CB BANCSHARES INC/HI, 10-Q, 1997-08-14

CB BANCSHARES INC/HI
10-Q, 1997-08-14
STATE COMMERCIAL BANKS

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 0-12396

CB BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

Hawaii 99-0197163
(State of Incorporation) (IRS Employer Identification No.)

201 Merchant Street Honolulu, Hawaii 96813
(Address of principal executive offices)

(808) 546-2411
(Registrant's Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes [X] No [ ]

The number of shares outstanding of registrant's common stock at July 31, 1997
was 3,551,228 shares.

<PAGE>
PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CB BANCSHARES, INC. AND SUBSIDIARIES (unaudited)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(in thousands, except shares and per share data)
- ------------------------------------------------------------------------------
June 30, December 31, June 30,
1997 1996 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 42,490 $ 56,632 $ 68,300
Federal Funds Sold and securities
purchased 4,405 - 7,005
Held-to-maturity 93,156 97,831 8,060
Available for sale 122,337 138,199 118,060
Trading - - 78
Restricted investment securities 26,259 25,100 26,041
Loans held for sale 16,684 5,629 5,141
Gross loans 1,052,868 1,031,554 1,106,949
Less allowance for loan losses (16,967) (15,431) (15,498)
Net Loans 1,035,901 1,016,123 1,091,451
Premises and equipment 19,471 18,227 16,009
Other assets 40,727 29,002 47,923
Goodwill 10,001 10,426 10,852
- ------------------------------------------------------------------------------
Total assets $1,411,431 $1,397,169 $1,398,920
==============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-interest bearing $ 105,408 $ 113,043 $ 119,139
Interest bearing 850,431 838,867 833,250
- ------------------------------------------------------------------------------
Total deposits 955,839 951,910 952,389
Short-term borrowings 181,227 208,681 211,589
Other liabilities 21,111 22,342 25,306
Long-term debt 131,653 94,825 95,481
- ------------------------------------------------------------------------------
Total liabilities 1,289,830 1,277,758 1,284,765
Stockholders' equity
$1 par value, 50,000,000 shares
authorized, Issued and
outstanding - 3,551,228 shares 3,551 3,551 3,551
Additional paid-in capital 65,080 65,080 65,080
Retained earnings 52,131 49,878 45,891
Unrealized valuation adjustment 839 902 (367)
Total stockholders' equity 121,601 119,411 114,155
- ------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,411,431 $1,397,169 $1,398,920
==============================================================================
</TABLE>
2

<PAGE>
CB BANCSHARES, INC. AND SUBSIDIARIES (unaudited)
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(in thousands, except per share data) Quarter ended Six months ended
- ------------------------------------------------------------------------------------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $23,273 $24,515 $45,838 $48,331
Interest and dividends on investment securities
Taxable 4,023 2,373 8,171 5,344
Non-taxable 52 31 103 85
Dividends 467 450 911 871
Other interest income 254 428 702 935
- -------------------------------------------------------------------------------------------------------------
Total interest income 28,069 27,797 55,725 55,566

Interest Expense
Deposits 8,729 8,602 17,239 17,640
Short-term borrowings 3,470 2,961 6,542 6,077
Long-term debt 1,231 1,685 2,572 3,522
- -------------------------------------------------------------------------------------------------------------
Total interest expense 13,430 13,248 26,353 27,239
- -------------------------------------------------------------------------------------------------------------
Net interest income 14,639 14,549 29,372 28,327
Provision for loan losses 1,500 1,280 2,550 1,590
- -------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 13,139 13,269 26,822 26,737
Other income
Service charges and fees 1,047 1,052 2,091 2,747
Other 1,521 1,391 2,889 2,656
- -------------------------------------------------------------------------------------------------------------
Total other income 2,568 2,443 4,980 5,403

Other expenses
Salaries and employee benefits 4,327 5,297 8,833 13,987
Net occupancy and equipment expense 2,860 2,234 5,531 4,612
Other 5,105 5,952 10,955 10,361
- -------------------------------------------------------------------------------------------------------------
Total other expenses 12,292 13,483 25,319 28,960
- -------------------------------------------------------------------------------------------------------------
Income before income taxes 3,415 2,229 6,483 3,180
Provision for income taxes 1,465 883 2,683 1,260
- -------------------------------------------------------------------------------------------------------------
Net income $ 1,950 $ 1,346 $ 3,800 $ 1,920
=============================================================================================================
Per common share:
Net income $ 0.55 $ 0.38 $ 1.07 $ 0.54
=============================================================================================================
</TABLE>
3

<PAGE>
CB BANCSHARES, INC. AND SUBSIDIARIES (unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(in thousands) Six Months ended June 30,
- ------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,800 $ 1,920
Net adjustments to reconcile net income to
cash used in operating activities (22,286) (18,533)
- ------------------------------------------------------------------------------
Net cash used in operating activities (18,486) (16,613)

Cash flows from investing activities:
Net decrease in federal funds sold and
securities under agreements to resell (4,405) (7,005)
Proceeds from maturities of held-to-maturity
securities 4,675 -
Purchases of available-for-sale securities (7,332) (61,267)
Proceeds from sales of available-for-sale
securities 12,864 -
Proceeds from maturities of
available-for-sale securities 10,508 149,845
Net (increase) decrease in loans (21,314) 23,446
Purchases of premises and equipment (3,202 (162)
Proceeds from sale of premises and equipment 756 -
- ------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities (7,450) 104,857

Cash flows from financing activities:
Net increase (decrease) in deposits 3,929 (59,094)
Net (decrease) in short-term borrowings (27,454) (27,771)
Proceeds from long-term debt 119,650 -
Principal payments on long-term debt (82,822) (5,890)
Cash dividends paid (1,509) (2,308)
- ------------------------------------------------------------------------------
Net cash (used in) provided by
financing activities 11,794 (95,063)

DECREASE IN CASH (14,142) (6,819)
- ------------------------------------------------------------------------------

Cash and due from banks at beginning of period 56,632 75,119
- ------------------------------------------------------------------------------

Cash and due from banks at end of period $42,490 $68,300
==============================================================================
</TABLE>

<PAGE>
CB BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997

NOTE A - BASIS FOR PRESENTATION

The unaudited financial statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all information and footnotes
necessary for a fair presentation of the financial condition, results of
operations, and cash flows of CB Bancshares, Inc., and subsidiaries, in
conformity with generally accepted accounting principles.

The financial statements reflect all adjustments of a normal and recurring
nature which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods.

NOTE B - CONTINGENCIES

On January 30, 1996, a lawsuit was filed in the First Circuit Court of the
State of Hawaii by Hamamoto Corporation ("HC") and its president, Shinsuke
Hamamoto, against the Association, its subsidiaries, one of its officers as
well as the Company and other entities and individuals. The lawsuit is an
action by the plaintiffs, as purchasers of the International Savings Building
at 1111 Bishop Street in Honolulu, Hawaii, for recission, special, general
and punitive damages. The plaintiffs seek recission of sale of the ISL
building to them (made in May 1988 for $7,450,000), based on allegations that
various parties negligently or intentionally misrepresented and/or
fraudulently failed to disclose unsuccessful negotiations for a new ground
lease with the fee-simple landowner and the alleged unreasonableness of
demands by the fee-simple owner. The plaintiffs also allege failure to
disclose land appraisals concerning the property and the presence of toxic
asbestos in the cooling system, pipes, walls and ceiling tiles of the
building and intentional or negligent infliction of emotional distress in
connection with the vacation of the ISL Building by the Association as a
substantial tenant of the building. The Company and the Association
defendants have answered plaintiffs' complaint denying any liability in
connection with plaintiffs' allegations. While the Company and the
Association defendants believe they have meritorious defenses in this action,
due to the uncertainties inherent in the early stages of litigation, no
assurance can be given as to the ultimate outcome of the lawsuit at this
time.

The Association vacated its leased portion of the 1111 Bishop Street building
at the end of March 1997. In March, the Company was informed by the landowner,
the Estate of James Steiner ("Steiner Trust"), that HC failed to make timely
payment of monthly rent and real property taxes. The Steiner Trust
subsequently sued the Association and HC. The landowner's 1988 consent to the
Association's assignment of the underlying ground lease did not release the
Association from ground lease obligations upon default by the assignee, and
thus the Association remains liable for the ground lease. The current monthly
ground lease payments of $65,333 are fixed until July 20, 2001, at which time
the monthly ground lease payments will be renegotiated to July 20, 2011. In
2011, the monthly ground lease payments will be renegotiated for a final ten
year period through July 20, 2021. In no event would the negotiated lease rent
for any period be less than $30,000 per year.

5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

In May 1997, HC reassigned the lease to the Association pursuant to an
agreement among the Steiner Trust, the Association, HC and its president, and
Steiner Trust's lawsuit was dismissed. As a result, the Association currently
controls the operation of the 1111 Bishop Street building. However, the
agreement did not release the Association form obligations under the lease, or
terminate the litigation between the Association and HC. The agreement also
established a $5 million cap on the amount of damages the Association can
recover from HC with respect to the assignment.

The Company reached an agreement with the director of the Company and two
former executives who had threatened to file a lawsuit against the Company in
the First Circuit Court of the State of Hawaii. The agreement provided for
the settlement of claims totaling $256,000, a reinstatement of employment of
one executive, and a consulting contract for the director.

The Company is a defendant in other various legal proceedings arising from
normal business activities. In the opinion of management, after reviewing
these proceedings with counsel, the aggregate liability, if any, resulting
from these proceedings would not have a material effect on the Company's
financial position or results of operations.

NET INCOME

Consolidated net income for the quarter ended June 30, 1997, totaled
$1.95 million, or $0.55 per share, as compared to $1.35 million, or $0.38
per share for the same quarter last year. Consolidated net income for the
six months ended June 30, 1997 totaled $3.8 million, or $1.07 per share, as
compared to $1.92 million, or $0.54 per share for the same period last year.

The increase in net earnings for the six months ended June 30, 1997 was due
primarily to the accrual of salaries and benefit expenses related to the
Voluntary Separation Program (VSP) in the first quarter of 1996. These
expenses amounted to $3.3 million, or $2.0 million on an after-tax basis.
Excluding the $2.0 million after tax effect for the VSP, the Company's net
earnings for the first half of 1996 would have been approximately $3.9
million. See further discussion of the VSP in the section titled, "Other
Expenses." Somewhat offsetting the increase in earnings due to 1996's VSP
accrual was a $1 million increase in the provision for loan losses, and a
$350,000 accrual for a special recognition award granted to Mr. Morita,
Chairman and Chief Executive Officer under the Retirement Agreement dated
March 6, 1997.

The Company's annualized return on average assets (ROA) for the second
quarter and six months ended June 30, 1997 was 0.56% and 0.55%, respectively,
as compared to 0.38% and 0.27% for the respective 1996 periods. The
Company's annualized return on average stockholder's equity (ROE) for the
second quarter and six months ended June 30, 1997 was 6.50% and 6.40%,
respectively, as compared to 4.70% and 3.33% for the respective 1996 periods.
Excluding the aforementioned $2.0 million effect of the VSP discussed above,
ROA and ROE would have been 0.54% and 6.73%, respectively, for the first half
of 1996.

6
<PAGE>
NET INTEREST INCOME
A comparison of net interest income for the six months ended June 30, 1997 and
1996 is set forth below on a taxable basis:
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
(dollars in thousands)
<S> <C> <C>
Interest income $55,833 $55,623
Interest Expense 26,353 27,239
------- -------
Net interest income $29,480 $28,384
======= =======
Net interest margin 4.52% 4.23%
======= =======
</TABLE>
Interest income for the six months ended June 30, 1997 remained relatively
flat at $55.83 million, an increase of $210,000 from the $55.62 million for
the same period in 1996. Interest expense decreased by $886,000 from $27.24
million to $26.35 million. Net interest income increased $1.1 million for the
six months ended June 30, 1997 versus the same period in 1996.

The weighted average yield on interest-earning assets increased to 8.56% for
the six months ended June 30, 1997, as compared to 8.29% for the respective
1996 period. The weighted average cost of interest-bearing liabilities
decreased to 4.69% for the six months ended June 30, 1997, in comparison to
4.70% for the respective 1996 period. As a result of the foregoing, the
Company's net interest margin increased by 29 basis points to 4.52% for the
six months ended June 30, 1997.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses at June 30, 1997 was $16.97 million, and
represented 1.61% of total loans. The ratio at December 31, 1996 and June 30,
1996, was 1.49% and 1.43%, respectively. Although there was a slight
improvement in the level of non-performing loans from December 31, 1996, the
continued weakness in the Hawaiian real estate market and continued concerns
of the State's economic health led to an increase in the provision for loan
losses to $2.55 million for the six months ended June 30, 1997 - see further
discussion below.

Changes in the allowances for loan losses were as follows:
<TABLE>
<CAPTION>
Quarter ended Six Months ended
June 30, June 30,
1997 1996 1997 1996
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance at beginning of period $16,094 $14,528 $15,431 $14,576

Provision charged to expense 1,500 1,280 2,550 1,590

Net recoveries(charge-offs) (627) (310) (1,014) (668)
-------- -------- ------- -------
Balance at end of period $ 16,967 $15,498 $16,967 $15,498
</TABLE>
7
<PAGE>

NON-PERFORMING ASSETS

A summary of non-performing assets follows:
<TABLE>
<CAPTION>
6/30/97 12/31/96 6/30/96
---------------------------------
<S> <C> (dollars in thousands) <C>
Loan accounted for on a
non-accrual basis $21,557 $23,385 $15,397
Loan contractually past due
ninety days or more as to
interest or principal payments 2,510 2,379 6,676
----------------------------------

Total non-performing loans 24,067 25,764 22,073

Other Real Estate Owned 2,230 1,844 745
----------------------------------

Total non-performing assets $26,297 $27,608 $22,818
===================================
</TABLE>
Non-performing assets at June 30, 1997 totaled $26.30 million, a decrease of
$1.31 million from December 31, 1996, and an increase of $3.48 million from
June 30, 1996. The increase from June 30, 1996 was mainly due to increases
in non-accruing real estate (1-4 family type) loans. In consideration of
this, the provision for loan losses for 1997 reflects an increase of $960,000
over the comparable six month period in 1996.

OTHER OPERATING INCOME

Other operating income totaled $4.98 million for the six month period ended
June 30, 1997, which compares to $5.40 million for the comparable period in
1996. This decline was primarily attributable to the loss of commissions and
fees relating to the Bank's credit card portfolio, which was sold to an
unrelated third party in October 1996.

