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Emerald Isle Bancorp Announces Loan Loss Recovery.

QUINCY, Mass.--(BUSINESS WIRE)--Aug. 21, 1997--Emerald Isle Bancorp Inc., (NASDAQ SYMBOL:EIRE) has announced receipt of a cash payment from the Trustee in Bankruptcy for the Bennett Funding Group Inc., in the amount of $724,055 on August 14, 1997. The payment relates to loans secured by leases originally made by the corporation to the Bennett Funding Group Inc. of Syracuse, N.Y., that in conjunction with, the corporation booked an extraordinary loan loss of $1.0 million in March of 1996. Subsequent to the filing of a lawsuit by the U.S. Attorney's office in New York and the Securities and Exchange Commission against Bennett Funding for misrepresentation and factual omissions related to the selling of equipment leases which accused the company of running a massive Ponzi scheme, the Bennett Funding Group filed for bankruptcy under Chapter XI.

On June 24, 1997 the corporation entered into an agreement with the Trustee in Bankruptcy by which the corporation, over a two year period will receive payments in settlement of all of its outstanding claims up to a maximum of $1,120,000. This represents approximately 80 percent of the remaining outstanding balance due of $1.41 million prior to the provision and related charge off for $1.0 million taken by the corporation in March of 1996.

The agreement calls for the corporation to receive an initial payment, net of servicing fees and payments to the Debtors Estate, of $724,055 which represents 78.5 percent of the cash payments received by the Trustee from the underlying leases since the date of the Bankruptcy filing. By the terms of the agreement additional cash payments will be received monthly, as the cash is collected by the Trustee, over the next 18-24 months of approximately $396,000 up to the maximum total recovery to the corporation of $1,120,000.

In conjunction with the receipt of the initial payment of $724,055 the corporation has booked a recovery to its loan loss provision in the amount of $660,000 and used the balance of the payment to reduce the carrying value of its remaining investment in the Bennett Funding Leases from $411,000 to $364,000. The balance of the corporation's loans remains secured by the cash flow from the underlying leases by agreement with the Trustee in Bankruptcy.

The recovery of $660,000 results in an increase in the corporation's loss allowance from $2.58 million to $3.24 million and as a percentage of loans outstanding, from .89 percent to 1.12 percent. After the recovery, loan loss reserves as a percentage of nonperforming loans is 219.8 percent.

Mark A. Osborne, chairman of the board and chief executive officer, stated, "while our investment in Bennett Funding leases did not produce the results originally desired, this recovery is a direct result of the initial due diligence conducted by the corporation when originating the loans involved. The due diligence involved resulted in our investing in only legitimate leasing transactions, and securing our investment appropriately. We did not get caught up in the Ponzi scheme that defrauded other institutional and individual investors of millions of dollars. Although we brought litigation in the Bankruptcy Court in New York directed at recovering all of our investment with interest, we elected to negotiate a settlement with the Trustee in order to avoid a prolonged legal battle. As a result of receipt of the initial payment of $724,055 and related recovery we have decided to suspend monthly loan loss provisions for the balance of 1997." -0-

Emerald Isle Bancorp, Inc., is the parent company of The Hibernia Savings Corporation, a full service, state-chartered stock savings corporation. The executive office of Emerald Isle Bancorp, Inc. is located at 730 Hancock Street, Quincy, Mass.

CONTACT: Emerald Isle Bancorp

MaryBeth Sorgi

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Publication:Business Wire
Date:Aug 21, 1997
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