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                              EMPLOYMENT AGREEMENT

          AGREEMENT made effective as of May 24, 1997 by and among CITY NATIONAL
     BANK OF NEW  JERSEY  (the  "Bank") a  national  banking  association,  CITY
     NATIONAL  BANCSHARES   CORPORATION  (the   "Corporation"),   a  New  Jersey
     corporation,  each with its principal  office at 900 Broad Street,  Newark,
     New Jersey (the Bank and the Corporation sometimes collectively referred to
     as the "Employer"), and LOUIS E. PREZEAU ("Executive").

          WHEREAS,  the Corporation is a bank holding company, and the Bank is a
     wholly owned subsidiary of the Corporation

          WHEREAS,  the Bank, the  Corporation and the Executive have previously
     entered  into  an  Employment  Agreement  made as of May  24,  1993,  which
     employment  Agreement has been extended to the date hereof by action of the
     respective Boards of Directors of the Bank and the Corporation:

          WHEREAS, the Bank and the Corporation desire to continue to retain the
     services of  Executive  as  President  and Chief  Executive  Officer of the
     Corporation  and the Bank for the period  provided  in this  Agreement  and
     subject to the terms and conditions hereofand

          WHEREAS,  Executive  is willing to serve in the employ of the Bank and
     the  Corporation  as President and Chief  Executive  Officer on a full-time
     basis for said period on the terms and conditions specified herein:

          NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  herein
     contained,  and upon the other terms and conditions  hereinafter  provided,
     the parties hereto agree as follows.

     1.  POSITION AND RESPONSIBILITIES.

          (a) During the period of his  employment  hereunder,  Executive  shall
     serve as President and Chief  Executive  Officer of the Corporation and the
     Bank.  Executive shall have such duties as are customarily or appropriately
     vested in the President and Chief Executive Officer of a publicly-held bank
     holding  company  and a  national  bank,  and as from  time to time  may be
     prescribed  by  the  Board,   provided  such  duties  are  consistent  with
     Executive's  present duties and with  Executive's  current  position as the
     President and Chief Executive Officer of the Employer. During the period of
     his employment  hereunder,  Executive shall devote substantially all of his
     business time, attention, skill, and efforts to the faithful performance of
     his duties  hereunder,  including  activities  and services  related to the
     organization,  operation and management of the Employer. Executive shall be
     allowed  to devote a  sufficient  amount of time to  service  his  existing
     private accounting  practice clients,  provided that such practice does not
     interfere with the adequate performance of his obligations hereunder.

          (b) During the period of employment hereunder, Corporation shall elect
     Executive  as director of the Bank and shall  nominate  and  recommend  the
     Executive for election as a director of the Corporation.

     2.  TERM.

          The period of Executive's  employment  under this  Agreement  shall be
     deemed to have  commenced as of the effective  date first above written and
     shall  continue  for a period of three (3)  years  thereafter.  Thereafter,
     subject to Section 9(b) hereof, the Employer may, in its discretion,  renew
     this  Agreement  upon  such  terms  and  conditions  as shall  be  mutually
     agreeable to the parties.

     3.  COMPENSATION AND RELATED MATTERS.

          (a)  Salary.  As  compensation  for the  responsibilities  and  duties
     described in Section 1, the Employer  shall pay  Executive an annual salary
     of $150,000  during the First year of  employment  (such  annual  salary as
     adjusted  from  time  to  time,  the  "Base  Salary"),   payable  biweekly.
     Executive's salary during the second and third year of employment hereunder
     may be increased from the  immediately  preceding year as determined by the
     Board or a duly appointed  committee  prior to  commencement of such second
     and third year. At Executive's option and expense,  the Executive may defer
     part of his salary pursuant to Section 83 of the Internal Revenue Code, and
     Executive shall be responsible for notifying  Employer of such election and
     making all necessary  arrangements  for such deferral  (with respect to any
     trusts, agreements,  etc.). In addition to his Base Salary, Executive shall
     be entitled to the same  directors  fees as  directors  of the Bank and the
     Corporation.

          (b)  Employee  Benefits.  So  long as  Executive  shall  be  employed,
     hereunder, the Bank shall provide Executive. at no cost to Executive,  with
     all such other  benefits as are provided  uniformly to permanent  full-time
     employees  of the  Employer.  In  addition,  Executive  will be entitled to
     incentive  compensation and bonuses as provided in any plan of the Employer
     in which officers of the Bank are eligible to participate.

