SCHEDULE 14A

(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant |X|

Filed by a Party other than the Registrant |_|

Check the appropriate box:
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|_| Confidential for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))

Medford Bancorp, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

|_| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction
applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price of other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

|_| Fee paid previously with preliminary materials.

|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number of the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700

March 27, 2001

Dear Stockholder:

You are cordially invited to attend the 2001 Annual Meeting of
Stockholders of Medford Bancorp, Inc. (the "Company") to be held on Monday,
April 30, 2001, at 10:00 a.m., local time, at Anthony's of Malden, 105 Canal
Street, Malden, Massachusetts.

The Annual Meeting has been called for the following purposes:

1. To elect three Directors of the Company for a three-year term.

2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on March 5, 2001,
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT AT THE ANNUAL
MEETING YOU VOTE "FOR" PROPOSAL ONE.

Very truly yours,

/s/ Arthur Meehan
ARTHUR H. MEEHAN
Chairman, President and Chief Executive Officer

IMPORTANT

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.

MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700

-----------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 2001

-----------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Medford
Bancorp, Inc. (the "Company") will be held at Anthony's of Malden, 105 Canal
Street, Malden, Massachusetts on Monday, April 30, 2001, at 10:00 a.m., local
time, for the following purposes:

1. To elect three Directors of the Company for a three-year term.

2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.

The Board of Directors of the Company has fixed the close of business on
March 5, 2001, as the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. Only holders of record of the Company's common stock at
the close of business on that date will be entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof.

In the event that there are not sufficient votes to approve the foregoing
proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned
or postponed in order to permit further solicitation of proxies by the Company.

The above matters are described in detail in the accompanying Proxy
Statement.

By Order of the Board of Directors

EUGENE R. MURRAY
Clerk

March 27, 2001

Medford, Massachusetts

IMPORTANT

MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700

--------------------

PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 2001

--------------------

VOTING, REVOCATION AND SOLICITATION OF PROXIES

Annual Meeting

This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Medford Bancorp, Inc. (the
"Company") for use at its 2001 Annual Meeting of Stockholders to be held at
Anthony's of Malden, 105 Canal Street, Malden, Massachusetts, on Monday, April
30, 2001, at 10:00 a.m., local time, and any adjournments or postponements
thereof.

At the Annual Meeting, stockholders of the Company will be asked to
consider and vote upon the following matters:

1. To elect three Directors of the Company for a three-year term; and

2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.

The accompanying Notice of Meeting and this Proxy Statement are initially
being mailed on or about March 27, 2001 to record holders of the Company's
common stock as of March 5, 2001 (the "Record Date").

Annual Report

The Company's 2000 Annual Report, including the Company's Annual Report on
Form 10-K, for the year ended December 31, 2000 (the "Annual Report"), which
contains the Company's consolidated financial statements audited by its
independent certified public accountants and their report thereon, is being
delivered simultaneously with this Proxy Statement to stockholders of record of
the Company as of the Record Date. The Annual Report, however, is not part of
the Company's proxy soliciting material. Additional copies of the Annual Report,
and copies of the Company's Annual Report on Form 10-K, for the year ended
December 31, 2000 as filed with the Securities and Exchange Commission (the
"SEC") are available upon written request, without charge, from the Company.
Such requests should be directed to: Medford Bancorp, Inc., 29 High Street,
Medford, Massachusetts 02155, Attention: Shareholder Relations.

Record Date; Voting

The Board of Directors of the Company has fixed the close of business on
March 5, 2001, as the Record Date for determining stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. Only holders of record of Common Stock of the Company at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. At the
close of business on the Record Date, there were 7,822,664 shares of Common
Stock of the Company issued and outstanding and entitled to vote at the Annual
Meeting and any adjournments or postponements thereof. As of such date, there
were approximately 1,046 holders of record of the Company's Common Stock. The
holders of the Company's Common Stock outstanding as of the close of business on
the Record Date will be entitled to one vote for each share held upon each
matter properly submitted to the Annual Meeting and any adjournments or
postponements thereof.

Proxies

Holders of the Company's Common Stock are requested to complete, date,
sign and promptly return the accompanying proxy card in the enclosed envelope.
The proxy card must be signed and dated for it to be properly executed. If the
enclosed proxy card is properly executed and returned to the Company in time to
be voted at the Annual Meeting, the shares represented thereby will, unless such
proxy has previously been revoked, be voted in accordance with the instructions
marked thereon. Executed proxies with no instruction indicated thereon will be
voted "FOR" Proposal One (the election of the three nominees of the Board of
Directors of the Company). In their discretion, the persons named in the proxy
card are each authorized to vote upon such other business as may properly come
before the Annual Meeting and any adjournments or postponements thereof.

The presence of a stockholder at the Annual Meeting will not automatically
revoke the stockholder's proxy. A stockholder of record may, however, revoke a
proxy at any time prior to the voting thereof on any matter by filing with the
Clerk of the Company a written notice of revocation, by delivering to the
Company a duly executed proxy bearing a later date, or by attending the Annual
Meeting and voting in person. All written notices of revocation and other
communications with respect to revocation of proxies in connection with the
Annual Meeting should be addressed as follows: Medford Bancorp, Inc., 29 High
Street, Medford, Massachusetts 02155, Attention: Shareholder Relations.

In addition to the use of the mails, proxies may be solicited personally
or by telephone or telegraph by officers, Directors and employees of the Company
who will not be specially compensated for such solicitation activities.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries for forwarding solicitation materials to the beneficial
owners of shares held of record by such persons, and the Company will reimburse
such persons for their reasonable out-of-pocket expenses incurred in that
connection. The Company has also retained Corporate Investor Communications,
Inc., a proxy soliciting firm, to assist in the solicitation of proxies at a fee
of approximately $4,000, plus reimbursement of certain out-of-pocket costs. The
cost of soliciting proxies, including the fee of Corporate Investor
Communications, Inc., will be borne by the Company.

Quorum and Stockholder Vote Required

The presence, in person or by proxy, of at least a majority of the total
number of issued and outstanding shares of Common Stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. A
quorum being present, a plurality of the votes cast at the Annual Meeting is
necessary to elect each of the nominees for Director.

In accordance with the By-laws of the Company and applicable state law,
abstentions, votes withheld for director nominees and broker non-votes (that is,
shares represented at the meeting which are held by a broker or other nominee
and as to which (i) instructions have not been received from the beneficial
owner or the person entitled to vote and (ii) the broker or nominee does not
have discretionary voting power) shall be treated as shares that are present and
entitled to vote for the purpose of determining whether quorum is present.
Abstentions and broker non-votes will not be counted as voting at the Annual
Meeting and, therefore, will have no effect on the outcome of Proposal One.

