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) April 16, 1998
COVEST BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-20160 36-3820609
(State or other (Commission File No.) (IRS Employer
jurisdiction of Number)
Incorporation)
749 Lee Street, Des Plaines, Illinois 60016
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 847-294-6500
Page 2
Item 5. Other Events
On April 16, 1998, the Company issued a press release pertaining to
First 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 Securites Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: April 16, 1998
COVEST BANCSHARES, INC.
By: /S/ Larry G. Gillie
Larry G. Gillie
President and
Chief Executive Officer
By: /S/ Paul A. Larsen
Paul A. Larsen
Senior Vice President and
Chief Financial Officer
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Exhibit 99.1
CoVest Bancshares, Inc. Announces First Quarter Results
DES PLAINES, IL April 16, 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 March 31, 1998 totaled $1,009,000, or
$0.24 (basic) and $0.22 (diluted) earnings per share, a
decrease of 23% from the $1,317,000, or $0.30 (basic) and
$0.29 (diluted) earnings per share for the like quarter in
1997.
The composition of the loan portfolio continues to change as
commercial loans, commercial real estate, construction, and
leases increased by $31 million, or 36%, from year-end 1997.
These loans and leases now represent almost 30% of total
loans receivable, up from 23% at year-end 1997 and up from
less than 10% at March 31, 1997. Management expects the
composition of commercial loans, commercial real estate,
construction, and leases to become a larger percentage of
the overall loan portfolio and assets mix, as $43 million of
approved and accepted commitments were outstanding as of
March 31, 1998. Total loans increased by $15 million during
the first quarter of 1998.
During the first quarter of 1998, residential mortgage loans
decreased by $19 million as borrowers took advantage of
lower rates and refinanced their mortgages, many through our
new mortgage center. Almost $4 million of loans available
for sale were outstanding at quarter end 1998. These were
originated by our mortgage center. Located in McHenry,
Illinois, this office, which opened on February 12, 1998,
makes residential mortgages that are then sold on a service
released basis to the secondary market.
Returns on average equity and average assets during the
first quarter were 8.46% and 0.69% respectively during 1998
compared to 10.73% and 0.96% in 1997.
Net interest income increased by $222,000, or 6%, for the
first quarter of 1998 compared to the first quarter of 1997.
The Company's net interest margin decreased 6 basis points,
or 2%, to 2.87% for the first quarter of 1998 from 2.93% for
the first quarter of 1997. The interest rate spread
averaged 2.44% for 1998 and 2.45% during the first quarter
of 1997. The net interest margin for the fourth quarter of
1997 was 2.91% and the net interest spread was 2.42%. We
entered into an arbitrage transaction during the second half
of the fourth quarter of 1997, using Federal Home Loan Bank
borrowings which mature in late 1998 to fund two large
mortgage backed security pools. This arbitrage accounts for
$50 million in increased volume during the first quarter of
1998 and has an average spread of 72 basis points.
The provision for possible loan losses was increased by
$48,000, or 14%, to $399,000 for the first quarter of 1998.
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Non interest income excluding security gains increased
$422,000, or 83%, from the comparable quarter last year.
Loan charges, sales and servicing fees increased by $264,000
to $531,000, deposit related charges and fees increased by
$41,000 to $219,000, and income from sales of annuities and
securities by CoVest Investments increased by $134,000 to
$153,000. Realized gains of $256,000 on sales of securities
were also recorded. This is a decrease of $307,000 in net
gains on security sales from the comparable quarter in 1997.
Non-interest expense increased $779,000, or 31%, for the
first quarter of 1998 from the comparable quarter in 1997.
Over 57%, or $449,000, is related to compensation,
commissions and employee benefits resulting from the
increase in the number of personnel. Additionally, other
operating expense increases include $105,000 in occupancy
expenses, a $53,000 increase in Federal Deposit Insurance
Premium, a $100,000 increase in data processing expenses and
a $44,000 increase in advertising. The data processing
expense includes $75,000 related to testing computer
hardware and software to be year 2000 compliant.
The Company's assets decreased by $4 million to $579 million
as of March 31, 1998, from $583 million at December 31,
1997.
At March 31, 1998, the allowance for possible loan losses
amounted to almost $4.2 million, or 362% of non-performing
loans as compared to a 305% coverage at December 31, 1997.
At March 31, 1998, total non-performing assets amounted to
$1.4 million, or 0.25% of total assets compared to $1.3
million, or 0.22% of total assets at December 31, 1997.
Total deposits decreased by 4% to $356 million from $372
million at December 31, 1997.
Stockholders' equity in CoVest Bancshares, Inc. totaled $48
million at March 31, 1998. At quarter-end the number of
common shares outstanding was 4,350,598 and the book value
per common share outstanding was $11.03. 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. Approximately 21,000 shares
remain to be repurchased under the current stock repurchase
program.
In discussing the increase in non interest income during the
first quarter, Larry G. Gillie, President, made the
following comments: "One of our major goals for 1998 was to
increase non-interest income. To that end, our mortgage
center opened mid-February, 1998, and since inception, has
closed over 100 loans which total over $12 million. In
addition, our newly revamped investment center has produced
sales of over $6.2 million in annuities, securities, life,
property and casualty and long-term care insurance during
the quarter. Overall, the response from our customer base
has been very positive and we expect that response to
continue to grow as we further develop these two new functions."
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COVEST BANCSHARES, INC.
FINANCIAL HIGHLIGHTS
financials in thousands, except per share
Mar 31, 1998 Dec 31, 1997 Change
Selected Financial Condition Data:
(unaudited)
TOTAL ASSETS $ 579,057 $ 582,722 -1%
Investment Securities 161,800 164,172 -1%
Loans Receivable, net 392,361 377,509 4%
Deposits 355,944 371,752 -4%
Stockholders' Equity 48,004 48,294 -1%
Selected Asset Quality Ratios:
Total non-performing loans 1,149 1,304 -12%
Non-performing loans to
Loans Receivable, Net 0.29% 0.35% -15%
Total non-performing assets 1,429 1,306 9%
Non-performing assets to
Total Assets 0.25% 0.22% 10%
Total Allowance for Loan
Losses 4,161 3,979 5%
Allowance for Loan Losses to
non-performing loans 3.62x 3.05x 19%
Three Months Ended March 31 1998 1997
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 4,044 $ 3,822 6%
Provision for loan losses 399 351 14%
Net Interest Income after
provision for loan
losses 3,645 3,471 5%
Non-interest income 1,186 1,071 11%
Non-interest expense 3,292 2,513 31%
Income before income taxes 1,539 2,029 -24%
Income tax expense 530 712 -26%
Net Income $ 1,009 $ 1,317 -23%
Earnings per share:
Basic $ 0.24 0.30 -20%
Diluted 0.22 0.29 -24%
Selected Operating Ratios:
Return on Average Assets 0.69% 0.96% -29%
Return on Average Equity 8.46% 10.73% -21%
Operating expenses to
average assets 2.24% 1.86% 20%
Net interest rate spread 2.44% 2.45% 0%
Net interest rate margin 2.87% 2.93% -2%
