From the desk of David W. Cogan President & Chief Executive Officer

Dear Customers and Friends,
Your bank recently celebrated a milestone in its growth when its total assets topped out at just over one hundred million dollars.

While Mutual Federal Savings doesn’t chase after growth for its own sake the way most stock-owned banks do (and indeed, must), we are still gratified to see this institution thrive. Growth is rewarding because it reflects a collective vote of confidence by depositors and borrowers like you who have chosen this bank as the place you prefer to do business.

And it’s not surprising that Mutual Federal Savings has grown this year, given the inflows of deposit dollars brought in by weary investors seeking relief from a stormy market. The basic benefits of bank savings accounts may be old-fashioned, but have never been so welcome: Your money is safe and secure, protected against the vagaries of the market; deposits are insured against loss by the FDIC; funds are available without waiting, in case they are suddenly needed.

A bank savings account is still the best way to limit or eliminate market risk. Many of you already know that, and have voted with your feet!

Thank you for placing your trust in Mutual Federal Savings. We will continue to work hard to deserve it.

Best regards,

David W. Cogan

Saving Makes Cents For Kids, Too

This October Mutual Federal Savings Bank will kick off its ninth consecutive year of sponsor-ship and participation in the Saving Makes Cents educational program in the elementary schools of Whitman, Hanson, Halifax, and Carver.

Saving Makes Cents is designed to teach children the value of money, and to encourage them to develop the habit of saving on a regular schedule.
Paul D. Tisdale, Security and Compliance Officer for Mutual Federal Savings, introduced Saving Makes Cents to local schools when it was first created by the Massachusetts State Treasurer’s Office. He continues to coordinate the program for the bank, and local branch managers visit the classrooms regularly to enable participating students to deposit to their Saving Makes Cents accounts without leaving school premises.

It’s not about the amount.
The emphasis, Mr. Tisdale, explains, is on the regularity of the deposits, not the amounts. “To cultivate the habit of saving,” he says, “ it’s far better for a student to deposit any amount, even a dime or a quarter, every two weeks on Bank Visit Day, than to deposit larger amounts, but sporadically. By the way,” he adds with a smile, “it works that way for adults, too. It’s never too late to form good habits!” Thanks, Paul (he is relentless!)

A student’s participation in Saving Makes Cents is optional, and at the parents’ discretion. The program includes 3rd, 4th, and 5th grades, but can vary by school. If you would like your child to take part, or are interested in helping out as a parent volunteer, be on the lookout for Parent Authorization Forms, which students will be bringing home in the coming weeks. For more information, contact your school office or local Mutual Federal Savings Bank.

<top>

New! Monthly Statements
for Mortgages and Home Equity Loans

• Detailed loan information mailed to you monthly
• Convenient statement billing replaces passbooks
• No changes to your loan terms

Yes, it’s true: To the delight of many and the regret of a few, old loan passbooks are being retired for all mortgage and home equity loans. In their stead, we will introduce a new monthly statement. Included in the statement will be detailed account information, a detachable payment stub, and a payment reply envelope.

Personal loans, auto loans, and other types of loans will not be affected by this change.
Mortgage and home equity customers will receive their first statement about ten days before their Nov-ember payment due date. Passbooks for these loans will be retired at the close of business Friday, October 18. Please keep your passbook as a record of past transactions.

If you currently have your loan payments made by automatic monthly transfer from your Mutual Federal checking account, your payments will continue uninterrupted. You will receive a monthly statement showing your most recent payment and next payment due, for informational purposes only.

If you don’t have automatic payment, and would like to sign up for this service, simply complete the Enroll-ment Form at right and return it to the bank with your next payment.

You can also continue to use any of these convenient payment methods:

• By mail
• By telephone transfer from checking at 1-888-BANK-ARM
• From your pc with CheckMate Online Banking at www.mutualfederal.com
• In person at any branch

Please call the Loan Center at 781-447-448 or your nearest branch if you have any questions about your loan.

<top>

Q. What are your rates on a 15 year mortgage loan with 20% down? The amount to be borrowed would be $58,400

A. At this writing, our best rate is 5.25% plus two points, with an Annual Percentage Rate of 5.56%. That works out to a monthly payment of $8.04 per thousand. Rates are currently so low, you can even eliminate points and still get a rate under 6%!

