CENTENNIAL BANK
                                 ---------------

                           DEFERRED COMPENSATION PLAN
                           --------------------------


                            Effective January 1, 1996


<PAGE>



                                 CENTENNIAL BANK

                           DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS
                                -----------------

ARTICLE I.    NAME, OBJECT, EFFECTIVE DATE..........................      1
     1.01     Name..................................................      1
     1.02     Object................................................      1
     1.03     Effective Date........................................      1

ARTICLE II.   DEFINITIONS AND INTERPRETATIONS.......................      1
     2.01     General Definitions...................................      1
     2.02     Interpretation........................................      3
     2.03     Alternative Action....................................      4
     2.04     Applicable Law........................................      4
     2.05     Headings..............................................      4
     2.06     Signed Copies.........................................      4

ARTICLE III.  PARTICIPATION and ELECTIONS...........................      4
     3.01     Participation.........................................      4
     3.02     Deferral Elections....................................      4
     3.03     Subsequent Ineligibility..............................      4

ARTICLE IV.   DISTRIBUTION OF BENEFITS..............................      5
     4.01     Eligibility for Distribution..........................      5
     4.02     Post-Retirement Death Benefit.........................      6
     4.03     Pre-Retirement Death Benefit..........................      6
     4.04     Designation of Beneficiary............................      6
     4.05     Commencement of Distributions.........................      6
     4.06     Administrator Discretion for Small Distributions......      7
     4.07     Qualified Domestic Relations Order....................      7

ARTICLE V.    DEFERRAL OF COMPENSATION..............................      7
     5.01     Deferral Contributions................................      7
     5.02     Minimum Deferral......................................      8
     5.03     Modifications to Amount Deferred......................      8
     5.04     Revocation of Deferral................................      9
     5.05     Company Matching Contributions........................      9
     5.06     Vesting of Marching Contributions.....................      9

<PAGE>

ARTICLE VI.   FUNDING  .............................................     10
     6.01     Participant Interest in Assets........................     10
     6.02     Asset Acquisition.....................................     10
     6.03     Trust Agreement.......................................     10
     6.04     Asset Investment......................................     11
     6.05     Insurance.............................................     11
     6.06     Valuations............................................     11
     6.07     Limited Effect of Allocation..........................     12
     6.08     Report of Account Balance.............................     13

ARTICLE VII.  ADMINISTRATION OF PLAN................................     13
     7.01     Plan Administrator....................................     13
     7.02     Allocation and Delegation of Administrative Functions.     13
     7.03     Administrator Powers..................................     13
     7.04     Reliance on Reports...................................     15
     7.05     Rules and Procedures..................................     15
     7.06     Administrative Records................................     15
     7.07     Exchange of Information...............................     15
     7.08     Actions Binding.......................................     15
     7.09     Company Records.......................................     15
     7.10     Duties of Participant.................................     15
     7.11     Administrator Expenses................................     16
     7.12     Administrator Indemnified.............................     16
     7.13     Limitation of Liability...............................     16

ARTICLE VIII. CLAIMS AND REVIEW PROCEDURE...........................     16
     8.01     Claims for Benefits and Inquiries.....................     16
     8.02     Denial of Claims......................................     16
     8.03     Review of Denied Claims...............................     17
     8.04     Decision on Review....................................     17
     8.05     Rules and Procedures on Review........................     18
     8.06     Exhaustion of Remedies................................     18

ARTICLE IX.   AMENDMENT AND TERMINATION OF THE PLAN.................     18
     9.01     Future of the Plan....................................     18
     9.02     Company Right to Amend or Terminate the Plan..........     18
     9.03     Company Right to Terminate the Plan...................     19
     9.04     Procedure for Plan Amendment or Termination...........     19
     9.05     Reorganization........................................     19

ARTICLE X.    MISCELLANEOUS.........................................     19
     10.01    Company Right to Terminate Employment.................     19
     10.02    Participation in Other Plans..........................     19
     10.03    Alienability..........................................     19


<PAGE>



                                 CENTENNIAL BANK
                                 ---------------

                           DEFERRED COMPENSATION PLAN
                           --------------------------


          Pursuant to due authorization by its Board of Directors, the
undersigned, Centennial Bancorp, an Oregon corporation ("the Company"), did
constitute, establish and adopt the following Deferred Compensation Plan
("Plan"), effective January 1, 1996.

