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                                                                    EXHIBIT 10.3

                      1998 DEFERRED COMPENSATION AGREEMENT

        This 1998 Deferred Compensation Agreement (the "Agreement") is made and
entered into this 1st day of May, 1998 by and between Columbia Bancorp, an
Oregon corporation ("Bancorp") and Terry L. Cochran ("Employee").

                                    RECITALS

        (1) Bancorp is an Oregon corporation and is the holding company of
Columbia River Banking Company (the "Bank"), a state-chartered Oregon financial
institution with its principal office in The Dalles, Oregon.

        (2) Employee is now employed full-time by Bancorp as President and Chief
Executive Officer of Bancorp and of the Bank. Employee has served as President
and Chief Executive Officer of Bancorp since its formation in 1995, and has
served in many positions at the Bank, including President and Chief Executive
Officer, since 1981.

        (3) Bancorp recognizes the contributions that Employee has made to the
success and profitability of the Bank and of Bancorp, and desires to provide
deferred compensation and other consideration to Employee as compensation for
his services and for the confidentiality covenants set forth in the Agreement.

               Now, therefore, it is agreed:

        1. Deferred Compensation.

        1.1 Employee shall become eligible for deferred compensation under the
Agreement upon his retirement as a full-time employee of Bancorp; provided, that
in no event shall Employee be entitled to deferred compensation payments under
the Agreement prior to May 15, 2000 regardless of the date of Employee's
termination of employment by retirement or otherwise.

        1.2 Beginning on the first 15th day of May immediately following the
date of Employee's retirement, and on the 15th day of May of each year
thereafter through and including May 15, 2006, Bancorp shall pay Employee
deferred compensation consisting of (i) $26,000 per year, plus (ii) Accrued
Interest as provided in Section 1.3 herein.

        1.3 Payment of the Accrued Interest described in Section 1.2(ii) has
been provided for by the purchase of a $120,000 market rate certificate of
deposit (the "CD") on December 26, 1995. The CD, which has been or shall be
replaced upon maturity as required from time to time to fulfill the terms of the
Agreement, was purchased to fund such payments. Upon the maturity of the CD a
new market rate certificate of deposit shall be purchased with a comparable
maturity for the same purpose as long as Employee is entitled to deferred
compensation payments under the Agreement. Any interest earned (the "Accrued
Interest") on the CD and any subsequent certificates of deposit purchased under
the Agreement shall be paid to Employee as follows: (i) on the first May 15 on
which Employee is paid his first yearly deferred compensation payment under the
Agreement, Employee shall also be paid all Accrued Interest earned from the
first date the CD and any subsequent certificates of deposit began earning
interest through the May 15 of the year in which Employee is paid such first
yearly payment; (ii) on the 15th day of May of each year thereafter through and
including May 15, 2006, Employee shall be paid all Accrued Interest earned from
the CD and any subsequent certificates of deposit from May 15 of the previous
calendar year through May 15 of the current payment year.

        1.4 For the purposes of this Agreement, Employee shall be deemed
"retired" on and as of the date of occurrence of one or more of the following:
(i) the date of expiration of Employee's term of employment under the Employment
Agreement between the parties of May 1, 1998 where such term has not been
extended; (ii) the effective date of termination of Employee's employment by
Bancorp or by 


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Employee, with or without cause; or (iii) such other date on which the parties
may mutually agree in writing.

        1.5 If prior to retirement Employee is terminated by Bancorp with cause,
Employee shall not be entitled to any deferred compensation payments or any
benefits under Section 1.6 or elsewhere in the Agreement, and the Agreement
shall as of such termination date be null and void.

        1.6 As additional consideration under the Agreement, from and after the
date of Employee's retirement through May 15, 2006, Bancorp shall provide
Employee with all medical, dental, disability, vision and life insurance which
Bancorp or the Bank provides to full-time employees.

        2. Change of Control.

        2.1 If there is a change of control of Bancorp on or at any time prior
to May 15, 2006, Employee shall continue to be entitled to receive the deferred
compensation provided in Section 1 of the Agreement.

        2.2 If Employee is a participant in a restricted stock plan or share
option plan, and such plan is terminated involuntarily as a result of the change
of control, all stock and options shall be declared fully vested and shall be
distributed. With respect to any unexercised options under any stock option
plan, such options may be exercised within the period provided in such plan.
Effective as of the date of the change of control, any holding period
established for stock paid as bonus or other compensation shall be deemed
terminated, except as otherwise provided by law.

