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 
      June 30, 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 August 10, 1998, the Registrant had issued and outstanding 4,403,803 
shares of the Registrant's Common Stock.  In addition, it had also 
repurchased 132,600 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 August 10, 1998, was $67,000,000.


 



<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..................15 
 
PART II.  OTHER INFORMATION 

          Item 1.   Legal Proceedings......................30 
          Item 2.   Changes in Securities..................30 
          Item 3.   Defaults upon Senior Securities........30 
          Item 4.   Submission of Matters to a Vote 
                     of Security Holders...................30 
          Item 5.   Other Information......................31 
          Item 6.   Exhibits and Reports of Form 8-K.......31 
 
 
          Form 10-Q Signatures.............................32 
 
 
 
 
 
 
 





















<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)                               JUNE 30,     DEC. 31, 
(Dollars in thousands except                 1998         1997   
   per share amounts)                     ---------    --------- 
 
ASSETS 
------ 
CASH AND CASH EQUIVALENTS                 $  7,405   $    5,670
   
INTEREST BEARING DEPOSITS AT BANKS          13,718       17,800

INVESTMENTS: 
  Securities Available-for-Sale             16,386       31,412   
  Mortgage-Backed Securities and
    Related Securities Available-
    for-Sale                               103,109      120,753
  Tax Exempt Municipal Securities           
    Available-for-Sale                      10,124        4,428
  Federal Home Loan Bank Stock and           
   FRB Stock                                 9,329        7,579
                                          ---------    ---------  
TOTAL INVESTMENTS                          138,948      164,172   
 
LOANS RECEIVABLE: 
 
  Commercial Real Estate Loans              72,489       55,843
  Multi-Family Loans                        25,148        4,604
  Construction Loans                        15,060        8,939
  Commercial Loans                           7,967        5,504
  Commercial Leases                         38,546       11,274
  Mortgage Loans                           193,647      236,077
  Consumer Loans                            57,943       59,245
  Mortgage Loans held for Sale               4,416          -0-
                                          ---------    ---------  
    TOTAL LOANS RECEIVABLE                 415,216      381,486   
  Allowance for Possible Loan Loss         ( 4,632)     ( 3,977)  
                                          ---------    ---------  
LOANS RECEIVABLE, NET                      410,584      377,509   

ACCRUED INTEREST RECEIVABLE                  3,040        3,487   
PREMISES AND EQUIPMENT                      11,248       10,767
OTHER REAL ESTATE OWNED                         72          -0-
OTHER ASSETS                                 3,335        3,317   
                                          ---------    ---------  
TOTAL ASSETS                              $588,350     $582,722   
                                          =========    ======== 





<PAGE>4
                                           JUNE 30,     DEC. 31, 
                                             1998         1997   
                                          ---------    --------- 
LIABILITIES AND STOCKHOLDERS' EQUITY 
------------------------------------ 
LIABILITIES: 
  Deposits:
Non-Interest Bearing                      $  13,043    $  14,112
Interest Bearing Checking										 
  Money Market Accounts                      99,510       78,311
Savings Accounts                             55,423       59,562
Certificates of Deposit                     180,104      219,767
                                           --------     --------
                                            348,080      371,752
  Short-Term Borrowings and Securities
    Sold U/A to Repurchase                   62,728       76,956   
  Long-Term Advances from Federal 
    Home Loan Bank                          120,000       75,000   
  Advances from Borrowers for
    Taxes and Insurance                       3,077        2,914   
  Accrued Expenses and Other Liabilities      6,886        7,806   
                                          ---------    ---------  
TOTAL LIABILITIES                           540,771      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
    6/30/98 and 12/31/97 respectively            44           44   
  Additional Paid-in Capital                 19,323       19,365   
  Retained Earnings                          29,696       28,410   
  Treasury Stock, 77,000 shares; and 0
    shares, held at cost
    6/30/98 and  12/31/97 respectively       (1,403)         -0-        
  ESOP Loan                                  (  368)     (   511)  
  Unearned Stock Award                       (   73)     (    73)  
  Accumulated Other Comprehensive
    Income                                      360        1,059   
                                          ---------     ---------  
TOTAL STOCKHOLDERS' EQUITY                   47,579       48,294   
                                          ---------     ---------  
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                    $   588,350   $  582,722   
                                          =========     =========  











