UNITED STATES 
               SECURITIES AND EXCHANGE COMMISSION 
                     WASHINGTON, D.C.  20549 
                  -----------------------------
 
                            FORM 10-Q 
 
        Quarterly Report Pursuant to Section 13 or 15 (d) 
             of the Securities Exchange Act of 1934 
 
 
For the Quarterly Period Ended          Commission File Number 
      March 31, 1998                           0-20160 

                  -----------------------------
 
                    COVEST BANCSHARES, INC. 
     (Exact name of registrant as specified in its charter) 
 
 
          Delaware                           36-3820609 
(State or other jurisdiction       (I.R.S. Employer Identification 
     of incorporation or                      Number) 
        organization) 
 
749 Lee Street, Des Plaines, Illinois               60016 
(Address of Principal Executive Offices)          (Zip Code) 

Registrant's telephone number, including area code: (847) 294-6500 
 
Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15 (d) of the 
Securities Exchange Act of 1934 during the preceding 12 months (or 
for such shorter period that the registrant was required to file 
such reports), and (2) has been subject to such filing requirements 
for the past 90 days. 
 
                    Yes  --X--            No  ----- 
 
As of May 12, 1998, the Registrant had issued and outstanding 4,403,803 
shares of the Registrant's Common Stock.  In addition, it had also 
repurchased 47,970 shares which were being held as treasury stock.  
The aggregate market value of the voting stock held by non-affiliates 
of the Registrant as of May 12, 1998, was $68,427,874.

















 
<PAGE>2
 
                  	  COVEST BANCSHARES, INC. 
 
                        Table of Contents 
 
PART I.   FINANCIAL INFORMATION (UNAUDITED)              PAGE NO. 

 
          Item 1.   Financial Statements....................3 
 
          Item 2.   Management's Discussion and 
                    Analysis of Financial Condition and
                    Results of Operations..................13 
 
PART II.  OTHER INFORMATION 

          Item 1.   Legal Proceedings......................24 
          Item 2.   Changes in Securities..................24 
          Item 3.   Defaults upon Senior Securities........24 
          Item 4.   Submission of Matters to a Vote
                     of Security Holders...................24
          Item 5.   Other Information......................24
          Item 6.   Exhibits and Reports of Form 8-K.......25  
 
          Form 10-Q Signatures.............................25 
 






























<PAGE>3
PART 1.   FINANCIAL INFORMATION
Item 1.   Condensed Consolidated Financial Statements 
          see notes to condensed consolidated financial statements
          (unaudited)

COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)                                MAR. 31,     DEC. 31, 
(Dollars in thousands except                 1998         1997   
   per share amounts)                     ---------    --------- 
 
ASSETS 
------ 
CASH AND CASH EQUIVALENTS                 $  7,026   $   23,470   
 
INVESTMENTS: 
  Securities Available-for-Sale             41,271       35,840   
  Mortgage-Backed Securities and
    Related Securities Available-
    for-Sale                               111,495      120,753   
  Federal Home Loan Bank Stock and           
   FRB Stock                                 8,829        7,579
                                          ---------    ---------  
TOTAL INVESTMENTS                          161,596      164,172   
 
LOANS RECEIVABLE: 
  Mortgage Loans                           217,024      236,077   
  Commercial Real Estate Loans              85,060       69,386
  Commercial Loans and Leases               32,287       16,778
  Consumer Loans                            58,161       59,245
  Mortgage Loans held for Sale               3,989          -0-
                                          ---------    ---------  
TOTAL LOANS RECEIVABLE                     396,522      381,486   
  Allowance for Possible Loan Loss         ( 4,161)     ( 3,977)  
                                          ---------    ---------  
LOANS RECEIVABLE, NET                      392,361      377,509   

ACCRUED INTEREST RECEIVABLE                  3,625        3,487   
PREMISES AND EQUIPMENT                      11,089       10,767
OTHER REAL ESTATE OWNED                        280          -0-
OTHER ASSETS                                 3,080        3,317   
                                          ---------    ---------  
TOTAL ASSETS                              $579,057     $582,722   
                                         ==========    ========= 












<PAGE>4
                                           MAR. 31,     DEC. 31, 
                                             1998         1997   
                                          ---------    --------- 

LIABILITIES AND STOCKHOLDERS' EQUITY 
------------------------------------ 
LIABILITIES: 
  Deposits:
Non-Interest Bearing                      $   9,762    $  14,112
NOW and Money Market Accounts                92,746       78,311
Savings Accounts                             57,333       59,562
Certificates of Deposit                     196,103      219,767
                                           --------     --------
                                            355,944      371,752
  Short-Term Borrowings and Securities
    Sold U/A to Repurchase                   65,553       76,956   
  Long-Term Advances from Federal 
    Home Loan Bank                          100,000       75,000   
  Advances from Borrowers for
    Taxes and Insurance                       2,353        2,914   
  Accrued Expenses and Other Liabilities      7,203        7,806   
                                          ---------    ---------  
TOTAL LIABILITIES                           531,053      534,428   

STOCKHOLDERS' EQUITY:
  Common Stock, par value $.01 per share;
    7,500,000 authorized shares; 4,403,803
    and 4,365,761 shares issued at
    3/31/98 and 12/31/97 respectively            44           44   
  Additional Paid-in Capital                 19,520       19,365   
  Retained Earnings                          29,071       28,410   
  Treasury Stock, 53,205 shares; and 0
    shares, held at cost
    3/31/98 and  12/31/97 respectively       (  905)         -0-        
  ESOP Loan                                  (  476)     (   511)  
  Unearned Stock Award                       (   73)     (    73)  
  Accumulated Other Comprehensive
    Income                                      823        1,059   
                                          ---------     ---------  
TOTAL STOCKHOLDERS' EQUITY                   48,004       48,294   
                                          ---------     ---------  
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                    $   579,057     $582,722   