ARTICLE I.  NAME, OBJECT, EFFECTIVE DATE

          1.01 NAME. This Plan shall be known as the "Centennial Bank Deferred
Compensation Plan," herein called the "Plan."

          1.02 OBJECT. The primary object of the Plan is to provide a select
group of management or highly compensation personnel of the Company and its
Affiliates with an appropriate level of retirement income by supplementing the
retirement benefits otherwise provided under any qualified retirement programs
the Company may, from time to time, provide to its eligible employees. The Plan
and any related Trust are intended to be unfunded and nonqualified for purposes
of the Internal Revenue Code of 1986, as amended ("Code"), and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").

          1.03 EFFECTIVE DATE. The effective date of the Plan is January 1,
1996, except where an earlier or later effective date is expressly stated.


ARTICLE II.  DEFINITIONS AND INTERPRETATIONS

          2.01 GENERAL DEFINITIONS. The following words and phrases shall have
the following meanings, unless the context requires otherwise:

               (a)  "ADMINISTRATOR"  means the Administrator appointed under
          Article VII.

               (b)  "AFFILIATE" means any other Employer entity in any of the
          following aggregation groups which include the Company: a controlled
          group of corporations under Code ss. 414(b); a controlled group of
          trades or businesses (whether or not incorporated) under Code ss.
          414(c); and an affiliated service group under Code ss. 414(m). As of
          the Effective Date of the Plan, the following two entities are
          Affiliates of the Company:

                                    Centennial Bank
                                    Centennial Mortgage Co.

<PAGE>

               (c) "BENEFICIARY" means each person, or the estate of a deceased
          Participant, entitled to benefits, if any, upon the death of a
          Participant determined pursuant to 4.04.

               (d) "COMPANY" means Centennial Bancorp, an Oregon corporation,
          the corporation which sponsors and maintains this Plan.

               (e) "DIRECTORS" means the Board of Directors of the Company as
          from time to time constituted.

               (f) "ELIGIBLE EMPLOYEE" means each active Employee of the Company
          or an Affiliate who, on or after the Effective Date, (i) is a member
          of a "select group of management or highly compensated employees" of
          the Company within the meaning of Sections 201(2), 301(a)(3) and
          401(a)(4) or ERISA, and (ii) is selected by the Administrator to
          participate in this Plan.

               (g) "EMPLOYEE" means any individual who is employed by the
          Company or an Affiliate, whether compensated by a salary or hourly
          wage, unless the term is limited to employment by a particular entity
          by the phrase "Employee of the Company," "Employee of an Affiliate,"
          or words of similar import.

               (h) "EMPLOYER" means the Company or an Affiliate, as applicable.

               (i) "FISCAL YEAR" means the fiscal year of the Company, currently
          the twelve (12) month period from January 1 to December 31.

               (j) "DEFERRED COMPENSATION ACCOUNT" means the bookkeeping account
          established by the Company to account for the benefit payable under
          the terms of the Plan in conjunction with the elections by the
          Participant as set forth in the Participation Agreement.

               (k) "PARTICIPANT" means any Eligible Employee of the Company or
          an Affiliate who is selected as eligible to participate in the Plan
          and elects to participate in the Plan as provided under 3.01.

               (l) "PARTICIPATION AGREEMENT" means the agreement between a
          Participant and the Company or an Affiliate for deferred compensation
          benefits under this Plan.

               (m) "PLAN YEAR" means the twelve (12) month period from January 1
          to December 31.

<PAGE>

               (n) "RETIREMENT DATE" means the date of Participant's age for
          retirement or such other date for receiving benefits as set forth in
          the Participation Agreement.

               (o) "TERMINATION OF EMPLOYMENT" means the date on which such
          Participant (i) retires, resigns or ceases to be an Eligible Employee;
          (ii) dies or becomes disabled while a Participant; or (iii) departs
          from the service of the Company and its affiliates or subsidiaries for
          any reason; provided, that a Participant will not be deemed to have
          terminated his employment solely by reason of a leave of absence duly
          approved by the Administrator.

               (p) "TRUST" means any trust established by a separate Trust
          Agreement for this Plan, if any. "Trust Fund" means the corpus of the
          Trust.

               (q) "DEFERRED COMPENSATION AGREEMENT" means that portion of the
          Participation Agreement between the Participant and the Company to
          defer receipt by the Participant of compensation not yet earned. Such
          agreement shall state the deferral amount to be withheld from a
          Participant's pay or bonus and shall become effective no earlier than
          the first day of the month following the execution of such agreement.

