Related Party Transactions and Outside Related Director Information

CityBank (CTBK)

4/14/2006 Proxy Information

Loans to Management and Directors

City Bank has had, and expects to have in the future, banking transactions, including loans, in the ordinary course of business with directors, executive officers, and their associates, on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other persons, which transactions do not involve more than the normal risk of collectability or present other unfavorable features. Neither at December 31, 2005 nor any time during the fiscal year 2005, did loans to directors and executive officers, including those made to related business interests and their associates exceed 10% of the equity capital accounts of the Bank or $5,000,000, individually or 20% in the aggregate as a group. All such loans were made in the ordinary course of our business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and in the opinion of management, do not involve any undue credit risk to us.

Lease Agreement

We lease the land on which the Harbour Pointe office is located at 11832 Mukilteo Speedway, Mukilteo, Washington from our President, Conrad Hanson. The origination date of this lease was January 1, 1991. The initial term is 15 years, with 5-year renewal options. The current lease payment is $14,906 per month, which includes related real estate tax, and is adjusted on an annual basis in accordance with the Consumer Price Index for the Pacific Cities and U.S. City Average effective January of each year. We consider the rent and the terms and conditions of the land lease agreement with Conrad Hanson to be fair and substantially the same or better than the terms and conditions of leases prevailing for comparable arms-length transactions.

Sale of Diligenz, Inc.

On August 11, 2005, the Bank completed the sale of Diligenz, Inc. (“Diligenz”) to Corporation Service Company (“CSC”), headquartered in Wilmington, Delaware. The sale, which was structured as an all-cash stock purchase, was effected by the Bank acquiring Diligenz’s minority shareholders’ and option holders’ stock and then selling such stock, together with the Bank’s holdings in Diligenz, to CSC. The Bank realized net proceeds of approximately $35 million at closing and reported an after tax gain of approximately $28 million from the transaction. Conrad Hanson and James Carroll, each of who are directors and executive officers of the Bank, were minority shareholders of Diligenz (in Mr. Hanson’s case, through his ownership of an LLC). Mr. Hanson and Mr. Carroll received $4.52 million and $565,000, respectively, from the proceeds of their sale of Diligenz common stock as part of the transaction. As officers and directors of Diligenz, Mr. Hanson and Mr. Carroll, together with the President of Diligenz, also entered into Indemnification Agreements with the Bank. Under the Indemnification Agreements, each such person will be indemnified by the Bank against certain claims arising by reason of the fact that such person was an officer/director of Diligenz prior to the closing of the transaction. In connection with the Bank’s consideration and approval of the transaction, the independent Board of Directors of the Bank appointed Martin Heimbigner and Richard Pahre as the Diligenz Sale Committee. In that capacity, Mr. Heimbigner and Mr. Pahre, with the advice of legal and accounting advisors, negotiated the transaction documents on behalf of the Bank and oversaw the sale process. The Bank also retained an investment banking firm to provide an independent fairness opinion with respect to the sale price.

Legal Fees Paid to Director

R. Scott Hutchison, a director of the Bank, is a partner in the law firm of Hutchison and Foster, City Bank’s legal counsel. The Bank paid $168,969.51 to the law firm of Hutchison and Foster for legal services rendered during the fiscal year 2005.