<PAGE>   1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

[ X ]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the quarterly period ended September 30, 1996

[   ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the transition period from _________ to _________

Commission file number  0-27938

                                COLUMBIA BANCORP

             (Exact name of registrant as specified in its charter)

                                                             93-1193156
            Oregon                                        (I.R.S. Employer
   (State of Incorporation)                            Identification Number)

                              316 East Third Street
                            The Dalles, Oregon 97058
                    (Address of principal executive offices)

                                 (541) 298-6647
              (Registrant's telephone number, including area code)

         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

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         2,245,757 shares as of October 15, 1996

<PAGE>   2


                                COLUMBIA BANCORP

                                   FORM 10-QSB

                               SEPTEMBER 30, 1996

                                      INDEX

<TABLE>
<CAPTION>
                                                                                    PAGE
PART I - FINANCIAL INFORMATION                                                    REFERENCE
------------------------------                                                    ---------
<S>                                                                                  <C>
      Consolidated Balance Sheets as of September 30, 1996 and                        3
             December 31, 1995 

      Consolidated Statements of Income for the nine months and quarter ended         4
             September 30, 1996 and 1995 

      Consolidated Statements of Cash Flows for the nine months ended                 5
             September 30, 1996 and 1995 

      Consolidated Statements of Changes in Shareholders' Equity for the              6
             periods of December 31, 1994 to September 30, 1996 

      Notes to Consolidated Financial Statements                                     7-8

      Management's Discussion and Analysis of Financial
             Condition and Results of Operations:

             Overview                                                                 9
             Material Changes in Financial Condition                                  9
             Material Changes in Results of Operations                               10
             Loan Loss Provision                                                     10
             Liquidity and Capital Resources                                         10-11

PART II - OTHER INFORMATION

      Item 6 - Exhibits and Reports on Form 8-K                                      12

      Signatures                                                                     13
</TABLE>


                                       2
<PAGE>   3


                        COLUMBIA BANCORP AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            September 30,       December 31,
                                                                                 1996               1995
                                                                            -------------       -------------
<S>                                                                         <C>                 <C>          
ASSETS
Cash and due from banks                                                     $  15,027,703       $  12,610,087
Federal funds sold                                                             11,365,546           6,272,765
                                                                            -------------       -------------
           Total cash and cash equivalents                                     26,393,249          18,882,852

Investment securities available-for-sale                                        7,908,620           7,665,899
Investment securities held-to-maturity                                         40,307,056          41,165,508
Federal Home Loan Bank stock                                                      651,100             622,400
                                                                            -------------       -------------
           Total investment securities                                         48,866,776          49,453,807

Loans, net of allowance for loan losses and unearned loan fees                114,010,690         104,178,022
Property and equipment, net of depreciation                                     4,342,121           3,719,073
Accrued interest receivable                                                     2,124,901           1,815,876
Other assets                                                                      314,973             435,907
                                                                            -------------       -------------
           Total Assets                                                     $ 196,052,710       $ 178,485,537
                                                                            =============       =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
      Noninterest bearing demand deposits                                   $  31,787,923       $  31,817,250
      Interest bearing demand accounts                                         71,299,253          56,888,529
      Savings accounts                                                         23,996,782          22,203,757
      Time certificates and IRA accounts                                       48,043,839          47,965,662
                                                                            -------------       -------------
                Total deposits                                                175,127,797         158,875,198

Short-term borrowings                                                             456,801              97,381
Notes payable to Federal Home Loan Bank                                           600,000           1,200,000
Accrued interest payable and other liabilities                                  1,053,707             829,066
                                                                            -------------       -------------
                Total liabilities                                             177,238,305         161,001,645

Employee stock ownership plan shares subject to put option                        841,918             866,471

Shareholders' equity:
      Common stock, no par value; 4,000,000 shares
           authorized, 2,245,757 issued and outstanding
           (2,237,817 at December 31, 1995)                                     5,024,433           4,974,400
      Additional paid-in capital                                                6,317,733           4,848,953
      Retained earnings                                                         7,554,972           7,683,876
      Net unrealized loss on securities available-for-sale, net of tax            (82,733)            (23,337)
                                                                            -------------       -------------
                                                                               18,814,405          17,483,892
      Less: employee stock ownership plan shares subject to put option           (841,918)           (866,471)
                                                                            -------------       -------------
                Total shareholders' equity                                     17,972,487          16,617,421
                                                                            -------------       -------------
                                                                            $ 196,052,710       $ 178,485,537
                                                                            =============       =============
</TABLE>

See accompanying notes.

