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                                                                    Exhibit 10.1


                     [PEOPLE'S BANCSHARES, INC. LETTERHEAD]




April 19, 2001



Vincent A. Smyth, Esq.
2001 Sailfish Point Boulevard (315)
Stuart, Florida  34996-1983

Mr. William G. Foster, Jr.
10537 James Wren Way
Fairfax, Virginia  22030

Mr. Thomas F. Gillen
F. J. Morrissey & Co., Inc.
1700 Market Street
Suite 1420
Philadelphia, Pennsylvania  19103-3913


RE:      PEOPLE'S BANCSHARES, INC.
         -------------------------

Dear Messrs. Smyth, Foster and Gillen:

This Letter Agreement is intended to set forth the terms of the agreement
reached between and among People's Bancshares, Inc. ("Bancshares") and each of
you, Vincent A. Smyth ("Smyth"), William G. Foster, Jr. ("Foster") and Thomas F.
Gillen ("Gillen") with respect to the termination of the proxy contest (the
"Proxy Contest") concerning the election of Directors at Bancshares' 2001 Annual
Meeting of Stockholders (the "Bancshares Stockholders Meeting") referred to in
Smyth's and the other reporting persons' named therein Amendment No. 2 to their
Schedule 13D filed with the Securities and Exchange Commission (the "SEC") and
dated April 16, 2001 (the "Amended Schedule 13D"). Smyth, Foster and Gillen are
sometimes collectively referred to herein as the "Smyth Group".

In order to avoid Bancshares' and the Smyth Group's respective expenditures of
time, effort and money in furtherance of the Proxy Contest and to induce the
Smyth Group to terminate the Proxy Contest and to resolve all disputes between
the parties hereto, the parties hereby agree as follows:

    1.   DIRECTORS

    a)   Subject to the receipt by Bancshares of letters of nonobjection from
         the Board of Governors of the Federal Reserve System (the "FRB") with
         respect to each of Smyth, Gillen and Foster, the Bancshares Board of
         Directors (the "Bancshares Board") will (at the meeting of the
         Bancshares Board of Directors immediately following the Bancshares
         Stockholders Meeting or any adjournment or postponement thereof)
         increase the size of the Bancshares Board to thirteen (13) members and
         elect Smyth to fill a vacancy as a Class I director, Foster to fill a
         vacancy as a Class II director and Gillen to fill a vacancy as a Class
         III director; and

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Vincent A. Smyth
William G. Foster, Jr.
Thomas F. Gillen
April 19, 2001
Page 2



    b)   Subject to the receipt by Bancshares' subsidiary, People's Savings Bank
         of Brockton (the "Bank") of letters of nonobjection from the Federal
         Deposit Insurance Corporation (the "FDIC") with respect to each of
         Smyth, Gillen and Foster, the Board of Directors of the Bank (the "Bank
         Board") will (at the meeting of the Bank Board of Directors immediately
         following the Bancshares Stockholders Meeting or any adjournment or
         postponement thereof) vote to increase the size of the Bank Board to
         thirteen (13) members and to elect Smyth, Gillen and Foster as
         directors to fill the resulting vacancies on the Bank Board.

    c)   In the event Bancshares does not receive a letter of nonobjection from
         the FRB with respect to one or more of Smyth, Gillen or Foster serving
         as a director of Bancshares, Bancshares shall allow the Smyth Group to
         propose a substitute nominee(s) for the position or positions on the
         Bancshares Board that would have been filled by Smyth, Gillen or
         Foster, as the case may be, and subject to receipt of letters of FRB
         nonobjection with respect to such substitute or substitutes and to such
         nominee(s) being reasonably acceptable to the Bancshares Board, take
         steps to elect him, her or them to the Bancshares Board in lieu of
         Smyth, Gillen or Foster, as the case may be. Similarly, in the event
         the Bank does not receive a letter of nonobjection from the FDIC with
         respect to one or more of Smyth, Gillen or Foster serving as a director
         of the Bank, the Bank shall allow the Smyth Group to propose a
         substitute nominee(s) for the position or positions on the Bank Board
         that would have been filled by Smyth, Gillen or Foster, as the case may
         be, and subject to receipt of letters of nonobjection with respect to
         such substitute or substitutes, and to such nominee(s) being reasonably
         acceptable to the Bank Board, take steps to elect him, her or them to
         the Bank Board in lieu of Smyth, Gillen or Foster, as the case may be.

    2.   ATTENDANCE AT BANCSHARES BOARD AND BANK BOARD MEETINGS PRIOR TO SERVICE
         AS DIRECTORS; CONFIDENTIALITY; EXPENSES


    a)   Subject to Smyth's, Foster's and Gillen's compliance with the terms of
         the Confidentiality Agreement, dated March 27, 2001, among the Smyth
         Group and Bancshares, after the date hereof and prior to the date of
         their appointment to the Bancshares Board and the Bank Board, the
         members of the Smyth Group will be invited to attend all or a portion
         of Bancshares' and the Bank's regular meetings as guests. The members
         of the Smyth Group will also be invited by Bancshares to attend certain
         additional meetings, if any, with management of Bancshares prior to
         such appointment.