PROPOSAL ONE

ELECTION OF CLASS OF DIRECTORS

The Board of Directors of the Company currently consists of eleven members
and is divided into three classes. Two of the three classes of Directors consist
of four members and one class consists of three members. The term of office of
the Directors in one of the classes expires in each year, and their successors
are elected at each annual meeting of stockholders for a term of three years and
until their successors are elected and qualified. The terms of Paul J. Crowley,
Edward J. Gaffey, and Andrew D. Guthrie, Jr., M.D., as Directors of the Company
expire in 2001.

At the Annual Meeting, three persons will be elected Directors of the
Company to serve for a three-year term until the 2004 Annual Meeting of
Stockholders and until their successors are elected and qualified. The Board of
Directors of the Company has nominated Paul J. Crowley, Edward J. Gaffey, and
Andrew D. Guthrie, Jr., M.D., for reelection as Directors of the Company for
three-year terms.

Unless authority to do so has been withheld or limited in the proxy, it is
the intention of the persons named in the proxy to vote the shares represented
by each properly executed proxy "FOR" the election of each of the nominees named
above as Directors of the Company. The Board of Directors believes that each of
the nominees will stand for election and, if elected, will serve as a Director.
However, if any nominee fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other person or
persons as the Board of Directors may recommend.

The Board of Directors recommends that stockholders vote "FOR" the
election of each of the nominees proposed for Directors named herein.

DIRECTORS

The following table sets forth as of January 1, 2001, information supplied
by each person who is currently a Director and/or a nominee for election as a
Director of the Company with respect to such person's age, principal occupation
for the past five years and the year in which the person began serving as a
Director or Trustee of Medford Savings Bank (the "Bank") (prior to the formation
of the Company).

NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR A THREE-YEAR TERM

Director
Name Age Since Principal Occupation
- ---- --- ----- --------------------

Paul J. Crowley 70 1993 Founder and Chairman Emeritus of Computer Partners and
former President of C.S.C. Consulting Group (retired)

Edward J. Gaffey 63 1984 President of Country Way Trust; former President and
Treasurer of Edward J. Gaffey & Sons, Inc., operating
funeral homes in Medford, Arlington and Scituate,
Massachusetts

Andrew D. Guthrie, Jr., M.D. 71 1983 Physician, President of Mistick Pediatric Associates

DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2002 ANNUAL MEETING

Director
Name Age Since Principal Occupation
- ---- --- ----- --------------------

David L. Burke 57 1995 President and Treasurer of Boston Steel &
Manufacturing Company in Malden, Massachusetts

Mary Lou Doherty 75 1983 Assistant Principal, Medford school system (retired)

Arthur H. Meehan 65 1992 Chairman of the Board of Directors of the Company and
the Bank; President and Chief Executive Officer of the
Company; President, Chief Executive Officer and a
Director of the Bank since 1993

Eugene R. Murray 68 1979 Clerk of the Company and of the Bank; Underwriting
Manager of Boston Office of Cigna Special Risk
Facilities (retired)

DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2003 ANNUAL MEETING

Director
Name Age Since Principal Occupation
- ---- --- ----- --------------------

Edward D. Brickley 65 1973 Manager of Corporate International Accounting at
Polaroid Corporation in Cambridge, Massachusetts
(retired)

Robert A. Havern III 51 1981 Attorney in private practice in Arlington,
Massachusetts; Member of State Legislature of the
Commonwealth of Massachusetts since 1987

Francis D. Pizzella 73 1976 Attorney at law; President of Savings Bank Life
Insurance Company of Massachusetts and President of
the Savings Bank Employees Retirement Association
(retired)

Deborah A. Burke-Santoro 45 1999 Marketing and Communications Director, Office of the
Mayor, City of Malden

The Board of Directors, Its Committees and Compensation

The following is a description of the Executive, Audit, and Compensation
and Options Committees of the Board of Directors of the Company. The Board of
Directors acts as a nominating committee, selecting nominees for election or
reelection as Directors and officers. The Board of Directors will consider a
nominee for election to the Board of Directors recommended by a stockholder of
record if the stockholder submits the nomination in compliance with the
requirements of the Company's By-Laws. See "STOCKHOLDER PROPOSALS" for a summary
of these requirements.

Executive Committee. The Bank's Executive Committee met 12 times and the
Company's Executive Committee did not meet during fiscal year 2000. The members
of the Executive Committees of the Company and of the Bank during 2000 were
Messrs. Meehan (Chairman), Crowley, Gaffey, Murray and Pizzella. The Executive
Committee is vested with the authority of the Board of Directors in most matters
between meetings of the Board of Directors. Except for Mr. Meehan, who received
no compensation for his service, members of the Bank's Executive Committee
received $400 for each meeting they attended through July 2000, and $500 for
each meeting attended thereafter, as well as an annual fee of $8,600, during
fiscal year 2000.

Audit Committee. The Company's Audit Committee met 7 times. The members of
the Company's Audit Committee during 2000 were Messrs. Gaffey (Chairman and
Clerk), Brickley and Pizzella. The Audit Committee, among other things, reviews
the financial statements and the scope of the independent annual audit, reviews
the Audit Committee Charter, reviews the independence of the independent public
accountants, monitors internal financial and accounting controls, and appoints
the independent certified public accountants. Members of the Company's Audit
Committee received $450 (the Clerk received an additional fee of $125 per
meeting) for each meeting they attended through July 2000, and $500 for each
meeting attended thereafter, as well as an annual fee of $2,800, during fiscal
year 2000.

Audit Committee Report

The Audit Committee has:

o reviewed and discussed the audited financial statements with
management;

o discussed with the independent auditors the matters required to be
discussed by SAS 61; and

o received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1
("Independence Discussion with Audit Committees"), and has discussed
with the independent auditors the auditors' independence.

Based on the review and discussions above, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000 for filing with the SEC.

The Board of Directors has determined that the members of the Audit
Committee are "independent" under the rules of the Nasdaq Stock Market. The
Audit Committee has adopted a written charter. The charter is included as
Exhibit A to this proxy statement.

