Chicago's PrivateBancorp (NASDAQ:PVTB) founded itself, not surprisingly, to focus on private banking. While that term was once quite popular with many European banks, and did include some allusions to bank secrecy laws in countries like Switzerland, that's not so much the case today. These days, private banking mostly refers to a banking service model that targets affluent individuals, offering exceptional service levels and additional operations like wealth management and tax/inheritance planning.

At the risk of oversimplification, PrivateBancorp does not want to be TCF Financial (NYSE:TCB), Citigroup (NYSE:C), or Comerica (NYSE:CMA). It's not looking for regular folks to open checking accounts or use its debit and ATM cards. For this company, the issue isn't carpeting the Midwest with branches and ATMs, but ratcheting up the level of service offered, so that wealthier individuals will wish to do the bulk of their fee-rich banking with PrivateBancorp.

So far, the plan is working. PrivateBancorp is still rather small (less than $4 billion in total assets), but growing quickly. Reported net income rose nearly 40% this quarter; it would have shown good growth even without the inclusion of a gain on sale.

Net interest income rose 37%, margins actually improved a bit from last year, and non-interest income was strong as well (including a 50% rise in fees from wealth management). Oddly enough, whereas most service-intensive banks sport high efficiency ratios (good service isn't cheap), PrivateBancorp's efficiency ratio is below that of many banks that don't specialize in private banking.

There are, nevertheless, some issues here to keep in mind. First, the company's cost of funds is rather high, and high-cost brokered deposits are about one-quarter of the deposit base. Second, the bank does a lot of its lending in commercial real estate, which can present above-average risks. Finally, the valuation here is no particular bargain, even when you bake in the assumption of strong above-average growth.

All in all, PrivateBancorp looks to this Fool like a bank well worth watching, but I wouldn't say it's worth your own personal investment dollars yet.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).