               (r) "UNFORESEEABLE EMERGENCY" means a severe financial hardship
          to the Participant resulting from a sudden and unexpected illness or
          accident of the Participant or of a dependent of the Participant, loss
          of the Participant's property due to casualty, or other similar
          extraordinary and unforeseeable circumstances arising as a result of
          events beyond the control of the Participant. The circumstances that
          will constitute an "Unforeseeable Emergency" would depend upon the
          facts of each case, but, in any case, payment may not be made in the
          event that such hardship is or may be relieved:

          (1) Through reimbursement or compensation by insurance or otherwise,

          (2) by liquidation of the Participant's assets, to the extent that
     liquidation of such assets would not itself cause sever financial hardship,
     or

          (3) by cessation of Deferrals under the Plan.

          The need to send a Participant's child to college or the desire to
purchase a home shall not be an Unforeseeable Emergency.

          2.02 INTERPRETATION. Wherever the fulfillment of the intent and
purpose of this Plan requires, and the context will permit, the use of the
masculine gender includes the feminine and use of the singular includes the
plural.

<PAGE>

          2.03 ALTERNATIVE ACTION. In the event it shall become impossible for
the Company or the Administrator to perform any act required by this Plan, the
Company or Administrator may perform such alternative act as most nearly carries
out the intent and purpose of this Plan.

          2.04 APPLICABLE LAW. All legal questions pertaining to the Plan shall
be determined in accordance with applicable federal law, and to the extent not
preempted by federal law, the laws of the state of Oregon. All contributions and
benefit payments made hereunder shall be deemed to have been made in Oregon.

          2.05 HEADINGS. Article and section headings are for convenient
reference only and shall not be deemed to be part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article or
section.

          2.06 SIGNED COPIES. This Plan may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts taken together shall constitute one (1) and the same instrument.


ARTICLE III.  PARTICIPATION and ELECTIONS

          3.01 PARTICIPATION. Subject to the provisions of the Plan, all
Eligible Employees covered by the Plan will be eligible to defer compensation
and receive benefits at the time and in the manner provided hereunder, upon
execution of a Participation Agreement and approval by the Administrator.

          3.02 DEFERRAL ELECTIONS. All compensation deferral elections by a
Participant must be made in writing on the forms prescribed by the Administrator
(constituting a Deferred Compensation Agreement) prior to the commencement of
the Plan Year, except that:

               3.02-1 INITIAL PLAN YEAR. In the case of deferrals for the
initial Plan Year, a Participant may make an effective deferral election not
later than thirty (30) days after the first day of the Plan Year with respect to
compensation earned in periods beginning after the election is made; and

               3.02-2 INITIAL ELIGIBILITY. In the case of an Employee who first
becomes eligible to participate after the Plan's effective date, the Participant
may make a deferral election within thirty (30) days after first becoming
eligible, provided such election is made only with respect to compensation to be
earned in periods beginning after the date of the election.

          3.03 SUBSEQUENT INELIGIBILITY. If, prior to a Participant's Retirement
Date, the Administrator determines, based on a judicial or administrative
determination or an opinion of counsel, that the Participant ceases to be a
member of a "selected group of management or highly compensated employees" of
the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(4) of
ERISA, such Participant shall cease participating in this Plan with respect to
all periods for which such Participant is not a member of such select group.

<PAGE>

ARTICLE IV.  DISTRIBUTION OF BENEFITS

          4.01 ELIGIBILITY FOR DISTRIBUTION. Participants shall be eligible for
a distribution of benefits from the Plan upon (a) the earlier of the
Participant's Termination of Employment or Retirement Date, (b) the event of an
approved financial hardship due to an Unforeseeable Emergency, (c) a scheduled
in-service withdrawal, or (d) an accelerated distribution.

               4.01-1 DISTRIBUTION DUE TO TERMINATION OR REACHING RETIREMENT
DATE. On the date the Participant shall have reached Retirement Date as set
forth in the Participation Agreement, or otherwise terminates employment with
the Company, the Corporation shall distribute an amount equal to the deemed fair
market value of the assets in the Participant's Deferred Compensation Account in
the form and in the manner elected by Participant and provided in the
Participation Agreement.

