SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) October 16, 1997
COVEST BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-20160 36-3820609
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(State or other (Commission File (I.R.S.
Employer jurisdiction Number) Identification
No.) No.)
749 Lee Street, Des Plaines, Illinois 60016
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 294-6500
Item 5. OTHER EVENTS
On Thursday, October 16, 1997, the Company issued a press
release pertaining to net income for the quarter ended
September 30, 1997. The text of the press release is attached
hereto as Exhibit 99.1.
Item 7. Exhibit 99.1
Dated: October 16, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 16, 1997
By:
Name: Larry G. Gillie
Title: President &
Chief Executive Officer
By:
Name: Paul A. Larsen
Title: Senior Vice President &
Chief Financial Officer
Item 7 EXHIBIT 99.1
CoVest Bancshares, Inc. Announces Improved Third Quarter
Results
DES PLAINES, IL, Oct. 16, 1997 -- CoVest Bancshares, Inc.
(Nasdaq/COVB), formerly FirstFed Bancshares, Inc. and the
holding company for CoVest Banc, Des Plaines, Illinois,
announced net income for the quarter ended September 30,
1997 was $1,040,000, or $.32 per share, nearly a 183 percent
increase over the loss of $1,257,000, a loss of $.35 per share for
the quarter ended September 30, 1996. The increase in
quarterly income resulted primarily from the
absence of the $3,070,000 pre tax special assessment to
recapitalize the Savings Association Insurance Fund
(SAIF) and the corresponding decrease in income tax expense.
Without the special assessment and income tax reduction, the net
income for the third quarter of 1996 would have been $731,000, or
$.20 per share. Excluding the special assessment, net income
for the three months ended September 30,
1997 represents an increase of 42.3%. Returns on average
assets and average equity during the third quarter were 0.80%
and 9.07% respectively in 1997, compared to a negative 0.80% and
negative 9.45% in 1996. Without the 1996 special assessment and
tax benefit, the return on average assets and average equity
for the third quarter would have been 0.46% and 5.49%
respectively. Net income for the nine months ended September 30, 1997
totaled $3,345,000, or $1.02 per share, compared to $984,000, or
$.27 per share, for the comparable period in 1996, an increase
of 240%. Returns on average assets and average equity for
the nine months were 0.83% and 9.52% respectively in 1997,
compared to 0.21% and 2.38% in 1996. Without the 1996 special
assessment and tax benefit, the return on average assets and average
equity for the first nine months of 1996, would have been 0.64% and
7.19% respectively. Net interest income for the third
quarter of 1997 was $3,872,000, an increase of $535,000 or 16% from
the like period in 1996. The Company's net interest margin
for the quarter increased to 3.08% from 2.16% for the third
quarter of 1996. The interest rate spread increasing by 84 basis
points, to 2.54% from 1.70% accounted for the majority of the
improved results.
Non-interest income, excluding security gains,
increased by $121,000 or 26% for the third quarter of 1997 from the
like period in 1996. On a year-to-date basis, non interest
income, excluding security gains, increased by 32% from the first
nine months of 1996. Both increases in loan and deposit
related charges and fees account equally for the improvement.
Non-interest expense decreased from $5,573,000 for
the third quarter of 1996 to $2,749,000 for the third quarter
of 1997. This 51% decrease is directly related to the
previously mentioned special SAIF assessment. Without the
$3,070,000 charge, operating expenses would have increased by
$246,000. For the nine months ended September 30, 1997, non-
interest expenses were $8,058,000 versus $10,980,000 for the first
nine months of 1996. Without the special SAIF assessment,
operating expenses for 1996 would have been $7,910,000, versus the
$8,058,000 reported for the first nine months of 1997, or
a 2% increase.
Total assets decreased from $541,169,000 at December
31, 1996 to $527,468,000 as of September 30, 1997. Total
loans receivable increased by almost $21 million during the
first nine months, even after the Bank securitized $17.8 million in
fixed rate mortgage loans. These are now carried in the
Mortgage-Backed Securities section of the Corporation's balance
sheet. The loan growth has been centered in higher yielding
commercial, leases, and commercial real estate loans.