                                          =========     =========  




<PAGE>5
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME            THREE MONTHS ENDED
(Unaudited)                                 MAR. 31,     MAR. 31,
(Dollars in thousands)                       1998         1997
                                          ---------    ---------
INTEREST INCOME
  Loans Receivable                          $ 7,566      $ 6,638
  Mortgage-Backed and Related Securities      1,924        1,936
  Securities                                    664          959
  Other Interest and Dividend Income            293          145
                                           ---------    ---------
  Total Interest Income                      10,447        9,678
INTEREST EXPENSE
  Deposits                                    4,144        4,740
  Advances from Federal Home Loan Bank        2,166          908
  Other Borrowed Money                           93          208
                                           ---------    ---------
  Total Interest Expense                      6,403        5,856
NET INTEREST INCOME                           4,044        3,822
  Provision for Possible Loan Losses            399          351
NET INTEREST INCOME AFTER PROVISION        ---------    ---------
  FOR POSSIBLE LOAN LOSSES                    3,645        3,471
NON-INTEREST INCOME
  Loan Charges and Servicing Fees               531          267
  Deposit Related Charges and Fees              219          178
  Gain on Sale of Securities                    256          563
  Insurance and Annuity Commissions             141           15
  Other                                          39           48
                                           ---------    ---------
TOTAL NON-INTEREST INCOME                     1,186        1,071
NON-INTEREST EXPENSE
  Compensation and Benefits                   1,667        1,218
  Occupancy and Equipment                       500          395
  Federal Insurance Premium                      60            7
  Data Processing                               306          206
  Advertising                                    87           43
  Other Real estate Owned                         6          -0-
  Other                                         666          644
                                           ---------    ---------
TOTAL NON-INTEREST EXPENSE                    3,292        2,513
                                           ---------    ---------
INCOME BEFORE TAXES                           1,539        2,029
  Income Tax Provision                         (530)      (  712)
                                           ---------    ---------
NET INCOME                                  $ 1,009      $ 1,317
                                           =========    =========




<PAGE>6
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS        THREE MONTHS ENDED
(Unaudited)                                 MAR. 31,     MAR. 31,
(Dollars in thousands)                        1998         1997
                                           ---------    ---------
OPERATING ACTIVITIES
  Net Income                                $ 1,009      $ 1,317
  Adjustments to Reconcile Net Income to
   Cash Provided by Operating Activities
    Depreciation and Amortization of
       Premises and Equipment                  262           181
    Provision for Possible Loan Losses         399           351
    Net Gain on Sale of Securities           ( 256)      (   563)
    Change In:
      Prepaid Expenses and Other Assets        237             7 
      Accrued Interest Receivable            ( 138)      (   937)
      Accrued Expenses and Other Liabilities ( 291)          677
                                           ---------    ---------
NET CASH FROM OPERATING ACTIVITIES           1,222         1,033 

CASH FLOWS FROM INVESTING ACTIVITIES
  Loan Originations, Net of Principal
    Payments                              ( 15,531)      ( 9,480)
  Principal Payments on Mortgage-Backed
    and Related Securities                   8,938         2,860
  Purchases of Mortgage-Backed and
    Related Securities                    (  9,746)          -0- 
  Purchases of Securities                 ( 21,175)      ( 9,977)
  Proceeds from Sales and Maturities
    of Securities                           25,831         2,157
  Purchase of Federal Home Loan Bank
    and Federal Reserve Bank Stock        (  1,250)          -0-  
  Purchase of Office Properties and 
    Equipment                             (    584)      (    97)
                                           ---------    ---------
NET CASH FROM INVESTING ACTIVITIES        ( 13,517)      (14,537)









<PAGE>7
                                             THREE MONTHS ENDED
                                            MAR. 31,     MAR. 31,
                                              1998         1997
                                           ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net Increase (Decrease) in NOW Accounts,
    Money Markets, Savings and
    Certificates of Deposit                 (15,808)       4,708
  Net Borrowings of Federal
    Home Loan Bank Advances                  25,000          -0-
  Proceeds (Repayments) from Other
    Borrowings                              (11,403)       7,997
  Net Change in Mortgage Escrow Funds       (   561)    (  1,541)
  Purchase of Common Stock Net of 
    Proceeds from Exercise of Stock Options ( 1,064)    (    510)
  Payment Received on Loan to ESOP               35           33
  Dividend Paid, Net of Dividend
    Reinvestment Program                   (    348)    (    302)
                                           ---------    ---------
NET CASH FROM FINANCING ACTIVITIES         (  4,149)      10,385
                                           ---------    ---------

NET DECREASE IN CASH AND
  CASH EQUIVALENTS                         ( 16,444)     ( 3,119)

CASH AND CASH EQUIVALENTS, BEGINNING         23,470       12,837
                                           ---------    ---------
CASH AND CASH EQUIVALENTS, ENDING           $ 7,026      $ 9,718 
                                           =========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Interest Paid                             $ 6,311      $ 5,681
  Income Taxes Paid                             -0-          -0-