Members of the Audit Committee:

Edward J. Gaffey, Chairman and Clerk
Edward D. Brickley
Francis D. Pizzella

Compensation and Options Committee. The Company's Compensation and Options
Committee met 2 times during 2000. The Compensation and Options Committee of the
Company consists of Messrs. Murray (Chairman), Burke, Crowley, Gaffey, and
Pizzella. The Compensation and Options Committee establishes salary increases
and other compensation-related issues for the Chairman, President and Chief
Executive Officer, and reviews the proposed salary increases of all other senior
executives and all officers as a group. The Compensation and Options Committee
also determines, pursuant to the Medford Bancorp, Inc. Stock Option Plan, the
persons to whom options will be granted, the number of shares underlying the
options, the types of options and other terms and conditions of the options.
Members of the Company's Compensation and Options Committee received $450 for
each meeting they attended through July 2000, and $500 for each meeting attended
thereafter, during fiscal year 2000.

The Board of Directors of the Company held 6 meetings during fiscal 2000.
Each of the Directors attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors of the Company and the total number of
meetings held by all committees of the Board of Directors on which such Director
served. Except for Mr. Meehan, who received no compensation for his service,
directors of the Company received $325 for each meeting of the Board of
Directors that they attended through July 2000, and $400 for each meeting
attended thereafter, during fiscal year 2000.

Pursuant to the Company's Directors Deferred Compensation Plan for Outside
Directors, non-employee Directors may defer payment of all or any part of annual
fees, meeting fees, committee fees, and other payments for services rendered by
the Directors ("Fees") and may invest such Fees in the Company's Common Stock.
Under this plan, Fees earn interest and dividends and are payable at the
Director's election in installments over a three-year period following the
Director's retirement from the Board of Directors, death, or disability.

OWNERSHIP BY MANAGEMENT AND OTHER STOCKHOLDERS

The following table sets forth certain information with respect to the
number of shares of the Company's Common Stock beneficially owned as of February
1, 2001, by the Chairman, President and Chief Executive Officer, the other four
most highly compensated executive officers (including executive officers of the
Bank), each Director and all Directors and executive officers as a group.

Amount and Nature of Percentage of
Beneficial Outstanding
Executives Ownership (1)(2)(3) Common Stock
- ---------- ------------------- ------------

Arthur H. Meehan..................................... 280,301 (4) 3.58%
Chairman, President, Chief Executive
Officer and Director of the Company
Phillip W. Wong...................................... 75,880 *
Executive Vice President,
Chief Financial Officer and
Treasurer of the Company
George A. Bargamian ................................. 85,435 1.09%
Executive Vice President of the Bank
Eric B. Loth ........................................ 69,483 *
Senior Vice President of the Bank
William F. Rivers.................................... 74,228 *
Senior Vice President of the Bank

Directors

Edward D. Brickley................................... 27,134 (5) *
David Burke ......................................... 11,310 (6) *
Deborah A. Burke-Santoro............................. 1,922 *
Paul J. Crowley...................................... 112,618 (7) 1.44%
Mary Lou Doherty..................................... 22,072 *
Edward J. Gaffey..................................... 112,688 (8) 1.44%
Andrew D. Guthrie.................................... 54,534 *
Robert A. Havern III................................. 35,396 *
Eugene R. Murray..................................... 78,983 1.01%
Francis D. Pizzella.................................. 170,223 (9) 2.18%
All Directors and Executive
Officers as a Group (15 persons) 1,212,207 15.50%

- ----------
* Less than 1%

(1) Unless otherwise noted in the footnotes to this table, each of the
Directors, nominees and executive officers has sole or shared voting and
investment power for the shares of Common Stock beneficially owned by
him/her. The amounts set forth for Messrs. Meehan, Wong, Bargamian, Loth
and Rivers include 10,225, 2,779, 12,831, 111, and 24,127 shares,
respectively, allocated to their accounts under the Bank's Employees'
Stock Ownership Plan (the "ESOP").

(2) The shares of Common Stock in this column include those shares which may
be acquired by the persons or group indicated pursuant to the exercise of
stock options within 60 days of February 1, 2001.

(3) This share ownership includes shares of Common Stock allocated to the
account of Directors under the Deferred Investment Plan for Outside
Directors as of December 31, 2000 as follows: 8,399, 3,722, 13,826,
37,298, 19,742, 33,286, 35,149 and 857 shares of Common Stock have been
allocated to the accounts of Messrs. Brickley, Burke, Crowley, Gaffey,
Guthrie, Murray, Pizzella and Ms. Burke-Santoro, respectively.

(4) This share ownership includes Mr. Meehan's interest in a 401(k) Plan Share
Fund which may invest in the Company's stock. He does not have voting
power over the shares, but does have the right to dispose of them.

(5) Of the shares of Common Stock listed as owned by Mr. Brickley, 4,000
shares are owned by Mr. Brickley's wife. Mr. Brickley disclaims beneficial
ownership of these shares.

(6) Of the shares of Common Stock listed as owned by Mr. Burke, 1,488 shares
are owned by Mr. Burke's wife. Mr. Burke disclaims beneficial ownership of
these shares.

(7) Of the shares of Common Stock listed as owned by Mr. Crowley, 10,000
shares are owned by Mr. Crowley's wife. Mr. Crowley disclaims beneficial
ownership of these shares.

(8) Of the shares of Common Stock listed as owned by Mr. Gaffey, 20,350 shares
are owned by Mr. Gaffey's wife. Mr. Gaffey disclaims beneficial ownership
of these shares.

(9) Of the shares of Common Stock listed as owned by Mr. Pizzella, 35,280
shares are owned by Mr. Pizzella's wife. Mr. Pizzella disclaims beneficial
ownership of these shares.

The following table presents information as to the entities known to the
Company to be beneficial owners of more than five percent of the Common Stock of
the Company as of December 31, 2000.

Amount and Nature of Percentage of
Beneficial Outstanding
Name and Address of Beneficial Owner Ownership Common Stock
- ------------------------------------ --------- ------------

Dimensional Fund Advisors Inc....................... 634,800(1) 8.11%
1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401
Banc Fund III L.P................................... 480,200(2) 6.14%
Banc Fund III Trust
Banc Fund IV L.P.
Banc Fund V L.P.
208 South LaSalle Street, Suite 200
Chicago, Illinois 60604
Brookline Bancorp, Inc.............................. 424,248(3) 5.42%
160 Washington Street
Brookline, Massachusetts 02147
Perkins, Wolf, McDonnell & Company.................. 412,000(4) 5.27%
53 West Jackson Boulevard, Suite 722
Chicago, Illinois 60604

- ---------------

(1) The Company has relied upon the information set forth in the Schedule 13G
filed with the SEC by Dimensional Fund Advisors Inc. on February 2, 2001.

