<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______ to_________
Commission file number ____________
EMERALD ISLE BANCORP, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3300934
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
730 HANCOCK STREET
QUINCY, MASSACHUSETTS, 02170
(Address of principal executive offices)
(617) 479-5001
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: SEPTEMBER 30, 1996, COMMON
STOCK- PAR VALUE $1.00 1,765,568 SHARES OUTSTANDING.
<PAGE>
EMERALD ISLE BANCORP, INC.
INDEX
PAGE NUMBER
Cover Page 1
Index 2
PART I - FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Balance Sheet - September 30, 1996, December 31, 1995 3
Statement of Income-Three and Nine months ended 4
September 30, 1996 and 1995
Statement of Changes in Stockholders' Equity-Nine months 5
ended September 30, 1996 and 1995
Statement of Cash Flows-Nine months ended 6
September 30, 1996 and 1995
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
PART II-OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
- --------------------------------------------------------------------------------
EMERALD ISLE BANCORP, INC
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
-----------------------------------
30-SEP-96 31-DEC-95
(UNAUDITED) (AUDITED)
-----------------------------------
<S> <C> <C>
ASSETS:
Total cash and due from banks $4,187,457 $3,213,259
Short term investments 5,627,673 4,860,000
Securities held to maturity 88,313,215 77,565,687
Securities available for sale 34,677,554 42,874,583
Loans, net 247,855,994 208,326,723
Banking premises & equipment, net 7,117,429 5,574,956
Accrued interest receivable 2,475,641 2,128,536
Other real estate owned 70,000 430,000
Other assets 2,057,377 1,891,469
---------------- ----------------
Total assets $392,382,340 $346,865,213
---------------- ----------------
---------------- ----------------
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Now & demand deposits $26,515,368 $22,011,361
Money market accounts 35,428,234 33,819,928
Other deposits 46,671,019 46,038,261
Term certificates accounts 213,247,769 180,917,699
---------------- ----------------
Total deposits 321,862,390 282,787,249
Federal Home Loan Bank advances 41,668,000 38,968,000
Mortgagors' escrow payments 1,457,287 1,094,397
Income taxes payable 53,097 364,444
Other liabilities 541,986 826,507
---------------- ----------------
Total liabilities 365,582,760 324,040,597
Commitments and contingencies
STOCKHOLDERS' EQUITY
Serial preferred stock, $1.00 par value 1,000,000
shares authorized: none issued 0 0
Common stock, $1.00 par value, 5,000,000 shares
authorized 1,765,568 and 1,532,431 shares
issued and outstanding 1,765,568 1,532,431
Additional paid-in-capital 11,982,715 8,824,970
Undivided profits 13,621,897 12,406,361
Net unrealized (loss)/gain on securities
available for sale (570,600) 60,854
---------------- ----------------
Total stockholders' equity 26,799,580 22,824,616
---------------- ----------------
Total Liabilities & Stockholders' Equity $392,382,340 $346,865,213
---------------- ----------------
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
EMERALD ISLE BANCORP, INC
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30 September 30 September 30
1996 1995 1996 1995
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST & DIVIDEND INCOME
Interest on loans $5,358,907 $4,586,235 $15,104,965 $12,681,350
Income & dividends on investment securities 2,008,073 1,460,106 5,872,444 4,321,728
Interest on short - term investments 90,980 27,255 145,753 262,263
------------ ------------------------------ ------------
Total interest & dividend income 7,457,960 6,073,596 21,123,162 17,265,341
INTEREST EXPENSE
Interest on deposits 3,677,926 3,100,306 10,441,825 8,935,861
Interest on borrowed funds 708,146 458,020 1,884,497 891,164
------------ ------------------------------ -------------
Total interest & dividend expense 4,386,072 3,558,326 12,326,322 9,827,025
------------ ------------------------------ -------------
Net interest income 3,071,888 2,515,270 8,796,840 7,438,316
Provision for possible loan losses 50,000 48,334 1,136,333 300,000
------------ ------------------------------ -------------
Net interest income after loan loss provision 3,021,888 2,466,936 7,660,507 7,138,316
------------ ------------------------------ -------------
OTHER INCOME
Gains (losses) securities sales (20,156) 191,395 33,124 310,657
Gains (losses) real estate sale 0 0 (12,948) (130,070)
Gains (losses) on loan sales net (2,900) (178) 13,101 (55,370)
Gains (losses) on sale of fixed assets 0 0 0 4,748
Gains (losses) on sale of loan servcing 0 0 0 763,806
Miscellaneous 150,530 122,496 479,128 435,070
------------ ------------------------------ -------------
Total other income 127,474 313,713 512,405 1,328,841
------------ ------------------------------ -------------
OPERATING EXPENSES
Salaries & employee benefits 1,080,875 848,925 3,087,744 2,483,073
Net occupancy & Equipment 336,431 261,336 984,634 733,013
Other real estate owned 30,538 48,367 78,858 195,471
Other noninterest expenses 509,371 486,062 1,498,287 1,641,220
------------ ------------------------------ ------------
Total operating expenses 1,957,215 1,644,690 5,649,523 5,052,777
------------ ------------------------------ -------------
Income (loss) before taxes 1,192,147 1,135,959 2,523,389 3,414,380
Income taxes 464,937 427,181 974,122 1,255,216
------------ ------------------------------ -------------
Net income 727,210 708,778 1,549,267 2,159,164
------------ ------------------------------ -------------
------------ ------------------------------ -------------
Per common share
Net income
Primary $0.43 $0.46 $0.95 $1.40
Average number of common shares
Primary 1,690,728 1,553,198 1,629,212 1,539,312
</TABLE>
<PAGE>
EMERALD ISLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine months ended September 30, 1996
(Unaudited in thousands)
<TABLE>
<CAPTION>
NET UNREALIZED
ADDITIONAL LOSS ON
COMMON PAID-IN UNDIVIDED MARKETABLE
STOCK CAPITAL PROFITS EQUITY SECURITIES TOTAL
------------ ------------ ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $1,532,431 $8,824,970 $12,406,361 $60,854 $22,824,616
Net income 1,549,267 1,549,267
Issuance of additonal stock 233,137 3,157,744 3,390,881
Increase in net unrealized loss
on securities held for sale (631,454) (631,454)
Cash dividend paid (333,730) (333,730)
---------- ----------- ----------- ----------- -----------
Balance at September 30, 1996 $1,765,568 $11,982,714 $13,621,898 ($570,600) $26,799,580
---------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
Emerald Isle Bancorp, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended September 30
------------------------------
1996 1995
------------ ------------
Cash flows from operating activities
Net Income $1,549,267 $2,159,164
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 491,289 378,982
Amortization of bond premium 292,207 418,708
Loan loss provision 1,136,333 300,000
(Gain) on sale of loans, real estate owned,
securities, and joint venture interest, (net) (33,276) (893,770)
Deferred loan fees 74,920 (255,736)
Loans sold 8,844,519 13,158,533