               4.01-2 DISTRIBUTION DUE TO UNFORESEEABLE EMERGENCY. A Participant
may request a distribution due to Unforeseeable Emergency by submitting a
written request to the Administrator accompanied by evidence to demonstrate that
the circumstances being experienced qualify as an Unforeseeable Emergency. The
Administrator shall have the authority to require such evidence as it deems
necessary to determine if a distribution is warranted. If an application for a
hardship distribution due to an Unforeseeable Emergency is approved, the
distribution is limited to an amount sufficient to meet the emergency. The
allowed distribution shall be payable in a method determined by the
Administrator as soon as possible after approval of such distribution. A
Participant who has commenced receiving installment payments under the Plan may
request acceleration of such payments in the event of an Unforeseeable
Emergency. The Administrator may permit accelerated payments to the extent such
accelerated payment does not exceed the amount necessary to meet the emergency.

               4.01-3 IN-SERVICE WITHDRAWAL. A Participant may schedule an
in-service withdrawal of deferred compensation if, at the time a deferral is
made, the Participant indicates in the Participation Agreement (a) that the
deferral will be paid as an in-service withdrawal, and (b) the distribution
dates applicable to such deferral. Provided, however, that a distribution of an
in-service withdrawal may not be made within five (5) Plan Years of the original
date of deferral.

               4.01-4 ACCELERATED DISTRIBUTION. A Participant may request to
receive the full value of his or her account balance at any time after
commencing participation in the Plan by submitting a written request to the plan
administrator; provided, however, that Participants exercising this accelerated
distribution provision will immediately forfeit an amount equal to ten percent
(10%) of the value of the account and will thereafter be ineligible to
participate under the Plan for all future periods of employment with the Company
or its Affiliates. Distribution of such Participant's accelerated distribution
shall be made as soon as administratively practicable after such Participant's
request is received. Any accelerated distributions made within one year of the
Company's bankruptcy may be required to be returned to the Company.

<PAGE>

          4.02 POST-RETIREMENT DEATH BENEFIT. If the Participant dies after
benefits commence under 4.01 above, but before receiving the balance of such
Deferred Compensation Account, Participant's Beneficiary (designated pursuant to
4.04) shall be entitled to the balance of Participant's Deferred Compensation
Account, paid as provided in the Participation Agreement, commencing on the
first day of the month following the month of death and continuing for the
period specified therein.

          4.03 PRE-RETIREMENT DEATH BENEFIT. In the event the Participant should
die after becoming a participant, but prior to the commencement of benefits
under 4.01, Participant's Beneficiary (designated pursuant to 4.04) shall be
entitled to the balance of Participant's Deferred Compensation Account, paid as
provided in the Participation Agreement, commencing on the first day of the
month following the month of death and continuing for the period specified
therein.

          4.04 DESIGNATION OF BENEFICIARY. Payment of death benefits under 4.02
or 4.03, above, will be made to such individual or individuals as (i) the
Participant may have designated in a written instrument filed with the Company
prior to Participant's death, and (ii) the Company shall have approved (whether
before or after the Participant's death) by resolution of its Board of
Directors.

               4.04-1 NO DESIGNATION. In the absence of any effective
designation of beneficiary any such amounts becoming due and payable upon the
death of the Participant shall be payable to his duly qualified executor or
administrator.

               4.04-2 DIVORCE REVOKES PRIOR SPOUSAL DESIGNATION. Except as
provided in a valid "qualified domestic relations order," the divorce or
annulment of the marriage of a Participant after the execution of a beneficiary
designation revokes all provisions in such designation in favor of the former
spouse of the Participant and any provisions therein naming such former spouse,
and the effect of such designation is the same as though the former spouse did
not survive the Participant.

          4.05 COMMENCEMENT OF DISTRIBUTIONS. Distribution of benefits to a
Participant or beneficiary under the Plan (for reasons other than an unforeseen
emergency or Accelerated Distribution) shall commence within 30 days after such
Participant's reaching Retirement Date or Termination of Employment.

<PAGE>

          4.06 ADMINISTRATOR DISCRETION FOR SMALL DISTRIBUTIONS. Notwithstanding
anything in this Article IV to the contrary, if the total amounts held under
this Plan for a Participant total $5,000 or less and the Participant has
Terminated Employment, the Administrator may at any time elect a lump sum
distribution, which distribution shall occur no later than 30 days after the
Participant suffers a Termination of Employment.

