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) July 17, 1997
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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 (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
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
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Item 5. Other Events
On Thursday, July 17, 1997, the Company issued a press release
pertaining to net income for the quarter ended June 30, 1997.
The text of the press release is attached hereto as Exhibit 99.1.
Item 7. Exhibit 99.1
Dated: July 17, 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: July 17, 1997 COVEST BANCSHARES, INC.
By: /s/ Larry G. Gillie
Name: Larry G. Gillie
Title: President &
Chief Executive Officer
By: /s/ Paul A. Larsen
Name: Paul A. Larsen
Title: Senior Vice President &
Chief Financial Officer
Item 7 EXHIBIT 99.1
CoVest Bancshares Inc. Announces Second Quarter Earnings
DES PLAINES, IL, July 17, 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
June 30, 1997 was $987,000, or $.31 per share, compared to $283,000, or
$.08 per share for the quarter ended June 30, 1996. This represents an
increase of $704,000 or 249%. These results come from an increase
in net interest income of $853,000 or 28%, an increase in non-interest
income of $453,000 or 120%, and only a $105,000 or 4 % increase in
operating expenses.
Net income for the six months ending June 30, 1997 was $2.3
million, a slight increase of $63,000 from the $2.2 million for the
same period in 1996. Earnings per share for the six months of 1997 is
$.71 per share versus $.61 per share for the like period in 1996. The
composition of the earnings, however, has changed dramatically between
these two six month periods. Gains from the sale of securities
decreased by $1,633,000. The balance sheet restructuring which began
in 1996 generated $2,507,000 from the sales of long-term fixed-rate
assets versus $874,000 security gains in 1997 due to sales of thrift
and commercial bank stocks at the holding company level. The net
interest income for the six months ended June 30, 1996 was $6.1 million
versus almost $7.7 million for the first six months of 1997. This
represents an increase of almost $1.6 million or 26% between the two
periods. The provision for possible loan losses for the quarter ended
June 30, 1997, was comprised of $300,000 for credit cards and $102,000
for commercial and commercial real estate loans. This compares to the
$342,000 which was provided in the second quarter of 1996. During that
1996 period $300,000 was also provided for possible credit card losses.
For the first six months of 1997, $753,000 has been provided for
possible loan losses versus $532,000 during the first six months of
1996. Net charged off loans for the first six months of 1996 were
$657,000 compared to $688,000 for the six months ended June 30, 1997.
The losses continue to be centered in the credit card portfolio were
personal bankruptcies remain a primary concern.
Non-interest income, excluding security gains, increased by
$271,000 or 36% for the six months ending June 30, 1997. Loan charges
and service fees increased from $180,000 for the second quarter of 1996
to $259,000 for the second quarter in 1997 . This increase is
primarily the result of mortgage loan servicing fees paid to the Bank
by the Federal Home Loan Mortgage Corporation on the fixed rate
mortgages that have previously been securitized. Deposit related
charges and fees have risen by over 50% between the second quarter of
1997 versus the second quarter of 1996, as additional revenue producing
services continue to be introduced.
Total non-interest expenses grew by $105,000 from the second
quarter of 1996. This represents a 4% increase. Compensation and
benefits expense increased by slightly over 2%, while federal deposit
insurance premium expense decreased by $198,000 . The largest increase
in expenses was in advertising and name change expense, which rose by
$171,000 as both the Bank and the Corporation changed there names to
CoVest. The name change from First Federal Bank for Savings was needed
to increase both commercial and retail customer awareness of our
services in the various market areas we serve. The bulk of these
expenses have now been recognized.
Total assets decreased from $541,169,000 at December 31, 1996 to
$536,418,000 as of June 30, 1997. Total loans receivable in all
categories increased by $22 million, with the largest growth coming in
commercial, leases and commercial real estate loans. Total earnings
assets yielded 7.48 percent for the second quarter of 1997 versus 7.01
percent for the like quarter in 1996. The increase in yield is the
result of the ongoing balance sheet restructuring with began in 1996
which calls for continuing sale of long-term fixed rate securitized
mortgage backed securities and their replacement with higher yielding
commercial related loans.