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Vincent A. Smyth
William G. Foster, Jr.
Thomas F. Gillen
April 19, 2001
Page 3


    b)   Bancshares shall reimburse the members of the Smyth Group for their
         actual, documented, out-of-pocket costs reasonably incurred in
         connection with their attendance as invited guests at all or a portion
         of meetings of the Bancshares Board or the Bank Board referred to in
         (a) above or at meetings with Bancshares' management referred to in (a)
         above.

    c)   Bancshares shall also reimburse the members of the Smyth Group for
         actual documented expenses and filing fees (incurred through April 19,
         2001) directly related to the retention of legal counsel with respect
         to the preparation for or commencement of the Proxy Contest.

    3.   VOTING OF SMYTH GROUP'S SHARES.

             a)   During the period commencing on the date of this Letter
                  Agreement and ending on the date that is one day after the
                  latest of (a) the date of the Bancshares Stockholders Meeting
                  or (b) the date of the last of any adjournment or postponement
                  of such meeting, (the "Final Date of the Meeting") the Smyth
                  Group will cause all of the shares of common stock of
                  Bancshares beneficially owned by any member of the Smyth Group
                  as of the record date for any such meeting, to be present for
                  quorum purposes and to be voted:

         (i)   For all the Bancshares Board's nominees for Director at the
               Bancshares Stockholders Meeting, namely Messrs. Cavallo, Gomes
               and Siskind, provided that any proposed change to the slate of
               nominees or additions to the Bancshares Board after the date
               hereof and prior to the Bancshares Stockholders Meeting must be
               approved by the Smyth Group; and

         (ii)  In accordance with the recommendations made by the Bancshares
               Board on all other proposals, if any, presented for a vote of
               Bancshares stockholders at the Bancshares Stockholders Meeting or
               at any adjournments or postponements thereof.

    4.   PRESS RELEASES; ANNOUNCEMENT OF TERMINATION OF PROXY CONTEST

    For the period from the date of this Letter Agreement through the Final
    Date of the Meeting, Bancshares and the Smyth Group agree as follows:

         a)       Bancshares will, subject to the requirements of applicable
                  federal securities laws, provide Gillen with an opportunity to
                  review and comment on any press release, public filing, or
                  letter to Bancshares' stockholders containing statements about
                  the Smyth Group, prior to its public release.

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Vincent A. Smyth
William G. Foster, Jr.
Thomas F. Gillen
April 19, 2001
Page 4


         b)       The members of the Smyth Group will, jointly and individually,
                  subject to the requirements of applicable federal securities
                  laws, provide to Bancshares an opportunity to review and
                  comment on any press release, public filing, or letter to
                  Bancshares' stockholders containing statements about
                  Bancshares or the Bank, prior to its public release or filing.

         c)       Promptly after the entry of the parties into this Letter
                  Agreement, Bancshares and the Smyth Group will issue a joint
                  press release and Smyth and the Smyth Group will further amend
                  (or cause the further amendment of) the Amended Schedule 13D
                  (and file such further amendment with the SEC) to state that
                  the Smyth Group has agreed to terminate the Proxy Contest and
                  support the election of Messrs. Cavallo, Gomes and Siskind.

    5.  GENERAL RELEASE.

    Each of Smyth, Foster and Gillen, on the date of this Letter Agreement,
    will sign and deliver, to Richard S. Straczynski as the representative of
    Bancshares and the other released parties specified therein, a general
    release in the form set forth on EXHIBIT A attached hereto.

    6.  COUNTERPARTS.

    This Letter Agreement may be executed in one or more counterparts, each of
    which shall be deemed an original, but all of which together shall
    constitute one and the same instrument.

    If this Letter Agreement accurately describes the agreement between and
    among us, please confirm your agreement to the foregoing by signing your
    respective names in the spaces provided below and executing the general
    release attached as Exhibit A hereto and returning both documents to me in
    the self addressed envelope provided.


                                         Very truly yours,

                                         People's Bancshares, Inc.

                                         By:  /s/ Richard S. Straczynski
                                              ----------------------------------
                                         Richard S. Straczynski
                                         President and Chief Executive Officer


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Vincent A. Smyth
William G. Foster, Jr.
Thomas F. Gillen
April 19, 2001
Page 5



Agreed and Accepted:

/s/ Vincent A. Smyth
------------------------------------
Vincent A. Smyth



Agreed and Accepted:

/s/ William G. Foster, Jr.
------------------------------------
William G. Foster, Jr.



Agreed and Accepted:

/s/ Thomas F. Gillen
------------------------------------
Thomas F. Gillen