..................         1,125             875             724            549
                                                -----------     -----------     -----------    -----------
Net income ..................................   $     3,220     $     3,033     $     2,610    $     2,144
                                                ===========     ===========     ===========    ===========
KEY STATISTICS
Diluted earnings per share ..................          0.41            0.39            0.33           0.28
Basic earnings per share ....................          0.43            0.41            0.35           0.29
Return on average total assets ..............          0.88%           0.89%           0.82%          0.73%
Return on average total equity ..............         15.99%          15.86%          15.07%         13.35%
Net interest margin .........................          3.56%           3.46%           3.53%          3.18%
Yield on average earning assets .............          5.79%           5.90%           6.03%          6.02%
Cost of average paying liabilities ..........          2.42%           2.63%           2.69%          3.06%
Efficiency Ratio (tea) ......................          57.3%           56.3%           55.4%          62.5%
COMMON STOCK INFORMATION
Book value per share ........................   $     11.56     $     10.71     $      9.71    $      8.80
Dividends paid per share ....................         0.027           0.027           0.020          0.020
Outstanding shares at end of pd. ............     7,704,203       7,404,234       7,382,370      7,375,530


                                                                          2001
                                                ----------------------------------------------------------
                                                   FOURTH         THIRD           SECOND          FIRST
                                                -----------     -----------     -----------    -----------
                                                 (dollars in thousands except ratios and per share data)
                                                                                   
SUMMARY INCOME STATEMENT
INTEREST INCOME
Loans, including fees .......................   $    12,311     $    12,785     $    12,877    $    13,002
Federal funds sold and
 interest bearing deposits ..................            13              23              31            177
Securities ..................................         4,144           3,704           3,327          3,202
                                                -----------     -----------     -----------    -----------
Total interest income .......................        16,468          16,512          16,235         16,381
Interest expense ............................         8,548           9,478           9,625          9,986
                                                -----------     -----------     -----------    -----------
Net interest income .........................         7,920           7,034           6,610          6,395
Provision for loan loss .....................         1,257             845             738            339
                                                -----------     -----------     -----------    -----------
Net interest income after
 provision for loan loss ....................         6,663           6,189           5,872          6,056
                                                -----------     -----------     -----------    -----------
NON-INTEREST INCOME
Banking, wealth management
 services and other income ..................         1,149             902           1,024            953
Securities gains (losses), net ..............         1,191             365             353            186
Trading losses on swap ......................            --              --              --             --
                                                -----------     -----------     -----------    -----------
Total non-interest income ...................         2,340           1,267           1,377          1,139
                                                -----------     -----------     -----------    -----------
NON-INTEREST EXPENSE
Salaries and employee
 benefits ...................................         2,519           2,303           1,855          2,434
Goodwill ....................................           206             206             206            206
Occupancy expense ...........................         1,325             985             960            888
Other non-interest expense ..................         2,576           1,847           2,378          1,758
                                                -----------     -----------     -----------    -----------
Total non-interest expense ..................         6,626           5,341           5,399          5,286
                                                -----------     -----------     -----------    -----------
Income before income taxes ..................         2,377           2,115           1,850          1,909
Provision for income taxes ..................           459             524             492            576
                                                -----------     -----------     -----------    -----------
Net income ..................................   $     1,918     $     1,591     $     1,358    $     1,333
                                                ===========     ===========     ===========    ===========
KEY STATISTICS
Diluted earnings per share ..................          0.26            0.22            0.19           0.19
Basic earnings per share ....................          0.27            0.22            0.19           0.19
Return on average total assets ..............          0.70%           0.64%           0.60%          0.64%
Return on average total equity ..............         12.18%          10.46%           9.46%          9.86%
Net interest margin .........................          3.28%           3.17%           3.21%          3.32%
Yield on average earning assets .............          6.57%           7.16%           7.67%          8.37
Cost of average paying liabilities 2.42% ....          3.59%           4.40%           4.92%          5.55
Efficiency Ratio (tea) ......................          60.9%           60.6%           64.5%          67.8%
COMMON STOCK INFORMATION
Book value per share ........................   $      8.65     $      8.71     $      8.23    $      8.10
Dividends paid per share ....................         0.020           0.020           0.017          0.017
Outstanding shares at end of pd. ............     7,206,420       7,125,186       7,021,002      7,028,652


                                      F-34



                      PRIVATEBANCORP, INC. AND SUBSIDIARIES
                           SUPPLEMENTAL FINANCIAL DATA
            SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)(CONTINUED)



                                                                      2002
                                         -------------------------------------------------------------
                                            FOURTH           THIRD           SECOND          FIRST
                                         ------------     ------------    ------------    ------------
                                            (dollars in thousands except ratios and per share data)
                                                                              
NUMBER OF SHARES USED TO COMPUTE:
Basic earnings per share .............      7,422,471        7,392,542       7,378,748      7,287,033
Diluted earnings per share ...........      7,912,101        7,809,603       7,808,900      7,613,646
Capital Ratios
Total equity to total assets .........           5.77%            5.65%           5.38%          5.27%
Total risk-based capital ratio .......           8.29%            9.10%           9.37%          9.93%
Tier-1 risk based capital ratio ......           6.91%            7.61%           7.84%          8.37%
Leverage ratio .......................           5.47%            5.91%           6.07%          6.25%
Selected Financial Condition
Data (at end of period)
Total securities .....................   $    487,020     $    403,192    $    392,090    $    388,728
Total loans ..........................        965,641          913,197         865,778         782,434
Total assets .........................      1,543,414        1,404,326       1,332,008       1,231,208
Total deposits .......................      1,205,271        1,163,327       1,074,475         981,865
Funds borrowed .......................        209,954          125,422         154,499         155,523
Total stockholders' equity ...........         89,092           79,281          71,697          64,926
Credit Quality
Non-performing assets:
Loans delinquent over 90 days ........            650            2,549           2,518           1,448
Nonaccrual loans .....................            749              430             649           1,458
Other real estate ....................             --               --              --              --
                                         ------------     ------------    ------------    ------------
Total non-performing assets ..........   $      1,399     $      2,979    $      3,167    $      2,906
                                         ============     ============    ============    ============
Loans charged-off ....................              4              165             515              66
Recoveries ...........................             33               70              25              39
                                         ------------     ------------    ------------    ------------
Net charge-offs (recoveries)  ........   $        (29)    $         95    $        490    $         27
                                         ============     ============    ============    ============
Provision for loan losses ............   $        914     $        828    $      1,609    $        511
                                         ============     ============    ============    ============
KEY RATIOS:
Net charge-offs to average loans .....          (0.01)%          0.04%           0.24%           0.01%
Total non-performing loans to total
       loans .........................           0.14%            0.33%           0.37%           0.37%
Total non-performing assets to total
       assets ........................           0.09%            0.21%           0.24%           0.24%
LOAN LOSS RESERVE SUMMARY:
Balance at beginning of period .......   $     10,642     $      9,909    $      8,790    $      8,306
Provision ............................            914              828           1,609             511
Net charge-offs (recoveries) .........            (29)              95             490              27
                                         ------------     ------------    ------------    ------------
Ending allowance for loan losses .....   $     11,585     $     10,642    $      9,909    $      8,790
NET LOAN CHARGE-OFFS (RECOVERIES):
Commercial real estate ...............   $         --     $         --    $         --    $         --
Residential real estate ..............             --               --              --              --
Commercial ...........................             (2)              46             481              18
Personal .............................            (27)              49               9               9
Home equity ..........................             --               --              --              --
Construction .........................             --               --              --              --
                                         ------------     ------------    ------------    ------------
Total net loan charge-
     offs (recoveries) ...............   $        (29)    $         95    $        490    $         27
                                         ============     ============    ============    ============


                                                                      2002
                                         --------------------------------------------------------------
                                             FOURTH           THIRD          SECOND           FIRST
                                         ----------    -------------     ------------     -------------
                                            (DOLLARS IN THOUSANDS EXCEPT RATIOS AND PER SHARE DATA)
                                                                              
NUMBER OF SHARES USED TO COMPUTE:
Basic earnings per share .............    7,160,358        7,071,759        7,022,483         6,972,092
Diluted earnings per share ...........    7,427,007        7,393,757        7,282,625         7,175,100
Capital Ratios
Total equity to total assets .........         5.29%            5.96%            6.12%             6.52%
Total risk-based capital ratio .......         9.71%           10.55%           10.98%            10.97%
Tier-1 risk based capital ratio ......         8.18%            8.88%            9.17%             9.12%
Leverage ratio .......................         6.64%            6.99%            7.26%             7.60%
Selected Financial Condition
Data (at end of period)
Total securities .....................   $  332,933    $     279,319     $    224,505     $     210,840
Total loans ..........................      780,771          715,977          666,262           625,700
Total assets .........................    1,176,768        1,041,975          944,887           873,693
Total deposits .......................      850,495          801,146          750,494           695,571
Funds borrowed .......................      231,488          137,956          106,128            90,397
Total stockholders' equity ...........       62,304           62,087           57,826            56,946
Credit Quality
Non-performing assets:
Loans delinquent over 90 days ........        2,504            3,766              938             2,847
Nonaccrual loans .....................          664            2,658            1,504               117
Other real estate ....................           --               62               --                --
                                         ----------    -------------     ------------     -------------
Total non-performing assets ..........   $    3,168    $       6,486     $      2,442     $       2,964
                                         ==========    =============     ============     =============
Loans charged-off ....................          521              199              332                --
Recoveries ...........................           12               16               35                 8
                                         ----------    -------------     ------------     -------------
Net charge-offs (recoveries)  ........   $      509    $         183     $        297     $          (8)
                                         ==========    =============     ============     =============
Provision for loan losses ............   $    1,257    $         845     $        738     $         339
                                         ==========    =============     ============     =============
KEY RATIOS:
Net charge-offs to average loans .....         0.27%            0.11%            0.18%            (0.01)%
Total non-performing loans to total
 loans ...............................         0.41%            0.91%            0.37%             0.47%
Total non-performing assets to total
 assets ..............................         0.27%            0.62%            0.26%             0.34%
LOAN LOSS RESERVE SUMMARY:
Balance at beginning of period .......   $    7,558    $       6,896     $      6,455     $       6,108
Provision ............................        1,257              845              738               339
Net charge-offs  (recoveries) ........          509              183              297                (8)
                                         ----------    -------------     ------------     -------------
Ending allowance for loan losses .....   $    8,306    $       7,558     $      6,896     $       6,455
NET LOAN CHARGE-OFFS (RECOVERIES):
Commercial real estate ...............   $       --    $          --     $         --     $          --
Residential real estate ..............           --               --               --                --
Commercial ...........................          438              185              276                (3)
Personal .............................           71               (2)              21                (5)
Home equity ..........................           --               --               --                --
Construction .........................           --               --               --                --
                                         ----------    -------------     ------------     -------------
Total net loan charge-
 offs (recoveries) ...................   $      509     $        183     $        297     $          (8)
                                         ==========    =============     ============     =============

                                      F-35



                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I,  Ralph Mandell, certify that:

1.   I have reviewed this annual report on Form 10-K of PrivateBancorp, Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a)   designed such disclosure controls and procedures to ensure that
             material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
             those entities, particularly during the period in which this
             annual report is being prepared;

        b)   evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this annual report (the "Evaluation Date"); and

        c)   presented in this quarterly report our conclusions about the
             effectiveness of the disclosure controls and procedures based on
             our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

        a)    all significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

        b)    any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Dated:  March 3, 2003            /s/  RALPH B. MANDELL
                                 ---------------------

                                 Ralph B. Mandell
                                 Chairman, Chief Executive Officer and President




                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I,  Gary Svec, certify that:

1.   I have reviewed this annual report on Form 10-K of PrivateBancorp, Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a)    designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              annual report is being prepared;

        b)    evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

        c)    presented in this annual report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
              our evaluation as of the Evaluation Date;

        d)    The registrant's other certifying officers and I have disclosed,
              based on our most recent evaluation, to the registrant's auditors
              and the audit committee of registrant's board of directors (or
              persons performing the equivalent function):

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent functions):

        a)    all significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

        b)    any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Dated:  March 3, 2003                                    /s/  GARY L. SVEC
                                                         -----------------------

                                                         Gary L. Svec
                                                         Chief Financial Officer



                                  EXHIBIT INDEX

EXHIBIT NO.   DESCRIPTION OF EXHIBITS
- -----------   ------------------------------------------------------------------
3.1           Amended and Restated Certificate of Incorporation of
              PrivateBancorp, Inc. (Filed as an exhibit to the Company's Form
              S-1 Registration Statement (File No. 333-77147) and incorporated
              herein by reference).
3.2           [Intentionally left blank]
3.3           Amended and Restated By-laws of PrivateBancorp, Inc. (Filed as an
              exhibit to the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 2000 and incorporated herein by
              reference).
4.1           Subordinated Note of PrivateBancorp Inc., dated February 11, 2000,
              principal amount of $5 million due February 11, 2007, issued to
              Johnson International, Inc. (Filed as an exhibit to the Company's
              Annual Report on Form 10-K for the fiscal year ended December 31,
              1999 and incorporated herein by reference).
4.2           Certain instruments defining the rights of the holders of
              long-term debt of the Company and certain of its subsidiaries,
              none of which authorize a total amount of indebtedness in excess
              of 10% of the total assets of the Company and its subsidiaries on
              a consolidated basis, have not been filed as Exhibits. The Company
              hereby agrees to furnish a copy of any of these agreements to the
              SEC upon request.
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 (Filed as
              an exhibit to the Company's Form S-1 Registration Statement (File
              No. 333-77147) and incorporated herein by reference).
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 (Filed as an exhibit to the Company's Form S-1
              Registration Statement (File No. 333-77147) and incorporated
              herein by reference).
10.3          First Amendment to Lease dated May 31, 2001 by and between
              Columbia Lisle Limited Partnership and The PrivateBank and Trust
              Company (Filed as an exhibit to the Company's Form 10-Q for the
              quarter ended September 30, 2001 and incorporated herein by
              reference).
10.4          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 (Filed as an exhibit
              to the Company's Form S-1 Registration Statement (File No.
              333-77147) and incorporated herein by reference).
10.5          Building Lease by and between Towne Square Realty, L.L.C. and The
              PrivateBank and Trust Company dated August 6, 1999 (Filed as an
              exhibit to the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 1999 and incorporated herein by
              reference).
10.6          First Amendment to lease dated January 1, 2002 by and between
              Towne Square Realty, L.L.C. and The PrivateBank and Trust
              Company.
10.7          Sublease Agreement for banking facility located at 1401 South
              Brentwood Blvd., St. Louis, Missouri, dated as of December 13,
              1999, by and between Union Planters Bank, National Association,
              St. Louis Brentwood Associates, L.P. and PrivateBancorp, Inc.
              (Filed as an exhibit to the Company's Quarterly Report on Form
              10-Q for the quarter ended March 31, 2000 and incorporated herein
              by reference).
10.8          Lease Agreement by and between Shodeen Management Company as agent
              for the beneficiaries of a land trust with Harris Bank St.
              Charles, pursuant to Trust Agreement dated March 4, 1994, and
              known as Trust No. 2321, and The PrivateBank and Trust Company
              dated January 9, 2001, for banking facility located at 312
              Crescent Place, Geneva, Illinois (Filed as an exhibit to the
              Company's Quarterly Report on Form 10-Q for the quarter ended
              March 31, 2001 and incorporated herein by reference).
10.9          Lease Agreement dated August 31, 1995 between 208 South LaSalle
              Associates, L.P. and Lodestar Financial Services, Inc.+
10.10         First Amendment to lease dated February 15, 2000 between
              LaSalle-Adams,L.L.C. and Lodestar Financial Services, Inc.+
10.11         Second Amendment to lease dated August 12, 2002 between
              LaSalle-Adams, L.L.C. and Lodestar Investment Counsel, Inc.+
10.12         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 filed as Exhibit 10.6 to the Company's Form S-1
              Registration Statement (File No. 333-77147) and incorporated
              herein by reference).



EXHIBIT NO.   DESCRIPTION OF EXHIBITS
- -----------   ------------------------------------------------------------------
10.13         PrivateBancorp, Inc. Amended and Restated Stock
              Incentive Plan (filed as Appendix A to the Company's
              Proxy Statement for its 2000 Annual Meeting of
              Stockholders and incorporated herein by reference).*
10.14         Employment Agreement by and between Ralph B. Mandell and
              PrivateBancorp, Inc. dated July 1, 2001 (Filed as an exhibit to
              the Company's Quarterly Report on Form 10-Q for the quarter ended
              September 30, 2001 and incorporated herein by reference).*
10.15         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 (Filed as an
              exhibit to the Company's Form S-1 Registration Statement (File No.
              333-77147) and incorporated herein by reference).
10.16         Employment Agreement by and between Richard C. Jensen and
              PrivateBancorp, Inc. dated as of July 27, 2000 (Filed as an
              exhibit to the Company's Form S-1 Registration Statement (File No.
              333-52676) and incorporated herein by reference ).*
10.17         Form of Indemnification Agreement by and between PrivateBancorp,
              Inc. and its directors and executive officers (Filed as an exhibit
              to the Company's Form S-1 Registration Statement (File No.
              333-77147) and incorporated herein by reference).*
10.18         Agreement and Plan of Reorganization by and between
              PrivateBancorp, Inc. and Towne Square Financial Corporation dated
              as of June 24, 1999 (Filed as an exhibit to the Company's Form S-1
              Registration Statement (File No. 333-77147) and incorporated
              herein by reference).
10.19         Stock Purchase Agreement dated as of October 4, 1999 by and among
              PrivateBancorp, Inc., Johnson International, Inc. and Johnson Bank
              Illinois (Filed as an exhibit to the Company's Quarterly Report on
              Form 10-Q for the quarter ended September 30, 1999 and
              incorporated herein by reference).
10.20         Loan Agreement dated as of February 11, 2000, between
              PrivateBancorp, Inc. and LaSalle Bank National Association (Filed
              as an exhibit to the Company's Annual Report on Form 10-K for the
              fiscal year ended December 31, 1999 and incorporated herein by
              reference).
10.21         Amendment No. 1 to Loan agreement dated as of February 11, 2002
              between PrivateBancorp, Inc. and LaSalle Bank National Association
              (Filed as an exhibit to the Company's Quarterly Report on Form
              10-Q for the quarter ended March 31, 2002 and incorporated herein
              by reference).
10.22         Amendment No. 2 to Loan agreement dated as of April 11, 2002
              between PrivateBancorp, Inc. and LaSalle Bank National Association
              (Filed as an exhibit to the Company's Quarterly Report on Form
              10-Q for the quarter ended June 30, 2002 and incorporated herein
              by reference).
10.23         Amendment No. 3 to Loan agreement dated as of December 24, 2002
              between PrivateBancorp, Inc. and LaSalle Bank National
              Association.+
10.24         Letter Agreement dated September 26, 2000 by and between
              PrivateBancorp, Inc., The PrivateBank and Trust Company and Donald
              A. Roubitchek (Filed as an exhibit to the Company's Quarterly
              Report on Form 10-Q for the quarter ended September 30, 2000 and
              incorporated herein by reference).*
10.25         Employment Agreement by and between William Goldstein and Lodestar
              Investment Counsel LLC, dated as of December 30, 2002.+
12.1          Calculation of Ratio of Earnings to Fixed Charges.+
21.1          Subsidiaries of the Registrant
23.1          Consent of Ernst & Young LLP.+
24.1          Powers of Attorney (set forth on signature page).
99.1          Certification of Chief Executive Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.+
99.2          Certification of Chief Financial Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.+

+      Filed herewith.
*      Indicates management contracts or compensatory plans or arrangements
       required to be filed as an exhibit.