(2) The Company has relied upon the information set forth in the Schedule 13G
filed with the SEC by Banc Funds on February 9, 2001.

(3) The Company has relied upon the information set forth in the Schedule 13D
filed with the SEC by Brookline Bancorp, Inc. on March 13, 2000 regarding
ownership as of March 3, 2000.

(4) The Company has relied upon the information set forth in the Schedule 13G
filed with the SEC by Perkins, Wolf, McDonnell & Company on February 15,
2001.

EXECUTIVE COMPENSATION

Executive officers of the Company currently receive no compensation in
their capacities as executive officers of the Company but are compensated as
employees of the Bank.

The following table sets forth information concerning the compensation for
services rendered in all capacities during the three fiscal years through 2000
earned by the Chairman, President and Chief Executive Officer, and the four
other most highly compensated executive officers of the Bank (who, in the case
of Messrs. Meehan and Wong, are also officers of the Company).

I. Summary Compensation Table

Annual Compensation(1) Long term
Compensation
Awards(3)
Securities
Name and Principal Position with Underlying All Other Annual
the Bank Year Salary ($) Bonus(2)($) Options (#) Compensation($)
- --------------------------- ---- ---------- ----------- ---------- ---------------

Arthur H. Meehan 2000 $463,050 $100,000 8,000 $197,984(4)
Chairman, President and 1999 441,000 100,000 8,000 242,200(4)
Chief Executive Officer 1998 420,000 95,000 7,500 241,504(4)

Phillip W. Wong 2000 $165,500 $25,000 5,000 $6,734(5)
Executive Vice President, 1999 150,500 25,000 5,000 2,500(5)
Chief Financial Officer and 1998 137,500 25,000 3,000 2,428(5)
Treasurer

George A. Bargamian 2000 $136,500 $20,000 2,000 $6,204(6)
Executive Vice President 1999 130,000 25,000 3,000 2,150(6)
1998 124,000 20,000 3,000 2,153(6)

Eric B. Loth 2000 $136,000 $0 2,000 $5,883(7)
Senior Vice President 1999 130,000 5,000 2,000 1,952(7)
1998 123,000 0 3,000 2,141(7)

William F. Rivers 2000 $129,000 $15,000 2,000 $5,809(8)
Senior Vice President 1999 122,600 20,000 3,000 2,111(8)
1998 116,600 18,000 3,000 2,041(8)

- ----------

(1) Excludes the value of certain perquisites and benefits furnished by the
Company or Bank to its executive officers to facilitate the conduct of its
business. The aggregate amount of such benefits for each executive officer
did not exceed the lesser of $50,000 or 10% of the compensation reported
in the table for such individual.

(2) Amounts paid under the Bank's Incentive Compensation Program for services
rendered in the year reported.

(3) None of the executives listed received any restricted stock awards or LTIP
payouts during the three years reported.

(4) A contribution of $5,834, $2,500 and $2,500 was made to Mr. Meehan's
401(k) account in 2000, 1999 and 1998, respectively. A contribution of
$31,500, $24,000 and $24,000 was made to Mr. Meehan's Supplemental
Executive Retirement Plan in 2000, 1999 and 1998, respectively. A
contribution of $160,650, $215,700 and $215,004 was made to Mr. Meehan's
Executive Supplemental Benefit Agreement in 2000, 1999 and 1998,
respectively.

(5) A contribution of $6,734, $2,500 and $2,428 was made to Mr. Wong's 401(k)
account in 2000, 1999 and 1998, respectively.

(6) A contribution of $6,204, $2,150 and $2,153 was made to Mr. Bargamian's
401(k) account in 2000, 1999 and 1998, respectively.

(7) A contribution of $5,883, $1,952 and $2,141 was made to Mr. Loth's 401(k)
account in 2000, 1999 and 1998, respectively.

(8) A contribution of $5,809, $2,111 and $2,041 was made to Mr. Rivers' 401(k)
account in 2000, 1999 and 1998, respectively.

II. Stock Options Granted in Fiscal 2000

The following table sets forth information concerning individual grants of
stock options made during fiscal 2000 to each executive officer of the Company
and/or the Bank listed below. Neither the Company nor the Bank granted any stock
appreciation rights during fiscal 2000.

Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
----------------- ---------------
Percentage
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted Year ($/sh) Date 5%($) 10%($)
- ---- ------- ---- ------ ---- ----- ------

Arthur H. Meehan 8,000 23.5% $14.9375 12/21/10 $75,153 $190,452
Philip W. Wong 5,000 14.7% $14.9375 12/21/10 $46,971 $119,033
George A. Bargamian 2,000 5.9% $14.9375 12/21/10 $18,788 $47,613
Eric B. Loth 2,000 5.9% $14.9375 12/21/10 $18,788 $47,613
William F. Rivers 2,000 5.9% $14.9375 12/21/10 $18,788 $47,613

III. Option Exercises and Year-End Value Table

The following table sets forth the aggregate number of stock options
exercised by each executive officer of the Company and/or the Bank listed below
and, for each such executive officer, the number of exercisable and
unexercisable stock options and the value of exercisable and unexercisable
"in-the-money" stock options at the end of fiscal 2000.

Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
------------------------------------------------------------------------

Number of
Securities
Underlying Value of Unexercised
Unexercised In-The-Money
Options at Securities Underlying
FY-End (#) Options at FY-End ($)
---------- ---------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($)(1) Unexercisable Unexercisable(1)
- ---- ------------ ------------- ------------- ----------------

Arthur H. Meehan 16,456(2) $188,801(2) 156,578/10,250 $1,214,700/$4,500

Phillip W. Wong -0- -0- 51,100/5,900 $402,500/$2,813

George A. Bargamian -0- -0- 9,100/2,900 $0/$1,125

Eric B. Loth -0- -0- 68,100/2,900 $363,750/$1,125

William F. Rivers 30,000(2) $323,438(2) 9,100/2,900 $0/$1,125

(1) Market value of underlying securities at exercise or year-end minus the
exercise or base price. Market value is calculated on the basis of the
closing price for the Common Stock as reported on the Nasdaq National
Market of $15.50 on December 29, 2000.

(2) Because the shares have not been sold by the executive, they are reflected
in the beneficial ownership table.