OTHER OPERATING EXPENSES

Other operating expenses totaled $25.32 million for the six months ended
June 30, 1997, a decrease of $3.64 million over the same period in 1996. The
decline in other operating expenses was due primarily to the accrual of $3.29
million in salary and benefit expenses related to the Voluntary Separation
Program(VSP)in the first quarter of 1996. Excluding the effects of the VSP
accrual in 1996, other operating expenses decreased by $351 thousand from the
first half of 1996.

8
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note B to the consolidated Financial Statements included herein.

Item 4. Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of Shareholders held on April 30, 1997, the
following members were elected to the Board of Directors to serve as Class II
directors until the 2000 annual meeting of shareholders and until their
successors are elected:

Shares Voted For Shares Withheld
---------------- ----------------
Donald J. Andres 2,367,559 18,630
Ronald K. Migita 2,367,870 18,319
James M. Morita 2,315,749 70,440
H. Clifton Whiteman 2,369,255 16,934

Also elected was Grant Thornton LLP as independent auditor for the ensuing
year:
For: 2,343,251
Against: 14,998
Abstain: 27,490

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

(10.1) Settlement Agreement
(10.2) Supplemental Agreement
(10.3) Settlement, Release and Indemnification Agreement
(10.4) Consulting Agreement
(10.5) License and Service Agreement between Fiserv Solutions,
Inc. and City Bank, dated March 27, 1997

(b) Reports on Form 8-K

The following reports on Form 8-K were filed during the quarter ended
June 30, 1997

ITEM REPORTED DATE FILED
------------------------------- --------------
Election of four directors at Company's April 30, 1997
Annual Meeting; Election of James H.
Kamo to Chairman of the Board and Corporate
Secretary; Appointment of Ronald K. Migita
to President and Chief Executive Officer of
the Company; Delay of the merger of principal
subsidiaries, International Savings and Loan
and City Bank.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CB BANCSHARES, INC. AND SUBSIDIARIES

July 31, 1997 By /s/ Daniel Motohiro
Daniel Motohiro, Treasurer
and Principal Financial Officer

<PAGE>
EXHIBIT 10.1
Settlement Agreement

PARTIES
- -------

Hawaiian Trust Company, Limited, a Hawaii Corporation, Ernest Steiner and
Keith J. Steiner, Co-Trustees Under the Will and of the Estate of James
Steiner, Deceased, Acting in Their Fiduciary Capacities and Not Their
Individual Capacities With Liability Limited to the Assets of the Trust.
(The "Steiner Trust"); and

Hamamoto Corporation, a Hawaii Corporation. ("HC"); and
Shinsuke Hamamoto. ("Hamamoto"), individually and as president of HC;
and
International Savings and Loan Association, Limited, a Hawaii
Corporation and ISL Services, Inc. a Hawaii Corporation (collectively,
"ISL").

RECITALS
- --------

The Steiner Trust is the owner/lessor of the property located at 1111
Bishop Street, Honolulu (the "property");

HC is the current lessess of the property. Hamamoto is the owner and
president of HC;

ISL is the former lessess of the property who, by assignement of lease,
conveyed the leasehold interest to HC;

A dispute has arisen between and among the Steiner Trust, HC and ISL
regarding the performance of the lease obligations. This dispute gave rise
to the litigation known as Hawaiian Trust Co., Ltd. et al. v. Hamamoto
Corporation, et al., Civil No. 97-1442-04, First Circuit Court (the
"Steiner Trust Litigation");

A dispute has arisen between HC and ISL and others regarding the sale and
assignment of the leasehold interest. This dispute gave rise to litigation
known as Hamamoto Corporation et al. v. International Savings and Loan
Assocation, et al., Civil No. 96-0403-01, First Circuit Court, (the "HC
Litigation");

The parties have resolved some of their differences and the matters raised
in the Steiner Trust Litigation (Civ. No. 97-1442-04) and desire to
memorialize their agreement;

AGREEMENT
- ---------

In consideration of the mutual promises herein set forth, the sufficiency
of which is expressly acknowledged, the parties agree as follows:

1. The Steiner Trust Litigation will be dismissed udner HRCP Rule 41
(a)(1)(a).

2. The Steiner Trust, for itself and its current and former trustees and
current and former beneficiaries and its and their officers, directors,
<PAGE>
agents, attorneys and employees, heirs, executors, personal representatives
and assigns, and HC and Hamamoto, for themselves and their respective
officers, directors, employees, agents, attorneys, heirs, executors,
personal representatives and assigns hereby mutually release one another of
and from all claims, damages, suits and demands (including attorneys' fees)
they may have, whether known or unknown, and of any nature whatsoever,
which arise from the purchase, possession or use of the property; the lease
rent and the renegotiaiton of lease rent; any express or implied promises
or representations made at any time by any of them which are not expressly
set forth herein; the Steiner Trust lease, as amended; HC's purchase of the
leasehold interest; and any alleged defects in the proerty and any
improvements thereon; provided, however, that this release is subject to
the following:

a. In the event that ISL, by itself or with others, files involuntary
bankruptcy proceedings against HC and/or Hamamoto (as the case may be) may
assert all claims agaisnt the Steiner Trust and related parties in the
Bankruptcy proceeding or a related adversary proceeding. If such claims
are brought, the Steiner Trust and related parties will be free to assert
any claim or defense against HC and/or Hamamoto and related parties.

b. In the event a third party brings a claim against HC or Hamamoto for
injuries related to asbestos contamination in the building located on the
property, then HC and Hamamoto are free to assert such claims against the
Steiner Trust and related parties as relate solely to such injury and the
Steiner Trust will be free to assert any and all claims and defences
against HC or Hamamoto and related parties.

c. This Release and Agreement of Lease called for in paragraph 3, below,
shall not operate to relieve ISL and other former holders of the leashold
interest(except HC and Hamamoto) from their obligations to observe and
perform the lessee's past, present and future obligations under the lease,
whether by them or by an assignee.

3. HC will assign, in the form attached hereto, all of its rights, title
and interest in and to the property and the lease with the Steiner Trust,
as amended, to International Savings and Loan Association. The Assignment
shall be free and clear of all liens and encumbrances except for those of
record at the time ISL conveyed to HC and for such other matters as ISL
shall, in its sole discretion, accept. HC shall warrant its title and the
existence of the tenant leases.

4. Notwithstanding any release given herein, HC and ISL expressly retain
all rights, claims and defenses as against each other; except that ISL
agrees to a cap of $5 million for any judgment for monetary damages in
favor of ISL against HC related to ISL's liability for all of the Lessee
obligations under the Steiner Estate Lease dated July 21, 1961 and/or the
Lessor's Consent to Assignment of Lease dated April 29, 1988 concerning the
assignment by ISL to HC. This capitation agreement does not release ISL of
its burden of proof as to the actual amount of such damage claims. It is
further understood and agreed that such capitation does not limit ISL's
claims for offset of HC's rescission damages, if any, related to payment of
rent by ISL to HC. As to HC's claim for rescission, ISL is entitled to
offsets that are proven without limitation, except that ISL may not claim
rescission offsets arising after June 1, 1997.

5. On or before midnight on May 31, 1997, HC shall turn over to ISL the
building and all furniture and fixtures (except for HC's computer), all
books, records, receivable and payable accounts, curently existing funds,
<PAGE>
files, subleases, vendor and maintenance agreements, security deposits,
material concerning ADA, non-privileged material concerning asbestos
claims, and any other material that is necessary for the orderly
functioning of the buidling. HC and Hamamoto promises to fully cooperate
with ISL in providing such further information and documentation as is
reasonable under the circumstances. ISL shall apply all funds in the "1111
Bishop Street" account at City Bank to building operating costs. HC and
Hamamoto will cooperatein closing that account.

6. The parties further agree that they shall cooperate with each other in
performing this agreement, including the preparation, execution and
recordation of any and all such documents as may be reasonably necessary or
appropriate.

7. The releases herein contained are not an admission of any negligence,
willful misconduct, breach of contract, liability or fault of any kind by
any of the parties hereto or any person or entity, but is a compromise in
complete settlement of existing or potential future claims.

8. The undersigned admit that no promise or agreement not herein expressed
has been made to the undersigned to induce this compromise, that this
compromise is made with full knowledge of the facts, and with the advice of
counsel, and that the terms herein are contractual and not mere recitals.

9. This agreement shall be governed by and interpreted under the laws of
the State of Hawaii.

10. This agreeement shall be binding upon and shall inure to the benefit of
the parties hereto, their respective heirs, representatives, successors,
predecessors and successors in trust, employees, stockholders, agents,
attorneys, beneficiaries, officers, directors, and assigns.

11. Each party hereto hereby warrants and represents that each is the owner
of all claims, demands and causes of action against the other which are
herein released and that each person signing this agreement has the
authority to execute this agreement and to bind the party, on whose behalf
he or she signs, to the terms of this agreement.

12. This agreement contains the parties' entire agreement and may be
amended or modified only upon mutual written agreement by the parties.

13. Each of the parties will bear their own attorneys' fees, court costs
and expenses incurred in the Litigation.

14. In the vent of future lawsuit to enforce the provisions of this
agreement, the prevailing party shall be entitled to recover his costs and
reasonable attorneys' fees.

15. Except as specifically set forth above, this agreement shall not
prejudice any claims or defenses by, between or among ISL, HC, Hamamoto and
related parties.

<PAGE>
IN WITNESS WHEREOF, the parties hereto executed this agreeement on this
28th day of May, 1997.

APPROVED AS TO FORM:

/s/Wayne Nasser
Attorney for HAWAIIAN TRUST COMPANY, LIMITED; ERNEST STEINER AND KEITH J.
STEINER, Co-Trustees Under the Will and of the Estate of James Steiner,
Deceased, Acting in Their Fiduciary Capacities and Not Their Individual
Capacities With Liability Limited to the Assets of the Trust

/s/Ronald Au
Attorney for HAMAMOTO CORPORATION and SHINSUKE HAMAMOTO

/s/J. Stephen Street
Attorney for INTERNATIONAL SAVINGS AND LOAN ASSOCIATION, LIMITED and ISL
SERVICES, INC.

/S/HAWAIIAN TRUST COMPANY, LIMITED
Its Vice President

/s/HAWAIIAN TRUST COMPANY, LIMITED
Its Assistant Vice President

/s/Ernest Steiner
/s/Keith J. Steiner
Co-Trustees Under the Will and of the Estate of James Steiner, Deceased,
Acting in Their Fiduciary Capacities and Not Their Individual Capacities
With Liability Limited to the Assets of the Trust.

/s/HAMAMOTO CORPORATION
Its President, Secretary and Treasurer

/s/Shinsuke Hamamoto

/s/INTERNATIONAL SAVINGS AND LOAN ASSOCIATION, LIMITED
Its President

/s/INTERNATIONAL SAVINGS AND LOAN ASSOCIATION, LIMITED
Its Vice President

/s/ISL SERVICES, INC.
Its President

/s/Its Vice President

<PAGE>
EXHIBIT 10.2
Supplemental Agreement

Hamamoto Corporation ("HC") warrants its right to, and does hereby assign
the following contracts to International Savings and Loan Association,
Limited ("ISL"):

1. Honeywell Building Services contract dated July 2l, 1989.

2. Centurion Security Systems, Inc. contract dated June 27, 1988.

3. BFI Systems, Inc. contract dated August 11, 1993.

ISL hereby agrees to assume HC's obligations, if any, under the above
described contracts from June 1, 1997 and thereafter. Nothing herein shall
be construed as an assumption by ISL of any of HC's obligations or
liability under these contracts arising prior to June 11 1997.

HC also does hereby assign all ownership rights in and rights to recover on
claims and agrees to designate ISL the named insured on all policies of
insurance now in effect covering the International Savings Building
(specifically the commercial general liability policy with Fireman's Fund
and/or National Surety Corporation). HC shall take such steps as are
necessary to effect this assignment and designation of ISL as the named
insured on or before midnight, May 31, 1997, to be effective June 1, 1997.
ISL reserves the right to preserve or discontinue any coverage, or any
portion of such coverage, under the existing insurance contract(s) at its
discretion at any time after assignment and redesignation of the named
insured. ISL shall assume responsibility for payment of premiums from June
1, 1997 forward and shall be entitled to any unearned premiums refunded, if
any, after June 1, 1997.

HAMAMOTO CORPORATION
By Its: /s/President

INTERNATIONAL SAVINGS AND LOAN
ASSOCIATION, LIMITED
By Its /s/President

Office of the Assistant Registrar, Land Court, State of Hawaii (Bureau of
Conveyances)

The original of this document was recorded as follows:

DOCUMENT NO. 2384841
DATE JUNE 5, 1997
TIME 3:00

Tax Map Key No. (1) 2-1-010-010

<PAGE>
ASSIGNMENT OF LEASE AND CONSENT

THIS INDENTURE, made this 29th day of May, 1997, effective as of June 1,
1997, by and between HAMAMOTO CORPORATION, a Hawaii corporation,
hereinafter called the "Assignor", and INTERNATIONAL SAVINGS AND LOAN
ASSOCIATION, LIMITED, a Hawaii corporation, whose address is 1lll Bishop
Sheet, Honolulu, Hawaii 96813, hereinafter called the "Assignee", and
ERNEST STEINER, KEITH J. STEINER, and HAWAIIAN TRUST COMPANY, LIMITED, a
Hawaii corporation, as Co_Trustees under the Will and of the Estate of
James Steiner, Deceased, hereinafter called the "Lessor".

WITNESSETH THAT:

In consideration of the sum of TEN DOLLARS ($10.00) and other valuable
consideration paid by the Assignee, the receipt of which is hereby
acknowledged by the Assignor, and in consideration of the covenants and
agreements of the Assignee hereinafter expressed, the Assignor does hereby
sell, assign, transfer, set over and deliver unto the Assignee all of the
estate, right, title and interest of the Assignor in and to the lease
described in Exhibit A attached hereto and made a part hereof, and in and
to all tenant leases and tenant agreements described in Exhibit B attached
hereto and made a part hereof.

And all of the estate, right, title and interest of the Assignor in and to
the land thereby demised and all buildings, improvements, rights,
easements, privileges and appurtenances situated on or built on or used,
occupied and enjoyed in connection with said lease and the land thereby
demised.

TO HAVE AND TO HOLD the same unto the Assignee according to the tenancy
hereinafter set forth, for and during the remaining portion of the term of
said lease and said tenant leases and tenant agreements, absolutely.