Loans originated for sale (8,837,218) (7,709,396)
Increase (decrease) in accrued expenses,
income taxes, and other liabilities (1,227,322) 193,367
(Increase) decrease in accrued interest
receivable (347,105) (155,989)
(Increase) decrease in other assets 843,243 196,945
------------ ------------
Total adjustments 1,237,590 5,631,644
------------ ------------
------------ ------------
Net cash provided by operating activities 2,786,857 7,790,808
------------ ------------
Cash flows from investing activities
Loans purchased (5,036,754) (19,648,822)
Loans paid(net) (35,845,081) (24,597,890)
Proceeds of Oreo Sales 494,163 666,000
Short-term investments ( net) (767,673) 890,000
Purchases of securities held to maturity (21,961,856)
Proceeds from maturities of securities held
to maturity 11,017,656 9,273,697
Purchase of securities available for sale (10,503,518) (29,245,821)
Proceeds of securities available for sale 17,628,984 21,924,171
Purchases of premises and equipment (2,033,762) (1,071,684)
------------ ------------
Net cash used by investing activities (47,007,841) (41,810,349)
------------ ------------
Cash flows from financing activities
Deposits, net 39,438,031 22,551,583
FHL Bank Advances (net) 2,700,000 11,300,000
Proceeds from sale of Common Stock 3,390,881 566,577
Dividends Paid (333,730) (243,390)
------------ ------------
Net cash provided by financing activities 45,195,182 34,174,770
Net increase (decrease) in cash 974,198 155,229
Cash and cash equivalents--beginning of year 3,213,259 3,780,957
------------ ------------
Cash and cash equivalents--end of year $4,187,457 $3,936,186
------------ ------------
Supplemental disclosures of cash flow information:
Interest paid $12,283,716 $9,811,906
Federal income taxes paid $385,000 $600,000
<PAGE>
EMERALD ISLE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim consolidated financial statements of Emerald
Isle Bancorp, Inc. and Subsidiaries (Kildare Corporation/The
Limerick Securities Corporation/Meath Corporation) presented
herein should be read in conjunction with the consolidated
financial statements of The Hibernia Savings Bank. for the
year ended December 31, 1995.
Consolidated financial information as of September 30, 1996
and the results of operations and the changes in
stockholders' equity and cash flows for the nine months
ended September 30, 1996 and 1995 are unaudited, and in the
opinion of management reflect all adjustments (consisting
solely of normal recurring accruals) necessary for a fair
presentation of such information. Interim results are not
necessarily indicative of results to be expected for the
entire year.
2) COMMITMENTS
At September 30, 1996 the Company had outstanding
commitments to originate loans amounting to approximately
$25,434,000 which are not reflected in the consolidated
balance sheet.
3) EARNINGS PER SHARE
The earnings per share computations for the quarter ended
September 30, 1996 are based on 1,690,728 common shares
outstanding, and for the quarter ended September 30, 1995
are based on 1,553,198 common equivalent shares outstanding.
4) FORMATION OF HOLDING COMPANY
At the annual meeting of Stockholders on April 29,1996 The
Hibernia Savings Bank stockholders voted to approve a plan
of reorganization and acquisition between the Bank and
Emerald Isle Bancorp, Inc. a newly formed Massachusetts
corporation organized at the direction of the Bank, and each
of the transactions contemplated thereby, pursuant to which
the Bank will become a wholly owned subsidiary of the
Emerald Isle Bancorp, Inc. The plan of reorganization and
acquisition, dated February 15, 1996, between the Bank and
Emerald Isle Bancorp, Inc. provides that each share of the
Bank's outstanding common stock, will be automatically
converted into and exchanged for one share of common stock
of Emerald Isle Bancorp, Inc. October 1, 1996 marked the
completion of the formation of the holding company Emerald
Isle Bancorp, Inc.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of the financial conditions
and results of operations for the three and nine month period
ended September 30, 1996.
The Company's total assets increased 17.5% on an annualized
basis to $392,382,340 at September 30, 1996 from total
assets of $346,865,213 at December 31, 1995 and increased
21.4% from total assets of $323,246,925 at September 30,
1995. Short term investments, securities held to maturity
and securities held for sale totaled $128,618,442 or 32.8%
of total assets at September 30, 1996 an increase of
$3,317,172 from $125,300,270 or 36.1% of total assets at
December 31, 1995 and an increase of $19,967,497 from
$108,650,945 or 33.6% of total assets at September 30, 1995.
Loans, net increased $39,529,271 or 19.0 % to $247,855,994
or 63.2% of total assets at September 30, 1996 from
$208,326,723 or 60.1% of total assets at December 31, 1995
and increased $46,295,451 from $201,560,543 or 62.4% of
total assets at September 30, 1995. The Company, during the
third quarter of 1996, originated and purchased loans
totaling $43,808,361 and sold loans totaling $5,815,971 as
compared to loans originated and purchased of $26,876,871
and sold loans totaling $4,905,861 during the third quarter
of 1995. Foreclosed real estate at September 30, 1996
totaled $70,000 or 0.02% of total assets compared to
$430,000 or 0.12% of total assets at December 31, 1995 and
$608,673 or 0.19% of total assets at September 30, 1995. The
Company's non-performing loans totaled $842,897, or 0.21% of
total assets at September 30, 1996 as compared to $930,766
or 0.27% of total assets at December 31, 1995 and $1,015,891
or 0.31% of total assets at September 30, 1995. The
Company's loan loss provision for the third quarter ended
September 30, 1996 was $50,000 as compared to $48,334 for
the third quarter of 1995. The allowance for loan losses
totaled $2,598,913 at September 30, 1996 as compared to
$2,541,997 at December 31, 1995 and $2,503,982 at September
30, 1995.
Deposits at September 30, 1996 totaled $321,862,390 as
compared to $282,787,249 at December 31, 1995 an increase of
$39,075,141, or 18.4% on an annualized basis, and also
increased $43,257,513 or 15.5% from deposits of $278,604,877
at September 30, 1995. Outstanding borrowings totaled
$41,668,000 at September 30, 1996 an increased of $2,700,000
from $38,968,000 at December 31, 1995 and increased
$21,368,000 from $20,300,000 at September 30, 1995.
<PAGE>
Stockholders' Equity increased to $26,799,580 at
September 30, 1996 from $22,824,616 at December 31, 1995 and
$22,282,268 at September 30, 1995. The increase for the
third quarter is due to earnings of $727,210, the issuance
of 103,478 additional shares of stock, of which 100,000
shares were issued through a private placement raising, net
of expenses, $1,501,500 of new capital, and a decrease as a
result of the payment of a $.07 dividend on common shares
outstanding totaling $116,394.
Material Changes in Results of Operations
Net income for the third quarter ended September 30, 1996
was $727,210 or $.43 per share as compared to net income in
the third quarter ended September 30, 1995 of $708,778 or
$.46 per share.
