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 20, 2000
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 Thursday, April 20, 2000, the Company issued a press release pertaining to
First Quarter 2000 results. The text of the press release is attached
hereto as Exhibit 99.1.
<PAGE>
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 20, 2000
COVEST BANCSHARES, INC.
By:
/S/ James L. Roberts
James L. Roberts
President and
Chief Executive Officer
By:
/S/ Paul L. Larsen
Paul A. Larsen
Executive Vice President and
Chief Financial Officer
CoVest Bancshares, Inc. Reports 40 Percent Increase in Net Income
DES PLAINES, IL April 20, 2000 - CoVest Bancshares, Inc.'s (Nasdaq/COVB)
net income was $1,097,000 for the first quarter of 2000, up 40% over $786,000
for the same period last year. Basic earnings per share were $0.27 compared
to $0.19 per share for the first quarter of 1999. Diluted earnings per share
were $0.26, a 44% increase compared to $0.18 per share for first quarter
1999. Return on average assets was 0.78% compared to 0.59% in the first
quarter of last year. Return on average equity was 9.51%, a 42% increase
from 6.68% for the same period in 1999. The Company's efficiency ratio was
59.43% compared to 74.03% in the first quarter of 1999.
"We are pleased with the progress made during the first quarter of 2000 in
continuing to convert CoVest Banc to a community bank" stated James L.
Roberts, President and CEO.
Cash earnings (net earnings adjusted for the after tax impact of amortization
of goodwill) for the first quarter of 2000 were $1,123,000, or $0.27 (basic)
and $0.26 (diluted) earnings per share, compared to $812,000 or $0.20 (basic)
and $0.19 (diluted) earnings per share for the same period in 1999.
Net interest income increased by $236,000, or 6%, for the first quarter of
2000 compared to the first quarter of 1999. A $28 million increase in
average earning assets for the first quarter of 2000 versus the first quarter
of 1999 accounted for part of this income increase, as did an increase in the
total average loans outstanding to total assets of 82% for the first quarter
of 2000, up from 73% during the like quarter of 1999. The Company's net
interest margin averaged 3.10% for the first quarters of 2000 and 1999. The
net spread averaged 2.53% for the first quarter of 2000, a 13 basis point
decrease from 2.66% during the first quarter of 1999. An increase in average
non-interest bearing liabilities offset the interest spread compression. The
yield on average earning assets increased by 48 basis points while the cost
of interest-bearing liabilities increased by 61 basis points. The Company
expects the net interest margin to remain relatively constant during the next
several quarters.
The provision for possible loan losses increased by $161,000 from $99,000 to
$260,000 in the first quarter of 2000. This was a reflection of the 50%
increase in commercial, commercial real estate, multi-family and construction
loans since March 31, 1999. The provision for possible loan losses is
anticipated to remain proportional for the next several quarters.
Non interest income decreased $372,000, or 36%, to $674,000 from the
comparable quarter last year. Loan charges and servicing fees increased by
$122,000 as the volume of loans increased. Mortgage Center income was down
84%, to $86,000 in the first quarter of 2000 compared to $536,000 in the
similar quarter in 1999. The volume of new loans generated dropped to $7
million from $28 million during the first quarter of 1999. The higher level
of interest rates had a major impact on mortgage loan refinancings and new
loan generation. Of the $7 million generated in the first quarter of 2000,
51% were retained in the Bank's portfolio. During the first quarter of 1999,
only 3% were retained in the Bank's portfolio. Based on current pending loans
in process, management expects the second quarter to return to the same
dollar levels experienced in 1999. About 30% of the new production is
expected to be retained in the Bank's portfolio. Deposit related charges and
fees decreased by $12,000 during the first quarter of 2000 as compared to the
first quarter of 1999. During the first quarter of 2000, the Company
recognized a loss of $88,000 from the sale of $6.8 million of municipal
securities versus gains of $2,000 during the first quarter of 1999. The
municipal securities sold were scheduled to mature within the next two years.