SUBJECT, HOWEVER, to the payment of the rents reserved by said lease and
subject also to the observance and performance by the Assignee of all of
the covenants and conditions contained in said lease which are or ought to
be observed and performed by the Lessee therein named.

The Assignor does hereby covenant with the Assignee that the Assignor is
the lawful owner of said lease and the term of years thereby demised; that
said lease is in full force and effect, is free and clear of and from all
liens and encumbrances, except for the lien of real property taxes not yet
by law required to be paid and except as may herein specifically be set
forth; that the Assignor has good right to sell and convey said lease; and,
that the Assignor will WARRANT AND DEFEND the same unto the Assignee
against the lawful claims and demands of all persons, except as aforesaid.

In consideration of the foregoing, the Assignee does hereby covenant and
agree to and with the Lessor of said lease that the Assignee will,
effective as of and from the date of the execution and delivery of this
instrument and during the residue of the term of said lease, pay the rents
thereby reserved as and when the same become due and payable pursuant to
the provisions of said lease, pay all past-due rents and monetary
obligations, faithfully observe and perform all of the covenants and
conditions contained in said lease which are, should be, or ought to have
been observed and performed by the Lessee therein named, and at all times
hereafter indemnify and save harmless the Lessor from and against the
nonpayment of said rents and the nonobservance or nonperformance of said
covenants and conditions and each of them.
<PAGE>
The Assignor does hereby covenant with the Assignee that the Assignor is
the landlord and/or lessor of any tenant leases and tenant agreements to
which the property described in said Exhibit A attached hereto is subject;
that said tenant leases and tenant agreements are in full force and effect,
are not in default and are free and clear of and from all liens and
encumbrances, except as may have been made by the tenants thereunder and
except as may herein specifically be set forth; that the Assignor has good
right to sell, assign and convey the same; and, that the Assignor will
WARRANT AND DEFEND the same unto the Assignee against the lawful claims and
demands of all persons, except as aforesaid.

The assignment herein set forth and the warranties of the Assignor
concerning the same are expressly declared to be in favor of the Assignee,
as tenant in severalty, its successors and permitted assigns.

The rights and obligations of the Assignor, the Assignee and the Lessor
shall be binding upon and inure to the benefit of their respective
successors and permitted assigns. All obligations undertaken by two or more
persons shall be deemed to be joint and several unless a contrary intention
shall be clearly expressed elsewhere herein. The term "lease" herein shall
mean and include the lease described herein and any amendments thereof.

In consideration of the covenants of the Assignee set forth herein, the
Lessor, by joinder herein, does hereby consent to this assignment upon the
express condition, however, that this consent shall not authorize nor be
deemed to authorize any other or further assignment of said lease, nor be
construed as a waiver of any of the terms, covenants or conditions in said
lease contained and on the part of the Lessee thereunder to be observed and
performed.

This Assignment is made a part of a Settlement Agreement between the
parties and if there is any conflict between the terms of this Assignment
and the Settlement Agreement, the Settlement Agreement shall control;
provided, however, that the conveyance of the Lessee's interest to Assignee
is absolute and may not be revoked or affected by any future default,
breach or failure to perform the Settlement Agreement.

The parties hereto agree that this instrument may be executed in
counterparts, each of which shall be deemed an original, and said
counterparts shall together constitute one and the same agreement, binding
all of the parties hereto, notwithstanding all of the parties are not
signatory to the original or the same counterparts. For all purposes,
including, without limitation, recordation, filing and delivery of this
instrument, duplicate unexecuted and unacknowledged pages of the
counterparts may be discarded and the remaining pages assembled as one
document.
<PAGE>
In accordance with Section 560:7-306(a) of Hawaii Revised Statutes (1985),
as amended, said Hawaiian Trust Company, Limited, Ernest Steiner and Keith
J. Steiner, are executing this document solely in their capacity as
Trustees herein, and are not assuming any personal liability. Any recovery
against said Trustees, based on this instrument shall be limited to the
assets of the Trust referred to herein.

<PAGE>
IN WITNESS WHEREOF, the Assignor, the Assignee and the Lessor have executed
these presents on the day and year first above written.

HAMAMOTO CORPORATION,
a Hawaii corporation

By /s/Shinsuke Hamamoto
Its President

Assignor

INTERNATIONAL SAVINGS AND LOAN ASSOCIATION, LIMITED,
a Hawaii corporation

By /s/Richard C. Lim
Its President

By /s/Richard M. Fukuda
Its Vice President

Assignee

TRUSTEES UNDER THE WILL AND OF THE ESTATE OF JAMES STEINER, DECEASED

/S/Keith J. Steiner

HAWAIIAN TRUST COMPANY, LIMITED
a Hawaii corporation

By /s/Fred Ferguson-Brey
Its Vice President

By /s/Sharman Noguchi
Its Assistant Vice President

Lessor

<PAGE>
STATE OF HAWAII
CITY & COUNTY OF HONOLULU

On this 29th day of May, 1997 before me appeared Richard C. Lim and Richard
M. Fukuda to me personally known who, being by me duly sworn did say that
they are the President and Vice President, respectively, of International
Savings & Loan Association, Ltd, that the instrument was signed in behalf
of the corporation by authority of its Board of Directors: and said Richard
C. Lim and Richard M. Fukuda acknowledged such instrument to be the free
act and deed of the corporation.

/s/Tammey Peltier
Notary Public
State of Hawaii
My commission expires 10/16/99

<PAGE>
STATE OF HAWAII
CITY & COUNTY OF HONOLULU

On this 29th day of May, 1997 before me personally appeared Shinsuke
Hamamoto, who, being by me duly sworn did say he is the President of
Hamamoto Corporation, a Hawaii corporation, that the instrument was signed
in behalf of the corporation by authority of its Board of Directors: and
said Shinsuke Hamamoto acknowledged such instrument to be the free act and
deed of the corporation.

/s/
Notary Public
State of Hawaii
My commission expires 03/18/2001

<PAGE>
STATE OF HAWAII
CITY & COUNTY OF HONOLULU

On this 28th day of May, 1997 before me personally appeared Keith J.
Steiner, to me personally known, who, being by me duly sworn or affirmed,
did say that such person(s) executed the foregoing instrument as the free
act and deed of such person(s), and if applicable in the capacity shown,
having been duly authorized to execute such instrument in such capacity.

/s/Linda M. Yanagihara
Notary Public
State of Hawaii
My commission expires 10/17/2000

<PAGE>
STATE OF HAWAII
CITY & COUNTY OF HONOLULU

On this 29th day of May, 1997 before me appeared Fred Ferguson-Brey and
Sharman Noguchi to me personally known, who, being by me duly sworn did say
that they are the Vice President and Assistant Vice President,
respectively, of Hawaiian Trust Company, Limited, a Hawaii corporation, as
Trustee aforesaid, that the instrument was signed in behalf of the
corporation by authority of its Board of Directors: and said Fred Ferguson-
Brey and Sharman Noguchi acknowledged such instrument to be the free act
and deed of the corporation as such Trustee.

/s/Linda M. Yanagihara
Notary Public
State of Hawaii
My commission expires 10/17/2000

<PAGE>
EXHIBIT A

That certain Lease, dated July 21, 1961, by and between Harry Steiner Trust
Company, Limited, Trustees under the Will and of the Estate of James
Steiner, Deceased, as Lessor, and Investors Finance, Inc., a Hawaii
corporation, as Lessee, and recorded in the Office of the Assistant
Registrar of the Land Court of the State of Hawaii as Document No. 277888,
and noted on Transfer Certificate of Title No. 247,284, as amended by
instruments dated May 28, 1963, and recorded in said Office as Document No.
312332, and dated March 30, 1964, and recorded in said Office as Document
No. 327991 (herein collectively called the "Lease"), which Lease, by mesne
assignments, was assigned to the Assignor, by Assignment of Lease, dated
April 20, 1988, and recorded in said Office as Document No. 1547767, and
which Lease demises the following described property:

All of that certain parcel of land situate on the Northeast side of Hotel
Street and Adams Lane, Honolulu, City and County of Honolulu, State of
Hawaii, being a portion of Royal Patent 27, Land Commission Award 801 to
Alexander Adams, containing an area of 15,440 square feet, as shown on Map
1 filed in said Office with Land Court Application No. 1792 of the Trustees
under the Will and of the Estate of James Steiner, Deceased, and being
described in and covered by Transfer Certificate of Title No. 247,284.

Together with all of the Assignor's estates, rights, title and interests,
as lessor and/or landlord, in and to any tenant leases and tenant
agreements affecting the above-described property or any portion thereof,
including without limitation, those tenant leases and tenant agreements
listed in Exhibit B attached hereto.

Subject, however, to the following encumbrances:

1. Reservation in favor of the State of Hawaii of all mineral and metallic
mines.

2. The terms, provisions, covenants, conditions, agreements, obligations,
restrictions, reservations and easements set forth in the Lease.

3. Any tenant leases and tenant agreements affecting the above-described
property or any portion thereof, and the terms, provisions, covenants,
conditions, agreements, obligations, restrictions, reservations and
easements set forth therein.

--End of Exhibit A--

<PAGE>
EXHIBIT B

A. Bishop Street Building Office Lease, dated April 20, 1988, by and
between Hamamoto Corporation, a Hawaii corporation, as Landlord, and
International Savings and Loan Association, Limited, as Tenant.

B. [list all others].

--End of Exhibit B--

<PAGE>
EXHIBIT 10.3
Settlement, Release. and Indemnification Agreement

This Settlement, Release, and Indemnification Agreement ("Agreement") is
made and entered into this 30th day of May, 1997, by and among LIONEL Y.
TOKIOKA ("Tokioka"), whose residence address is 918 Waiiki Street,
Honolulu, Hawaii 96821, WARREN Y. KUNIMOTO ("Kunimoto"), whose residence
address is 2810 Koaniani Way, Honolulu, Hawaii 96822, HELEN KWOK ("Kwok"),
whose residence address is 6671 Hawaii Kai Drive, Honolulu, Hawaii 96822,
CB BANCSHARES, INC. ("CBBI"), whose business address is 201 Merchant Sheet,
Honolulu, Hawaii 96821, CITY BANK ("CB"), whose business address is 201
Merchant Street, Honolulu, Hawaii 96813, INTERNATIONAL SAVINGS & LOAN
ASSOCIATION, LIMITED ("ISL"), whose business address is 201 Merchant
Street, Honolulu, Hawaii 96813 and JAMES M. MORITA ("Morita"), whose
residence address is 4219 Alae Street, Honolulu, Hawaii 96816.

WHEREAS, Tokioka, Kunimoto and Kwok were employees of ISL;

WHEREAS, in or about April of 1994, ISL was acquired by CBBl;

WHEREAS, James M. Morita is or was the Chairman of the Board of CBBI,
Chairman of the Board and CEO of CB and Chairman of the Board and CEO of
ISL;

WHEREAS, on or about August 2l, 1996, the Board of Directors of CBBI passed
a resolution that authorized and approved the merger between CB and ISL,
with CB being the surviving corporation;

WHEREAS, Tokioka's, Kunimoto's and Kwok's employment were terminated on
November 15, 1996;

WHEREAS, Tokioka, Kunimoto and Kwok have alleged various claims arising out
of the terminations of their employment;

WHEREAS, Tokioka, Kunimoto, Kwok, CBBI,CB and ISL desire to completely and
forever settle the disputes between Tokioka, Kunimoto and Kwok, on the one
hand and CBBI, CB and ISL on the other;

WHEREAS, this Agreement settles all claims heretofore asserted by Tokioka,
Kunimoto and Kwok, and in accordance with the terms of this Agreement;

THEREFORE, Tokioka, Kunimoto, Kwok, CBBI, CB, ISL and Morita hereby
stipulate and agree to the following terms:

A. DEFINITIONS

For purposes of this Agreement, the following terms shall have the
following meanings:

1. "Claimants. shall mean Tokioka, Kunimoto, Kwok and their respective
heirs, successors, personal representatives, survivors, and assigns.

2. "Respondents" shall mean CBBI, CB, ISL, their respective directors,
officers, shareholders, members, employees, agents (and former directors,
officers, shareholders, members, employees and agents), attorneys,
trustees, administrators, insurers, indemnitors, personal representatives,
successors, assigns, affiliates, subsidiaries, parent, and/or related
entities.

<PAGE>
3. "Morita" shall mean James M. Morita and heirs, successors, personal
representatives, survivors, and assigns.

4. "Person" means any individual, corporation, association, partnership,
agency, institution, organization, or other entity, and his, her, or its
legal representative, other than Claimants or Respondents.

5. "Claims" and/or "Settled Claims" mean any and all rights, claims, and
causes of action, known or unknown, pleaded or unpleaded, suspected or
unsuspected, concealed or unconcealed, for compensation, compensatory
damages, statutory damages, punitive damages, equitable relief, or other
relief arising out of, or based upon, or otherwise related to, Tokioka's
employment by ISL up to and including the termination of his employment on
November 15, 1996; (2) Kunimoto's employment by ISL up to and including the
termination of his employment on November 15, 1996; (3) Kwok's employment
by ISL up to and including the termination of her employment on November
15, 1996; (4) Claimants' assertion or statements regarding the termination
of their employment, including but not limited to: (1) all claims arising
out of Hawaii Revised Statutes Chapter 394B; (2) all claims arising out of
any violation of any applicable state and federal wage and hour laws, and
any amendments thereto; and (3) al1 claims based on common law sounding in
tort, contract, implied contract, negligence and/or gross negligence,
including, but not limited to promissory estoppel, quantum meruit,
libel/slander, defamation, misrepresentation, emotional distress (negligent
or intentional) fraud or deceit, unpaid wages, equitable claims, breach of
contract, breach of the covenant of good faith and fair dealing, breach of
fiduciary duty, wrongful discharge and/or termination, and violation of
public policy. It is specifically agreed that "Claims" and/or "Settled
Claims" does not mean any and all rights, claims, and causes of action,
known or unknown, pleaded or unpleaded, suspected or unsuspected, concealed
or unconcealed, for compensation, compensatory damages, statutory damages,
punitive damages, equitable relief, or other relief asserted arising out
of, or based upon, or otherwise related to, any acts, omissions or other
events occurring from and after the date of this Agreement, including but
not limited to, acts, omissions or events occurring from and after
Tokioka's employment with CBBI and Kunimoto's employment by CB as set forth
in section C. 1., below.

6. "Parties" means Claimants, Respondents and Morita.

B. AUTHORITY

1. Each party signing this Agreement warrants and represents that he or she
has the authority to sign on behalf of himself or herself or of the entity
he or she represents and that this Agreement has been validly authorized
and constitutes a legally binding and enforceable obligation of each Party.