EX-10.9

                                                                    Exhibit 10.9

                                  OFFICE LEASE


                                     Between


                       208 SOUTH LASALLE ASSOCIATES, L.P.
                                   as Landlord


                                       And


                        LODESTAR FINANCIAL SERVICES, INC.
                                    as Tenant



                                LEASE INDEX



                                                                                    Page
                                                                                 
1.     BASIC LEASE PROVISIONS .....................................................    1
2.     DEMISE AND TERM ............................................................    2
3.     RENT .......................................................................    2
4.     USE ........................................................................    4
5.     CONDITION OF PREMISES ......................................................    5
6.     BUILDING SERVICES ..........................................................    5
7.     RULES AND REGULATIONS ......................................................    6
8.     CERTAIN RIGHTS RESERVED TO LANDLORD ........................................    6
9.     MAINTENANCE AND REPAIRS ....................................................    7
10.    ALTERATIONS ................................................................    7
11.    INSURANCE ..................................................................    8
12.    WAIVER AND INDEMNITY .......................................................    8
13.    FIRE AND CASUALTY ..........................................................    9
14.    CONDEMNATION ...............................................................   10
15.    ASSIGNMENT AND SUBLETTING ..................................................   10
16.    SURRENDER ..................................................................   11
17.    DEFAULTS AND REMEDIES ......................................................   11
18.    HOLDING OVER ...............................................................   13
19.    SECURITY DEPOSIT ...........................................................   13
20.    SUBSTITUTION OF OTHER PREMISES .............................................   13
21.    DEMOLITION OR RENOVATION ...................................................   14
22.    ESTOPPEL CERTIFICATES ......................................................   14
23.    SUBORDINATION ..............................................................   14
24.    QUIET ENJOYMENT ............................................................   15
25.    BROKER .....................................................................   15
26.    NOTICES ....................................................................   15
27.    MISCELLANEOUS ..............................................................   15

EXHIBIT "A"                                                                  FLOOR PLANS
EXHIBIT "B"                                                        RULES AND REGULATIONS
EXHIBIT "C"                                                        WORK LETTER AGREEMENT
EXHIBIT "D"                                                         DRAWINGS OF PREMISES
EXHIBIT "E"                                                           BUILDING STANDARDS


                                       i



                                  OFFICE LEASE

       THIS LEASE (this "Lease") is made as of this 31st day of August, 1995
between 208 SOUTH LASALLE ASSOCIATES, L.P., an Illinois limited partnership
("Landlord") having an address at 208 South LaSalle Street, Suite 1602, Chicago,
Illinois 60604 and LODESTAR FINANCIAL SERVICES, INC., an Illinois corporation
("Tenant"), for space in the building known as 208 South LaSalle Street,
Chicago, Illinois 60604 (such building, together with the land upon which it is
situated, being herein referred to as the "Building"). The following Basic Lease
Provisions (the "Lease Provisions") set forth certain basic terms of this Lease:

1.     BASIC LEASE PROVISIONS.

       1.1    Suite Number(s): 1710, as shown on Exhibit A attached hereto.

       1.2    Rentable Square Feet: 3,319

       1.3    Base Rent:

                                      Annual Rent        Monthly Rent
              11/1/95-10/31/96        $51,444.48          $4,287.04
              11/l/96-10/31/97        $53,103.96          $4,425.33
              11/l/97-10/31/98        $54,763.56          $4,563.63
              11/1/98-10/31/99        $56,423.04          $4,701.92
              11/1/99-10/31/00        $58,082.52          $4,840.21
              11/1/00-10/31/01        $59,742.00          $4,978.50
              11/1/01-12/31/02        $61,401.48          $5,116.79

       1.4    Abated Rent: Base Rent shall abate for such portions of the first
                           (1st) two (2) calendar months of the Commencement
                           Date that Tenant is not in Default (as hereinafter
                           defined) under the terms of the Lease.

       1.5    Tenant's Proportionate Share: .4194%

       1.6    Base Expenses or Base Expense Year: 1995

       1.7    Base Taxes or Base Tax Year: 1995

       1.8    Security Deposit: $4,287.04

       1.9    Broker For Landlord: S.N. Phelps Realty L.L.C.

              Broker For Tenant: Strobeck Real Estate

       1.10   Term of Lease: Seven (7) years, two (2) months

       1.11   Commencement Date: November 1, 1995

       1.12   Notices to Landlord: 208 South LaSalle Associates, L.P.
                                   208 South LaSalle Street, Suite 1602
                                   Chicago, IL 60604
                                   Attention: General Manager

                                       1



              Notices to Tenant:   Lodestar Financial Services, Inc.
                                   208 South LaSalle
                                   Suite 1710
                                   Chicago, IL 60604
                                   Attention: William Goldstein

2.     DEMISE AND TERM. Landlord leases to Tenant and Tenant leases from
Landlord the premises (the "Premises") described in Section 1.1 of the Lease
Provisions and shown on the plan attached hereto as Exhibit "A", subject to the
covenants and conditions set forth in this Lease, for a term (the "Term")
described in Section 1.10 of the Lease Provisions commencing on the date (the
"Commencement Date") described in Section 1.11 of the Lease Provisions and
expiring on the date (the "Expiration Date") as determined by adding the Term to
the Commencement Date, unless terminated earlier as otherwise provided in this
Lease. Within five (5) business days after its receipt of Landlord's request
(the "Date Confirmation Letter"), Tenant shall confirm in writing to Landlord on
or before occupancy of the Premises, the actual Commencement Date and the
Expiration Date by its execution and return of the Date Confirmation Letter.

3.     RENT.

       3.1    Definitions. For purposes of this Lease, the following terms shall
have the following meanings:

       3.1.1  "Base Expenses" or "Base Expense Year" shall mean the amount or
       the year set forth in Section 1.6 of the Lease Provisions.

       3.1.2  "Base Taxes" or "Base Tax Year" shall mean the amount or the year
       set forth in Section 1.7 of the Lease Provisions.

       3.1.3 "Expenses" shall mean all expenses, costs and disbursements (other
       than Taxes) paid or incurred by Landlord in connection with the
       ownership, management, maintenance, operation, replacement and repair of
       the Building. If the cost incurred in making an improvement or replacing
       any equipment is not fully deductible as an expense in the year incurred
       in accordance with generally accepted accounting principles, the cost
       shall be amortized over the useful life of the improvement or equipment,
       as reasonably determined by Landlord. Expenses shall not include: (a)
       costs of tenant alterations; (b) interest and principal payments on
       mortgages; (c) advertising expenses and leasing commissions; (d) any cost
       or expenditure for which Landlord is reimbursed, whether by insurance
       proceeds or otherwise, except through Expense Escalation (as hereinafter
       defined); (e) legal expenses of negotiating leases or pursuing
       collections; (f) salaries, wages or other compensation of any personnel
       of Landlord or its managing agent above the grade of the Building's
       general manager; and (g) the cost of service or materials furnished to
       any tenant in the Building that are not generally furnished to other
       tenants. Expenses shall be determined on a cash or accrual basis, as
       Landlord may elect. If less than 100% of the rentable square feet in the
       Building is rented or occupied at any time during any calendar year,
       operating expenses for such calendar year shall be an amount equal to the
       Expenses which would normally be expected to be incurred had 100% of the
       Building's rentable square feet been occupied and had Landlord been
       supplying services to 100% of the Building's rentable square feet
       throughout such calendar

                                       2



       year (such occupancy adjustments to Expenses and/or Taxes shall also be
       made in determining the Base Expenses and/or Base Taxes).

       3.1.4  "Rent" shall mean Base Rent, Rent Escalation, Expense Escalation,
       Tax Escalation (as such terms are hereinafter defined) and any other sums
       or charges due by Tenant hereunder.

       3.1.5  "Taxes" shall mean all taxes, assessments and fees levied upon the
       Building, the property of Landlord located therein or the rents collected
       therefrom, by any governmental entity based upon the ownership, leasing,
       renting or operation of the Building, including, without limitation, all
       costs and expenses of protesting any such items. Taxes shall not include
       any net income, capital stock, succession, transfer, franchise, gift,
       estate or inheritance taxes; provided, however, if at any time during the
       Term, a tax or excise on income is levied or assessed by any governmental
       entity, in lieu of or as a substitute for, in whole or in part, real
       estate taxes or other ad valorem taxes, such tax shall constitute and be
       included in Taxes. For the purposes of determining Taxes for any given
       year, the amount to be included for such year (a) from special
       assessments payable in installments shall be the amount of the
       installments (and any interest) due and payable during such year, or, at
       Landlord's option, special assessments levied, assessed or otherwise
       imposed for such year without regard to when such special assessments are
       payable, and (b) from all other Taxes shall be the amount due and payable
       in such year, or at Landlord's option, Taxes levied, assessed or
       otherwise imposed for such year without regard to when such Taxes are
       payable.

       3.1.6  "Tenant's Proportionate Share" shall mean the percentage set forth
       in Section 1.4 of the Lease Provisions.

       3.2    Components of Rent. Tenant agrees to pay the following amounts to
Landlord at the office of the Building or at such other place as Landlord
designates:

       3.2.1  Base rent ("Base Rent") to be paid in monthly installments in the
       amounts as set forth in Section 1.3 of the Lease Provisions.

       3.2.2  Tax Escalation and Expense Escalation ("Tax Escalation and Expense
       Escalation") in an amount equal to Tenant's Proportionate Share of (a)
       the increase in expenses for any calendar year over the Base Expenses and
       (b) the increase in Taxes for any calendar year over the Base Taxes. (If
       Sections 1.6 and 1.7 of the Lease Provisions set forth a Base Expense
       Year and a Base Tax Year rather than Base Expenses and Base Taxes, the
       Base Expenses and the Base Taxes shall equal the amount of Expenses and
       Taxes, respectively, for the Base Expense Year and the Base Tax Year.)
       Prior to each calendar year, Landlord shall estimate the amount of the
       Tax Escalation and Expense Escalation due for such year, and Tenant shall
       pay Landlord one-twelfth of such estimate on the first day of each month
       during such year. Such estimate may be revised by Landlord whenever it
       obtains information relevant to making such estimate more accurate. At
       the end of each calendar year, Landlord shall deliver to Tenant a report
       setting forth the actual Expenses and Taxes for such calendar year and a
       statement of the amount of the Tax Escalation and Expense Escalation that
       Tenant has paid and is payable for such year. Within thirty (30) days
       after receipt of such report, Tenant shall pay to Landlord the amount of
       the Tax Escalation and Expense Escalation due for such calendar year
       minus any

                                       3



       payments of the Tax Escalation and Expense Escalation made by Tenant for
       such year. If Tenant's estimated payments of the Tax Escalation and
       Expense Escalation exceed the amount due Landlord for such calendar year,
       Landlord shall apply such excess as a credit against Tenant's other
       obligations under this Lease or promptly refund such excess to Tenant if
       the Term has already expired, provided Tenant is not then in default
       hereunder, in either case without interest to Tenant. Tenant shall have
       the right for a period of ninety (90) days after its receipt of
       Landlord's report to audit Expenses and Taxes. In the event the results
       of such audit disclose an overstatement of either Taxes or Expenses by
       ten percent (10%) or more, Landlord agrees to reimburse Tenant for its
       reasonable out-of-pocket expenses incurred in connection with such audit.

       3.3    Payment of Rent. The following provisions shall govern the payment
       of Rent.

       3.3.1  All Rent shall be paid to Landlord without offset or deduction,
       and the covenant to pay Rent shall be independent of every other covenant
       in this Lease. Payment shall be delivered to the Landlord at the address
       set forth above or at such other address as Landlord may designate from
       time to time.

       3.3.2  Any sum due from Tenant to Landlord which is not paid when due
       shall bear interest from the date due until the date paid at the annual
       rate of fifteen percent (15%) per annum, but in no event higher than the
       maximum rate permitted by law (the "Default Rate"); and, in addition,
       Tenant shall pay Landlord a late charge for any Rent payment which is
       paid more than five (5) days after its due date equal to five percent
       (5%) of such payment.

       3.3.3  In the event of the termination of this Lease prior to the
       determination of any Tax Escalation and Expense Escalation, Landlord's
       obligation to refund any such sums (provided Tenant is not in default
       hereunder) and Tenant's agreement to pay any such sums shall survive the
       termination of this Lease.

       3.3.4  No adjustment to the Rent by virtue of the operation of the rent
       adjustment provisions in this Lease shall result in the payment by Tenant
       in any year of less than the Base Rent shown on the Lease Provisions.

       3.3.5  Each amount owed to Landlord under this Lease for which the date
       of payment is not expressly fixed shall be due on the same date as the
       Rent listed on the statement showing such amount is due.

       3.3.6  If Landlord fails to give Tenant an estimate of Tax Escalation and
       Expense Escalation prior to the beginning of any calendar year, Tenant
       shall continue to pay Tax Escalation and Expense Escalation at the rate
       for the previous calendar year until Landlord delivers such estimate.

4.     USE. Tenant shall occupy and use the Premises only as general office use
and for no other purposes. Tenant shall comply with all federal, state and
municipal laws, ordinances and regulations and all covenants, conditions and
restrictions of record applicable to Tenant's use or occupancy of the Premises.
Without limiting the foregoing, Tenant shall not cause, nor permit, any
hazardous or toxic substances, medical waste or drugs to be brought upon,
produced, stored, used, discharged or disposed of in, on or about the Premises
without the prior written consent of Landlord (which Landlord may

                                       4



withhold in its sole discretion) and then only in compliance with all applicable
environmental laws.

5.     CONDITION OF PREMISES. Tenant's taking possession of the Premises shall
be conclusive evidence that the Premises were in good order and satisfactory
condition when Tenant took possession. No agreement of Landlord to alter,
remodel, decorate, clean or improve the Premises or the Building (or to provide
Tenant with any credit or allowance for the same), and no representation
regarding the condition of the Premises or the Building, have been made by or on
behalf of Landlord or relied upon by Tenant, except as expressly stated in the
Work Letter Agreement attached hereto as Exhibit "C".

6.     BUILDING SERVICES.

       6.1    Basic Services. Landlord shall furnish the following services in
keeping with the standards of similarly situated first-class office buildings:
(i) heating and air conditioning to provide a temperature condition required, in
Landlord's reasonable judgment, for comfortable occupancy of the Premises under
normal business operations, daily from 8:00 A.M. to 6:00 P.M., Saturdays from
8:00 A.M. to 1:00 P.M., and the remainder of weekends and holidays excepted;
(ii) water for drinking, and, subject to Landlord's approval, cold water at
Tenant's expense for any private restrooms and office kitchen requested by
Tenant; (iii) men's and women's restrooms at locations designated by Landlord
and in common with other tenants of the Building; (iv) daily janitor service in
the Premises and common areas of the Building, weekends and holidays excepted,
including periodic outside window washing of the perimeter windows in the
Premises; and (v) passenger elevator service in common with Landlord and other
tenants of the Building, 24 hours a day, 7 days a week; and freight elevator
service daily, weekends and holidays excepted, upon request of Tenant and
subject to scheduling and charges by Landlord.

       6.2    Electricity. Electricity shall be distributed to the Premises
either by the electric utility company serving the Building or, at Landlord's
option, by Landlord; and Landlord shall permit Landlord's wire and conduits, to
the extent available, suitable and safely capable, to be used for such
distribution. If and so long as Landlord is distributing electricity to the
Premises, Tenant shall obtain all of its electricity from Landlord and shall pay
all of Landlord's charges, which charges shall be based, at Landlord's option,
either on meter readings or on a survey of Tenant's electrical usage made by
Landlord or on Tenant's pro rata share of all space, including the Premises,
which is commonly metered with the Premises. If the electric utility company is
distributing electricity to the Premises, Tenant at its cost shall make all
necessary arrangements with the electric utility company for metering and paying
for electric current furnished to the Premises. All electricity used during the
performance of janitor service, or the making of any alterations or repairs in
the Premises, or the operation of any special air conditioning or other systems
serving the Premises, shall be paid for by Tenant.

       6.3    Telephones. Tenant shall arrange for telephone service directly
with one or more of the public telephone companies servicing the Building and
shall be solely responsible for paying for such telephone service. If Landlord
acquires ownership of the telephone cables in the Building at any time, Landlord
shall permit Tenant to connect to such cables on such terms and conditions as
Landlord may reasonably prescribe. As of the date of this Lease, telephone
service can be made available to the Premises through public telephone companies
that will be adequate for general office purposes.

                                       5



       6.4    Additional Services. Landlord shall not be obligated to furnish
any services other than those stated above. If Landlord elects to furnish
services requested by Tenant in addition to those stated above (including
services at times other than those stated above), Tenant shall pay Landlord's
then prevailing charges for such services. If Tenant shall fail to make any such
payment, then without notice to Tenant and in addition to all other remedies
available to Landlord, Landlord may discontinue any additional services. No
discontinuance of any such service shall result in any liability of Landlord to
Tenant or be considered as an eviction or a disturbance of Tenant's use of the
Premises. In addition, if Tenant's concentration of personnel or equipment
adversely affects the temperature or humidity in the Premises or the Building,
Landlord may install supplementary air conditioning units in the Premises, and
Tenant shall pay for the cost of installation and maintenance thereof.

       6.5    Failure or Delay in Furnishing Services. Tenant agrees that
Landlord shall not be liable for damages for failure or delay in furnishing any
service stated above if such failure or delay is caused, in whole or in part, by
any one or more of the events stated in Section 27.8, provided, however, in the
event such failure or delay shall continue for more than ten (10) consecutive
days, Tenant's obligation to pay Base Rent and Tax Escalation and Expense
Escalation shall abate beginning the eleventh (11th) day and be reinstated upon
return of services. In no event shall any such failure or delay be considered to
be an eviction or disturbance of Tenant's use of the Premises, or relieve Tenant
from its obligation to pay any Rent when due, or from any other obligations of
Tenant under this Lease.

7.     RULES AND REGULATIONS. Tenant shall observe and comply, and shall cause
its subtenants, assignees, invitees, employees, contractors and agents to
observe and comply, with the rules and regulations listed on Exhibit "B"
attached hereto and with such reasonable modifications and additions thereto as
Landlord may make from time to time. Landlord shall not be liable for failure of
any person to obey such rules and regulations. Landlord shall not be obligated
to enforce such rules and regulations against any person, and the failure of
Landlord to enforce any such rules and regulations shall not constitute a waiver
thereof or relieve Tenant from compliance therewith.

8.     CERTAIN RIGHTS RESERVED TO LANDLORD. Landlord reserves the following
rights, each of which Landlord may exercise without notice, except as otherwise
stated below, to Tenant and without liability to Tenant, and the exercise of any
such rights shall not be deemed to constitute an eviction or disturbance of
Tenant's use or possession of the Premises and shall not give rise to any claim
for set-off or abatement of rent or any other claim: (a) to change the name or
street address of the Building or the suite number of the Premises upon prior
notice; (b) to install and maintain any and all signs on the exterior or
interior of the Building; (c) to make repairs, decorations, alterations,
additions, or improvements, whether structural or otherwise, in and about the
Building, and for such purposes to enter upon the Premises, upon prior notice
(except in the event of emergencies) provided, however, such interruption or
suspension shall not unreasonably interfere with Tenant's use of or access to
the Premises, temporarily close doors, corridors and other areas in the Building
and interrupt or temporarily suspend services or use of common areas, and Tenant
agrees to pay Landlord for overtime and similar expenses incurred if such work
is done other than during ordinary business hours at Tenant's request; (d) to
retain at all times, and to use in appropriate instances, keys to all doors
within and into the Premises; (e) to grant to any person or to reserve unto
itself the exclusive right to conduct any business or render any service in the
Building; (f) to show or

                                       6



inspect the Premises at reasonable times and, if vacated or abandoned, to
prepare the Premises for reoccupancy; (g) to install, use and maintain in and
through the Premises, pipes, conduits, wires and ducts serving the Building,
provided that such installation, use and maintenance does not unreasonably
interfere with Tenant's use of the Premises; and (h) to take any other action
which Landlord deems reasonable in connection with the operation, maintenance or
preservation of the Building.

9.     MAINTENANCE AND REPAIRS. Tenant, at its expense, shall maintain and keep
the Premises in good order and repair at all times during the Term. In addition,
Tenant shall reimburse Landlord for the cost of any repairs to the Building
necessitated by the acts or omissions of Tenant, its subtenants, assignees,
invitees, employees, contractors and agents, to the extent Landlord is not
reimbursed for such costs under its insurance policies. Subject to the preceding
sentence, Landlord shall perform any maintenance or make any repairs to the
Building as Landlord shall desire or deem necessary for the safety, operation or
preservation of the Building, or as Landlord may be required or requested to do
by any governmental authority or by the order or decree of any court or by any
other proper authority.