Q. The gas company changed my service account number. I pay my gas bills with my online banking and am afraid my payments won’t be credited. What should I do?

A. Your payments should be automatically rerouted to your new account number, with no delay in any pay-ments you have in process. You should update your records with CheckMate Online Banking, however. Log on, then click on Messages, and Send Message, and key in a brief email notifying us of the change. You will get a confirmation that the change has been made, usually the next day. For more help, just call 1-800-686-2809.

Q. I signed up for the use of internet banking on your website, but have not had a response as of yet. I tried to log in but can’t remember my user or ID information. Please help!

A. When you sign up for CheckMate Online using the online form at www.mutualfederal.com, it normally takes 2-3 days to connect your service. Then we send you a Welcome Kit by mail, with instructions for choosing your secure password. If you haven’t received your Kit within a week of signing up, call us at 1-800-686-2809 and we’ll walk you through the process. If you have forgotten the User ID you entered when you signed up, call the number above, and we’ll help you with that as well.

Q. How can I make a deposit at the ATM? I don’t see any envelopes near the machine at some locations.

A. There are envelopes housed inside the ATMs. When you start your transaction and choose deposit, a small door on the face of the ATM will unlatch, allowing you to pull out one or more envelopes.

Did you know? We’ll waive the monthly maintenance fee for your Personal Checking or Super NOW Checking when you have Direct Deposit of your paycheck or social security. Call your nearest Mutual Federal Savings branch or 781-447-4488 for details.

Beginning the week of October 21, you may notice a few changes to Call-Banking, Mutual Federal Savings’ 24/7, toll-free, automated telephone banking service.

These changes are due to the bank’s introduction of a new customer sys-tem, which will be activated over the weekend of October 19-20. (See related articles in this letter.)

Most of the changes will be of a behind-the-scenes nature, designed to enhance the speed and reliability of the underlying operating system. A few changes, however, will affect your use of the service, and these will be clearly explained by the Call-Banking voice response, once the new system is in place.

We list them below for your advance notice:

• A new menu will present options in a slightly different way
• Your account number may need to be entered differently than before, such as omitting the extra zeroes.
• You will be asked to select a new personal identification number (PIN) the first time you use the new system. (the PIN you use for ATM transactions will not be affected.)
• Each signer on an account must choose a separate PIN.

We think you will find the changes to Call-Banking to be either hardly noticeable or improvements to service convenience. Should you have any questions at any time, please call your nearest branch, or 781-447-4488. We’ll be glad to help you.

Offices Closed One Day, Saturday, October 19
ATM Service Available

Mutual Federal Savings will introduce a new customer information system in October, the benefits of which are mentioned elsewhere in this newsletter. So that we can complete the installation of our new system with a minimum of service disruption, we have scheduled all work to be done over the weekend of October 19 - 20.

The list below details how customer access to service will be affected. Please plan your banking activity accordingly, and accept our sincere apologies for any inconvenience you may experience.

Lobby / Drive-Up: closed all day Saturday, Oct. 19

• ATM / Check Card: in service, no interruption anticipated
• CheckMate Online: in service Saturday and Sunday; out of service Monday, Oct. 21 (will not affect timing of any transactions already in process)
• Call-Banking (1-888-BANK-ARM): out of service from 4:00PM Friday, Oct. 18 thru Monday, Oct. 20.

Please call your nearest branch or
781-447-4488, should you have any questions.

October Deposit Statements On Temporary Schedule

The launch of our new customer system will delay the October statement a few days for some accounts, and create an extra mid-month statement for others. Your next statement will return to normal schedule.

New Statement Design In November
In November, we will introduce a newly designed monthly statement. We’ve made minor changes to produce a state-ment that uses less paper and is easier to read. We hope you will like the improvements.

Holiday Shopping? Don’t Forget Your Visa Check Card.

During the holiday season, when stocking stuffers, gift wrap, and decorations can cause you to burn through cash faster than a Yule log, it only makes good sense to use your Mutual Federal Visa Check Card. Not only for expensive purchases, but for all the little ones, as well.

If you like the convenience of simply signing for your purchases, or prefer not to use your PIN where others might see, simply choose “Credit” at the check-out and “No” if prompted for your PIN. The amount will be debited to your checking account in the same way, regardless of the method you choose.