C. SETTLEMENT

1. Consideration. In conjunction win the settlement of the Claims against
Respondents, Claimants hereby accept and acknowledge the following to be
paid or provided by Respondents as full consideration and settlement of
their respective Claims:

a. Helen Kwok: A lump sum payment of EIGHTY FIVE THOUSAND AND NO/100
DOLLARS ($85,000.00).

<PAGE>
b. Tokioka:

i. A lump sum payment of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) for amounts due.

ii. Reimbursement of Tokioka's out of pocket expenses due to the
termination of his employment, as approved by Ron Migita, CEO of CBBl.

iii A twelve (12) month consulting contract with CBBI to commence on June
1, 1997, with a fee of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($150,000.00) and the provision of an office and a parking stall at no cost
to Tokioka. The consulting contract shall obligate Tokioka to spend not
less than 50% of his work time on services under the consulting contract to
consist of responsibilities as directed by the Chief Executive Officer or
the Chairman of CBBI, including for example advising on or assisting in
regulatory issues, merger issues, public relations, shareholder relations,
asset liability management, lending policies, customer relations and other
related matters. At the end of each twelve (12) month period, the
consulting agreement shall automatically renew for another consecutive
twelve (12) month period, unless CBBI gives Tokioka written notice at least
three (3) months prior to the expiration of the contract period that the
consulting agreement will not be renewed. The annual fee for subsequent
terms shall be subject to adjustment by mutual agreement of the parties,
but in no event shall be less than $150,000.00.

c. Kunimoto:

Kunimoto shall be fully restated as an employee of CBBI or its subsidiaries
on terms as follow:

i. A lump sum payment of FORTY SIX THOUSAND SIX HUNDRED EIGHTY SIX AND
NO/100 DOLLARS ($46,686,00) for amounts due.

ii. Reimbursement of his out of pocket expenses caused by the termination
of his employment, as approved by Ron Migita, CEO of CBBl.

iii. Staring on June I, 1997, CB will employ Kunimoto as Senior Vice
President in charge of Information Technology and Strategic Planning at an
annual salary of NINETY THREE THOUSAND THREE HUNDRED SEVENTY TWO AND NO/100
DOLLARS ($93,372.00), with full employee benefits. Kunimoto shall be
entitled to normal step ups in compensation as mutually agreed to by CB and
Kunimoto.

iv. All employee benefits that Kunimoto previously enjoyed as an employee
of ISL shall be reinstated and updated as if there was no break in
employment. By way of example, but not as a limitation, Kunimoto's option
benefits shall continue in effect without interruption, his years of
service for pension and retirement benefits shall be updated to reflect no
break in service and he shall be immediately vested for all health
benefits.

v. Respondents agree that they will not terminate Kunimoto's employment
with CB, except In good faith in that there should be a reasonable factual
basis for a determination of good cause, on two (2) weeks written notice
for good cause relating to his performance, for a period of three (3)
years.

2. In addition Respondents shall pay Claimants jointly the sum of TWENTY
THREE THOUSAND SEVEN HUNDRED AND NO/100 DOLLARS ($23,700.00) for their
<PAGE>
attorneys' fees and costs incurred in connection with this matter. All lump
sum payments and the payment for attorneys' fees and costs shall be made by
certified or cashier's check on or before the close of business day, July
1, 1997. The check for attorneys' fees and costs shall be made out to
Claimants and Kobayashi, Sugita & Goda.

D. ADMISSION

1. Claimants acknowledge that neither this Agreement nor the fact of
settlement, nor the settlement negotiations, nor the settlement proceeds
are, may be construed as, may be deemed evidence of, or may be used at any
time as, an admission, concession, presumption, or inference of fault,
wrongdoing or liability of Respondents in any case, action or proceeding in
any court, administrative agency, or other tribunal, or in any manner, for
any purpose whatsoever, except however, that this Agreement may be used in
any action for the enforcement of the Agreement.

2. In any action for the enforcement of this Agreement, the prevailing
party shall be entitled to recover all reasonable fees and costs incurred
in such an action.

E. RELEASE

I. By Claimants. Claimants irrevocably and unconditionally release
Respondents, Morita and their respective successors, heirs, assigns,
directors, shareholders, trustees, officers, employees, servants, agents
(and former directors, shareholders, trustees, officers, employees,
servants, agents), attorneys, executors, administrators, insurers,
subsidiaries, affiliates, parent, and/or related entities, from the Settled
Claims.

2. By Respondents and Morita. Respondents and Morita irrevocably and
unconditionally release Claimants, their respective heirs, executors,
administrators, attorneys, successors and assigns from the Settled Claims.

3. The Parties acknowledge that they have read this Agreement and that they
understand the terms of this Agreement. The Parites further acknowledge
that they are entering into this Agreement deliberately, knowingly, and
voluntarily. The Parties also acknowledge that they have sought the advice
of their respective counsel prior to executing this Agreement.

4. The Parties acknowledge and understand that there is a risk that
subsequent to the execution of this Agreement, she, he or it may incur or
suffer loss, damages, or injuries that are in some way related to or
arising out of Claimants' employment with ISL or the termination thereof,
but that are unknown and unanticipated at the time this Agreement is
signed. Accordingly, the Parties hereby assume these risk and acknowledge
that this Agreement shall apply to all such unknown or unanticipated
claims.

5. The Parties represent and warrant that she, he or it owns the right,
title, and interest in all Claims she, he or it is releasing and that she,
he or it has not assigned or transferred or purported to assign or
transfer, voluntarily or involuntarily, her, his or its right, title, or
interest in any Claims being released.

<PAGE>
I. MISCELLANEOUS PROVISIONS

1. Regulatory Approval. This Agreement is conditioned upon Respondents
obtaining proper regulatory approval of all of the terms and conditions of
this Agreement. Kunimoto shall have the option of unilaterally revoking his
agreement to this settlement of his claims if regulatory approval is not
obtained by June 6, 1997.

2. No Inducement. The Parties acknowledge and understand that no Party
makes nor has made any representations to induce the other to sign this
Agreement other than what is specifically provided for herein.

3. Settlement Not an Admission of Liability. The Parties agree that the
covenants and releases contained in this Agreement are not to be construed
as admissions of negligence, willful misconduct, breach of contract,
violation of statute, liability, or fault of any kind whatsoever, but are
to be construed strictly as the compromise and settlement of disputed
claims.

4. Authority to Execute. The Parties represent that their signatories to
this Agreement have the authoirty to execute and bind the party on whose
behalf this Agreement is signed.

5. No Representation. The Parties acknowledge that no promise, agreement,
fact, or opinion not expressed herein has been made by or to them to induce
this Agreement and that this settlement is made with full knowledge of the
facts and possibilities of the subject matters of this Agreement and with
the advice of counsel.

6. Captions or Headings. The captions or headings of paragraphs in this
Agreement are inserted for convenience, reference, and identificaition
purposes only, and shall neither control, define, limit, nor affect any
provisions of this Agreement.

7. Amendments. This Agreement, which constitutes the entire agreement
between the Parties, may be changed, amended, or modified only by the
Parties executing a written instrument. The Parties hereby acknowledge and
agree that they will make no claim at any time that this Agreement has been
orally altered or modified in any respect whatsoever.

8. No Waiver. Waiver of any breach of this Agreement by the Parties shall
not be deemed a waiver by the Parties of any other breach of this
Agreement.

9. Governing. This Agreement shall be governed by, enforced in, and
interpreted under the laws of the State of Hawaii.

10. Benefit. This Settlement Agreement shall be binding upon, and inure to
the benefit of, each of the parties hereto and their respective heirs and
assigns.

11. Interpretation. The terms of this Agreement have been negotiated at
arm's length among knowledgeable parties represented by experienced
counsel. As a result, the rule of "interpretation against the draftsman"
shall not apply in any dispute over interpretation of the terms of this
Agreement.

12. Entire Agreement. This Agreement contains all of the terms and
agreements agreed upon between the Parties and supersedes and cancels each
<PAGE>
and every over prior conflicting agreement, promise, and/or negotiations
between them.

13. Severability of Unlawful Provisions. Should any provision of this
Agreement be declared or be determined by any court to be illegal or
invalid, the validity of the remaining parts, terms, or provisions shall
not be affected thereby and said illegal or invalid part, term, or
provision shall be deemed not to be a part of this Agreement.

14. Execution of Document. The Parties agree to execute any other or
further documents reasonably required to carry out the purpose of this
Agreement. Furthermore, this Agreement may be executed in counterparts,
each of which so executed shall, irrespective of the date of its execution
and delivery, be deemed an original, and the counterparts together shall
constitute one and the same instrument.

15. No Drafter of Agreement. This Agreement is a result of negotiations
between both Claimants, Respondents and Morita; therefore, neither party
shall be deemed the author of this Agreement for purposes on interpreting
this Agreement.

16. Confidentiality. The terms of this Agreement shall be confidential and
shall not be disclosed by any of the parties except as may be required by
law or regulation, or pursuant to court order, or to the Claimants spouses,
or to any of the parties accountants or attorneys, or in any dispute to
enforce this Agreement. If, however, Respondents are required to and do
disclose the terms of this Agreement to the Securities Exchange Commission
or other regulatory agencies and such disclosures are made public record,
then this confidentiality provision shall become null and void.

<PAGE>
IN WITNESS WHEREOF, Claimants, Respondents and Morita have executed this
Agreement as of the date written above.

/s/Lionel Y. Tokioka

/s/Warren Y. Kunimoto

/s/Helen Kwok

CB BANCSHARES, INC.

By /s/James H. Kamo
Its Chairman of the Board of Directors & Corporate Secretary

CITY BANK

By /s/James H. Kamo
Its Chairman of the Board of Directors & Corporate Secretary

INTERNATIONAL SAVINGS & LOAN ASSOCIATION

By /s/James H. Kamo
Its Corporate Secretary

/s/James M. Morita

APPROVED AS TO FORM:

/s/Bert T. Kobayashi, Jr.
Craig K. Shikuma for
KOBAYASHI, SUGITA & GODA
Attorneys for Lionel Y. Tokioka, Warren Y. Kunimoto and Helen Kwok

/s/Jamie A. Chuck
Attorney for CB Bancshares, Inc., City Bank, International Savings & Loan
Association

/s/Steven K.S. Chung
Attorney for James M. Morita

<PAGE>
EXHIBIT 10.4
Consulting Agreement

THIS AGREEMENT is made this 1st day of June ,1997, effective June 1, 1997,
between CB BANCSHARES, INC., (Company), a Hawaii corporation, of 201
Merchant Street, Honolulu, Hawaii 96813, and LIONEL Y. TOKlOKA, of 918
Waiiki Street, Honolulu, Hawaii 96821.

WITNESSETH:

WHEREAS, Company is engaged in the business of finance (commercial bank,
savings and loan); and

WHEREAS, Company desires to contract with Tokioka, as a consultant, for
certain services necessary for the operation of Company's business; and

WHEREAS, Tokioka has the skill and expertise necessary to provide such
services to Company;

NOW, THEREFORE, the parties do hereby mutually agree as follows:

I
RELATIONSHIP OF INDEPENDENT CONTRACTOR CREATED

1.01 It is expressly agreed by the parties hereto that Tokioka is not an
employee of Company for any purpose whatsoever, but is an independent
contractor. Furthermore, no relationship of joint venture or partnership of
any form is created by this Agreement.

1.02 Company shall request and/or direct Tokioka to furnish certain
services and advice, however, will not exercise any dominion or control
over the specific manner in which Tokioka performs his services so long as
the overall performance by Tokioka of his services hereunder are
satisfactory and in full conformity with the requirements of this
Agreement.

II
TERM OF AGREEMENT

2.01 The term of this Agreement shall commence on the effective date and
shall continue for a period of twelve (12) months. This Agreement will be
renewed for an additional 12-month period, unless the Company gives Tokioka
three (3) months prior written notice that it will not renew this
Agreement.

III
DUTIES

3.01 During the term of this Agreement, Tokioka shall act as and render
services on matters involving the following:

Company regulatory issues under the MOU
Company merger and integration
Shareholder relations
Public and community relations
Business development
Other consultant services as requested

<PAGE>
Such services shall be performed at the request of the Chairman of the
Board of CBBI and the Chief Executive Officer of CBBl.

3.02 Tokioka shall spend not less than fifty percent (50%) of his work time
and devote his best efforts, energies, abilities and attention to Company's
business.

IV
CONTRACT FEE

4.01 Company will pay Tokioka the following fee for the services provided
hereunder: ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) a
year for a period of one (1) year. Such fee will be payable as follows:
twelve (12) equal installments of TWELVE THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($12,500.00) on the last day of each month during the term of this
Agreement.

4.02 Company will reimburse Tokioka for all necessary expenses incurred by
Tokioka in connection with the furnishing of services under this Agreement,
including the following:

(a) Company shall provide parking, office space, and other facilities
necessary for services to be performed by Tokioka, or shall reimburse
Tokioka for such charges.

(b) Company shall reimburse Tokioka for incidental dining, recreation,
entertainment and like expenses relating to Tokioka's services.

V
LIABILITY FOR TAXES AND OTHER STATUTORY REQUIREMENTS

5.01 Tokioka agrees that all state and federal withholding taxes, social
security taxes, general excise tax, self-employment taxes, and any and all
other taxes, fees, assessments or contributions, relating to fees received
or expenses reimbursed, if any, shall be the sole responsibility of
Tokioka.

VI
EVIDENCE OF COMPLIANCE

6.01 Tokioka agrees to observe and comply with policies rules and
regulations of Company in the performance of his duties.

6.02 Tokioka agrees that he shall, upon request, and at such times and in
such frequency as Company may desire, provide Company with evidence to
establish that Tokioka has complied fully with his contractual obligations
as set forth in this Agreement.

VII
CONFIDENTIAL INFORMATION

7.01 Company's project involves confidential information and very sensitive
issues. Tokioka agrees that the knowledge and information described below
in subparagraphs 7.01 (a) and (b) (information) shall for all times and for
all purposes be regarded by Tokioka as strictly confidential and held by
Tokioka in confidence, and solely for Company's benefit and use, and shall
neither be used by Tokioka nor directly or indirectly disclosed by Tokioka
to any person except to Company, or to others with Company's prior
permission.
<PAGE>
(a) All information that Tokioka may receive from Company, or from its
employees or by virtue of performance of services rendered under and
pursuant to this Agreement, or other information that belong to Company or
to those with whom Company has contacted regarding such information; and

(b) All information provided by Tokioka to Company in oral or written
reports of work done, together with any other information acquired by or as
a result of the work performed by Tokioka for Company and during the term
of this Agreement, unless such "information has become common knowledge or
is already in the public domain.