Interest and dividend income increased in the third quarter
of 1996 to $7,457,960 from $6,073,596 for the third quarter
of 1995 or 22.8%. The Company's total yield on average
earning assets for the third quarter of 1996 was 7.94% as
compared to 8.0% for the third quarter of 1995. Total
earning assets increased $67,649,447 or 21.7% to
$379,350,026 at September 30, 1996 from $311,700,579 at
September 30, 1995. The increase in earning assets accounts
for the increase of $1,384,364 in interest income.
Interest expense increased by $827,746 or 23.2% to
$4,386,072 for the third quarter ended September 30, 1996
from $3,558,326 for the third quarter ended September 30,
1995. The average cost of funds for the third quarter was
4.67% at September 30, 1996 as compared to 4.68% for the
same quarter in 1995. The increase of $26,062,000 in average
total deposits, along with an increase in outstanding
borrowings of $21,368,000 to $41,668,000 at September 30,
1996 from $20,300,000 at September 30, 1995 explains the
increase in interest expense.
Non-interest expenses totaled $1,957,214 for the third
quarter ended September 30, 1996 as compared to $1,644,689
for the same period in 1995, an increase of $312,525 or
19.0%. The principal increases are wage and benefit costs,
occupancy costs, and marketing costs. The Bank has increased
personnel in all customer related areas. The Company's
lending perspective has grown and along with this the
Company has increased staff to be able to meet its
customers borrowing needs and to maintain our portfolio. The
increase of branch personnel relates to three new locations,
one in
<PAGE>
Hingham which opened in July of 1995, one in Stoughton which
opened in December of 1995 and a second location in Hingham
which opened in May of 1996. Occupancy expenses increased
due to the addition of the three new full service branches
mentioned above. Marketing and advertising costs also
increased as a result of the ongoing expansion of our
franchise. Non-interest expense was positively effected by
the reduction of our OREO expenses.
Other income decreased by $127,474 to $186,239 for the third
quarter ended September 30, 1996 from $313,713 for the same
period in 1995. Other income for the third quarter of 1996
included service charges of $137,098, gains on the sale of
loans of $2,900, losses on the sale of securities of $20,156
and OREO income of $7,632 compared to service charges of
$111,107, losses on the sale of loans of $178, gains on the
sale of securities of $191,395 and OREO income of $11,389
for the third quarter of 1995.
Income Tax
Provision for income taxes for the quarter ended
September 30, 1996 was $464,938 as compared to $427,181 for
the same period in 1995.
Liquidity and Capital
The Company attempts to maximize interest-earning assets
while maintaining sufficient funds on hand to meet loan
commitments, cash disbursements and possible deposit
outflows. The Company obtains funds for investment and
other banking purposes principally from deposits,
borrowings, loan repayments and through sales of loans, loan
participations and securities available for sale, and
maturity of investment securities are a relatively stable
source of funds, deposit flows are greatly influenced by
general interest rates, economic conditions and competitive
factors. Borrowings may also be used to offset reductions
in other sources of funds such as deposits. The Bank may
borrow up to 30% of its total assets but not more than 20
times its capital stock holdings in the FHLB for any sound
business purpose for which the Bank has legal authority.
Borrowings authorized totaled $53,414,000 at September 30,
1996.
<PAGE>
Capital Resources and Dividends
The Company's regulators have classified and defined capital
into the following components: (1) Tier I capital, which
includes tangivle stockholders' equity for common stock and
certain perpetual preferred stock, and (2) Tier II capital,
which includes a portion of the allowance for possible loan
losses, certain qualifying long-term debt and preferred
stock which does not qualify for Tier I capital. In
addition, they have implemented risk-based capital
guidelines that require a bank to maintain certain minimum
capital as a percent of such bank's assets and certain off-
balance sheet items adjusted for pre-defined credit risk
factors (risk-adjusted assets). As of September 30, 1996
the Bank's Tier I and Tier II capital ratios were 11.69% and
12.80%, respectively. In addition to the risk-based
guidelines discussed above, the Bank's regulators require
that the Bank maintain a minimum leverage (Tier I capital as
a percent of tangible assets) of 4%. As of September 30,
1996 the Bank had a leverage capital ratio of 6.8%.
Asset/Liability Management
The overall interest rate sensitivity of the Bank is
dependent upon the bank's ability to reprice its interest
rate sensitive assets and liabilities. The ability to
successfully manage the repricing of assets and liabilities
significantly reduces the interest rate risk in any interest
rate environment. As of September 30, 1996 the Bank is net
liability sensitive for the next twelve months going
forward, and for the following one to two year period, net
asset sensitive in the two to three and three to five year
time horizons, liability sensitive in the five to ten year
horizon and asset sensitive thereafter. The Bank's
management monitors and manages interest rate risk as an
integral part of its overall business strategy.
<PAGE>
PART II - OTHER INFORMATION
For the quarter ended September 30, 1996, Items 1, 2, 3 and 5 of Part II
are either inapplicable or would elicit a response of "None" and therefore no
reference thereto has been made herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Hibernia Savings Bank held its Annual Meeting of Stockholders on
April 29, 1996.
(b) At the annual meeting, the following individuals were elected as
Directors of the Bank:
William E. Lucey Paul D. Osborne
CERTIFIED PUBLIC ACCOUNTANT TREASURER
O'CONNOR & DREW OSBORNE OFFICE FURNITURE
Thomas P. Moore, Jr. Douglas C. Purdy
VICE PRESIDENT ATTORNEY-AT-LAW
STATE STREET RESEARCH & MANAGEMENT CO. SERAFINI, PURDY, DINARDO &
WELLS
Mark A. Osborne
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
THE HIBERNIA SAVINGS BANK
Each other director whose term of office as a director continued after
the annual meeting is set forth below:
Martha M. Campbell Richard J. Murney
ATTORNEY-AT-LAW CERTIFIED PUBLIC ACCOUNTANT
Bernard J. Dwyer John V. Murphy
ATTORNEY-AT-LAW EXECUTIVE VICE PRESIDENT &
CHIEF OPERATING OFFICER
Peter L. Maguire, President DAVID L. BABSON & CO., INC.
MANAGEMENT INFORMATION SERVICES
Michael T. Putziger Richard P. Quincy
ATTORNEY-AT-LAW PRESIDENT
ROCHE, CARENS & DEGIACOMO QUINCY & CO.
Thomas J. Carens William T. Novelline
OF COUNSEL PRESIDENT
ROCHE, CARENS & DEGIACOMO ABBOT FINANCIAL MANAGEMENT
(c) In addition to the election of directors, the following matters were
also voted upon at the annual meeting: formation of a holding company;
election of the clerk; and selection of auditors.