10.    ALTERATIONS.

       10.1   Limitations. Tenant shall not make any replacement, alteration,
improvement or addition to or removal from the Premises (collectively an
"Alteration") without the prior written consent of Landlord which consent shall
not be unreasonably withheld or delayed. In the event Tenant proposes to make
any Alteration, Tenant shall, prior to commencing such Alteration, submit to
Landlord for prior written approval: (i) detailed plans and specifications; (ii)
sworn statements, including the names, addresses and copies of contracts for all
contractors; (iii) all necessary permits evidencing compliance with all
applicable governmental rules, regulations and requirements; (iv) certificates
of insurance in form and amounts required by Landlord, naming Landlord and any
other parties designated by Landlord as additional insureds; and (v) all other
documents and information as Landlord may reasonably request in connection with
such Alteration. Tenant agrees to pay Landlord's standard charges which charges
shall be in an amount equal to five percent (5%) of the cost of such Alteration
for review of all such items and supervision of the Alteration. Neither approval
of the plans and specifications nor supervision of the Alteration by Landlord
shall constitute a representation or warranty by Landlord as to the accuracy,
adequacy, sufficiency or propriety of such plans and specifications or the
quality of workmanship or the compliance of such Alteration with applicable law.
Tenant shall pay the entire cost of the Alteration and, if requested by
Landlord, shall deposit with Landlord prior to the commencement of the
Alteration, security for the payment and completion of the Alteration in form
and amount required by Landlord. Each Alteration shall be performed in a good
and workmanlike manner, in accordance with the plans and specifications approved
by Landlord, and shall meet or exceed the standards for construction and quality
of materials established by Landlord for the Building. In addition, each
Alteration shall be performed in compliance with all applicable governmental and
insurance company laws, regulations and requirements. Each Alteration shall be
performed by union contractors if required by Landlord and in harmony with
Landlord's employees, contractors and other tenants. Each Alteration made by
Landlord or Tenant in or upon the Premises (excepting only Tenant's furniture,
equipment and trade fixtures) shall become Landlord's property and shall remain
upon the Premises at the expiration or termination of this Lease without
compensation to Tenant; provided, however, that Landlord shall have the right to
require Tenant to remove such Alteration at Tenant's sole cost and expense in
accordance with

                                       7



the provisions of Section 16, provided, however, Tenant shall not be required to
remove any such Alteration if Landlord has indicated in writing of its prior
agreement that such Alteration may remain in the Premises at the expiration of
the Lease.

       10.2   Lien Waivers. Upon completion of any Alteration, Tenant promptly
shall furnish Landlord with sworn owner's and contractors statements and full
and final waivers of lien covering all labor and materials included in such
Alteration. Tenant shall not permit any mechanic's lien to be filed against the
Building, or any part thereof or any interest therein, arising out of any
Alteration performed, or alleged to have been performed, by, on behalf of, or at
the direction of Tenant. If any such lien is filed, Tenant, within ten (10) days
thereafter, shall have such lien released of record or deliver to Landlord a
bond in form, amount, and issued by a surety satisfactory to Landlord,
indemnifying Landlord against all costs and liabilities resulting from such lien
and the foreclosure or attempted foreclosure thereof. If Tenant fails to have
such lien so released or to deliver such bond to Landlord, Landlord, without
investigating the validity of such lien, may pay or discharge the same; and
Tenant shall reimburse Landlord upon demand for the amount so paid by Landlord,
including Landlord's expenses and attorneys' fees.

11.    INSURANCE. Tenant, at its expense, shall maintain at all times during the
Term the following insurance policies: (a) fire insurance, including extended
coverage, vandalism, malicious mischief and water damage coverage and demolition
and debris removal, insuring the full replacement cost of all improvements,
alterations or additions to the Premises made at Tenant's expense, and all other
property owned or used by Tenant and located in the Premises; (b) commercial
general liability insurance, contractual liability insurance and property damage
insurance with respect to the Building and the Premises, with limits to be set
by Landlord from time to time but in any event not less than $1,000,000 combined
single limit for personal injury, sickness or death or for damage to or
destruction of property for any one occurrence; and (c) insurance against such
other risks and in such other amounts as Landlord may from time to time
reasonably require. The form of all such policies and deductibles thereunder
shall be subject to Landlord's prior approval. All such policies shall be issued
by insurers acceptable to Landlord and licensed to do business in the State of
Illinois and shall contain a waiver of any rights of subrogation thereunder. In
addition, the policies shall name Landlord and any other parties designated by
Landlord as additional insureds, shall require at least thirty (30) days' prior
written notice to Landlord of termination or modification and shall be primary
and not contributory. Tenant, at least ten (10) days prior to the Commencement
Date, and within ten (10) days prior to the expiration of each such policy,
shall deliver to Landlord certificates evidencing the foregoing insurance or
renewal thereof, as the case may be.

12.    WAIVER AND INDEMNITY.

       12.1   Waiver. Except in the event of Landlord's negligence or willful
misconduct, Tenant releases Landlord, its property manager and their respective
agents and employees from, and waives all claims for, damage or injury to person
or property and loss of business sustained by Tenant and resulting from the
Building or the Premises or any part thereof or any equipment therein becoming
in disrepair, or resulting from any accident in or about the Building. This
paragraph shall apply particularly, but not exclusively, to flooding, damage
caused by Building equipment and apparatus, water, snow, frost, steam, excessive
heat or cold, broken glass, sewage, gas, odors, excessive noise or vibration or
the bursting or leaking of pipes, plumbing fixtures or sprinkler devices.
Without limiting the generality of the foregoing, Tenant waives all claims and
rights of recovery against Landlord, its property

                                       8



manager and their respective agents and employees for any loss or damage to any
property of Tenant, which loss or damage is insured against, or required to be
insured against, by Tenant pursuant to Section 11 above, whether or not such
loss or damage is due to the fault or negligence of Landlord, its property
manager or their respective agents or employees, and regardless of the amount of
insurance proceeds collected or collectible under any insurance policies in
effect.

       12.2   Indemnity. Tenant agrees to indemnify, defend and hold harmless
Landlord, its property manager and their respective agents and employees, from
and against any and all claims, demands, actions, liabilities, damages, costs
and expenses (including attorneys' fees and expenses), for injuries to any
persons and damage to or theft or misappropriation or loss of property occurring
in or about the Building and arising from the use and occupancy of the Premises
or from any activity, work, or thing done, permitted or suffered by Tenant in or
about the Premises (including, without limitation, any alteration by Tenant) or
from any breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of Tenant to be performed under this Lease or
due to any other act or omission of Tenant, its subtenants, assignees, invitees,
employees, contractors and agents. Without limiting the foregoing, Tenant shall
indemnify, defend and hold Landlord harmless from any claims, liabilities,
damages, costs and expenses (including attorneys' fees and expenses) arising out
of the use or storage of hazardous or toxic materials in the Building by Tenant,
its subtenants, assignees, invitees, employees, contractors and agents. If any
such proceeding is filed against Landlord or any such indemnified party, Tenant
agrees to defend Landlord or such party in such proceeding at Tenant's sole cost
by legal counsel reasonably satisfactory to Landlord, if requested by Landlord.

13.    FIRE AND CASUALTY. If all or a substantial part of the Premises or the
Building is rendered untenantable by reason of fire or other casualty, Landlord
may, at its option, either restore the Premises and the Building, or terminate
this Lease effective as of the date of such fire or other casualty. Landlord
agrees to give Tenant written notice within ninety (90) days after the
occurrence of any such fire or other casualty designating whether Landlord
elects to so restore or terminate this Lease. If Landlord elects to terminate
this Lease, Rent shall be paid through and apportioned as of the date of such
fire or other casualty. If Landlord elects to restore, Landlord's obligation to
restore the Premises shall be limited to restoring those improvements in the
Premises existing as of the date of such fire or other casualty which were made
at Landlord's expense and shall exclude any furniture, equipment, fixtures,
additions, alterations or improvements in or to the Premises which were made at
Tenant's expense. If Landlord elects to restore, Rent shall abate for that part
of the Premises which is untenantable on a per diem basis from the date of such
fire or other casualty until Landlord has substantially completed its repair and
restoration work, provided that Tenant does not occupy such part of the Premises
during said period. Notwithstanding the foregoing, Tenant may elect to terminate
this Lease upon thirty (30) days prior written notice to Landlord in the event
(i) Landlord elects to restore and Landlord estimates that such restoration will
take in excess of two hundred ten (210) days, or (ii) any damage to the Building
or Premises occurs in the final year of the Lease and prevents Tenant from
occupying all of the Premises for more than thirty (30) days.

         Notwithstanding the foregoing, there shall be no abatement of Rent or
Tax Escalation or Expense Escalation by reason of any portion of the Building
being unusable or inaccessible for a period equal to five (5) consecutive
business days or less. If the cause of the damage or destruction is an
earthquake or a flood, Tenant shall be entitled to an abatement of rent only
when and if Landlord receives reimbursement for such rent from

                                       9



insurance proceeds, if any. If such damage or destruction occurs as a result of
the negligence or the intentional acts of Tenant or Tenant's employees, agents,
contractors or invitees, and the proceeds of insurance which are actually
received by Landlord are not sufficient to pay for the repair of all of the
damage, Tenant shall pay to Landlord upon demand, the difference between the
cost of repairing the damage and the insurance proceeds received by Landlord.

14.    CONDEMNATION. If the Premises or the Building is rendered untenantable by
reason of a condemnation (or by a deed given in lieu thereof), then either party
may terminate this Lease by giving written notice of termination to the other
party within thirty (30) days after such condemnation, in which event this Lease
shall terminate effective as of the date of such condemnation. If this Lease so
terminates, Rent shall be paid through and apportioned as of the date of such
condemnation. If such condemnation does not render the Premises or the Building
untenantable, this Lease shall continue in effect and Landlord shall promptly
restore the portion not condemned to the extent reasonably possible to the
condition existing prior to the condemnation. In such event, however, Landlord
shall not be required to expend an amount in excess of the proceeds received by
Landlord from the condemning authority. Landlord reserves all rights to
compensation for any condemnation. Tenant hereby assigns to Landlord any right
Tenant may have to such compensation, and Tenant shall make no claim against
Landlord or the condemning authority for compensation for termination of
Tenant's leasehold interest under this Lease or interference with Tenant's
business.

15.    ASSIGNMENT AND SUBLETTING.

       15.1   Landlord's Consent. Tenant shall not, without the prior written
consent of Landlord: (i) assign, convey, pledge, mortgage or otherwise transfer
this Lease or any interest hereunder, or sublease the Premises, or any part
thereof, whether voluntarily or by operation of law; or (ii) permit the use of
the Premises by any person other than Tenant and its employees. Any such
transfer, sublease or use described in the preceding sentence (a "Transfer")
occurring without the prior written consent of Landlord shall be void and of no
effect. Landlord's consent to any Transfer shall not constitute a waiver of
Landlord's right to withhold its consent to any future Transfer. Landlord's
consent to any Transfer or acceptance of rent from any party other than Tenant
shall not release Tenant from any covenant or obligation under this Lease.
Landlord may require as a condition to its consent to any assignment of this
Lease that the assignee execute an instrument in which such assignee assumes the
obligations of Tenant hereunder. For purposes of this paragraph, the Transfer
(whether direct or indirect) of all or a majority of the capital stock in a
corporate Tenant (other than the shares of the capital stock of a corporate
Tenant whose stock is publicly traded) or the merger, consolidation or
reorganization of such Tenant and the transfer of all or any general partnership
interest in any partnership Tenant shall be considered a Transfer; provided,
however, that the issuance of new shares of capital stock in the Tenant or the
transfer of existing shares of capital stock in the Tenant to employees or
employee's family members for estate planning purposes shall not constitute a
"Transfer" hereunder.

       15.2   Standards for Consent. If Tenant desires the consent of Landlord
to a Transfer, Tenant shall submit to Landlord, at least thirty (30) days prior
to the proposed effective date of the Transfer, a written notice which includes
such information as Landlord may require about the proposed Transfer and the
transferee. If Landlord does not terminate this Lease, in whole or in part,
pursuant to Section 15.3, Landlord shall not unreasonably

                                       10



withhold its consent to any assignment or sublease. Landlord shall not be deemed
to have unreasonably withheld its consent if, in the judgment of Landlord: (i)
the transferee is of a character or engaged in a business which is not in
keeping with the standards or criteria used by Landlord in leasing the Building;
(ii) the financial condition of the transferee is such that it may not be able
to perform, or may be less able than Tenant to perform, its obligations in
connection with this Lease; (iii) the purpose for which the transferee intends
to use the Premises or portion thereof is in violation of the terms of this
Lease or the lease of any other tenant in the Building; (iv) the transferee is a
governmental entity or is an existing tenant of the Building. If Landlord
wrongfully withholds its consent to any Transfer, Tenant's sole and exclusive
remedy therefor, shall be to seek specific performance of Landlord's obligation
to consent to such Transfer.

       15.3   Recapture. Landlord shall have the right to terminate this Lease
as to that portion of the Premises which is the subject of a Transfer or
proposed Transfer. Landlord may exercise such right to terminate by giving
notice to Tenant at any time within thirty (30) days after the date on which
Tenant has furnished (or failed to furnish) to Landlord all of the items
required under Section 15.2. If Landlord exercises such right to terminate,
Landlord shall be entitled to recover possession of, and Tenant shall surrender
such portion of, the Premises on the later of (i) the effective date of the
proposed Transfer, or (ii) sixty (60) days after the date of Landlord's notice
of termination. In the event Landlord exercises such right to terminate,
Landlord shall have the right to enter into a lease with the proposed transferee
without incurring any liability to Tenant on account thereof. If Landlord
consents to any Transfer, Tenant shall pay to Landlord fifty percent (50%) of
all rent and other consideration received by Tenant in excess of the Rent paid
by Tenant hereunder for the portion of the Premises so transferred. Such rent
shall be paid as and when received by Tenant. In addition, Tenant shall pay to
Landlord any attorneys' fees and expenses incurred by Landlord in connection
with any proposed Transfer, whether or not Landlord consents to such Transfer.

16.    SURRENDER. Upon termination of the Term or Tenant's right to possession
of the Premises, Tenant shall return the Premises to Landlord in good order and
condition, ordinary wear and damage by fire or other casualty excepted. If
Landlord requires Tenant to remove any Alterations pursuant to Section 10.1,
then such removal shall be done in a good and workmanlike manner; and upon such
removal Tenant shall restore the Premises to its condition prior to the
installation of such Alterations. If Tenant does not remove such Alterations
after request to do so by Landlord, Landlord may remove the same and restore the
Premises; and Tenant shall pay to Landlord upon demand the cost of such removal
and restoration. Tenant shall also remove its furniture, equipment, trade
fixtures and all other items of personal property from the Premises prior to the
termination of the Term or Tenant's right to possession of the Premises. If
Tenant does not remove such items, Tenant shall be conclusively presumed to have
conveyed the same to Landlord without further payment or credit by Landlord to
Tenant; or at Landlord's sole option such items shall be deemed abandoned, in
which event Landlord may cause such items to be removed and disposed of at
Tenant's expense, without notice to Tenant and without obligation to compensate
Tenant.

17.    DEFAULTS AND REMEDIES.

       17.1   Default. The occurrence of any of the following shall constitute a
default ("Default") by Tenant under this Lease: (i) Tenant fails to pay any Rent
when due and such failure is not cured within five (5) days after notice from
Landlord, (ii) Tenant fails to

                                       11



perform any other provision of this Lease and such failure is not cured within
thirty (30) days after notice from Landlord (or immediately if the failure
involves a hazardous condition), provided, however, that if such failure cannot
be reasonably cured within thirty (30) days then such period shall be extended
so long as Tenant is prosecuting such cure with diligence (except in the case of
Force Majeure); or (iii) Tenant's leasehold interest is levied upon or attached
under process of law, (iv) Tenant abandons or vacates the Premises, (v) any
voluntary or involuntary proceedings are filed by or against Tenant or any
guarantor of this Lease under any bankruptcy, insolvency or similar laws and, in
the case of any involuntary proceedings, are not dismissed within thirty (30)
days after filing, or (vi) Tenant or any guarantors of this Lease die or
dissolve.

       17.2   Right of Re-Entry. Upon the occurrence of a Default, Landlord may
elect to terminate this Lease, or, without terminating this Lease, terminate
Tenant's right to possession of the Premises. Upon any such termination, Tenant
shall immediately surrender and vacate the Premises and deliver possession
thereof to Landlord. Tenant grants to Landlord the right to enter and repossess
the Premises and to expel Tenant and any others who may be occupying the
Premises and to remove any and all property therefrom, without being deemed in
any manner guilty of trespass and without relinquishing Landlord's rights to
Rent or any other right given to Landlord hereunder or by operation of law.

       17.3   Reletting. If Landlord terminates Tenant's right to possession of
the Premises without terminating this Lease, Landlord may relet the Premises or
any part thereof. In such case, Landlord shall use reasonable efforts to relet
the Premises on such terms as Landlord shall reasonably deem appropriate;
provided, however, Landlord may first lease Landlord's other available space and
shall not be required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant about such reletting. Tenant shall reimburse
Landlord for the costs and expenses of reletting the Premises including, but not
limited to, all brokerage, advertising, legal, alteration and other fees and
expenses incurred to secure a new tenant for the Premises. In addition, if the
consideration collected by Landlord upon any such reletting, after payment of
the expenses of reletting the Premises which have not been reimbursed by Tenant,
is insufficient to pay monthly the full amount of the Rent, Tenant shall pay to
Landlord the amount of each monthly deficiency as it becomes due. If such
consideration is greater than the amount necessary to pay the full amount of the
Rent, the full amount of such excess shall be retained by Landlord and in no
event shall any portion thereof be payable to Tenant.

       17.4   Termination of Lease. If Landlord terminates this Lease, Landlord
may recover from Tenant and Tenant shall pay to Landlord, on demand, as and for
liquidated and final damages, an accelerated lump sum amount equal to the amount
by which Landlord's estimate of the aggregate amount of Rent owing from the date
of such termination through the Expiration Date plus Landlord's estimate of the
aggregate expenses of reletting the Premises, exceeds Landlord's estimate of the
fair rental value of the Premises for the same period (after deducting from such
fair rental value the time needed to relet the Premises and the amount of
concessions which would normally be given to a new tenant), both discounted to
present value at the rate of five percent (5%) per annum.

       17.5   Other. Landlord may but shall not be obligated to perform any
obligation of Tenant under this Lease; and, if Landlord so elects, all costs and
expenses paid by Landlord in performing such obligation, together with interest
at the Default Rate, shall be reimbursed to Landlord by Tenant on demand. Any
and all remedies set forth in this Lease:

                                       12



(i) shall be in addition to any and all other remedies Landlord may have at law
or in equity, (ii) shall be cumulative, and (iii) may be pursued successively or
concurrently as Landlord may elect. The exercise of any remedy by Landlord shall
not be deemed an election of remedies or preclude Landlord from exercising any
other remedies in the future.

       17.6   Bankruptcy. If Tenant becomes bankrupt, the bankruptcy trustee
shall not have the right to assume or assign this Lease unless the trustee
complies with all requirements of the United States Bankruptcy Code; and
Landlord expressly reserves all of its rights, claims, and remedies thereunder.

18.    HOLDING OVER. If Tenant retains possession of the Premises after the
expiration or termination of the Term or Tenant's right to possession of the
Premises, Tenant shall pay Rent during the first sixty (60) days of such
holdover at one hundred fifty percent (150%) of the rate in effect immediately
preceding such holdover and thereafter at double the rate in effect immediately
preceding such holding over computed on a monthly basis for each month or
partial month that Tenant remains in possession. Tenant shall also pay,
indemnify and defend Landlord from and against all claims and damages (including
attorneys' fees and expenses), consequential as well as direct, sustained by
reason of Tenant's holding over. In addition, at any time while Tenant remains
in possession, Landlord may elect instead, by written notice to Tenant and not
otherwise, to have such retention of possession constitute a renewal of this
Lease for one year for the fair market rental value of the Premises as
reasonably determined by Landlord but in no event less than the Rent payable
immediately prior to such holding over. The provisions of this Section do not
waive Landlord's right of re-entry or right to regain possession by actions at
law or in equity or any other rights hereunder, and any receipt of payment by
Landlord shall not be deemed a consent by Landlord to Tenant's remaining in
possession or be construed as creating or renewing any lease or right of tenancy
between Landlord and Tenant.

19.    SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit with
Landlord, as security for the performance of Tenant's obligations under this
Lease, the security deposit set forth in Section 1.8 of the Lease Provisions
(the "Security Deposit"). Upon the occurrence of a Default, Landlord may use all
or any part of the Security Deposit for the payment of any Rent or for the
payment of any amount which Landlord may pay or become obligated to pay by
reason of such Default, or to compensate Landlord for any loss or damage which
Landlord may suffer by reason of such Default. If any portion of the Security
Deposit is used, Tenant, within five (5) days after written demand therefor
shall deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount. Landlord shall not be required to keep the
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. In no event shall the Security
Deposit be considered an advanced payment of Rent, and in no event shall Tenant
be entitled to use the Security Deposit for the payment of Rent. If no Default
by Tenant exists hereunder, the Security Deposit or any balance thereof shall be
returned to Tenant within thirty (30) days after the expiration of the Term and
vacation of the Premises by Tenant. Landlord shall have the right to transfer
the Security Deposit to any purchaser of the Building. Upon such transfer,
Tenant shall look solely to such purchaser for return of the Security Deposit;
and Landlord shall be relieved of any liability with respect to the Security
Deposit.