(c) The obligations and promises contained in this paragraph 7.01 and its
subparagraphs shall be binding on Tokioka during the term of this Agreement
and shall also survive the termination of this Agreement.

7.02 Upon the termination of this Agreement, Tokioka shall not be entitled
to the records and files of Company, unless Company, in its sole
discretion, grants such permission in writing.

VIII
ARBITRATION

8.01 Company and Tokioka hereby consent in advance that, at the election of
either party, any dispute arising out of or connected with this Agreement,
or any alleged breach hereof, including any dispute as to any amount owed
under this Agreement, shall be settled by arbitration in accordance with
the rules then prevailing of the American Arbitration Association for
Commercial Disputes. The results of any arbitration shall be final and
binding upon the parties and judgment thereof may be entered in any court
of competent jurisdiction.

8.02 Nothing herein contained shall be deemed to give the arbitrator any
authority, power or right to alter, change, amend, modify, add to or
subtract from any of the provisions of this Agreement, except that the
arbitrator shall have the authority to reasonably interpret any of the
provisions of this Agreement.

8.03 The arbitrator shall be required to abide by the provisions of this
agreement under the lawfully adopted policies of the State of Hawaii, and
the arbitrator shall not modify or alter same.

8.04 These arbitration provisions shall, with respect to any controversy or
dispute, survive the termination or expiration of this Agreement.

8.05 In arbitrations under this Agreement, each party shall bear its
respective costs, fees and expenses of presenting its own case, and half of
the arbitrator's fees and administration expenses, unless otherwise ordered
by the arbitrator, in which case the prevailing party may be awarded all
costs, fees and expenses.

8.06 Notwithstanding the provisions of this Section VIII, either party
shall have the right to seek injunctive relief in relation to threatened
conduct, which is permitted by applicable law.

IX
TERMINATION

9.01 Notwithstanding any other provision of this Agreement, Tokioka's
services under this Agreement may be terminated:
<PAGE>
(a) Whenever Company and Tokioka shall mutually agree to termination in
writing;

(b) Upon insolvency of either party or the filing of any petition in
bankruptcy by or against either party;

(c) At Tokioka's option, if Tokioka shall suffer a permanent disability.
For purposes of this Agreement, "permanent disability" shall mean Tokioka's
inability to substantially render the services required hereunder for a
period of three (3) months, or for a total of three (3) months in any
consecutive twelve-month period because of a physical or mental condition.
If Tokioka suffers from a permanent disability within the meaning of this
subsection 9.01 (c), then Tokioka's right to receive a fee described in
Section IV above shall cease and become null and void;

(d) Upon death of Tokioka; or

(e) Notwithstanding the provisions of subparagraphs 9.01 (a) through 9.01
(d) above, services may be terminated for just cause by company upon
fifteen (15) days prior written notice to Tokioka. The term "just cause,"
as used in this agreement, shall mean Tokioka's acts or omissions that in
the reasonable opinion of Company, demonstrate Tokioka's dishonesty,
malfeasance, or negligence in the course of performing his services under
this Agreement. The term "just cause" shall also include, but not be
limited to, Tokioka's breach of the terms of this Agreement, by, among
other things, nonperformance of professional responsibilities, as a result
of incompetence, lack of judgment, insubordination, substance abuse, or
otherwise, which is not cured by Tokioka within fifteen (15) days of
receipt of written notification of such breach from Company.

9.02 Upon termination for any of the reasons above mentioned, excluding
death, Tokioka shall be entitled to receive accrued but unpaid fee that is
provided for in Section IV above.

X
ASSIGNMENT

10.01 Neither party may assign this Agreement without the other party's
prior written consent.
XI
CONFLICT OF INTEREST

11.01 During the term of this Agreement or any extension thereof, Tokioka
shall not, directly or indirectly, without the prior written consent of
Company:

(a) Render services of a like nature to any other person, partnership,
corporation or entity, whether for compensation or otherwise; or

(b) Engage in any activity that is competitive with or adverse to Company's
business interest. Tokioka shall not engage in such activity as an
individual, as a partner in a partnership, as an officer or director of a
corporation, or as a principal of any other similar entity.

11.02 Tokioka may, however, passively invest his assets in other
noncompetitive business enterprises provided such investment does not
require Tokioka's services in any manner whatsoever.

<PAGE>
XII
FACILITIES AND SERVICES

12.01 Except as provided otherwise herein, Company shall provide
supplemental information, materials, supplies and support reasonably
necessary or proper for Tokioka's performance of his duties under this
Agreement.

XIII
REMEDIES

13.01 Breach by either party of any of the terms and conditions contained
herein will be deemed to constitute a material breach of this Agreement
after taking into consideration the notice requirement and opportunity to
cure a failure contained In subsection 13.02 below. This Agreement may be
enforced by all legal and equitable remedies available to a party to a
contract which is materially breached by the other party. As used in this
Agreement, "material breach" is a violation of a right or duty which has
more than a trivial result and has a substantial detrimental effect upon
the party alleging the breach.

13.02 In the event either party shall fail to perform their obligations
under this Agreement, either party shall notify the party failing to
perform in writing of such failure, specifying the defaults alleged. Unless
such default shall be corrected within fifteen (15) days of the date of
such written notice, the party providing the notice shall be entitled to
declare this Agreement breached and to suspend payments under this
Agreement, unless and until a court of competent jurisdiction shall issue
an order directing Company to do otherwise.

XIV
MISCELLANEOUS PROVISIONS

14.01 Section and Paragraph Headings. Section and paragraph headings are
inserted only for convenience and reference and in no way define, limit,
extend or describe the scope or intent of this Agreement or any provision
hereof.

14.02 Entire Agreement. This Agreement embodies the entire agreement of the
parties and supersedes any other agreements or understandings with respect
hereto that may ever have existed between the party.

14.03 Notices. All notices, requests, demands, consents and other
communications which are required to be given in writing shall be given or
served for all purposes by being sent as registered or certified mail
return receipt requested, postage prepaid, addressed to Company or Tokioka,
as the case may be, at the address set forth above or at such other post
office address as either may from time to time designate by writing given
to or served on the party in the manner set forth in this paragraph, or by
being delivered personally to the other party, provided that the other
party acknowledges receipt thereof in writing. Any such notice, request,
demand, consent or other communication shall be deemed conclusively to have
been given or served on the date of such mailing or personal delivery.

14.04 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby.

<PAGE>
14.05 Waiver. The failure of any party to enforce at any time any
provisions of this Agreement shall not constitute a waiver of the right
thereafter to enforce the same or any other provision hereof.

14.06 Amendment. This Agreement may be amended only by an instrument in
writing signed by the party against whom enforcement of the amendment is
sought.

14.07 Applicable Law. This Agreement shall be governed by laws of the State
of Hawaii both as to interpretation and performance.

<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and
year first above written.

"Company"

CB BANCSHARES, INC.

By /s/James H. Kamo
Its Chairman of the Board and Secretary

By/s/Ronald K. Migita
Its President and Chief Executive Officer

"Tokioka"

By/s/Lionel Y. Tokioka

<PAGE>
STATE OF HAWAII
CITY AND COUNTY OF HONOLULU

On this 1st day of June, 1997, before me appeared James H. Kamo and Ronald
K. Migita, to me personally known, who, being by me duly sworn did say that
they are the Chairman of the Board, Secretary and President, CEO,
respectively, of CB BANCSHARES, INC., a Hawaii corporation; that the seal
affixed to the foregoing instrument is the corporate seal of said
corporation; that the instrument was signed and sealed in behalf of said
corporation by authority of its Board of Directors; and that said officers
acknowledged the instrument to be the free act and deed of said
corporation.

/s/Leilani Y. Mayekawa
Notary Public, First Circuit

My commission expires: August 6, 1998

<PAGE>
STATE OF HAWAII
CITY AND COUNTY OF HONOLULU

On this 4th day of June, 1997, before me personally appeared Lionel Y.
Tokioka, to me known to be the person described in and who executed the
foregoing instrument and acknowledged that they executed the same as their
free act and deed.

/s/Leilani Y. Mayekawa
Notary Public, First Circuit

My commission expires: August 6, 1998

<PAGE>
EXHIBIT 10.5
License and Service Agreement

This LICENSE AND SERVICE AGREEMENT numbered 3810162 is entered into as of the
Effective Date below by and between

Fiserv Solutions Inc.

a Corporation whose registered office is located at

2601 Technology Drive
Orlando, FL 32804

(hereinafter called `Company') and

City Bank

whose registered office is located at

201 Merchant Street
Honolulu, HI 96813

(hereinafter called `Client')

This Agreement shall be construed and enforced under the laws of the State
of Hawaii

Effective Date: 3/27/97

<PAGE>
Witnesseth:

WHEREAS, Company is the licensor of the Software System (as hereinafter
defined), and

WHEREAS, Client wishes to install and Use (as hereinafter defined), the
Software System in Client's premises,

NOW, THEREFORE, the parties hereto agree from the Effective Date as
follows:

1. Definitions

The following are the definitions of various terms used in this
Agreement:

1.1 `Accounts' means the total number of individually designated accounts
processed by the Transaction, Time and Loan subsystem of the Software
System.

1.2 `Basic Maintenance Services' means services to correct a Nonconformity
or Major Nonconformity in the original, unmodified Software System.
Basic Maintenance Services are available only with respect to the
current and last prior release of the Software System.

1.3 `Business Requirements' means the description of the Client's business
needs and the functionality required.

1.4 `Client Confidential Information' means any confidential information
concerning Client's business, that is labeled as such and all data
pertaining to Client's customers.

1.5 `Computer System' means that dedicated computer machinery and
manufacturer-supplied software identified on Schedule 2. Client shall
have sole responsibility to own or lease, unpack, plan, install, test,
and maintain the equipment according to any and all applicable building
or electrical codes, regulations or requirements, as well as the
manufacturer and Company requirements.

1.6 `Effective Date' means the date identified as such in this Agreement
as the date upon which this Agreement shall commence.

1.7 `Enhancements' means modifications made to the Software System which
add program features or functions not originally within the Software
System. Company reserves the right to define which changes are
classified as Enhancements. Such Enhancements may be subject to an
additional fee.

1.8 `Functional Specifications' means the description of the detailed
functionality changes to product, account and customer level processing.

1.9 `Location' means only those premises identified on Schedule 1.

<PAGE>
1.10 `Maintenance Fee' means that fee for the time being in effect for the
provision of the Maintenance Services hereunder. Such fees and services
apply to Basic Maintenance and Special Maintenance Services as
specified in this Agreement and Schedule 1.

1.11 `Nonconformity' means a failure of the Software System to process
Client's data accurately or to perform functions described in Company's
documentation.

(i) Level One: A Major Nonconformity which renders the Software System
inoperative.

(ii) Level Two: Any nonconformity which significantly degrades the
performance of the Software System or which affects regulatory
compliance, including, but not limited to, the calculation of interest,
fees and balances, errors affecting the accuracy of customer statements,
failure to comply with Federal regulatory requirements or generally
accepted accounting principles for financial institutions, and Client's
ability to know its financial position.

(iii) Level Three: A nonconformity which has a significant impact on
the Client's ability to perform its normal business functions and for
which no circumvent procedure is immediately available to Client,
including, but not limited to, failure to meet performance criteria
established in Section 12.1 of this Agreement.

(iv) Level Four: A nonconformity which negatively impacts the ability
of the Client to perform its normal business functions but for which
there is a relatively cost effective circumvent procedure immediately
available to the Client.

(v) Level Five: A nonconformity which does not fit into any of the
above categories.

1.12 `Professional Service Fees' means the number of days or fractions of
days worked within each grade multiplied by the daily fee rate as
defined on the Schedule(s) 1. Additional fees may be charged for hours
worked outside these at the request of Client at the rates previously
agreed in writing by Client.

1.13 `Software System' means the standard, unmodified computer programs in
object code, unless otherwise specified on Schedule 1, and procedure
statements in machine readable form, together with one set of Company
standard documentation as listed on Schedule 1. The Software System does
not include separate, independent, Complementary and stand-alone modules
or subsystems which Client has developed and maintained without
Company's assistance.

1.14 `Special Maintenance Services' means any other services as specified
on Schedule 1.

1.15 `Specification Nonconformity' means a failure of the modified
Software System to operate in accordance with the Functional
Specifications.

<PAGE>
1.16 `Taxes' means all sales, use, excise, value added, and other taxes
and duties however designated which are levied by any taxing authority
having jurisdiction over the Location. Taxes shall not include any
levies by any taxing authority which are based upon the net income of
Company.

1.17 `Third Party' means any party other than Company's employees or
subcontractors and Client.

1.18 `Total License Fee' means the total sum specified as such on Schedule
1 for standard, unmodified modules of the Software System.

1.19 `Upgrades' means changes made to maintain compatibility with new
system software releases or to improve upon previously existing features
and operations with the Software System. This primarily includes
program fixes to the existing Software System. If Client is receiving
Basic Maintenance Services, Upgrades are provided without charge to the
Client.

1.20 `Use' means copying or loading any portion of the Software System
from storage units or media into any equipment for the processing of
data by the Software System once so loaded, or the operation of any
procedure or machine instruction utilizing any portion of either the
computer program or instructional material supplied with the Software
System. Use is deemed to occur at the Location where any of the above
processes happen. Use is limited to type of operations described in
Company documentation solely to process Client's own work and that of
affiliate financial institutions. Use specifically excludes any service
bureau or time-share services to unaffiliated third parties without
prior written consent by Company and payment by Client of additional
fees in accordance with mutually agreed terms.

1.21 `Workday' means Company's working day for the purposes of this
Agreement, as specified on Schedule 1.

1.22 `Release' means an official product delivery that changes the formal
release designation. If Client is receiving Basic Maintenance Services,
Releases are provided without charge to the Client.

1.23 `License' means the rights to Use or have access to the Software
System as defined in this Agreement.

2. License to Use the Software System

2.1 Company agrees to furnish the Software System to Client and does
hereby grant to Client a non-exclusive, nontransferable License to Use
the Software System at the Location to process up to the designated
number of Accounts as specified on Schedule 1.