<PAGE>
(i) The individuals identified below were elected to serve as directors of
the Bank for three year terms as follows:
For Against Abstentions Broker
or Withheld Non-Votes
Thomas P. Moore, Jr. 1,304,280 60,393 - -
Mark A. Osborne 1,310,462 54,211 - -
Paul D. Osborne 1,310,462 54,211 - -
Douglas C. Purdy 1,307,762 56,911 - -
(ii) The individual identified below was elected to serve as a director of
the Bank for a one year term as follows:
For Against Abstentions Broker
or Withheld Non-Votes
William E. Lucey 1,307,440 53,425 3,808 -
(iii) As set forth in the Bank's proxy statement, the holding company
formation was accomplished under a Plan of Reorganization and
Acquisition dated as of February 15, 1996 which provides for the
acquisition of all of the outstanding shares of the Bank's common
stock, $1.00 par value by the Company in exchange for an equal number
of shares of Company common stock, $1.00 par value, in a share
exchange pursuant to Chapter 172, Section 26B of the Massachusetts
General Laws. The vote for the formation of the holding company was
as follows:
For Against Abstentions Broker
or Withheld Non-Votes
1,101,481 9,269 3,554 250,369
(iv) The stockholders of the Bank voted to reelect Douglas C. Purdy as the
Clerk of the Bank until the next election or until a successor is
elected and qualified. The vote for the Clerk was as follows:
For Against Abstentions Broker
or Withheld Non-Votes
1,309,624 51,350 3,699 -
(v) The stockholders of the Bank voted to approve the selection of Arthur
Andersen, LLP, as independent auditors for the Bank to certify the
Annual Report of Condition of the Bank for the year ending
December 31, 1996, as follows:
For Against Abstentions Broker
or Withheld Non-Votes
1,358,735 1,800 4,138 -
(d) Not applicable.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Exhibit Description
10.1 Employment Agreement between The Hibernia Savings Bank and
Mark A. Osborne
10.2 Special Termination Agreement between The Hibernia Savings Bank
and Mark A. Osborne
10.3 Amendment to Special Termination Agreement between The Hibernia
Savings Bank and Mark A. Osborne
(b) On October 7, 1996, the Company filed a Form 8-K and reported in
response to Item 2 the consummation of the reorganization of The Hibernia
Savings Bank into a wholly-owned subsidiary of the Company. In the Company's
Form 8-K, it incorporated by reference from its Registration Statement on
Form 8-A the financial statements contained in the Bank's Annual Report on Form
F-2 for the year ended December 31, 1995 and the Quarterly Report on Form F-4
for the three months ended March 31, 1996. The Company also included the Bank's
Quarterly Report on Form F-4 for the three months ended June 30, 1996 as an
exhibit to the Company's Form 8-K.
<PAGE>
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.
Emerald Isle Bancorp, Inc.
Date: November 14, 1996 By: /s/ Gerard F. Linskey
---------------------
Gerard F. Linskey,
Treasurer
<PAGE>
Exhibit 10.1
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 2nd day of January, 1991 by and between THE
HIBERNIA SAVINGS BANK, a Massachusetts savings bank with its main office in
Quincy, Massachusetts (the "Bank") and MARK A. OSBORNE of Norwell,
Massachusetts (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive and the Bank are parties to an Employment
Agreement dated September 4, 1986; and
WHEREAS, certain further action has been taken by the Bank with respect
to the Executive's employment with the Bank and the parties wish hereby to
enter into a new Employment Agreement to memorialize the current
understandings between the parties;
NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Bank and the Executive agree as follows:
1. EMPLOYMENT. The Bank agrees to employ the Executive and the Executive
agrees to continue in the employ of the Bank on the terms and conditions
hereinafter set forth.
2. CAPACITY. The Executive shall serve the Bank as its President,
Chairman of the Board of Directors and Chief Executive Officer subject to his
election by the Board of Directors. In this capacity, the Executive shall,
subject to the By-Laws of the Bank and to the direction of the Board of
Directors, have responsibility for the general supervision and management of
the Bank's business.
<PAGE>
3. EFFECTIVE DATE AND TERM. The commencement date (the "Commencement
Date") of this Agreement shall be January 2, 1991. Subject to the provisions
of Section 6, the term of the Executive's employment hereunder shall be for
five (5) years from the Commencement Date; provided, however, that the term
shall be extended automatically for periods of one year commencing on the day
prior to the first anniversary of the Commencement Date and on the day prior
to each subsequent anniversary thereafter, unless, on the date of any such
anniversary, either party gives written notice to the other of such party's
election not to extend the term of this Agreement. The last day of such term,
as so extended from time to time, is herein sometimes referred to as the
"Expiration Date".
4. COMPENSATION AND BENEFITS. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) SALARY. For all services rendered by the Executive under this
Agreement, the Bank shall pay the Executive a base salary at the rate
of $185,000.00 per year, subject to increase from time to time in
accordance with the usual practice of the Bank with respect to review of
compensation of its senior executives. At such time as the initial base
salary is increased, if ever, such increased salary shall become the
base salary under this
-2-
<PAGE>
Agreement. The Executive's salary shall be payable in periodic
installments in accordance with the Bank's usual practice for its
senior executives.
(b) REGULAR BENEFITS. The Executive shall also be entitled to
participate in any and all employee benefit plans, medical insurance
plans, life insurance plans, disability income plans, retirement plans,
bonus incentive plans and other benefit plans from time to time in
effect for senior executives of the Bank. Such participation shall be
subject to (i) the terms of the applicable plan documents, (ii) generally
applicable Bank policies and (iii) the discretion of the Board of
Directors or any administrative or other committee provided for in or
contemplated by such plan. In addition, the Executive shall be entitled
to receive benefits which are the same or substantially similar to
those which are currently being provided to the chief executive officers
of savings banks within the Commonwealth of Massachusetts.
(c) BUSINESS EXPENSES. The Bank shall reimburse the Executive for all
reasonable travel, entertainment and other business expenses incurred by
him in the performance of his duties and responsibilities, subject to
such reasonable requirements with respect to substantiation and
documentation as may be specified by the Bank including without
limitation expenses incurred in travelling to and
-3-
<PAGE>
from and attending conventions and seminars in connection with the
Bank's business. On those occasions when Executive is accompanied by
his spouse, Bank shall pay all reasonable expenses incurred by
Executive on his spouse's behalf.
(d) AUTOMOBILE. The Bank will provide the Executive with the full
use of an automobile of a type and style consistent with his status as
President, Chief Executive Officer and Chairman of the Board, such
automobile to be selected by the Executive. All costs of operating,
insuring, maintaining or repairing said automobile (including without
limitation the costs of gasoline and oil) shall be paid by the Bank. The
Executive recognizes that such costs paid by the Bank represent taxable
income to him. The Bank agrees to pay to the Executive, on an annual
basis, an amount approximating the additional tax cost to the Executive
incurred as a result of the inclusion of such costs in the Executive's
taxable income to him. Such amount, to be determined solely by the Bank,
in its reasonable judgment, shall be based upon average marginal rates
in effect for persons receiving like compensation, and the actual tax
paid by the Executive shall not determine the amount so paid.
(e) VACATION. The Executive shall be entitled to not less than four
weeks of vacation per year, to be taken at
-4-
<PAGE>
such times and intervals as shall be determined by the Executive with the
approval of the Bank, which approval shall not be unreasonably withheld.