20.    SUBSTITUTION OF OTHER PREMISES. Landlord shall have the right at any time
to move Tenant to any other leasable space in the Building provided that said
space shall be approximately the same size as the Premises and that Landlord
shall pay the cost of

                                       13



moving Tenant's furniture and equipment to the new space. The new space shall
include tenant improvements that are substantially equivalent to the tenant
improvements contained in the Premises, and the cost of any required tenant
improvements shall be paid by Landlord. If Landlord elects to relocate Tenant,
Landlord shall give Tenant written notice of its election. Landlord shall
deliver substitute space to Tenant not more than one hundred eighty (180) days
after Tenant approves plans for the construction of required tenant
improvements, if any, at the new space. Tenant shall not unreasonably withhold
or delay its approval of any plans for the construction of tenant improvements.
Landlord shall give Tenant thirty (30) days advance notice of the estimated
move-in date. After Tenant moves into the new space, this Lease shall remain in
full force and effect and be deemed applicable to such new space. Upon Tenant's
relocation, Landlord and Tenant shall amend this Lease to provide for the
relocation of the Premises. Landlord's right to relocate Tenant hereunder shall
be limited to relocation of Tenant to comparable space which, for purposes of
this Lease, shall be defined to mean space of substantially similar size as the
Premises with substantially similar LaSalle Street exposure as the Premises, or
such other space as Landlord and Tenant may mutually agree is comparable space.
Landlord shall pay all reasonable expenses related to the cost of relocating
Tenant, including, but not limited to the cost of moving furniture and equipment
to the new space, new business stationery and installation of telephone and
computer equipment. Such move shall be made during evenings, weekends, or such
other time as is agreeable to Tenant so as to incur the least inconvenience to
Tenant.

21.    DEMOLITION OR RENOVATION. Intentionally Omitted.

22.    ESTOPPEL CERTIFICATES. Tenant agrees that, from time to time upon written
request by Landlord, Tenant shall execute and deliver to Landlord a written
certificate certifying: (i) that this Lease is unmodified and in full force and
effect (or if there have been modifications, a description of such modifications
and that this Lease as modified is in full force and effect); (ii) the dates to
which Rent has been paid; (iii) that Tenant is in possession of the Premises, if
that is the case; (iv) that Landlord is not in default under this Lease, or, if
Tenant believes Landlord is in default, the nature thereof in detail; (v) that
Tenant has no off-sets or defenses to the performance of its obligations under
this Lease (or if Tenant believes there are any off-sets or defenses, a full and
complete explanation thereof); and (vi) such additional matters as may be
requested by Landlord, it being agreed that such certificate may be relied upon
by any prospective purchaser, mortgagee or other person having or acquiring an
interest in the Building. If Tenant fails to execute and deliver any such
certificate within fourteen (14) days after request, Tenant shall be deemed to
have irrevocably appointed Landlord as Tenant's attorney-in-fact to execute and
deliver such certificate in Tenant's name.

23.    SUBORDINATION. This Lease is and shall be expressly subject and
subordinate at all times to (a) any present or future ground, underlying or
operating lease of the Building, and all amendments, renewals and modifications
to any such lease, and (b) the lien of any present or future mortgage or deed of
trust encumbering fee title to the Building and/or the leasehold estate under
any such lease. If any such mortgage or deed of trust be foreclosed, or if any
such lease be terminated, upon request of the mortgagee, beneficiary or lessor,
as the case may be, Tenant will attorn to the purchaser at the foreclosure sale
or to the lessor under such lease, as the case may be. The foregoing provisions
are declared to be self-operative and no further instruments shall be required
to effect such subordination and/or attornment; provided, however, that Tenant
agrees upon request by any such mortgagee, beneficiary, lessor or purchaser at
foreclosure, as the case may be, to

                                       14



execute such subordination and/or attornment instruments as may be required by
such person to confirm such subordination and/or attornment on the form
customarily used by such party. Notwithstanding the foregoing to the contrary,
any such mortgagee, beneficiary or lessor may elect to give the rights and
interests of Tenant under this Lease (excluding rights in and to insurance
proceeds and condemnation awards) priority over the lien of its mortgage or deed
of trust or the estate of its lease, as the case may be. In the event of such
election and upon the mortgagee, beneficiary or lessor notifying Tenant of such
election, the rights and interests of Tenant shall be deemed superior to and to
have priority over the lien of said mortgage or deed of trust or the estate of
such lease, as the case may be, whether this Lease is dated prior to or
subsequent to the date of such mortgage, deed of trust or lease. In such event,
Tenant shall execute and deliver whatever instruments may be required by such
mortgagee, beneficiary or lessor to confirm such superiority on the form
customarily used by such party. If Tenant fails to execute any instrument
required to be executed by Tenant under this Section 23 within ten (10) days
after request, Tenant irrevocably appoints Landlord as its attorney-in-fact, in
Tenant's name, to execute such instrument.

24.    QUIET ENJOYMENT. As long as no Default exists, Tenant shall peacefully
and quietly have and enjoy the Premises for the Term, free from interference by
Landlord, subject, however, to the provisions of this Lease. The loss or
reduction of Tenant's light, air or view will not be deemed a disturbance of
Tenant's occupancy of the Premises nor will it affect Tenant's obligations under
this Lease or create any liability of Landlord to Tenant.

25.    BROKER. Tenant represents to Landlord that Tenant has dealt only with the
broker(s), if any, set forth in Section 1.9 of the Lease Provisions (the
"Broker") in connection with this Lease and that, insofar as Tenant knows, no
other broker negotiated this Lease or is entitled to any commission in
connection herewith. Tenant agrees to indemnify, defend and hold Landlord, its
property manager and their respective employees harmless from and against all
claims, demands, actions, liabilities, damages, costs and expenses (including,
attorneys' fees and expenses) arising from either (i) a claim for a fee or
commission made by any broker, other than the Broker, claiming to have acted by
or on behalf of Tenant in connection with this Lease, or (ii) a claim of, or
right to, lien under the Statutes of Illinois relating to real estate broker
liens with respect to any such broker retained by, or claiming to have been
retained by, Tenant. Landlord agrees to pay the Broker a commission in
accordance with a separate agreement between Landlord and a Broker if, and only
if, a written agreement with that Broker has been signed by Landlord.

26.    NOTICES. All notices and demands to be given by one party to the other
party under this Lease shall be given in writing, mailed or delivered to
Landlord or Tenant, as the case may be, at the address set forth above or at
such other address as either party may hereafter designate. Notices shall be
delivered by hand or by United States certified or registered mail, postage
prepaid, return receipt requested, or by a nationally recognized overnight air
courier service. Notices shall be considered to have been given upon the earlier
to occur of actual receipt (or refusal of receipt) or two (2) business days
after posting in the United States mail.

27.    MISCELLANEOUS.

       27.1   Successors and Assigns. Subject to Section 15, each provision of
this Lease shall extend to, bind and inure to the benefit of Landlord and Tenant
and their respective

                                       15



legal representatives, successors and assigns; and all references herein to
Landlord and Tenant shall be deemed to include all such parties.

       27.2   Entire Agreement. This Lease, and the riders and exhibits, if any,
attached hereto which are hereby made a part of this Lease, represent the
complete agreement between Landlord and Tenant, superseding any letters of
intent and other prior writings and conversations between them or their agents,
and Landlord has made no representations or warranties except as expressly set
forth in this Lease. No modification or amendment of or waiver under this Lease
shall be binding upon Landlord or Tenant unless in writing signed by Landlord
and Tenant. The invalidity or unenforceability of any provision of this Lease
shall not affect or impair any other provisions.

       27.3   Time of Essence. Time is of the essence of this Lease and each and
all of its provisions.

       27.4   Execution and Delivery. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of space or
an option for lease, and it is not effective until execution and delivery by
both Landlord and Tenant. Execution and delivery of this Lease by Tenant to
Landlord shall constitute an irrevocable offer by Tenant to lease the Premises
on the terms and conditions set forth herein, which offer may not be revoked for
fifteen (15) days after such delivery. This Lease may be executed and delivered
in counterparts, each of which so executed and delivered shall be deemed to be
an original and all of which shall constitute one and the same instrument.

       27.5   Governing Law. This Lease shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without regard to
its conflicts of laws principles.

       27.6   Attorneys' Fees. Tenant shall pay to Landlord all costs and
expenses, including reasonable attorneys fees and expenses, incurred by Landlord
in successfully enforcing this Lease or incurred by Landlord as a result of any
litigation to which Landlord becomes a party as a result of this Lease.

       27.7   Delay in Possession. In no event shall Landlord be liable to
Tenant if Landlord is unable to deliver possession of the Premises to Tenant on
the Commencement Date for causes outside Landlord's reasonable control. If
Landlord is unable to deliver possession of the Premises to Tenant by the
Commencement Date, the Commencement Date shall be deferred until Landlord can
deliver possession to Tenant, and the Expiration Date shall be deferred for an
equal number of days, provided, however, that if possession is not delivered by
December 31, 1995, Landlord will provide Tenant temporary space within the
Building at Landlord's sole cost and expense including telephone and computer
cabling, and relocating Tenant, at Landlord's expense to the Premises upon
delivery of Premises provided that all working drawings are executed by Tenant
prior to September 1, 1995 and no material items with extended lead time are
specified by Tenant. Notwithstanding the above, Tenant shall have the right to
terminate this Lease if possession is not delivered on or prior to June 30,
1996.

       27.8   Force Majeure. Landlord and Tenant shall not be in default
hereunder and neither party shall be excused from performing any of its
obligations hereunder if such party is prevented from performing any of its
obligations hereunder due to any accident, breakage, strike, shortage of
materials, acts of God or other causes beyond such party's

                                       16



reasonable control; provided, however, in no event shall Tenant be excused from
performing its obligation to pay Rent hereunder on account of any of the
foregoing clauses.

     27.9  Interpretation. The headings and titles in this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of this Lease. As used in this Lease the words tenant and
landlord include the plural as well as the singular. Words used in the neuter
gender include the masculine and feminine gender. This Lease shall not be
construed more strictly against one party than the other merely by virtue of the
fact that it was prepared by counsel for one of the parties, it being
acknowledged and agreed that both parties have had meaningful opportunities to
review, comment upon and negotiate each and every provision hereof.

     27.10 No Waiver. No receipt of money by Landlord from Tenant after
termination of this Lease or after the service of any notice or after the
commencing of any suit or after final judgment for possession of the Premises
shall renew, reinstate, continue or extend the Term or affect any such notice or
suit. No waiver of any default of Tenant shall be implied from any omission by
Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect any default other than the
default specified in the express waiver and then only for the time and to the
extent therein stated.

     27.11 No Recording. Tenant shall not record this Lease or a memorandum of
this Lease in any official records.

     27.12 Limitation of Liability. Any liability of Landlord under this Lease
shall be limited solely to its interest in the Building, and in no event shall
any personal liability be asserted against Landlord in connection with this
Lease nor shall any recourse be had to any other property or assets of Landlord.

     27.13 Authority. If Tenant is a corporation, trust, or general or limited
partnership, Tenant, and each individual executing this Lease on behalf of such
entity represents and warrants that such individual is duly authorized to
execute and deliver this Lease on behalf of said entity, that said entity is
duly authorized to enter into this Lease, and that this Lease is enforceable
against said entity in accordance with its terms. If Tenant is a corporation,
trust or partnership, Tenant shall deliver to Landlord upon demand evidence of
such authority satisfactory to Landlord.

     27.14 Conflict. Except as otherwise provided herein to the contrary, any
conflict between the printed provisions, exhibits, addenda or riders of this
Lease and the typewritten or handwritten provisions, if any, shall be controlled
by the typewritten or handwritten provisions.

     27.15 Multiple Parties. If more than one person or entity is named as
Tenant herein, the obligations of Tenant shall be the joint and several
responsibility of all persons or entities named herein as Tenant. Service of a
notice in accordance with Section 26 on one Tenant shall be deemed service of
notice on all Tenants.

     27.16 Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.

                                       17



     27.17 Right to Lease. Landlord reserves the absolute right to effect such
other tenancies in the Building as Landlord in its sole discretion shall
determine, and Tenant is not relying on any representation that any specific
tenant or number of tenants will occupy the Building.

     27.18 Security Interest. In consideration of the covenants and agreements
contained herein, and as a material consideration to Landlord for entering into
this Lease, Tenant hereby unconditionally grants to Landlord a continuing
security interest in and to all personal property of Tenant located in, or left
at, the Building and the security deposit and any advance rent payment or other
deposit, now in or hereafter delivered to or coming into the possession, custody
or control of Landlord, by or for the account of Tenant, together with any
increase in profits or proceeds from such property. The security interest
granted to Landlord hereunder secures payment and performance of all obligations
of Tenant under this Lease now or hereafter arising or existing, whether direct
or indirect, absolute or contingent, or due or to become due. In the event of a
default under this Lease which is not cured within the applicable grace period,
if any, Landlord is and shall be entitled to all the rights, powers and remedies
granted a secured party under the Illinois Uniform Commercial Code and otherwise
available at law or in equity, including, but not limited to, the right to
retain as damages the personal property, security deposit and other funds held
by landlord, without additional notice or demand regarding this security
interest. Tenant agrees that it will execute such other documents or instruments
as may be reasonably necessary to carry out and effectuate the purpose and terms
of this Section or as otherwise reasonably requested by Landlord, including
without limitation, execution of a UCC-1 financing statement. Tenant's failure
to execute such documents within ten (10) days after request shall constitute a
default under this Lease and Landlord shall have the right to execute such
documents and instruments as Tenant's attorney-in-fact.

     27.19 Waiver of Trial by Jury. In any proceeding to enforce the terms of
this Lease or obtain any remedy provided for herein or otherwise permitted by
law in connection with the subject matter hereof, Landlord and Tenant waive
trial by jury to the fullest extent permitted by law.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.

TENANT:                                      LANDLORD:
LODESTAR FINANCIAL SERVICES, INC.            208 SOUTH LASALLE ASSOCIATES, L.P.

By: /s/ William A. Goldstein                 By: 208 LaSalle L.L.C.
    ------------------------------               its General Partner
      Its: President
           -----------------------
                                                 By: /s/ George R. Cornwell
                                                     ---------------------------
                                                      Its: Managing Member
                                                           ---------------------

                                       18



                           (Landlord's Acknowledgment)

STATE OF Illinois          )
                           )    SS
COUNTY OF Cook             )

On this 31st day of August, 1995 before me appeared George R. Cornwell to me
personally known, who being by me duly sworn, did say that he is the Managing
Member of 208 LASALLE L.L.C., the general partner of 208 SOUTH LASALLE
ASSOCIATES, L.P., an Illinois limited partnership, the partnership that executed
the within and foregoing instrument and that said instrument was signed by him
on behalf of the general partner on behalf of said partnership as the free act
and deed of said partnership.

                                              /s/ Christine R. Berardi
                                              ----------------------------------
                                              NOTARY PUBLIC

                                              Cook
                                              ----------------------------------
                                              County

                                              My commission expires: 1/22/97
                                                                     -----------

                                       19



                        (Tenant Corporate Acknowledgment)

STATE OF   IL               )
                            )    SS
COUNTY OF Cook              )

On this 22nd day of August, 1995 before me appeared William A Goldstein, to me
personally known, who being by me duly sworn, did say that (he) (she) is the
President of Lodestar Financial Services, Inc., the corporation that executed
the within and foregoing instrument and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors, and
that the seal affixed is the corporate seal of said corporation and said he
acknowledged said instrument to be the free act and deed of said corporation.

                                                 /s/ Kimberly Hargreaves-Geary
                                                 -------------------------------
                                                 NOTARY PUBLIC

                                                 Cook
                                                 -------------------------------
                                                 County

                                                 My commission expires: 9-5-98
                                                                        --------

                                       20



                                   EXHIBIT "A"

                               [FLOOR PLAN APPEARS HERE]



                                   EXHIBIT "B"

                              RULES AND REGULATIONS

1.  Tenant shall not make any room-to-room canvass to solicit business from
other tenants in the Building and shall not exhibit, sell or offer to sell, use,
rent or exchange any item or services in or from the Premises unless ordinarily
included within Tenant's use of the Premises as specified in the Lease.

2.  Tenant shall not make any use of the Premises which may be dangerous to
person or property or which shall increase the cost of insurance or require
additional insurance coverage.

3.  Tenant shall not paint, display, inscribe or affix any sign, picture,
advertisement, notice, lettering or direction or install any lights on any part
of the outside or inside of the Building, other than the Premises, and then not
on any part of the inside of the Premises which can be seen from outside the
Premises, except as approved by Landlord in writing.

4.  Tenant shall not use the name of the Building in advertising or other
publicity, except as the address of its business, and shall not use pictures of
the Building in advertising or publicity.

5.  Tenant shall not obstruct or place objects on or in sidewalks, entrances,
passages, courts, corridors, vestibules, halls, elevators and stairways in and
about the Building. Tenant shall not place objects against glass partitions or
doors or windows or adjacent to any open common space which would be unsightly
from the Building corridors or from the exterior of the Building.

6.  Bicycles shall not be permitted in the Building other than in locations
designated by Landlord.

7.  Tenant shall not allow any animals, other than seeing-eye dogs, in the
Premises or the Building.

8.  Tenant shall not disturb other tenants or make excessive noises, cause
disturbances, create excessive vibrations, odors or noxious fumes or use or
operate any electrical or electronic devices or other devices that emit
excessive sound waves or are dangerous to other tenants of the Building or that
would interfere with the operation of any device or equipment or radio or
television broadcasting or reception from or within the Building or elsewhere,
and shall not place or install any projections, antennae, aerials or similar
devices outside of the Building or the Premises.

9.  Tenant shall not waste electricity or water and shall cooperate fully with
Landlord to assure the most effective operation of the Building's heating and
air conditioning, and shall refrain from attempting to adjust any controls
except for the thermostats within the Premises. Tenant shall keep all doors to
the Premises closed.

10. Unless Tenant installs new doors to the Premises, Landlord shall furnish two
(2) sets of keys for all doors to the Premises at the commencement of the Term.
Tenant shall furnish Landlord with duplicate keys for any new or additional
locks on doors installed by Tenant. When the Lease is terminated, Tenant shall
deliver all keys to Landlord and will provide to Landlord the means of opening
any safes, cabinets or vaults left in the Premises.

11. Except as otherwise provided in the Lease, Tenant shall not install any
signal, communication, alarm or other utility or service system or equipment
without the prior written consent of Landlord.

12. Tenant shall not use any draperies or other window coverings instead of or
in addition to the Building standard window coverings designated and approved by
Landlord for exclusive use throughout the Building.

13. Landlord may require that all persons who enter or leave the Building
identify themselves to watchmen, by registration or otherwise. Landlord,
however, shall have no responsibility or liability for

                                       22



any theft, robbery or other crime in the Building. Tenant shall assume full
responsibility for protecting the Premises, including keeping all doors to the
Premises locked after the close of business.

14. Tenant shall not overload floors; and Tenant shall obtain Landlord's prior
written approval as to size, maximum weight, routing and location of business
machines, safes, and heavy objects. Tenant shall not install or operate
machinery or any mechanical devices of a nature not directly related to Tenant's
ordinary use of the Premises.

15. In no event shall Tenant bring into the Building inflammables such as
gasoline, kerosene, naphtha and benzene, or explosives or firearms or any other
articles of an intrinsically dangerous nature.

16. Furniture, equipment and other large articles may be brought into the
Building only at the time and in the manner designated by Landlord. Tenant shall
furnish Landlord with a list of furniture, equipment and other large articles
which are to be removed from the Building, and Landlord may require permits
before allowing anything to be moved in or out of the Building. Movements of
Tenant's property into or out of the Building and within the Building are
entirely at the risk and responsibility of Tenant.

17. No person or contractor, unless approved in advance by Landlord, shall be
employed to do janitorial work, interior window washing, cleaning, decorating or
similar services in the Premises.

18. Tenant shall not use the Premises for lodging, cooking (except for microwave
reheating and coffee makers) or manufacturing or selling any alcoholic beverages
or for any illegal purposes.

19. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

20. Tenant shall cooperate and participate in all reasonable security programs
affecting the Building.

21. Tenant shall not loiter, eat, drink, sit or lie in the lobby or other public
areas in the Building. Tenant shall not go onto the roof of the Building or any
other non-public areas of the Building (except the Premises), and Landlord
reserves all rights to control the public and non-public areas of the Building.
In no event shall Tenant have access to any electrical, telephone, plumbing or
other mechanical closets without Landlord's prior written consent.

22. Tenant shall not use the freight or passenger elevators, loading docks or
receiving areas of the Building except in accordance with regulations for their
use established by Landlord.

23. Tenant shall not dispose of any foreign substances in the toilets, urinals,
sinks or other washroom facilities, nor shall Tenant permit such items to be
used other than for their intended purposes; and Tenant shall be liable for all
damage as a result of a violation of this rule.

24. In no event shall Tenant allow its employees to use the public areas of the
Building as smoking areas.

                                       23



                                   EXHIBIT "C"

                              WORK LETTER AGREEMENT

TO:  Lodestar Financial Services, Inc.