<PAGE>5
<TABLE>
<CAPTION>
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME           THREE MONTHS ENDED      SIX MONTHS  ENDED
(Unaudited)                                 JUNE 30,     JUNE 30,    JUNE 30,      JUNE 30
(Dollars in thousands)                        1998         1997	      1998          1997
                                           ---------    ---------   ---------   ---------
                                           <C>           <C>        <C>           <C>             
INTEREST INCOME
  Loans Receivable                          $ 7,879      $ 7,001     $15,445      $13,639
  Mortgage-Backed and Related Securities      1,475        1,695       3,400        3,631
  Securities and Dividend Income                426          920       1,092        1,884
  Other Interest Income                         371          306         662          446
                                           ---------    ---------   ---------   ---------
  Total Interest Income                      10,151        9,922      20,599       19,600
INTEREST EXPENSE
  Deposits                                    3,887        4,860       8,031        9,600
  Advances from Federal Home Loan Bank        2,179          954       4,345        1,862
  Other Borrowed Money                          113          253         207          461
                                           ---------    ---------   ---------   ---------
  Total Interest Expense                      6,179        6,067      12,583       11,923
NET INTEREST INCOME                           3,972        3,855       8,016        7,677
  Provision for Possible Loan Losses            769          402       1,168          753
NET INTEREST INCOME AFTER PROVISION        ---------    ---------   --------    ---------
  FOR POSSIBLE LOAN LOSSES                    3,203        3,453       6,848        6,924
NON-INTEREST INCOME
  Loan Charges and Servicing Fees               747          259       1,279          526
  Deposit Related Charges and Fees              247          214         466          392
  Gain on Sale of Securities                    463          311         719          874
  Insurance and Annuity Commissions              69           15         210           30
  Other                                          52           33          91           81
                                           ---------    ---------   ---------   ---------
TOTAL NON-INTEREST INCOME                     1,578          832       2,766        1,903
NON-INTEREST EXPENSE
  Compensation and Benefits                   1,852        1,281       3,601        2,499
  Occupancy and Equipment                       496          348         997          743
  Federal Insurance Premium                      57           66         118           73
  Data Processing                               268          215         575          421
  Advertising                                   110          248         197          342
  Other Real estate Owned                       (42)         -0-         (36)         -0-
  Other                                         563          638       1,145        1,231
                                           ---------    ---------  ---------    ----------
TOTAL NON-INTEREST EXPENSE                    3,304        2,796       6,597        5,309
                                           ---------    ---------  ---------    ----------
INCOME BEFORE TAXES                           1,477        1,489       3,017        3,518
  Income Tax Provision                         (505)        (502)     (1,035)      (1,214)       
                                           ---------    ---------  ---------    ----------
NET INCOME                                  $   972      $   987   $   1,982     $  2,304
                                           =========    =========  =========    ==========

</TABLE>



<PAGE>6
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS          SIX MONTHS ENDED      
(Unaudited)                                  JUNE 30,   JUNE 30,      
(Dollars in thousands)                        1998        1997       
                                           ---------    ---------     
OPERATING ACTIVITIES
  Net Income                                $ 1,982      $ 2,304
  Adjustments to Reconcile Net Income to
   Cash Provided by Operating Activities
    Depreciation and Amortization of
       Premises and Equipment                   482          375
    Provision for Possible Loan Losses       (1,168)         753
    Net Gain on Sale of Securities            ( 719)     (   874)
    Change In:
      Prepaid Expenses and Other Assets       (  18)         706 
      Accrued Interest Receivable               447      (   519)
      Accrued Expenses and Other Liabilities  ( 123)          99
                                           ---------    ---------  
NET CASH FROM OPERATING ACTIVITIES            3,219        2,844 

CASH FLOWS FROM INVESTING ACTIVITIES
  Loan Originations, Net of Principal
    Payments                               ( 34,243)     (23,137)
  Principal Payments on Mortgage-Backed
    and Related Securities                   26,945       29,928
  Purchases of Mortgage-Backed and
    Related Securities                     ( 40,363)         -0- 
  Purchases of Securities                  ( 31,693)     ( 9,995)
  Proceeds from Sales and Maturities
    of Securities                            71,700       11,420
  Purchase of Federal Home Loan Bank
    and Federal Reserve Bank Stock         (  1,750)       3,570  
  Purchase of Office Properties and 
    Equipment                              (    963)     (   343)
                                           ---------    ---------  
NET CASH FROM INVESTING ACTIVITIES         ( 10,367)      11,443





<PAGE>7
                                               SIX MONTHS ENDED      
                                             JUNE 30,    JUNE 30,    
                                              1998         1997       
                                           ---------    ---------  
CASH FLOWS FROM FINANCING ACTIVITIES
  Net Increase (Decrease) in NOW Accounts,
    Money Markets, Savings and
    Certificates of Deposit                 (23,672)       2,488
  Net Borrowings of Federal
    Home Loan Bank Advances                  45,000     (  2,500)
  Proceeds (Repayments) from Other
    Borrowings                              (64,228)    (  4,076)
  Net Change in Mortgage Escrow Funds           163     (    717)
  Purchase of Common Stock Net of 
    Proceeds from Exercise of Stock Options ( 1,909)    (  1,921)
  Payment Received on Loan to ESOP              143          173
  Dividend Paid, Net of Dividend
    Reinvestment Program                   (    696)    (    601)
                                           ---------    ---------  
NET CASH FROM FINANCING ACTIVITIES            4,801     (  7,154)
                                           ---------    --------- 

NET DECREASE IN CASH AND
  CASH EQUIVALENTS                         (  2,347)     ( 7,133)