Non-interest expense decreased $805,000, or 22% for the first quarter of 2000
from the comparable quarter in 1999. Total compensation and benefit costs
decreased $366,000 for the quarter ended March 31, 2000 versus March 31,
1999. During the first quarter of 1999, the Company recognized $182,000 in
non-recurring employee termination expenses, as certain positions were
eliminated to bring operating costs more in line with the revenue of the
Bank. Mortgage center commissions and employee sales incentives decreased to
$99,000 from $185,000 for the same period in 1999. There were decreases in
building occupancy expenses of $33,000; the cost of Federal Deposit Insurance
premiums decreased by $34,000 because of a lower assessment level; data
processing expenses decreased by $26,000 as Y2K expenses were not present
during 2000; and miscellaneous expenses decreased by $266,000. The Company's
goal is to maintain an efficiency ratio in the 60% range.
At March 31, 2000, total non-performing assets amounted to $723,000, or 0.13%
of total assets compared to $766,000, or 0.13% of total assets at December
31, 1999. These are first mortgage loans in various stages of foreclosure and
one parcel of residential Other Real Estate Owned.
At March 31, 2000, the Allowance for Possible Loan Losses was $5.1 million,
or 878% of non-performing loans, as compared to $4.8 million, a 631% coverage
at December 31, 1999.
The Company's assets remained stable at $569 million as of March 31, 2000, as
compared to $568 million at December 31, 1999. Loans receivable increased $3
million to $466 million as of March 31, 2000 versus $463 million outstanding
as of December 31, 1999. Loan growth continued in multi-family loans by $6
million and commercial loans by $4.8 million. Commercial leases and
construction loans have declined approximately $4 million and $ 2 million,
respectively. Limited growth in the loan portfolio is expected during the
remainder of 2000. Total investments have decreased by $8.2 million as a
result of the sale of $6.8 million of municipal securities and mortgage-
backed security paydowns. These funds increased the liquidity in interest
bearing deposits at quarter-end by $7.7 million. Deposits increased 3% to
$410 million as of March 31, 2000 compared to $398 million as of December 31,
1999. The growth has been centered in non-interest bearing deposits that
grew by 14% and purchased certificates of deposit. In March 2000, the Bank
introduced a High Yield Account. This account has a market sensitive rate of
interest that is indexed to the 91-day Treasury Bill weekly auction rate.
All balances over $2,500 are tiered to this market interest rate. The
Company is focused on growing High Yield account balances and attracting new
commercial deposit accounts. These funds will be used to pay down purchased
CD's and FHLB borrowings.
Stockholders' equity totaled $46 million at March 31, 2000. The number of
common shares outstanding was 4,075,723 and the book value per common share
outstanding was $11.36. The Company completed its 17th stock repurchase
program on February 3, 2000. A total of 100,000 shares were repurchased at
an average price of $14.84. The Company announced its 18th stock repurchase
program on February 3, 2000, enabling the Company to repurchase 100,000
shares of its outstanding stock. To date, 39,822 shares have been
repurchased at an average price of $10.38.
SAFE HARBOR STATEMENT
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such forward-
looking statements to be covered by the safe harbor provisions for forward-
looking statements contained in the Private Securities Reform Act of 1995, and
is including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of the Company, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "project" or similar expressions. The Company's ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse affect on the
operations and future prospects of the Company and the subsidiary include, but
are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or securities portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Company's market area, our implementation of new technologies, our ability
to develop and maintain secure and reliable electronic systems and accounting
principles, policies and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements. Further information concerning the Company
and its business, including additional factors that could materially affect the
Company's financial results, is included in the Company's filings with the
Securities and Exchange Commission.
<PAGE>
COVEST BANCSHARES INC.
