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 15, 1998
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 15, 1998, the Company issued a press release
pertaining to net income for the quarter ended September 30, 1998.
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: October 15, 1998
By:/s/ R. Kennedy Alger
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Name: R. Kennedy Alger
Title: Senior Vice President &
Lending Officer
By:/s/ Paul A. Larsen
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Name: Paul A. Larsen
Title: Senior Vice President and
Chief Financial Officer
Item 7. Exhibit 99.1
CoVest Bancshares, Inc. Announces Third Quarter Results
DES PLAINES, IL October 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 September 30, 1998 totaled $899,000, or $0.22 (basic) and
$0.20 (diluted) earnings per share, versus $1,040,000, or $0.24
(basic) and $0.23 (diluted) earnings per share for the third
quarter in 1997. Excluding $186,000 in after tax non-recurring
expenses related to the departure of the chief executive officer,
net income for the third quarter of 1998 would have been
$1,085,000.
For the first nine months of 1998, the Company earned $2,881,000
versus $3,345,000 for the like period in 1997. This represents
$0.68 (basic) and $0.63 (diluted) versus $0.77 (basic) and $0.74
(diluted) for the first nine months of 1997.
The Company's net interest margin decreased 7 basis points, to
3.01% for the third quarter of 1998 from 3.08% for the third
quarter of 1997. The interest rate spread, however, increased by
4 basis points, and averaged 2.58% during the third quarter of
1998 and 2.54% during the third quarter of 1997.
The Company's net interest income increased by 8%, to $4,175,000
for the three months ended September 30, 1998, compared to
$3,872,000 for the third quarter of 1997.
The provision for possible loan losses was $399,000 for the third
quarter of 1998 versus $430,000 for the like period in 1997. This
increased the reserve for possible loan losses to 1.14% of total
loans as of September 30, 1998.
During the third quarter, the Company funded in excess of $31
million in commercial loans, commercial real estate loans,
construction loans, multi-family loans and investment grade
equipment leases. On a year-to-date basis the Company has funded
over $96 million in new commercial related loans and leases. The
composition of the loan portfolio continues to change as
commercial loans now represent 2%, commercial real estate loans
represent 15%, multi-family loans represent 9%, construction loans
represent 8%, and leases represent 10%. These loans now represent
44% of total loans receivable, up from 23% at year-end 1997, and
up from less than 18% at September 30, 1997. As of September 30,
1998, the Bank had $ 23 million of approved and accepted
commitments outstanding which should be funded in the next 90
days.
During the first nine months of 1998, residential mortgage loans
decreased by $64 million, or over 27% of the December 31, 1997
outstanding balance, as borrowers took advantage of lower rates
and refinanced their mortgages. The CoVest Banc mortgage centers
in McHenry and Aurora, Illinois, processed many of the refinanced
mortgages which are then sold on a service released basis to the
investor market. The mortgage centers have almost $5 million of
loans for sale outstanding at September 30, 1998, and have
processed about 460 loans which represent $60 million in new
investor loan fundings. The payoffs in mortgage loans, offset by
the anticipated growth in commercial loans, commercial real estate
loans, construction loans, multi-family loans, and commercial
equipment leases, will continue to make this segment a larger
percentage of the Bank's overall loan portfolio and assets mix.
Non-interest income excluding security gains increased $648,000,
or 109%, from the comparable quarter last year. Loan charges and
servicing fees increased by 248%, or $374,000 to $626,000. The
Bank collected commercial real estate prepayment fees as a result
of the general decline in interest rates. The Bank also collected
$276,000 in loan service release fees primarily from the activity
being generated by the mortgage centers. Deposit related fees
increased by $29,000 to $258,000, and income from sales of
annuities and securities by CoVest Investments increased by
$35,000 to $47,000. Realized gains of $81,000 on sales of
securities were also recorded. This is a decrease of $235,000 in
net gains on security sales from the comparable quarter in 1997.
Non-interest expense increased $990,000, or 36%, for the third
quarter of 1998 from the comparable quarter in 1997. Over $310,000
of this increase related to the recognition of salary, the
engagement of a search firm, and legal expenses due to the
departure of the Chief Executive Officer. Commissions and
employee sales incentives, mostly attributed to the mortgage
center grew to $181,000 from $39,000 in the third quarter of 1997.
Other operating expenses increased by $112,000 for occupancy costs
at the mortgage centers and remodeling of the Des Plaines
facility, and a $41,000 increase in data processing expenses.