Non-performing assets comprised .22 percent of total assets at
June 30, 1997. This is in line with the .23 percent as of March 31,
1997. Of this total, over 68 percent of non-performing loans are
single family mortgages, on which the Company has not incurred a loss
for at least the last 6 years. At quarter end, our Allowance for
Possible Loan Losses was $1,489,000 and continued to cover non-
performing loans by more than 143 percent.
Deposits increased by $2.5 million and short term borrowings
decreased by $6.6 million during the six months ended June 30, 1997
from year-end 1996. The cost of funds was 5.07 percent on average for
the quarter, as compared to a cost of 5.50 percent on average for the
same quarter in 1996.
Net interest margin for the quarter ended June 30, 1997 was 2.90
percent versus 1.99 percent for the second quarter of 1996. At the
same time the net interest spread increased by 88 basis points, which
was on average for the second quarter of 1997, 2.41 percent. For the
six months ended June 30, the net interest margin for 1997 was 2.91
percent versus 2.02 percent in 1996.
Stockholders' equity in CoVest Bancshares, Inc. totaled almost $50
million as of June 30, 1997. The number of common shares outstanding
was 2,985,021 and the book value was $16.72 as compared to $16.30 as of
December 31, 1996. The Company completed its tenth stock repurchase
plan and on June 24, 1997, initiated its eleventh plan which authorizes
it to repurchase up to an additional 100,000 shares.
CoVest Bank's Core Capital and Risk-based Capital ratios stood at
8.32 percent and 16.79 percent as of June 30, 1997, respectively, which
substantially exceed all regulatory requirements.
As of June 30, 1997, CoVest Bancshares had consolidated assets of
$536.4 million. The Bank operates three full-service offices in
Arlington Heights, Des Plaines and Schaumburg.
According to Larry G. Gillie, President of CoVest Bancshares, "We
continue to position the Bank and our balance sheet to look more like
that of a community bank. In fact, we have just received regulatory
approval to convert from a federally insured thrift organization
supervised by the Office of Thrift Supervision to a national bank that
is regulated by the Office of the Comptroller of the Currency. This
will be completed by July 31, 1997. We completed our name change at
both the Corporate and Bank level on June 2, 1997 to CoVest Bancshares
and CoVest Banc. We believe the restructuring of our balance sheet,
the name change and changing our charter will allow us the flexibility
and the opportunity to better meet the demands of communities we
serve."
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
(Dollars in thousands) JUN 30, DEC 31,
1997 1996
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ASSETS
CASH AND CASH EQUIVALENTS
Cash & Amounts Due from
Depository Institutions $19,770 $12,837
Federal Funds Sold 0 0
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TOTAL CASH AND CASH EQUIVALENTS 19,970 12,837
INVESTMENTS:
Securities Available - for - Sale 52,326 53,751
Mortgage-Backed Securities and
Related Securities Available -
for - Sale 82,881 111,935
Federal Home Loan Bank Stock 3,620 7,190
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TOTAL INVESTMENTS 138,827 172,876
LOANS RECEIVABLE
Mortgage Loans 258,722 253,473
Commercial Loans, Leases and
Real Estate 44,033 29,596
Consumer Loans 59,663 56,900
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TOTAL LOANS RECEIVABLE 362,418 339,969
Less Allowance for Possible Loan Loss (1,489) (1,424)
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LOANS RECEIVABLE, NET 360,929 338,545
ACCRUED INTEREST RECEIVABLE 4,127 3,608
PREMISES AND EQUIPMENT 9,827 9,859
OTHER ASSETS 2,738 3,444
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TOTAL ASSETS $536,418 $541,169
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $404,578 $402,090