RE:  Premises located at:
     208 South LaSalle
     Suite 1710
     Chicago, IL 60604

Ladies and Gentlemen:

     Simultaneously with the execution of this Work Letter Agreement, you
("Tenant") and 208 South LaSalle Associates, L.P. ("Landlord") are entering into
a lease (the "Lease") pertaining to the space referred to above (the
"Premises").

     In consideration of the covenants contained in this Work Letter Agreement
and in the Lease, Landlord and Tenant agree as follows:

Tenants Plans:            1. Tenant desires Landlord to perform certain
                          leasehold improvement work (the "Work") in the
                          Premises pursuant to a plan (the "Plan") for the Work
                          prepared by Gastinger & Walker dated August 17, 1995,
                          a copy of which is attached hereto as Exhibit "D". The
                          Work and the Plan have been approved by Landlord and
                          Tenant but such approval by Landlord shall not
                          constitute any warranty by Landlord to Tenant of the
                          adequacy of the design for Tenant's intended use of
                          the Premises with the exception of constructing the
                          Premises in accordance with local current building
                          codes and ordinances, nor shall Landlord's approval of
                          the Plan create any liability or responsibility on the
                          part of Landlord for compliance with applicable
                          statutes, ordinances, regulations, laws, codes and
                          industry standards, including without limitation, any
                          and all statutes, ordinances, regulations, laws, codes
                          and industry standards relating to handicap
                          discrimination (including, without limitation, the
                          Americans with Disabilities Act).

Working Drawings:         2. If necessary for the performance of the Work,
                          Landlord, at its expense, shall prepare final Working
                          Drawings and specifications for the Work (the
                          "Working Drawings") based upon and consistent with the
                          Plan. Tenant shall approve or disapprove and modify
                          the Working Drawings within five (5) business days
                          after receipt of same from Landlord. If Tenant
                          modifies said Working Drawings, said drawings shall
                          require Landlord's final approval.

Performance of the Work:  3. Except as hereinafter provided to the contrary
                          Landlord, at its expense, shall perform the Work shown
                          on the Plan and Working Drawings using (except as may
                          be stated or

                                       24



                           shown in the Plan or the Working Drawings) building
                           standard materials and quantities ("Building
                           Standards"), a copy of which is attached hereto as
                           Exhibit "E". Tenant shall not be entitled to any
                           credit or payment from Landlord for any Building
                           Standards or any non-standard work not utilized by
                           Tenant.

Substantial Completion:    4.    Landlord shall use reasonable efforts to cause
                           the Work to be "substantially completed" on or
                           before the date described in Section 1.11 of the
                           Basic Lease Provisions in the Lease, subject to
                           delays described in Section 27.8 of the Lease and
                           delays described in Paragraph 5 of this Work Letter
                           Agreement. The Work shall be considered
                           "substantially completed" for all purposes under
                           this Work Letter Agreement and the Lease if and when
                           Landlord's architect issues a written certificate to
                           Landlord and Tenant, certifying that the Work has
                           been completed (except for minor finish-out and
                           "punchlist" items) in substantial compliance with
                           the Plan and, if applicable, the Working Drawings,
                           or when Tenant first takes occupancy of the Premises,
                           whichever first occurs. If the Work is not
                           substantially completed on or before the date
                           described in Section 1.11 of the Basic Lease
                           Provisions in the Lease by reason of any delay
                           (other than a delay specified in Paragraph 5 below),
                           the Lease shall remain in effect, Landlord shall
                           have no liability to Tenant as a result of any delay
                           in occupancy, the date described in Section 1.11 of
                           the Basic Lease Provisions in the Lease shall be
                           extended (subject to Paragraph 5 below) to the date
                           on which the Work is substantially completed and the
                           Expiration Date shall be extended by an equal number
                           of days.

Tenant Delays:             5.    There shall be no extension of the date
                           described in Section 1.11 of the Basic Lease
                           Provisions in the Lease (as permissibly extended
                           under Paragraph 4 above) if the Work has not been
                           substantially completed on said date by reason of any
                           delay attributable to Tenant, including without
                           limitation:

                           (i)   Tenant's requirements for special work or
                           materials, finishes, or installations other than the
                           Building Standards;

                           (ii)  the performance of any other work in the
                           Premises by any person, firm or corporation employed
                           by or on behalf of Tenant, or any failure to complete
                           or delay in completion of such work; or

                           (iii) any other material act or omission of Tenant.

                                       25



Additional Work:         6. Upon Tenant's request and submission by Tenant
                         (at Tenant's sole cost and expense) of the necessary
                         information and/or plans and specifications for (i)
                         work other than the Work specified in the Plan and
                         Working Drawings (the "Additional Work") or (ii)
                         material other than Building Standard materials,
                         including, but not limited to floor and wall coverings,
                         ("Upgrade Materials"), Landlord may, at its election,
                         perform the Additional Work or substitute such Upgrade
                         Material for Building Standard materials, as
                         applicable, at Tenant's sole cost and expense (except,
                         only in the case of dedicated, 20 amp outlets indicated
                         on the Plan which are not installed by the completion
                         of the Work; such incremental difference in cost
                         between installing such dedicated circuits and
                         ordinary, Building Standard outlets shall be a credit
                         to Tenant toward Additional Work or Upgrade Materials).
                         Prior to commencing any Additional Work or utilizing
                         any Upgrade Materials requested by Tenant, Landlord
                         shall submit to Tenant a written statement of the cost
                         of such Additional Work or the incremental cost of such
                         Upgrade Materials, which includes a credit for the
                         price of Building Standard materials. The
                         aforementioned cost in the case of Additional Work
                         shall include a five percent (5%) add-on charge for
                         Landlord's field supervision, administration and
                         overhead. Submitted simultaneously with such additional
                         cost statement, Landlord shall also deliver a proposed
                         Tenant Extra Order (the "TEO") for Additional Work or
                         Upgrade Materials in the standard form then in use by
                         Landlord. If Tenant shall fail to enter into said TEO
                         within one (1) week after Tenant's receipt thereof,
                         Landlord shall proceed to do only the Work specified in
                         the Plan and Working Drawings utilizing only Building
                         Standard materials. Tenant agrees to pay to Landlord,
                         concurrently with its execution of the TEO, the entire
                         cost of the Additional Work or the incremental cost of
                         the Upgrade Materials, as applicable, as shown in the
                         statement delivered by Landlord.

                         Notwithstanding the above, any non-Building Standard,
                         special order items, including, but not limited to
                         floor and wall coverings and items not returnable to
                         vendor shall be excluded from the above paragraph, and
                         shall be at Tenant's sole cost and expense if any
                         Additional Work or Upgraded Material TEO is initiated
                         by Tenant, upon or after Tenant's execution of the
                         Working Drawings.

Tenant Access:           7. Landlord, in Landlord's discretion and upon request
                         by Tenant, may grant to Tenant and Tenant's agents a
                         license to enter the Premises prior to the date
                         designated in the Lease for the commencement of the
                         Term in order that Tenant may do other work required by
                         Tenant to make the

                                       26



                         Premises ready for Tenant's use and occupancy. It shall
                         be a condition to the grant by Landlord and continued
                         effectiveness of such license that:

                         (a) Tenant shall give to Landlord not less than three
                         (3) days' prior notice of its request to have such
                         access to the Premises, as long as Tenant has delivered
                         to Landlord prior to giving such notice: (i) a
                         description of and schedule for the work to be
                         performed by those persons and entities for whom and
                         which such access is being requested; (ii) the names
                         and addresses of all contractors, subcontractors and
                         material suppliers for whom and which such early access
                         is being requested and the approximate number of
                         individuals, itemized by trade, who will be present in
                         the Premises; (iii) copies of all contracts pertaining
                         to the performance of the work for which such early
                         access is being requested; (iv) copies of all plans and
                         specifications pertaining to the work for which such
                         access is being requested; (v) copies of all licenses
                         and permits required in connection with the performance
                         of the work for which such access is being requested;
                         (vi) certificates of insurance (in amounts and with
                         insured parties satisfactory to Landlord) and
                         instruments of indemnification against all claims,
                         costs, expenses, damages and liabilities which may
                         arise in connection with such work; and (vii)
                         assurances of the availability of funds sufficient to
                         pay for all such work. All of the foregoing shall be
                         subject to Landlord's approval, which shall not be
                         unreasonably withheld.

                         (b) Such early access shall be subject to scheduling by
                         Landlord.

                         (c) Tenant's agents, contractors, workmen, mechanics,
                         suppliers and invitees shall work in harmony and not
                         interfere with Landlord and Landlord's agents in
                         performing the Work and any Additional Work in the
                         Premises, Landlord's work in other premises and in
                         common areas of the Building, or the general operation
                         of the Building. If at any time such entry shall cause
                         or threaten to cause such disharmony or interference,
                         including labor disharmony, Landlord may withdraw such
                         license upon twenty-four (24) hours' prior written
                         notice to Tenant.

                         Any such entry into and occupation of the Premises by
                         Tenant shall be deemed to be under all of the terms,
                         covenants, conditions and provisions of the Lease,
                         excluding only the covenant to pay Rent and
                         specifically including the provisions of Sections 10,
                         11, and 12 thereof. Landlord shall not be liable for
                         any injury, loss or damage which may occur to any of
                         Tenant's work or installations made in the Premises or
                         to property placed therein prior to

                                       27



                         the commencement of the Term, the same being at
                         Tenant's sole risk and liability. Tenant shall be
                         liable to Landlord for any damage to the Premises or to
                         any portion of the Work caused by Tenant or any of
                         Tenant's employees, agents, contractors, workmen or
                         suppliers. In the event the performance of the work by
                         Tenant, its agents, employees or contractors causes
                         extra costs to Landlord or requires the use of
                         elevators during hours other than 7:00 a.m. to 3:00
                         p.m. on Monday through Friday (except holidays), Tenant
                         shall reimburse Landlord for the entire extra cost and
                         the cost incurred by Landlord for the engineers or
                         operators under applicable union regulations or
                         contracts.

Entire Agreement:        8.  The terms and provisions of the Lease, insofar as
                         they are applicable to this Work Letter Agreement, are
                         hereby incorporated herein by reference.

Landlord's Remedies:     9.  All amounts payable by Tenant to Landlord hereunder
                         shall be deemed to be Rent under the Lease and upon any
                         default in the payment of same, Landlord shall have all
                         of the rights and remedies provided for in the Lease.

 TENANT:                                     LANDLORD:

 LODESTAR FINANCIAL SERVICES, INC.           208 SOUTH LASALLE ASSOCIATES, L.P.,
                                             an Illinois limited partnership

 By:  /s/ William A. Goldstein               By: /s/ George R. Cornwell
     -----------------------------               --------------------------
 Title: President                            Title: Managing Member
        --------------------------                  -----------------------

                                       28



                                   EXHIBIT "E"
                        LODESTAR FINANCIAL SERVICES, INC.

                               BUILDING STANDARDS

                               BUILDING COMPONENTS

1.   WALLS:

     a.   Public corridor and demising partitions shall be one-hour fire rated,
          consisting of 2-1/2" steel stud 24" OC, with one (1) layer of 5/8"
          gypsum board, type "x", each side from floor to underside of slab.

     b.   Interior office partitions shall be 2-1/2" steel stud 24" OC, with one
          (1) layer of 5/8" gypsum board each side from floor to underside of
          suspended ceiling. Sound attenuating blankets extended 3' on either
          side of partitions for offices fronting on LaSalle Street and
          conference room.

     c.   Half height walls in lieu of full height walls shall be 2-1/2" steel
          stud 16" OC with one (1) layer of 5/8" gypsum board each side. Wall
          must be properly configured for stability.

2.   DOORS AND FRAMES:

     a.   Corridor entrance door shall be single swing, 3'0" x 7'0" x 1-3/4"
          thick, solid core oak doors with hardwood frames. One (1) glass panel
          door inset is included.

     b.   Secondary exit door shall be single swing oak solid core doors, 3'0" x
          7'0" x 1-3/4" thick, with hardwood frames.

     c.   Interior office doors shall be single swing oak solid core doors, 3'0"
          x 1-3/4".

3.   HARDWARE:

     a.   All doors shall have the following in US10 (bronze) finish: A Russwin
          800 Series passage set with lever handles, hinges 4-1/2" x 4-1/2" (one
          and one-half (1-1/2) pair per door), one (1) wall stop (Ives 407.5).
          Door silencers shall be provided on aluminum door frames. Three (3)
          coat hooks mounted on an oak board on wall behind each office door.

     b.   Corridors/entrance door and secondary exit door (in addition to the
          above provisions) shall include: locksets keyed to the building master
          and LCN overhead type surface mounted automatic door closer (to match
          US10 finish).

                                       29



4.   WINDOWS:

     a.   Exterior wood double hung windows shall remain as per the Plan.


5.   MILLWORK:

     a.   Half height walls (if and where substituted for full height
          partitions) shall have a 3-3/4"w x 3/4"h oak cap.

     b.   Break Room Unit: One pre-manufactured sink with base and upper cabinet
          (Omni style) by Merillat as per the Plan.

     c.   Coat Rod and Shelf: Oak coat rod with plastic laminate shelf on metal
          brackets at 2'-0" OC as per the Plan.

                                    FINISHES

1.   CEILINGS:

     a.   Suspended ceiling system shall be provided consisting of one (1)
          continuous 2' x 2' standard 1/2" flat grid. Main hangers shall occur
          every four (4) feet, with direction to be determined base upon optimum
          light fixture placement. Acoustical ceiling tile to be 2' x 2'
          Travertone with revealed edge by Armstrong.

2.   FLOORS:

     a.   Carpet shall be installed by tackless method. One (1) color (tenant's
          choice) shall be selected from the Building Color Palette. Carpet to
          be LEES Best Regards III.

     b.   Vinyl floor covering shall be 12 x 12 tile (VCT) installed over
          properly prepared subfloor. One (1) color shall be selected from the
          Building Color Palette. VCT to be Standard Exelon by Armstrong.

3.   WINDOWS:

     a.   Finishes: Exterior wood double hung windows shall be painted with
          enamel semi-gloss to match wall color selection. All windows to be
          checked/repaired for leakage and rattles.

     b.   Treatment: Windows shall be provided with 1" metal mini-blinds. Color
          shall be building standard almond.

4.   BASE:

     a.   Vinyl Base: Wall base shall be 4" high (straight at carpet, covered at
          VCT) with color to be selected from Building Standard Palette. Base
          shall be VPI Series 300.

                                       30



5.   WALLS:

     a.   Painting of partitions, columns and walls. Painting shall be with two
          (2) coats of flat latex finish paint as selected from the Building
          Color Palette color chart. Up to two (2) colors may be used provided
          transitions occur at natural areas such as door openings, column
          breaks, etc. Vinyl wall covering in the two (2) LaSalle Street
          offices, conference room, reception rooms, and hallway.

6.   MILLWORK, DOORS, and FRAMES:

     a.   All wood shall be mahogany stain with a clear finish. Wainscotting and
          chair-rail in reception room; chair-rail in the conference room.

7.   ACCESSORIES:

     a.   Electrical, Data and Telephone: Plastic outlets, switches and cover
          plates shall be off-white in color.

     b.   All ceiling components such as HVAC grilles, suspended ceiling grids,
          etc. shall use off-white in color.

     c.   Light fixture diffusers shall be chrome finish.

     d.   Sinks, faucets, drains, etc. shall be chrome plated or stainless steel
          (SS) finish.

     e.   Plastic laminate cabinets shall be standard almond color.

                                BUILDING SERVICES

1.   HEATING/COOLING:

     a.   Building mechanical system consists of a perimeter induction system
          combined with an interior dual duct forced air HVAC system. The
          Development Package includes painted metal induction covers as
          standard. 2' x 2' perforated metal ceiling grilles will be supplied
          for both supply and returns, with quantities supplied for stand office
          configurations.

2.   PLUMBING:

     a.   Sink shall be single compartment SS by Kohler.

     b.   Faucets shall be American Standard Gooseneck.

     c.   Five gallon electrical hot water heater shall be supplied and
          installed in sink cabinet.

     d.   Grease trap shall be provided as required by Code.

                                       31



3.   ELECTRICAL:

     a.   Electrical Outlets: Electrical outlet needs shall be based upon
          typical office requirements estimated at two (2) watts/USF and the
          Plan.

     b.   Light Fixtures: Lighting needs shall be based upon typical office
          requirements estimated at three (3) watts/USF. 24" X 48" three (3)
          lamp fixtures (with 18 cell parabolic) shall be provided based upon
          the Plan. Spacing shall not interrupt main tees. Initial lamping shall
          be cool white. One (1) switch shall be provided in each fixed office
          with additional switches as required for enclosed and general work
          areas.

4.   DATA:

     a.   Telephone/data outlets shall consist of a receptacle and cover plate
          with conduit and pull string to the ceiling, for use by the tenant's
          telephone and/or computer networking installers. Outlets shall be
          provided as per the Plan.

                                       32

EX-10.10

                                                                   Exhibit 10.10

                       FIRST AMENDMENT TO LEASE AGREEMENT

         THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amendment") is made as of
this 15th day of February, 2000, by and between LaSalle-Adams, L.L.C., a
Delaware limited liability company ("Landlord") as successor in interest to 208
South LaSalle Associates, L.P. and Lodestar Financial Services, Inc., an
Illinois corporation ("Tenant").

                              W I T N E S S E T H:

         A.  WHEREAS, Landlord's predecessor in interest and Tenant entered into
a lease agreement (the "Lease") dated August 31, 1995 for rental of certain
office space commonly known as Suite 1710 (the "Premises") consisting of
approximately 3,319 square feet of space, in the building (the "Building") which
is located at 208 South LaSalle Street in Chicago, Illinois;

         B. Landlord and Tenant desire to amend the Lease to, among other
things, extend the Expiration Date of the Lease Term, upon the terms and
conditions hereinafter set forth.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:

         1.  Defined Terms. Each initially capitalized word or term used as a
defined term in this Amendment but not otherwise defined herein which is defined
in the Lease shall have the same meaning as is ascribed to such initially
capitalized word or term in the Lease.

         2.  Extension of Term. The Term of the Lease is hereby extended
commencing on February 1, 2000 and continuing through and including December 31,
2003 (the "Extended Term"). All of the terms and provisions of the Lease shall
continue to be applicable during the Extended Term, except as is otherwise
specifically provided in this Amendment.

         3.  Expansion Space.

         (a) Effective as of February 15, 2000 (the "Expansion Space
Commencement Date") the Premises will be expanded to include Suite 1709 at the
Building, consisting of approximately



157 rentable square feet (the "Expansion Space"). As of the Expansion Space
Commencement Date, all references in the Lease to the "Premises" shall be deemed
to include the Expansion Space, and the Premises shall be deemed to consist of a
total of approximately 3,476 rentable square feet. The Expansion Space is shown
on Exhibit A attached hereto and made a part hereof.

         (b) Tenant acknowledges that it is accepting the Expansion Space "as
is" without any representations from Landlord as to the repair or the condition
of the Expansion Space or with respect to the suitability or fitness of the
Expansion Space for Tenant's use. Tenant's taking possession of the Expansion
Space shall be conclusive evidence that the Expansion Space was in good order
and satisfactory condition as of the date Tenant took possession thereof. No
agreement of Landlord to alter, remodel, decorate, clean or improve the
Expansion Space or the Premises (or to provide Tenant with any credit or
allowance for same), and no representation regarding the condition of the
Expansion Space, the Premises or the Building have been made by or on behalf of
Landlord or relied upon by Tenant, except as expressly stated in this Amendment.
Notwithstanding the foregoing to the contrary, Landlord shall, at its expense,
on or prior to February 1, 2000, patch and paint the walls of the Expansion
Space (using Building standard materials); install one (1) surface-mounted
fluorescent light fixture; meter the Expansion Space to connect same to the
Premises; furnish and install one (1) countertop (using Building standard
stock); patch ceiling tiles; and install new Building standard carpeting.

         4. Rent.

         A. Base Rent. Tenant shall pay Base Rent for the Expansion Space during
the Extended Term as follows:



                       Annual Rate
                       -----------
                      of Base Rent      Annual         Monthly
                      ------------      ------         -------
       Period           Per RSF        Base Rent      Base Rent
       ------           -------        ---------      ---------
                                              
February 15, 2000       $  9.75        $ 1,530.75       $ 127.56
- - January 31, 2001

February 1, 2001 -      $ 10.25        $ 1,609.25       $ 134.10
 January 31, 2002

February 1, 2002 -      $ 10.75        $ 1,687.75       $ 140.65
 December 31, 2002


                                       2




     B. Additional Rent. Tenant's obligation to pay Expenses and Taxes for the
Expansion Space (which obligation shall commence on the Expansion Space
Commencement Date) shall be as set forth in the Lease, with the exception of the
following modifications (with respect to the Expansion Space only):

        (i) The reference to "1995" in Sections 1.6 and 1.7 of the Lease shall
     be deleted, and "None" shall be inserted in lieu thereof in each instance;

        (ii) Section 3.2.2 of the Lease shall be modified by deleting the first
     sentence thereof in its entirety, and inserting in its place "Tax
     Escalation and Expense Escalation ("Tax Escalation and Expense Escalation")
     in an amount equal to Tenant's Proportionate Share of (a) Expenses in any
     calendar year and (b) Taxes for any calendar year."

