EXHIBIT (10)(l)



|                          |  |  |  |                                      
|------------------------- |  |  |  | -------------------------------------
|The Sage Group            |  |  |  |                                      
|CONSULTANTS TO MANAGEMENT |  |  |  | 10409 LESLIE DRIVE                   
|                          |  |  |  | RALEIGH, NORTH CAROLINA 27601        
|                          |  |  |  | (919) 844-9783                       
|                          |  |  |  | E-mail: steve@sagegroupconsulting.com



MEMORANDUM



|      |  |                                                                         
|----- |  | ------------------------------------------------------------------------
|DATE: |  | May 1, 2004                                                             
|      | 
|TO:   |  | Lee Johnson, President M&F Bank                                         
|      | 
|FROM: |  | Steven A. Savia, CMC                                                    
|      | 
|RE:   |  | Final 2004 Incentive Compensation Program  Branch Customer Service Plan
|      | 
|CC:   |  |                                                                         



This years incentive
compensation program will have multiple components.



| | 1. | Executive Plan
| | -- | --------------



| | 2. | City Executive Plan
| | -- | -------------------



| | 3. | Loan Production Plan
| | -- | --------------------



| | 4. | Branch Customer Service Plan
| | -- | ----------------------------



| | 5. | Corporate Support/Teller Plan
| | -- | -----------------------------



This memo describes the Branch Customer Service Plan.



This is a new plan this year. We have segmented Branch Customer Service personnel from Corporate Support Personnel and Tellers. This plan is described below.



| | 1. | Threshold level of Net Income - the Threshold level for 2004 will be $1.448 million (2003 = $1.389 million).
| | -- | ------------------------------------------------------------------------------------------------------------



| | 2. | Schedule J presents the 2004 key measures for participants in the Branch Customer Service Plan.
| | -- | -----------------------------------------------------------------------------------------------



| | 3. | Once the threshold has been exceeded, the overall Bank pool will be created by 65% percent of the increase in net income marginal difference between budgeted net income ($1.484
million) and actual. The Branch Customer Service Plan Pool will be based on 30% of the overall Bank pool.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Branch Customer Service plan is based on the assumption that the award will be a percent of base salary. The plan has no budget implications since the awards would be
made based on a pool created from a percentage of the marginal increase beyond the budget. The Banks income would therefore always be more than budget if awards were being made.



Schedule A is a listing of the measures that the program will include and where in the Banks information system or other reporting
processes the data for those measures is found.



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SCHEDULE A  PERFORMANCE FACTORS



|                                                |  |                                      
|----------------------------------------------- |  | -------------------------------------
|Measurement Factor                              |  | Where Available                      
|Growth in Average Assets                        |  | General Ledger/ Finance              
|Return on Average Assets                        |  | General Ledger/ Finance              
|Efficiency Ratio                                |  | General Ledger/ Finance              
|Total Deposits                                  |  | General Ledger/ Finance              
|Total Assets                                    |  | General Ledger/ Finance              
|Growth in Portfolio Loan Levels                 |  | Credit Administration                
|Net Income                                      |  | General Ledger/ Finance              
|Percent Recovery Of Loan Loss                   |  | General Ledger/ Credit Administration
|Service Charge Income                           |  | General Ledger/ Finance              
|Classified Loans as a % of Capital              |  | General Ledger/ Credit Administration
|Non-Performing Assets as % of Loan Loss Reserve |  | General Ledger/ Credit Administration
|Income per Employee                             |  | General Ledger/ Finance              
|Assets per Employee                             |  | General Ledger/ Finance              
|Level of Earning Assets                         |  | General Ledger/ Finance              
|Audit Exceptions                                |  | Internal Audit                       
|Loan Originations ($)                           |  | Loan Production (Retail Bank Admin)  
|Loan Origination (#)                            |  | Loan Production (Retail Bank Admin)  
|Average Closing Days                            |  | Credit Administration                
|Exceptions From Quality Control                 |  | Credit Administration                
|CRA Rating                                      |  | Compliance                           
|Target Customer Calls (#)                       |  | Loan Production (Retail Bank Admin)  
|% Loan Portfolio > 30 Days Delinquent           |  | Credit Administration                
|Document Exceptions Not Cleared 30 Days         |  | Credit Administration                
|Operating Losses                                |  | General Ledger                       
|Transactions per Employee                       |  | Operations                           
|Loans Processed (#)                             |  | Credit Administration                
|Delinquencies as % of Loan Portfolio            |  | Credit Administration                
|Monthly Branch Mystery Shop Score               |  | Operations                           
|New Deposit Accounts Opened                     |  | Operations/Branch Reports            
|Deposit Accounts Closed                         |  | Operations/Branch Reports            
|Loan Referrals                                  |  | Loan Production (Retail Bank Admin)  
|Branch Profitability                            |  | Finance                              