During such vacation time, the Executive's compensation shall be paid in
full.
(f) LIFE INSURANCE PLAN. The Executive and the Bank acknowledge that,
in addition to the Executive being a named insured under the Bank's group
life insurance plan, the Executive is covered by a term life insurance
contract in the face amount of $750,000. The Executive shall be the owner
of the policy and, in the event of the death of the Executive while in the
employ of the Bank, the proceeds shall be paid to the beneficiary
specified by the Executive, or if no beneficiary shall have been so
specified, to the estate of the Executive. The Bank shall be solely
responsible for the payment of premiums on such term life insurance
policy for so long as this Agreement is in effect. If, for any reason,
the policy is cancelled, Bank shall procure and pay for a substitute
insurance policy providing similar coverage.
The Executive recognizes that insurance premiums paid by the Bank on
all policies providing insurance in excess of limitations imposed by the
Internal Revenue Code are considered "excess insurance" and represent
taxable income to him. The Bank agrees to pay to the Executive, on an
annual basis, an amount approximating the additional tax
-5-
<PAGE>
cost to the Executive incurred as a result of the inclusion of all such
premiums for such excess insurance in the Executive's taxable income. Such
amount, to be determined solely by the Bank, in its reasonable judgment,
shall be based upon average marginal rates in effect for persons receiving
like compensation, and the actual tax paid by the Executive shall not
determine the amount so paid.
At the expiration of the Bank's obligations to Executive under this
Agreement including the payment of all termination benefits, Bank's
obligations to pay the premiums on such term policy shall cease; provided
however, that Bank will insure that such policy or policies provide the
Executive with the option for Executive to assume the premium cost of
continuing such insurance coverage.
(g) PHYSICAL EXAMINATION. The Executive agrees that he will submit to
an annual physical examination by a physician licensed to practice medicine
in the Commonwealth of Massachusetts chosen by the Executive. The Bank
will pay all expenses of such examination but shall not be entitled to a
report of the examination.
(h) TAX RETURN PREPARATION AND TAX PLANNING SERVICES. The Bank will
contract with the Bank's accountants in order to have such accountants
provide all services to Executive as are necessary to prepare the
Executive's state and federal tax returns and to provide such financial
and tax
-6-
<PAGE>
planning services as may be reasonably required by the Executive. All
costs of such services shall be paid by the Bank.
The Executive recognizes that such payments paid by the Bank on all
such financial planning and tax services represent taxable income to him.
The Bank agrees to pay to the Executive, on an annual basis, an amount
approximating the additional tax cost to the Executive incurred as a
result of the inclusion of ALL such financial planning and tax services
in the Executive's taxable income. Such amount, to be determined solely
by the Bank, in its reasonable judgment, shall be based upon average
marginal rates in effect for persons receiving like compensation, and
the actual tax paid by the Executive shall not determine the amount so
paid.
(i) SALARY CONTINUATION PLAN. The Bank agrees that, in the event of
the death of the Executive prior to the termination of this Agreement,
in addition to any other life insurance benefits which are provided for
under this Agreement, the Bank will pay the Executive's named beneficiary
the sum of One Hundred Thousand Dollars ($100,000.00) per year for each
of the four years following the Executive's death. Such amount shall be
deemed a "salary continuation benefit" and shall be paid in equal monthly
installments over the four year period. The Bank may purchase and maintain
a life insurance policy on the
-7-
<PAGE>
Executive in an amount sufficient to fund such benefit and, in such event
the Bank shall be the owner and beneficiary of such policy and solely
responsible for the payment of premiums on such policy, but such benefit
shall be due and payable whether or not such insurance is purchased and
whether or not the Bank receives payment on any such policy.
(j) OTHER BENEFITS. In addition to paying for all membership and
subscription fees for professional organizations and periodicals, Bank
shall pay for the cost of initiation fee and annual membership dues or
fees on behalf of the Executive at a private golf course of the
Executive's choosing in the Greater Boston Area.
5. EXTENT OF SERVICE. During his employment hereunder, the Executive
shall, subject to the direction and supervision of the Board of Directors,
devote his full business time, best efforts and business judgment, skill and
knowledge to the advancement of the Bank's interests and to the discharge of
his duties and responsibilities hereunder. He shall not engage in any other
business activity, except as may be approved by the Board of Directors;
provided, however, that nothing herein shall be construed as preventing the
Executive from the following:
(a) investing his assets in a manner not prohibited by Section 9(a)
hereof, and in such form or manner as shall not require any material
services on his part in the operations or affairs of the companies or
other entities in which such investments are made;
-8-
<PAGE>
(b) serving on the board of directors of any company, subject to the
prohibitions set forth in Section 9(a) and provided that he shall not be
required to render any material services with respect to the operations
or affairs of any such company; or
(c) engaging in religious, charitable or other community or non-profit
activities which do not impair his ability to fulfill his duties and
responsibilities under this Agreement.
6. TERMINATION AND TERMINATION BENEFITS. The Executive's employment may
be terminated under the following circumstances:
(a) TERMINATION BY THE BANK FOR CAUSE. The Executive's employment
hereunder may be terminated without further liability on the part of the
Bank effective immediately by a two-thirds vote of all of the members of
the Board of Directors for cause by written notice to the Executive
setting forth in reasonable detail the nature of such cause. Only the
following shall constitute "cause" for such termination:
(i) Deliberate dishonesty of the Executive with respect to
the Bank or any subsidiary of affiliate thereof;
(ii) Conviction of the Executive of a crime involving moral
turpitude;
(iii) Gross and willful failure to perform a substantial portion
of his duties and responsibilities hereunder, which failure continues
for more than thirty days
-9-
<PAGE>
after written notice given to the Executive pursuant to a two-thirds
vote of all of the members of the Board of Directors, such vote to set
forth in reasonable detail the nature of such failure.
(b) TERMINATION BY THE EXECUTIVE. The Executive's employment hereunder
may be terminated effective immediately by the Executive by written notice
to the Board of Directors in the event of the following:
(i) Failure of the Board of Directors to elect the Executive to
any of the offices of President, Chairman of the Board, and Chief
Executive Officer of the Bank, or to continue the Executive in such
offices; or
(ii) Failure by the Bank to comply with any of the provisions of
Section 4(a) through (j) inclusive or any material breach by the Bank of
any other provision of this Agreement; or
(iii) If, in the reasonable judgment of the Executive (such
judgment being exercised in good faith), a significant change in the
nature or scope of Executive's responsibilities, power, functions or
duties has occurred which, when compared to the Executive's
responsibilities, powers, functions or duties exercised by the Executive
as of the date of execution of this Agreement, constitutes a demotion
and/or dismissal or if a reasonable determination is made by the
Executive that he is unable to exercise the
-10-
<PAGE>
responsibilities, powers, functions or duties exercised by him as of
the date of execution of this Agreement.