     5. Broker. Tenant represents and warrants to Landlord that except for Prime
Group Realty Services, Inc. ("Broker") Tenant has not dealt with any real estate
broker, salesperson or finder in connection with this Amendment, and no such
person initiated or participated in the negotiation of this Amendment. Tenant
hereby agrees to indemnify and hold Landlord harmless from and against any and
all liabilities and claims for commissions and fees arising out of a breach of
the foregoing representation. Landlord shall be responsible for the payment of
any commissions or fees due to Broker based upon a separate agreement(s) between
Landlord and Broker.

     6. Notices. Effective as of the date of this Amendment, the address for
notices to Landlord, as set forth in Section 1.12 of the Lease, shall be
modified to insert the following as Landlord's address for notices:


                  To Landlord:   LaSalle-Adams, L.L.C.
                                 c/o Prime Group Realty Trust
                                 77 West Wacker Drive, Suite 3900
                                 Chicago, Illinois 60601
                                 Attention: James F. Hoffman

                  with copy to:  Prime Group Realty Trust
                                 77 West Wacker Drive, Suite 3900
                                 Chicago, Illinois 60601
                                 Attention: Philip A. Hoffer

                                        3



     7.  Effect of Amendment. The Lease, as hereby amended, shall remain in full
force and effect, subject to the terms and provisions thereof and hereof.

     8.  Submission. Submission of this Amendment by Landlord or Landlord's
agent to Tenant or its agent or representative, for examination and/or execution
shall not in any manner bind Landlord and no obligation on Landlord shall arise
under this Amendment unless and until this Amendment is fully signed and
delivered by both Landlord and Tenant; provided, however, the execution and
delivery by Tenant of this Amendment to Landlord or Landlord's agent shall
constitute an irrevocable offer by Tenant on the terms and conditions herein
contained, which offer may not be revoked by Tenant for thirty (30) days after
such delivery.

     9.  No Default. Tenant represents, warrants and covenants that to the best
of Tenant's knowledge, Landlord and Tenant are not in default of any of their
respective obligations under the Lease and no event has occurred which, with the
passage of time or the giving of notice, or both, would constitute a default by
either Landlord or Tenant thereunder.

     10. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                         [Signatures on Following Page]

                                        4




         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first written above.

 TENANT:                                     LANDLORD:

 LODESTAR FINANCIAL SERVICES,                LASALLE-ADAMS, L.L.C., a Delaware
 INC., an Illinois corporation               limited liability company

                                             By: Prime Group Realty, L.P.,
 By: /s/ William A. Goldstein                    a Delaware limited
     ------------------------                    partnership, its
 Its: President                                  Administrative Member
      -----------------------

                                                 By: Prime Group Realty Trust,
                                                     a Maryland real estate
                                                     investment trust, its
                                                     Managing General Partner


                                                     By: /s/ Steven R.
                                                     Its: V.P

                                                     By: /s/ P.A. Hoffer
                                                     Its: EVP
                                                         -----------------------

                                       5

EX-10.11

                                                                   Exhibit 10.11

                            Second Amendment to Lease

         THIS SECOND AMENDMENT TO LEASE (this "Second Amendment") is made as of
the 12th day of August, 2002, by and between LASALLE-ADAMS, L.L.C., a Delaware
limited liability company ("Landlord") and LODESTAR INVESTMENT COUNSEL, INC., an
Illinois corporation, (formerly known as LODESTAR FINANCIAL SERVICES, INC., an
Illinois corporation) ("Tenant").

                                   Background

         A. Landlord and Tenant entered into a lease agreement dated as of
August 31, 1995 (the "Original Lease"), as amended by that certain First
Amendment to Lease Agreement dated as of February 15, 2000 (the "First
Amendment", the Original Lease and the First Amendment shall be collectively
referred to herein as the "Lease"), pursuant to which Landlord leases to Tenant
Suites 1709 and 1710 (the "Current Premises"), currently consisting of
approximately 3,476 rentable square feet, in the building located at 208 S.
LaSalle Street, Chicago, Illinois (the "Building"). The Premises is more
particularly described in the Lease.

         B. Landlord and Tenant desire by this instrument to amend the Lease to,
among other things, extend the term of the Lease.

                                      Terms

            NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:

         1. Definitions. All terms used herein shall have the meanings ascribed
to them in the Lease unless otherwise defined herein.

         2. Expansion of Current Premises. Effective as of January 1, 2003 (the
"Suite 1724 Commencement Date"), the Current Premises will be expanded to
include that certain additional office space located on the seventeenth (17/th/)
floor of the Building and known as Suite 1724, consisting of approximately 1,283
rentable square feet, as depicted on Exhibit A attached hereto ("Suite 1724";
Suite 1724 and the Current Premises may be hereinafter referred to as the
"Premises"). From and after the Suite 1724 Commencement Date, all terms and
conditions set forth in the Lease shall apply to Suite 1724, except as otherwise
expressly provided herein.

         3. Suite 1724 Term. The Term for Suite 1724 shall commence on the Suite
1724 Commencement Date and expire on December 31, 2007.




         4. Base Rent for Suite 1724.

            (a) Effective as of the Suite 1724 Commencement Date, Tenant shall
pay Base Rent for Suite 1724 (in addition to the Base Rent payable by Tenant
with respect to the Current Premises) in accordance with the following schedule:

- --------------------------------------------------------------------------------
        Period             Annual Base Rent per      Annual Base       Monthly
                           Rentable Square Foot         Rent          Base Rent
                              of Suite 1724
- --------------------------------------------------------------------------------
    Suite 1724                    $11.00             $14,113.00       $1,176.08
Commencement Date to
     12/31/03
- --------------------------------------------------------------------------------
1/01/04 to 12/31/04                11.50              14,754.50        1,229.54
- --------------------------------------------------------------------------------
1/01/05 to 12/31/05                12.00              15,396.00        1,283.00
- --------------------------------------------------------------------------------
1/01/06 to 12/31/06                12.50              16,037.50        1,336.46
- --------------------------------------------------------------------------------
1/01/07 to 12/31/07                13.00              16,679.00        1,389.92
- --------------------------------------------------------------------------------

            (b) Tenant shall pay all Rent in the manner and at the time set
forth in the Lease.

         5. Conversion of Lease to Net Lease. Landlord and Tenant acknowledge
that the Lease is currently a modified "gross" lease, whereby Tenant pays
Tenant's Proportionate Share of the increase in Operating Expenses and Taxes
over the Base Expense Year and the Base Tax Year. With this Second Amendment,
Landlord and Tenant desire to change the Lease to a pure "net" lease, whereby
Tenant shall pay Tenant's Proportionate Share of Operating Expenses and Taxes
without reference to the Base Expense Year or the Base Tax Year. Accordingly, as
of January 1, 2003, (a) the reference to "1995" in Section 1.6 of the Lease
shall be deemed to be deleted, (b) the Base Expenses set forth in Section 1.6 of
the Lease shall be "$0.00", (c) the reference to "1995" in Section 1.7 shall be
deemed to be deleted, and (d) the Base Taxes set forth in Section 1.7 of the
Original Lease shall be "$0.00". Landlord reasonably estimates that Tenant's
Proportionate Share of Operating Expenses and Taxes for 2002 will equal a total
of approximately $12.70 per square foot of the Premises, based on 100% occupancy
of the Building. Tenant acknowledges that such figure is only an estimate and
the actual total of Tenant's Proportionate Share of Operating Expenses and Taxes
for 2002 may be more or less than such estimate.

         6. Tenant's Proportionate Share. Effective as of the Suite 1724
Commencement Date, the definition of "Tenant's Proportionate Share" in the Lease
Schedule shall be deemed to be amended so that Tenant's Proportionate Share
shall be deemed to be 0.5402%, which has been determined by dividing the
rentable square feet of the Premises (after the Suite 1724 Commencement Date) by
the rentable square feet in the Building (874,742 square feet).

         7. Lease Term. Effective as of the date hereof, the Lease Term shall be
extended to commencing on January 1, 2003 and continuing through and including
December 31, 2007 (the

                                        2



"Extended Term"). All of the terms and provisions of the Lease shall continue to
be applicable during the Extended Term, except as otherwise specifically
provided in this Second Amendment.

         8. Rentable Area of the Current Premises. Tenant acknowledges that
Landlord remeasured the Current Premises prior to the date of this Second
Amendment, in accordance with the 1996 Building Owners and Managers Association
definition of rentable square footage, and based on such remeasurement, as of
January 1, 2003, the rentable area of the Current Premises shall be deemed to be
3,442 square feet.

         9. Base Rent. Effective as of January 1, 2003, Tenant shall pay Base
Rent for the Current Premises (in addition to the Base Rent payable by Tenant
with respect to Suite 1724) in monthly installments due on the first day of each
month in accordance with the following schedule:


- --------------------------------------------------------------------------------
      Period             Annual Base Rent per      Annual Base     Monthly Base
                         Rentable Square Foot         Rent             Rent
                       of the Current Premises
- --------------------------------------------------------------------------------
1/01/03 to 12/31/03            $11.00              $37,862.00       $3,155.17
- --------------------------------------------------------------------------------
1/01/04 to 12/31/04             11.50               39,583.00        3,298.58
- --------------------------------------------------------------------------------
1/01/05 to 12/31/05             12.00               41,304.00        3,442.00
- --------------------------------------------------------------------------------
1/01/06 to 12/31/06             12.50               43,025.00        3,585.42
- --------------------------------------------------------------------------------
1/01/07 to 12/31/07             13.00               44,746.00        3,728.83
- --------------------------------------------------------------------------------

         10. Condition of Suite 1724.

             (a) Tenant acknowledges and agrees that it shall take possession of
Suite 1724 in an "as-is" condition, without any representations from Landlord as
to the repair or the condition of Suite 1724 or with respect to the suitability
or fitness of Suite 1724 for Tenant's use, except as expressly set forth in this
Second Amendment. Tenant's taking possession of Suite 1724 shall be conclusive
evidence that Suite 1724 is in good order and satisfactory condition when Tenant
took possession. No agreement of Landlord, the managing or leasing agent of the
Building or their respective agents, partners or employees to alter, remodel,
decorate, clean or improve Suite 1724 or the Building (or to provide Tenant with
any credit or allowance for the same), and no representations regarding the
condition of Suite 1724 or the Building, have been made by or on behalf of
Landlord or such other parties or relied upon by Tenant, except as expressly set
forth in this Second Amendment.

             (b) Tenant desires Landlord to perform certain leasehold
improvement work (the "Work") in Suite 1724 consisting of the following: (1)
open corridor between Suite 1710 and Suite 1724, (2) rework kitchens in Suite
1710 and Suite 1724 in accordance with the drawings attached hereto as Exhibit
A, (3) replace wallcovering in Suite 1710, (4) add wallcovering to the reception
area in Suite 1710, the window line offices in Suite 1710 where walls are
currently painted and all of Suite 1724, (5) add exhaust fan in the existing
storage/server room that will exhaust air out of the Premises, (6) replace
carpeting throughout Suites 1710 and Suite 1724, (7) relocate furniture in Suite
1710 as needed to perform the Work, (8) replace baseboard in Suite 1724, (9)
touch-up all existing millwork and wainscoting in Suite 1710, (10) replace vinyl
tile in

                                        3



kitchens of Suite 1710 and 1724, and (11) use reasonable efforts to increase air
flow in the reception area of Suite 1710.

             (c) Landlord shall perform the Work using Building standard
materials and quantities (which shall be equal to or greater than the Building
standard materials currently in Suite 1710). Landlord shall pay for the cost of
the Work in an amount not to exceed $58,545.76 (the "Allowance") and Tenant
shall pay for any and all costs and expenses associated with the Work
(including, without limitation, such additional expenses which result from any
special work, materials, finishes or installations required by Tenant or from
any delays in the Work occasioned by Tenant) in excess of the Allowance. If the
cost of the Work is less than the Allowance, Tenant shall be entitled to receive
a credit against the next due installment of Base Rent in the amount of the
portion of the Allowance not used for the Work.

             (d) Landlord shall use commercially reasonable efforts to cause the
Work to be "substantially completed" on or before the January 1, 2003 subject to
delays described in Section 27.8 of the Original Lease and delays caused by
Tenant. The Work shall be considered "substantially completed" for all purposes
under this Amendment and the Lease if and when the Work can be used for its
intended purpose (except for minor finish-out and "punchlist" items) or when
Tenant first takes occupancy of the Premises, whichever first occurs.

             (e) If the Work is not substantially completed on or before January
1, 2003 by reason of any delay (other than a delay caused by Tenant), the Lease
shall remain in effect, Landlord shall have no liability to Tenant as a result
of any delay in occupancy, the Suite 1724 Commencement Date (and Tenant's
obligation to pay Base Rent, Expense Escalation and Tax Escalation) shall be
extended (unless such delay is caused by Tenant) to the date on which the Work
is substantially completed.

             (f) The covenants and conditions of the Lease, as amended hereby,
including Tenant's obligation to pay Base Rent, Expense Escalation and Tax
Escalation with respect to the Current Premises, shall be in full force and
effect during the completion of the Work.

             (g) Landlord shall complete the Work outside of the Building's
normal business hours. Tenant shall not interfere with the completion of the
Work. Landlord shall use reasonable efforts to not materially interfere with
Tenant's business operations in the Current Premises while completing the Work.

             (h) If Landlord substantially completes the Work before January 1,
2003, Tenant shall have the right to occupy Suite 1724 upon substantial
completion of the Work on the terms and conditions of the Lease (as amended
hereby), except that Tenant shall not be required to pay Base Rent for Suite
1724 until January 1, 2003. Tenant acknowledges that Tenant will be required to
pay the Expense Escalation and Tax Escalation for Suite 1724 if Tenant occupies
Suite 1724 before January 1, 2003 (upon substantial completion of the Work).

         11. Brokers. Tenant represents to Landlord that Tenant has dealt only
with Prime Group Realty Services, Inc. and Strobeck Real Estate (the "Brokers")
in connection with this Second Amendment and that, insofar as Tenant knows, no
other broker negotiated this Second Amendment or is entitled to any commission
in connection herewith. Tenant agrees to indemnify, defend and hold Landlord,
its property manager and their respective employees harmless from and against
all claims, demands, actions, liabilities, damages, costs and expenses

                                        4



(including, attorneys' fees and expenses) arising from either (i) a claim for a
fee or commission made by any broker, other than the Brokers, claiming to have
acted by or on behalf of Tenant in connection with this Second Amendment, or
(ii) a claim of, or right to, lien under the laws of the state of Illinois
relating to real estate broker liens with respect to any such broker retained
by, or claiming to have been retained by, Tenant.

         12. Full Force and Effect. Except as in this Second Amendment
specifically provided, the Lease shall remain unchanged and in full force and
effect.

         13. Conflicts. This Second Amendment and the Lease shall be deemed one
instrument and in the event of a conflict between this Second Amendment and the
Lease, the terns and provisions of this Second Amendment shall, in all instances
and for all purposes, control.

         14. Counterparts. This Second Amendment may be executed in any number
of counterparts each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

         15. Time of Essence. Time is of the essence of this Second Amendment.

         16. Submission. Submission of this Second Amendment by Landlord or
Landlord's agent, or their respective agents or representatives, to Tenant for
examination and/or execution shall not in any manner bind Landlord and no
obligations on Landlord shall arise under this Second Amendment unless and until
this Second Amendment is fully signed and delivered by Landlord and Tenant;
provided, however, the execution and delivery by Tenant of this Second Amendment
to Landlord or Landlord's agent or their respective agents or representatives,
shall constitute an irrevocable offer by such Tenant to enter into the
transactions contemplated by this Second Amendment on the terms and conditions
herein contained, which offer may not be revoked for fifteen (15) business days
after such delivery.

         17. No Default.

             (a) Tenant represents, warrants and covenants that to the best of
Tenant's knowledge, Landlord and Tenant are not in default of any of their
respective obligations under the Lease and no event has occurred which, with the
passage of time or the giving of notice, or both, would constitute a default by
either Landlord or Tenant thereunder.

             (b) Landlord represents, warrants and covenants that to the best of
Landlord's knowledge, Landlord and Tenant are not in default of any of their
respective obligations under the Lease and no event has occurred which, with the
passage of time or the giving of notice, or both, would constitute a default by
either Landlord or Tenant thereunder.

                      [balance of page intentionally blank]

                                        5




             IN WITNESS WHEREOF, the parties hereto have executed or caused to
be executed this Second Amendment and it shall be effective on the date first
written above.

                             LANDLORD:

                             LASALLE-ADAMS, L.L.C., a Delaware limited
                             liability company

                             By: Prime Group Realty, L.P., a Delaware limited
                             partnership, its Administrative Member

                              By: Prime Group Realty Trust, a Maryland real
                                  estate investment trust, its Managing General
                                  Partner

                                  By:   /s/
                                       -----------------------------------------
                                  Its:  V.P.
                                       -----------------------------------------
                                  By:   /s/ P.A. Hoffer
                                       -----------------------------------------
                                  Its: EVP
                                       -----------------------------------------

                              TENANT:

                              LODESTAR INVESTMENT COUNSEL, INC., an Illinois
                              corporation,(formerly known as
                              LODESTAR FINANCIAL SERVICES, INC., an
                              Illinois corporation)


                              By:  /s/ William A. Goldstein
                                   ------------------------------------------
                              Its: President
                                   ------------------------------------------

                                        6




                                    EXHIBIT A

                             Description of the Work




                            [FLOOR PLAN APPEARS HERE]

EX-10.23

                                                                   Exhibit 10.23

                        AMENDMENT NO. 3 TO LOAN AGREEMENT

     THIS AMENDMENT NO. 3 TO LOAN AGREEMENT (this "Amendment") dated as of
December 24, 2002, is entered into between PRIVATEBANCORP, INC., a Delaware
corporation (the "Borrower"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association with its main office located in Chicago, Illinois (the
"Bank").

                                    RECITALS

     A. The Borrower and the Bank entered into a loan agreement, dated as of
February 11, 2000 (the "Original Loan Agreement"), in which the Bank agreed to
extend to the Borrower credit in the aggregate principal amount of Eighteen
Million Dollars ($18,000,000).

     B. The Borrower delivered to the Bank a Revolving Note dated as of
February 11, 2000, in the principal amount of Eighteen Million Dollars
($18,000,000) (the "Revolving Note").

     C. In connection with the transactions contemplated under the Original Loan
Agreement, the Borrower granted to the Bank a security interest in 100% of the
capital stock of Private Bank and Trust Company, an Illinois state bank with its
main office located in Chicago, Illinois, and upon the completion of its
formation, The Private Bank, a federal savings bank with its main office to be
located in St. Louis, Missouri, with such security interests evidenced by Pledge
and Security Agreement, dated as of February 11, 2000, made by the Borrower for
the benefit of the Bank (the "Pledge Agreement").

     D. Pursuant to the terms of an Amendment No. 1 to Loan Agreement and
Revolving Note dated February 11, 2002 (the "First Amendment"), the Borrower and
the Bank agreed to extend the Expiry Date (as defined in the Original Loan
Agreement) from February 11, 2002, to April 11, 2002.

     E. Pursuant to the terms of an Amendment No. 2 to Loan Agreement and
Revolving Note dated April 11, 2002 (the "Second Amendment"), the Borrower and
the Bank agreed to extend the Expiry Date further from April 11, 2002, to April
11, 2003, and to increase the maximum aggregate principal amount the Bank is
willing to lend to the Borrower to Twenty Five Million Dollars ($25,000,000).

     F. The Borrower and the Bank have now agreed to extend the Expiry Date
further from April 11, 2003, to December 1, 2003, and to increase the maximum
aggregate principal amount the Bank is willing to lend to the Borrower to Thirty
Five Million Dollars ($35,000,000).

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:




                                   AGREEMENTS

     Section 1. The Original Loan Agreement, as amended by the First Amendment
and the Second Amendment, is referred to herein as the "Loan Agreement." All
terms that are capitalized and used herein (and are not otherwise specifically
defined herein) shall be used in this Amendment as defined in the Loan
Agreement.