FINANCIAL HIGHLIGHTS
(Unaudited)
THREE MONTHS ENDED
MAR. 31, MAR. 31,
2000 1999 % CHANGE
----------- ----------- ---------
Earnings:
Net Interest Income (FTE) $4,204,000 $3,999,000 5%
Net Income $1,097,000 $ 786,000 40%
Per Share
Earnings $0.27 $0.19 42%
Diluted Earnings $0.26 $0.18 44%
Key Ratios:
Return on Average Assets 0.78% 0.59% 32%
Return on Average Equity 9.51% 6.68% 42%
Net Interest Margin 3.10% 3.10% 0%
Efficiency Ratio 59.43% 74.03% -20%
Average Stockholders' Equity to
Average Assets 8.13% 8.56% -5%
Risk-Based Capital Ratios:
Tier I 12.05 12.67 -5%
Total 13.30 13.93 -5%
Common Stock Data
Cash Dividends Declared Per Share $0.08 $0.08 0%
Book Value Per Share $11.36 $11.08 3%
Price/Earnings Ratio 8.89X 16.91X -47%
<PAGE>
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
MAR. 31, DEC. 31,
(Dollars in thousands) 2000 1999
-------- --------
ASSETS
- ------
CASH AND CASH EQUIVALENTS $ 7,992 $ 9,027
INTEREST BEARING DEPOSITS 9,308 1,590
INVESTMENTS:
Securities Available-for-Sale 44,441 51,702
Mortgage-Backed Securities and
Related Securities Available-
for-Sale 17,840 18,759
Federal Home Loan Bank Stock and
FRB Stock 6,529 6,529
-------- --------
TOTAL INVESTMENTS 68,810 76,990
LOANS RECEIVABLE:
Commercial Loans 22,205 17,426
Multi-Family Loans 132,120 126,109
Commercial Real Estate Loans 72,956 74,284
Construction Loans 44,051 46,177
Commercial/Municipal Leases 17,652 22,029
Mortgage Loans 129,506 130,160
Consumer Loans 51,742 51,239
Mortgage Loans held for Sale 364 106
-------- --------
TOTAL LOANS RECEIVABLE 470,596 467,530
Allowance for Possible Loan Loss ( 5,091) ( 4,833)
-------- --------
LOANS RECEIVABLE, NET 465,505 462,697
ACCRUED INTEREST RECEIVABLE 3,163 3,437
PREMISES AND EQUIPMENT 10,461 10,669
OTHER ASSETS 4,137 4,086
-------- --------
TOTAL ASSETS $569,376 $568,496
======== ========
<PAGE>
MAR. 31, DEC. 31,
2000 1999
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
LIABILITIES:
Deposits:
Non-Interest Bearing $ 22,385 $ 19,691
Interest Bearing Checking 22,181 21,930
Savings Accounts 49,449 49,700
Money Market Accounts 91,857 88,779
Certificates of Deposit 174,668 173,782
Purchased CDs 49,490 44,173
-------- --------
410,030 398,055
Short-Term Borrowings and Securities
Sold U/A to Repurchase 85,627 85,004
Long-Term Advances from Federal
Home Loan Bank 19,000 29,000
Advances from Borrowers for
Taxes and Insurance 3,302 4,640
Accrued Expenses and Other Liabilities 5,109 5,523
-------- --------
TOTAL LIABILITIES 523,068 522,222
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share;
7,500,000 authorized shares; 4,403,803
shares issued at 3/31/00 and 12/31/99
respectively 44 44
Additional Paid-in Capital 17,824 17,919
Retained Earnings 34,285 33,514
Treasury Stock, 328,080 shares and
299,796 shares, held at cost 3/31/00
and 12/31/99 respectively (4,563) (4,312)
Unearned Stock Award 0 (14)
Accumulated Other Comprehensive
(Loss) (1,282) (877)
--------- --------
TOTAL STOCKHOLDERS' EQUITY 46,308 46,274
--------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 569,376 $568,496
========= ========
<PAGE>
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED
(Unaudited) MAR. 31, MAR. 31,
(Dollars in thousands) 2000 1999
--------- ---------
INTEREST INCOME
Loans and Leases Receivable $ 9,247 $ 7,593
Interest Bearing Deposits at Banks 117 387
Mortgage-Backed and Related Securities 318 508
Taxable Securities 538 477
Tax Exempt Securities 101 156
Other Interest and Dividend Income 117 129
-------- --------
Total Interest Income 10,438 9,250
INTEREST EXPENSE
Deposits 4,826 3,676
Advances from Federal Home Loan Bank 1,341 1,603
Other Borrowed Money 119 55
-------- --------
Total Interest Expense 6,286 5,334
NET INTEREST INCOME 4,152 3,916
Provision for Possible Loan Losses 260 99
NET INTEREST INCOME AFTER PROVISION -------- --------
FOR POSSIBLE LOAN LOSSES 3,892 3,817
NON-INTEREST INCOME
Loan Servicing Fees 324 202
Mortgage Center Income 86 536
Deposit Related Charges and Fees 225 237
Gain on Sale of Securities (88) 2
Insurance and Annuity Commissions 60 39
Other 66 30
-------- --------
Total Non-Interest Income 673 1,046
NON-INTEREST EXPENSE
Compensation and Benefits 1,492 1,858
Commissions and Incentives 99 185
Occupancy and Equipment 494 527
Federal Insurance Premium 19 53
Data Processing 218 244
Advertising 91 92
Other Real estate Owned 0 2
Other 455 712
-------- --------
TOTAL NON-INTEREST EXPENSE 2,868 3,673
-------- --------
INCOME BEFORE TAXES 1,697 1,190
Income Tax Provision (600) (404)
-------- --------
NET INCOME $ 1,097 $ 786
======== ========
<PAGE>
COVEST BANCSHARES INC.