(c) TERMINATION BY THE BANK WITHOUT CAUSE. The Executive's employment
with the Bank may be terminated without cause by a three-fourths vote of
all members of the Board of Directors on written notice to the Executive.
(d) TERMINATION AT AGE SIXTY-FIVE. The Executive reaches age
sixty-five, except that retirement or termination benefits provided by
this Agreement shall not be prejudiced by this Section.
(e) CERTAIN TERMINATION BENEFITS. In the event of termination of
this Agreement for any reason other than a termination under Section
6(a) above, the Executive shall be entitled to the following
benefits:
(i) For the period subsequent to the date of termination until
the Expiration Date, the Bank shall continue to pay the Executive the
base salary at the rate in effect on the date of termination,
including such increases as are provided in Section 4(a).
(ii) For the period subsequent to the date of termination until
the Expiration Date, the Executive shall continue to receive all
benefits described in Section 4(b), (d) and (f) above existing on the
date of termination (except for any cash bonus plans which shall be
pro-rated through the date of termination). For purposes of
-11-
<PAGE>
application of such benefits, the Executive shall be treated as if he
had remained in the employ of the Bank, with an annual salary at the
rate in effect on the date of termination, with increases as provided
in Section 4(a), and service credits will continue to accrue during such
period as if the Executive had remained in the employ of the Bank.
(iii) If, in spite of the provisions of Section 6(e)(ii) above,
benefits or service credits under any benefit plan shall not be payable
or provided under any such plan to the Executive, or to the Executive's
dependents, beneficiaries or estate, because the Executive is no longer
deemed to be an employee of the Bank, the Bank itself shall pay or
provide for payment of such benefits and service credits for such
benefits to the Executive, or to the Executive's dependents,
beneficiaries or estate.
(iv) If, as of the date of termination, the Executive is eligible
to retire under any retirement plan of the Bank in effect at such time,
the Executive will be entitled to receive any and all benefits that would
accrue to retiring employees under such plan for such period of time
after termination as the Executive is receiving termination benefits
under this Agreement.
(f) Not withstanding any other provision of this Agreement, the
Executive shall be under no obligation whatsoever to seek or accept
any employment after termination
-12-
<PAGE>
of employment with the Bank and the Executive's entitlement to all
benefits provided herein shall not be prejudiced in any way by his
failure to seek employment after termination of employment with the
Bank.
7. TERMINATION BENEFITS BUY-OUT.
(a) In the event of Executive's termination hereunder under
circumstances entitling the Executive to termination benefits under
Section 6(e), at the Executive's sole option, the Executive, at any
time before all termination benefits have been paid, may demand and,
upon such demand, the Bank shall pay the Executive the then current
value of the termination benefits owed to the Executive, such payment
to be made within thirty (30) days of demand.
(b) In the event of the Executive's death after the lawful termination
of this Agreement, but prior to the payment of all termination benefits
owed to Executive hereunder, in addition to any other life insurance
benefits provided in this Agreement, the Bank will pay the Executive's
named beneficiary the sum of One Hundred Thousand Dollars
($1,000,000.00) per year for each of the four years following the
Executive's death. Such amount shall be deemed a "salary continuation
benefit" and shall be paid in equal monthly installments over the four
year period. The Bank may purchase and maintain a life insurance policy
on the Executive in an amount sufficient to fund such benefit and,
-13-
<PAGE>
in such event the Bank shall be the owner and beneficiary of such
policy and solely responsible for the payment of premiums on such
policy, but such benefit shall be due and payable whether or not such
insurance is purchased and whether or not the Bank receives payment on
any such policy.
8. DISABILITY. If, due to illness or physical or mental disability, the
Executive shall be unable to perform substantially all of his duties and
responsibilities hereunder, the Board of Directors may designate another
executive to act in his place during the period of such disability.
Notwithstanding any such designation, the Executive shall continue to receive
his full salary and benefits under Section 4 of this Agreement until he
becomes eligible for disability income under the Bank's disability income
plan. While receiving disability income payments under such plan, the
Executive shall not receive any salary under Section 4(a), but shall continue
to participate in the Bank's benefit plans and to receive other benefits as
specified in Section 4 until the Expiration Date; provided, however, that in
the event that the disability income payments under under the Bank's
disability income plan are less than the Executive's salary at the time of
such disability, the Bank shall pay the Executive an amount equal to the
difference between such salary and disability payments. In the absence of a
disability income plan at the time of such disability, the Bank shall pay the
Executive benefits equal to the Executive's full salary. If
-14-
<PAGE>
any question shall arise as to whether during any period the Executive was
disabled so as to be unable to perform substantially all of his duties and
responsibilities hereunder due to physical or mental illness, the Executive
may, and at the request of the Bank will, submit to the Bank a certification,
in reasonable detail, by a physician selected by the Executive or his
guardian to whom the Bank has no reasonable objection as to whether the
Executive was so disabled, and such certification shall for the purposes of
this Agreement be conclusive of the issue. If such question shall arise and
the Executive shall fail to submit such certification, the Bank's
determination of such issue shall be binding on the Executive.
9. NONCOMPETITION AND CONFIDENTIAL INFORMATION
(a) NONCOMPETITION. During
(i) a period of one year following the date of termination of
the Executive's employment with the Bank by the Executive as a result of
his election not to extend pursuant to Section 3 or by the Bank for
cause pursuant to Section 6(a) hereof, and
(ii) the period during which the Bank continues to provide
benefits to the Executive pursuant to Section 6(e)(i)-(iii) hereof,
the Executive will not, directly or indirectly, whether as owner, partner,
shareholder, consultant, agent, employee, co-venturer or otherwise, or through
any person (as defined in Section 11),
-15-
<PAGE>
compete in the Bank's market area (defined as the towns in which the Bank's
main office and branch offices are located and all towns contiguous thereto)
with the banking or any other business conducted by the Bank during the
period of his employment hereunder, nor will he attempt to hire any employee
of the Bank, assist in such hiring by any other person, encourage any such
employee to terminate his or her relationship with the Bank or solicit or
encourage any customer of the Bank to terminate its relationship with the
Bank or to conduct with any other person any business or activity which such
customer conducts or could conduct with the Bank.
(b) CONFIDENTIAL INFORMATION. The Executive will not disclose to
any other person (except as required by applicable law or in connection
with the performance of his duties and responsibilities hereunder), or
use for his own benefit or gain, any confidential information of the Bank
obtained by him incident to his employment with the Bank. The term
"confidential information" includes, without limitation, financial
information, business plans, prospects and opportunities (such as
lending relationships, financial product developments, or possible
acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the Bank's management but does not
include any information which has become part of the public domain by
means other than the Executive's non-observance of his obligations
hereunder.
-16-
<PAGE>
(c) RELIEF INTERPRETATION. The Executive agrees that the Bank shall
be entitled to injunctive relief for any breach by him of the covenants
contained in Sections 9(a) or 9(b). In the event that any provision of
this Section 9 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over
too great a period of time, too large a geographic area or too great a
range of activities, it shall be interpreted to extend only over the
maximum period of time, geographic area or range of activities as to
which it may be enforceable. For purposes of this Section 9, the term
"Bank" shall mean the Bank and any of its subsidiaries and affiliates.