CASH AND CASH EQUIVALENTS, BEGINNING         23,470       12,837
                                           ---------    ---------  
CASH AND CASH EQUIVALENTS, ENDING          $ 21,123     $ 19,970 
                                           =========    =========  








<PAGE>8
<TABLE>
<CAPTION>
COVEST BANCSHARES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands)
Six  months ended June 30, 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                                                2,304                                                   2,304
 
Change in Unrealized Gain on Securities  
 Available-for-sale                                                                                     (626)      (626)
                                                                                                               --------
Comprehensive Income                                                                                                691
                                                                                                                --------
Cash Dividends ($.13 per share)                          (  601)                                                 (  601)
                                                                                                                       
Purchase of Treasury Stock                                           (2,409)                                     (2,409)
                                                                                                                       
Principal payment on ESOP Loan                                                    173                               173

Treasury Stock Reissued in Conjunction                                                                                  
 with Stock Option Exercises                  (   56)      (438)        982                                         488

-----------------------------------------------------------------------------------------------------------------------
                                                                                                                       
Balance at June 30, 1997              $34    $22,099    $35,255   ($ 7,265)     ($  685)     ($ 73)    ($   92)   $49,899
========================================================================================================================
                                                                                                                       
Balance at December 31, 1997          $44    $19,365    $28,410    $     -      ($  511)     ($ 73)    $ 1,059    $48,294   
                                                                                                                        
Net Income                                                1,982                                                     1,982
  
Change in Unrealized Gain on Securities
  Available-for-Sale                                                                                    (  699)    (  699)
                                                                                                                --------
                                                                                                                       
Comprehensive Income                                                                                              1,283
                                                                                                                --------
Cash Dividends ($.16 per share)                         (   696)                                                 (  696)
                                                                                                                       
Purchase of Treasury Stock                                          (2,821)                                      (2,821)
                                                                                                                       
Principal Payment on ESOP Loan                                                      143                             143  
                                                                                                                       
Treasury Stock Reissued in Conjunction                                                                                 
  with Stock Option Exercises                (  506)                 1,418                                          912  
                                                                                                                       
Tax Benefits related to 
  Employee Stock Option Plans                   464                                                                 464    
                                                                                                                      
------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998           $ 44     $19,323     $29,696   ($ 1,403)     ($ 368)     ($ 73)    $  360     $47,579   
=======================================================================================================================

</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.

                                                          THREE MONTHS ENDED
                                ----------------------------------------------------------------------------------------  
                                             JUNE 30, 1998                                   JUNE 30, 1997              
                                -----------------------------------------        ---------------------------------------  
                                                                AVERAGE                                          AVERAGE  
                                   AVERAGE                       YIELD/             AVERAGE                       YIELD/  
                                   BALANCE        INTEREST        COST              BALANCE        INTEREST        COST   
INTEREST-EARNING ASSETS:        -----------------------------------------        --------------------------------------- 
<S>                               <C>              <C>           <C>               <C>               <C>         <C> 
  Commercial Real Estate          $76,953          $1,663         8.64%            $32,187           $679         8.44% 
  Multi-Family Loans               17,149             344         8.02                 -0-            -0-            0
  Commercial Loans                  7,112             168         9.45                 202              5         9.90
  Commercial Leases                33,922             557         6.57               7,926            130         6.56
  Mortgage Loans                  208,625           3,784         7.26             257,537          4,783         7.43  
  Consumer Loans                   58,228           1,363         9.36              59,016          1,404         9.52
  Investment Securities            30,788             479         6.22              56,988            920         6.46      
  Mortgage-Backed and                                                                                                    
    Related Securities             91,425           1,475         6.45              96,000          1,695         7.06   
  Other Investments                25,755             371         5.75              21,077            306         5.81   
                                -----------------------------------------        --------------------------------------- 
Total Interest-Earning Assets    $549,957         $10,204         7.42%           $530,933        $ 9,922         7.48%  
                                                                                                                          
Non-Interest Earning Assets        22,633                                           19,075                               
                                -----------------------------------------        ---------------------------------------
TOTAL ASSETS                     $572,590                                         $550,008                               
                                =========================================        =======================================  
                                                                                                                       
INTEREST-BEARING LIABILITIES:                                                                                             
  Interest-Bearing Checking      $ 22,431           $  72         1.28%           $ 21,672       $     97         1.79%  
  Savings                          56,468             352         2.49              64,351            401         2.49   
  Money Market                     74,146             903         4.87              51,026            619         4.85
  Certificates of Deposit         175,120           2,423         5.53             259,475          3,612         5.57
  Jumbo CD's                        9,781             137         5.64               9,447            131         5.55   
  FHLB Advances                   156,484           2,179         5.57              63,367            954         6.02   
  Other Borrowed Funds              7,799             113         5.75              19,206            253         5.27   
                                -----------------------------------------        ---------------------------------------
Total Interest-Bearing                                                                                                    
  Liabilities                    $502,229          $6,179         4.92%           $479,097        $ 6,067         5.07%  
                                                                                                                       