AVERAGE BALANCE SHEET
(Unaudited)
(Dollars in thousands)
The following table sets forth certain information related to the Company's
average balance sheet. It reflects the average yield on assets and average
cost of liabilities for the periods indicated, as derived by dividing income or
expense by the average daily balance of assets or liabilities, respectively,
for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------------------
MARCH 31, 2000 MARCH 31, 1999
----------------------------------------- ---------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Commercial Loans (A)(B) $18,205 $ 334 7.34% $ 9,334 $ 136 5.83%
Commercial Real Estate (B) 74,252 1,487 8.01 61,918 1,324 8.55
Multi-Family Loans (B) 123,956 2,446 7.89 65,167 1,274 7.82
Construction Loans (B) 45,201 1,166 10.32 35,792 796 8.89
Commercial/Muni Leases 19,747 308 6.24 32,897 518 6.30
Mortgage Loans (A)(B) 130,011 2,393 7.36 144,385 2,609 7.23
Consumer Loans 51,263 1,113 8.68 44,953 936 8.32
Securities 53,785 808 6.01 57,213 845 5.91
Mortgage-Backed and
Related Securities 18,317 318 6.94 30,485 508 6.67
Other Investments 8,466 117 5.53 33,554 387 4.61
----------------------------------------- ---------------------------------------
Total Interest-Earning Assets $543,203 $10,490 7.72% $515,698 $ 9,333 7.24%
Non-Interest Earning Assets 17,621 21,576
----------------------------------------- ---------------------------------------
TOTAL ASSETS $560,824 $537,274
========================================= =======================================
INTEREST-BEARING LIABILITIES:
Interest-Bearing Checking $ 22,417 $ 61 1.09% $ 22,607 $ 59 1.04%
Savings 49,529 308 2.49 52,444 323 2.46
Money Market 89,484 1,206 5.39 80,778 865 4.28
Certificates of Deposits 174,262 2,439 5.60 185,124 2,429 5.25
Purchased CDs 50,311 812 6.46 0 0 0.00
FHLB Advances 89,824 1,341 5.97 120,000 1,603 5.34
Other Borrowed Funds 8,759 119 5.43 4,997 55 4.40
----------------------------------------- ---------------------------------------
Total Interest-Bearing
Liabilities $484,586 $ 6,286 5.19% $465,950 $5,334 4.58%
Other Liabilities 30,070 24,285
----------------------------------------- ---------------------------------------
TOTAL LIABILITIES $514,656 $490,235
----------------------------------------- ---------------------------------------
Stockholders' Equity 46,168 47,039
----------------------------------------- ---------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $560,824 $537,274
========================================= =======================================
NET INTEREST INCOME $ 4,204 $3,999
----------------------------------------- ---------------------------------------
NET INTEREST RATE SPREAD (3) 2.53% 2.66%
----------------------------------------- ---------------------------------------
NET INTEREST MARGIN (4) 3.10% 3.10%
----------------------------------------- ---------------------------------------
</TABLE>
(A) Includes cash basis loans.
(B) Includes deferred fees/costs.
(C) Interest Rate Spread is calculated by subtracting the average cost of
interest-bearing liabilities from the average rate on interest-earning
assets.
(D) Net Interest Margin is calculated by dividing net interest income by
average interest-earning assets.
