Annual Report
1996

Emerald Isle Bancorp, Inc.

730 Hancock Street, Quincy, Massachusetts 02170

Financial Highlights

Total Assets
(dollars in thousands)

12/31/96 12/31/95
Balance Sheet Data
Total assets $409,638,765 $346,865,213
Earning assets 393,615,610 335,761,878
Securities 128,623,944 125,300,270
Allowance for possible loan losses 2,623,406 2,541,997
Loans, net 263,208,189 208,326,723
Deposits 337,089,927 282,787,249
Borrowings 41,668,000 38,968,000
Stockholders' equity 27,936,387 22,824,616

Operating Data
Interest income $28,782,863 $23,949,001
Interest expense 16,737,024 13,719,768
Net interest income 12,045,839 10,229,233
Provision for possible loan losses 1,211,333 300,000
Non-interest expense 7,736,300 6,852,498
Net income 2,380,869 2,719,235

Per Share Data*
Earnings per share $1.14 $1.41
Book value per share $12.64 $11.92
Outstanding shares 2,210,888 1,915,539
Dividends declared per share $0.22 $0.18

Other Data
Yield on average earning assets 7.95% 7.94%
Cost of funds 4.62% 4.55%
Net interest margin 3.33% 3.39%
Return on average assets 0.64% 0.88%
Return on average equity 9.41% 12.42%
Leverage capital to assets ratio at year end 6.82% 6.58%

* Per share data has been adjusted to reflect the 5 for 4 stock split effective
February 3, 1997

Total Assets Total Deposits Total Loans, Net
(Dollars in Thousands) (Dollars in Thousands) (Dollars in Thousands)
- ---------------------- ---------------------- ----------------------
1992..... $229,792 1992..... $205,921 1992..... $134,584
1993..... $249,827 1993..... $221,950 1993..... $135,661
1994..... $286,429 1994..... $256,340 1994..... $163,371
1995..... $346,865 1995..... $282,787 1995..... $208,327
1996..... $409,639 1996..... $337,090 1996..... $263,208

Emerald Isle Bancorp, Inc.

Letter to Stockholders

Dear Stockholder,

During 1996 the management of our company continued to implement its basic
business strategy of geographically expanding our franchise in order to
facilitate the achievement of growth, both in assets under management and the
volume of core business activities. The management of our company believes
that the expansion of our franchise and the growth and diversification of our
business activities is the best business strategy available to us to create
value for our stockholders. I am pleased to report that efforts in that
regard resulted in a number of successful business initiatives during the
past year.

The most visible event that took place in 1996 was the completion of the
formation of our holding company, Emerald Isle Bancorp, Inc., on October 1,
1996. This is the first annual report published by our new company. The
formation of our holding company, Emerald Isle Bancorp, Inc., is an integral
component of our business strategy to expand operations and build franchise
value. The holding company structure provides the flexibility needed to
respond to continuously evolving competitive conditions in the financial
services marketplace and enables us to consider the acquisition of other
banking institutions outside our existing market area. The holding company
allows us to operate any acquired institution as a stand- alone community
bank in order to capitalize on its established individual local identity.

. . . the expansion of our franchise and the growth and diversification of
our business activities is the best business strategy available to us to
create value for our stockholders.

The management of our company believes that our growth focused business
strategies have proven to be both timely and effective. The continuing
consolidation of our local banking industry has resulted in an opportunity
for our company to become a significant competitor within our market area.
The absorption of banks with a community based operating philosophy, like
ours, by our regional competitors has created a void that we are filling.

During the past year our local operating environment was characterized by
strong competition for both quality lending opportunities and retail
deposits. The condition of our local residential real estate market
continued to improve as both the volume of sales and average sales prices
increased for single family homes and condominiums. Last year was also a
very strong year for our local commercial real estate market. Vacancy rates
for apartments, retail, office and industrial space all declined resulting in
increased rents. Business activity in our market area continued to expand.
There was moderate job growth and the Massachusetts unemployment rate
declined. Overall, 1996 was a year of solid economic growth in
Massachusetts.