          (c) Expenses.  In addition to the salary and other  benefits  provided
     hereunder,  the  Employer  shall  reimburse  Executive  for all  reasonable
     travel,  commutation  and other  expenses  incurred  and  accounted  for by
     Executive in performing his obligations under this Agreement.  In addition.
     Employer  shall  pay  executive  an  additional   non-accountable   expense
     allowance  of $6,000.00  irrespective  of actual  expenses  incurred by the
     Executive.  Executive  may receive  advances  for  business  expenses to be
     incurred by Executive in accordance  with normal  business  practices.  The
     non-accountable  expense  allowance will increase by $2,000 a year for each
     new branch.

          (d) Life  Insurance.  So long as Executive is employed by the Employer
     hereunder,  the Employer  shall pay, for the benefit of Executive,  100% of
     that amount of annual premium on life insurance policy no. 37-627041 issued
     by the Equitable Life Insurance  Company as is allocable to a death benefit
     of up to three (3) times the Executive's annual Base Salary then in effect.
     Executive  shall be the  owner of such  policy  and  shall be  entitled  to
     exercise  all rights of  ownership  of such  policy,  including  naming the
     beneficiary of such policy.

          (e)  Automobile.  So long as  Executive  is  employed  hereunder,  the
     Employer  shall  provide  Executive,  for his  exclusive  use,  with a 1995
     Oldsmobile  Aurora,  or an  automobile  (which  shall be new or used within
     Executive's discretion) of comparable make and model, which is no more than
     three (3) years old from model year.  The Employer  shall pay (or reimburse
     Executive  for) all  expenses  relate  to the  operation,  maintenance  and
     up-keep of such automobile, including insurance, gas, service and repairs.

          (f) Vacation.  Executive shall be entitled to four weeks paid vacation
     per year, of which up to two weeks  vacation may be carried  forward to the
     next year  (entitling  Executive to a maximum of six weeks  vacation in any
     one year if two weeks of vacation from the prior year were not used).  Time
     spent at  banking  conventions  shall  not be  counted  as  vacation  time.
     Executive will be compensated for all unused vacation at the termination of
     his employment for any reason (to extent Executive would have been entitled
     to such vacation time in the year of termination).

          (g) Conventions. Employer shall reimburse Executive and his spouse for
     all expenses  related to their  attendance at three  banking  conventions a
     year selected by the Executive (such as the National  Bankers  Association,
     the New Jersey Bankers  Association and the American  Bankers  Association,
     etc.).  (h)  Financial  Tax/Legal  Consultant.   Employer  shall  reimburse
     Executive  for  expenses  related  to to the  consultation  of a  Financial
     Tax/Legal  Consultant for his personal finances.  This benefit is available
     for one time anytime during his contract.

          (i) Annual Medical Checkup. Employer shall reimburse Executive for the
     expenses related to an annual complete physical.

     4.  PERFORMANCE BONUS.

          (a)  Calculation  of Bonus.  Executive  shall be entitled to an annual
     performance bonus ("Performance Bonus") equal to the following:

     0 to 10% Return on Average  Common Equity (ROACE) - No Bonus Over 10% up to
     15% ROACE - 10% on excess up to 15% ROACE Over 15% ROACE - 10% on the first
     5% plus 20% on excess over 15%

          In any year,  the Board has the discretion to increase the Bonus award
     over the level indicated above .

          (b) Payment of Performance  Bonus. The Performance Bonus shall be paid
     in cash, the Corporation's common stock, or any combination thereof, as the
     Executive shall decide, as follows:

          (i) if all or any,  portion of the Performance  Bonus is to be paid in
     cash,  such cash  payment  shall be made within  thirty (30) days after the
     Corporation   has  received  the  final   year-end  audit  report  for  the
     Corporation  and the  Bank  prepared  and  certified  by the  Corporation's
     independent auditors'

          (ii) if all or any portion of the  Performance  Bonus is to be paid in
     the Corporation's common stock, the purchase of such shares will be limited
     to the number of shares specified under Stock Options (5a) and the value of
     each share of such stock shall be equal to the price as quoted  under Stock
     Options (5b).