Non-Interest Bearing                                                                                                      
  Deposits                         11,391                                           10,777                               
                                                                                                                          
Other Liabilities                  11,064                                           10,251                               
                                -----------------------------------------        ---------------------------------------
TOTAL LIABILITIES                $524,684                                         $500,125                               
                                -----------------------------------------        ---------------------------------------
Stockholders' Equity               47,906                                           49,883                               
                                -----------------------------------------        ---------------------------------------  
TOTAL LIABILITIES AND                                                                                                     
  STOCKHOLDERS' EQUITY           $572,590                                         $550,008                               
                                =========================================        =======================================
NET INTEREST INCOME                               $ 4,025                                         $ 3,855                
                                -----------------------------------------        ---------------------------------------  
NET INTEREST RATE SPREAD (1)                                      2.50%                                           2.41%  
                                -----------------------------------------        ---------------------------------------  
NET INTEREST MARGIN (2)                                           2.93%                                           2.90%  
                                -----------------------------------------        ---------------------------------------  
(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.
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>

                                                           SIX  MONTHS ENDED
                                ----------------------------------------------------------------------------------------  
                                             JUNE 30, 1998                                  JUNE 30, 1997              
                                -----------------------------------------        ---------------------------------------  
                                                                AVERAGE                                          AVERAGE  
                                   AVERAGE                       YIELD/             AVERAGE                       YIELD/  
                                   BALANCE        INTEREST        COST              BALANCE        INTEREST        COST   
INTEREST-EARNING ASSETS:        -----------------------------------------        ---------------------------------------  
<S>                               <C>               <C>           <C>              <C>             <C>             <C>     
  Mortgage Loans                 $218,908          $7,952         7.27%           $255,227        $ 9,489         7.44%  
  Commercial Loans                  6,493             304         9.36                 149              7         9.40
  Commercial Leases                24,904             831         6.67               8,079            271         6.71
  Commercial Real Estate           73,002           3,132         8.58              27,754          1,159         8.35
  Multi-Family Loans               12,920             516         7.99                 -0-            -0-           0
  Consumer Loans                   58,348           2,710         9.29              58,313          2,713         9.30   
  Investment Securities            38,362           1,168         6.09              57,182          1,884         6.59   		         
  Mortgage-Backed and                                                                                                    
    Related Securities            102,060           3,400         6.66             103,194          3,631         7.04   
  Other Investments                22,515             662         5.88              17,292            446         5.16   
                                -----------------------------------------        --------------------------------------- 
Total Interest-Earning Assets    $557,512         $20,675         7.42%           $527,190        $19,600         7.44%  
                                                                                                                          
Non-Interest Earning Assets        23,288                                           18,965                               
                                -----------------------------------------        ---------------------------------------
TOTAL ASSETS                     $580,800                                         $546,155                               
                                =========================================        =======================================  
                                                                                                                          
INTEREST-BEARING LIABILITIES:                                                                                             
  Interest-Bearing Checking      $ 22,252           $ 147         1.32%           $ 21,611       $    191         1.77%  
  Savings                          57,405             712         2.48              64,821            804         2.48   
  Money Market                     68,307           1,660         4.86              47,986          1,147         4.78
  Certificates of Deposit         187,734           5,243         5.59             251,082          7,176         5.76
  Jumbo CD's                        9,559             269         5.65              10,036            281         5.65   
  FHLB Advances                   156,298           4,345         5.56              62,383          1,862         5.97   
  Other Borrowed Funds              7,947             207         5.18              17,584            461         5.24   
                                -----------------------------------------        ---------------------------------------
Total Interest-Bearing                                                                                                    
  Liabilities                    $509,502         $12,583         4.94%           $475,503        $11,923         5.02%  
                                                                                                                       
Non-Interest Bearing                                                                                                      
  Deposits                         11,594                                           10,403                               
                                                                                                                          
Other Liabilities                  11,604                                           10,299                               
                                -----------------------------------------        ---------------------------------------
TOTAL LIABILITIES                $532,700                                         $496,205                               
                                -----------------------------------------        ---------------------------------------
Stockholders' Equity               48,100                                           49,950                               
                                -----------------------------------------        ---------------------------------------  
TOTAL LIABILITIES AND                                                                                                     
  STOCKHOLDERS' EQUITY           $580,800                                         $546,155                               
                                =========================================        =======================================
NET INTEREST INCOME                               $8,092                                          $ 7,677                
                                -----------------------------------------        ---------------------------------------  
NET INTEREST RATE SPREAD (1)                                      2.48%                                           2.42%  
                                -----------------------------------------        ---------------------------------------  
NET INTEREST MARGIN (2)                                           2.90%                                           2.91%  
                                -----------------------------------------        ---------------------------------------  

(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>11
                        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 and six months 
ended June 30, 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 June 30, 1998 and December 31, 1997, the results of 
the Company's operations for the three and six months ended June 30,
1998 and 1997, its cash flows for the six months ended June 30, 1998 
and 1997, its changes in stockholders' equity for the six months 
ended June 30, 1998 and 1997, and its average balance sheet for the 
three and six months ended June 30, 1998 and 1997.