                                       3
<PAGE>   4

                        COLUMBIA BANCORP AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three months ended               Nine months ended
                                                             September 30,                    September 30,
                                                    ----------------------------       ----------------------------
                                                        1996             1995             1996              1995
<S>                                                 <C>              <C>               <C>              <C>        
INTEREST INCOME
Interest and fees on loans                          $ 3,076,489      $ 2,771,982       $ 8,780,954      $ 7,837,597
Interest on investments:
      Taxable investment securities                     511,864          516,905         1,539,835        1,606,435
      Nontaxable investment securities                  196,772          165,790           574,495          482,468
Other interest income                                   135,030          122,064           409,135          192,990
                                                    -----------      -----------       -----------      -----------
      Total interest income                           3,920,155        3,576,741        11,304,419       10,119,490

INTEREST EXPENSE
Interest bearing demand and savings                     758,128          669,434         2,166,376        1,998,566
Interest on time deposits and IRA's                     663,861          689,015         2,045,718        1,660,741
Other borrowed funds                                     11,865           35,176            49,063          134,805
                                                    -----------      -----------       -----------      -----------
      Total interest expense                          1,433,854        1,393,625         4,261,157        3,794,112
                                                    -----------      -----------       -----------      -----------
NET INTEREST INCOME                                   2,486,301        2,183,116         7,043,262        6,325,378
PROVISION FOR LOAN LOSSES                                81,479           22,500           156,479           65,500
                                                    -----------      -----------       -----------      -----------
NET INTEREST INCOME AFTER
  PROVISION FOR LOAN LOSSES                           2,404,822        2,160,616         6,886,783        6,259,878

NONINTEREST INCOME
Service charges and fees                                274,096          240,195           789,180          743,119
Credit card discounts and fees                           98,446           73,176           236,124          173,581
Financial services department, net of expenses           38,985           23,748           103,545           65,706
Other noninterest income                                 43,996           43,556           183,641          167,033
                                                    -----------      -----------       -----------      -----------
      Total noninterest income                          455,523          380,675         1,312,490        1,149,439

NONINTEREST EXPENSE
Salaries and employee benefits                          954,975          841,141         2,751,861        2,518,532
Occupancy expense                                       149,694          129,375           453,662          396,866
Credit card processing fees                              65,345           50,285           161,141          138,952
Office Supplies                                          56,482           43,209           114,626          146,510
FDIC assessment                                           1,500           (9,542)            3,500          150,986
Data processing expense                                  51,905           62,467           158,072          178,024
Other noninterest expenses                              403,461          413,781         1,538,800        1,208,780
                                                    -----------      -----------       -----------      -----------
      Total noninterest expense                       1,683,362        1,530,716         5,181,662        4,738,650
                                                    -----------      -----------       -----------      -----------
INCOME BEFORE INCOME TAXES                            1,176,983        1,010,575         3,017,611        2,670,667

PROVISION FOR INCOME TAXES                              384,850          306,370         1,003,421          863,385
                                                    -----------      -----------       -----------      -----------
NET INCOME                                          $   792,133      $   704,205       $ 2,014,190      $ 1,807,282
                                                    ===========      ===========       ===========      ===========
Earnings per share of common stock                  $       .35      $       .31       $       .88      $       .80
                                                    ===========      ===========       ===========      ===========
</TABLE>

See accompanying notes.

                                       4
<PAGE>   5



                        COLUMBIA BANCORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           The Nine months Ended
                                                                                                September 30,
                                                                                                -------------
                                                                                           1996              1995
                                                                                           ----              ----
<S>                                                                                   <C>                <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                            $  2,014,190       $  1,807,282
Adjustments to reconcile net income to net cash provided by operating activities
      Depreciation                                                                         273,575            243,819
      Provision for loan losses                                                            156,479             65,500
      Federal Home Loan Bank stock dividend                                                (28,700)           (20,800)
      Increase in accrued interest receivable                                             (309,025)          (318,041)
      Decrease in other assets                                                             120,934             64,658
      Increase in accrued interest payable and other liabilities                           224,641            113,407
                                                                                      ------------       ------------
           Net cash provided by operating activities                                     2,452,094          1,955,825