Pension Plan

On January 25, 2000, the Board of Directors of the Bank voted to terminate
the Bank's defined benefit pension plan, a non-contributory qualified retirement
plan for eligible employees from the Savings Banks Employee Retirement
Association (the "Plan"). In connection with the termination of the Plan, the
Bank's Board of Directors also voted to cease the accrual of pension benefits,
effective February 29, 2000. Final Plan termination was approved by the Internal
Revenue Service on October 25, 2000.

As a result of the termination of the Plan, eligible employees were
offered a single sum settlement equal to the value of their benefits under the
Plan. In addition, a portion of the surplus of the Plan was used to enhance
benefits of eligible employees. If these eligible employees did not roll over
these benefits into other pension vehicles, they were subject to significant tax
penalties. Settlements and enhancements for all employees were paid on November
21, 2000. The following are the settlements and enhancements for the executive
officers of the Bank:

Executive Basic Value Enhancement Total
--------- ----------- ----------- -----
Arthur H. Meehan $234,110 $50,088 $284,198
Phillip W. Wong $69,060 $14,776 $83,836
George A. Bargamian $118,192 $25,281 $143,473
Eric B. Loth $84,312 $18,039 $102,351
William F. Rivers $139,882 $29,928 $169,810

Employment Contract, Special Termination Agreements, Other Agreements

The Bank and the Company entered into an amended and restated employment
agreement with Mr. Meehan, effective November 26, 1997, to include the Company
as a party (the "Amended and Restated Agreement"). Although the Amended and
Restated Agreement has an initial term of three years, on April 27, 1998, and on
each successive anniversary of that date, unless the Company and the Bank, or
Mr. Meehan, have previously given the specified notice to the other of its or
his election not to extend the Amended and Restated Agreement, an additional
one-year period will be added to the Amended and Restated Agreement. The Amended
and Restated Agreement provides that Mr. Meehan will receive minimum annual
compensation equal to a current base salary ($486,200 as of January 1, 2001),
subject to no less than an annual cost of living increase, in addition to all
regular benefits provided by the Bank and any sums that may be awarded under the
Bank's discretionary bonus plan. Under the terms of the Amended and Restated
Agreement, the Company and the Bank may terminate Mr. Meehan's employment,
without incurring any continuing obligations to him, at any time for "cause,"
which is defined by the Amended and Restated Agreement to mean his deliberate
dishonesty to the Company or the Bank, conviction of a crime involving moral
turpitude, or gross and willful failure to perform his duty. If the Company and
the Bank terminate Mr. Meehan's employment for any reason other than "cause," or
if Mr. Meehan terminates his employment under certain conditions, the Company
and the Bank will remain obligated to continue providing the compensation and
benefits specified in the Amended and Restated Agreement for the duration of
what otherwise would have been the term of the Amended and Restated Agreement.

The Bank entered into amended and restated special termination agreements
with each of Messrs. Meehan, Wong, Bargamian, Loth and Rivers, effective
November 26, 1997, to include certain references to change in control (as
defined in the Amended and Restated Special Termination Agreements) of the
Company (the "Special Termination Agreements"). In addition, the Special
Termination Agreements of Messrs. Meehan and Wong include the Company as a
party. The Special Termination Agreements provide that (A) if there is a Change
in Control and (B) if, at any time during the three-year period following such
Change in Control, the Bank (and the Company, in the case of Messrs. Meehan and
Wong) terminates the contracting officer's employment for any reason other than
for "cause" (as defined in the Special Termination Agreement), or the
contracting officer terminates his own employment following (i) his demotion;
(ii) his loss of title, office or significant authority; (iii) a reduction in
his annual base salary; (iv) the failure to pay the officer his current or
deferred compensation for seven days; (v) the failure to continue in effect any
material compensation, incentive, bonus or benefit plan, unless an alternative
equitable arrangement is agreed upon; (vi) the failure to continue to provide
the officer with certain benefits; or (vii) the failure to obtain a satisfactory
agreement from any successor to assume and agree to perform the Special
Termination Agreements, the officer will be entitled to receive the severance
benefits provided to him in his respective agreement as described below. In the
case of such a termination, Mr. Meehan would be entitled to receive a lump sum
payment in an amount equal to approximately three times his average annual
compensation over the five previous years of his employment with the Bank, and
each of Mr. Wong, Bargamian, Loth and Rivers would be entitled to receive an
amount equal to approximately two times his average annual compensation over the
same period.

The Bank entered into a Supplemental Executive Retirement Plan with Mr.
Meehan, effective November 1, 1994. The agreement is designed to provide the
benefits which he would have been entitled to under defined benefit plans but
for the reduction in the IRC 401 (a) (17) compensation ceiling to $150,000
effective November 1, 1994.

The Bank also entered into an Executive Supplemental Benefit Agreement
with Mr. Meehan, effective October 28, 1997. The Executive Supplemental Benefit
Agreement generally provides for fifteen annual payments of $70,000 to Mr.
Meehan upon his retirement or to a beneficiary if Mr. Meehan dies before
receiving all fifteen annual payments. The annual payments are conditioned upon
Mr. Meehan's fulfilling certain specified duties to render services to the Bank
in an advisory or consulting capacity at the request of the Bank.

Compensation Committee Report on Executive Compensation

The following report reflects the work of the Company's Compensation and
Options Committee.

The Company's executive compensation philosophy is to provide competitive
levels of compensation, integrate management's pay with the achievement of the
Company's performance goals, reward above average corporate performance,
recognize individual initiative and achievement, and assist the Company in
attracting and retaining qualified management.

At the end of each fiscal year, the Compensation and Options Committee
reviews the performance of the Chairman, President and Chief Executive Officer
(the "CEO"), evaluates the performance of the Company, and establishes an
appropriate salary increase for recommendation to and approval by the Board of
Directors. In addition, the Compensation and Options Committee reviews the
proposed salary increases for all other senior executives, and all officers as a
group. In establishing the salary for the CEO, the Compensation and Options
Committee (i) considers financial performance data, including, without
limitation, return on assets, return on equity, asset growth and quality, and
capital position, (ii) utilizes a comparison of the compensation package for
comparable positions in financial institutions within the Company's peer group
provided by outside consulting services and (iii) makes a subjective evaluation
of the individual performance of the CEO in carrying out his or her duties and
responsibilities. The committee's salary practice is to compensate the CEO to
attract and retain a qualified incumbent.

Additional short-term incentives can be earned through a discretionary
bonus plan, administered by the Compensation and Options Committee. Senior
executive officers as well as other officers are eligible to receive a bonus
payable prior to the end of the first quarter of the following year if the
Company or the Bank meets or exceeds certain base standards and individual
performance warrants consideration. The base standards for 2000 were the
budgeted financial goals and results of the Company and the Bank, which included
earnings per share as well as other financial achievements, and the
discretionary evaluation of individual performance and contributions towards
those results.