These increases were offset by a $48,000 decrease in advertising
in 1998 from 1997 as a substantial portion of the 1997 advertising
expenses related to the Bank's name change.
The Company's assets decreased by $2 million to $581 million as of
September 30, 1998, from $583 million at December 31, 1997.
At September 30, 1998, the allowance for possible loan losses
amounted to $4.8 million, or 458% of non-performing loans as
compared to a 305% coverage at December 31, 1997.
At September 30, 1998, total non-performing assets amounted to
$1.1 million, or 0.19% of total assets compared to $1.3 million,
or 0.22% of total assets at December 31, 1997.
Total deposits decreased by 7% to $346 million from $372 million
at December 31, 1997. This decrease was primarily a reduction in
certificate of deposit balances which was partially offset by the
acquisition of balances in Preferred Money Market accounts.
Stockholders' equity in CoVest Bancshares, Inc. totaled $46.6
million at September 30, 1998. At the end of the third quarter,
the number of common shares outstanding was 4,271,203 and the book
value per common share outstanding was $10.92. The Company
repurchased 72,835 shares during the third quarter at an average
price of $17.10. 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 August 25,
1998. This enables the Company to purchase up to 100,000 shares
of its outstanding shares in the open market and/or through
privately negotiated transactions. Only 17,835 shares have been
repurchased under the current stock repurchase program.
Returns on average equity and average assets during the third
quarter were 7.65% and 0.62% respectively during 1998 compared to
9.07% and 0.80% in 1997. Returns on average equity and average
assets for the first nine months of 1998 was 8.05% and 0.66%
respectively during 1998 compared to 9.52% and 0.83% in 1997.
COVEST BANCSHARES, INC.
FINANCIAL HIGHLIGHTS
(financials in thousands, except per share)
Sept 30.1998 Dec 31,1997 Change
Selected Financial Condition Data: (unaudited)
TOTAL ASSETS $ 580,529 $ 582,722 0%
Investment Securities 139,484 164,172 -15%
Loans receivable, Net 413,534 377,509 10%
Deposits 346,410 371,752 - 7%
Stockholders' Equity 46,621 48,294 - 3%
Selected Asset Quality Ratios:
Total non-performing loans 1,044 1,304 -20%
Non-performing loans to
Loans Receivable, Net 0.25% 0.35% -27%
Total non-performing assets 1,116 1,306 -15%
Non performing assets to
Total Assets 0.19% 0.22% -14%
Total Allowance for
Loan Losses 4,783 3,979 20%
Allowance for Loan Losses
to non-performing loans 4.58x 3.05x 50%
Three Months Ended Sept 30 1998 1997
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 4,175 $ 3,872 8%
Provision for loan losses 399 430 - 7%
Net Interest Income after
provision for loan loss 3,776 3,442 10%
Non-interest income, excluding
security gains 1,241 593 109%
Security Gains 81 316 -74%
Non-interest expense 3,739 2,749 36%
Income before income taxes 1,359 1,602 -15%
Income tax expense 460 562 -18%
Net income $ 899 $ 1,040 -14%
Earnings per share:
Basic $ 0.22 $ 0.24 - 8%
Diluted $ 0.20 $ 0.23 -13%
Selected Operating Ratios:
Return on Average Assets 0.62% 0.80% -23%
Return on Average Equity 7.65% 9.07% -16%
Operating expenses to
average assets 2.56% 2.12% 21%
Net Interest rate spread 2.58% 2.54% 2%
Net interest rate margin 3.01% 3.08% - 2%
Nine Months Ended Sept 30 1998 1997
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 12,191 $ 11,550 6%
Provision for loan losses 1,567 1,183 32%
Net Interest Income after
provision for loan losses 10,624 10,367 2%
Non-interest income, excluding
security gains 3,287 1,622 103%
Security Gains 800 1,190 -33%
Non-interest expense 10,335 8,058 28%
Income before income taxes 4,376 5,121 -15%
Income tax expense 1,495 1,776 -16%
Net income $ 2,881 $ 3,345 -14%
Earnings per share:
Basic $ 0.68 $ 0.77 -12%
Diluted $ 0.63 $ 0.74 -15%
Selected Operating Ratios:
Return on Average Assets 0.66% 0.83% -20%
Return on Average Equity 8.05% 9.52% -15%
Operating expenses to
average assets 2.37% 2.00% 19%
Net interest rate spread 2.51% 2.47% 2%
Net interest rate margin 2.94% 2.97% - 1%
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