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from the sale of available-for-sale securities                                         --            843,684
Proceeds from the maturity of available-for-sale securities                              4,289,017          5,832,230
Purchases of available-for-sale securities                                              (4,733,471)          (749,000)
Proceeds from the maturity of held-to-maturity securities                               12,798,513          8,563,457
Purchases of held-to-maturity securities                                               (11,963,609)        (7,712,753)
Purchase of Federal Home Loan Bank stock                                                        --            (33,300)
Net change in loans made to customers                                                   (9,989,147)       (10,143,485)
Purchases of premises and equipment                                                       (927,941)          (276,143)
Proceeds from the sale of premises and equipment                                            40,000                 --
                                                                                      ------------       ------------
           Net cash used in investing activities                                       (10,486,638)        (3,675,310)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net change in demand deposits and savings accounts                                      16,174,422          1,284,568
Net change in time deposits and IRA accounts                                                78,177         13,218,262
Net decrease in borrowings from Federal Home Loan Bank                                    (600,000)          (381,000)
Net decrease in federal funds purchased                                                         --         (1,500,000)
Dividends paid                                                                            (545,011)          (456,483)
Proceeds from stock options                                                                 77,933             23,398
Net increase in short-term borrowings                                                      359,420            192,991
                                                                                      ------------       ------------
           Net cash provided by financing activities                                    15,544,941         12,381,736

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                     7,510,397         10,662,251
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                        18,882,852         10,318,766
                                                                                      ------------       ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $ 26,393,249       $ 20,981,017
                                                                                      ============       ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

      Interest paid in cash                                                           $  4,217,407       $  3,728,214
                                                                                      ============       ============
      Taxes paid in cash                                                              $  1,029,208       $    867,872
                                                                                      ============       ============
SCHEDULE OF NONCASH ACTIVITIES

      Change in unrealized loss on available-for sale securities, net of tax          $    (59,396)      $    261,835
                                                                                      ============       ============
</TABLE>

See accompanying notes.

                                       5
<PAGE>   6

                        COLUMBIA BANCORP AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          Unrealized
                                                                                            gain
                                                                                          (Loss) on      
                                                                                          available         ESOP              
                                                             Additional                   for sale       plan shares      Total
                                                Common        Paid-in       Retained      investment     subject to    Shareholders'
                                   Shares        Stock        Capital       Earnings      securities     put options      Equity
                                   ------        -----        -------       --------      ----------     -----------      ------
<S>                              <C>         <C>            <C>           <C>            <C>            <C>            <C>         
BALANCE, December 31, 1994         743,006   $  4,954,851   $  4,797,008  $  5,749,790   $   (315,391)  $   (504,750)  $ 14,681,508

Cash dividends                          --             --             --      (555,074)            --             --       (555,074)

Stock options exercised              1,000          6,668         16,730            --             --             --         23,398

3 for 1 stock split              1,488,011             --             --            --             --             --             --

Stock options exercised              5,800         12,881         35,215            --             --             --         48,096

Changes in  unrealized  loss
on AFS securities, net of tax           --             --             --            --        292,054             --        292,054

Changes in ESOP shares
subject to put option                   --             --             --            --             --       (361,721)      (361,721)

Net income                              --             --             --     2,489,160             --             --      2,489,160
                                 ---------   ------------   ------------  ------------   ------------   ------------   ------------
BALANCE, December 31, 1995       2,237,817      4,974,400      4,848,953     7,683,876        (23,337)      (866,471)  $ 16,617,421

Stock options exercised              3,540          7,868         27,900            --             --             --         35,768

Cash dividends                          --             --             --      (545,011)            --             --       (545,011)

Stock options exercised              4,400         42,165             --            --             --             --         42,165

Changes in  unrealized  loss
on AFS securities, net of tax           --             --             --            --        (59,396)            --        (59,396)

Changes in ESOP shares
subject to put option                   --             --             --            --             --         24,553         24,553

Transfer to surplus                                            1,440,880    (1,440,880)                                          --

Cash dividend declared                                                        (157,203)                                    (157,203)

Net Income                              --             --             --     2,014,190             --             --      2,014,190
                                 ---------   ------------   ------------  ------------   ------------   ------------   ------------
BALANCE, September 30, 1996      2,245,757   $  5,024,433   $  6,317,733  $  7,554,972   $    (82,733)  $   (841,918)  $ 17,972,487
</TABLE>

See accompanying notes.