          (c) Pro Rate Share on  Termination.  Except as  provided  in  Sections
     8(b), 11(b) or otherwise  herein,  in the event the Executive's  employment
     shall be  terminated  (other  than  pursuant  to Section 5 hereof),  either
     voluntary or involuntary  or by death,  prior to the expiration of the term
     hereof the  Executive  shall  nonetheless  be  entitled  to receive a bonus
     payable in  accordance  with the terms hereof equal to (i) the  Performance
     Bonus to which the Executive  would  otherwise be entitled as calculated in
     accordance  with  Section 4(a)  hereof,  multiplied  by (ii) a fraction the
     numerator of which is the number of days employed by the  Executive  during
     the  year in  which  the  Executive's  employment  was  terminated  and the
     denominator of which is 365.

          (d)  Certification  of Bonus. If executive and Employer shall disagree
     as to the amount of the Performance  Bonus,  the Employer shall request the
     Employer's independent auditors to prepare a certificate showing the amount
     of Net Operating  Profit,  Common  Stockholders  Equity and the Performance
     Bonus. Such certificate shall be binding upon the parties, absent manifest
     error.

          5. STOCK OPTIONS.  (a) The  Corporation  hereby grants to Executive an
     option to purchase  5,700  shares of the  Corporation's  common stock (such
     shares being the "Option  Shares") at the price set forth below. The option
     granted by this paragraph 5(a) can be exercised as follows:

          Year 1 - May 1,  1997 to April  30,  1998 - 1900  shares  Year 2 - May
     1,1998 to April 30, 1999 - 3800  shares less any shares  executed in Year 1
     Year 3 - May 1,  1999 to April  30,  2000 - 5700  shares  less  any  shares
     executed in Years 1 & 2

          (b) The price to be paid by  Executive  for each  Option  Share (The "
     Option Price") shall be $20.00. All payments of purchase price must be made
     in cash in full at the time of delivery of the Option  Shares to Executive.
     Executive may exercise the option  granted  hereunder  and purchase  Option
     Shares by giving  written  notice of his  election to  exercise  his option
     hereunder.  The notice shall comply with Section 22 hereof, and shall state
     the number of Option Shares which Executive desires to purchase.

          (c) The options and the accompanying terms set forth in this Section 5
     shall be deemed to be the sole and exclusive  property of Executive and can
     not be sold, assigned, transferred, pledged or otherwise disposed of in any
     manner whatsoever by Executive.  Any attempt by Executive to sell,  assign,
     transfer,  pledge or otherwise dispose of the options granted him hereunder
     shall be absolutely  void, and shall not be binding upon the Corporation or
     its successors and assigns.

          (d) The existence of the options hereunder shall not affect in any way
     the  right or  power  of the  Corporation  or its  stockholders  to make or
     authorize  any or all  adjustments  recapitalizations,  reorganizations  or
     other changes in its capital  structure or its  business,  or any merger or
     consolidation,  of the  corporation,  or any  issue of  bonds,  debentures,
     preferred or prior  preference stock ahead of or affecting the common stock
     or  the  rights   thereof,   or  the  dissolution  or  liquidation  of  the
     Corporation,  or any sale or  transfer  of all or any part of its assets or
     business,  or any other  corporate act or proceeding,  whether of a similar
     character or otherwise.

          (e) If after the date  hereof  while the  option is  outstanding,  the
     Corporation  shall effect a subdivision  or  combination of shares or other
     capital readjustment, the payment of a stock dividend, or other increase or
     reduction of the number of shares of common stock  outstanding  (other than
     the issuance or  repurchase of shares for fair  consideration,  then (i) in
     the event of an  increase  in the number of such  shares  outstanding,  the
     number of Option Shares then subject to the option shall be proportionately
     increased and the Option Price shall be proportionately  reducedand (ii) in
     the event of a  reduction  in the number of such  shares  outstanding,  the
     number or Option Shares then subject to the option shall be proportionately
     reduced and the Option Price shall be proportionately increased.

          (f) Executive  acknowledges  that the Option Shares may be "restricted
     stock" within the meaning of Rule 144 of the  Securities  Act of 1533.  and
     may be disposed of only in accordance with Rule 144.