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














<PAGE>12

A reconciliation of the numerators and denominators for earnings per 
common share dilution computations for the three months ended June 30, 
1998 and 1997 were presented below: (in thousands except per share 
data)



                                   Three Months ended June 30,
                                   ---------------------------
                                      1998         1997
                                      ----         ----
Earnings per share:
   Net Income                       $  972       $  987
   Weighted average common
     shares outstanding              4,230        4,315
                                    ------        -----
  Earnings per share                $  .23       $  .23
                                    ======       ======

Earnings per share assuming dilution:  
  Net Income                        $  972       $  987
                                    ======       ======

  Weighted average common
     shares outstanding              4,230        4,315
  Add:  dilutive effect of assumed
     exercises, incentive stock
     options and management
     retention plan                    322          215 
                                     -----        -----
  Weighted average common and
     dilutive potential common
     shares outstanding              4,552        4,530
                                     =====        =====

  Diluted earnings per share        $  .21       $  .22
                                    ======       ======

<PAGE>13
A reconciliation of the numerators and denominators for earnings per 
common share dilution computations for the six months ended June 30, 
1998 and 1997 were presented below: (in thousands except per share 
data)
 
                                 Six Months Ended June 30,
                                --------------------------
                                      1998          1997
                                      ----          ----
Earnings per share:
  Net Income                        $1,982         $2,304
Weighted average common
  shares outstanding                 4,234          4,341
                                     -----          -----

Earnings per share                  $  .47         $  .53
                                    ======         ======

Earnings per share assuming dilution:
  Net Income                        $1,982         $2,304
                                    ======         ======
  Weighted average comon
    shares outstanding               4,234          4,341
  Add: dilutive effect of assumed
   exercises, incentive stock
   options and management
   retention plan                      303            202
                                     -----          -----
  Weighted average common and
   dilutive potential common
   shares outstanding                4,537          4,563
                                    ======          =====

   Diluted earnings per share       $  .44         $  .51
                                    ======         ======


(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>14
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 were 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. On August 7, 1998, the Company completed the Repurchase Plan.


(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 the first and 
second quarters of 1998 were 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 June 30, 1998, the Bank's 
capital requirements under FIRREA and its actual capital ratios.  As 
of June 30, 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      $47,213   12.62%   $29,954    8.00%    $17,259   4.62%
Tier I Capital to
  Risk Weighted
    Assets       42,581   11.37     14,977    4.00      27,604   7.37
Tier I Capital to
  Average Assets 42,581    7.47     22,793    4.00      19,788   3.47


<PAGE>15
(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, commercial real estate, 
multi-family, construction loans, leases and consumer loans.  It is 

<PAGE>16
management's intention that commercial lending will become an 
increasingly larger portion of the total loan portfolio as the balance 
sheet is restructured to become 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 income produced by the mortgage 
center, 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 increased by $5.6 million 
from $582.7 million at December 31, 1997, to $588.3 million at June 
30, 1998. 

During the first quarter the Company funded over $31 million 
commercial loans, commercial real estate loans, construction loans, 
and leases, and during the second quarter, the fundings grew to over 
$42 million.   On a year-to-date basis the Company has funded over $73 
million in new commercial related loans. The composition of the loan 
portfolio continues to change as commercial loans represented 2%, 
commercial real estate loans represented 17%, multi-family loans 
represented 6%, construction loans represented 4%, and leases 
represented 9% at June 30, 1998.  These loans now represent 38% of 
total loans receivable, up from 23% at year-end 1997, and up from less 
than 12% at June 30, 1997. With $35 million of approved and accepted 
commitments outstanding as of June 30, 1998, which should be funded in 
the next 90 days,  management expects the  composition of commercial 
loans, commercial real estate, construction, and multi-family loans to  
continue to grow and become a larger percentage of the overall loan 
portfolio and assets mix. 


<PAGE>17
During the first six months of 1998, residential mortgage loans 
decreased by $42 million as borrowers took advantage of lower rates 
and refinanced their mortgages. The CoVest Banc mortgage center in 
McHenry, Illinois  processed  many of the refinanced mortgages which 
are then sold on a service released basis to the investor market.  The 
mortgage center has over $4 million of loans held for sale at June 30, 
1998.  The net overall result was that gross loans increased by $34 
million.

At June 30, 1998, the allowance for possible loan losses amounted to 
over $4.6 million.  This represented coverage of 1.12% of total loans 
as of June 30, 1998, and is greater than the 1.04% coverage which 
existed at year-end 1997.

Securities available-for-sale decreased by $15 million. Some were 
replaced by  municipal bonds and FHLB stock.  All new security 
purchases mature within five years.

Mortgage-backed and other mortgage-related securities decreased $17.6       
million or 14.6% from December 31, 1997.  The proceeds from the sales 
of and paydowns on mortgage-backed securities were used to fund 
additional commercial related loans.