10. CONFLICTION AGREEMENTS. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
he is a party or is bound, and that he is not now subject to any covenants
against competition or similar covenants which would affect the performance
of his obligations hereunder.
11. DEFINITION OF "PERSON", "DIRECTOR" AND "BOARD OF DIRECTORS". For
purposes of this Agreement: the term "Person" shall mean an individual, a
corporation, an association, a partnership, an estate, a trust and any other
entity or organization; and the terms "Director" and "Board of Directors"
shall mean a Director and the Board of Directors, respectively, of the Bank.
-17-
<PAGE>
12. WITHHOLDING. All payments made by the Bank under this Agreement
shall be net of any tax or other amounts required to be withheld by the Bank
under applicable law.
13. ENFORCEMENT EXPENSES. In the event that the Executive retains legal
counsel and/or incurs other costs and expenses in connection with the
enforcement of any or all of the Executive's rights under this Agreement, the
Bank shall pay (or the Executive shall be entitled to recover from the Bank,
as the case may be) the Executive's reasonable attorney's fees and other
reasonable costs and expenses in connection with the enforcement of said
rights regardless of whether the Executive prevails on the merits of his
claims, so long as such claims are made in good faith.
14. ASSIGNMENT; SUCCESSORS AND ASSIGNS. ETC. Neither the Bank nor the
Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the
other party. This Agreement shall inure to the benefit of and be binding upon
the Bank and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
15. SPECIAL TERMINATION AGREEMENT. Executive and Bank are parties to a
written Special Termination Agreement dated September 4, 1986 as amended by
Amendment dated as of January 2, 1991. Nothing contained in this Agreement
shall limit the provisions thereof and such Special Termination Agreement is
to remain in full force and effect in accordance with its provisions as from
time to time amended.
-18-
<PAGE>
16. INDEMNITY. Bank shall indemnify, defend, and hold the Executive
harmless for all acts or decisions made by him in good faith while performing
services for the Bank. In addition to and not in lieu of such indemnity,
Bank shall include Executive as an insured under any insurance policy now in
force or hereafter obtained during the term of this Agreement covering the
officers and directors of the Bank. Bank shall pay all expenses including
without limitation reasonable attorneys' fees actually and necessarily
incurred by the Executive in connection with the defense of such acts and
decisions, suits or proceedings, including costs of settlement and/or appeal.
17. ENFORCEABILITY. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is
so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
18. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party
to require the performance of any term or obligation of this Agreement, or
the waiver by either party of any breach of this Agreement, shall not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver
of any subsequent breach.
-19-
<PAGE>
19. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and
delivered in person or sent by registered or certified mail, postage prepaid,
to the Executive at the last address the Executive has filed in writing with
the Bank, or, in the case of the Bank, at its main office attention of the
Clerk.
20. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Bank.
21. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and governed in all respects by the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Bank, by its duly authorized officer and by the Executive,
as of the date first above written:
ATTEST: THE HIBERNIA SAVINGS BANK
/s/ Thomas Johnson By: /s/ [Unreadable]
- ------------------------ --------------------------
, Clerk
Title: Director
-----------------------
[Seal]
WITNESS:
/s/ [Unreadable] /s/ Mark A. Osborne
- ------------------------ ------------------------------
MARK A. OSBORNE
-20-
<PAGE>
Exhibit 10.2
<PAGE>
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 4th day of September, 1986 by and between
HIBERNIA SAVINGS BANK, a Massachusetts savings bank with its main office in
Boston, Massachusetts (the "Bank") and MARK A. OSBORNE, an individual
presently employed by the Bank in the capacity of President and Chief
Executive Officer (the "Executive").
1. PURPOSE. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Bank and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Bank, the Bank is willing
to provide, subject to the terms of this Agreement, certain severance
benefits to protect the Executive from the consequences of a Terminating
Event (as defined in Section 3) occurring subsequent to a Change in Control.
2. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred in either of the following events: (i) if there has occurred a
change in control which the Bank would be required to report in response to
Item 5(f) of the Form for Proxy Statement (Form F-5) prescribed by 12 CFR
Section 335.212 promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or, if such regulation is no longer in effect, any
regulations promulgated by the Federal Deposit
<PAGE>
Insurance Corporation or by the Securities and Exchange Commission pursuant
to the 1934 Act which are intended to serve similar purposes or (ii) when any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934
Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3
promulgated under the 1934 Act), directly or indirectly, of securities of the
Bank representing twenty-five percent or more of the total number of votes
that may be cast for the election of directors of the Bank and, in the case
of either (i) or (ii) above, the Bank's Board of Directors has not consented
to such event by a two-thirds vote of all of the members of the Board of
Directors adopted either prior to such event or within ninety days
thereafter, except that, if at the time such a consent vote is adopted after
such event the persons who were directors of the Bank immediately prior to
such event do not constitute a majority of the Board of Directors of the Bank
or of any successor institution, such vote shall not be deemed to constitute
consent for the purposes of this Agreement. In addition, a Change in Control
shall be deemed to have occurred if, as the result of, or in connection with,
any tender or exchange offer, merger or other business combination, sale of
assets or contested election or any combination of the foregoing
transactions, the persons who were directors of the Bank before such
transaction shall cease to constitute a majority of the Board of Directors of
the Bank or of any successor institution. Notwithstanding the other
provisions of
-2-
<PAGE>
this Section, the sale of the Bank's stock in connection with its conversion
from mutual to stock form shall not constitute a Change in Control.
3. TERMINATING EVENT. A "Terminating Event" shall mean (a) termination
by the Bank of the employment of the Executive with the Bank for any reason
other than (i) death, (ii) deliberate dishonesty of the Executive with
respect to the Bank or any subsidiary or affiliate thereof or (iii)
conviction of the Executive of a crime involving moral turpitude or (b)
resignation of the Executive from the employ of the Bank, while the Executive
is not receiving payments or benefits from the Bank by reason of the
Executive's disability, subsequent to the occurrence of any of the following
events:
(i) A significant change in the nature or scope of the Executive's
responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised
by the Executive immediately prior to the Change in Control; or
(ii) A reasonable determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities,
authorities, powers, functions or duties exercised by the Executive
immediately prior to such Change in Control; or
(iii) A decrease in the total annual compensation payable by the Bank to
the Executive other than as a result of a decrease in compensation payable
to the Executive and
-3-
<PAGE>
to all other executive officers of the Bank on the basis of the Bank's
financial performance.
4. SEVERANCE PAYMENT. In the event a Terminating Event occurs within
three years after a Change in Control, the Bank shall pay to the Executive an
amount equal to (3) three times the "base amount" (as defined in Section
280G(b)(3) of the Internal Revenue Code of 1954, as amended (the "Code"))
applicable to the Executive, less (y) One Dollar ($1.00), payable in one lump
sum payment on the date of termination.