<PAGE>8

<TABLE>
<CAPTION>
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands)
Three months ended March 31, 1997 and 1998
                                                                                                       
                                                                                                     ACCUMULATED           
                                            ADDITIONAL                                    UNEARNED   OTHER            
                                    COMMON   PAID-IN    RETAINED   TREASURY      ESOP       STOCK    COMPREHENSIVE         
                                     STOCK   CAPITAL    EARNINGS    STOCK        LOAN       AWARD    INCOME       TOTAL
------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>     <C>       <C>         <C>          <C>          <C>       <C>       <C>        

Balance at December 31, 1996          $ 34   $22,155    $33,990    ($5,838)     ($ 858)      ($ 73)    $  534    $49,944
                                                                                                                       
Net Income                                                1,317                                                   1,317
 
Change in Unrealized Gain on Securities  
 Available-for-sale                                                                                     (626)      (626)
                                                                                                                --------
                                                                                                                      
Comprehensive Income                                                                                                691
                                                                                                                --------
Cash Dividends ($.0667 per share)                        (  303)                                                 (  303)
                                                                                                                       
Purchase of Treasury Stock                                           (1,371)                                     (1,371)
                                                                                                                       
Principal payment on ESOP Loan                                                     33                                33

Treasury Stock Reissued in Conjunction                                                                                  
 with Stock Option Exercises                               (200)        560                                         360

-----------------------------------------------------------------------------------------------------------------------
                                                                                                                       
Balance at March 31, 1997             $34    $22,155    $34,804   ($ 6,649)     ($  825)     ($ 73)    ($   92)   $49,354
========================================================================================================================
                                                                                                                       
Balance at December 31, 1997          $44    $19,365    $28,410    $     -      ($  511)     ($ 73)    $ 1,059    $48,294   
                                                                                                                        
Net Income                                                1,009                                                   1,009 
  
Change in Unrealized Loss on Securities
  Available-for-Sale                                                                                  (  236)    (  236)
                                                                                                                --------
                                                                                                                       
Comprehensive Income                                                                                                773
                                                                                                                --------
Cash Dividends ($.08 per share)                         (   348)                                                 (  348)
                                                                                                                       
Purchase of Treasury Stock                                          (1,447)                                      (1,447)
                                                                                                                       
Principal Payment on ESOP Loan                                                     35                                35  
                                                                                                                       
Treasury Stock Reissued in Conjunction                                                                                 
  with Stock Option Exercises                (  159)                   542                                          383  
                                                                                                                       
Tax Benefits related to 
  Employee Stock Option Plans                   314                                                                 314    
                                                                                                                       
------------------------------------------------------------------------------------------------------------------------
                                                                                                                       
Balance at March 31, 1998     	    $44      $19,520    $29,071      ($ 905)     ($  476)     ($ 73)    $  823     $48,004   
========================================================================================================================
</TABLE>








<PAGE>9
<TABLE>
<CAPTION>
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.
<S>
                                                                    THREE MONTHS ENDED
                                ----------------------------------------------------------------------------------------  
                                             MARCH 31, 1998                                   MARCH 31, 1997              
                                -----------------------------------------        ---------------------------------------  
                                                                AVERAGE                                          AVERAGE  
                                   AVERAGE                       YIELD/             AVERAGE                       YIELD/  
                                   BALANCE        INTEREST        COST              BALANCE        INTEREST        COST   
                                -----------------------------------------        ---------------------------------------          
INTEREST-EARNING ASSETS:         <C>              <C>            <C>              <C>             <C>             <C>     
  Mortgage Loans                 $229,305          $4,168         7.27%           $252,894        $ 4,706         7.44%
  Commercial Loans and Leases      21,654             410         7.57               8,330            144         6.91
  Commercial Real Estate           77,650           1,641         8.45              23,265            479         8.22
  Consumer Loans                   58,469           1,347         9.19              57,601          1,309         9.09
  Mortgage-Backed and
   Related Securities             112,814           1,924         6.82             110,465          1,936         7.01   
  Investment Securities            39,446             613         6.22              59,476            964         6.48   
  Other Investments                25,101             344         5.48              10,249            140         5.46   
                                -----------------------------------------        --------------------------------------- 
Total Interest-Earning Assets    $564,439         $10,447         7.40%           $522,280        $ 9,678         7.41%  
                                                                                                                          
Non-Interest Earning Assets        23,765                                           18,920                               
                                -----------------------------------------        ---------------------------------------  
                                                                                                                         
TOTAL ASSETS                     $588,204                                         $541,200                               
                                =========================================        =======================================  
                                                                                                                          
INTEREST-BEARING LIABILITIES:                                                                                             
  Interest-Bearing Checking      $ 22,071           $  75         1.36%           $ 21,551       $     95         1.76%  
  Savings                          58,352             360         2.47              65,296            403         2.47   
  Money Market                     62,401             757         4.85              44,905            527         4.69
  Certificates of Deposit         200,489           2,819         5.62             253,322          3,584         5.66
  Jumbo CD's                        9,335             133         5.69               9,447            131         5.55   
  FHLB Advances                   156,111           2,166         5.55              61,378            908         5.91   
  Other Borrowed Funds              7,532              93         4.99              15,988            208         5.23   
                                -----------------------------------------        ---------------------------------------  
                                                                                                                        
Total Interest-Bearing                                                                                                    
  Liabilities                    $516,291          $6,403         4.96%           $471,887        $ 5,856         4.96%  
                                                                                                                       
Non-Interest Bearing                                                                                                      
  Deposits                         12,596                                           10,029                               
                                                                                                                          