Against this background we achieved substantial growth in each of our major
business lines. Total assets increased by 18.1% to $409.6 million, earning
assets grew by 17.2% to $393.6 million, loans outstanding increased by 26.3%
to $263.2 million and total deposits grew by 19.2% to $337.1 million. The
volume of transactions generated by our core business activities and the
number of customers serviced continued to expand throughout the

year. Net income for 1996 totaled $2.4 million. Earnings per share for 1996
totaled $1.14. Stockholders' equity increased by 22.4% to $27.9 million at
December 31, 1996 and book value per share increased to $12.64.

The primary method we have chosen to achieve the expansion of our franchise
and the growth of our business activities is by opening additional full
service banking offices either within our existing service area or contiguous
to it. In executing this business strategy we have opened four new full
service branch offices during the past two years, doubling the number of such
facilities we operate.

Our fifth full service branch office opened at 274 Main Street in Hingham on
July 17, 1995 and on December 23, 1995 we opened our sixth full service
branch office at 397 Washington Street in Stoughton. As of December 31, 1996
at our Hingham office new customers had opened deposit accounts with balances
totaling $15.7 million, at our Stoughton office new customers had opened
deposit accounts with balances totaling $15.1 million. Most importantly,
both offices reached the break-even deposit level during 1996 and were
operating profitably at year end. We expect both to make a contribution to
earnings in 1997.

. . . we achieved substantial growth in each of our major business lines.

We opened our seventh full service branch office, and second office in
Hingham, at 71 Main Street on May 13, 1996. Deposit growth at this office
has not been as robust as we would like. Nonetheless, at December 31, 1996
deposit balances for this office totaled $3.6 million. Our eighth full
service branch office, and second such facility in Quincy, opened on November
14, 1996 at 63 Franklin Street. Initial results have been beyond our
expectations. At year end, after being open for slightly more than one
month, deposit balances at this office totaled $3.4 million. Our goal for
1997 for these two offices is to achieve their respective break-even deposit
levels by year end.

We will continue to implement our basic business strategy by opening two
additional

Stockholders' Equity Earning Assets Book Value Per Share
(Dollars in Thousands) (Dollars in Thousands) (Dollars)
- ---------------------- ---------------------- ----------------------
1992..... $13,954 1992..... $213,146 1992..... $ 8.71
1993..... $17,312 1993..... $240,480 1993..... $10.34
1994..... $19,786 1994..... $275,944 1994..... $10.94
1995..... $22,825 1995..... $335,762 1995..... $11.92
1996..... $27,936 1996..... $393,615 1996..... $12.64

full service branch offices in 1997. We have received regulatory approval to
open an office at 470 West Broadway in South Boston. The renovation of this
building is underway and we hope to be open for business by mid-summer. In
August of 1996 we acquired a site at 1932 Ocean Street in Marshfield. The
municipal approvals required to construct a new facility at this location
have been obtained and we expect to apply by mid- summer for the necessary
regulatory approvals to commence operating at this site. If all goes as
planned, we should be open for business in Marshfield by the end of 1997.

While additional worthwhile opportunities exist to expand our franchise and
branch network, we believe that once the foregoing projects are completed it
will be appropriate to take a respite from our physical expansion efforts in
order to allow our new branch offices to mature. Our efforts will then be
directed at achieving incremental growth utilizing our existing facilities so
as to create the critical mass required for each of our new offices to
operate profitably. The maturation process will result in realizing the
financial benefits of our expansion program through the achievement of the
projected return on our investment in these new facilities.

As previously noted, total assets increased by $62.7 million or 18.1% from
$346.9 million at December 31, 1995 to $409.6 million at December 31, 1996, a
rate of growth well in excess of the industry average. This achievement
follows 21.1% asset growth generated in 1995.

Total earning assets increased by $57.8 million or 17.2% from $335.8 million
at year end 1995 to $393.6 million at year end 1996. The increase achieved
during 1996 in earning assets, which was primarily in loans outstanding, was
the most significant positive factor in the 17.8% increase in net interest
income achieved for the year. Our ratio of average earning assets to average
total assets declined marginally from 97.1% for 1995 to 96.9% for 1996.