Short -Term Borrowings and Securities
Sold Under Agreement to Repurchase 47,114 53,690
Long - Term Advances From
Federal Home Loan Bank 25,000 25,000
Advances From Borrowers For
Taxes & Insurance 3,007 3,724
Accrued Expenses & Other Liabilities 6,820 6,721
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TOTAL LIABILITIES 486,519 491,225
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share;
7,500,000 authorized shares; 3,406,616,
shares issued at 6/30/97 and 12/31/96. 34 34
Additional Paid-in Capital 22,099 22,155
Retained Earnings 35,255 33,990
Treasury Stock, at cost, 421,595,
and 343,300 shares held at 6/30/97,
and 12/31/96 respectively (7,265) (5,838)
ESOP Loan (685) (858)
Unearned Stock Awards (73) (73)
Unrealized Gain (Loss) On Assets
Available - For - Sale 534 534
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TOTAL STOCKHOLDERS' EQUITY 49,899 49,944
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $536,418 $541,169
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COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED
(Dollars in thousands) JUN 30, JUN 30, JUN 30, JUN 30,
1997 1996 1997 1996
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INTEREST INCOME
Loans Receivable $7,001 $6,470 $13,639 $12,918
Mortgage-Backed & Related Securities 1,696 2,868 3,632 5,965
Securities 954 1,011 1,913 1,803
Other Interest and Dividend Income 271 153 416 499
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TOTAL INTEREST INCOME 9,922 10,502 19,600 21,185
INTEREST EXPENSE
Deposits 4,860 6,033 9,600 12,152
Advances from Fed. Home Loan Bank 954 1,156 1,862 2,516
Other Borrowed Money 253 311 461 416
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TOTAL INTEREST EXPENSE 6,067 7,500 11,923 15,084
NET INTEREST INCOME 3,855 3,002 7,677 6,101
Prov. for Possible Loan Losses (402) (342) (753) (532)
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NET INTEREST INCOME AFTER PROV.
FOR POSSIBLE LOAN LOSSES 3,453 2,660 6,924 5,569
NON-INTEREST INCOME
Loan Charges and Servicing Fees 259 180 526 385
Deposit Related Charges and Fees 214 141 392 259
Gain on Sale of Securities 311 0 874 2,507
Other 48 58 111 114
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TOTAL NON-INTEREST INCOME 832 379 1,903 3,265
NON-INTEREST EXPENSE
Compensation and Benefits 1,281 1,251 2,499 2,441
Occupancy and Equipment 348 357 743 727
Federal Deposit Insurance Premium 66 264 73 530
Data Processing 215 192 421 405
Advertising and Name Change Expense 248 77 342 125
Other 638 550 1,231 1,179
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TOTAL NON-INTEREST EXPENSE 2,796 2,691 5,309 5,407
INCOME BEFORE TAXES 1,489 348 3,518 3,427
Income Tax Provision (502) (65) (1,214) (1,186)
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NET INCOME $987 $283 $2,304 $2,241
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COVEST BANCSHARES INC.
PERFORMANCE RATIOS THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED) JUN 30, JUN 30, JUN 30, JUN 30,
1997 1996 1997 1996
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Net Interest Margin 2.90% 1.99% 2.91% 2.02%
Net Interest Spread 2.41% 1.53% 2.42% 1.53%
Non-Performing Assets to Total
Assets at End of Period 0.22% 0.12% 0.22% 0.12%
Allowance for Possible Loan Losses
to Non-Performing Loans 1.43x 1.46x 1.43x 1.46x
Annualized Return on
Average Assets 0.72% 0.20% 0.84% 0.20%
Annualized Return on
Average Equity 7.91% 2.04% 9.22% 2.04%
Ratio of Operating Expense to
Average Total Assets,
Annualized 2.03% 1.72% 1.94% 1.72%
Ratio of Net Interest Income
to Non-Interest Expense,
Annualized 1.38x 1.12x 1.47x 1.12x
Earnings Per Common Share
Primary $ 0.31 $ 0.08 $ 0.71 $ 0.61
Fully Diluted 0.31 0.08 0.71 0.61
Book Value per Share $16.70 $16.12 $16.70 $16.12
Market Value per Share $18.38 $17.63 $18.38 $17.63
Stockholders' Equity as of
June 30 (in thousands) $49,899 $54,810 $49,899 $54,810