Long-term incentives are provided through the grant of stock options.
These plans are administered by the Compensation and Options Committee, which
has the authority to determine the individuals to whom and the terms at which
option grants are made. Options are granted to individuals to reward significant
contributions to Company performance or to attract and retain qualified
individuals. Both "incentive stock options" and "nonqualified stock options" may
be granted pursuant to these plans. All options granted under these plans are
required to have an exercise price per share equal to at least the fair market
value of a share of Common Stock on the date the option is granted and vest over
a period as determined by the Compensation and Options Committee.

Based upon a review of the performance of the Company and Mr. Meehan's
performance, which review was conducted at the Committee meeting in December
2000, Mr. Meehan's salary was increased effective January 1, 2001, from $463,050
to $486,200. Additionally, Mr. Meehan was granted 8,000 stock options and
awarded a cash bonus of $100,000 in December 2000. Mr. Meehan's compensation was
based on the Company's overall profitability, the performance of the Company's
core banking business, the Company's asset growth and quality, the Company's
deposit growth and the Company's equity growth. More specifically, the Committee
acknowledged that the Company achieved record net income of $13,769,000 for
2000, an increase of $1,118,000 over 1999 levels. Earnings per share for 2000
also increased - 20 cents or 13.9% compared to the previous year. At year end,
total assets increased 6.9% to $1.3 billion from the prior year and total
deposits increased 7.1% to $975.9 million. Furthermore, return on equity
increased from 13.52% to 15.06%. In addition, the Committee reviewed
comprehensive surveys obtained from outside consulting services, as well as
compensation information of a select peer group, comparing Mr. Meehan's overall
compensation to that of chief executive officers of comparable banking
institutions in the Northeast, Massachusetts and the local peer group.

Messrs. Wong, Bargamian, Loth and Rivers were also granted salary
increases effective January 1, 2001, based upon their individual performance and
that of the Company, as described above. In addition, Messrs. Wong, Bargamian,
Loth and Rivers were granted stock options, and Messrs. Wong, Bargamian and
Rivers were also awarded a cash bonus in December 2000 based upon assessments of
individual performance as well as comparison to peer group compensation
packages.

Members of the Compensation and Options Committee:

Eugene R. Murray, Chairman
David Burke
Paul J. Crowley
Edward J. Gaffey,
Francis D. Pizzella

RELATIONSHIPS AND TRANSACTIONS WITH THE COMPANY

Certain Directors and officers of the Company and the Bank and members of
their immediate family are at present, as in the past, customers of the Bank and
have transactions with the Bank in the ordinary course of business. In addition,
certain of the Directors are at present, as in the past, also directors,
officers or stockholders of corporations or members of partnerships that are
customers of the Bank and have transactions with the Bank in the ordinary course
of business. Such transactions with Directors and officers of the Company and
the Bank and their families and with such corporations and partnerships were
made in the ordinary course of business, were made on substantially the same
terms, including interest rates and collateral on loans, as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than the normal risk of collectibility or present other features
unfavorable to the Bank.

PERFORMANCE GRAPH

Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock (or the
Bank's common stock, prior to the formation of the Company), based on the market
price of the Company's (or Bank's) common stock and assuming reinvestment of
dividends, with the total return of companies within the Standard & Poor's 500
Stock Index and the NASDAQ Bank Index. The NASDAQ Bank Index is a broad-based
capitalization-weighted index of domestic and foreign common stocks of banks
that are traded on the Nasdaq National Market System as well as the SmallCap
Market. The calculation of total cumulative return assumes a $100 investment in
the Company's (or Bank's) common stock, the S&P 500 and the NASDAQ Bank Index on
December 31, 1995.

[The following table was depicted as a line chart in the printed material.]

- --------------------------------------------------------------------------------
Medford Bancorp, Inc. (MDBK) Vs. The Five Year Total Return for the NASDAQ
Bank Index and S&P 500 Index
- --------------------------------------------------------------------------------

Index of Total Return

S&P 500 NASDAQ MDBK Price Plus
DATE Index Bank Index Index Cumulative Dividends

12/31/95 100.00 100.00 100.00 $10.750
3/31/96 105.36 104.84 104.28 $11.210
6/30/96 110.08 107.83 108.59 $11.673
9/30/96 113.45 116.00 110.57 $11.886
12/31/96 122.90 129.34 123.99 $13.329
3/31/97 126.22 140.60 118.83 $12.774
6/30/97 148.20 165.61 142.75 $15.346
9/30/97 159.29 194.89 176.57 $18.981
12/31/97 163.85 215.28 194.27 $20.884
3/31/98 186.66 229.94 218.77 $23.518
6/30/98 192.80 221.28 204.85 $22.021
9/30/98 173.66 181.12 162.13 $17.429
12/31/98 210.58 193.17 170.43 $18.321
3/31/99 221.06 184.88 163.91 $17.620
6/30/99 236.61 198.35 189.37 $20.357
9/30/99 221.87 179.79 159.59 $17.156
12/31/99 254.83 182.03 174.43 $18.751
3/31/00 260.63 165.85 150.77 $16.208
6/30/00 253.70 163.39 150.72 $16.202
9/30/00 251.25 195.32 173.34 $18.634
12/31/00 231.62 214.13 169.34 $18.097

1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----

Medford Savings Bank/Medford Bancorp, Inc. $100.00 $123.99 $194.27 $170.43 $174.43 $168.34
% change 23.99 56.68 (12.27) 2.35 (3.49)
S & P 500 $100.00 $122.90 $163.85 $210.58 $254.83 $231.62
% change 22.90 33.32 28.52 21.01 (9.11)
NASDAQ Bank Index $100.00 $129.34 $215.28 $193.17 $182.03 $214.13
% change 29.34 66.45 (10.27) (5.77) 17.63

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and SEC
regulations, the Company's executive officers and directors must file reports of
ownership and changes in ownership with the SEC and the Nasdaq Stock Market,
Inc. and furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, no executive officer or director of either the Bank or
the Company failed to file any such reports.

ACCOUNTANTS

The firm of Wolf & Company, P.C. served as the Company's independent
certified public accountants for the year ended December 31, 2000 and is
expected to serve as the Company's independent certified public accountants for
2001. Representatives of Wolf & Company, P.C. are expected to be present at the
Annual Meeting to be available to respond to appropriate questions, and to have
the opportunity to make a statement if they so desire.