Other Liabilities                  11,623                                            9,425                               
                                -----------------------------------------        ---------------------------------------  
                                                                                                                          
TOTAL LIABILITIES                $540,510                                         $491,341                               
                                -----------------------------------------        ---------------------------------------  
                                                                                                                          
Stockholders' Equity               47,694                                           49,859                               
                                -----------------------------------------        ---------------------------------------  
TOTAL LIABILITIES AND                                                                                                     
  STOCKHOLDERS' EQUITY           $588,204                                         $541,200                               
                                =========================================        =======================================  
                                                                                                                          
NET INTEREST INCOME                               $4,044                                        $ 3,822                
                                -----------------------------------------        ---------------------------------------  
NET INTEREST RATE SPREAD (1)                                      2.44%                                           2.45%  
                                -----------------------------------------        ---------------------------------------  
NET INTEREST MARGIN (2)                                           2.87%                                           2.93%  
                                -----------------------------------------        ---------------------------------------  

(1) Interest Rate Spread is calculated by subtracting the average cost of
    interest-bearing liabilities from the average rate on interest-earning
    assets.
(2) Net Interest Margin is calculated by dividing net interest income by
    average interest-earning assets.

</TABLE>


<PAGE>10
                       COVEST BANCSHARES INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              (Unaudited)

(1)          Basis of Presentation

The accompanying unaudited condensed consolidated financial statements 
have been prepared in accordance with generally accepted accounting 
principles for interim financial information and with the instructions 
to Form 10-Q and Regulation S-X.  Accordingly, they do not include all 
the information and footnotes required by generally accepted accounting 
principles for complete financial statements.

The results of operations and other data for the quarter ended 
March 31, 1998 are not necessarily indicative of results that 
may be expected for the entire year ended December 31, 1998.

In the opinion of management, the unaudited condensed consolidated 
financial statements contain all adjustments (consisting only of 
normal recurring adjustments) necessary to present fairly the 
financial condition of CoVest Bancshares, Inc. (the "Company"), 
including its wholly owned subsidiary, CoVest Banc (the 
"Bank"), as of March 31, 1998 and December 31, 1997, the results of 
the Company's operations for the three months ended March 31, 1998 
and 1997, its cash flows for the three months ended March 31, 1998 
and 1997, its changes in stockholders' equity for the three months 
ended March 31, 1998 and 1997, and its average balance sheet for the 
three months ended March 31, 1998 and 1997.

Certain amounts in prior condensed consolidated financial statements 
have been reclassified to conform with the March, 1998 presentation. 


(2)     Nature of Operations
 
CoVest Bancshares, Inc. formerly known as FirstFed Bancshares, Inc. 
(the "Company") is a bank holding company organized under the laws of 
the state of Delaware.  During 1997, the Company converted its bank 
subsidiary, First Federal Bank, to a national bank charter and 
concurrently changed the name to CoVest Banc, National Association 
(the "Bank").  The Company provides a full line of financial services 
to customers within nine counties in northeast Illinois from its four 
locations.  The Bank opened a mortgage loan center in McHenry, 
Illinois in mid-February. 


<PAGE>11
A reconciliation of the numerators and denominators for earnings per 
common share dilution computations for the period ended March 31, 1998 
and 1997 were presented below: (dollars and shares in thousands)


                                    Period Ended March 31
                                    ---------------------
                                    1998            1997 
Earnings per share:
   Net Income                      $1,009         $1,317
   Weighted average common
    shares outstanding              4,238          4,367
                                    -----          -----
   Earnings per share              $  .24         $  .30
                                    =====           ====

Earnings per share assuming dilution:
   Net Income                      $1,009         $1,317
                                     ====           ====
   Weighted average common
    shares outstanding              4,238          4,367
   Add: dilutive effect of assumed
        exercises, incentive stock
        options and management
        retention plan                276            230
                                     ----           ----
   Weighted average common and
    diluted potential common
    shares outstanding              4,514          4,597
                                     ====           ====

   Diluted earnings per share      $  .22            .29
                                     ====           ====


(3)	   Stock Repurchase Program 
 
On October 27, 1997, the Company's Board of Directors approved a Stock 
Repurchase Program, the Company's twelfth, which enabled the Company 
to repurchase up to 150,000 (post-splits) shares of its outstanding 
stock. On May 12, 1998, the buyback was completed at an average price 
of $16.74.


<PAGE>12
On May 12, 1998 the Company's Board of Directors announced a new Stock 
Repurchase Program, the Company's thirteenth, enabling the company to
repurchase up to 100,000 shares of its outstanding stock.  These
purchases will be made in the open market and/or through privately 
negotiated transactions.  The stock will be used for the issuance
of shares in connection with the exercises of previously granted
stock options. 


(4)     Stock Dividend and Cash Dividend

On December 1, 1997, the second three-for-two stock split, payable in 
the form of a one-for-two stock dividend occurred.  All amounts have 
been restated to show the effect of this stock dividend. The regular 
quarterly dividend for the fourth quarter of 1997 and first quarter of 
1998 was paid at $.08 per share post-split.


(5)     Regulatory Capital Requirements

Pursuant to the Financial Institutions Reform, Recovery and 
Enforcement Act of 1989 ("FIRREA"), as implemented by regulations 
promulgated by the Office of Comptroller of Currency (the "OCC"), 
National banks must meet three separate minimum capital requirements. 
The following table summarizes, as of March 31, 1998, the Bank's 
capital requirements under FIRREA and its actual capital ratios.  As 
of March 31, 1998, the Bank exceeded all current minimum regulatory 
capital requirements. 


