UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 15, 1998
COVEST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20160 36-3820609
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation identification
number)
749 Lee Street, Des Plaines, Illinois 60016
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (847) 294-6500
Item 5. Other Events
On July 15, 1998, the Company issued a press release pretaining to
second quarter 1998 results. The text of the press release is attached
hereto as Exhibit 99.1.
Item 7. Exhibit 99.1
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 15, 1998
COVEST BANCSHARES, INC.
By: /s/__________________________
Larry G. Gillie
President and
Chief Executive Officer
By: /s/___________________________
Paul A. Larsen
Senior Vice President
and Chief Financial Officer
Exhibit 99.1
CoVest Bancshares, Inc. Announces Second Quarter Results
DES PLAINES, IL July 15, 1998 - CoVest Bancshares, Inc. (Nasdaq/COVB),
the holding company for CoVest Banc, Des Plaines, Illinois, today
announced that net income for the three months ended June 30, 1998
totaled $972,000, or $0.23 (basic) and $0.21 (diluted) earnings per
share, versus $987,000, or $0.23 (basic) and $0.22 (diluted) earnings
per share for the like quarter in 1997.
For the first six months of 1998, the Company earned $1,982,000 versus
$2,304,000 for the like period in 1997. This represents $0.47 (basic)
and $0.43 (diluted) versus $0.53 (basic) and $0.51 (diluted) for the
first six months of 1997.
The Company's net interest margin increased 3 basis points, to 2.93%
for the second quarter of 1998 from 2.90% for the second quarter of
1997. The interest rate spread averaged 2.50% for 1998 and 2.41% during
the second quarter of 1997.
The Company's net interest income totaled $3,972,000 for the three
months ended June 30, 1998, compared to $3,855,000 for the second
quarter of 1997.
The provision for possible loan losses was $769,000 for the second
quarter of 1998 versus $402,000 for the like period in 1997. This
increases our reserve for possible loan losses to 1.12% of total loans
as of June 30, 1998.
During the first quarter the Company funded over $31 million commercial
loans, commercial real estate, construction, and leases, and during the
second quarter, the fundings grew to over $42 million. On a year-to-
date basis the Company has funded over $73 million in new commercial
related loans. The composition of the loan portfolio continues to change
as commercial loans now represent 2%, commercial real estate loans
represent 17%, multi-family loans represent 6%, construction loans
represent 4%, and leases represent 9%. These loans now represent 38% of
total loans receivable, up from 23% at year-end 1997, and up from less
than 12% at June 30, 1997. With $ 35 million of approved and accepted
commitments outstanding as of June 30, 1998, which should be funded in
the next 90 days, management expects the composition of commercial
loans, commercial real estate, construction, and leases to continue to
grow and become a larger percentage of the overall loan portfolio and
assets mix.
During the first six months of 1998, residential mortgage loans
decreased by $42 million as borrowers took advantage of lower rates and
refinanced their mortgages. The CoVest Banc mortgage center in McHenry,
Illinois processed many of the refinanced mortgages which are then
sold on a service released basis to the investor market. The mortgage
center has over $4 million of loans for sale outstanding at June 30,
1998. The net overall result was that loans increased by $34 million.
Non-interest income excluding security gains increased $595,000, or
114%, from the comparable quarter last year. Loan charges, sales and
servicing fees increased by 188%, or $488,000 to $747,000, primarily
from the activity being generated by the mortgage center. Deposit
related fees increased by $33,000 to $247,000, and income from sales of
annuities and securities by CoVest Investments increased by $54,000 to
$69,000. Realized gains of $463,000 on sales of securities were also
recorded. This is a increase of $152,000 in net gains on security sales
from the comparable quarter in 1997.
Non-interest expense increased $508,000, or 18%, for the second quarter
of 1998 from the comparable quarter in 1997. Over $370,000 of this
increase relates to commissions and employee benefits attributed to the
mortgage center. Other operating expense increases include $148,000 due
in part to occupancy costs at the mortgage center and a $53,000 increase
in data processing expenses. These increases were offset by a $138,000
decrease in advertising in 1998 from 1997 advertising expenses related
to the Bank's name change.
The Company's assets increased by $5 million to $588 million as of June
30, 1998, from $583 million at December 31, 1997.
At June 30, 1998, the allowance for possible loan losses amounted to
$4.6 million, or 579% of non-performing loans as compared to a 305%
coverage at December 31, 1997.