                                       6
<PAGE>   7

                                COLUMBIA BANCORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    Principles of Consolidation

      The interim consolidated financial statements include the accounts of
      Columbia Bancorp, a bank holding company (Bancorp), and its wholly-owned
      subsidiaries, Columbia River Banking Company ("Columbia River"), and
      Klickitat Valley Bank ("Klickitat Valley"), after elimination of
      intercompany transactions and balances. Substantially all activity of
      Bancorp is conducted through its subsidiary banks.

      The interim financial statements have been prepared in accordance with
      generally accepted accounting principles for interim financial
      information. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for
      complete financial statements. The financial information included in this
      interim report has been prepared by management without audit by
      independent public accountants who do not express an opinion thereon.
      Bancorp's annual report will contain audited financial statements. In the
      opinion of management, all adjustments including normal recurring accruals
      necessary for fair presentation of results of operations for the interim
      periods included herein have been made. The results of operations for the
      nine months ended September 30, 1996 are not necessarily indicative of
      results to be anticipated for the year ending December 31, 1996.

2.    Recent Mergers

      Bancorp was incorporated on October 3, 1995, and became the holding
      company of Columbia River through merger. Columbia River is an Oregon
      state-chartered bank, headquartered in The Dalles, Oregon, and doing
      business as Columbia River Bank and Juniper Banking Company. The effective
      date of the merger was January 1, 1996, and the transaction was
      consummated on January 13, 1996, on which date Bancorp acquired 100% of
      the common stock of Columbia River, and the shareholders of Columbia River
      became shareholders of Bancorp.

      Effective June 13, 1996, Bancorp completed its acquisition of Klickitat
      Valley, making Klickitat Valley the second wholly-owned bank subsidiary of
      Bancorp. The business combination was accomplished through the exchange of
      8.5 shares of Bancorp common stock for each share of Klickitat Valley
      common stock. Klickitat Valley is a Washington state-chartered bank with
      headquarters in Goldendale, Washington.

      The accompanying financial statements have been restated and include the
      accounts and results of operations of the mergers as pooling-of-interest
      combinations.

3.    Loans and Reserve for Loan Losses
      The composition of the loan portfolio was as follows:

<TABLE>
<CAPTION>
                                             September 30,        December 31,
                                                  1996                 1995
                                             -------------        -------------
<S>                                          <C>                  <C>          
         Commercial                             30,829,691           23,519,800
         Agriculture                            16,434,097           15,226,705
         Real estate                            52,694,961           52,200,356
         Consumer                               14,692,336           13,774,834
         Other                                     850,386              740,163
                                             -------------        -------------
                                               115,501,471          105,461,858
         Allowance for loan losses              (1,219,629)          (1,071,494)
         Deferred loan fees                       (271,152)            (212,342)
                                             -------------        -------------
                                             $ 114,010,690        $ 104,178,022
                                             =============        =============
</TABLE>

                                       7
<PAGE>   8

      Transactions in the reserve for loan losses were as follows for the nine
      months ended September 30:

<TABLE>
<CAPTION>
                                                     1996               1995
                                                  -----------       -----------
<S>                                               <C>               <C>        
         Balance at beginning of period           $ 1,071,494       $   954,355
         Provision charged to operations              156,479            65,500
         Recoveries                                    39,612           100,466
         Loans charged off                            (47,956)          (57,050)
                                                  -----------       -----------

         Balance at end of period                 $ 1,219,629       $ 1,063,271
                                                  ===========       ===========
</TABLE>

      It is the policy of Bancorp's subsidiaries, Columbia River, and Klickitat
      Valley, to place loans on nonaccrual status whenever the collection of all
      or a part of the principal balance is in doubt. Loans placed on nonaccrual
      status may or may not be contractually past due at the time of such
      determination, and may or may not be secured by collateral. Loans on
      nonaccrual status at September 30, 1996 and December 31, 1995 were
      approximately $267,000 and $308,000, respectively.

      Loans past due 90 days or more on which Bancorp continued to accrue
      interest were approximately $52,000 at September 30, 1996, and
      approximately $60,000 at December 31, 1995. There were no loans on which
      the interest rate or payment schedule were modified from their original
      terms to accommodate a borrower's weakened financial position at September
      30, 1996 or December 31, 1995.