                                     BANK ONLY
               ----------------------------------------------------
                 Actual         Regulatory         Excess Above 
                Capital        Capital Req.        Capital Req. 
                 Amount   %      Amount       %        Amount    %    
               -------  ------  -------     -----    -------   -----
                              (Dollars in Thousands)               
Total Capital to
  Risk Weighted
    Assets      $46,173   16.51%   $22,641    8.00%    $23,532   8.51%
Tier I Capital to
  Risk Weighted
    Assets       42,012   15.02     11,321    4.00      30,691  11.02
Tier I Capital to
  Average Assets 42,012    7.14     23,528    4.00      18,483   3.14


<PAGE>13
(6)          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 included in this 
statement for purposes of these safe harbor provisions.  Forward-
looking statements, 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 its subsidiaries 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 of composition of the loan or 
investment portfolios, demand for loan products, deposit flows, 
competition, demand for financial services in the Company's market 
area 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.



ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
             CONDITION AND RESULTS OF OPERATIONS 

OVERVIEW 
-------- 
The Company's business activities currently consist of ownership of 
the Bank, and investments in other equity securities.  The Bank's 
principal business consists of attracting deposits from the public and 
investing these deposits, together with funds generated from 
operations, primarily in commercial loans, leases and commercial real 
estate, and consumer loans.  It is management's intention that 
commercial loans will become an increasingly larger portion of the 
total loan portfolio as the balance sheet is restructured to become 


<PAGE>14
more like that of a community bank.  The Bank's deposit accounts are 
insured to the maximum allowable by the Federal Deposit Insurance 
Corporation (the "FDIC"). 

The Bank's results of operations are dependent primarily on net 
interest income, which is the difference between the interest earned 
on its loans, and securities portfolios, and the interest paid on 
deposits and borrowed funds.  The Bank's operating results are also 
affected, to a lesser extent, by loan commitment and servicing fees, 
customer service charges, fees from annuity and insurance products, 
and other income.  Operating expenses of the Bank include employee 
compensation and benefits, equipment and occupancy costs, federal 
deposit insurance premiums and other administrative expenses. 

The Bank's results of operations are further affected by economic 
and competitive conditions, particularly changes in market interest 
rates.  Results are also affected by monetary and fiscal policies of 
federal agencies, and actions of regulatory authorities. 
 

FINANCIAL CONDITION 
------------------- 
Total consolidated assets of the Company decreased by $3.6 million 
from $582.7 million at December 31, 1997, to $579.1 million at 
March 31, 1998. 

The composition of the loan portfolio continues to change as 
commercial loans, commercial real estate, construction, and leases 
increased by $31 million, or 36%, from year-end 1997. These loans and 
leases now represent almost 30% of total loans receivable, up from 23% 
at year-end 1997, and up from less than 10% at March 31, 1997. 
Management expects the  composition of commercial loans, commercial 
real estate, construction, and leases to  become a larger percentage 
of the overall loan portfolio and assets mix, as $43 million of 
approved and accepted commitments  were outstanding as of March 31, 
1998. Total loans increased by $15 million during the first quarter of 
1998.

During the first quarter of 1998, residential mortgage loans decreased 
by $19 million as borrowers took advantage of lower rates and 
refinanced their mortgages, many through the Company's new mortgage 
center. Almost $4 million of loans originated by the mortgage center 
were held for sale at the end of the first quarter, 1998.  The market 
value of these loans approximated their book value at March 31, 1998.  
Located in McHenry, Illinois,  the mortgage center opened on February 



<PAGE>15
12, 1998,  and makes residential mortgages that are sold on a service 
released basis to the secondary market.

At March 31, 1998, the allowance for possible loan losses amounted to 
almost $4.2 million.  This represented coverage of 1.05% of total 
loans as of March 31, 1998, and is approximately the same coverage 
which existed at year-end 1997.

Securities available-for-sale increased by $5.5 million as various 
municipal bonds and short-term governments were added to the 
portfolio.  All of these mature under five years.

Mortgage-backed and other mortgage-related securities decreased $9.3       
million or 7.7% from December 31, 1997.  The proceeds from the sales 
of, and paydowns on, mortgage-backed securities were used to fund 
additional commercial real estate and commercial leases.

Deposits decreased to $356 million at March 31, 1998, from $371.8 
million at December 31, 1997.  Most of this decrease centers on the 
Bank's prior reliance on certificates of deposit which, as a 
percentage of deposits, have decreased to 55% as of March 31, 1998, 
from 59% as of December 31, 1997.  The only deposit account to show 
growth was in the Bank's Preferred Money Market account.  This account 
is indexed to the 91 day U.S. Treasury Bill rate and reflects the 
weekly change that occurs as a result of the auction in the bond 
market.

Stockholders' equity totaled $48 million at March 31, 1998.  At 
quarter-end, the number of common shares outstanding was 4,350,598 and 
the book value per common share outstanding was $11.03.  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.   
At May 11, 1998, approximately 6,000 shares remain to be repurchased 
under the current stock repurchase program.

At March 31, 1998, total non-performing assets amounted to $1.4 
million, or 0.25% of total assets compared to $1.3 million, or 0.22% 
of total assets at December 31, 1997.  Management believes the 
reserves for possible loan losses to be adequate.  There were no 
commercial real estate, multi-family, construction, or commercial 
loans and leases non-performing as of March 31, 1998.  Furthermore, 
76% of non-performing loans were single family mortgages.

