EXHIBIT (10)(i)

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 Executive Incentive Compensation Program
|      | 
|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 addresses the Executive Plan.



Overall for all plans, we will put in place the following:



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



| | 2. | Key factor measures for each of the employee participants. Schedule B presents the 2004 executive management measures.
| | -- | ----------------------------------------------------------------------------------------------------------------------



| | 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 Executive Management Plan Pool will be composed of 26% of the increase in net income marginal difference between budgeted net income ($1.484 million) and actual.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Executive Plan is based on the assumption that the award will be a percent of base
salary. The Banks income would therefore always be more than budget if awards were being made.



Schedule A is a listing of the quantitative 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. Other measures,
especially those using scorecard methodology, are noted in the specific schedules of personnel.



Non-quantifiable or project specific related measures may require the individual participants to submit support documentation detailing the achievement and the role they played in the achievement, especially if
there is no correlating system measure.



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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 B is a listing of the senior and executive management employees that will be
included in the Senior and Executive Management Plan.



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SCHEDULE B  EXECUTIVE AND SENIOR MANAGEMENT PLAN PARTICIPANTS



|                     |  |                                                        
|-------------------- |  | -------------------------------------------------------
|EXECUTIVE MANAGEMENT |  | POSITION                                               
|Becote, Fohliette    |  | SVP/CFO/Financial Group Executive                      
|                     | 
|Christopher, Wesley  |  | SVP/Retail Banking Group Executive                     
|                     | 
|Small, Elaine        |  | EVP/Operations Group Executive                         
|                     | 
|SENIOR MANAGEMENT    |  | POSITION                                               
|Harrington, Walter   |  | SVP/Credit Administration                              
|                     | 
|Parker, Lucera       |  | Marketing Director                                     
|                     | 
|Powell, Anthony      |  | Audit Risk Manager                                     
|                     | 
|Satterfield, Debbie  |  | VP Manager of Commercial Lending and Senior Underwriter
|                     | 
|Sellars, Harold      |  | SVP/Quality Assurance/Lending Administrator            
|                     | 
|Sturges, Allan       |  | VP and Controller                                      



The next step is putting the factors
with the personnel and their positions. Schedule G, beginning on the next page, has the measures and the weighted percentage for each employee who will participate in the Executive/Senior Management Plan this year. A number of the measures are less
quantifiable than in the past year, reflecting the scorecard approach. These are special projects for which the individual is responsible and the successful completion of those projects. Where necessary we have provided definitions for the factors
and their measures. These definitions will also appear in the full Program Plan Document.



SCHEDULE G  2004 EXECUTIVE AND SENIOR MANAGEMENT PLAN PARTICIPANTS  2004 MEASURES



|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EMPLOYEE          |  | MEASUREMENT FACTORS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Becote, Fohliette |  | Efficiency Ratio (25%)  Standard Definition in Plan Document  Contributions to Income (20%)  The position has the ability to contribute to the Banks income through a variety of
initiatives within scope of responsibility and occasionally outside the specific scope of responsibility. This factor tracks specific addition to income directly resulting from projects initiated or substantially managed by the employee. Levels will
be based on achieving increments of $25,000.  Facilities Management 
Achieving budget on revenue and expenses (15%)  This factor is based on the management of the corporate facility as well as responsibility for the Banks other facilities. Achievement of budgeted revenues and maintaining the budget
level of expenses is deemed satisfactory. Achieving additional revenues above budget or reduced expenditures results in an incentive award.