Our continuing business focus on originating residential, commercial real estate
and business loans for inclusion in our loan portfolio as our primary investment
vehicle produced very strong results during the past year.

During 1996 the consolidation of our local banking industry continued to evolve.
This process has drastically reduced the number of community based banks within
our market area. We view this as a significant business opportunity for us, not
only for the coming year, but also for many years to come. We feel that our
institution provides a superior level
of personalized service that many customers demand and that our larger regional
competitors are unable to provide, particularly for small business owners and
investors in commercial real estate.

Throughout 1996 commercial real estate lending was the strongest performing
business line of our company. For the year, our Commercial Real Estate Loan
Department originated 79 loans totaling $68.3 million as compared to 47 loans
totaling $27.2 million originated in 1995. This represents a very significant
151.1% or $41.1 million increase in the volume of commercial real estate loans
originated for 1996 as compared to the prior year. The average size of a new
commercial real estate loan originated in 1996 was $865,000 and $579,100 in
1995. Our focus is on investing in commercial real estate loans secured by
multi-family residential properties, retail space, office buildings and certain
types of industrial properties held for investment purposes. On the strength of
the increase in the volume of loans originated last year, our commercial real
estate loan outstandings grew by $26.3 million or 33.2% to $105.4 million at
December 31, 1996 from $79.1 million a year earlier. Commercial real estate
loan outstandings also grew 10.7% during 1995.

Our Commercial Loan Department originated 95 commercial and industrial
business loans last year totaling $10.6 million as compared to 48 business
loans totaling $13.8 million in

1995. In spite of the modest decline in the volume of loans originated for
the year, our commercial and industrial loan outstandings increased by $4.7
million or 28.2% to $21.6 million at December 31, 1996 from $16.9 million a
year earlier. The average size of a commercial business loan originated in
1996 was $111,500 and $286,700 in 1995. Our corporate commitment to allocate
significant resources to this department is directed at accomplishing, over
time, a substantial increase in both the volume of our commercial and
industrial business loan originations and in our total commercial loan
portfolio outstandings. We need to be successful in building this business
line in order to achieve our earnings potential as a company.

Residential mortgage lending continues to be a very important business line
for our company. For the year we originated, through our Retail Loan
Department, 443 residential first mortgage loans totaling $59.9 million as
compared to 483 residential loans totaling $60.7 million originated in 1995.
The average size of a residential loan originated in 1996 was $135,100 and
$125,800 in 1995. During 1996, 134 residential fixed rate mortgage loans
totaling $18.5 million were sold into the secondary mortgage market as
compared to 126 residential mortgage loans totaling $12.9 million sold during
1995. We now service 265 real estate loans, totaling $31.6 million, for
investors, after selling our entire servicing portfolio of 798 loans totaling
$69.1 million in the second quarter of 1995. Of our total residential
mortgage loan originations in 1996, approximately 60% were variable rate and
40% were fixed rate. As a result of the continuing strong flow of variable
rate loan originations, we were able to achieve significant growth of $23.5
million, or 20.9%, in our residential mortgage loan portfolio which totaled
$112.5 million at December 31, 1995 and $136.0 million at December 31, 1996.
This follows the achievement of 34.6% growth in residential mortgage loan
outstandings generated in 1995.

During the past year our Retail Loan Department also originated 798 consumer
loans totaling $4.6 million as compared to 384 loans totaling $2.0 million
originated during 1995. Consumer loans outstanding totaled $3.0 million at
December 31, 1996 as compared to $2.5 million at December 31, 1995. During
the fourth quarter of 1996 we established a separate Consumer Loan Department
and hired an experienced consumer loan officer. These steps were taken to
create a more directed corporate focus on building our consumer loan
portfolio so that, over time, it will become an important earning asset of
our company.

The substantial increase in total loans outstanding generated during 1996
represented the achievement of a very important business goal which is a
major factor in the improvement in our core earnings capacity.