          4.07 QUALIFIED DOMESTIC RELATIONS ORDER. The rights of prior spouse or
other family member to any share of a Participant's account balance shall take
precedence over any claims of the Participant and spouse at the time of
retirement or death only as provided in a qualified domestic relations order.
See 10.03.


ARTICLE V. DEFERRAL OF COMPENSATION

          5.01 DEFERRAL CONTRIBUTIONS.

               5.01-1 AMOUNT. The Company shall credit to a book reserve (the
"Deferred Compensation Account") established for this purpose, the Participant's
Salary and Bonus Deferral Contributions as set forth in the Participant's
Deferred Compensation Agreement for each fiscal year, subject to the limitations
set forth herein and to all rules applicable to contributions under the Plan:

               (a) SALARY DEFERRAL CONTRIBUTIONS. Beginning after January 1,
     1996, and each pay period thereafter, the Company shall withhold and credit
     to the Company's bookkeeping reserve for the Plan the total amount of all
     salary deferral elections made by Participants. Any such contribution shall
     be:

                    (1) Known as the Participant's salary deferral contribution;

                    (2) Made pursuant to a written election filed by the
          Participant with the Company prior to the period of service to which
          such compensation applies, at such times as determined by the
          Administrator, directing the Company to withhold from direct
          compensation payments the amount specified by the Participant, which
          shall be stated in any whole percentage from one percent (1%) to a
          maximum of one-hundred percent (100%) of current compensation, or such
          other maximum percentage as the Administrator may set;

                    (3) Allocated to the bookkeeping reserve Deferred
          Compensation Account of each electing Participant;

                    (4) One hundred percent (100%) vested and nonforfeitable at
          all times; and

                    (5) Subject to the limitations and conditions herein set
          forth.

               (b) BONUS DEFERRAL. Beginning January 1, 1996, the Company shall
     withhold and credit to the Company's bookkeeping reserve for the Plan the
     total amount of all bonus deferral elections made by Participants. Any such
     contribution shall be:

                    (1) Known as the Participant's bonus deferral election;

                    (2) Made pursuant to a written election filed by the
          Participant with the Company prior to the period of service to which
          such bonus applies, at such times as determined by the Administrator,
          directing the Company to withhold from direct bonus payments the
          amount specified by the Participant, which shall be stated in any
          whole percentage from one percent (1%) to a maximum of one-hundred
          percent (100%) of current bonus, or such other maximum percentage as
          the Administrator may set;

                    (3) Allocated annually to the Deferred Compensation Account
          of the Participant at the time such bonus payment would have been
          otherwise payable;

<PAGE>

                    (4) One hundred percent (100%) vested and nonforfeitable at
          all times; and

                    (5) Subject to the limitations and conditions herein set
          forth.

               5.01-2 INVESTMENT AND DISTRIBUTION. Amounts credited to a
Participant's Deferred Compensation Account shall be invested by the Company and
periodically valued as provided in Article VI.

          5.02 MINIMUM DEFERRAL. Each Employee who becomes a Participant must
agree to defer a minimum of one thousand dollars two hundred ($1,200.00) per
Plan Year.

          5.03 MODIFICATIONS TO AMOUNT DEFERRED. A Participant may change
Deferrals with respect to Compensation not yet earned by submitting a new
properly executed Deferred Compensation Agreement to the Administrator. Such
change shall take effect as soon as administratively practicable but not earlier
than the first pay period commencing with or during the first month following
receipt by the Administrator of such Deferred Compensation Agreement.
Modifications (other than a revocation of participation as provided in Article
5.04) may only be made prior to the beginning of a Plan Year and subject to the
limitations specified in the Adoption Agreement.

<PAGE>


          5.04 REVOCATION OF DEFERRAL. Any Participant may revoke his or her
election to have Compensation deferred by so notifying the Administrator in
writing. The Participant's full Compensation on a nondeferred basis will then be
restored as soon as administratively practicable, but no earlier than the first
pay period commencing with or during the first month following receipt of
written notice of such revocation by the Administrator.

               5.04-1 PAYMENT OF ACCOUNT. Notwithstanding this Article 5.04, the
Participant's Deferred Compensation Account shall be paid only as provided in
Article IV of this Plan.