5. EMPLOYMENT STATUS. This Agreement is not an agreement for the
employment of the Executive and shall confer no rights on the Executive
except as herein expressly provided.
6. TERM. Subject to the satisfaction of the conditions set forth in
Sections 15 and 16 hereof, this Agreement shall take effect one day prior to
the effective date of the conversion of the Bank from mutual to stock form of
Massachusetts savings bank, and shall terminate upon the earlier of (a) the
termination by the Bank of the employment of the Executive because of death,
deliberate dishonesty of the Executive with respect to the Bank or any
subsidiary or affiliate thereof or conviction of the Executive of a crime
involving moral turpitude, (b) the resignation or termination of the
Executive for any reason prior to a Change in Control or (c) the resignation
of the Executive after a Change in Control for any reason other than the
occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
-4-
<PAGE>
7. WITHHOLDING. All payments made by the Bank under this Agreement shall
be net of any tax or other amounts required to be withhold by the Bank under
applicable law.
8. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this agreement or the breach thereof shall be settled by
arbitration in accordance with the laws of the Commonwealth of Massachusetts
by three arbitrators, one of whom shall be appointed by the Bank, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association
in the City of Boston. Such arbitration shall be conducted in the City of
Boston in accordance with the rules of the American Arbitration Association,
except with respect to the selection of arbitrators which shall be as
provided in this Section 8. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. In the
event that it shall be necessary or desirable for the Executive to retain
legal counsel and/or incur other costs and expenses in connection with the
enforcement of any or all of the Executive's rights under this Agreement, the
Bank shall pay (or the Executive shall be entitled to recover from the Bank,
as the case may be) the Executive's reasonable attorneys' fees and other
reasonable costs and expenses in connection with the enforcement of said
rights (including the enforcement of any
-5-
<PAGE>
arbitration award in court) regardless of the final outcome, unless and to
the extent the arbitrators shall determine that under the circumstances
recovery by the Executive of all or a part of any such fees and costs and
expense would be unjust.
9. ASSIGNMENT. Neither the Bank nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the Bank and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the
completion by the Bank of all payments due him under this Agreement, the Bank
shall continue such payments to the Executive's beneficiary designated in
writing to the Bank prior to his death (or to his estate, if he fails to make
such designation).
10. ENFORCEABILITY. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is
so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
11. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving
-6-
<PAGE>
party. The failure of either party to require the performance of any term or
obligation of this Agreement or the waiver by either party of any breach of
this Agreement shall not prevent any subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent breach.
12. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and
delivered in person or sent by registered or certified mail, postage prepaid,
to the executive at the last address the Executive has filed in writing with
the Bank or, in the case of the Bank, at its main office, attention of the
Clerk.
13. ELECTION OF REMEDIES. An election by the Executive to resign after a
Change in Control under the provisions of this Agreement shall not constitute
a breach by the Executive of any employment agreement between the Bank and
the Executive and shall not be deemed a voluntary termination of employment
by the Executive for the purpose of interpreting the provisions of any of the
Banks' benefit plans, programs or policies. Nothing in this Agreement shall
be construed to limit the rights of the Executive under any employment
agreement that he may then have with the Bank.
14. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Bank.
-7-
<PAGE>
15. RATIFICATION OF AGREEMENT. This Agreement shall be submitted to the
full Board of Directors of the Bank for ratification at the first meeting of
the Board of Directors subsequent to the Bank's conversion.
16. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Bank, by its duly authorized officer and by the Executive,
as of the date first above written:
ATTEST: [Bank]
/s/ Thomas Johnson By: /s/ Thomasine Kennedy
- ------------------ ---------------------
Clerk Title: Treasurer
---------
[Seal]
WITNESS:
/s/ Judith K. Wyman /s/ Mark A. Osborne
- ------------------- -------------------
MARK A. OSBORNE
-8-
<PAGE>
Exhibit 10.3
<PAGE>
AMENDMENT
Reference is made to a Special Termination Agreement dated September 4,
1986 by and between The Hibernia Savings Bank ("Bank") and Mark A. Osborne
("Executive").
WHEREAS, the Executive and the Bank are parties to an Employment
Agreement dated January 2, 1991;
WHEREAS, the parties wish to amend the Special Termination Agreement,
dated September 4, 1986,
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Bank and the Executive
agree as follows:
1. Paragraph 3(a) is amended by adding the words "after a Change in
Control" after the word "Bank" in line 3 of paragraph 3.
2. Paragraph 8 of the Special Termination Agreement dated September 4,
1986 is hereby deleted in its entirety and in its place is inserting
the following:
"In the event that the Executive retains legal counsel and/or
incurs any other costs or expenses in connection with the
enforcement of any or all of the Executive's rights under this
Agreement, the Bank shall pay (or the Executive shall be entitled
to recover from the Bank, as the case may be) the Executive's
reasonable attorneys' fees and other reasonable costs and expenses
in connection with the enforcement of the Executive's rights,
regardless of whether the Executive prevails on the merits of such
claims, so long as such claims are made in good faith";
<PAGE>
3. In all other respects, the terms and provisions of the Special
Termination Agreement dated September 4, 1986 shall remain in full force
and effect.
Executed as of the 2nd day of January, 1991.
THE HIBERNIA SAVINGS BANK
BY: /s/
------------------------------
/s/ /s/ Mark A. Osborne
-------------------
MARK A. OSBORNE
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0001018380
<NAME> EMERALD ISLE BANCORP, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,185,457
<INT-BEARING-DEPOSITS> 3,640,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34,042,272
<INVESTMENTS-CARRYING> 88,265,470
<INVESTMENTS-MARKET> 84,939,416
<LOANS> 250,454,906
<ALLOWANCE> 2,598,913
<TOTAL-ASSETS> 392,382,340
<DEPOSITS> 321,862,390
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,052,370
<LONG-TERM> 41,668,000
0
0
<COMMON> 1,765,568
<OTHER-SE> 25,034,012
<TOTAL-LIABILITIES-AND-EQUITY> 392,382,340
<INTEREST-LOAN> 15,104,965
<INTEREST-INVEST> 6,018,197
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 21,123,162
<INTEREST-DEPOSIT> 10,441,825
<INTEREST-EXPENSE> 12,326,322
<INTEREST-INCOME-NET> 6,796,840
<LOAN-LOSSES> 1,136,333
<SECURITIES-GAINS> 33,124
<EXPENSE-OTHER> 5,649,523
<INCOME-PRETAX> 2,523,389
<INCOME-PRE-EXTRAORDINARY> 1,549,267
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,549,267
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
<YIELD-ACTUAL> 7.96
<LOANS-NON> 842,898
<LOANS-PAST> 1,513,015
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,541,997
<CHARGE-OFFS> 1,646,710
<RECOVERIES> 567,294
<ALLOWANCE-CLOSE> 2,598,913
<ALLOWANCE-DOMESTIC> 2,598,913
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