<PAGE>
2.2 Client may change the Location, without cost to Client, in the event
Client transfers its data processing department to a new location within
the same country as the Location. Client will provide Company with
fifteen (15) days advance notice of any proposed transfer of operations.
In the event the Computer System becomes temporarily unavailable, Client
is authorized to use the Software System for primary processing
functions on a temporary and emergency basis on a backup computer system
leased, acquired by or available to Client until such time as the
availability of the Computer System is restored. The parties agree that
the temporary extension of the Software System licenses granted
hereunder shall be adequate to permit Client to take full advantage of
its disaster recovery and contingency data processing plans.

2.3 The Company, prohibits the copying of any portions of the Software
System except that Client may copy reasonable quantities of any standard
end user documentation; and may copy machine language code, in whole or
in part, in reasonable quantities, in printed or electronic form, for
use by Client at the Location for archive, back-up or emergency restart
purposes, or to replace copy made on defective media. The original, and
any copies of the Software System, or any part thereof, shall be the
property of Company.

2.4 Client shall maintain any such copies and the original at the Location
and one Client archive site in the same country as the Location, which
site is specified on Schedule 1 "the Archive Site". Client may
transport or transmit a copy of the Software System from the Location or
the Archive Site to another location in the same country as the Location
for back-up use when required by Computer System malfunction, provided
that the copy or original is destroyed or returned to the Location or
Archive Site when the malfunction is corrected. Client shall reproduce
and include Company's copyright and other proprietary notices on all
copies, in whole or in part, in any form, of the Software System made in
accordance with this Section.

2.5 Company grants to Client the right to Use any modifications furnished
or authorized by Company pursuant to this Agreement.

3. Professional Services Terms

3.1 In consideration of the payment to Company by Client of the cost of
all items and services provided and any other expenses incurred by
Company in connection with this Agreement, Company hereby agrees to
provide personnel in accordance with the terms and conditions set out in
this Agreement.

3.2 All work which is to be performed by Company hereunder shall be based
upon the preliminary Business Requirements listed on Schedule 3. Client
shall utilize Schedule 3 to provide Company with all necessary
information concerning its requirements for modifications to the
Software System or other information requested by Company related to
Company's performance of its obligations under this Agreement. Any
estimates of costs and completion dates listed on the Schedules are
referenced solely for the purpose of allowing Client to plan its budgets
and schedules based upon the then available information.

<PAGE>
3.3 Company shall provide a Preliminary Project Plan based upon the
Business Requirements which shall be incorporated as Schedule 4 when
appropriate. The parties agree that they shall use their best efforts
to complete and validate Schedule 4 within sixty (60) days of the
Effective Date. Schedule 4 shall contain a preliminary listing of the
nature and timing of tasks for the project, some of which are to be
performed by Company and some by Client. Company shall utilize
reasonable efforts to meet the dates set forth in the Project Plan or
any replacement thereof.

3.4 Company will provide installation, conversion or training to Client
for the Software System, in accordance with Schedule 4, the fees
therefore shall be as specified on Schedule 1. The timing of any
installation, conversion and training shall be as specified in the
Project Plan mutually agreed upon by the parties.

3.5 In the event that Company is to provide modifications to the Software
System, the modifications shall be based upon specifications created by
Company and approved by Client as provided below:

(i) During the phase referred to on the Project Plan as "Functional
Specifications", Company may develop Functional Specifications based upon
the descriptions contained on Schedule 3 for Client's written approval.
Company shall not be obligated to perform any further development work
until Functional Specifications have been accepted in writing by Client
which acceptance shall not be unreasonably withheld or unduly delayed.

(ii) At anytime and from time to time prior to acceptance of the
Software System, Client, by written notice to Company's project manager,
may request changes to the Functional Specifications ("Change Orders").
Promptly upon receipt of a Change Order, Company shall give notice to
Client describing the cost and time implications of such a Change Order,
including without limitation, the impact on Company's charges and the
Project Plan. The parties shall mutually agree in writing concerning
the impact of any Change Order, and Company shall not implement any
Change Order without prior written authorization from Client.

(iii) The Project Plan shall also set forth the time period after the
acceptance of the Functional Specifications within which Company shall
prepare an acceptance test script for the adaptations described therein
when appropriate. The requirement for an acceptance test script is
based on the size and complexity of the project.

(iv) The Software System modifications shall be deemed to have been
accepted by Client either upon the completion of a formal Acceptance
Test (as set forth in Client's test scripts) or ninety (90) days after
delivery of the modified Software System, whichever occurs first.
Acceptance by Client will not be unreasonably withheld or unduly
delayed. Client agrees promptly to notify Company in writing (and with
reasonable particularity) upon conclusion of the Acceptance Test or
earlier upon discovery of any Specification Nonconformity's disclosed by
such testing or use. Company shall correct any Specification
Nonconformity's disclosed by such testing without further charge to
Client within a reasonable time of Client's notice.

3.6 The Professional Services Fees are based on a workday as defined on
Schedule(s) 1. Additional Professional Services Fees may be charged for
hours worked outside these at the request of Client at the rates
previously agreed in writing by Client.
<PAGE>
3.7 If support is primarily required in part days, Company may notify
Client that an hourly fee rate shall apply. The hourly rate will be
calculated pro-rata of the stated daily rate unless otherwise agreed.

3.8 The daily rates quoted in the table will be valid for twelve months
from the effective date listed on the relevant Schedule 1. Thereafter,
they will be subject to change by Company on one-month's prior written
notice for the next twelve month period.

4. Basic and/or Special Maintenance Services

4.1 In consideration of the payment to Company by Client of the
Maintenance Fee, Company agrees to furnish to Client Basic and/or
Special Maintenance Services as described and subject to the terms and
conditions contained in this Agreement.

4.2 Client may elect to receive Basic Maintenance Services and/or Special
Maintenance Services by designating the services selected on Schedule 1.

4.3 Company shall maintain the Software System in compliance with
applicable Federal regulations, and generally accepted accounting
principles which affect financial institutions. Company will make its
reasonable best efforts to alleviate any condition which may result in
Client sustaining penalties and/or unfavorable review by regulating
agencies in the event of Company's failure to provide Upgrades and/or
Enhancements within time deadlines established by regulators.

4.4 Client agrees to train current and future employed staff members on
the technical and user operations of the Software System. If the Client
chooses, training can be provided at the Company's location or at the
Client's location at the then current training rates. Phone training
will also be invoiced at the said rate.

(i) Professional Services Fees paid by the Client for the installation,
conversion and base training, as specified in Schedule 1, shall include
thirty five (35) days of training which the Company will deliver to the
Client's staff. Client will limit training class size to a maximum of
ten (10) students. Client may, at its discretion, select from any of
the beginning or advanced curricula which the Company offers in its then
current course catalog.

(ii) Client may, at its discretion, receive additional days of training
for its staff at the published then-current fees.

4.5 As part of Basic Maintenance Services, Company shall provide telephone
support for reporting of Level One, Two, and Three Nonconformity's
twenty-four hours per day, seven days per week. Company shall provide
services to correct or resolve any other Nonconformity of the Software
System only on Workdays, Monday - Friday 8:00 to 5:00 EST excluding bank
holidays. Telephone cost for remote dial-up is Client's expense.
Company may utilize remote diagnostic software and dial-up telephone
lines in providing these services.

<PAGE>
4.6 Company and Client shall promptly assign such technical personnel as
are necessary to identify, isolate, and reconstruct any reported Level
One Nonconformity and, provided that such Nonconformity is capable of
reconstruction and is due to a defect in the Software System, Company
and Client shall utilize its best efforts to correct or utilize a
circumvent procedure to restore system operation within twenty-four
hours of Company's receipt of the call or before the next occurrence of
the Nonconformity, whichever is earlier. Company shall be responsible
for travel of Company personnel incurred during the resolution of the
Level One Nonconformity.

4.7 Company and Client shall use its best efforts to correct or adopt a
circumvent procedure with respect to a Level Two Nonconformity within
forty-eight (48) hours of its receipt of the Level Two Nonconformity
report.

4.8 Company and Client shall use its best efforts to correct a Level Three
Nonconformity within five (5) business days of its receipt of the Level
Three Nonconformity report by providing a circumvent procedure or code,
whichever is most reasonable.

4.9 Company shall use its best efforts to adopt a circumvent procedure
with respect to a Level Four Nonconformity within five (5) business days
of its receipt of the Nonconformity or the next occurrence of the issue.
If a circumvent procedure has been adopted, Company may deliver a
software coded correction to the Level Four Nonconformity with the next
scheduled base release of the Software System that is still open for
development changes at the time of the notice of the Level Four
Nonconformity, whichever is earliest.

4.10 Company shall use its best efforts to correct a Level Five
Nonconformity with the next Software System Release open for development
at the time of the notice of the Level Five Nonconformity.

4.11 Should Company's review of the Level One, Two or Three Nonconformity
indicate, in Company's reasonable opinion, that the reported problem is
not in the Software System but is due to Client's abuse or misuse of the
Software System, or by a modification or addition to the Software System
not performed by Company (inclusive of the integration of Third Party
products with the Software System), or by Client's failure to properly
maintain the Computer System or to install the required System Software
release as instructed by Company, then:

(i) Client agrees, if required by Company, to reimburse Company the
related costs of work performed by Company in investigating the problem
including related system calculated on a time-and-materials basis at
Company's then standard professional service rates, and

(ii) Company, on request of Client, shall advise Client whether Company
can correct or assist in resolving such problem, and the terms under
which Company shall undertake the same, and on written acceptance by
Client shall correct or assist in resolving the problem in accordance
with such terms.

<PAGE>
4.12 Maintenance Fees cover twenty (20) hours of support per month through
Client's acceptance of Software System at conversion and, thereafter,
ten (10) hours of support per month for support not related to
Nonconformity's. If such support hours are greater than those
specified, Client will be contacted and invoiced for hourly support at
the Company's then current rates.

4.13 The initial Maintenance Fee and adjustment terms are specified on
Schedule 1. Maintenance Fees shall be subject to annual increases and
shall also be subject to increase following delivery of separately
priced Enhancements or changes in the maximum number of accounts that
can be processed as specified in the Agreement.

4.14 All such increases to the Maintenance Fee shall be incorporated by
amending Schedule 1.

4.15 Invoicing of the Maintenance Fee will commence as specified on
Schedule 1.

4.16 State regulatory requirements will be addressed by the following
process:

(i) If Base Maintenance is in effect, Company will make available any
CBS software it has ownership or rights to license (there may be
additional licensing fees and/or services fees for non-CBS products) of
which has been written for such requirement.

(ii) Client may request Professional Services as defined in Section
Three (3. Professional Services Terms) to fulfill or supplement
requirements. In such event, Company will attempt to coordinate need
across client base in order to pool resources and expenses.

5. Use Of And Rights To Company's Work Product

All information, reports, studies, object or source code, flow charts,
diagrams and other tangible or intangible material of any nature
whatsoever produced by or as a result of any of the services performed
hereunder shall be the sole and exclusive property of Company or its
corporate parent. Client shall be entitled to Use all such work product
produced by Company in accordance with the terms and conditions of the
License and Service Agreement. Nothing contained in this Agreement
shall be deemed to provide greater rights with respect to the Software
System, as modified for Client's use herein, than those provided in the
Agreement.

6. Term

6.1 The term of the License grant shall begin on the Effective Date and
continue in perpetuity unless terminated earlier as provided herein.

6.2 The provision of the Basic Maintenance Services by Company shall
commence sixty (60) days from Effective Date specified on Page 1 hereto
and shall continue for a period of five years.

6.3 A Maintenance Services agreement may be renewed for successive one
year terms at Company's then current fees for all modules then under
Agreement.

<PAGE>
7. Delivery

The Company agrees to deliver the Software System to the Location in
accordance with the schedule contained in Schedule 4.

8. Payment

8.1 Company shall add to each invoice for reimbursement by Client an
amount equal to any applicable Taxes. Company shall remit such Taxes to
the appropriate taxing authorities.

8.2 Each payment to be made to Company under this Agreement shall be paid
by Client, in funds as specified on Schedule 1, within thirty (30) days
of the date of an invoice in respect thereof and the time of payment
shall be of the essence of this Agreement.

8.3 If the whole or any part of any invoice remains outstanding for thirty
(30) days or more, Client shall pay an agreed late charge calculated at
the rate of one and one half percent (1-1/2%) per part or complete month
on the overdue balance. Company shall pay the same late charge on the
amount of any credit due to Client for sums previously paid by Client
which were the subject of a dispute resolved in Client's favor.

8.4 Except as expressly provided in this Agreement to the contrary, Client
agrees to pay the reasonable travel and living expenses in accordance
with Company's then current travel policy, of any employees of Company
and its authorized contractors who render services at either the
Location or any other Client site in connection with the activities
described in this Agreement. All expenses shall be itemized on invoices
submitted by Company and shall be due and payable upon presentation of
each invoice as provided herein.

9. Performance

9.1 Client shall give Company full access to the Location, the Software
System, and the Computer System to enable Company to provide Services
and shall make available information, facilities, and services
reasonably required by Company for the performance of its obligations
under this Agreement.

9.2 Work in determining the nature of any problem or in making
corrections, amendments, or additions to the Software System may be
carried out at Company's site or at the Location at the discretion of
Company.

9.3 Client agrees to operate the Computer System and Software System.

10. Rescheduling

If Client is unable to provide access to required facilities or
personnel or is unable to meet its tasks assigned on Schedules 3 and 4
within 5 business days, Company will endeavor to reschedule tasks to
minimize the non-productive time arising. If such non-productive time
is expected to be significant, Company will at its discretion reassign
its personnel to other suitable work.

<PAGE>
11. Schedules

The attached Schedules form part of and are included in this Agreement.

12. Warranties

12.1 The Company represents and warrants that the Software System will
perform the functions specified in the Documentation identified on
Schedule 1.

(i) For a period of ten (10) days after first quarter end following
initial conversion, and/or installation of Enhancements, Upgrades, and
Releases, Company will promptly provide replacements or corrections to
any part of the Software System which does not so perform where such
failure is material and is notified in writing to Company within such
period. This warranty shall not apply if the problem has been caused by
unauthorized amendment to the Software System, or by incorrect Use.

(ii) Company acknowledges that the Software system is designed to
operate on the Computer System specified on Schedule 2 and will meet the
following operating performance criteria:

A) "Processing Window" not to exceed four (4) hours for 100,000
Accounts or six (6) hours for 200,000.

B) Average internal processing (point-to-point within AS/400) of on-
line transactions of not more than one (1) second.