The following table sets forth the amounts and categories of non- 
performing loans and assets. 


<PAGE>16

                                     March 31, 1998    Dec. 31, 1997 
                                      -------------    ------------- 
                                          (Dollars in Thousands)     
Non-performing loans:
  Mortgage Loans                     $     876         $    1,137
  Commercial Real Estate Loans             -0-               -0-
  Commercial Loans & Leases                -0-               -0-
  Consumer                                 273                167     
                                       -------------    ------------- 
Total non-performing loans          $    1,149         $    1,304    

Other real estate owned             $      280         $      -0- 
Other repossessed assets                   -0-                -0-
                                       -------------    -------------
Total non-performing assets         $    1,429         $    1,304

Total non-performing loans as 
  a percentage of net loans                .29%               .35% 
 
Total non-performing assets as 
  a percentage of total assets             .25%               .22%



LIQUIDITY  
--------- 
The Company's primary sources of funds are deposits, principal and 
interest payments on loans and mortgage-backed securities, and funds 
provided by other operations.  While scheduled loan and mortgage-
backed securities repayments and maturities of short-term investments 
are a relatively predictable source of funds, deposit flows and loan 
prepayments are greatly influenced by general interest rates, economic 
conditions, competition and the restructuring occurring in the banking 
industry. 

The Company's cash flows are a result of three principal activities: 
operating activities, investing activities and financing activities.  
Net cash provided by operating activities, primarily net income, was 
$1.2 million for the three months ended March 31, 1998.  Net cash used 
in investing activities was $13.5 million for the three months ended 
March 31, 1998.  Net cash used in financing activities amounted to 
$4.2 million for the three months ended March 31, 1998.  

The Company uses its liquidity to meet its ongoing commitments to 
fund maturing certificates of deposit and deposit withdrawals, repay 
borrowings, fund existing and continuing loan commitments, and pay 


<PAGE>17
operating expenses.  At March 31, 1998, the Company had commitments to 
originate loans and undisbursed loan balances totaling $43 million, 
and its customers had approved but unused lines of credit totaling 
$62.6 million. The Company considers its liquidity and capital 
resources to be adequate to meet its foreseeable short and long-term 
needs.  The Company expects to be able to fund or refinance, on a 
timely basis, its material commitments and long-term liabilities. 

SELECTED RATIOS 
--------------- 
(unaudited)                             THREE MONTHS ENDED  
                                       MARCH 31,   MARCH 31,  
                                           1998        1997 
                                       --------------------
Annualized Return on Avg. Equity           8.46%      10.73% 
Annualized Return on Avg. Assets           0.69%       0.96% 
Book Value per Share                     $11.03      $10.91   
Closing Market Price per Share           $17.25      $11.83 

Earnings per Primary Share:
Basic                                    $  .24      $  .30
Diluted                                     .22         .29

Interest Margin                            2.87%       2.93%
 
Ratio of Operating Expense to
     Average Total Assets,
     Annualized                            2.24%       1.86%
Ratio of Net Interest Income to
     Non-Interest Expense,                      
     Annualized                            1.23x       1.52X 
 





RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 
1997
----------------------------------------------------------------------

GENERAL. Net income for the three months ended March 31, 1998 totaled 
$1,009,000, or $0.24 (basic) and $0.22 (diluted) earnings per share, a 
decrease of 23% from the $1,317,000, or $0.30 (basic) and $0.29 
(diluted) earnings per share for the like quarter in 1997.


<PAGE>18
NET INTEREST INCOME.  Net interest income increased by $222,000, or 
6%, for the first quarter of 1998 compared to the first quarter of 
1997.  The Company's net interest margin decreased 6 basis points, or 
2%, to 2.87% for the first quarter of 1998 from 2.93% for the first 
quarter of 1997.  The interest rate spread averaged 2.44% for 1998 and 
2.45% during the first quarter of 1997.  The volume of earning assets 
increased by $42.2 million between the two periods while the average 
yield remained constant at approximately 7.40%.  The net interest 
margin for the fourth quarter of 1997 was 2.91% and the net interest 
spread was 2.42%. The Bank entered into an arbitrage transaction 
during the second half of the fourth quarter of 1997, using Federal 
Home Loan Bank borrowings which mature in late 1998 to fund two large 
mortgage backed security pools.  This arbitrage accounted for $50 
million in increased volume during the first quarter of 1998 and has 
an average spread of 72 basis points. 

The cost of interest bearing liabilities remained constant between the 
two periods at 4.96%.  The composition of the liabilities changed as 
money market accounts continue to be a larger percentage of the Bank's 
deposit funding source replacing the shrinking pool of certificates of 
deposit. As detailed above, $50 million of the increase in Federal 
Home Loan Bank borrowings are to fund mortgage-backed securities.  

PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan 
losses was increased by $48,000, or 14%, to $399,000 for the first 
quarter of 1998.  The Company, and the banking industry as a whole, 
has seen more credit card charge-offs resulting from personal 
bankruptcies. For the quarter ended March 31, 1998, 71% of all of the 
Company's charge-offs were attributable to personal bankruptcy 
filings.  Based upon most recent experience of other credit card 
lenders, losses are expected to continue at this level in the near 
term.  Management regularly conducts a review of its loan portfolio, 
write-off experiences and adequacy of allowance, and believes the 
allowance to be adequate.