For the year ended December 31, 2000, the Company paid the following fees
to Wolf & Company, P.C. for services rendered:

- --------------------------------------------------------------------------------
Fees
- --------------------------------------------------------------------------------
Audit service, includes quarterly reviews of interim $94,600
financial information
- --------------------------------------------------------------------------------
Financial information systems design and
implementation $0
- --------------------------------------------------------------------------------
All other, including tax compliance $23,500
- --------------------------------------------------------------------------------

The Audit Committee has considered whether the provision of the non-audit
services above is compatible with maintaining the auditor's independence.

OTHER MATTERS

It is not anticipated that any matters other than those set forth in this
Proxy Statement will be brought before the Annual Meeting. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters in their discretion in accordance with their best judgment.

STOCKHOLDER PROPOSALS

Stockholder proposals intended to be presented at the 2002 Annual Meeting
of Stockholders of the Company must be received in writing by the Company at its
principal executive offices on or before November 30, 2001 in order to be
considered for inclusion in its proxy statement and form of proxy relating to
the 2002 Annual Meeting. These proposals must also comply with the rules of the
SEC governing the form and content of proposals in order to be included in the
Company's proxy statement and form of proxy. The Company's By-Laws also provide
that any stockholder wishing to have a proposal or director nomination
considered at the 2002 Annual Meeting must provide written notice of such
proposal or director nomination, along with appropriate supporting materials as
set forth in the Company's By-laws, to the Clerk of the Company at the Company's
principal executive office not less than 75 days nor more than 120 days prior to
April 30, 2002; provided, however, that in the event the Annual Meeting is
scheduled to be held on a date more than 30 days before April 30, 2002, or more
than 60 days after April 30, 2002, a stockholder's notice shall be timely if
delivered to, or mailed to and received by, the Company at its principal
executive office not later than the close of business on the later of (a) the
75th day prior to the scheduled date of such Annual Meeting, or (b) the 15th day
following the day on which public disclosure of the date of such Annual Meeting
is first made by the Company. Any proposals or nominations that are not received
during this period will not be considered at the 2002 Annual Meeting. Any
stockholder wishing to submit a proposal or director nomination should review
the By-law requirements regarding proposals and director nominations and should
submit any such proposal or director nomination and appropriate supporting
documentation to: Medford Bancorp, Inc., 29 High Street, Medford, Massachusetts
02155, Attention: Shareholder Relations. Proxies solicited by the Board of
Directors will confer discretionary voting authority with respect to these
proposals or nominations, subject to SEC rules governing the exercise of this
authority.

March 27, 2001

Exhibit A

Medford Bancorp, Inc.

Audit Committee Charter

I. General Statement of Purpose

The Audit Committee of the Board of Directors (the "Audit Committee") of
Medford Bancorp, Inc. (the "Company") and of all of its subsidiaries, including
without limitation, Medford Savings Bank (the "Bank") oversees, on behalf of the
Board of Directors of the Company (the "Board"), the participation by
management, the chief internal auditor (the "Internal Auditor"), the internal
audit function reporting to the Internal Auditor, and the independent external
auditor (the "Independent Auditor") in the Company's and the Bank's financial
reporting process. The primary objective of the Audit Committee in exercising
its oversight function is to promote and preserve the integrity of the Company's
and the Bank's financial statements and financial reporting process as well as
the independence of the Company's Independent Auditor.

II. Audit Committee Composition

The Audit Committee shall consist of at least three (3) members who shall
be appointed annually by the Board and shall satisfy the qualification
requirements set forth in Rule 4310 of the Marketplace Rules of the National
Association of Securities Dealers, Inc. (or any successor rule). The Audit
Committee shall designate one of its members to be Chairperson of the Audit
Committee. At least one (1) member of the Audit Committee shall be an individual
who, at the time of his or her appointment, also serves as an outside,
independent Director of the Bank.

III. Meetings

The Audit Committee generally is to meet four times per year in person or
by telephone conference call, with any such additional meetings as may be deemed
necessary by the Audit Committee. The minutes of the Audit Committee meetings
shall be made available to the full Board of Directors.

IV. Audit Committee Activities

The principal activities of the Audit Committee will generally include the
following:

A. Review of Audit Committee Charter

o Review and reassess the adequacy of this Charter annually and
submit it to the Board for approval.

B. Audited Financial Statements and Independent Annual Audit

o Review the overall audit plan (including, without limitation,
its scope and the time and resources required to implement
such plan) with the Independent Auditor, the Internal Auditor
and the Company's Chief Financial Officer who is responsible
for preparing the Company's and the Bank's financial
statements.

o Review and discuss with management (including the Company's
Chief Financial Officer) and with the Independent Auditor:

A-1

(i) the Company's annual audited financial statements,
including any significant financial reporting issues
that have arisen in connection with the preparation of
such audited financial statements;

(ii) the adequacy of the Company's and the Bank's internal
financial reporting controls that could significantly
affect the integrity of the Company's and the Bank's
financial statements;

(iii) major changes in and other questions regarding
accounting and auditing principles and procedures; and

(iv) the effectiveness of the Company's internal audit
process.

o Review and discuss with the Independent Auditor (if the Audit
Committee deems it appropriate, outside of the presence of
management) how the Independent Auditor plans to handle its
responsibilities under the Private Securities Litigation
Reform Act of 1995.

o Review and discuss with the Independent Auditor (if the Audit
Committee deems it appropriate, outside of the presence of
management) any problems or difficulties that the Independent
Auditor may have encountered with management or others and any
management letter provided by the Independent Auditor and the
Company's response to that letter. This review shall include
considering any difficulties encountered by the Independent
Auditor in the course of performing its audit work, including
any restrictions on the scope of its activities or its access
to information.

o Discuss with the Independent Auditor such issues as may be
brought to the Audit Committee's attention by the Independent
Auditor pursuant to Statement on Auditing Standards No. 61
("SAS 61").

o Based on the Audit Committee's review and discussions (1) with
management of the audited financial statements, (2) with the
Independent Auditor of the matters required to be discussed by
SAS 61, and (3) with the Independent Auditor concerning the
Independent Auditor's independence, make a recommendation to
the Board as to whether the Company's audited financial
statements should be included in the Company's Annual Report
on Form 10-K.

o Prepare the Audit Committee report required by Item 306 of
Regulation S-K of the Securities Exchange Act of 1934 (or any
successor provision) to be included in the Company's annual
proxy statement.