The conditions under which these test results can be duplicated by
Client are as follows:

a) Client's acquisition of the AS/400 configuration outlined on
Schedule 2 of this Agreement.

b) Operation of the Software System in accordance with the operating
instructions provided in the Documentation.

c) Company approved memory and machine operating system parameters.

d) Disk capacities are maintained under an eighty percent (80%) total
disk saturation level.

e) Batch jobs are not run concurrently in the same memory and machine
pools (partitions) with interactive jobs.

f) The A/S400 is operated utilizing version V3R6 or equivalent
operating system and the test is conducted utilizing an unmodified
version of the Software Systems release 9603.

g) Account mix does not exceed sixty-five percent (65%) Transaction
Accounts.

h) "Processing Window" is defined as from the first CBS nightly
processing step through statement processing, backups and report
production.

i) Processing Windows measurement will be done only with CBS products.

<PAGE>
Upon notification by Client to Company of the Software Systems failure
to meet the criteria set forth in (A) and/or (B) stated above, Client
shall provide written documentation supporting such claim, and Company
will immediately commence to verify and correct the failure. In the
event such failure can be corrected through modification of the Software
System, Company shall, at its sole cost and expense, promptly make such
modification. In the event such failure can be corrected only through
utilization of more powerful or additional hardware and/or operating
system software, Company shall procure and pay for such hardware and/or
operating system software for Client at Company's then current actual
cost for the required hardware and/or operating system software. In
either event, Company will conduct these services in a timely manner as
to not disrupt the daily business operations of the client.

The foregoing represents Company's sole obligation and Clients' sole
remedy for a failure of the Software System to meet the performance
criteria outlined above.

(iii) Both parties acknowledge that the warranties given by Company are
conditional upon the procurement and maintenance by Client of the
Computer System in accordance with such configuration and that use of
the Software

System's ad hoc query commands will be limited during Client's normal
business hours.

12.2 The Company's obligation under the warranty stated in the foregoing
paragraph shall be to repair or replace defective or non-conforming
parts of the Software System at its own expense and within a reasonable
time. In the event that the Company is unable to repair or replace the
defective or non-conforming parts of the Software System, the Company
shall refund to Client the license fees previously paid to the Company
for the defective part.

12.3 The Company represents and warrants it has the right to license the
use of the Software System (and any adaptations by Company thereto) and
that such Software System and adaptations will not infringe or violate
any third party's patent, copyright, trade secret, trademark, service
mark or other intellectual property rights.

12.4 Company represents and warrants that the Services described in this
Agreement shall be performed in a workmanlike manner and in accordance
with standards applicable to the financial software services industry.

12.5 Company represents and warrants to Client that to the best of the
Company's knowledge that the Software system shall be free of any
viruses, hidden program or intentionally harmful, destructive or
disabling mechanism or devices and support the year 2000 calendar.

12.6 Company represents and warrants to Client that the Software furnished
here operates in compliance with and conforms to all applicable federal
rules and regulations.

12.7 THE WARRANTIES STATED ABOVE ARE LIMITED WARRANTIES AND ARE THE ONLY
WARRANTIES MADE BY COMPANY. COMPANY DOES NOT MAKE, AND CLIENT HEREBY
EXPRESSLY WAIVES, ALL OTHER WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTIES ARE IN LIEU OF
ALL LIABILITIES OR OBLIGATIONS OF COMPANY FOR DAMAGES ARISING OUT OF OR
IN CONNECTION WITH THE USE OR PERFORMANCE OF THE SOFTWARE SYSTEM.
<PAGE>
13. Indemnity

13.1 Notwithstanding Company's disclaimer of consequential damages in
Section 14 hereof, Company shall defend, indemnify and hold harmless
Client, its directors, officers, members, employees and agents and
their heirs, successors and assigns from and against any and all
claims, demands, actions, liabilities, losses, damages and expenses,
including, without limitation, settlement costs and reasonable
attorneys' fees, arising out of or relating to an actual or alleged
infringement or violation of any third party's trade secrets,
trademark, copyright, patent or other intellectual property rights,
(the "Intellectual Property Rights") in connection with the use of the
Software System. Company's obligation pursuant to the immediately
preceding sentence is subject to the following conditions: (i) Client
shall give Company prompt written notice of all actions, claims or
threats against Client of infringement of any Intellectual Property
Rights; (ii) Client shall permit Company to elect to assume complete
control of such claims at its sole discretion and expense; and (iii)
Client shall cooperate with Company in defending against claims,
including making known or available to Company all records and
documents pertaining to claims upon reimbursement of all costs
associated with provision or reproduction thereof.

13.2 If use of the Software System is prohibited by either judicial action
or agreement, Company, at its own expense, shall elect either (i) to
procure for Client the right to continue using the Software System; or
(ii) to replace as soon as practicable the Software System with a non-
infringing product which has substantially similar functional
capability; or (iii) to modify the Software System so that it becomes
non-infringing without any material loss of functionality; or (iv) to
remove the Software system and any interdependent product whose
function is significantly impaired by the removal of the infringing
Software System and refund Client any amount equal to the license fees
paid to Company for the affected portion of the Software System as
depreciated and accept the return. Such depreciation shall be
calculated as an equal amount per year during the useful life of the
Software System as determine by Company and agreed to by Client based
on generally accepted accounting principles.

13.3 The foregoing sites the entire liability of Company for the
infringement of any Intellectual Property Rights of a third person by
the Software System or any parts thereof, and Client hereby expressly
waives any other liabilities on the part of Company arising therefrom.

13.4 The Company shall have no liability for any claim which is based upon

(a) the Use of any part of the Software System in combination with
Materials or software not provided or installed by Company; or

(b) modifications made by Client or any Third Party.

14. Limitation of Liability of the Parties

14.1 Each party shall indemnify and hold the other harmless against any

(a) loss of or any damage to any tangible property or

(b) injury to or death of any person;

<PAGE>
caused by the negligence of, breach of statutory duty by, or willful
misconduct of the indemnifying party's employees, agents, or sub-
contractors.

14.2 COMPANY AND CLIENT SHALL HAVE NO LIABILITY WITH RESPECT TO THEIR
OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR LOSS OF GOODWILL, OR
FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, WHETHER IN
TORT OR IN CONTRACT, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. IN ANY EVENT, THE LIABILITY OF COMPANY TO CLIENT FOR ANY
REASON AND UPON ANY CAUSE OF ACTION WHATSOEVER SHALL BE LIMITED TO THE
AMOUNT OF ANY LICENSE FEE WHICH CLIENT HAS PAID TO COMPANY AS OF THE
DATE ON WHICH SUCH CAUSE OF ACTION ACCRUES.

15. Title

15.1 Nothing in this Agreement shall convey to Client any title to or any
rights in the Software System including but not limited to all
proprietary rights or ownership of any modifications. The Client's sole
right in relation to the Software System or any modifications is to Use
the same for the duration of this Agreement under the terms and
conditions herein contained.

15.2 The Software System and all modifications, Enhancements, or Upgrades
made to the Software System and all patents, copyrights, or other
proprietary rights related to each of the above are the sole and
exclusive property of Company, whether made by Company, Client, or any
of their employees or agents.

16. Non-Disclosure

16.1 Client acknowledges that Company represents and warrants to Client
that: (a) the Software System, including all specifications, work
product, translations and other materials developed by Company, and (b)
the terms and conditions of this Agreement contain highly confidential,
unique, secret and valuable information of Company. Client agrees that
it shall not decompile, disassemble or reverse engineer the Software
System and that it shall not sell, transfer, publish, disclose, display
or otherwise make available to others the Software System, any
materials relating to or forming a part of the Software System or any
other proprietary information of Company without the prior written
consent of Company. Client agrees to secure and protect the Software
System and proprietary information and to take appropriate action with
its employees who are permitted access to such materials to satisfy its
obligations hereunder. Client further agrees that it shall use
commercially reasonable efforts to assist Company in identifying and
preventing any use or disclosure of any portion of the Software System
or proprietary information. All obligations and undertakings of Client
relating to confidentiality and nondisclosure, whether contained in
this Section or elsewhere in this Agreement, shall survive the
termination of this Agreement for any reason.

16.2 Either party shall protect the other parties Confidential Information
from disclosure with the same degree of care afforded by its own
confidential information. All obligations and undertakings of either
party specified herein with respect to Client Confidential Information
shall survive the termination of this Agreement for whatever reason.

<PAGE>
16.3 Client shall permit Company's authorized representatives at all
reasonable times during Client's normal hours of operation to audit
Client's Use at the Location to determine that the provisions of this
Agreement are being faithfully performed. Such audits will be
conducted at the Company's expense. Any such audit shall be conducted
in such a manner as to minimize the disruption to Client's business
and/or the Use of the Software System.

16.4 Either party shall promptly notify the other if it becomes aware of
any breach of confidence relating to either parties confidential or
proprietary information and give each other party all reasonable
assistance in connection with investigation of same thereof.

17. Termination

17.1 The termination of this Agreement shall automatically, and without
further action by Company, terminate and extinguish the License, and all
rights in and to the Software System shall automatically revert
irrevocably to Company. Company shall have the right to take immediate
possession of the Software System and all copies thereof wherever
located without further notice or demand.

Client may terminate as provided in paragraph 17.2 only the service
related portion of the Agreement and shall retain the Use of the
Software System as defined in the Agreement. All license fees in
Schedule 1 are retained and due to Company in such event.

17.2 Client may terminate the Agreement:

(i) in the event of a material default by Company that is not cured
within the applicable cure period specified in this Agreement, or a
reasonable cure period (with the minimum being thirty (30) days if no
other cure period is stated) from receipt by Company of written notice
specifying the nature of the default with reasonable particularity.

(ii) with thirty (30) days notice to Company. In such case, Client
agrees to pay to Company a sum equal to forty percent (40%) of the
remaining Maintenance Fees due to Company for the remainder of this
Agreement.

17.3 If Client violates any of the Non-Disclosure, Non-Assignment, or
License to Use provisions of this Agreement and fails to remedy any such
breach within five (5) days of notice thereof from Company, Company may
terminate this Agreement without further notice.

17.4 If Client violates or fails to perform any of the terms or conditions
other than those specifically expressed in Sub-clause (17.3) and fails
to remedy any such breach within thirty (30) days of notice thereof from
Company, or if Client shall become insolvent or ceases to do business,
then Company may give a written notice declaring this Agreement is
terminated at the expiration of such notice period.

17.5 Exercise of the right of termination afforded to either party shall
not prejudice legal rights or remedies either party may have against the
other in respect of any breach of the terms of this Agreement.

17.6 Client's failure to pay on a timely basis or within cure period as
outlined in paragraph 17.2 is cause for termination of this Agreement
and the License.
<PAGE>
17.7 Upon the termination of this Agreement, Company shall furnish to
Client such copies of Client's data files as Client may request in
machine readable format form along with such other information and
assistance as or is reasonable and customary to enable Client to
deconvert from the Company system. Client shall reimburse Company for
the production of data records and other services at Company current
fees for such services.

18. Force Majeure

Neither party shall be responsible for delays or failures in performance
resulting from acts reasonably beyond the control of that party.

19. Non-Assignment

19.1 In the event of the sale of fifty percent (50%) or more of Client's
common stock, or the sale of all or substantially all of Client's
assets, or in the event of any merger in which Client is not the
surviving organization, Client may transfer this Agreement and the
License upon the prior written consent of Company, which consent shall
not be unreasonably withheld or delayed.

19.2 If the organization acquiring Client's common stock, assets or
surviving a merger is an organization deriving more than five percent
(5%) of its gross revenues from providing service bureau, time share,
computer software consulting services, computer software licensing or
computer hardware sales, Company shall be under no obligation to consent
to such transfer.

19.3 Except as expressly provided above, neither party may assign or
transfer its rights, duties or obligations under this Agreement to any
person or entity, in whole or in part, without the prior written consent
of the other party, which consent shall not be unreasonably withheld or
delayed. Company will allow Client to assign its rights and duties to
an affiliate without the consent of the Company.

20. Entire Agreement

20.1 This Agreement, together with the Schedules referenced herein
constitutes the complete and exclusive statement of the Agreement
between the parties as to the subject matter hereof and supersedes all
previous agreements with respect thereto.

20.2 Each party hereby acknowledges that it has not entered into this
Agreement in reliance upon any representation made by the other party
but not embodied herein.

20.3 This Agreement may not be modified or altered except by a written
instrument executed by both parties.

21. Variation

No variation of this Agreement shall be binding on either party unless
such variation is incorporated in a revised Schedule to this Agreement
and signed by the duly authorized representatives of both parties.

22. Notices

<PAGE>
Any notice required to be given hereunder shall be given by sending the
same

(a) by air courier to the addresses as first set out above or to any
subsequent address designated by either party for the purpose of
receiving notices pursuant to this Agreement, and any notice so sent
shall be deemed to have been given five (5) business days after the same
was mailed; or

(b) by confirmed facsimile.

23. Action

No action, regardless of form, arising out of this agreement shall be
brought by Client more than two (2) years after such cause of action
shall have accrued.

24. General Terms

24.1 Dispute Resolution. In the event of any dispute, controversy or
claim or any kind or nature arising under or in connection with this
Agreement (including disputes as to the creation, validity,
interpretation, breach or termination of this Agreement (a "Dispute"),
then upon the written request of either party, each of the parties will
appoint a designated officer whose task it will be to meet for the
purpose of endeavoring to resolve the Dispute or to negotiate for an
adjustment to the applicable provision of this Agreement. the
designated officers who should be regularly involved in the daily
operation will meet as often as the parties reasonably deem necessary in
order to gather and furnish to the other all appropriate information
with respect to the matter in issue which the parties believe to be
appropriate and germane in connection with its resolution. Such
officers will discuss the Dispute and negotiate in good faith in an
effort to resolve the Dispute or amend the applicable provision without
the necessity of any formal proceeding relating thereto. The specific
format for such discussions will be left to the discretion of the
designated officers but may include the preparation of agreed upon
statements of fact or written statements of position furnished to the
other party. No formal proceeding for the resolution of the Dispute
under Section 24 may be commenced until the earlier occur of (a) the
designated officers conclude in good faith that amicable resolution
through continued negotiation of the matter in issue does not appear
likely, or (b) the 30th day after the initial request to negotiate the
Dispute (either such occurrence, the "Arbitration Date").

24.2 Arbitration: Any Dispute that is not resolved informally through
negotiation between the parties will be resolved by arbitration as
specified herein. Such arbitration shall be held in the City or
suburbs of Honolulu, Hawaii, in accordance with the rules of the
American Arbitration Association pertaining to the Resolution of
Computer Disputes ("AAA Rules") then in effect. The arbitrators shall
render a written opinion setting forth their findings of fact and
reasoning related to the award. Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction over
the parties. The arbitrators shall have the authority to grant any
legal remedies that would be available in any judicial proceeding
instituted to resolve a disputed matter. During the course of any such
Arbitration, each party agrees to continue its obligations in
accordance with the terms of this Agreement.
<PAGE>
24.3 The prevailing party in an action brought against the other to
enforce the terms of this Agreement or any rights or obligations
hereunder, shall be entitled to receive its reasonable costs and
expenses of bringing such action including its reasonable attorneys
fees.