During 1996, 1,415 loans of all types were originated totaling $143.4 million
as compared to 962 loans totaling $103.8 million in 1995. Total loans
outstanding, net for the year, increased by $54.9 million or 26.3% from
$208.3 on December 31, 1995 to $263.2 million on December 31, 1996. This
follows the achievement of growth in loans outstanding during 1995 of 27.5%.
The number of loans in our portfolio increased from 2,686 at December 31,
1995 to 3,266 at December 31, 1996. We continued to be one of the most
active lenders in our market area. The substantial increase in total loans
outstanding generated during 1996 represented the achievement of a very
important business goal which is a major factor in the improvement

in our core earnings capacity. Our success in achieving this goal will have
a substantial impact on our net earnings for 1997.

Our loan portfolio is the highest earning asset of our company. For 1996,
our investment in commercial real estate loans generated a net interest
margin of 5.64%, our investment in commercial business loans generated a net
interest margin of 5.78% and our portfolio of residential mortgage loans and
consumer loans produced a net interest margin of 3.42%. Combined, our
investment in loans outstanding generated a net interest margin of 4.40% in
1996.

Our investment in securities increased modestly by $3.3 million or 2.7% from
$125.3 million at December 31, 1995 to $128.6 million at December 31, 1996.
Of our total portfolio at year end, $83.5 million is classified as held to
maturity and $30.7 million is classified as available for sale. The balance
of our investment portfolio is invested in short term investment securities
totaling $11.7 million and $2.7 million in equity securities, primarily stock
in the Federal Home Loan Bank. Our holdings of securities classified as
available for sale and our short term investments are available to provide
liquidity as needed. Our investment portfolio produced a net interest margin
of 1.51% during 1996.

Our company has been very successful in expanding its franchise and customer
base over the past few years and the volume of our business activities has
grown substantially.

For 1996 our combined commercial real estate and commercial business loan
portfolios contributed 53.8% of our net earnings of $2.4 million, despite
accounting for only 32.1% of earning assets. Our residential mortgage and
consumer loan portfolios contributed 46.1% of our net earnings, while
accounting for 35.1% of earning assets. Because of the dramatic differential
in both net interest margins and net interest income generated by the major
categories of earning assets in which our company invests, we have been
following, and intend to follow in 1997, two complementary business
strategies directed at maximizing the earnings potential of our company. A
reallocation of our asset mix out of our investment in securities and into an
incremental investment in loans outstanding will enhance both our net
interest margin and our net earnings by taking advantage of the higher
returns earned through our lending activities. We believe that an asset mix
of approximately 70.0% in loans outstanding, 25.0% in securities and 5.0% in
other assets is the appropriate asset mix that will allow for the
maximization of our earnings potential while still providing for sufficient
ongoing liquidity. As of December 31, 1996 our loan portfolio accounted for
64.3% of total assets and our investment portfolio 31.4% of total assets.

The higher net interest margins earned by our commercial real estate and
business lending activities of 5.64% and 5.78%, respectively, dictate that we
continue to focus on achieving growth in these business lines. This focus on
the commercial segments of our business will result in a shift, over time, in
the composition of our loan portfolio. It is our goal to reallocate our
investment in loans outstanding by reducing our relative investment in
residential mortgages and consumer loans while increasing our relative
investment in commercial real estate and commercial business loans.
Currently, residential mortgages and consumer loans comprise 52.3% of our
total loan portfolio while commercial real estate and commercial business
loans account for 47.7%. The eventual reallocation of our loan portfolio

to a mix of 40.0% in residential mortgages and consumer loans and 60.0% in
commercial real estate and commercial business loans will enhance our net
interest margin and net earnings. It is recognized that residential mortgage
loans have a substantively lower risk profile than commercial real estate or
commercial business loans. Accordingly, it is paramount that our
underwriting principles not be compromised in order to achieve the foregoing
business goal.

Overall, our asset quality was very good throughout 1996. Nonperforming
assets totaled $930,766 at December 31, 1995 and $1.1 million as of December
31, 1996 and as a percent of assets, 0.27% and 0.26% as of the same dates.
As of year end, our ratio of loan loss reserves to nonperforming assets was
247.9%. The continuing improvement in our asset quality is evidenced by the
fact that, at year end, our company had no other real estate owned. Our
company experienced lower losses on the sale of other real estate owned and
reduced expenses related to the management and disposition of nonperforming
assets in 1996.