     Section 2. Section 2.1 of the Loan Agreement is hereby deleted and replaced
in its entirety with the following:

          Section 2.1 The Loans. Subject to and upon the terms and conditions
     set forth herein, the Bank agrees, at any time and from time to time prior
     to the close of business on December 1, 2003 (the "Expiry Date"), to make
     loans (any such loan being referred to as a "Loan," and collectively
     referred to as the "Loans"), which Loans: (a) shall at the option of the
     Borrower be Prime Rate Loans or Eurodollar Rate Loans, provided that all
     Loans comprising the same Borrowing shall at all times be of the same Type;
     and (b) may be prepaid and reborrowed in accordance with the provisions
     hereof; provided, however, that the aggregate principal amount of Loans
     outstanding from the Bank shall at no time exceed the principal amount of
     Thirty Five Million Dollars ($35,000,000).

     Section 3. The first Recital and Section 2.4 of the Loan Agreement are each
hereby amended by deleting the dollar figure referenced therein of "Eighteen
Million Dollars ($18,000,000)" and replacing it in both places with the
following reference to "Thirty Five Million Dollars ($35,000,000)."

     Section 4. The replacement Note created pursuant to the Second Amendment,
shall be replaced in its entirety by a new Note, substantially identical in all
respects to the current Note, except for the maturity date and the principal
amount, and in the form attached hereto as Exhibit A. Upon the execution of the
new Note and delivery to the Bank, the Bank will destroy the current Note and
all of the Bank's rights under the destroyed Note shall thereafter be
represented by the new Note. All references to the "Note" in the Loan Agreement
and the other Loan documents shall refer to the new Promissory Note with the new
principal amount.

     Section 5. To induce the Bank to execute and deliver this Amendment, the
Borrower hereby represents to the Bank that as of the date hereof and as of the
time that this Amendment becomes effective, and after taking into account the
revisions set forth in this Amendment, as follows:

          (a) each of the representations and warranties set forth in the Second
     Loan Agreement is true and correct;

          (b) the Borrower is in full compliance with all of the terms and
     conditions of the Loan Agreement and the other documents delivered in
     connection therewith, and no Default has occurred under the Loan Agreement
     (as defined therein) or any document in connection therewith; and

                                       2



          (c) no fact or circumstance exists that with the lapse of time, the
     giving of notice or both would constitute such a Default.

     Section 6. This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed will constitute but one and the same instrument.

     Section 7. Except as previously amended hereby, each of the Loan Agreement
and the Pledge Agreement is hereby ratified and confirmed and shall continue in
full force and effect.

     Section 8. This Amendment shall become effective when it shall have been
executed by the Borrower and the Bank and thereafter shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.


PRIVATEBANCORP, INC.                       LASALLE BANK NATIONAL ASSOCIATION


By:  /s/ Gary L. Svec                       By:  /s/ Michael A. Tighe, Jr.
   -----------------------------------        ---------------------------------
   Name:  Gary L. Svec                        Name:  Michael A. Tighe, Jr.
   Title: Chief Financial Officer             Title: Vice President



                                       3



                                   EXHIBIT A

                                 REVOLVING NOTE

$35,000,000                                                    Chicago, Illinois

                                                               December 24, 2002

     FOR VALUE RECEIVED, the undersigned, PRIVATEBANCORP, INC., a Delaware
corporation with its principal place of business located at 10 N. Dearborn,
Chicago, Illinois 60602 (the "Borrower"), hereby promises to pay to the order of
LaSalle Bank National Association, a national banking association with its main
office located in Chicago, Illinois (the "Bank"), the principal sum of Thirty
Five Million United States Dollars (US$35,000,000), or whatever lesser amount of
principal remains unpaid and owing from time to time under the terms of this
Revolving Note.

     This Revolving Note is referred to in, and was executed and delivered
pursuant to, that certain Loan Agreement of even date herewith between the
Borrower and the Bank (as amended, restated, supplemented or modified from time
to time, the "Agreement"), to which reference is hereby made for a statement of
the terms and conditions under which the loan evidenced hereby is to be repaid
and for a statement of remedies upon the occurrence of a "Default" as defined
therein. The Agreement is incorporated herein by reference in its entirety. All
terms which are capitalized and used herein (which are not otherwise
specifically defined herein) and which are defined in the Agreement shall be
used in this Revolving Note as defined in the Agreement.

     The Borrower agrees that in any action or proceeding instituted to collect
or enforce collection of this Revolving Note, the amount shown on the Bank's
books and records with respect to the Borrower shall be prima facie evidence of
the unpaid principal balance of this Revolving Note.

     The unpaid principal balance plus all accrued but unpaid interest hereunder
shall be due and payable on the Expiry Date, or such earlier date on which such
amount shall become due and payable on account of acceleration by the Bank.

     The Borrower shall make all payments of principal due under the terms of
this Revolving Note at the times, in the manner and in the amounts provided in
the Agreement. The Borrower promises to pay to the Bank interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full at the rates and payable at the times provided in the Agreement. Interest
shall be calculated on the basis of a 360-day year, counting the actual number
of days elapsed.

     Upon the occurrence of any Default, the interest rate as provided in
Section 2.6 of the Agreement shall apply. Interest due hereunder may, at the
Bank's option and subject to the terms of the Agreement, be charged to any
account maintained by the Borrower with the Bank.

                                       4



     It is the intention of the parties hereto to conform strictly to applicable
usury laws as in effect from time to time during the term of the Loan.
Accordingly, if any transaction contemplated hereby would be usurious under
applicable law (including the laws of the United States of America, or of any
other jurisdiction whose laws may be mandatorily applicable), then, in that
event, notwithstanding anything to the contrary in the Agreement or this
Revolving Note, it is agreed that the aggregate of all consideration that
constitutes interest under applicable law that is contracted for, charged or
received under the Agreement or this Revolving Note or otherwise in connection
with the Agreement or this Revolving Note shall under no circumstances exceed
the maximum amount of interest allowed by applicable law, and any excess shall
be credited to the Borrower by the Bank (or if such consideration shall have
been paid in full, such excess refunded to the Borrower by the Bank). All sums
paid, or agreed to be paid, to the Bank for the use, forbearance and detention
of the indebtedness of the Borrower by the Bank shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the actual rate of
interest is uniform during the full term thereof.

     To the extent permitted by applicable law and except as provided in the
Agreement, the Borrower, for itself and its legal representatives, predecessors,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of nonpayment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection
and the benefit of any exemption under the homestead exemption laws, if any, or
any other exemption or insolvency laws, and further agrees that the Bank may
release or surrender, exchange or substitute any real estate and/or personal
property or other collateral security now held or which may hereafter by held as
security for the payment of this Revolving Note, and may extend the time for
payment or (with the consent of the Borrower) otherwise modify the terms of
payment for any part or the whole of the indebtedness evidenced hereby.

     This Revolving Note may be prepaid in whole or in part only as provided in
the Agreement. Upon or at any time after the occurrence or existence of a
Default, the Bank shall be entitled, at its option, to accelerate the then
outstanding indebtedness hereunder and take such other action as provided for in
the Agreement.

     THIS REVOLVING NOTE HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED AT, AND
SHALL BE DEEMED TO HAVE BEEN MADE AT, CHICAGO, ILLINOIS. THE LOAN REFERENCED
HEREIN IS TO BE FUNDED AND REPAID AT, AND THIS REVOLVING NOTE IS OTHERWISE TO BE
PERFORMED AT, CHICAGO, ILLINOIS, AND THIS REVOLVING NOTE SHALL BE INTERPRETED,
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO: (i) ITS
JUDICIALLY OR STATUTORILY PRONOUNCED RULES REGARDING CONFLICT OF LAWS OR CHOICE
OF LAW; (ii) WHERE ANY OTHER INSTRUMENT IS EXECUTED OR DELIVERED; (iii) WHERE
ANY PAYMENT OR OTHER PERFORMANCE REQUIRED BY ANY SUCH INSTRUMENT IS MADE OR
REQUIRED TO BE MADE; (iv) WHERE ANY BREACH OF ANY PROVISION OF ANY SUCH
INSTRUMENT OCCURS, OR ANY CAUSE OF ACTION OTHERWISE ACCRUES; (v) WHERE ANY
ACTION OR OTHER PROCEEDING IS INSTITUTED OR PENDING;

                                       5



(vi) THE NATIONALITY, CITIZENSHIP, DOMICILE, PRINCIPAL PLACE OF BUSINESS, OR
JURISDICTION OR ORGANIZATION OR DOMESTICATION OF ANY PARTY; (vii) WHETHER THE
LAWS OF THE FORUM JURISDICTION OTHERWISE WOULD APPLY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF ILLINOIS; OR (viii) ANY COMBINATION OF THE FOREGOING. AS
PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, THE BORROWER
RECOGNIZES THAT THE BANK'S PRINCIPAL OFFICE IS LOCATED IN CHICAGO, ILLINOIS, AND
THAT THE BANK MAY BE IRREPARABLY HARMED IF REQUIRED TO INSTITUTE OR DEFEND ANY
ACTIONS AGAINST THE BORROWER IN ANY JURISDICTION OTHER THAN THE NORTHERN
DISTRICT OF ILLINOIS OR COOK COUNTY, ILLINOIS; THEREFORE, THE BORROWER
IRREVOCABLY (a) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING RELATING
TO THIS REVOLVING NOTE AND/OR THE LOAN EVIDENCED HEREBY MAY BE BROUGHT IN THE
NORTHERN DISTRICT OF ILLINOIS, IF FEDERAL JURISDICTION IS AVAILABLE, AND,
OTHERWISE, IN THE CIRCUIT COURT OF COOK COUNTY, AT THE BANK'S OPTION; (b)
CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING; (c) WAIVES ANY OBJECTION WHICH THE BORROWER MAY HAVE TO THE LAYING
OF VENUE IN ANY SUCH SUIT, ACTION OR PROCEEDING IN EITHER SUCH COURT; AND (d)
AGREES TO JOIN THE BANK IN ANY PETITION FOR REMOVAL TO EITHER SUCH COURT BROUGHT
BY THE BANK. THE BORROWER WAIVES TRIAL BY JURY AND ANY OBJECTION TO JURISDICTION
AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND AGREES NOT TO ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. NOTHING CONTAINED HEREIN SHALL
AFFECT THE RIGHT OF THE BANK TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

     IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be duly
executed as of the date first above written.

                                        PRIVATEBANCORP, INC.



                                        By:
                                           ----------------------------------
                                           Name:
                                                -----------------------------
                                           Title:
                                                 ----------------------------

                                       6

EX-10.25

                                                                   Exhibit 10.25

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made and entered into as of the 30th day of December, 2002,
by and between Lodestar Investment Counsel, LLC, a Delaware limited liability
company (hereinafter referred to as "Employer"), and William A. Goldstein
(hereinafter called "Executive").

                              W I T N E S S E T H:
                              - - - - - - - - - -


     WHEREAS, Executive currently serves as President, Secretary and Treasurer
of Lodestar Investment Counsel, Inc., an Illinois corporation ("Lodestar");

     WHEREAS, The PrivateBank and Trust Company, an Illinois banking association
("PrivateBank"), and PrivateBancorp, Inc., a Delaware corporation ("PVTB"), have
entered into an Amended and Restated Unit Purchase Agreement by and among
PrivateBank, PVTB, Employer, Lodestar and certain other parties named therein
made effective as of September 4, 2002 (the "Purchase Agreement") for the
purpose of PrivateBank's acquisition of 80% of the membership interests of
Employer (the "Acquisition");

     WHEREAS, in connection with the Acquisition, Employer and Executive have
agreed that Executive will be employed by Employer as of the effective date of
the Acquisition;

     WHEREAS, Employer desires to employ Executive, and Executive desires to
serve, as the Chief Executive Officer of Employer; and

     WHEREAS, Employer and Executive desire to supersede all prior agreements
between Executive and Lodestar and enter into this Agreement;

     NOW, THEREFORE, in consideration of the mutual promises herein contained
and subject to the conditions precedent set forth herein, the parties agree as
follows:

     1. Employment and Term.

          (a) Contingent upon Closing of Purchase Agreement. Executive's
     employment with Employer, and the terms of this Agreement, are contingent
     upon the consummation of the transactions contemplated in the Purchase
     Agreement. In the event the Purchase Agreement is terminated prior to the
     consummation of the transactions contemplated thereby, this Agreement shall
     be null and void.

          (b) Employment. Employer shall employ Executive as the Chief Executive
     Officer of Employer, and Executive shall so serve, for the term set forth
     in Paragraph 1(c).

          (c) Term. The initial term of Executive's employment under this
     Agreement shall commence on the effective date of the Acquisition (the
     "Effective Date") and end on the fifth anniversary date of such Effective
     Date (the "Initial Term"), subject to earlier termination as provided in
     Paragraph 7.



     2. 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 Employer in
     the conduct of its business. Executive's powers and authority shall be as
     prescribed by the Limited Liability Company Agreement of Employer dated as
     of December 30, 2002 (the "LLC Agreement") and shall include all those
     delegated to him by Lodestar prior to the Effective Date, together with the
     performance of such other duties and responsibilities as from time to time
     may be assigned to him by the Board of Managers of Employer (the "Board")
     consistent with the position of Chief Executive Officer. Executive shall
     report to the Board and Ralph B. Mandell, Chairman and Chief Executive
     Officer of PVTB and PrivateBank, or his successor, or on any Change in
     Control, to a person of similar seniority. Executive recognizes, that
     during the period of his employment hereunder, he owes an undivided duty of
     loyalty to Employer, and agrees to devote his full 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 Employer.
     Recognizing and acknowledging that it is essential for the protection and
     enhancement of the name and business of Employer and the goodwill
     pertaining thereto, Executive shall perform his duties under this Agreement
     professionally, in accordance with the applicable laws, rules and
     regulations and such standards, policies and procedures established by
     Employer and the industry from time to time. Executive will not perform any
     duties for any other business without the prior written consent of
     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 member of the Board,
     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 as Employer's Chief Executive Officer, nothing herein contained
     shall assure Executive, nor in any manner be construed to constitute an
     agreement by Employer to continue the employment of Executive after the
     expiration of the Initial Term in such capacity or in any other capacity.

     3. Base Salary. For services performed by Executive for Employer pursuant
to this Agreement during the period of Executive's employment with Employer,
Employer shall pay Executive a base salary at the rate of one hundred thousand
dollars ($100,000.00) per year, payable in substantially equal installments in
accordance with PrivateBank's regular payroll practices. Any compensation which
may be paid to Executive under any additional compensation or incentive plan of
Employer or PVTB 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 Executive shall be entitled under this Agreement. Executive's
base salary shall be subject to review from time to time, and Employer may (but
is not required to) increase the base salary as the Board, in its discretion,
may determine.

     4. Annual Bonuses. For each calendar year during Executive's employment,
Executive shall be eligible to participate in Employer's employee bonus pool
(the "Bonus Pool") which shall include not less than thirty-five percent (35%)
of the quarterly Revenues of Employer. "Revenues" shall be determined in
accordance with generally accepted accounting



                                       2




principles; provided that for any partial calendar year, "Revenues" shall only
include Revenues of Employer received after the Effective Date. The Bonus Pool
shall be allocated such that Executive shall receive at least thirty-five
percent (35%) of the revenues attributable to Executive's designated accounts
(as determined in accordance with Employer's policies which shall not be altered
except with the unanimous approval of the Board and each executive of Employer
affected thereby).

     5. Equity Incentive Compensation. During the term of employment hereunder,
Executive shall be eligible to participate in any equity-based incentive
compensation plan or program adopted by PVTB, including any plan providing for
the granting of options to purchase stock.

     6. Other Benefits. In addition to the compensation described in Paragraphs
3, 4 and 5, above, Executive shall also be entitled to the following:

          (a) Participation in Benefit Plans. Executive shall be entitled to
     participate in all of the various retirement, welfare, fringe benefit, and
     expense reimbursement plans, programs and arrangements of PVTB, PrivateBank
     or Employer to the extent 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;
     provided that such benefits shall be consistent with the benefits provided
     to similarly situated officers of PVTB and PrivateBank; provided, however,
     that any benefits Executive receives from Employer shall offset any
     comparable benefits provided by PVTB and PrivateBank to their employees
     generally for which Executive is eligible for participation in accordance
     herewith.

          (b) Vacation. Executive shall be entitled to eight (8) weeks of
     vacation per calendar year (prorated for any partial calendar year during
     the Initial Term) or, if greater, such number of days of vacation with pay
     during each calendar year during the period of employment in accordance
     with Employer's applicable personnel policy as in effect from time to time.

          (c) Expense Reimbursement. 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, which policies and procedures shall be
     similar to those applicable to officers of PVTB and PrivateBank.

          (d) Other Benefits. During the term of employment hereunder, Executive
     shall be entitled to receive such other benefits and perquisites consistent
     with past practices for such Executive at Lodestar as disclosed by Lodestar
     to PVTB prior to the date hereof.

     7. Termination. Unless earlier terminated in accordance with the following
provisions of this Paragraph 7, Employer shall continue to employ Executive and
Executive shall remain employed by Employer during the Initial Term as set forth
in Paragraph 1(c). Paragraph 8 hereof sets forth certain obligations of Employer
in the event that 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; Disability; Retirement. Except to the extent otherwise
     provided in Paragraph 8 with respect to certain post-Date of Termination
     (as hereinafter defined) payment



                                       3




     obligations of Employer, Executive's employment with Employer shall
     terminate immediately as of the Date of Termination in the event of
     Executive's death, in the event that Executive becomes Disabled (as
     hereinafter defined), or in the event that Executive retires upon or after
     attaining age 65, prior to the fifth anniversary of the Effective Date for
     personal or spousal health reasons or after such fifth anniversary for any
     reason ("Retirement"). The Board shall promptly give Executive written
     notice of any such determination of Executive's Disability and of any
     decision of the Board to terminate Executive's employment by reason
     thereof. In the event of Disability, until the Date of Termination, the
     base salary payable to Executive under Paragraph 3 hereof shall be reduced
     dollar-for-dollar by the amount of disability benefits, if any, paid to
     Executive in accordance with any disability policy or program provided by
     Employer.

          (b) Discharge for Cause. In accordance with the procedures hereinafter
     set forth, the Board may discharge 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 Employer, Executive's employment with Employer shall terminate
     immediately as of the Date of Termination in the event Executive is
     discharged for Cause. Any discharge of Executive for Cause shall be
     communicated by a Notice of Termination to Executive given in accordance
     with Paragraph 14 of this Agreement.

          (c) Termination for Other Reasons. Employer may discharge Executive
     without Cause by giving written notice to Executive in accordance with
     Paragraph 14. Executive may resign from his employment with or without Good
     Reason, by giving written notice to Employer in accordance with Paragraph
     14 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", except for Good
     Reason determined pursuant to clause (G) or (H) of Paragraph 7(d)(vi).
     Except to the extent otherwise provided in Paragraph 8 with respect to
     certain post-Date of Termination obligations of Employer, Executive's
     employment with Employer shall terminate immediately as of the Date of
     Termination in the event 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:

               (i) "Accrued Obligations" shall mean, as of the Date of
          Termination, the sum of (A) 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 Executive as of the Date of Termination to the
          extent not theretofore paid, including any amounts attributable to
          Executive's participation in the Bonus Pool for revenues received by
          Employer through the Date of Termination relating to Executive's
          designated accounts, determined in accordance with Paragraph 4, (C)
          any vacation pay, expense reimbursements and other cash entitlements
          accrued by 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


                                       4




          the period during which they are earned, but no discretionary
          compensation, other than participation in the Bonus Pool, shall be
          deemed earned or accrued until it is specifically approved by the
          Board in accordance with the applicable plan, program or policy.

               (ii) "Cause" shall mean: (A) theft or embezzlement by Executive
          from Employer or any of its subsidiaries or affiliates, (B)
          Executive's conviction of a felony, (C) Executive's drug use or
          intoxication on the job, (D) a material breach of this Agreement by
          Executive that is not cured within thirty (30) days of his or her
          receipt of written notice thereof from Employer, or (E) Executive's
          statutory disqualification from acting as an investment adviser or an
          investment adviser representative under federal or state law.

               (iii) "Change in Control" of any Person shall mean any of the
          following: (A) any sale, transfer or issuance or series of sales,
          transfers and/or issuances of the equity interests in such Person
          which results in any other Person or Persons owning a majority of the
          equity interests in such Person, or (B) any recapitalization,
          reorganization, reclassification, merger, consolidation or exchange to
          which such Person is a party and as a result of which any other Person
          or Persons owns a majority of the equity interests in such Person.

               (iv) "Date of Termination" shall mean (A) in the event of a
          discharge of Executive for or without Cause, the date 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 Executive, the date specified in the written notice to
          Employer, which date shall be no less than thirty (30) days from the
          date of such written notice, (C) in the event of Executive's death,
          the date of Executive's death, (D) in the event of termination of
          Executive's employment by reason of Disability pursuant to Paragraph
          7(a), the date Executive receives written notice of such termination,
          and (E) in the event of Executive's Retirement pursuant to Paragraph
          7(a), the date specified in the written notice to Employer, which date
          shall be no less than thirty (30) days from the date of such written
          notice.