At June 30, 1998, total non-performing assets amounted to $872,000, or
0.15% of total assets compared to $1.3 million, or 0.22% of total assets
at December 31, 1997.
Total deposits decreased by 6% to $348 million from $372 million at
December 31, 1997. This decrease was primarily a reduction in
certificates of deposits as the Company reduced its dependency on long
term fixed rate deposits.
Stockholders' equity in CoVest Bancshares, Inc. totaled $47.7 million at
June 30, 1998. At the end of the second quarter, the number of common
shares outstanding was 4,326,803 and the book value per common share
outstanding was $11.02. The Company repurchased over 69,000 shares
during the second quarter at an average price of $18.33. This compares
to December 31, 1997, when the number of common shares outstanding was
4,365,761 and the book value per common share outstanding was $11.06.
The Company announced its most recent stock repurchase plan on May 12,
1998. Approximately 52,000 shares remain to be repurchased under the
current stock repurchase program.
Returns on average equity and average assets during the second quarter
were 8.12% and 0.68% respectively during 1998 compared to 7.91% and
0.72% in 1997. Returns on average equity and average assets for the
first six months of 1998 was 8.24% and 0.68% respectively during 1998
compared to 9.22% and 0.84% in 1997.
In discussing the second quarter, Larry G. Gillie, President, made the
following comments: "We are continuing to restructure our loan
portfolio as befits a commercial bank, and we are increasing non-
interest income to reduce our dependency on the slope of the yield
curve. At the same time, we have kept our operating expenses under
control and continue to change our mix of deposits toward transaction
accounts and away from long-term certificates of deposit."
COVEST BANCSHARES, INC.
FINANCIAL HIGHLIGHTS
financials in thousands, except per share
Selected Financial Condition Data:
June 30, 1998 Dec. 31,1997 Change
(unaudited)
TOTAL ASSETS $ 588,350 $ 582,722 1%
Investment Securities 138,949 164,172 -15%
Loans Receivable, net 410,584 377,509 9%
Deposits 348,080 371,752 -6%
Stockholders' Equity 47,688 48,294 -1%
Selected Asset Quality Ratios:
Total non-performing
loans 800 1,304 -39%
Non-performing loans to
Loans Receivable, Net 0.19% 0.35% -44%
Total non-performing
assets 872 1,306 -33%
Non-performing assets to
Total Assets 0.15% 0.22% -34%
Total Allowance for Loan
Losses 4.632 3.979 16%
Allowance for Loan Losses to
non-performing loans 5.79x 3.05x 95%
Three Months Ended June 30 1998 1997
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 3,972 $ 3,855 3%
Provision for loan lsses 769 402 91%
Net Interest Income after
provision for loan
losses 3,203 3,453 -7%
Non-interest income,
excluding security
gains 1,116 521 114%
Security Gains 463 311 49%
Non-interest expense 3,305 2,796 18%
Income before income taxes 1,477 1,489 -1%
Income tax expense 505 502 1%
Net income $ 972 $ 987 -2%
Earnings per share:
Basic $ 0.23 $ 0.23 0%
Diluted $ 0.21 $ 0.22 -5%
Selected Operating Ratios:
Return on Average Assets 0.68% 0.72% -6%
Return on Average Equity 8.12% 7.91% 3%
Operating expenses to
average assets 2.31% 2.03% 14%
Net interest rate spread 2.50% 2.41% 4%
Net interest rate margin 2.93% 2.90% 1%
Six Months Ended June 30 1998 1997
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ $ 8,016 $7,677 4%
Provision for loan losses 1,168 753 55%
Net Interest Income after
provision for loan losses 6,848 6,924 -1%
Non-interest income, excluding
security gains 2,046 1,029 99%
Security gains 719 874 -18%
Non-interest expense 6,596 5,309 24%
Income before income taxes 3,017 3,518 -14%
Income tax expense 1,035 1,214 -15%
Net income $ 1,982 2,304 -14%
Earnings per share:
Basic $ 0.47 $ 0.53 -11%
Diluted $ 0.44 $ 0.51 -14%
Selected Operating Ratios:
Return on Average Assets 0.68% 0.84% -19%
Return on Average Equity 8.24% 9.22% -11%
Operating expenses to
average assets 2.27% 1.94% 17%
Net interest rate spread 2.48% 2.42% 2%
Net interest rate margin 2.90% 2.91% 0%
