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 earlier event reported) October 21, 1999
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
Item 5. Other Events
On October 21, 1999, the Company issued a press release pertaining to
Third Quarter 1999 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: October 21, 1999
COVEST BANCSHARES, INC.
By: /s/ James L. Roberts
James L. Roberts
President and
Chief Executive Officer
By: /s/ Paul A. Larsen
Paul A. Larsen
Executive Vice President and
Chief Financial Officer
Exhibit 99.1
CoVest Bancshares, Inc. Announces Third Quarter Results
DES PLAINES, IL October 21, 1999 - CoVest Bancshares, Inc. (Nasdaq/COVB), the
holding company for CoVest Banc N.A., Des Plaines, Illinois, announced today
results for the third quarter ended September 30, 1999. Net income for the
quarter totaled $1,068,000, or $0.26 (basic) and $0.25 (diluted) earnings per
share, versus net income for the three months ended September 30, 1998 of
$899,000, or $0.22 (basic) and $0.20 (diluted) earnings per share.
Cash earnings (net earnings adjusted for the after tax impact of amortization
of goodwill) for the third quarter of 1999 were $1,100,000, or $0.27 (basic)
and $0.25 (diluted) earnings per share, compared to $931,000 or $0.22 (basic)
and $0.21 (diluted) earnings per share for the same period in 1998.
For the first nine months of 1999, the Company earned $2,893,000 versus
$2,881,000 for the same period in 1998. This represents $0.70 (basic) and
$0.67 (diluted) earnings per share versus $0.68 (basic) and $0.63 (diluted)
earnings per share for the first nine months of 1998.
Cash earnings for the first nine months of 1999 were $2,988,000, or $0.72
(basic) and $0.70 (diluted) earnings per share, compared to $2,976,000 or $0.71
(basic) and $0.66 (diluted) earnings per share for the same period in 1998.
Return on average assets and return on average equity during the third quarter
were 0.79% and 9.29% respectively during 1999 compared to 0.62% and 7.65% for
the same period in 1998. Return on average assets and average equity for the
first nine months of 1999 was 0.72% and 8.30% respectively compared to 0.66%
and 8.05% for the same period in 1998.
Cash earnings for the third quarter of 1999 represented returns on average
tangible assets and average equity of 0.82% and 9.57% respectively, compared to
0.64% and 7.92% respectively for the third quarter of 1998. Cash earnings for
the first nine months of 1999 represented returns on average tangible assets
and average equity of 0.74% and 8.55% compared to 0.68% and 8.31% respectively
for the same period in 1998.
Net interest income decreased by only $13,000 for the third quarter of 1999
compared to the third quarter of 1998, even though the Company had a $45
million decrease in average earning assets for the third quarter of 1999
versus the third quarter of 1998. The primary reason for the decrease in
average earning assets related to an arbitrage transaction the Company entered
into during the fourth quarter of 1997. The Company purchased mortgage backed
securities utilizing $50 million in FHLB borrowings. The borrowings matured in
November, 1998 and the securities were sold to repay the borrowings. The
Company's net interest rate spread and margin averaged 2.79% and 3.23%
respectively during the third quarter of 1999, a 21 and 22 basis point
increase from 2.58% and 3.01% respectively during the third quarter of 1998.
This represented increases of 8% in interest rate spread and 7% in net interest
margin growth.
The provision for possible loan losses was $454,000 for the third quarter of
1999 versus $399,000 for the like period in 1998. On a year to date basis the
provision has decreased from $1,567,000 for the first nine months of 1998 to
$841,000 for the first nine months of 1999. During 1998, the Company
experienced net loan losses from its credit card portfolio of $1.1 million out
of total net chargeoffs of $1.2 million. The Company sold its credit card
portfolio in late 1998.
Non interest income decreased $373,000, or 28%, to $949,000 from the
comparable quarter last year. The Company recognized losses of $17,000 on
security sales during the third quarter of 1999, but recognized an $81,000
gain on security sales during the third quarter of 1998. Without the effect of
securities gains/losses, non interest income decreased $275,000 for the quarter
ending September 30, 1999 versus 1998. Mortgage Center income decreased by
$241,000 to $206,000 in the third quarter of 1999 compared to $447,000 in the
similar quarter in 1998, as many loans originated were retained in the
Company's portfolio instead of being sold to investors. Loan charges and
servicing fees declined $169,000 to $286,000 in the third quarter of 1999
versus the same period in 1998, primarily due to a $122,000 reduction in loan
prepayment fees from $178,000 in the third quarter of 1998 to $56,000 for the
same period in 1999. Other income during the third quarter of 1999 included
$94,000 due to a gain on the sale of other real estate owned.