Deposit growth for the year totaled $54.3 million or 19.2% as deposits
increased from $282.8 million on December 31, 1995 to $337.1 million on
December 31, 1996. Retail deposits increased during the year by $59.3
million and, as a result, our funding from wholesale deposit sources declined
from $20.0 million to $15.0 million. Transaction account balances increased
by $9.2 million or 41.7 % to $31.2 million, savings and money market deposit
accounts grew by $5.7 million or 7.2% to $85.6 million and certificates of
deposit balances increased by $39.4 million or 21.8% to $220.3 million.
Deposits increased at each of our branch offices during 1996. Our four
newest offices, which opened in 1995 and 1996, accounted for $29.8 million or
54.9% of the total increase in deposits generated for the year. The number
of deposit accounts open increased by 5,398 or 25.6% from 21,102 accounts as
of December 31, 1995 to 26,500 accounts as of December 31, 1996.

Borrowings increased during 1996 by $2.7 million or 6.9% from $39.0 million
at December 31, 1995 to $41.7 million at December 31, 1996. At certain
points in time during 1996, borrowings, more specifically Federal Home Loan
Bank advances, were a

Total Residential Mortgage Loan Total Commercial Loans Total Commercial Real Estate Loans
(Dollars in Thousands) (Dollars in Thousands) (Dollars in Thousands)
- ------------------------------- ---------------------- ----------------------------------

1992..... $ 70,005 1992..... $ 0 1992..... $ 63,221
1993..... $ 69,798 1993..... $ 5,490 1993..... $ 57,380
1994..... $ 83,494 1994..... $ 8,423 1994..... $ 71,478
1995..... $112,486 1995..... $16,857 1995..... $ 79,112
1996..... $136,049 1996..... $21,615 1996..... $105,359

more economical means of funding our asset growth than retail deposits. From
a cost perspective, aggressive price competition for retail deposits within
our local market area dictated that we utilize borrowings on occasion as a
funding resource.

Our yield on average earning assets increased by one basis point during 1996
to 7.95% from 7.94% in 1995. Competition for quality lending opportunities
during the past year somewhat limited our ability to more aggressively price
our loan products and services. Since January 31, 1996 when the Federal
Reserve Board of Governors reduced the federal funds rate from 5.50% to
5.25%, market interest rates have trended upward. Over that period of time
the yield on the 30 year Treasury bond has increased from 6.03% to 6.64%.
Mirroring the general increase in interest rates, our average cost of funds
increased by seven basis points during 1996 to 4.62% from 4.55% for 1995.
Consequently, our net interest margin decreased slightly by six basis points
during 1996 to 3.33% from 3.39% for 1995. One side observation concerning
our funding cost is that our average cost of funds for the fourth quarter of
1996 was 4.57%, eight basis points lower than our average cost of funds for
the first three quarters of the year of 4.65%. The lower cost of funds for
the fourth quarter is directly related to an enhanced ability to manage our
costs due to the success of our new branch offices in attracting incremental
core deposits.

The growth in earning assets achieved of 17.2% during 1996, in particular the
26.3% growth in loans outstanding, combined to more than offset the decrease
in our net interest margin.

The continuing success of our growth oriented business strategies requires
that an ongoing investment be made in this company to support our current and
future growth.

The net result of the foregoing factors was that interest and dividend income
generated from our aggregate investment in loans and securities for 1996
increased by 20.2% or $4.9 million to $28.8 million from $23.9 million for
1995 while total interest expense increased by less, 22.0% or $3.0 million
from $13.7 million in 1995 to $16.7 million for 1996. Consequently, even
though our net interest margin declined slightly by six basis points our net
interest income increased by $1.8 million or 17.8% from $10.2 million for
1995 to $12.0 million for 1996.

Our loan loss provision for 1996 increased to $1.2 million as compared to
$300,000 for 1995. The increase in the loan loss provision for 1996 was the
result of a special provision of $1.0 million taken in the first quarter of
the year resulting from the Bennett Funding Group, Inc. fraud and subsequent
bankruptcy filing. We are confident that during 1997 we will be successful
in recovering a substantial portion of our investment in the Bennett Funding
Group, Inc.