Non-performing assets comprised .22 percent of total
assets at September 30, 1997. This is the same ratio that was
experienced at June 30, 1997. Of this total, over 68% of
the non-performing loans are single family mortgages, on
which the Company has not incurred a loss for at least the last six
years. At September 30, the Allowance for Possible Loan Losses
was $1,532,000 and continued to cover non-performing loans by
more than 133 percent. The provision for possible loan losses
continued to grow as $300,000 was provided for consumer
loans and $130,000 was provided for commercial related loans.
Deposits decreased by $15.6 million and short-term
borrowings increased by $3.8 million during the nine
months ended September 30, 1997. The net result is that total
liabilities decreased by $13.5 million from year-end
1996.
Stockholders' equity of the Company totaled
$49,729,000 at September 30, 1997. The number of shares issued and
outstanding was 2,930,572, and the book value per common share
outstanding was $16.97. Approximately 24,000 shares remain to be
purchased under the current stock repurchase program.
At September 30, 1997, CoVest Banc's risk-based
capital was $46,714,000 and its core and tangible capital was
$45,182,000. Therefore, the risk-based, core and tangible capital
ratios at September 30, 1997 were 16.51%, 8.60% and 8.60%
respectively, which substantially exceed all regulatory requirements.
According to Larry G. Gillie, President of CoVest
Bancshares Inc., "We have accomplished two of our major
goals this year with our name change at the Bank and Company
level in early June and our conversion from a federally chartered
thrift to a national bank on July 31, 1997."
"Our name change has been well received by the
communities that we serve, especially in the business sector. We
have added an experienced and recognized Executive Vice President to
head our Commercial Lending departments along with four
commercial lenders to generate commercial business and put us in a
strong position to take advantage of the business opportunities
that our national bank status affords us."
"Our commercial business will continue to improve
our operating results and help diversify our balance sheet
structure which will enhance our stockholder value."
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
(Dollars in thousands) SEPT 30, DEC 31,
1997 1996
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ASSETS
CASH AND CASH EQUIVALENTS
Cash & Amounts Due from
Depository Institutions $13,695 $12,837
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TOTAL CASH AND CASH EQUIVALENTS $13,695 $ 12,837
INVESTMENTS:
Securities Available-for-Sale 36,891 53,751
Mortgage-Backed Securities and
Related Securities Available-
for-Sale 95,682 111,935
FHLB and Federal Reserve Stock 4,089 7,190
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TOTAL INVESTMENTS $136,662 $172,876
LOANS RECEIVABLE
Mortgage Loans 238,535 253,473
Commercial Loans, Leases and
Real Estate 62,912 29,596
Consumer Loans 59,356 56,900
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TOTAL LOANS RECEIVABLE $360,803 $339,969
Less Allowance for Possible
Loan Loss (1,532) (1,424)
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LOANS RECEIVABLE, NET 359,271 338,545
ACCRUED INTEREST RECEIVABLE 4,354 3,608
PREMISES AND EQUIPMENT 9,853 9,859
OTHER ASSETS 3,633 3,444
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TOTAL ASSETS $527,468 $541,169
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits 386,468 $402,090
Short -Term Borrowings
and Securities Sold Under
Agreement to Repurchase 57,441 53,690
Long - Term Advances From
Federal Home Loan Bank 25,000 25,000
Advances From Borrowers For