               (v) "Disabled" and "Disability" shall mean that Executive will be
          deemed to be disabled upon the earlier of (A) 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, Executive has been unable to
          perform substantially all of his usual and customary duties under this
          Agreement or (B) the date that a reputable physician selected by the
          Board, and as to whom Executive has no reasonable objection,
          determines in writing that Executive will, by reason of physical or
          mental injury or disease, be unable to perform substantially all of
          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 Executive is disabled, upon reasonable request therefor
          by the Board, Executive shall submit to reasonable medical examination
          for the purpose of determining the existence, nature and extent of any
          such disability.



                                       5




               (vi) "Good Reason" shall mean, without Executive's express
          written consent, the occurrence of any of the following circumstances;
          provided, that (other than with respect to clause (G) or (H) below)
          Executive gives Employer written notice of such circumstances and
          Employer has not cured such circumstances within thirty (30) days of
          its receipt of notice thereof: (A) material and adverse diminution in
          Executive's position, duties, responsibilities or authority (except
          during periods when Executive is unable to perform all or
          substantially all of Executive's duties and/or responsibilities due to
          Disability); (B) a material breach of any term of this Agreement by
          Employer; (C) any reduction in Executive's base salary; (D) Executive
          is required by Employer to relocate his permanent residence; (E) any
          amendment to Sections 5.01, 5.02 or 5.03 of the LLC Agreement that is
          made in contravention of the approvals required for such amendment to
          be effectuated pursuant to Section 13.05 of the LLC Agreement; (F) the
          failure of PVTB to nominate Executive for a second three-year term (or
          the then-current length of the term applicable to members of PVTB's
          board of directors) as a director of PVTB following his initial
          three-year term on the board of directors of PVTB; (G) Executive
          terminates his employment within the ninety (90) day period
          immediately following the twelve (12)-month anniversary of a Change in
          Control of PVTB or any subsidiary of PVTB if such subsidiary is then a
          Member (as defined in the LLC Agreement) of Employer; (H) Executive
          terminates his employment within the ninety (90) day period
          immediately following the twelve (12)-month anniversary of a Change in
          Control of Employer; or (I) any reduction in the Bonus Pool which
          causes Executive's allocation pursuant to Paragraph 4 hereof to be
          less than thirty-five percent (35%) of the revenues attributable to
          Executive's designated accounts.

               (vii) "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
          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) All capitalized terms used in this Paragraph 7(d) but not
          otherwise defined herein shall have the definitions ascribed to them
          in LLC Agreement.

     8. Obligations of Employer Upon Termination. The following provisions
describe the obligations of Employer to Executive under this Agreement upon
termination of employment. Employer and Executive agree that any and all
membership interests in Employer owned by Executive as of the Date of
Termination shall be treated as set forth in the LLC Agreement. Upon a
termination of Executive's employment for any reason other than (a) by Employer
for Cause or (b) by Executive without Good Reason, (x) Executive will be
eligible to receive health insurance benefits under the applicable plans at
premium rates on the same "cost-sharing" basis as was in effect immediately
prior to such termination until Executive is Medicare eligible, and (y) Employer
will provide office space and office services to Executive for a reasonable
period of time, not to exceed twelve (12) months, provided that Executive does
not compete with Employer (as described in Paragraph 12) during such period.
However, except as explicitly provided in this Agreement, nothing in this
Agreement shall limit or otherwise adversely affect any rights which Executive
may have under applicable law, under any other


                                       6



agreement with Employer or any of its affiliates or subsidiaries, or under any
compensation or benefit plan, program, policy or practice of Employer or any of
its affiliates or subsidiaries.

          (a) Death, Disability, Retirement, Discharge for Cause, or Resignation
     Without Good Reason. In the event Executive's employment with Employer
     terminates pursuant to Paragraph 7(a) by reason of the death, Disability or
     Retirement of Executive, or pursuant to Paragraph 7(b) by reason of the
     discharge of Executive by Employer for Cause, or pursuant to Paragraph 7(c)
     by reason of the resignation of Executive other than for Good Reason,
     Employer shall pay to Executive, or his heirs or estate, in the event of
     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 Executive.

          (b) Discharge Without Cause or Resignation for Good Reason. In the
     event that Executive's employment with Employer terminates pursuant to
     Paragraph 7(c) by reason of the discharge of Executive by Employer other
     than for Cause or other than due to Executive's death, Disability, or
     Retirement, or by reason of the resignation of Executive for Good Reason:

               (i) Employer shall pay all Accrued Obligations to 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 Executive;

               (ii) Employer shall continue to pay for a period of eighteen (18)
          months (the "Severance Period") the (A) Executive's then-current
          annual base salary, and (B) bonus amount received by Executive, if
          any, for the year immediately preceding the year in which such
          termination of employment occurs, payable in substantially equal
          monthly installments in accordance with Employer's regular payroll
          practices; and

               (iii) Employer shall continue, for the Severance Period,
          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 executives.

          (c) 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 termination of Executive's
     employment with Employer, Employer shall have no obligations under this
     Agreement, other than its obligations under this Paragraph 8, and Executive
     shall have no obligations under this Agreement, other than Executive's
     obligations under Paragraphs 11 and 12 hereof (to the extent applicable).


                                       7




          (d) Conditions. Any payments or benefits made or provided pursuant to
     this Paragraph 8 are subject to Executive's:

               (i) compliance with the provisions of Paragraphs 11 and 12 hereof
          (to the extent applicable);

               (ii) delivery to Employer of an executed Release and Severance
          Agreement, which shall be substantially in the form attached hereto as
          Attachment A, with such changes therein or additions thereto as needed
          under then applicable law to give effect to its intent and purpose;
          and

               (iii) delivery to Employer of a resignation from all offices and
          fiduciary positions (including membership on the Board and membership
          on PVTB's board of directors) with 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.

     9. 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 Employer,
an accountant chosen by Executive and an independent accountant acceptable to
both Executive and Employer, as the case may be. The committee's determination
shall be binding and conclusive on the parties hereto. Employer shall pay all
fees and expenses of the dispute resolution.

     10. Enforcement. In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, 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.

     11. 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 Employer or any of its
subsidiaries or affiliates, any proprietary information or data of Employer or
any of its subsidiaries or affiliates, which is not generally known to the
public or which could not be recreated through public means and which 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 Employer or the
business affairs and activities of any customer, prospective customer,
individual firm or entity doing business with 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 Employer, and upon termination of his employment for any
reason, said records shall be left with Employer as part of its property.



                                       8



     12. Non-Solicitation; Non-Competition. (a) Executive acknowledges that
Employer and any of 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 (x) during Executive's employment
with Employer and for a period equal to the Severance Period, if any, (if the
termination of employment was by Employer without Cause or by Executive for Good
Reason) or (y) during Executive's employment with Employer and, if Executive's
employment terminates prior to the fifth anniversary of the Effective Date, for
the remainder of the period from the Date of Termination through and including
the fifth anniversary of the Effective Date (if such termination was by Employer
for Cause or by Executive without Good Reason or due to Executive's Disability)
(the "Non-Compete Period"), he will not (except in his capacity as an executive
of Employer) directly or indirectly, for his own account, or as an agent,
executive, 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):

               (i) solicit or induce, or attempt to solicit or induce any client
          or customer of Employer (and with respect to Employer's subsidiaries
          or affiliates, any client or customer of such subsidiaries and
          affiliates with whom Executive had contact, or who was identified to
          Executive, during his employment with Employer) not to do business
          with Employer or any of its subsidiaries or affiliates;

               (ii) solicit or induce, or attempt to solicit or induce, any
          executive, employee, member of the Board, independent contractor, or
          agent of Employer (and with respect to Employer's subsidiaries or
          affiliates, any executive, employee, member of the board of directors
          or managers, as applicable, independent contractor, or agent of such
          subsidiaries and affiliates with whom Executive had contact, or who
          was identified to Executive, during his employment with Employer) to
          terminate his or her relationship with Employer or any of its
          subsidiaries or affiliates; or

               (iii) carry on or be engaged in any business which is similar to
          or in competition with Employer as it exists on the Date of
          Termination.

     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
Employer (existing or specifically planned as of the Date of Termination of
employment).

     The foregoing provisions shall not be deemed to prohibit (i) Executive's
ownership, not to exceed five percent (5%) 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 Employer.


                                       9




     Notwithstanding anything in the foregoing to the contrary, in the event
Employer terminates Executive's employment without Cause or Executive terminates
his employment for Good Reason, Executive may elect to waive any and all rights
he has to any severance payments or benefits hereunder or otherwise, and the
foregoing provisions of this Paragraph 12(a) shall be of no further force and
effect.

          (b) In addition to the foregoing, Executive agrees that during
     Executive's employment with Employer and after the termination of his
     employment with Employer for any reason he will not solicit any business,
     which is similar to or in competition with the business conducted by
     Employer as of the Date of Termination, from any client referred to
     Lodestar or Employer directly by PVTB or its affiliates or from any client
     that is under the primary coverage of another principal or investment
     professional of Employer. Further, Executive agrees that he shall not
     accept any business, which is similar to or in competition with the
     business conducted by Employer as of the Date of Termination, from any such
     client (even if not initially solicited by Executive) for a period of two
     (2) years from the date his employment with Employer is terminated for any
     reason. The list of clients included within the scope of this provision
     will be agreed upon by PVTB, Employer, Executive and the other executive
     officers of Employer from time to time.

          13. Remedies. Executive acknowledges that the restraints and
     agreements herein provided are fair and reasonable, that enforcement of the
     provisions of Paragraphs 11 and 12 will not cause him undue hardship and
     that said provisions are reasonably necessary and commensurate with the
     need to protect 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 11 or 12 above, will result in irreparable harm to the
     business of 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 11 and 12 is inadequate, (c) in addition to any remedy at law or
     equity for such breach, 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
     11 and 12, 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 Employer, whether predicated on this
     Agreement or otherwise, shall not constitute a defense or bar to the
     specific enforcement by 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.

          14. 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:



                                       10



     (a)  If to Executive, at the address set forth on the signature page
          hereof.

     (b)  If to Employer:

          Lodestar Investment Counsel, LLC
          208 South LaSalle Street
          Suite 1710
          Chicago, Illinois 60604
          Attn: William A. Goldstein
          Telecopy No.:  (312) 630-9669

          With a copy to:

          Vedder, Price, Kaufman & Kammholz
          222 North LaSalle Street
          Chicago, Illinois 60601
          Attn:  Jennifer R. Evans
          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.

     15. Indemnification.

          (a) In the event that legal action is instituted against Executive, by
     anyone other than Employer, during or after the Initial Term based on the
     performance or nonperformance by Executive of his duties hereunder,
     Employer will assume the defense of such action by its attorneys or
     attorneys selected by Executive reasonably satisfactory to Employer and
     advance the costs and expenses thereof (including reasonable attorneys'
     fees) without prejudice to or waiver by 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 Employer's Board determines
     that Executive should, in accordance with its certificate of formation,
     operating agreement, or insurance, reimburse such entities, Executive shall
     be liable to 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. Employer shall be entitled to set
     off the reimbursement amount against all sums which may be owed or payable
     by Employer to Executive hereunder or otherwise. The parties shall
     cooperate in the defense of any asserted claim, demand or liability against
     Executive or 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 Paragraph 15 shall be in
addition to any rights which Executive may now or hereafter have under the
certificate of formation or operating agreement of Employer or any of its
affiliates or subsidiaries, under any insurance


                                       11



contract maintained by Employer or any of its affiliates or subsidiaries, or any
agreement between Executive and Employer or any of its affiliates or
subsidiaries.

     16. Full Settlement; No Mitigation. 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 Employer
may have against Executive or others. In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, and
such amounts shall not be reduced whether or not Executive obtains other
employment.

     17. Payment in the Event of Death. In the event payment is due and owing by
Employer to Executive under this Agreement upon the death of Executive, payment
shall be made 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 Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.

     18. 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 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.

     19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the successors and
assigns of Employer. Employer shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of
property or membership interest, liquidation, or otherwise) to all or a
substantial portion of its assets, by agreement in form and substance reasonably
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that 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 Employer in accordance with the operation of law,
and such successor shall be deemed the "Employer" for purposes of this
Agreement.

     20. Tax Withholding. 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 Employer to or for the benefit of Executive under this Agreement or
otherwise. Employer may, at its option: (a) withhold such taxes from any cash
payments owing from Employer to Executive, (b) require Executive to pay to
Employer in cash such amount as may be required to satisfy such withholding
obligations and/or (c) make other satisfactory arrangements with Executive to
satisfy such withholding obligations.



                                       12



     21. 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.

     22. 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.

     23. Jurisdiction and Governing Law. Except as provided in Paragraph 9,
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.

     24. 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
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.

     25. Survival. Provisions of this Agreement shall survive the Initial Term
and the termination of Executive's employment with Employer to the extent
provided herein.

     26. 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.

     27. Amendment. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.

     28. 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.


                                       13




     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

ATTEST:                                 LODESTAR INVESTMENT COUNSEL, LLC

         /s/ Robert Dearborn            By: /s/  William A. Goldstein
- ----------------------------------         -----------------------------------
                                        Title:  Manager

                                        EXECUTIVE

Address: 208 S. LaSalle Street          /s/ William A. Goldstein
         Suite 1710                     -------------------------------------
         Chicago, Illinois  60604       William A. Goldstein



                                       14




                                               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 Lodestar Investment Counsel, LLC ("EMPLOYER")
and William A. Goldstein (hereinafter "EXECUTIVE").

     EXECUTIVE'S employment with EMPLOYER 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 EMPLOYER, its officers, directors, Executives, 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, attorneys' 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 EMPLOYER, 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.

     In consideration for the promises, covenants and payments described herein,
EMPLOYER fully releases EXECUTIVE and his agents, representatives, attorneys,
assigns, heirs, executors, and administrators from any and all liability,
claims, demands, actions, causes of action, suits, grievances, debts, sums of
money, agreements, promises, damages, back and front pay, costs, expenses,
attorneys' fees, and remedies of any type, which EMPLOYER may have and which are
known by EMPLOYER as of the date hereof (and except as otherwise set forth
herein), regarding any act that occurred up to and including the date on which
EXECUTIVE signs this Release and Severance Agreement, including, without
limitation, any claims arising or that arose or may have arisen out of or in
connection with EXECUTIVE'S employment or his separation of employment from
EMPLOYER.

     EXECUTIVE acknowledges that EXECUTIVE'S obligations pursuant to Paragraphs
11 and 12, of the Employment Agreement relating to the use or disclosure of
confidential information, non-competition, and non-solicitation of customers and
employees shall continue to apply to EXECUTIVE and that any claims, actions,
causes of action, suits, damages, and remedies of any type of EMPLOYER resulting
from EXECUTIVE'S breach of such Paragraphs are not released by the immediately
preceding paragraph of this Release and Severance Agreement.

                                      A-1





     This Release and Settlement Agreement supersedes any and all other
agreements between EXECUTIVE and EMPLOYER except agreements relating to
proprietary or confidential information belonging to EMPLOYER, 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 Executive benefit plan, program or
arrangement sponsored or provided by EMPLOYER, including but not limited to the
Employment Agreement and the plans, programs and arrangements referred to
therein.

     EXECUTIVE and EMPLOYER 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 EMPLOYER 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.

 LODESTAR INVESTMENT COUNSEL, LLC             EXECUTIVE

 By:
    ------------------------------            --------------------------------
 Its:                                         William A. Goldstein
     -----------------------------

                                      A-2

EX-12.1

                                                                    Exhibit 12.1


                              PrivateBancorp, Inc.
                    Computation of Earnings to Fixed Charges
                             (Dollars in thousands)

Earnings to fixed charges





                                                           Year Ended December 31
                                               2002          2001         2000           1999           1998       1997
                                               ----          ----         ----           ----           ----       ----
                                                                                                
Including  Interest on Deposits
Earnings:
     Earnings before income taxes            $14,277       $ 8,251       $ 6,688       $ 4,172        $ 4,849     $ 3,387
     Fixed Charges from below                 31,241        37,637        33,331        16,605         13,312      10,081
                                             -------       -------       -------       --------       --------    -------
     Earnings                                $45,518       $45,888       $40,019       $20,777        $18,161     $13,468
Fixed Charges:
     Interest expense                        $31,241       $37,637       $33,331       $16,605        $13,312     $10,081
     Interest Portion of Fixed Rentals (1)         -             -             -             -              -           -
                                             -------       -------       -------       -------        -------     -------
     Total Interest expense                  $31,241       $37,637       $33,331       $16,605        $13,312     $10,081

Ratio to Earning to Fixed Charges               1.46 X        1.22 X        1.20 X        1.25 X         1.36 X      1.34 X


(1) The company is not a party to any capital leases therefore, this item is not
applicable. All leases are operating leases


Excluding  Interest on Deposits
     Earnings before income taxes            $14,277       $ 8,251       $ 6,688       $ 4,172        $ 4,849     $ 3,387
     Fixed Charges from below                  7,264         8,058         4,116           931             19           3
                                             -------       -------       -------       -------        -------     -------
     Earnings before income taxes            $21,541       $16,309       $10,804       $ 5,103        $ 4,868     $ 3,390

Fixed charges:
     Interest expense (excluding
       deposits)                             $ 7,264       $ 8,058       $ 4,116       $   931        $    19     $     3
     Interest Portion of Fixed Rentals (1)   $     -       $     -             -             -              -           -
                                             --------      -------       -------       -------        -------     -------
     Total Interest expense                  $ 7,264       $ 8,058       $ 4,116       $   931        $    19     $     3

Ratio to Earning to Fixed Charges               2.97 X        2.02 X        2.62 X        5.48 X       256.21 X   1130.00 X





(1) The company is not a party to any capital leases therefore, this item is not
applicable. All leases are operating leases

EX-21.1

                                                                    EXHIBIT 21.1

                              LIST OF SUBSIDIARIES

     The following is a list of the direct and indirect subsidiaries of
PrivateBancorp, Inc. as of December 31, 2002:

                                                           Jurisdiction of
Subsidiary                                         Incorporation or Organization
- -----------------------------------                -----------------------------

The Private Bank & Trust Company                               Illinois

Lodestar Investment Counsel, LLC                               Delaware
(a subsidiary of The Private Bank & Trust Company)

The PrivateBank                                                National

PrivateBancorp Capital Trust I                                 Delaware

Private Investment Limited Partnership I                       Illinois

EX-23.1

                                                                    Exhibit 23.1

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following documents of our
report dated January 20, 2003, with respect to the consolidated financial
statements of PrivateBancorp, Inc. included in the Annual Report (Form 10-K) for
the year ended December 31, 2002:

..    Registration Statement (Form S-8 No. 333-43830) pertaining to the
     PrivateBancorp, Inc. Amended and Restated Stock Incentive Plan and the
     PrivateBancorp, Inc. Savings and Retirement Plan (formerly known as The
     PrivateBank and Trust Company Savings and Retirement Plan)

..    Registration Statement (Form S-8 No. 333-88289) pertaining to the
     PrivateBancorp, Inc. Amended and Restated Stock Incentive Plan

                                             /s/ Ernst & Young LLP

Chicago, Illinois
March 3, 2003

EX-99.1

                                                                    Exhibit 99.1

     The following certification is provided by the undersigned Chief Executive
Officer of PrivateBancorp, Inc. On the basis of such officer's knowledge and
belief for the sole purpose of complying with 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                  CERTIFICATION

     In connection with the Annual Report of PrivateBancorp, Inc. (the
"Company") on Form 10-K for the year ended December 31, 2002 as filed with the
Securities and Exchange Commission on March 3, 2003 (the "Report"), I, Ralph
B. Mandell, Chief Executive Officer of the Company, hereby certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

                                      By: /s/ Ralph B. Mandell
                                          --------------------------
                                      Name:    Ralph B. Mandell
                                               Title:   Chairman, President and
                                                        Chief Executive Officer

                                      Date:    March 3, 2003

EX-99.2

                                                                    Exhibit 99.2

     The following certification is provided by the undersigned Chief Financial
Officer of PrivateBancorp, Inc. On the basis of such officer's knowledge and
belief for the sole purpose of complying with 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                  CERTIFICATION

     In connection with the Annual Report of PrivateBancorp, Inc. (the
"Company") on Form 10-K for the year ended December 31, 2002 as filed with the
Securities and Exchange Commission on March 3, 2003 (the "Report"), I, Gary L.
Svec, Chief Financial Officer of the Company, hereby certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

                                         By: /s/ Gary L. Svec
                                             ------------------------------
                                         Name: Gary L. Svec
                                         Title: Chief Financial Officer

                                         Date: March 3, 2003