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) April 15, 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 April 15, 1999, the Company issued a press release pertaining to
First 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: April 15, 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
Senior Vice President and
Chief Financial Officer
Exhibit 99.1
CoVest Bancshares, Inc. Announces First Quarter Results
DES PLAINES, IL April 15, 1999 - CoVest Bancshares, Inc.
(Nasdaq/COVB), the holding company for CoVest Banc N.A., Des
Plaines, Illinois, announced today results for the first
quarter ended March 31, 1999. Net income totaled $786,000,
or $0.19 (basic) and $0.18 (diluted) earnings per share,
versus net income for the three months ended March 31, 1998
of $1,009,000, or $0.24 (basic) and $0.22 (diluted) earnings
per share. Excluding the effect of non recurring employee
termination expense of $182,000 ($112,000 net of tax), net
income for the quarter ended March 31, 1999 would have been
$898,000, or $0.22 (basic) and $0.21 (diluted) earnings per
share.
Return on average assets and return on average equity during
the first quarter were 0.59% and 6.68% respectively during
1999 compared to 0.69% and 8.46% in 1998.
Net interest income decreased by $128,000, or 3%, for the
first quarter of 1999 compared to the first quarter of 1998.
A $49 million decrease in average earning assets for the
first quarter of 1999 versus the first quarter of 1998
accounts for part of this income reduction. During the
fourth quarter of 1997, the Company entered into an
arbitrage transaction and 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 2.66% and 3.10% respectively
during the first quarter of 1999, a 22 and 23 basis point
increase from 2.44% and 2.87% respectively during the first
quarter of 1998. This represents increases of 9% in interest
rate spread and 8% in net interest margin growth.
Non interest income decreased $140,000, or 12%, to
$1,046,000 from the comparable quarter last year. During the
first quarter of 1999, the Company recognized security gains
of $2,000 versus gains of $256,000 during the first quarter
of 1998. Without the effect of security gains, non interest
income would have increased $114,000 for the quarter ending
March 31, 1999 versus March 31, 1998. Mortgage Center income
increased by $326,000 to $536,000 in the first quarter of
1999 compared to $210,000 in the similar quarter in 1998.
The Mortgage Center commenced operations on February 12,
1998. Loan charges and servicing fees decreased by $119,000
as the volume of mortgage loans decreased. Deposit related
charges and fees increased by $18,000 during the first
quarter of 1999 as compared to the first quarter of 1998.
Non-interest expense increased $381,000, or 12% for the
first quarter of 1999 from the comparable quarter in 1998.
Total compensation, commission, and benefit costs increased
$376,000 for the quarter ended March 31, 1999 versus March
31, 1998. Of this total, $182,000, or 48%, represents non-
recurring employee termination expenses, as certain
positions were eliminated in the first quarter of 1999 to
bring operating costs more in line with the revenues of the
Bank. Commissions and employee sales incentives, mostly
attributed to the Mortgage Center, which opened for business
on February 12, 1998, increased $119,000 to $185,000 from
$66,000 for the same period in 1998. The remaining $75,000
increase stems from the expansion of the commercial loan
function, some fixed costs associated with the Mortgage
Center operation, and increases in employee health insurance
costs. Increases in building occupancy expenses of $27,000
and miscellaneous expenses of $48,000 were partially offset
by a $62,000 decline in data processing expenses for the
first quarter of 1999 compared to the first quarter of 1998.
In March, 1998, the Company accrued $75,000 to address Y2K
issues. Anticipated expenses of $84,000 for 1999 are being
accrued on a monthly basis.
At March 31, 1999, total non-performing assets amounted to
$2 million, or 0.38% of total assets compared to $1 million,
or 0.19% of total assets at December 31, 1998. Non
performing assets as of March 31, 1999 include one
commercial loan with a balance of $874,000. A specific
reserve of $250,000 has been designated for that loan.
At March 31, 1999, the allowance for loan losses was $4.4
million, or 218% of non-performing loans as compared to 422%
coverage at December 31, 1998.
The Company's assets decreased 2% to $538 million as of
March 31, 1999, from $549 million at December 31, 1998.
Loans receivable declined 3% or $14 million to $388 million
as of March 31, 1999 versus $402 million outstanding as of
December 31, 1998. Mortgage loans declined $19 million as a
result of increased refinancing activity. Commercial leases
and construction loans have each declined approximately $4
million. These reductions have been partially offset by a
$10 million increase in multifamily loans outstanding.
Deposits decreased 2% to $356 million as of March 31, 1999
compared to $365 million as of December 31, 1998.
Stockholders' equity in CoVest Bancshares, Inc. totaled $46
million at March 31, 1999. The number of common shares
outstanding was 4,160,615 and the book value per common
share outstanding was $11.08. The Company completed its 15th
stock repurchase program on March 25, 1999; a total of
100,250 shares were repurchased at an average price of
$13.96. The Company announced its 16th stock repurchase
program on March 25, 1999, enabling the Company to
repurchase 100,000 shares of its outstanding stock. Under
the current stock repurchase plan, 50,000 shares remain to
be repurchased.
New President James L. Roberts stated: "We are attempting to
bring our expenses in line with other institutions of our
size which we anticipate will improve our performance ratios
for the remainder of 1999."
COVEST BANCSHARES, INC.
FINANCIAL HIGHLIGHTS
financials in thousands, except per share
Mar 31, 1999 Dec 31, 1998 Change
Selected Financial Condition Data: (unaudited)
TOTAL ASSETS $ 538,444 $ 548,697 -2%
Investment Securities 90,783 88,017 3%
Loans Receivable, net 388,178 402,329 -4%
Deposits 355,992 364,535 -2%
Stockholders' Equity 46,086 46,951 -2%
Selected Asset Quality Ratios:
Total non-performing loans 2,022 1,021 98%
Non-performing loans to Loans
Receivable, Net 0.52% 0.25% 105%
Total non-performing assets 2,022 1,021 98%
Non-performing assets to
Total Assets 0.38% 0.19% 102%
Total Allowance for Loan Losses 4,409 4,312 2%
Allowance for Loan Losses to
non-performing loans 2.18x 4.22x -48%
Three Months Ended March 31 1999 1998
Selected Income Data: (unaudited) (unaudited)
Net Interest Income $ 3,916 $ 4,044 -3%
Provision for loan losses 99 399 -75%
Net Interest Income after
provision for loan losses 3,817 3,645 5%
Non-interest income 1,046 1,186 -12%
Non-interest expense 3,673 3,292 12%
Income before income taxes 1,190 1,539 -23%
Income tax expense 404 530 -24%
Net income $ 786 $ 1,009 -22%
Earnings per share:
Basic $0.19 $0.24 -21%
Diluted $0.18 $0.22 -18%
Selected Operating Ratios:
Return on Average Assets 0.59% 0.69% -15%
Return on Average Equity 6.68% 8.46% -21%
Operating expenses to
average assets 2.73% 2.24% 22%
Net interest rate spread 2.66% 2.44% 9%
Net interest rate margin 3.10% 2.87% 8%