Deposits decreased to $348.1 million at June 30, 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 52% as of June 30, 1998, 
from 59% as of December 31, 1997.  The only deposit type to show 
growth was the Bank's Preferred Money Market account.  This account 
has grown by over $21 million, or 27%, and 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.

Borrowed funds have increased by $31 million from year-end 1997.  
These funds, for the most part, have been centered in borrowings from 
the Federal Home Loan Bank ("FHLB").  The Bank has taken advantage of 
offerings by the FHLB when funds were available at rates under the 
levels being offered for retail deposits.   

Stockholders' equity in CoVest Bancshares, Inc. totaled $47.6 million 
at June 30, 1998.  At the end of the second quarter, the number of 
common shares outstanding was 4,326,803 and the book value per common 
share outstanding was $11.00. The Company repurchased over 69,000 
shares during the second quarter at an average price of $18.33. This 










<PAGE>18
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.   The Company announced its most recent stock 
repurchase plan on May 12, 1998. On  August 7, 1998, the Company completed
the Repurchase Plan.

At June 30, 1998, total non-performing assets amounted to $872,000, or 
0.15% 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 June 30, 1998.  Furthermore, 72% of non-
performing loans were single family mortgages.


The following table sets forth the amounts and categories of non- 
performing loans and assets. 
                                      June 30, 1998    Dec. 31, 1997 
                                      -------------    ------------- 
                                          (Dollars in Thousands)     
Non-performing loans:
  Mortgage Loans                          $     578       $    1,137
  Commercial Real Estate Loans                   -0-              -0-
  Multi-family Loans                             -0-              -0-
  Construction Loans                             -0-              -0-
  Commercial Loans & Leases                      -0-              -0-
  Consumer                                      222              167     
                                       -------------    ------------- 
   Total non-performing loans             $     800       $    1,304    

Other real estate owned                   $      72       $       -0- 
Other repossessed assets                  $      -0-      $       -0- 
                                       -------------    -------------
   Total non-performing assets           $      872       $    1,304

Total non-performing loans as 
  a percentage of net loans                     .19%             .35% 
 
Total non-performing assets as 
  a percentage of total assets                  .15%             .22% 




<PAGE>19

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 
$3.2 million for the six months ended June 30, 1998.  Net cash used in 
investing activities was $10.4 million for the six months ended June 
30, 1998.  Net cash provided in financing activities amounted to $4.8 
million for the six months ended June 30, 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 
operating expenses.  At June 30, 1998, the Company had commitments to 
originate loans and undisbursed loan balances totaling $52 million, 
and its customers had approved but unused lines of credit totaling $65 
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        SIX MONTHS ENDED  
                                  JUNE 30,   JUNE 30,     JUNE 30,  JUNE 30, 
                                     1998       1997         1998      1997
                                 --------------------    -------------------
Annualized Return on Avg. Equity     8.12%      7.91%        8.24%     9.22%
Annualized Return on Avg. Assets     0.68%      0.72%        0.68%     0.84%
Book Value per Share               $11.00     $11.15       $11.00    $11.15
Closing Market Price per Share     $18.125    $12.25       $18.125   $12.25 

Earnings per Primary Share:
Basic                               $ .23     $  .23       $  .47    $  .53  
Diluted                	            $ .21     $  .22       $  .44    $  .51


<PAGE>20  
Net Interest Margin                  2.93%      2.90%        2.90%     2.91%
Ratio of Operating Expense to
     Average Total Assets,
     Annualized                      2.31%      2.03%        2.27%     1.94%
Ratio of Net Interest Income to
     Non-Interest Expense,                      
     Annualized                     1.20x       1.38X        1.22x     1.45x
 



RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30,1998 AND 1997
----------------------------------------------------------------------

GENERAL. Net income for the three months ended June 30, 1998 totaled 
$972,000, or $0.23 (basic) and $0.21 (diluted) earnings per share, 
versus $987,000, or $0.23 (basic) and $0.22 (diluted) earnings per 
share for the like quarter in 1997.

NET INTEREST INCOME. The Company's net interest income totaled 
$3,972,000 for the three months ended June 30, 1998, compared to 
$3,855,000 for the second quarter of 1997. The Company's net interest 
margin increased 3 basis points,  to 2.93% for the second quarter of 
1998 from 2.90% for the second quarter of 1997.  The interest rate 
spread averaged 2.50% for 1998 and 2.41% during the  second quarter of 
1997. The volume of earning assets increased by $19 million between 
the two periods while the average yield increased by 6 basis points 
from 7.48% to 7.42%.
 
The cost of interest bearing liabilities decreased by 15 basis points 
from 5.07% to the current 4.92%.  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.

PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan 
losses was $769,000 for the second quarter of 1998 versus $402,000 for 
the like period in 1997. This increases the reserve for possible loan 
losses to 1.12% of total loans as of June 30, 1998.  The Company, and 
the banking industry as a whole, experienced significant credit card 
charge-offs and 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>21
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 
                                           June 30,     June 30, 
                                            1998          1997 
                                         ---------     --------- 
                                          (Dollars in Thousands) 
 
Balance at beginning of period          $   4,161       $    1,513
Charge-offs:
  Mortgage Loans                         $     -0-       $      -0-
  Commercial Real Estate Loans                 -0-			           -0-
  Multi-family Loans                           -0-              -0-
  Construction Loans                           -0-              -0-
  Commercial Loans & Leases                    -0-              -0-
  Consumer                                    326              441 
                                         --------         -------- 
Total                                         326              441
                                         --------         --------
Recoveries:
  Mortgage Loans                         $     -0-       $      -0-
  Commercial Real Estate Loans                 -0-		        	   -0-
  Multi-family Loans                           -0-              -0-
  Construction Loans                           -0-              -0-
  Commercial Loans & Leases                    -0-              -0-
  Consumer                                     28               16     
                                          --------         -------- 
Total                                          28               16
                                          --------         --------
 Net charge-offs                              298              425

Additions charged to                                            
  operations                                  769              402
                                         --------        --------- 
Balance at end of period                 $  4,632           $1,489
                                         ========        =========
                                         
Ratio of net charge-offs during 
  the period to average loans 
  outstanding during the period              0.07%            0.12% 
 
Ratio of allowance for possible
  loan losses to non- performing loans       5.79x            1.52x 



<PAGE>22
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES.  Net 
interest income after provision for possible loan losses increased by 
$107,000 or  3% to $3,972,000 for the three month period ended June 
30, 1998, as compared to $3,855,000 for the three month period ended 
June 30, 1997.


NON-INTEREST INCOME. Non-interest income excluding security gains 
increased $594,000, or 114%, from the comparable quarter last year. 
Loan charges, sales and servicing fees increased by 188%, or $488,000 
to $747,000, primarily from the activity being generated by the 
mortgage center.  Deposit related fees increased by $33,000 to 
$247,000, and income from sales of annuities and securities by CoVest 
Investments increased by  $54,000 to $69,000. Realized gains of 
$463,000 on sales of securities were also recorded.  This is an 
increase of $152,000 in net gains on security sales from the 
comparable quarter in 1997.

NON-INTEREST EXPENSE.  Non-interest expense increased $508,000, or 
18%, for the second quarter of 1998 from the comparable quarter in 
1997. Over $370,000, of this increase relates to commissions and 
employee benefits attributed to the mortgage center. Other operating 
expense increases include $148,000 due in part to occupancy costs at 
the mortgage center and a $53,000 increase in data processing 
expenses.  These increases were offset by a $138,000 decrease in 
advertising in 1998 from 1997 advertising expenses  related to the 
Bank's name change.

INCOME TAX EXPENSE.  Income tax expense increased $3,000 to $505,000    
for the quarter ended June 30, 1998, compared to $502,000 for the same 
period in 1997.


RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,1998 AND 1997
----------------------------------------------------------------------

GENERAL. For the first six months of 1998, the Company earned 
$1,982,000 versus $2,304,000 for the like period in 1997, a decrease 
of 14%. This represents $0.47 (basic) and $0.43 (diluted) versus $0.53 
(basic) and $0.51 (diluted) for the first six months of 1997.


<PAGE>23
NET INTEREST INCOME. The Company's net interest income totaled 
$8,016,000 for the six months ended June 30, 1998, compared to 
$7,677,000 for the first six months of 1997. The Company's net 
interest margin decreased 1 basis point,  to 2.90% for the six month  
period of 1998 from 2.91% for the like period of 1997.  The interest 
rate spread averaged 2.48% for 1998 and 2.42% during the first six 
months of 1997. The volume of earning assets increased by $30 million 
between the two periods while the average yield decreased by 2 basis 
points from 7.44% to 7.42%.
 
The cost of interest bearing liabilities decreased by 8 basis points 
from 5.02% to the current 4.94%.  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.

PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan 
losses was $1,168,000 for the six month period of 1998 versus $753,000 
for the like period in 1997. This increases our reserve for possible 
loan losses to 1.12% of total loans as of June 30, 1998.  The Company, 
and the banking industry as a whole, has experienced significant 
credit card charge-offs and 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>24
LOAN LOSS ALLOWANCE ANALYSIS.  The following table sets forth an 
analysis of the Company's allowance for possible loan losses for the 
periods indicated. 
                                             Six Months Ended 
                                           June 30,     June 30, 
                                            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-
  Multi-family Loans                         -0-              -0-
  Construction Loans                         -0-              -0-
  Commercial Loans & Lease                   -0-              -0-
  Consumer                                  559              717     
                                         --------         -------- 
Total                                       597              717
                                         --------         --------
Recoveries:
  Mortgage Loans                       $     -0-       $      -0-
  Commercial Real Estate Loans               -0-	        		   -0-
  Multi-family Loans                         -0-              -0-
  Construction Loans                         -0-              -0-
  Commercial Loans & Leases                  -0-              -0-
  Consumer                                   84               29     
                                         --------         -------- 
Total                                        84               29
                                         --------         --------
 Net charge-offs                            513              688

Additions charged to                                            
  operations                              1,168              753
                                         --------        --------- 
Balance at end of period               $  4,632           $1,489
                                         ========        =========
Ratio of net charge-offs during 
  the period to average loans 
  outstanding during the period            0.13%            0.19% 
 
Ratio of allowance for possible
  loan losses to non- performing loans     5.79x            1.52x 



<PAGE>25
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES.  Net 
interest income after provision for possible loan losses decreased by 
$76,000 or  1% to $6,848,000 for the six month period ended June 30, 
1998, as compared to $6,924,000 for the six month period ended June 
30, 1997.