               5.04-2 REINSTATEMENT OF PARTICIPATION. In the event a Participant
revokes his or her deferral election, such Participant will cease participating
in the Plan for the balance of the Plan Year, but may again elect to defer
compensation under the Plan for the Plan Year next following such revocation.

          5.05 COMPANY MARCHING CONTRIBUTION. For all eligible Participants who
make Deferral Elections for the Plan Year under 3.02, the Company or an
Affiliate may contribute an amount or percentage as the Directors of the Company
or Affiliate, in their discretion, shall determine. Any such contribution shall
be:

               5.05-1 Known as the Company's matching contribution;

               5.05-2 Allocated to the matching account of each Eligible
Participant (based on the total amount of such Participant's deferral for the
Plan Year);

               5.05-3 Invested by the Company and periodically valued as
provided in Article VI;

               5.05-4 Subject to forfeiture under the vesting schedule set forth
in 5.06;

               5.05-5 Distributed in the form and in the manner elected by the
Participants and provided in the Participation Agreements; and

               5.05-6 Subject to the limitations and conditions herein set
forth.

          5.06 VESTING OF MATCHING CONTRIBUTIONS. If a Participant's employment
terminates prior to his or her Retirement Date for reasons other than the
Participant's death or total and permanent disability, the Participant's accrued
benefit in the Company's Matching contribution shall vest as follows:

<PAGE>

               5.06-1  VESTING SCHEDULE.

     Number of Years of                 Percentage of          Percentage
Cumulative Service Under Plan           Account Vested         Forfeited
-----------------------------           --------------         ----------

Less than 2 years                             0%                 100%
2 but less than 3 years                      20%                  80%
3 but less than 4 years                      40%                  60%
4 but less than 5 years                      60%                  40%
5 but less than 6 years                      80%                  20%
6 or more years                             100%                   0%

                  5.06-2 "Years of Service" Defined. For this 5.06, "years of
service" for vesting purposes shall have the same meaning, and be interpreted in
the same manner, as a vesting year of service under the 401(k) plan sponsored by
the Company and its Affiliates, currently known as the Centennial Bank
Employees' Savings and Profit Sharing Plan.


ARTICLE VI.  FUNDING

          6.01 PARTICIPANT INTEREST IN ASSETs. Amounts credited to a
Participant's Deferred Compensation Account and any payments to the Participant,
his duly designated Beneficiary, or any other beneficiary hereunder shall be
made from assets which shall continue, for all purposes, to be a part of the
general, unrestricted assets of the Company; no person shall have nor acquire
any interest in any such assets by virtue of the provisions of this Plan or the
Participation Agreement. The Company's obligation hereunder shall be an unfunded
and unsecured promise to pay money in the future. To the extent that the
Participant or any person acquires a right to receive payments from the Company
under the provisions hereof, such right shall be no greater than the right of
any unsecured general creditor of the Company; no such person shall have nor
require any legal or equitable right, interest or claim in or to any property or
assets of the Company.

          6.02 ASSET ACQUISITION. The Company reserves the absolute right in its
sole and exclusive discretion to acquire assets to fund the obligations of the
Plan, or refrain from funding the same, and to determine the extent, nature and
method of such funding, provided that no such asset acquisition, trust agreement
or other arrangement entered into by the Company shall affect the status of the
Plan as unfunded for purposes of Title I of ERISA or the Code.

          6.03 TRUST AGREEMENT. Any trust created by the Company, and any assets
held by such trust to assist the Company in meeting its obligations under this
Plan, shall conform its terms to the requirements of the model trust described
in Internal Revenue Procedure 92-64, 1992-2 C.B. 422.

<PAGE>

          6.04 ASSET INVESTMENT. Any funds credited to a Participant's Deferred
Compensation Account may be kept in cash or invested and reinvested in mutual
funds, stocks,kl bonds, securities or any other assets as may be selected by the
Administrator in its discretion.

               6.04-1 INVESTMENT ADVICE. In the exercise of the foregoing
discretionary investment powers, the Administrator may engage investment counsel
and, if it so desires, may delegate to such counsel full or limited authority to
select the assets in which the funds are to be invested.

               6.04-2 PARTICIPANT DIRECTION. The Administrator may designate a
group of investments in which each Participant's Deferred Compensation Accounts
may be deemed to be invested, and each participant may select from time to time
the investments in which such bookkeeping account will be deemed invested;
provided, however, that Administrator is under no obligation to acquire or
provide any of the investments designated by Participant and any investments
actually made will be made solely in the name of the Company and will remain the
Company's property.