Each of the above factors relates to
one or more positions in the Bank as a measure of their contribution to the Bank. In some cases the measure is an overall measure of the success of the Bank as a whole (such as Return on Average Assets). In other cases, the measure is more specific
to the nature of the position, e.g., Growth in Portfolio Loan Levels for the Retail Banking Group Executive and City Executives; Number of New Deposit Accounts for Customer Service Representatives and Branch Operations Managers.



Schedule E below lists the participants in this plan.



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SCHEDULE E  BRANCH CUSTOMER SERVICE PLAN PARTICIPANTS



|                       |  |                                       
|---------------------- |  | --------------------------------------
|EMPLOYEE               |  | POSITION                              
|Claxton, Amy           |  | Customer Service Representative       
|                       | 
|Corpening, Lori        |  | Loan Support                          
|Deloatch, Anne         |  | AVP/Senior Banking Center Service Mgr.
|                       | 
|Hart, Takisha          |  | Customer Service Representative       
|                       | 
|Mackey, Shemeka        |  | Customer Service Representative       
|                       | 
|Moore, Geraldine       |  | Sec./ Loan Support                    
|                       | 
|Morgan, Wendy          |  | Sec./ Loan Support                    
|                       | 
|Mungo, Audrey          |  | Banking Center Service Manager        
|                       | 
|Polite, Karen          |  | Customer Service Representative       
|                       | 
|Ray, LaRevia           |  | Customer Service Representative       
|                       | 
|Thorpe, Lenora         |  | Customer Service Representative       
|                       | 
|Winston-Graves, Sheila |  | Senior Banking Center Service Manager 
|                       | 
|Woods, Jacqueline      |  | Loan Support                          



The next step is putting the factors
with the personnel and their positions. For Branch Customer Service Plan Participants, the measures will be the same for each participant but measured by City for these employees. Schedule J provides suggested measures for these participants.



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SCHEDULE J  BRANCH CUSTOMER SERVICE PLAN PARTICIPANTS - 2004 MEASURES



|                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EMPLOYEE                                                                                                                                                                                                        |  | MEASUREMENT FACTORS                                                                                                                                                                                                                                        
|Claxton, Amy Corpening, Lori Deloatch, Anne * Hart, Takisha Mackey, Shemeka Moore, Geraldine Morgan, Wendy Mungo, Audrey * Polite, Karen Ray, LaRevia Thorpe, Lenora Winston-Graves, Sheila * Woods, Jacqueline |  | Average City Mystery Shop Score (15%), Total
Deposits for the City (10%), Deposit Customer Retention (20%), Cross Sell of Services (15%), Number of New Deposit Accounts (15%), Loan Referrals (10%), Branch Profitability (15%) * City Profitability (15%)



AWARD PAYOUTS



Below is a description of the basis for payouts for the various plans described above.



Branch Customer Service Plan -



The overall Bank pool will be created by 65% percent of the increase in net income marginal
difference between budgeted net income ($1.484 million) and actual. The Branch Customer Service Plan Pool will be based on 30% of the overall Bank pool. Thus, if the Bank achieves $200,000 above the threshold, the overall Bank pool is $130,000. The
Branch Customer Service pool would therefore be $39,000. Another way to calculate the pool is to take 19.5% of the marginal difference of the increase in net income above budgeted income for the Bank.



This plan pays out on a quarterly basis. Quarterly payouts are based on up to 5% of base
compensation not to exceed $1,000 per quarter.



Since payouts occur on a
quarterly basis but are based on annual results, that payout must be based on annualized quarterly results. As such, a small percentage holdback will be maintained and paid out with payment for the final quarter. 15% of the calculated payout will be
held back from the first three quarters. If the branch or city from which results are measured does not achieve its annual threshold, the fourth quarter payment will not be made and the hold back portion will be forfeited.



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