4.    Earnings Per Common Share

      Earnings per common share is calculated by dividing net income by the
      weighted average shares outstanding. Weighted average shares outstanding
      consist of common shares outstanding and common stock equivalents
      attributable to outstanding stock options.

      The weighted average number of shares and common share equivalents have
      been adjusted to give retroactive effect to the 3-for-1 stock split in
      September 1995.


                                       8
<PAGE>   9

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

      Columbia Bancorp (Bancorp) has completed its first quarter of operations
since the June 13th acquisition of Klickitat Valley Bank (Klickitat Valley).
Joining Columbia River Banking Company (Columbia River), the acquisition made
Klickitat Valley the second wholly-owned bank subsidiary of Bancorp. Management
believes the benefits of this acquisition are evident in the results of
operations of Bancorp, and will continue to strengthen both Columbia River and
Klickitat Valley as they continue providing their communities with financial
products and services.

      As the third quarter of 1996 drew to a close, excitement grew in
anticipation of the grand opening of the third branch of Columbia River's
Juniper Banking Company in Bend, Oregon. Management is extremely optimistic
about the future of this branch. In the shadow of the majestic Cascade mountain
range, the Bend office expands our market territory south, deeper into central
Oregon, into the an area that is continuing to see tremendous growth in
population. It is the largest city served by any of Bancorp's now nine branch
offices. Management is confident the Bend Office of Juniper Banking Company will
soon be discovered and patronized for providing unequaled expertise in the
delivery of bank services heretofore unseen in the Bend community.

      Columbia Bancorp reported net income of $2,014,190, or $.88 per share for
the nine months ended September 30, 1996. This represented a 11.4% increase in
net income, as compared to $1,807,282, or $.80 per share, for the nine months
ended September 30, 1995. Net income of $792,133, or $.35 per share for the
quarter ended September 30 1996 represented a 12.5% increase in net income, as
compared to $704,205, or $.31 per share, for the quarter ended September 30,
1995. The increased earnings during the quarter ended September 30, 1996
reflected primarily the expansion of Bancorp's interest-earning assets and
increased net interest income.

      The net income added to shareholders' equity during the first nine months
of 1996 was offset, in part, by dividends paid out to shareholders of $545,011.
On September 23, the Bancorp board declared a third-quarter dividend of $.07 per
share payable October 31 to shareholders of record September 30, 1996. With the
payment of the declared dividend, approximately 35% of earnings will have been
returned to shareholders, the remaining 65% being retained to fund the continued
strong growth of Bancorp.

MATERIAL CHANGES IN FINANCIAL CONDITION

      Material changes in financial condition for the nine months ended
September 30, 1996 include an increase in total assets, primarily in loans.
Funds were provided for these changes primarily by an increase in total
deposits.

      At September 30, 1996, total assets increased 9.8%, or approximately $17.6
million, over total assets at December 31, 1995. An increase of $9.8 million in
loans, an increase of $7.5 million in cash and cash equivalents, and a $.6
million decrease in investment securities were the major components of the
change in total assets. The increase in loans is reflected in increases in all
loan categories and is indicative of the continuing good local economy, and the
efforts of experienced loan professionals capitalizing on borrowers' desire for
service and value-added products.

      Bancorp experienced an increase in deposits of $16.3 million during the
first nine months of 1996. Interest bearing demand deposits increased $14.4
million, and savings deposits increased $1.8 million at September 30, 1996 as
compared to December 31, 1995. Management believes this increase is due to
continuing marketing efforts and helped by continued customer dissatisfaction
with merger and consolidation activities by competition in the markets served by
the Bank.

                                       9
<PAGE>   10

      All other changes experienced in asset and liability categories during the
first nine months of 1996 were comparatively modest.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

      Total interest income increased $1,184,929 for the nine months ended
September 30, 1996, and $343,414 for the quarter ended September 30, 1996, as
compared to the same periods in 1995. This increase is primarily due to the
increase in loans and federal funds held in 1996 as compared to 1995.

      Total interest expense also increased $467,045 for the nine months ended
September 30, 1996, and $40,229 for the quarter ended September 30, 1996, as
compared to the same periods in 1995. This increase is primarily due to the
increase in time deposits held during 1996 as compared to 1995.

      The increase in interest earned, offset in part by the increase in
interest paid, served to increase Bancorp's net interest income by $717,884 for
the nine months ended September 30, 1996, as compared to the nine months ended
September 30, 1995. Net income per common share increased to $.88 for the first
nine months of 1996 from $.80 for the first nine months of 1995.


