Des Plaines, Ill.-based CoVest Bancshares fired president Larry G. Gillie last week after deciding it needs a new leader to improve performance rapidly.
CoVest named executive vice president R. Kennedy Alger to be interim president. Mr. Gillie could not be reached for comment. CoVest's chief financial officer, Paul A. Larsen, said the board was disappointed that income had not improved dramatically since its subsidiary, CoVest Banc, of which Mr. Gillie also was president, converted from a thrift to a national bank last year.
"You would expect to see the margins go up, but that isn't happening," Mr. Larsen said.
For the 12 months ended March 31, CoVest Banc posted a return on assets of 0.71%, far below the 1.30% national average for banks with $500 million to $1 billion of assets.
Stephen Skiba, bank analyst at ABN Amro Inc. in Chicago, said CoVest Banc might have been better off as a thrift because it has had trouble competing with larger Chicago-area banks for commercial loans.
The bank is too small to offer the most competitive loan rates and is often tossed the bigger banks' leftovers, he said.
Mr. Skiba was also critical of $588 million-asset CoVest's expansion over the past two years. He said CoVest overpaid for both a branch it bought from Irving Park Federal Bank and a piece of land it bought for $1 million to accommodate a new branch.
Another analyst, however, was more forgiving of CoVest's past and bullish on its future. Bradley J. Ness of Howe Barnes Investments Inc., Chicago, said the decision to convert from a thrift was smart because CoVest is diversifying its loan portfolio and reducing its interest rate risk. But such transformations take time, he said.
"This can be a four- or five-year process," he said. "Changes like this always take a little bit longer than people think they will."