     6.  TERMINATION UPON DISABILITY

          (a) Employer may terminate  Executive's  employment hereunder upon the
     occurrence  of   Executive's   Disability.   As  used  herein,   the  terms
     "Disability"  or "Disabled"  shall mean the inability of the Executive,  by
     reason of injury,  illness or other similar cause, to perform major part of
     his duties  and  responsibilities  in  connection  with the  conduct of the
     business and affairs of the  Employer  for a period of six (6)  consecutive
     months.  The  determination  of whether the Executive is Disabled  shall be
     made by the majority vote of the Board, whose decision on this matter shall
     be final.  Executive  hereby  authorizes any physician,  hospital or health
     care  professional to furnish to the Employer  medical records covering his
     health or  physical  condition,  but only in the event  that  Executive  is
     unable to perform a major part of his  duties or  responsibilities  for one
     (1) month.

          (b) Upon  termination for  Disability,  Executive shall be entitled to
     receive the amount of any unpaid Performance Bonus calculated in accordance
     with Section 4(d) hereof.  In addition,  the Executive shall be entitled to
     Long term disability  benefits which shall be provided  pursuant to (i) any
     group  disability  insurance policy in which Executive is a participant and
     (ii) an additional  long-term  disability  policy  providing such amount of
     disability benefit as is necessary to cause the total amounts of disability
     benefits  under this paragraph (b) to equal  two-thirds of the  Executive's
     annual Base  Salary in effect at the time of  termination  for  Disability.
     Premiums on the additional  policy referred to in the preceding clause (ii)
     shall be paid by Employer so long as Executive shall be employed hereunder.

          7. TERMINATION UPON DEATH.  Executive's  employment hereunder shall be
     immediately  terminated  upon his death,  in which case Employer  shall pay
     Executive's  beneficiaries  or his  estate,  the amount of any  accrued but
     unpaid  salary  pursuant  to  Section  3(a) and the  amount  of any  unpaid
     Performance  bonus  calculate In  accordance  with Section 4(d) hereof.  In
     addition,  the Employer  shall continue all health  insurance  benefits for
     Executives  family member (which his family  members were  receiving on the
     date of death)  for one year  after the date of  death.  at the  Employer's
     expense.   Thereafter,  the  Employer  shall  have  no  further  obligation
     hereunder.

     8.  TERMINATION FOR CAUSE.

          (a) Termination by the Employer of Executive's (i) breach of fiduciary
     duty  involving  personal  dishonesty  (ii)  commission of a felony or of a
     misdemeanor  involving  dishonesty or moral turpitude,  (iii) commission of
     embezzlement  or fraud  against  Employer  or any of its  affiliates,  (iv)
     continuous  or  habitual  alcohol or drug  abuse,  (v)  habitual  unexcused
     absence,  or (vi) continuous gross negligence or willful  disregard for his
     duties hereunder.  For purposes of this Section,  no act, or the failure to
     act, on  Executive's  part shall be  considered  "willful"  unless done, or
     omitted to be done,  not in good faith and without  reasonable  belief that
     the action or omission was in the best interest of the Employer.

          (b) Employer may, at any time,  terminate the  Executive's  employment
     for "cause" in which case  Executive  shall be entitled to receive only the
     amount of any accrued but unpaid salary  pursuant to Section 3(a) but shall
     be entitled to no further compensation or benefits hereunder.

     9.  TERMINATION WITHOUT CAUSE: FAILURE TO RENEWSEVERANCE.

          (a)  Except  as  otherwise  provided  herein,  if the  termination  of
     Executive's  employment by the Employer without "Cause", the Employer shall
     pay to  Executive in one lump sum (in addition to the amount of any accrued
     but unpaid salary pursuant to Section 3(a) and any unpaid Performance Bonus
     calculated  in  Executive's  employment  by  the  Employer  without  "Cause
     accordance with Section 4(d) hereof:

          (i)an amount equal to Executive's then annual Base Salary if Executive
     is terminated without cause any time.

          (b) Upon the expiration of this Agreement,  if the Employer shall fail
     to offer to renew this  Agreement on  substantially  the same terms then in
     effect  or such  other  terms as  shall be  acceptable  to  Executive,  the
     Employer  shall pay to the  Executive  in one lump sum an  amount  equal to
     Executive's then current annual Base Salary

          10.  CONTINUATION  OF  BENEFITS  FOLLOWING  TERMINATION.  In the event
     Executive's  Employment is terminate without "Cause" or pursuant to Section
     5, 6 or 11(a) hereof, the Employer shall cause to be continued for one year
     following the date on which Executive's employment is terminated,  life and
     health  coverage  substantially  identical  to any group  coverage in which
     Executive  participated prior to termination,  provided,  however, that the
     Employer's obligation under this Section 10 shall cease prior to expiration
     of such one  year  period  upon (i)  Executive's  full-time  employment  by
     another  employer.  (ii)  executive's  normal  retirement as defined in any
     qualified retirement plan of the Employeror (iii) the Executive's death.