      Noninterest income increased approximately $164,000 for the nine months
ended September 30, 1996 as compared to the same period in 1995. This increase
is primarily attributable to increases in income generated by Columbia River's
credit card program, and the financial services division of Columbia River.
Other noninterest income and service charges and fees on deposit accounts also
added to the increase.

      Noninterest expense increased approximately $443,000 for the nine months
ended September 30, 1996 as compared to the comparable 1995 period. The increase
for the nine month period was primarily attributable to increases in salaries
and employee benefits and other noninterest expenses. Other noninterest expenses
increased primarily due to professional expenses related to the formation of
Bancorp as the holding company for the Bank, the initial filing of registration
of Bancorp with the Securities and Exchange Commission, and expenses related to
the Klickitat Valley acquisition. Decreases in Office Supplies expense, FDIC
Assessments and Data Processing expenses partially offset other increases.

      Salaries and employee benefits increased approximately $233,000, or 9%,
during the first nine months of 1996 as compared to the 1995 nine month period.
Management believes this increase was primarily due to deferred compensation
expense and routine adjustments in officer and staff salaries.

LOAN LOSS PROVISION

      During the nine months ended September 30, 1996, Bancorp charged a
$156,479 loan loss provision to operations, as compared to $65,500 charged
during the same period in 1995. Loans charged off, net of loan recoveries, was
$8,344 during the nine months ended September 30, 1996. Although this is
excellent in comparison to Bancorp's peer group, it pales in comparison to net
recoveries of $43,416 made during the same nine month period in 1995.

      Management believes that the reserve for loan losses is adequate for
potential loan losses, based on management's assessment of various factors,
including present delinquent and nonperforming loans, past history of industry
loan loss experience, and present and anticipated future economic trends
impacting the areas and customers served by Bancorp.

LIQUIDITY AND CAPITAL RESOURCES

      Bancorp's subsidiaries, Columbia River, and Klickitat Valley, have adopted
policies to maintain a relatively liquid position to enable them to respond to
changes in their financial environment. Generally, the Banks' major sources of
liquidity are customer deposits, sales and maturities of investment securities,
the use of federal funds markets and net cash provided by operating activities.
Scheduled loan repayments are a relatively stable source of funds, while deposit
inflows and unscheduled loan prepayments, which are influenced by general
interest rate levels, interest rates available on other investments,
competition, economic conditions and other factors, are not.


                                       10
<PAGE>   11

      The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first nine months of
1996. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income of $2,014,190, which is
adjusted for non-cash items and increases or decreases in cash due to changes in
certain assets and liabilities. Investing activities consisted primarily of both
proceeds from and purchases of securities, and the impact of the net growth in
loans. Financing activities present the cash flows associated with deposit
accounts, and reflect the dividend paid to shareholders.

The Federal Reserve Board ("FRB") and Federal Deposit Insurance Corporation
("FDIC") have established minimum requirements for capital adequacy for bank
holding companies and member banks. The requirements address both risk-based
capital and leveraged capital. The regulatory agencies may establish higher
minimum requirements if, for example, a corporation has previously received
special attention or has a high susceptibility to interest rate risk. At
September 30, 1996, the Bancorp's tier-one and total risk-based

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capital ratios were 13.81% and 14.73%, respectively. The FRB's minimum
risk-based capital ratio guidelines for Tier 1 and total capital are 4% and 8%,
respectively. At September 30, 1996, the capital-to-assets ratio under leverage
ratio guidelines was approximately 9.79%. The FRB's current minimum leverage
capital ratio guideline is 3%.

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                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibit 27 Article 9 Financial Data Schedule for Form 10-QSB

(b)   No current reports on Form 8-K were filed during the quarter ended
      September 30, 1996.


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                                   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.

                              COLUMBIA BANCORP

Dated:   October 29, 1996     /s/ Terry L. Cochran
                              --------------------
                              Terry L. Cochran
                              President & Chief Executive Officer

Dated:   October 29, 1996     /s/ Richard J. Croghan
                              ----------------------
                              Richard J. Croghan, EVP, Chief Financial Officer
                              and Chief Accounting Officer - Columbia River
                              Banking Company; Chief Financial Officer and 
                              Chief Accounting Officer - Columbia Bancorp


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