<PAGE>19
LOAN LOSS ALLOWANCE ANALYSIS.  The following table sets forth an 
analysis of the Company's allowance for possible loan losses for the 
periods indicated. 


                                           Three Months Ended 
                                          March 31,     March 31, 
                                            1998          1997 
                                         ---------     --------- 
                                          (Dollars in Thousands) 
 
Balance at beginning of period          $   3,977       $    1,424
Charge-offs:
  Mortgage Loans                        $      38       $      -0-
  Commercial Real Estate Loans                -0-              -0-
  Commercial Loans and Leases                 -0-              -0-
  Consumer                                    233              276     
                                           --------         -------- 
Total                                         271              276
                                           --------         --------

Recoveries:
  Mortgage Loans                        $     -0-       $      -0-
  Commercial Real Estate Loans                -0-              -0-
  Commercial Loans & Leases                   -0-              -0-
  Consumer                                     56               14     
                                           --------         -------- 
Total                                          56               14
                                           --------         --------
 Net charge-offs                              215              262

Additions charged to                                            
  operations                                  399              351
                                           --------        --------- 
Balance at end of period                 $  4,161           $1,513
 
Ratio of net charge-offs during 
  the period to average loans 
  outstanding during the period              0.06%            0.08% 
 
Ratio of allowance for possible
  loan losses to non- performing loans       3.62x            1.16x 





<PAGE>20
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES.  Net 
interest income after provision for possible loan losses increased 
by $174,000 or  5% to $3,645,000 for the three month period ended 
March 31, 1998, as compared to $3,471,000 for the three month period 
ended March 31, 1997.

NON-INTEREST INCOME. Non interest income excluding security gains 
increased $422,000, or 83%, from the comparable quarter last year. 
Loan charges, sales and servicing fees increased by $264,000 to 
$531,000, deposit related charges and fees increased by $41,000 to 
$219,000, and income from sales of annuities and securities by CoVest 
Investments increased by  $126,000 to $141,000. Realized gains of 
$256,000 on sales of securities were also recorded.  This is a 
decrease of $307,000 in net gains on security sales from the 
comparable quarter in 1997.

NON-INTEREST EXPENSE.  Non-interest expense increased $779,000, or 31% 
for the first quarter of 1998 from the comparable quarter in 1997. 
Over 57%, or $449,000, is related to  compensation, commissions and 
employee benefits resulting from the increase in the number of 
personnel.  Additionally, other operating expense increases included 
$105,000 in occupancy expenses, a $53,000 increase in Federal Deposit 
Insurance Premium, a $100,000 increase in data processing expenses and 
a $44,000 increase in advertising. The data processing expense 
included $75,000 related to testing  computer hardware and software to 
be Year 2000 compliant. 

INCOME TAX EXPENSE.  Income tax expense decreased $182,000 to $530,000    
for the quarter ended March 31, 1998, compared to $712,000 for the 
same period in 1997, primarily due to the decrease in income.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.  In an 
attempt to manage the Bank's exposure to changes in interest rates,
management closely monitors the Bank's interest rate risk.  

Interest rate risk results when the maturity or repricing intervals 
and interest rate indices of the interest-earning assets, interest-
bearing liabilities, and off-balance sheet financial instruments are 
different, creating a risk that changes in the level of market 
interest rates will result in disproportionate changes in the value 
of, and the net earnings generated from, the Company's interest-
earning assets, interest-bearing liabilities, and off-balance sheet 
financial instruments. The Company's exposure to interest rate risk is 
managed primarily through the Company's strategy of selecting the 
types and terms of interest-earning assets and interest-bearing 



<PAGE>21
liabilities which generate favorable earnings, while limiting the 
potential negative effects of changes in market interest rates.  
Since the Company's primary source of interest-bearing liabilities is 
customer deposits, the Company's ability to manage the types and terms 
of such deposits may be somewhat limited by customer preferences in 
the market areas in which the Company operates. Borrowings, which 
include FHLB Advances, short-term borrowings, and long-term 
borrowings, are generally structured  with specific terms which in 
management's judgment, when aggregated with the terms for outstanding 
deposits and matched with interest-earning assets, mitigate the 
Company's exposure to interest rate risk. The rates, terms and 
interest rate indices of the Company's interest-earning assets result 
primarily from the Company's strategy of investing in loans and 
securities (a substantial portion of which have adjustable-rate 
terms) which permit the Company to limit its exposure to interest rate 
risk, together with credit risk, while at the same time achieving a 
positive interest rate spread from the difference between the income 
earned on interest-earning assets and the cost of interest-bearing 
liabilities.

In addition to periodic gap reports comparing the sensitivity of 
interest-earning assets and interest-bearing liabilities to changes in 
interest rates, management utilizes a monthly report ("model") 
prepared by the Bank which measures the Bank's exposure to interest 
rate risk.  The model calculates the present value of assets, 
liabilities, off-balance sheet financial instruments, and equity at 
current interest rates, and at hypothetical higher and lower interest 
rates at one percent intervals.  The present value of each major 
category of financial instrument is calculated by the model using 
estimated cash flows based on weighted average contractual rates and 
terms at discount rates representing the estimated current market 
interest rate for similar financial instruments.  The resulting 
present value of longer term fixed-rate financial instruments are more 
sensitive to change in a higher or lower market interest rate 
scenario, while adjustable-rate financial instruments largely reflect 
only a change in present value representing the difference between the 
contractual and discounted rates until the next interest rate 
repricing date.  