Non-interest expense decreased $707,000, or 19% for the third quarter of 1999
from the comparable quarter in 1998. Total compensation, commission, and
benefit costs decreased $637,000 for the quarter ended September 30, 1999
versus 1998. This decrease was due to the fact that in 1998, the Company
recognized $210,000 in salary termination expenses due to the departure of the
Chief Executive Officer. In addition, during the third quarter of 1999, the
Company deferred $194,000 more in compensation expenses associated with loan
origination, as required by FASB 91, than during the same period in 1998. The
remaining decrease in compensation, commission, and benefit costs was the
result of staff reductions during the first quarter of 1999, as certain
employee positions were eliminated to bring operating costs more in line with
the revenues of the Bank. Loan related expenses increased by $48,000 in the
third quarter of 1999 as compared to the third quarter of 1998. Deposit
related expenses declined by $57,000 in the third quarter of 1999 versus the
third quarter of 1998 as a result of the implementation of additional controls
to stem chargeback losses. Advertising expenses increased by $71,000 in the
third quarter of 1999 as the Company initiated several ad campaigns to generate
additional deposits. General and administrative expenses declined by $109,000
during the third quarter of 1999 compared to 1998, primarily due to recruiting
expenses incurred in 1998 to replace the Chief Executive Officer.
At September 30, 1999, total non-performing assets amounted to $.9 million, or
0.16% of total assets compared to $1.0 million, or 0.19% of total assets at
December 31, 1998. Non performing assets as of September 30, 1999 included
first mortgage loans in various stages of foreclosure and a short term
receivable from the sale of machinery and inventory on a former commercial loan.
At September 30, 1999, the allowance for possible loan losses was $4.6 million,
or 831% of non-performing loans as compared to 422% coverage at December 31,
1998.
The Company's assets increased 1% to $557 million as of September 30, 1999,
from $549 million at December 31, 1998. Loans receivable increased $50 million
or 12% to $452 million as of September 30, 1999 versus $402 million outstanding
as of December 31, 1998. Increases were achieved in: commercial loans, $8
million; commercial real estate loans, $5 million; multi family loans, $57
million; construction loans, $9 million, and consumer loans, $2 million.
Mortgage loans declined $24 million; additional loans originated by the
Mortgage Center were retained in the Company's portfolio, but payoff activity
exceeded new originations. Leases outstanding decreased by $8 million. The
increase in loans receivable was partially offset by an $8 million decrease in
investment securities and a $33 million decrease in cash and cash equivalents.
Stockholders' equity in CoVest Bancshares, Inc. totaled $45.7 million at
September 30, 1999. The number of common shares outstanding was 4,104,007 and
the book value per common share outstanding was $11.13. The Company announced
its 17th stock repurchase program on June 28, 1999, enabling the Company to
repurchase 100,000 shares of its outstanding stock. A total of 92,538 shares
have been purchased as part of this latest program. Year to date, 292,788
shares have been repurchased.
This release may contain forward looking statements. Forward looking
statements are identifiable by the inclusion of such qualifications as expects,
intends, believes, may, likely, or other indications that the particular
statements are not based on facts but are rather based upon the Company's
beliefs as of the date of this release. Actual events and results may differ
significantly from those described in such forward looking statements.
COVEST BANCSHARES, INC.
FINANCIAL HIGHLIGHTS
financials in thousands, except per share
Sep 30, 1999 Dec 31, 1998 Change
Selected Financial Condition Data: (unaudited)
TOTAL ASSETS $ 555,836 $ 548,697 1%
Investment Securities 80,018 88,017 -9%
Loans Receivable, net 452,286 402,329 12%
Deposits 365,991 364,535 0%
Stockholders' Equity 45,662 46,951 -3%
Selected Asset Quality Ratios:
Total non-performing loans 550 1,021 -46%
Non-performing loans to Loans
Receivable, Net 0.12% 0.25% -52%
Total non-performing assets 900 1,021 -12%
Non-performing assets to
Total Assets 0.16% 0.19% -13%
Total Allowance for Loan Losses 4,571 4,312 6%
Allowance for Loan Losses to
non-performing loans 8.31x 4.22x 97%
Three Months Ended September 30 1999 1998
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 4,162 $ 4,175 0%
Provision for loan losses 454 399 14%
Net Interest Income after
provision for loan losses 3,708 3,776 -2%
Non-interest income 949 1,322 -28%
Non-interest expense 3,032 3,739 -19%
Income before income taxes 1,625 1,359 20%
Income tax expense 557 460 21%
Net income $ 1,068 $ 899 19%
Earnings per share:
Basic $0.26 $0.22 18%
Diluted $0.25 $0.20 25%
Selected Operating Ratios:
Return on Average Assets 0.79% 0.62% 27%
Return on Average Equity 9.29% 7.65% 21%
Operating expenses to
average assets 2.25% 2.56% -12%
Net interest rate spread 2.79% 2.58% 8%
Net interest rate margin 3.23% 3.01% 7%
Nine Months Ended September 30 1999 1998
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 12,067 $ 12,191 -1%
Provision for loan losses 841 1,567 -46%
Net Interest Income after
provision for loan losses 11,226 10,624 6%
Non-interest income 3,205 4,087 -22%
Non-interest expense 10,049 10,335 -3%
Income before income taxes 4,383 4,376 0%
Income tax expense 1,490 1,495 0%
Net income $ 2,893 $ 2,881 0%
Earnings per share:
Basic $0.70 $0.68 4%
Diluted $0.67 $0.63 6%
Selected Operating Ratios:
Return on Average Assets 0.72% 0.66% 9%
Return on Average Equity 8.30% 8.05% 3%
Operating expenses to
average assets 2.49% 2.37% 5%
Net interest rate spread 2.76% 2.51% 10%
Net interest rate margin 3.11% 2.94% 6%