     11. TERMINATION BY EXECUTIVE.

          (a) Executive may at any time for "Good Reason" voluntarily  terminate
     his employment hereunder by giving Notice of Termination in accordance with
     Section 12 hereof,  in which case  Executive  shall be  entitled to receive
     liquidated  damages  and full  satisfaction  of any  claims  Executive  may
     otherwise  have  hereunder  (in  addition  to the amount of any accrued but
     unpaid  salary  pursuant to Section 3(a) and any unpaid  Performance  Bonus
     calculated in accordance with Section 4(d) hereof).

          (b) If  Executive  terminates  his  employment  other  than for  "Good
     Reason",  he shall be  entitled  to receive  the amount of any  accrued but
     unpaid salary but shall be entitled to no further compensation or benefits

     (c) As used herein, "Good Reason" shall mean:

          (i)any change in control (A) of a nature that would  require  approval
     under  the  Change  in Bank  Control  Act,  12 U.S.C.  ss  1817(j)  and the
     regulations promulgated  thereunder,  whether or not such change in control
     is subject to that act, and (B) which is not approved by the Board prior to
     such change in control,

          (ii) a failure by the Employer to comply with a material  provision of
     this  Agreement  which is not cured within thirty (30) days after notice of
     such noncompliance has been given by Executive to the Employeror

          (iii) a  failure  of the  stockholders  of the  Corporation  to  elect
     Executive as a director of the  Corporation at a stockholders  meeting held
     during the term of this Agreement at which the Executive is up for election
     as a director of the Corporation .

          12. NOTICE OF TERMINATION.  Any purported termination by the Executive
     or by the Employer shall be  communicated by a Notice of Termination to the
     other  party  thereto.  For  purposes  of  this  Agreement,  a  "Notice  of
     Termination"  shall mean a written notice which shall indicate the specific
     termination provisions in this Agreement relied upon and shall set forth in
     reasonable  detail the facts and  circumstances  claimed to provide a basis
     for termination of Executive's employment under the provision so indicated.
     Unless otherwise specified therein, a Notice of Termination shall be deemed
     effective in accordance with Section 22.

     13. NON-COMPETITIVE: NON-DISCLOSURE.

          (a) Upon (i)  voluntary  termination  by Executive  of his  employment
     hereunder  for any  reason  other than Good  Reason,  (ii)  termination  of
     Executive's  employment by the Employer for Cause,  or (iii)  expiration of
     this Agreement, Executive agrees not to compete with the Employer or any of
     its  affiliates  for a period of one (1) year  following  such  termination
     within a 60 miles  radius of City  National  Bank.  Executive  agrees  that
     during such period and within said radius,  Executive  will not work for or
     advise, consult or otherwise serve with, directly or indirectly, any entity
     whose business  materially  competes with the depository,  lending or other
     business  activities of the Employer or any affiliate.  The parties hereto,
     recognizing  that  irreparable  injury  will  result to the  Employer,  its
     business  and  property  in  the  event  of  Executive's   breach  of  this
     Subsection,  agree that in the event of any such breach by  Executive,  the
     Employer  will be entitled,  in addition to any other  remedies and damages
     available,  to an injunction to restrain the violation hereof by Executive,
     Executive's  partners,  agents,  servants.  employers,  employees  and  all
     persons acting for or with the Executive.

          (b) Executive agrees not to disclose,  during or after the term of his
     employment,  any  knowledge  of the past,  present,  planned or  considered
     business  activities of the Employer or  affiliates  thereof to any person,
     firm,  corporation,  association  or other entity for any reason or purpose
     whatsoever.  Notwithstanding  the  foregoing,  Executive  may  disclose any
     knowledge of banking,  financial  and/or economic  principles,  concepts or
     ideas which are not solely and exclusively  derived from the business plans
     and  activities  of the  Employer.  In the event of a breach or  threatened
     breach by the Executive of the provisions of this Subsection,  the Employer
     shall be entitled to an injunction  restraining  Executive from disclosing,
     in whole  or in part,  the  knowledge  of the  past,  present,  planned  or
     considered  business  activities of the Employer or affiliates  thereof, or
     from rendering any services to any person, firm, corporation, association