Non-interest income in 1996 declined from $1.3 million in 1995 to $727,532 in
1996. A one time gain from the sale of loan servicing rights totaling
$763,806 in 1995 accounted for the comparative year to year decline in
non-interest income. Net losses on the sale of securities totaled $39,005
during the year compared to $90,993 in net gains realized during 1995. Fee
income from services provided to customers increased to $804,539 in 1996
compared to $579,224 in 1995. For 1996, the Bank had $193 in gains on the
sale of loans in the secondary market compared to losses of $52,611 in 1995.

Non-interest operating expenses rose by $883,802 or 12.9% from $6.9 million
for 1995 to $7.7 million for 1996. The increase was

primarily a result of increases in compensation and benefits expense of 23.3%
to $4.2 million in 1996 from $3.4 million in 1995. The increase in
compensation and benefits expense is the direct result of the expansion of
our staff from 94 employees at December 31, 1995 to 112 employees at December
31, 1996. Our lending staff size was increased in order to achieve and
manage our continuing growth in loans outstanding. New branch personnel were
required to staff our four newest full service branch offices opened during
1995 and 1996 in Hingham, Stoughton and Quincy. Additional administrative
support staff were needed to manage such functions as marketing and public
relations. Also as a result of the physical expansion of our branch network,
we experienced during 1996 a 33.5% or $337,577 increase in occupancy and
equipment expense from $1.0 million for 1995 to $1.3 million. The operating
expense increases for compensation and benefits and for occupancy and
equipment were partially offset by a reduction in expenses related to the
management and disposition of nonperforming assets which totaled $79,894 as
compared to $300,796 for the previous year, a reduction of 73.4%, along with
a substantial decline in our FDIC assessment of $326,261 from $333,152 in
1995 to $6,891 in 1996.

In spite of the 12.9% increase in operating expenses for 1996 our company
became more efficient. Asset growth for the year was 18.1%. Because our
asset growth rate exceeded the growth rate of our operating expenses, we
effectively are managing an increased asset base for a lower relative cost.
Our ratio of operating expenses to average assets declined substantively, by
14 basis points, from 2.21% for 1995 to 2.07% for 1996. While we believe the
effective control of operating expenses and increased productivity and
efficiency are integral factors in the achievement of increases in future
profitability, we also believe that it is essential that our staffing level
be sufficient to insure that the various business initiatives and strategies
we undertake can be completed efficiently and successfully.

Net earnings before taxes totaled $3.8 million for 1996. After accruing our
ordinary tax liability for 1996 of $1.4 million, our company earned $2.4
million for 1996.

Net Interest Income Operating Expenses as a Year End Stock Prices
(Dollars in Thousands) Percent of Average Assets (dollars)
- ---------------------- ------------------------- ----------------------
1992..... 8,236 1992..... 2.89% 1992.....$ 4-1/4
1993..... 9,207 1993..... 2.88% 1993.....$ 7-1/4
1994..... 9,230 1994..... 2.49% 1994.....$ 8-1/2
1995..... 10,229 1995..... 2.21% 1995.....$13
1996..... 12,046 1996..... 2.07% 1996.....$16

Our company has been very successful in expanding its franchise and customer
base over the past few years and the volume of our business activities has
grown substantially. Our asset growth rates for 1994, 1995 and 1996 have
been 14.7%, 21.1% and 18.1%, respectively. The growth rates for our loan
portfolio for the same three year period have been 20.4%, 27.5% and 26.3%,
respectively. The continuing success of our growth oriented business
strategies requires that an ongoing investment be made in this company to
support our current and future growth. In order to maintain a prudent
leverage capital ratio, we completed two separate private placements of newly
issued common stock at then market prices during 1996. The first, on May 17,
was for 100,000 shares of common stock which raised, after expenses, $1.4
million in new capital. The second private placement, also for 100,000
shares of common stock, was completed on September 24, and raised, again
after expenses, an additional $1.5 million in incremental capital.

. . . one of the most important results achieved during 1996 was a 23.1%
increase in the price per share of the common stock. . .

