Exhibit 10(i)

                              SETTLEMENT AGREEMENT
                                     BETWEEN
                           MONTEREY BAY BANCORP, INC.
                                       AND
                                JOSIAH T. AUSTIN

         This  Settlement  Agreement  is made and entered  into this 29th day of
April,1999,  by and between Monterey Bay Bancorp,  Inc., a Delaware  corporation
("Monterey Bay") and Josiah T. Austin ("Mr. Austin").

         WHEREAS,  Mr.  Austin,  a  stockholder  of record of Monterey  Bay, has
notified  Monterey  Bay of his  intention  to  support an  alternative  slate of
directors in opposition to  management's  nominees at Monterey Bay's 1999 Annual
Meeting of Stockholders  (the "1999 Annual Meeting") and has requested access to
a list of  stockholders  of record of Monterey  Bay for  purposes of  soliciting
proxies in opposition to management's nominees; and

         WHEREAS,  Mr.  Austin and Monterey  Bay are  desirous of resolving  the
matters  in  dispute  between  them  without   engaging  in  a  contested  proxy
solicitation.

         NOW THEREFORE,  in consideration of the respective promises made herein
and other good and valuable consideration,  the receipt and sufficiency of which
is hereby acknowledged, Monterey Bay and Mr. Austin hereby agree as follows:

         1. (a)  Concurrently  with the execution of this Agreement,  Mr. Austin
shall  provide to the Board of  Directors  of Monterey  Bay a written  statement
containing  all  information  concerning Mr. Austin that would be required to be
disclosed  pursuant to the Securities and Exchange Act of 1934, as amended,  and
the rules  thereunder,  if Mr. Austin were to be named as a director in Monterey
Bay's proxy statement for the 1999 Annual  Meeting.  No later than ten (10) days
after the  execution of this  Agreement,  the Board of Directors of Monterey Bay
shall  appoint Mr.  Austin as a director of Monterey Bay for a term  expiring at
Monterey Bay's annual meeting of stockholders in the year 2000 (the "2000 Annual
Meeting"), and shall, prior thereto, amend Monterey Bay's bylaws to increase the
authorized number of directors to provide for Mr. Austin's service as a director
in  accordance  with this  Agreement.  As a condition of this  appointment,  Mr.
Austin shall  execute and deliver to Monterey Bay his written  resignation  from
the Board, effective upon a material breach by Mr. Austin of this Agreement.  If
Monterey Bay fails to appoint Mr.  Austin  within this time,  then  Monterey Bay
shall  extend  the date of the 1999  Annual  Meeting  by ten (10)  days and this
Agreement shall terminate.

         (b) Mr. Austin's term as a director of Monterey Bay shall expire at the
2000  Annual  Meeting.  During the term of his service as a director of Monterey
Bay, Mr. Austin shall have all the rights and benefits,  including insurance and
indemnification,  provided other members of the Board of Directors, and shall be
eligible to  participate in meetings of the Board and  committees  thereof,  and
have access to information, to the same extent as the other directors.


                                       
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         2. As soon as practicable after the execution of this Agreement, but in
any event no later than thirty (30) days after the execution of this  Agreement,
the Board of Directors  of Monterey  Bay shall  retain a  nationally  recognized
investment  banking  firm to  advise  the  Board  concerning  various  means  of
enhancing  shareholder value.  Without limiting the generality of the foregoing,
the parties  intend that such  investment  bank shall as part of its  engagement
solicit   proposals  or  indications   of  interest  from  reputable   financial
institutions  and other  third  parties to acquire all or  substantially  all of
Monterey  Bay,  and present an analysis of such market  check to Monterey  Bay's
Board of Directors  within ninety (90) days from the date of its  engagement (it
being  understood that Monterey Bay's Board of Directors shall not, by virtue of
such solicitation,  be obliged to negotiate or consummate a sale of Monterey Bay
if it determines after such market check and other  deliberations that such sale
would not be in the best interests of Monterey Bay's shareholders).

         3. So long as  Monterey  Bay is not in  breach of this  Agreement,  Mr.
Austin,  from the date hereof through the date of termination of this Agreement,
shall not (other than by virtue of Mr. Austin's  participation  as a director on
the Board of  Monterey  Bay) (a) make,  or in any way  participate,  directly or
indirectly, in any "solicitation" of "proxies" (as such terms are defined in the
proxy rules of the  Securities and Exchange  Commission)  to vote  securities of
Monterey Bay in  opposition to the  recommendation  of the Board of Directors on
any matter submitted, or to be submitted to the stockholders of the Company; (b)
form,  join or in any way  participate  with  unaffiliated  third  parties  in a
"group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended,  with respect to any voting securities of Monterey Bay; or (c)
otherwise act alone or in concert with others to seek to control the management,
board of directors or policies of Monterey Bay,  provided that, the restrictions
of this  paragraph  shall not (x) prevent Mr.  Austin from acting in  accordance
with legal  requirements (y) require Mr. Austin to act in a manner  inconsistent
with his fiduciary duty, or (z) apply in the event of (i) the  commencement  (or
announcement by a third party of an intent to commence) a proxy  solicitation in
connection  with any meeting of the  stockholders of Monterey Bay other than the
1999 Annual  Meeting,  (ii) a third party  acquires (or  announces its intent to
acquire) more than 20% of Monterey  Bay's shares of common stock or total voting
power,  (iii)  Monterey Bay proposes to adopt  anti-takeover  measures,  or (iv)
Monterey  Bay  enters  into or  announces  its  intent  to enter  into a merger,
consolidation,  recapitalization,   liquidation,  sale  or  other  extraordinary
transaction.