          6.05 INSURANCE. In the event that, in its discretion, the Company
purchases an insurance policy or policies insuring the life of the Participant
(or any other property) to allow the Company to recover the cost of providing
the benefits, in whole, or in part, hereunder, neither the Participant, his
designated beneficiary, any other beneficiary nor any other person shall have
nor acquire any rights whatsoever therein or in the proceeds therefrom.

               6.05-1 COMPANY AS OWNER. The Company shall be the sole owner and
beneficiary of any such policy or policies and, as such, shall possess and may
exercise all incidents of ownership therein. No such policy, policies, or other
property shall be held in any trust for the Participant or any other person nor
as collateral security for any obligation of the Company hereunder.

<PAGE>

               6.05-2 PARTICIPANT COOPERATION. If the Company elects to purchase
a life insurance or annuity policy on the life of the Participant, Participant
shall sign any papers that may be required for that purpose and shall undergo
any medical examination or tests that may be necessary.

          6.06 Valuations.

               6.06-1 ANNUAL VALUATION. Every Plan Year (the "valuation
period"), as of December 31, the amounts credited to the Participants' Deferred
Compensation Accounts shall be valued at their deemed fair market value based on
the investment preferences expressed in the Participation Agreements, and the
deemed net increase or decrease from the fair market value as of the end of the
valuation period shall be determined.

               6.06-2 INTERIM VALUATION. The Administrator may arrange for other
periodic valuations of the accounts, and, following the method under this 6.06,
may make entries to the accounts entitled to share therein.

               6.06-3 VALUATION FOR TERMINATION. Any Participant who for any
reason terminates employment with the Company and is due an immediate
distribution, shall have his interest under the Plan determined on the basis of
the interim or annual valuation preceding or coincident with such distribution.

               6.06-4 ASSET VALUATION. The Administrator may rely on valuations
furnished by any trustees or investment manager for the Plan, published or
quoted market prices, opinions of persons believed to be skilled in such
matters, or any other valuation method which is reasonable under the
circumstances.

               6.06-5 ALLOCATION. Allocations of investment gain or loss shall
be made in accordance with the type of investment account each Participant is
deemed to maintain as provided in (a), (b) and (c).

               (a) TYPE OF ACCOUNTS. The types of investment accounts under the
     Plan are pooled investment fund(s) which the Administrator may from time to
     time make available, subject to the Participant's election to specify and
     change amount deemed invested in any particular investment fund.


               (b) GENERAL ALLOCATION. Subject to (c), the accounts of each
     Participant as of the valuation date, shall be credited or debited to take
     into account any deemed earnings or losses during the previous valuation
     period. Allocation will be time weighted to take into account the date of
     deferrals, contributions, distributions, and transfer among funds.

               (c) ALLOCATION LIMITED TO INVESTMENT FUND. The investment gain or
     loss of each type of investment fund under (a) shall be separately
     determined and allocated. Each Participant's account shall share only in
     the investment experience of the fund(s) in which such account is deemed
     invested, and shall not share in the investment experience of any other
     fund, regardless of the results achieved.

          6.07 LIMITED EFFECT OF ALLOCATION. The fact that any allocation shall
be made and credited to an account shall not vest in a Participant any right,
title or interest in or to any assets of the Company, or any right to payment,
except at the time(s) and upon the condition(s) elsewhere set forth in the Plan.

<PAGE>

          6.08 REPORT OF ACCOUNT BALANCE. A Participant shall be entitled to
find out the balance in his account within a reasonable time after making a
request therefor to the Administrator or its administrative office. The
Administrator shall furnish each Participant a statement showing his annual
account balance as soon as administratively practicable after the Plan Year end
allocations have been completed. The Administrator may, in its discretion,
arrange to provide Participants with account balance statements more frequently
so long as such statements are provided on a non-discriminatory basis.