Taxes & Insurance 1,400 3,724
Accrued Expenses & Other
Liabilities 7,430 6,721
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TOTAL LIABILITIES 477,739 491,225
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share;
5,000,000 authorized shares;
3,406,616, shares issued at
9/30/97 and 12/31/96. 34 34
Additional Paid-in Capital 22,450 22,155
Retained Earnings 35,861 33,990
Treasury Stock, at cost,
476,044, and 343,300 shares
held at 9/30/97, and
12/31/96 respectively (8,591) (5,838)
ESOP Loan (685) (858)
Unearned Stock Awards (73) (73)
Unrealized Gain (Loss) On Assets
Available - For - Sale 733 534
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TOTAL STOCKHOLDERS' EQUITY $ 49,729 $ 49,944
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $527,468 $541,169
=====================
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED
(Dollars in thousands) SEPT 30 SEPT 30 SEPT 30 SEPT 30
1997 1996 1997 1996
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INTEREST INCOME
Loans Receivable $ 7,133 $ 6,900 $20,772 $19,818
Mortgage-Backed & Related
Securities 1,623 2,809 5,254 8,774
Securities 689 1,213 2,573 3,016
Other Interest and Dividend Inc 160 112 606 611
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TOTAL INTEREST INCOME 9,605 11,034 29,205 32,219
INTEREST EXPENSE
Deposits 4,716 5,887 14,315 18,039
Advances from Fed. Home Loan Bk 823 1,515 2,635 4,031
Other Borrowed Money 194 295 705 711
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TOTAL INTEREST EXPENSE 5,733 7,697 17,655 22,781
NET INTEREST INCOME 3,872 3,337 11,550 9,438
Prov. for Possible Loan Losses 430 300 1,183 832
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NET INTEREST INCOME AFTER PROV.
FOR POSSIBLE LOAN LOSSES 3,442 3,037 10,367 8,606
NON-INTEREST INCOME
Loan Charges and Servicing Fees 252 183 778 568
Deposit Related Charges and Fees 229 156 621 415
Gain on Sale of Securities 316 54 1,190 2,561
Other 112 133 223 247
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TOTAL NON-INTEREST INCOME 909 526 2,812 3,791
NON-INTEREST EXPENSE
Compensation and Benefits 1,382 1,203 3,881 3,572
Occupancy and Equipment 388 314 1,131 1,041
Federal Deposit Insurance Premium 65 3,336 138 3,866
Data Processing 222 186 643 591
Advertising and Name Change Exp. 130 111 472 236
Other 562 423 1,793 1,674
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TOTAL NON-INTEREST EXPENSE 2,749 5,573 8,058 10,980
INCOME BEFORE TAXES $ 1,602 $(2,010) $ 5,121 $ 1,417
Income Tax Provision 562 (753) 1,776 433
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NET INCOME $ 1,040 $(1,257) $ 3,345 $ 984
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COVEST BANCSHARES INC.
PERFORMANCE RATIOS THREE MONTHS ENDED NINE MONTHS ENDED
(UNAUDITED) Sept 30, Sept 30, Sept 30, Sept 30,
1997 1996 1997 1996
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Net Interest Margin 3.08% 2.16% 2.97% 2.07%
Net Interest Spread 2.54% 1.70% 2.47% 1.58%
Non-Performing Assets to
Total Assets at End
of Period 0.22% 0.14% 0.22% 0.14%
Allowance for Possible
Loan Losses to
Non-Performing Loans 1.33x 1.67x 1.33x 1.67x
Annualized Return on
Average Assets 0.80% -0.80% 0.83% 0.21%
Annualized Return on
Average Equity 9.07% -9.45% 9.52% 2.38%
Ratio of Operating Expense to
Average Total Assets,
Annualized 2.12% 3.60% 2.00% 2.65%
Ratio of Net Interest Income
to Non-Interest Expense,
Annualized 1.41x .60x 1.43x .86x
Earnings Per Common Share
Primary $ .32 ($ .35) $ 1.02 $ .27*
Fully Diluted $ .31 ($ .35) $ .99 $ .27*
Book Value per Share $16.97 $ 15.76 $l6.97 $15.76
Market Value per Share $24.25 $ 16.50 $24.25 $16.50
Stockholders' Equity
as of Sept 30
(in thousands) $49,729 $51,633 $49,729 $51,633
* adjusted for stock split