NON-INTEREST INCOME. Non-interest income excluding security gains 
increased $1,018,000, or 99%, from the comparable period last year. 
Loan charges, sales and servicing fees increased by 143%, or $753,000 
to $1,269,000, primarily from the activity being generated by the 
mortgage center.  Deposit related fees increased by $74,000 to 
$466,000, and income from sales of annuities and securities by CoVest 
Investments increased by 600%, from $30,000 to $210,000. Realized 
gains of $719,000 on sales of securities were also recorded.  This was 
a decrease of $155,000 in net gains on security sales from the 
comparable period in 1997.

NON-INTEREST EXPENSE.  Non-interest expense increased $1,288,000, or 
24%, for 1998 from the comparable period in 1997. Over $370,000 of 
this increase related to commissions and employee benefits attributed 
to the mortgage center. Other operating expense increases included 
$254,000 due in part to occupancy costs at the mortgage center and a 
$154,000 increase in data processing expenses. The data processing 
expense included $75,000 related to testing  computer hardware and 
software to be Year 2000 compliant. These increases were offset by a 
$145,000 decrease in advertising in 1998 from 1997 advertising 
expenses  related to the Bank's name change.

INCOME TAX EXPENSE.  Income tax expense decreased $179,000 to 
$1,035,000    for the six month period ended June 30, 1998, compared 
to $1,214,000 for the same period in 1997.


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-


<PAGE>26
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 
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>27
The following table presents the Bank's current exposure to 
hypothetical changes in interest rates as of June 30, 1998:

                Percent Change in 
         Change in Interest Rates    Percent Change in      MV of Portfolio 
              (basis points)        Net Interest Income         Equity
         ------------------------   -------------------    -----------------
        
                  +200                     (9%)                   (28%)

                   100                     (6)                    (14)

                     0                      0                       0

                  -100                      6                      15

                  -200                     13                      31


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>28
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.  This number could vary based upon the results 
of testing and other factors. 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.  This same 
analysis has been performed for large depositors and funds providers.  
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>29
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.





<PAGE>30                    
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  
         On April 28, 1998, the annual meeting of stockholders was held.
         Gerald T. Niedert, Thomas TenHoeve and David B. Speer were             
         elected to serve as Class III directors with terms expiring  
         in 2001.  Continuing to serve as Class II directors with 
         terms expiring in 2000 are John A. Flink, Larry G. Gillie and  
         Frank A. Svoboda, Jr. Continuing to serve as Class I 
         directors with terms expiring in 1999 are George T. Drost and 
         David M. Miller.  The stockholders also ratified the 
         appointment of Crowe Chizek & Company, L.L.P., as the 
         Company's independent public accountants for the year ending 
         December 31, 1998.  

         There were 4,362,038 issued and outstanding shares of Common 
         Stock at the time of the annual meeting.  3,794,727 shares 
         were voted at the meeting.  The voting on each item presented 
         at the annual meeting was as follows: 
  

          Election of Directors          For                Withheld
         ----------------------          ---                ---------

          Gerald T. Niedert             3,773,741            20,986
          Thomas TenHoeve               3,773,404            21,323
          David B. Speer                3,773,741            20,986


         Ratification of Accountants
         -------------------------------------
                                            BROKER
         FOR       AGAINST     ABSTAIN     NON VOTES
         ---       -------     --------    ---------
      3,763,130     20,190      11,407         0
 

 
ITEM 5.  OTHER INFORMATION 
         None 
 




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 April 17, 1998 to 
         report under Item 5 net income for the period ended
         March 31, 1998.

         A report on Form 8-K was filed on May 12, 1998 to 
         report under Item 5 the completion of the Company's 12th
         Stock Repurchase Plan and announcing the 13th Stock
         Repurchase Plan.

         A report on Form 8-K was filed on May 27, 1998 to 
         report under Item 5 that the Company announced 
         the issuance of a regular quarterly dividend. 














<PAGE>31

                               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: August 13, 1998                   By:/s/ Larry G. Gillie
                                        --------------------------- 
                                             Larry G. Gillie 
                                             President and 
                                             Chief Executive Officer 
 
 
Date: August 13, 1998                   By:/s/ Paul A. Larsen
                                        --------------------------- 
                                             Paul A. Larsen 
                                             Senior Vice President, 
                                             Treasurer and 
                                             Chief Financial Officer