Stockholders' equity increased during 1996 by $5.1 million or 22.4% from
$22.8 million as of year end 1995 to $27.9 million as of year end 1996. This
follows an increase in stockholders' equity for 1995 of 15.4%. For 1996,
$2.4 million was added to stockholders' equity by net earnings, $457,386 was
paid out to stockholders in dividends, incremental new capital of $2.9
million was raised through the two private placements previously referenced
and an additional $497,980 in capital was raised through our various stock
purchase plans. Our leverage capital ratio increased to 6.82% at December
31, 1996

from 6.58% at December 31, 1995 and our risk-based capital ratio was
11.9% and 12.7% as of the same respective dates.

In addition to the positive financial achievements, there were several other
important business developments that occurred in 1996. On December 18, 1996
we declared a 25% stock dividend which was payable on February 3, 1997. We
believe the increase in the number of shares outstanding will further enhance
both the liquidity in the marketplace for, and value of our common stock. At
the same time, we maintained our regular quarterly cash dividend of $0.07 per
share, which after accounting for the stock dividend, results in an increase
in cash dividends to our stockholders of 25%. For the year, cash dividends
paid to our shareholders totaled $0.22 per share.

From our mutual perspective as stock-holders, one of the most important
results achieved during 1996 was a 23.1% increase in the price per share of
the common stock of our company, from $13.00 at December 31, 1995 to $16.00
at December 31, 1996. According to Keefe, Bruyette & Woods (KBW), an
investment in the common stock of our company earned a total return on
investment of 1,029% over the five year period ended December 31, 1996. By
comparison, the total return over the same period for the S&P 500 Index was
103% and for the Keefe, Bruyette & Woods New England Bank Index was 409%.

. . . we must continue to aggressively expand our business activities. There
are voids in our local marketplace for banking products and services which we
can, and will, fill.

The continuing consolidation of our industry has created unprecedented
business opportunities for this institution. To take advantage of those
business opportunities we must continue to aggressively expand our business
activities. There are voids in our local marketplace for banking products and
services which we can, and will, fill.

Over the past year, our dedicated staff has worked diligently and
successfully to achieve our business goals and improve both the financial and
competitive position of our company. I would like to personally thank each
and every member of our staff and our Board of Directors for their efforts.
I also wish to thank all of our stockholders for their continuing support and
confidence. I am looking forward to sharing our future successes with you.

Best regards,

/s/ Mark A. Osborne

Mark A. Osborne
Chairman of the Board,
President & Chief Executive Officer

1992-1996 Index of Total Return
-------------------------------
S&P 500 Index........... 103%
KBW New England Index... 409%
EIRE.................... 1,029%

Officers and Directors

Emerald Isle Bancorp, Inc.

Officers
Mark A. Osborne
Chairman of the Board, President & Chief
Executive Officer

Richard S. Straczynski
Executive Vice President

Gerard F. Linskey
Treasurer

Directors
Peter L. Maguire
President
Management Information Services

Thomas P. Moore, Jr.
Senior Vice President
State Street Research and Management Company

John V. Murphy
Executive Vice President
Mass Mutual Life Insurance Co.

Mark A. Osborne
Chairman of the Board &
Chief Executive Officer
The Hibernia Savings Bank

Douglas C. Purdy
Attorney-at-Law
Serafini, Purdy, DiNardo & Wells

Michael T. Putziger
Attorney-at-Law
Roche, Carens & DeGiacomo

Richard P. Quincy
President
Quincy & Co.