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|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |  | Net Income (15%)  Standard Definition in Plan Document  Special Project Completion (10%)  The successful completion of special projects assigned by the CEO or the Board of Directors
through the CEO as defined by the objectives set out in the assignment. Audit Exceptions (10%)  Standard Definition in Plan Document  Performance Evaluation (5%)  Standard Definition in Plan
Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                    | 
|Christopher, Wesley |  | Total Portfolio Loan Levels (30%) - Standard Definition in Plan Document  Net Income (15%) -Standard Definition in Plan Document  Non-Performing Assets as % of LLR (15%) - Standard Definition in Plan Document  Audit Exceptions (5%) - Standard Definition in Plan Document  Target Prospect Calls (number) (20%) - Standard Definition in Plan
Document  Performance Evaluation (15%) - Standard Definition in Plan
Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Harrington, Walter  |  | Credit Administration (15%) defined as maintenance of the on-line credit policies, including timely updates as needed;
administration of updated procedures required to maintain Bank Compliance; timely reporting to all users regarding the condition and quality of the loan portfolio.  Classified Loans as a % of Capital (10%) - Standard Definition in Plan Document  Complete Securitization of Loans in Portfolio (15%)  This is a special project
to be completed to protect the Banks position. Successful completion is defined as having all loans at the end of the year in a position for securitization and potential sale.  Non-Performing Assets as % of LLR (15%) Standard Definition in Plan Document  Audit Exceptions (15%) -Standard Definition in Plan Document  % Loan Portfolio > 30 Days Delinquent (15%) -Standard Definition in Plan
Document  External Audit Exceptions to Loan Portfolio (5%) - Standard
Definition in Plan Document  Performance Evaluation (10%) - Standard
Definition in Plan Document
|Parker, Lucera      |  | Total Deposits (15%) - Standard Definition in Plan Document  Total Portfolio Loan Levels (15%) -Standard Definition in Plan Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  | Net Income (5%) - Standard Definition in Plan Document  Media Hits (35%) - Standard Definition in Plan Document  Increase in Average Number of Products/Services per Customer (25%)  Success would be defined as increasing the average number
of products/services to existing customers by .3. Superior success would be to increase the average number by .75; Exceptional success would be increasing the average number by 1.  Performance Evaluation (5%) - Standard Definition in Plan Document          
|                | 
|Powell, Anthony |  | Total Internal Audits Conducted (30%)  The total number of internal audits conducted versus the number determined necessary at the
beginning of the year  External Audit Exceptions (30%) - Standard
Definition in Plan Document  Document Exceptions Not Cleared 30 Days (25%)
- Standard Definition in Plan Document  Performance Evaluation (15%)
- Standard Definition in Plan Document                                                                                                                     
|                | 
|Sellars, Harold |  | Net Income (20%) - Standard Definition in Plan Document  Non-Interest Income and Fees (10%) - Standard Definition in Plan Document  Document Exceptions Not Cleared 30 Days (15%) - Standard Definition in Plan
Document  Complete ARTA training for loan personnel (10%)  Special
project  Total Document Exceptions (15%) - Standard Definition in Plan
Document  Average Days to Commitment (15%) - Standard Definition in Plan
Document  Performance Evaluation (15%) - Standard Definition in Plan
Document
|                | 
|Small, Elaine   |  | New Systems, Products, Services, Training and Efficiencies (30%) - Standard Definition in Plan Document  Net Income (15%) - Standard Definition in Plan Document  System Up-time (25%) - Standard Definition in Plan Document  Audit Exceptions (15%) - Standard Definition in Plan Document  Performance Evaluation (15%) - Standard Definition in Plan
Document                                                                                                                                                



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|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Satterfield, Debbie |  | Total Portfolio Loan Levels (30%) - Standard Definition in Plan Document  Net Income (15%) - Standard Definition in Plan Document  Non-Performing Assets as % of LLR (15%) - Standard Definition in Plan Document  Audit Exceptions (5%) - Standard Definition in Plan Document  Total Document Exceptions (10%) -Standard Definition in Plan Document  Average Days to Commitment (15%) - Standard Definition in Plan Document  Performance Evaluation (10%) - Standard Definition in Plan
Document                                                                                                                                                                                                          
|                    | 
|Sturges, Allan      |  | Net Income (15%)  Standard Definition in Plan Document  Audit Exceptions (10%) - Standard Definition in Plan Document  Budget/Financial Statement Software (10%)  Research and evaluate options for budget and financial statement preparation and
present a recommendation to the CFO.  Regulatory Reporting (30%) 
Timely completion of regulatory reports for the FDIC and FRB and preparing first draft of SEC reports.  Transfer Pricing Model Software (10%)  Development or identification of transfer pricing model for branch financial statement preparation.  Efficiency Ratio (20%)  Standard Definition in Plan Document  Performance Evaluation (5%) - Standard Definition in Plan Document



AWARD PAYOUTS



Below is a description of the basis for payouts for the Executive Plan.



The Bank-wide pool from which this plans awards are distributed is based on 65% of the
difference between budgeted and actual, assuming actual exceeds budget. 40% of that pool is available to the executives of the Bank (see Schedule B, page 4). Thus, if the Bank exceeds its net income threshold of $1.448 million by $200,000, then the
Bank-wide pool available for incentive awards is $130,000 of which $52,000 would be available for Executive participants.



Based on the available pool, measures of success are weighted against the percent for each individuals performance factors. A percent is created and multiplied by
the individual participants base salary to create an incentive payment. As the Banks achievement of its goals grows, the pool also grows larger.



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