         4.  Notwithstanding  anything to the contrary in paragraph 3 hereof, so
long as Monterey Bay is not in breach of this  Agreement,  Mr. Austin shall vote
all of the securities of Monterey Bay beneficially owned by him for the director
nominees proposed by the Board at the 1999 Annual Meeting.

         5. It is  understood  and agreed that  monetary  damages would not be a
sufficient remedy for any breach or threatened breach of this Agreement. Each of
the parties hereto shall be entitled to equitable relief by way of injunction or
specific  performance  if the  other  party or any of its  respective  officers,
directors,  investment bankers, attorneys,  accountants or other representatives
breach,  or threaten to breach,  any of the provisions of this  agreement,  such
remedy by way of equitable relief being  cumulative,  and not exclusive,  of any
other remedies and/or rights that the complaining  party shall have the right to
exercise.  It is further  understood  and agreed that no failure or delay by any
party in exercising any right,  power or privilege


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hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.

         6. In the event of any dispute between the parties hereto regarding the
performance or interpretation  of this Agreement,  the prevailing party shall be
entitled  to its  reasonable  attorneys'  fees,  costs  and other  expenses,  in
addition to any other relief to which such party may be entitled.

         7.  This  Agreement  shall  be  governed  in  all  respects,  including
validity,  interpretation  and  effect,  by the  internal  laws of the  State of
Delaware, without regard to the principles of conflicts of laws.

         8. This Agreement  shall terminate upon the earliest of (i) the failure
of the Board of  Directors  to appoint Mr.  Austin as a director at Monterey Bay
within ten (10) days after the execution of this Agreement; (ii) March 31, 2000,
provided that if the  Agreement is not  otherwise  breached by the action of Mr.
Austin,  the term of Mr. Austin shall continue until a successor is duly elected
or appointed;  or (iii) Mr.  Austin's  resignation  from the Board.  No right or
obligation  shall survive the  termination of this  Agreement  except for claims
arising from, or in connection with, the breach of this Agreement.

         9.  During the term of this  Agreement,  neither  Monterey  Bay nor Mr.
Austin shall  institute  any  litigation  against the other,  except that either
party may  institute  litigation  against  the other  party in the event of, and
alleging,  any breach of or  default  under or  threatened  breach of or default
under, this Agreement.

         10. All the terms and provisions of this  Agreement  shall inure to the
benefit of, shall be  enforceable  by, and shall be binding upon, the successors
and assigns of the parties hereto.

         11. The parties hereto agree to cooperate in good faith with respect to
the  making  of any  public  announcement  of the  terms  or  existence  of this
Agreement. Notwithstanding the foregoing, nothing in this Agreement shall affect
the right of any party to make any public  disclosure  deemed  necessary by that
party to comply with that party's  obligations under the Securities Exchange Act
of 1934, as amended and the rules thereunder, or other applicable laws.

         12. This  Agreement  contains the entire  understanding  of the parties
with  respect to its  subject  matter.  There are no  restrictions,  agreements,
promises,  representations,  warranties,  covenants or understandings other than
those  expressly  set forth  herein.  This  Agreement  may be amended  only by a
written  instrument duly executed by the parties or their respective  successors
or assigns.

         13. All notices,  requests,  claims,  demands and other  communications
hereunder  shall be in  writing  and shall be given (and shall be deemed to have
been duly given if so given) by hand  delivery,  cable,  telecopy  (confirmed in
writing) or telex, or by mail (registered or certified,  postage prepaid, return
receipt requested) to the respective parties as follows:


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If to Monterey Bay:
                                       with a copy to:
Monterey Bay Bancorp, Inc.             McGuire, Woods, Battle & Boothe LLP
567 Auto Center Drive                  1050 Connecticut Avenue, N.W., Ste. 1200
Watsonville, CA  95076                 Washington, D.C.  20036-5317
Attention:  Marshall Delk              Attention:  William E. Donnelly, Esquire
                                     
If to Mr. Austin:                    
                                       with a copy to:
El Coronado Ranch                      Dechert Price & Rhoads
Star Route Box 395                     1775 Eye Street, N.W.
Pearce, AZ  85625                      Washington, D.C.  20006-2401
                                       Attention:  David J. Harris, Esquire
                                     
or to such  other  address  as the  person  to whom  notice  is  given  may have
previously furnished to the others in writing in the manner set forth above.

         14. This Agreement may be executed in counterparts, each of which shall
be an original,  but each of which  together  shall  constitute one and the same
Agreement.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the da
te first written above.

                                       MONTEREY BAY BANCORP, INC.



                                       By:  /s/ Marshall G. Delk
                                            ------------------------------------
                                           Marshall G. Delk
                                           President and Chief Operating Officer



                                            /s/ Josiah T. Austin
                                            ------------------------------------
                                            Josiah T. Austin

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