The Hibernia Savings Bank

Officers
Mark A. Osborne
Chairman of the Board & Chief Executive Officer

Richard S. Straczynski
President &
Chief Operating Officer

Wayne F. Blaisdell
Senior Vice President & Operations Officer

Gerard F. Linskey
Senior Vice President &
Chief Financial Officer

Dennis P. Myers
Senior Vice President &
Senior Loan Officer

Robert D. McCarthy
Vice President
Roger L. Meade
Vice President

Joseph F. Richardi
Vice President

Michael P. Donohoe
Treasurer

Thomasine F. Kennedy
Comptroller

Edwin J. Beck, Jr.
Assistant Vice President

Barry E. Burden
Assistant Vice President

Elizabeth M. Casey
Assistant Vice President

James M. Duff
Assistant Vice President

Armand A. Fernandez
Assistant Vice President

Robert E. Foy
Assistant Vice President

Patricia Hanlon
Assistant Vice President

Robert S. Pyer, Jr.
Assistant Vice President

Jane M. Hanlon-Cook
Loan Officer

Anne R. Mascal
Consumer Loan Officer

Douglas C. Purdy
Clerk of the Corporation

Directors
Martha M. Campbell
Attorney-at-Law

Thomas J. Carens
of Counsel
Roche, Carens & DeGiacomo

Bernard J. Dwyer
Attorney-at-Law

William E. Lucey
Certified Public Accountant
O'Connor & Drew

Peter L. Maguire
President
Management Information Services

Thomas P. Moore, Jr.
Senior Vice President
State Street Research and Management Company

John V. Murphy
Executive Vice President
Mass Mutual Life Insurance Co.

Mark A. Osborne
Chairman of the Board & Chief Executive Officer
The Hibernia Savings Bank

Paul D. Osborne
Treasurer
Osborne Office Furniture

Douglas C. Purdy
Attorney-at-Law
Serafini, Purdy, DiNardo & Wells

Michael T. Putziger
Attorney-at-Law
Roche, Carens & DeGiacomo

Richard P. Quincy
President
Quincy & Co.

John M. Sheskey
President
John M. Sheskey &
Associates, Inc.

Stockholder Information

Administrative Offices
Emerald Isle Bancorp, Inc.
730 Hancock Street
Quincy, MA 02170
617/479-5001

The Hibernia Savings Bank
730 Hancock Street
Quincy, MA 02170
617/479-5001

The Hibernia Savings Bank Main Office
731 Hancock Street
Quincy, MA 02170
617/479-2265
800-568-BANK

Branch Offices
101 Federal Street
Boston, MA 02110
617/345-0441

51 Commercial Street
Braintree, MA 02184
617/848-5560

1150 Washington Street
Weymouth, MA 02189
617/331-0893

274 Main Street
Hingham, MA 02043
617/740-4830

71 Main Street
Hingham, MA 02043
617/741-8061

397 Washington Street
Stoughton, MA 02072
617/297-3550

63 Franklin Street
Quincy, MA 02169
617/689-0001

Loan Centers
730 Hancock Street
Quincy, MA 02170
617/479-5001

731 Hancock Street
Quincy, MA 02170
617/479-2265

51 Commercial Street
Braintree, MA 02184
617/356-8246

Educational Training Facility
Quincy High School
52 Coddington Street
Quincy, MA 02169
617/472-2404

Transfer Agent and Registrar
ChaseMellon Shareholder Services, LLC
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
1-800-288-9541

Independent Public Accountants
Arthur Andersen, LLP
225 Franklin Street
Boston, MA 02110
617/330-4000

Legal Counsel
Roche, Carens & DeGiacomo
99 High Street
Boston, MA 02109
617/451-9300

Form 10-K
A copy of the Annual Report on form 10-K filed with the Securities and Exchange
Commission for fiscal 1996 is available without charge by writing to:

Gerard F. Linskey
Treasurer
Emerald Isle Bancorp, Inc.
730 Hancock Street
Quincy, MA 02170
617/479-5001

Trading of Common Stock
Emerald Isle Bancorp, Inc. common stock is traded over the counter on the NASDAQ
National Market System under the symbol EIRE.

Stockholder Relations
To receive further information about Emerald Isle Bancorp, Inc. please contact:

Gerard F. Linskey
Treasurer
Emerald Isle Bancorp, Inc.
730 Hancock Street
Quincy, MA 02170
617/479-5001

Annual Meeting
The annual meeting of the stockholders of Emerald Isle Bancorp, Inc. will be
held at 10:00 a.m. on Monday, April 28, 1997 at the Sheraton Tara hotel, 37
Forbes Road, Braintree, Massachusetts.

Emerald Isle Bancorp, Inc.