<PAGE>22
The following table presents the Bank's current exposure to 
hypothetical changes in interest rates as of March 31, 1998:

                                                          Percent Change in 
         Change in Interest Rates    Percent Change in      MV of Portfolio 
              (basis points)        Net Interest Income         Equity
         ------------------------   -------------------    -----------------
        
                  +200                     (8%)                   (20%)

                   100                     (4)           			      (11 )

                     0                      0                       0

                  -100                      3                      10

                  -200                      6                      19


Certain shortcomings are inherent in the method of analysis presented 
in the foregoing table.  For example, although certain assets and 
liabilities may have similar maturities or periods to repricing, they 
may react in different degrees to changes in market interest rates.  
Also, the interest rates on certain types of assets and liabilities 
may fluctuate in advance of changes in market interest rates, while 
interest rates on other types may lag behind changes in market rates. 
Additionally, certain assets, such as adjustable-rate mortgage loans, 
have features that restrict changes in interest rates on a short-term 
basis and over the life of the loan.  Further, in the event of a 
change in interest rates, prepayment and early withdrawal levels could 
deviate significantly from those assumed in calculating the tables.  
Finally, the ability of many borrowers to service their debt may 
decrease in the event of a significant interest rate increase.

In addition, the previous table does not necessarily indicate the 
impact of general interest rate movements on the Company's net 
interest income because the repricing of certain categories of assets 
and liabilities are subject to competitive and other pressures beyond 
the Company's control.  As a result, certain assets and liabilities 
indicated as maturing or otherwise repricing within a stated period 
may in fact mature or reprice at different times and at different 
volumes.







<PAGE>23
RECENT REGULATORY DEVELOPMENTS 
----------------------------------------------------------- 


Year 2000
   	The federal banking regulators have issued several statements 
providing guidance to financial institutions on the steps the 
regulators expect financial institutions to take to become Year 2000 
compliant.  Each of the federal banking regulators is also examining 
the financial institutions under its jurisdiction to assess each 
institution's compliance with the outstanding guidance.  If an 
institution's progress in addressing the Year 2000 problem is deemed 
by its primary federal regulator to be less than satisfactory, the 
institution will be required to enter into a memorandum of 
understanding with the regulator which will, among other things, 
require the institution to promptly develop and submit an acceptable 
plan for becoming Year 2000 compliant and to provide periodic reports 
describing the institution's progress in implementing the plan.  
Failure to satisfactorily address the Year 2000 problem may also 
expose a financial institution to other forms of enforcement action 
that its primary federal regulator deems appropriate to address the 
deficiencies in the institution's Year 2000 remediation program.

Management has considered this issue internally and receives periodic 
correspondence from its data processor regarding their plans to be 
year 2000 compliant.  Management does not anticipate that the Company 
will incur material operating expenses to be required to invest 
heavily in computer system improvements to be year 2000 compliant, but 
did provide $75,000 during the first quarter of 1998 to test computer 
hardware and software.  An unknown element at this time is the impact 
of the year 2000 on the Company's borrowing customers and their 
ability to repay.  The company has initiated a program to communicate 
with key bank customers to ensure they are properly prepared for the 
year 2000 and will not suffer serious adverse consequences.  
Nevertheless, if not properly addressed, these issue could result in 
interruptions in the company's business and have a material adverse 
effect on the  Company's results of operations.




<PAGE>24
NEW ACCOUNTING STANDARDS

Effective for fiscal years beginning after December 15, 1997, under a 
new accounting standard (SFAS 130), comprehensive income is now 
reported for all periods.  Comprehensive income includes both net 
income and other comprehensive income.  Other comprehensive income 
includes the change in unrealized gains and losses on securities 
available-for-sale.  Comprehensive income has been disclosed in the 
consolidated statements of changes in stockholders' equity. 

Effective for fiscal years beginning after December 15, 1997, a new 
accounting standard (SFAS 131), establishes standards for the way that 
public enterprises report information about operating segments in 
annual financial statements and requires that those enterprises report 
selected information about operating segments in interim financial 
reports issued to shareholders.  This standard will have no impact on 
the Corporation.

                    
PART II - OTHER INFORMATION 
COVEST BANCSHARES, INC. 

ITEM 1.  LEGAL PROCEEDINGS 
         There are no material pending legal proceedings to which 
         the Company or any of its subsidiaries is a party other 
         than ordinary routine litigation incidental to their 
         respective businesses. 

ITEM 2.  CHANGES IN SECURITIES 
         None 
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES 
         None 
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  
         None 
 
ITEM 5.  OTHER INFORMATION 
         None 
 



<PAGE>25
ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K 
        (a)  Exhibits
             27.  Financial Data Schedule

        (b)  Reports on Form 8-K
             A report on Form 8-K was filed on January 26, 1998
             to report under Item 5 the Company earnings for the
             fourth quarter of 1997 and calendar year 1997.

             A report on Form 8-K was filed on February 25, 1998 to 
             report under Item 5 that the Company announced 
             the issuance of a regular quarterly dividend. 







                               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 thereunto duly authorized. 
 
                                          COVEST BANCSHARES, INC. 
 
 
Date: MAY 14, 1998                      By:\S\
 -----------------                      --------------------------- 
                                             Larry G. Gillie 
                                             President and 
                                             Chief Executive Officer 
 
 
                                        By:\S\
                                        --------------------------- 
                                             Paul A. Larsen 
                                             Senior Vice President, 
                                             Treasurer and 
                                             Chief Financial Officer