24.4 Company and Client agree that each provision in this Agreement is
deemed equally essential to each party.

24.5 The section headings used herein are inserted only as a matter of
convenience and for reference and shall not affect the construction or
interpretation of this Agreement.

24.6 If any provision of this Agreement is held to be unenforceable, the
other provisions shall nevertheless continue in full force and effect.

24.7 The failure of either of the parties to insist upon strict
performance of any of the provisions of this Agreement shall not be
construed as the waiver of any subsequent default of a similar nature.

IN WITNESS whereof this Agreement has been executed as of the Effective
Date set forth on Page 1 by the following duly authorized representatives:

For and on behalf of Client:
By: /s/ Randall T. Kawano
Title: Senior VP & CFO

For and on behalf of Company
By: /s/ John E. O'Malley
Title: President CBS-USA

<PAGE>
License and Service Agreement No. 3810162

SCHEDULE 1
Company: Fiserv Solutions Inc.
Client: City Bank
Effective Date: 3/27/97
License Section
A. Software System Based on Number of Accounts Processed 200,000

1. The following modules of the Fiserv Comprehensive Banking Systems
software to function on the Computer System listed on Schedule 2 or
client provided work stations.

CBS License Fees
CBS Core Applications
Common File
CIF
GL
Loans
FTMS
Time
Tran
ACH Origination
Acct. Reconciliation
Safe Deposit
Chargeback
ATM Switch Interface
ATM Driver Software
ATM Card Management
ATM Positive Balance File
A/I Teller Interface
CBS Collection System
Call Report Interface (Sheshunoff)
Wausau IP/Imaging Interface
CFI Laser Pro Interface
VRU (Intervoice) Interface

B. Complementary Products

Shatswell Bankaudit
Regulatory Compliance Monitoring System
Optical System (Proformance)
Optical System Interface
<PAGE>
Branch Automation (CFI) Interface
CRA Reporting System (CFI ProActive)
MCIF (MPI) Interface
IPS Organization Interface
Asset/Liability (Basis) Interface
Accts. Payable (FTI) Interface
Invest. Portfolio Interface
Fixed Assets (FAS200) Interface
Payroll Acct (Ceridian) Interface
Currency Reporting Interface
RAC Currency Reporting System
COINS Interface
Mortgage Orig (Contour) Interface
Insurance Companies Interface
Counties for Property Tax Interface
TRW, Equifax, Trans Union Interface
WireNext Wire Transfer Interface
CFI LaserPro (Application & Closing)
CFI Branch Automation

2. System Documentation which are Instruction Manuals for use of the
Software System and for the completion of documents for the Software
System.

3. Initial license to process up to 200,000 accounts on CBS. Accounts
in excess of 200,000 are charged at $75,000 per 75,000 accounts to
maximum total charge of $1,750,000.

C. Location:

2969 Mapunapuna Place - Suite 200
Honolulu, Hawaii 96819

Archive Site:

TBD by Client.

D. Total License Fee:

Fee of $1,912,187 for Modules will be included in ICC and Fleetwood
Financial Corp. (FFC) leases.

Professional Services Section

Workday is defined as 8 hours:

A. Professional Services Fees

Personnel Grade Daily Rate
<PAGE>
IC Integration Services Coordinator $1,200
AP Analyst Programmer $ 880
PM Project Manager/Senior Consultant/Senior Analyst $1,000
PL Project Leader/consultant Analyst $2,000
SP Senior Programmer $1,500
TP Training Professional $1,500

CPI increases on Professional Services will begin in January 1, 1998 at
a rate not to exceed 10% per year.

B. Professional Services Fees Payment Timetable for Conversion:

Conversion - Installation, Conversion & Base Training
Base Conversion and Implementation Fees for City Bank and ISL $200,000
City Bank and ISL may be converted together or separately for this fee
with the exception of training, which will be limited to the cap
(number of days) in Paragraph 4.4 of the Agreement and travel/living
expenses. The payment is schedule is as follows:

1/3 on signing of Agreement
1/3 at the earliest of: (i) acceptance of Software System at
conversion; (ii) use of any portion of Software System in production;
(iii) no later than December 31, 1998 unless Company has not fulfilled
its obligations under this Agreement as it relates to preparing
Software System for acceptance by Client.
1/3 at the earliest of: (i) thirty (30) days after the acceptance of the
Software System at conversion; (ii) use of any portion of Software
System in production; (iii) no later than December 31, 1998 unless
Company has not fulfilled its obligations under this Agreement as it
relates to preparing Software System for acceptance by Client.

Optional Products Conversion Fees $ 96,000
Payment due at signing of Agreement.

Maintenance Services Section

A. Maintenance Services for City Bank

Modules: (Same as Section A.1.) $30,997.00 ICC Lease
Monthly Charge $21,389.68 FFC Lease
$52,386.68 Total
This amount includes CBS Software, IBM Hardware, IBM Maintenance,
Disaster Recovery and State Taxes for IHM Product and Services. The
term of this agreement is 60 months.

Basic Maintenance:
IBM Hardware Included in ICC Lease
IBM Software Included in ICC Lease
For a term of 60 months

Base Maintenance:
Monthly Charges: $25,000 for 60 days from effective date
$31,600 when conversion is completed
Special Maintenance Services:
Integration Services: $ 4,000 when conversion is completed
Project Management $ 2,835 for 2 person days per month

<PAGE>
For a term of 60 months, CPI increases on Base Maintenance and
Integration Services will begin in month 36 at a rate not to exceed
10% per year.

C. Maintenance Fee Payment Timetable

Effective Date for Monthly Charge is contract effective date.

Effective Date for Maintenance and Integration Services is at AS/400
installation date.

This Schedule 1 replaces all previous Schedule 1 forms for the Agreement
as of the Execution Date noted below.

For and on behalf of Client
By: /s/ Randall T. Kawano
Title: Senior VP & CFO

For and on behalf of Company
By: /s/ John E. O'Malley
Title: President CBS-USA

Execution Date:

<PAGE>
License and Service Agreement No. 310162

SCHEDULE 2 Third Party Hardware and
Operating System Software

AS/400 Preliminary Investment
for
City Bank
Honolulu, HI

AS/400 Advanced System Model 500\2142
512MB Main Storage with 71.3GB (58.7GB) Disk Storage
Utilizes Raid-5 Disk Storage Protection
CBKHI016/00942

Qty Description

1 IBM 9406-500 System Unit (512MB)
1 IBM 7857-017 12-19.2 KBPS Modem
1 IBM 9348-002 Magnetic Tape Unit
1 IBM 3570-B01 Magstar Tape Subsystem
1 IBM 3487-HG3 Infowindow
1 IBM 6400-012 Matix Prt

Operating Software

IBM 5716-SS1 Operating System/400 (0-75+ Users)
IBM 5716-XA1 Clnt Acc/400 Family (PC Support) (0-75+ Users)
IBM 5716-PW1 Application Development Tools
IBM 5716-QU1 Query for OS/400
IBM 5716-RG1 ILE RPG/400
IBM 5716-PT1 Performance Tools/400
IBM 5755-AS4 System Program Order

Total Hardware/Operating Software is included in the ICC Lease.
This machine has been configured with the information detailed in
the "Enterprise Banking Services Configuration Assumptions
Worksheet". A growth factor of 4% per year was added. Any
additional growth will be the responsibility of the client.

AS/400 Preliminary Investment
for
City Bank
Honolulu, HI

AS/400 Advanced System Model 400/2131
96MB Main Storage with 11.8GB (7.8GB) Disk Storage
Utilizes Raid-5 Disk Storage Protection
CBKHI017/00942

Qty Description

1 IBM 9402-400 System Unit (96MB)
1 IBM 7857-017 12-19.2 KBPS Modem
1 IBM 9910-E09 Exide Prestige Ext 1250
1 IBM 3487-HG3 (AS400 TSP Model)
Operating Software

<PAGE>
IBM 5716-SS1 Operating System/400 (0-30+ Users)
IBM 5716-PW1 Application Development Tools
IBM 5716-RG1 ILE RPG/400
IBM 5755-AS4 System Program Order

<PAGE>
License and Service Agreement No. 3810162

SCHEDULE 3 Business Requirements
To Be Agreed Upon Findings of the
Operations Audit. This should include
each party's responsibilities and a
formal sign-off procedure.)

Company: Fiserv
Client: City Bank
Effective Date: 3/27/97

The Business Requirements referred to in this schedule are not committed.
Customer may elect to commit to part or all of the Business Requirements by
notifying Company in writing. The cost estimates are committed to by
Company for 90 days from Effective Date.

LOANS

Loan mod to include transaction history and insurance paid and not show
payment reversals on year-end statements. PSR0002613
Due 3-98
Response: $30,800 & $6,160 annually

Loan mod to establish a initial rate cap. In other words two caps are
needed, one for initial rate, one for all subsequent. PSR0002615
Due 3-98
Response: $55,000 & 11,000 annually
Work around - use of ticklers.

Mod to track FASB fees and costs separately instead of net. PSR0002618
Response: $83,600 & $16,720 annually
Work around - download information into a spreadsheet.

Loan prepayment penalties (3 different calculations). CB/ISL provided
specifications. PSR0002744
Due Day 1
Response: $79,000 & $15,800 annually
Work around - attach a memo to the account stating penalty when the
account is opened. When account is being closed, memo would alert
operator to manually calculate the penalty.

Modify loan system to output an escrow paid file for automatic
distribution. PSR0002743
Response: $74,600 & $14,920 annually
<PAGE>
Balloon maturity should not cause late fee at balloon amount. PSR0002630
Due Day 1
Response: $26,400 & $5,280 annually.
Work around - create a tickler with the next review date slightly less
than the maturity date. Turn off the late fee, turn the late fee back
on when loan is refinanced.

Each quarter savings loans are analyzed, for loans with no interest
payments for the previous 60 days, they automatically charge back all
interest owed at the end of the quarter and withdraw from the pledged
collateral. This includes the printing of delinquent notices and charge
back notices to applicable customers. PSR0002643
Due 3-98
Response: $48,620 & $9,724 annually
Work around - Query and manual debit. CB indicated there were not
many of these.
Mod for Equity Lines and Credit Lines. As per G. Brueckman, a modified
payment type `5' is needed. PSR0002745
Due Day 1
Response: $9,680 & $1,936 annually
Mod to create a macro which will execute a query to bring payoff
information into a word document. PSR0002739
Due Day 1
Response: $23,000 & $4,600 annually
Mod to BCAS collection system to extract loans by delinquency days by
product type.
Due Day 1
Response: $1,000 as per Dan Lewis of Uni-source.
Mod for `step' loans where the interest rate is fixed for the first 5
years, then adjusted once to a specified rate? PSR0002740
Due 3-98
Response: $30,600 & $6,120 annually
Mod to increase the number of escrows attached to a loan to 99. PSR0002742
Due 3-98 - Doubtful
Response: $123,000 & $24,600 annually
Mod for loan collateral holds to be based on the loan principal balance
plus 10%. PSR0002642
Due 3-98
Response: $7,920 & $1,584 annually
Miscellaneous

<PAGE>
ISL currently offers a service where customers can have the bank transfer
funds and pay bills for the customer either through the ACH or via mailing
a check. CBS can accommodate the transfers and ACH processing but can not
create the check. Stephen Ching has requested that CBS supply a
modification bid however this does not represent a day one issue and
further analysis would be done by City Bank to determine if this service
will continue. PSR0002746
Due 3-98
Response: $39,400 & $7,880 annually

Compliance Issues

Escheat - report all accounts without customer contact for 5 years as of
6/30 annually; report end of October and end of April. Flag as of 6/30 and
stop paying interest as of 12/1 on these accounts. Allow non-monetary
customer contact to reactivate account. PSR0002644
Due 4-98
Response: $29,480 & $5,896 annually

For and on Behalf of Client
By: /s/ Randall T. Kawano
Title: Senior VP & CFO

For and on Behalf of Company
By: /s/ John E. O'Malley
Title: President CBS-USA

<PAGE>
License and Service Agreement No. 3810162

SCHEDULE 4 Preliminary Project Plan

Company: Fiserv
Client: City Bank
Effective Date: 3/27/97

It is acknowledged by Customer and Company that target conversion dates are
as follows:

March 20, 1998 for City Bank

May 22, 1998 for ISL.

The attached Project Plan will be modified to reflect these dates.
Activities and tasks will remain the same unless mutually agreed upon by
both parties.

For and on behalf of Client
By: /s/ Randall T. Kawano
Title: Senior VP & CFO

For and on behalf of Company
By: /s/ John E. O'Malley
Title: President CBS-USA

Confidential US Comb 05/15/96 1
__________
Initials

<ARTICLE> 9
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 42,490
<INT-BEARING-DEPOSITS> 850,431
<FED-FUNDS-SOLD> 4,405
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 122,337
<INVESTMENTS-CARRYING> 93,156
<INVESTMENTS-MARKET> 97,073
<LOANS> 1,052,868
<ALLOWANCE> 16,967
<TOTAL-ASSETS> 1,411,431
<DEPOSITS> 955,839
<SHORT-TERM> 181,227
<LIABILITIES-OTHER> 21,111
<LONG-TERM> 131,653
0
0
<COMMON> 3,551
<OTHER-SE> 18,050
<TOTAL-LIABILITIES-AND-EQUITY> 1,411,431
<INTEREST-LOAN> 45,838
<INTEREST-INVEST> 9,185
<INTEREST-OTHER> 702
<INTEREST-TOTAL> 55,725
<INTEREST-DEPOSIT> 17,239
<INTEREST-EXPENSE> 9,114
<INTEREST-INCOME-NET> 29,372
<LOAN-LOSSES> 2,550
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 25,319
<INCOME-PRETAX> 6,483
<INCOME-PRE-EXTRAORDINARY> 6,483
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,800
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
<YIELD-ACTUAL> 8.56
<LOANS-NON> 21,552
<LOANS-PAST> 2,527
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 15,431
<CHARGE-OFFS> 1,293
<RECOVERIES> 279
<ALLOWANCE-CLOSE> 16,967
<ALLOWANCE-DOMESTIC> 16,015
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 952

</TABLE>