Incentive Compensation Plan

Exhibit 10.7


[Logo] CompassBank


New Bedford, Massachusetts


INCENTIVE COMPENSATION PLAN


January, 1998


Approved and Adopted by
The Executive Committee of
the Board of Directors
May 15, 1998


[Logo] CompassBank


New Bedford, Massachusetts


INCENTIVE PLAN
--------------


Table of Contents


Page
---- Introduction and Highlights of Incentive Plan for 1998 ............... 1-2


Incentive Plan - --------------


Section I - Definitions ................................................ 3


Section II - Participation ............................................. 4


Section III - Activating the Plan ...................................... 4


Section IV - Calculation of Awards ..................................... 4


Section V - Distribution of Awards ..................................... 5


Section VI - Plan Administration ....................................... 5


Section VII - Amendment, Modification, Suspension or Termination ....... 5


Section VIII - Effective Date of Plan .................................. 6


Section IX - Employer Relation with Participants ....................... 6


Section X - Governing Law .............................................. 6


Section XI - President's Discretion .................................... 6


1998 Incentive Plan Participants ............................... Appendix A


1998 Performance Goals ......................................... Appendix B


Distribution of Awards ......................................... Appendix C


[Logo] CompassBank


New Bedford, Massachusetts


Introduction and Highlights of
------------------------------
Incentive Plan for 1998
-----------------------


Thomas Warren and Associates has been retained by Compass Bank to develop an incentive plan. It is important to examine the benefits which accrue to the organization through the operation of the incentive plan. The plan covers all employees.


o Provides Motivation: The opportunity for incentive awards provides
employees with the impetus to "stretch" for challenging, yet attainable,
goals.


o Provides Retention: by enhancing the Bank's competitive compensation
posture.


o Provides Management Team Building: by making the incentive award dependent
on the attainment of bank goals, a "team orientation" is fostered among all
employees.


o Provides Competitive Compensation Strategy: The implementation of incentive
arrangements is common in the banking industry today.


The highlights of the incentive plan included in the following pages are as follows:


1. The recommended plan is competitive compared with similar sized banks
and the banking industry in general.


2. The Board of Directors controls all aspects of the Plan.


3. All employees are participants.


4. The financial criteria necessary for plan operation consists of ROA
and ROE goals.


5. Incentive distributions range from 0% of base salary (did not meet
goal) to 40% of base salary (maximum performance under plan).


6. Award distribution would be made during 12-98 for fiscal year end
10-31-98 performance.


7. The categories of incentive plan participants are as follows:


Position Range of Bonus Awards
-------- ---------------------
A. President & CEO 0% - 40%
Board of Directors


B. Executive Officers Grade EIX, EX 0% - 30%


C. Senior Officers Grade EVII, EVIII 0% - 25%


D. Other officers Grade EV, EVI 0% - 20%


E. Other Officers/Exempt Employees EI-EIV 0% - 13%


F. Non-exempt Employees 0% - 8%


The Board of Directors of Compass Bank has established this Incentive Plan. The purpose of the plan is to meet and exceed financial goals and to promote a superior level of performance relative to the Bank's competition in its market area. Through payment of incentive compensation beyond base salaries, the plan provides reward for meeting and exceeding the Bank's financial goals.


SECTION I - DEFINITIONS
-----------


Various terms used in the plan are defined as follows:


Base Salary: The base salary at the end of
the plan year for all employees. Total
fees including retainers and meeting
fees for Board of Directors.


Board of Directors: The Board of Directors of
Compass Bank.


President & CEO: President and CEO of Compass Bank.


Management Performance Goals: Those pre-set objectives and goals which
are required to activate distribution of
awards under the plan.


Personnel Committee: The Personnel Committee of the Board of
Directors of the Bank.


Plan Participant: An eligible employee of the Bank
designated by the President & CEO and
approved by the Personnel Committee for
participation for the Plan Year.


Plan Year: The fiscal year.


ROA: Return on Assets.


ROE: Return on Equity.


Earnings are measured by Net Profit Return on Equity which is defined as
the Bank's net profit stated as a percentage of average surplus outstanding
exclusive of FAS 115 adjustments to capital and current year bonus
accruals.


SECTION II - ELIGIBILITY TO PARTICIPATE
--------------------------


To be eligible for an award under the plan, a plan participant must be in the full-time or part-time service of the Bank at the start and close of the fiscal year and be in the employ of the Bank when the award is paid out. However, if the active, full-time service with the Bank of a participant in the plan is terminated by death, disability, retirement, or if the participant is on an approved leave of absence, the President & CEO may recommend an award to such a participant based on the proportion of the plan year that he/she was in active service with the Bank. The plan participants for the fiscal year are set forth in Appendix A. The President may recommend a prorated incentive award to an employee with less than one year's service.


SECTION III - ACTIVATING THE PLAN
-------------------


The operation of the plan is predicated on attaining and exceeding management performance goals. The goals will consist of ROA and ROE. The performance goals for the fiscal year are set forth in Appendix B.


SECTION IV - CALCULATION OF AWARDS
---------------------


The Personnel Committee designates a rate of distribution for the incentive awards as determined by this plan. The actual rate of distribution for each category of employees will be based upon Bank performance. The individual performance of each employee may also affect the dollar amount or percentage of the award granted to each recipient under this plan. The full Board of Directors will approve the final award distributions.


SECTION V - DISTRIBUTION OF AWARDS
----------------------


Distribution of awards will be made during December, 1998 following the end of the fiscal year. Distribution of the bonus award must be recommended by ...