        2.3 As used in this Section, "control" shall mean the acquisition of
twenty-five percent (25%) or more of the voting securities of Bancorp by any
person, or persons acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, or to such acquisition of a percentage between
ten percent (10%) and twenty-five percent (25%) if the Board or the Comptroller
of the Currency, the FDIC, or the Federal Reserve Bank have made a determination
that such acquisition constitutes or will constitute control of Bancorp. The
term "person" refers to an individual, corporation, Bank, bank holding company,
or other entity, but excludes any Employee Stock Ownership Plan established for
the benefit of employees of Bancorp or any of its subsidiaries.

        3. Covenants.

        3.1 Employee shall at all times fully cooperate with Bancorp and its
affiliates in the defense or prosecution of any litigation arising from or
relating to matters about which Employee has knowledge based on his employment
or other work, paid or unpaid, for Bancorp and its affiliates.

        3.2 Employee shall at all times keep all confidential and proprietary
information gained from his employment by Bancorp, or other previous and present
paid or unpaid work for Bancorp and its affiliates, in strictest confidence, and
will not disclose or otherwise disseminate such information to anyone, other
than to Board members or employees of Bancorp or its affiliates, except as may
be required by law, regulation or subpoena.

        4. Miscellaneous.

        4.1 Employee's retirement shall not be deemed a retirement or general
termination under any provision of Bancorp's 1996 Stock Incentive Plan or under
any provision of any successor Plan, and shall therefore not limit the time
within which Employee may exercise his stock option rights thereunder, except as
otherwise provided under the Plan or any successor plan or under applicable law.

        4.2 Each and every portion of the Agreement is contractual and not a
mere recital, and all recitals shall be deemed incorporated into the Agreement.
The Agreement shall be governed by and interpreted according to Oregon law and
any applicable federal law. The Agreement may not be amended 


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except by a subsequent written agreement signed by all parties hereto.

        4.3 The Agreement contains the entire understanding and agreement of the
parties with respect to the parties' relationship, and all prior negotiations,
discussions or understandings, oral or written, are hereby integrated herein. No
prior negotiations, discussions or agreements not contained herein or in such
documents shall be binding or enforceable against the parties.

        4.4 The Agreement shall be effective and binding upon the parties as of
and from and after May 1, 1998 until its expiration or termination as provided
herein. Employee's rights under the Agreement are in addition to Employee's
rights under the Employment Agreement of May 1, 1998 between the parties.

        4.5 The Agreement may be signed in several counterparts. The signature
of one party on any counterpart shall bind such party just as if all parties had
signed that counterpart. Each counterpart shall be considered an original. All
counterparts of the Agreement shall together constitute one original document.

        4.6 All rights and duties of Bancorp under the Agreement shall be
binding on and inure to the benefit of Bancorp's successors and assigns,
including any person or entity which acquires a controlling interest Bancorp and
any person or entity which acquires all or substantially all of Bancorp's
assets. Bancorp and any such successor or assign shall be and remain jointly and
severally liable to Employee under the Agreement. Employee may not assign or
transfer Employee's rights or interests in or under the Agreement other than by
a will or by the laws of descent and distribution.

        4.7 The Agreement, including the payment rights provided in the
Agreement, shall inure to the benefit of and be enforceable by Employee's estate
or legal representative. Without limitation of the foregoing, it is understood
and agreed that if Employee's employment is terminated prior to the first date
on which Employee becomes eligible for the deferred compensation payments
provided under the Agreement, and if such termination is due to death,
disability or any other reason, other than termination with cause as described
in Section 1.5 herein, the Employee or his estate shall be entitled to all
deferred compensation payments hereunder from and after the first such date of
eligibility.

        4.8 Any waiver by any party hereto of any provision of the Agreement, or
of any breach thereof, shall not constitute a waiver of any other provision or
of any other breach. If any provision, paragraph or subparagraph herein shall be
deemed invalid, illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions, paragraphs and subparagraphs shall
not be affected.

        4.9 Any dispute, controversy, claim or difference concerning or arising
from the Agreement or the rights or performance of either party under the
Agreement, including disputes about the interpretation or construction of the
Agreement, shall be settled through binding arbitration in the State of Oregon
and in accordance with the rules of the American Arbitration Association. A
judgment upon the award rendered in such arbitration may be entered in any court
of competent jurisdiction.


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        4.10 The Agreement supersedes and replaces the Deferred Compensation
Agreement between Employee and Bancorp of May 1, 1997, and the latter agreement
shall be deemed null and void as of May 1, 1998.


______________________________________
Terry L. Cochran


COLUMBIA BANCORP

By:____________________________________
    Chairman


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