C. Unaudited Quarterly Financial Statements

o Review and discuss with management and the Independent Auditor
such issues as may be brought to the Audit Committee's
attention by the Independent Auditor pursuant to Statement on
Auditing Standards No. 71.

D. Matters Relating to Selection, Performance and Independence of
Independent Auditor

o Appoint the Independent Auditor.

o Instruct the Independent Auditor that the Independent
Auditor's ultimate accountability is to the Board and the
Audit Committee as representatives of the Company's
shareholders.

A-2

o Evaluate on an annual basis the performance of the Independent
Auditor and, if necessary in the judgment of the Audit
Committee, recommend that the Board replace the Independent
Auditor.

o Review and approve, on an annual basis, the fees to be paid to
the Independent Auditor.

o Request that the Independent Auditor provide the Audit
Committee with the written disclosures and the letter required
by Independence Standards Board Standard No. 1, as may be
modified or supplemented. Discuss with the Independent Auditor
any disclosed relationships or services that may impact the
objectivity and independence of the Independent Auditor, and
based on such discussion, take or recommend that the Board
take appropriate action to oversee the independence of the
Independent Auditor.

E. Matters Relating to Performance and Selection of Internal Auditor

o Review, no less frequently than annually, the overall annual
internal audit program (the "Internal Audit Program"),
including, without limitation, the scope, time, resources and
expertise required to implement the Internal Audit Program
with the Internal Auditor.

o Review and discuss with the Internal Auditor (if the Audit
Committee deems it appropriate, outside of the presence of
management) the results of his or her internal audits of the
business and operations of the Company and its units and of
the Internal Auditor's evaluations of and suggestions for
improvements regarding internal controls.

o Review and discuss with the Internal Auditor (if the Audit
Committee deems it appropriate, outside of the presence of
management) any difficulties encountered by the Internal
Auditor in the course of performing his or her audit work,
including any restrictions on the scope of his or her
activities or on his or her access to information or any other
aspect of the work of the Internal Auditor.

o Provide to the Board annually, an evaluation of the
performance of the Internal Auditor and a recommendation as to
whether the Internal Auditor should be retained or replaced
and a report as to the remuneration paid to the Internal
Auditor.

F. General

o The Audit Committee may be requested by the Board to review or
investigate, on behalf of the Board, activities of the Company
or the Bank or of its employees, and to perform such other
oversight functions as may be requested by the Board.

o In performing its oversight function, the Audit Committee
shall be entitled to rely upon advice and information that it
receives in its discussions and communications with
management, the Internal Auditor, the Independent Auditor and
such experts, advisors and professionals consulted with by the
Audit Committee. The Audit Committee shall have the authority
to retain special legal, accounting or other experts, advisors
or professionals to render advice to the Audit Committee. The
Audit Committee shall have the authority to request that any
officer or employee of the Company or the Bank, the Company's
outside legal counsel, the Company's Independent Auditor or
any other professional retained by the Company to render
advice to the Company attend a meeting of the Audit Committee
or meet with any members of or advisors to the Audit
Committee.

A-3

o Notwithstanding the responsibilities and powers of the Audit
Committee set forth in this Charter, the Audit Committee does
not have the responsibility of planning or conducting audits
of the Company's financial statements or determining whether
or not the Company's financial statements are complete,
accurate and in accordance with generally accepted accounting
principles. Such responsibilities are the duty of management,
the Internal Auditor and, to the extent of the Independent
Auditor's audit responsibilities, the Independent Auditor. It
also is not the duty of the Audit Committee to resolve
disagreements, if any, between management and the Independent
Auditor or to ensure compliance with laws, regulations or
Company or Bank policies.

A-4

|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE

- --------------------------------------------------------------------------------
MEDFORD BANCORP, INC.
- --------------------------------------------------------------------------------

CONTROL NUMBER:
RECORD DATE SHARES:

----------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------

- ------- Stockholder sign here---------------Co-owner sign here------------------

1. Election of three directors for a three year term.

For All With- For All
Nominees hold Except
Paul J. Crowley |_| |_| |_|
Edward J. Gaffey |_| |_| |_|
Andrew D. Guthrie, Jr., M.D. |_| |_| |_|

If you do not wish your shares voted "For" a particular nominee, mark the "For
All Except" box and strike a line through the name(s) of the nominee(s). Your
shares will be voted for the remaining nominee(s).

The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with report
thereto and the Company's 2000 Annual Report to Stockholders, and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is exercised.

Mark box at right if an address change or comment has been |_|
noted on the reverse side of this card.

DETACH CARD DETACH CARD

MEDFORD BANCORP, INC.

Dear Stockholder,

Please take note of the important information enclosed with this Proxy Ballot.

Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.

Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.

Your vote must be received prior to the Annual Meeting of Stockholders, April
30, 2001.

Thank you in advance for your prompt consideration.

RGNCM1

MEDFORD BANCORP, INC.

Proxy for the Annual Meeting of Stockholders to be held on April 30, 2001
This Proxy is Solicited by the Board of Directors

The undersigned hereby constitutes and appoints Arthur H. Meehan, William F.
Rivers and George A. Bargamian, and each of them, as Proxies of the undersigned,
with full power to appoint his substitute, and authorizes each of them (each
having full power to act without the other) to represent and to vote all shares
of Common Stock of Medford Bancorp, Inc. (the "Company") held of record by the
undersigned at the close of business on March 5, 2001 at the Annual Meeting of
Stockholders to be held at Anthony's of Malden, 105 Canal Street, Malden,
Massachusetts, on Monday, April 30, 2001 at 10:00 a.m., local time, and at any
adjournments or postponements thereof.

When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is given, this proxy will be
voted FOR the election to the Company's Board of Directors of the three nominees
listed in Proposal 1 on the reverse side. In their discretion, the Proxies are
each authorized to vote upon such other business as may properly come before the
meeting and at any adjournments or postponements thereof. A stockholder wishing
to vote in accordance with the Board of Directors' recommendation need only sign
and date this proxy and return it in the enclosed envelope prior to the Annual
Meeting of Stockholders, April 30, 2001.

Proxy for the Annual Meeting of Stockholders to be held on April 30, 2001
(please date and sign on reverse side, and mail your proxy card promptly in the
enclosed envelope).

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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
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Please sign this proxy exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees, custodians and
other fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, each person must sign. If the stockholder is a
corporation, the signature should be that of an authorized officer who should
state his or her title.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

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RGNCM2