ARTICLE VII.  ADMINISTRATION OF PLAN

          7.01 PLAN ADMINISTRATOR. The Plan shall be administered by the
Company, acting collectively through its Board of Directors, who together shall
be the "Plan Administrator" for purposes of ERISA ss. 3(16), herein called the
"Administrator." The Administrator has, in its sole discretion, the power and
authority to delegate and implement all functions necessary or desirable for the
proper administration of the Plan as described in this Article VII. In addition
to other duties and powers hereunder, the Company shall have the following
duties and powers as Administrator:

               7.01-1 To ensure that all records necessary for proper operation
of the Plan are kept;

               7.01-2 To ensure compliance with all reporting and disclosure
requirements imposed on the Plan "administrator" by ERISA and any other
applicable law;

               7.01-3 To allocate and delegate to any Company Employee or other
person any powers and duties relating to administration of the Plan as the
Administrator in its discretion, deems advisable, necessary or appropriate.

          7.02 ALLOCATION AND DELEGATION OF ADMINISTRATIVE FUNCTIONS. By action
of the Administrator, duly reflected in Plan records, the Administrator may
allocate and delegate its duties and powers under the Plan to one (1) or more
agents, who need not be employees of the Administrator, to assist in the
performance of its duties. The Company shall carry out its duties and
responsibilities under the Plan through its directors, officers and Employees,
acting on behalf of and in the name of the Company in their capacities as
directors, officers, and Employees and not as individual fiduciaries.

          7.03 ADMINISTRATOR POWERS. The Administrator shall have full power and
authority to control and manage the operation and administration of the Plan and
to construe and apply all of its provisions including the specific power and
authority to interpret the Plan and Trust, remedy or resolve ambiguities,
inconsistencies or omissions and to decide any questions about the rights of
Participants and their beneficiaries. Any action taken in good faith by the
Administrator in the exercise of authority conferred by this Plan shall be
conclusive and binding upon the Participants and their beneficiaries. All
discretionary powers conferred upon the Administrator shall be absolute, final
and binding. The authority of the Administrator shall include, but not by way of
limitation, the following:

<PAGE>

               7.03-1 Authority to decide all questions relating to the
eligibility of Employees to become Participants, the amount of service of any
Employee or Participant, and the amount of benefits to which any Participant may
be entitled by reason of his service prior to or after the effective date
hereof;

               7.03-2 Authority to approve the payment of all benefits as they
become payable under the Plan, which payments, except to the extent that they
may be made from any Trust, shall be made by the Company upon written
instructions from the Administrator;

               7.03-3 Authority to determine to whom any payments shall be made
for the benefit of any retired Participant of the Plan who is, in the judgment
of the Administrator, mentally incompetent;

               7.03-4 Authority to direct the Company to apply for, purchase,
hold or transfer, any contract or contracts issued by an insurance company for
the purpose of providing for the benefits under the Plan and to make payments to
the insurance company under any such contract;

               7.03-5 Authority to engage such professional consultants and
assistants as the Administrator, in its discretion, deems advisable, necessary
or appropriate, including (but not limited to) accountants, actuaries,
consultants, legal counsel, medical practitioners and clerical assistants to
perform services with regard to any of its responsibilities under the Plan,
including authority to employ one (1) or more persons to render advice with
regard to any responsibility any person designated under 7.04 may have under the
Plan;

               7.03-6 Authority to designate one (1) or more Company Employees
as the "Plan Administrator" for purposes of all reports required to be filed
with applicable governmental agencies, and to confer upon such Plan
Administrator such powers and duties as the Administrator, in its discretion,
shall determine from time to time;

               7.03-7 Authority to designate an agent for service of legal
process in any suit or action involving the Plan;

               7.03-8 Authority to perform or cause to be performed such further
acts as it may deem necessary, appropriate or convenient in the efficient
administration of the Plan;

<PAGE>

          7.04 RELIANCE ON REPORTS. The Administrator, any person delegated
under the provisions hereof to carry out any responsibilities under the Plan,
shall be entitled to rely upon tables, valuations, certificates, and reports
furnished by actuaries designated by the administrator and upon certificates,
reports, and opinions made or given by any accountant, legal counsel or other
expert or other advisor (who may be employed or retained by the Company)
selected or approved by the Administrator; and the Administrator and any
delegate thereof shall not be liable, except to the extent provided by law, for
any action taken, suffered or omitted in good faith or for any such action in
reliance upon any such actuary, accountant, legal counsel or other expert or
advisor.

          7.05 RULES AND PROCEDURES. The Administrator may adopt such rules to
govern its Plan administration procedure as it may deem advisable, provided such
rules are not inconsistent with the provisions and purposes of this Plan, and
such actuarial methods and tables as it may deem necessary.

          7.06 ADMINISTRATIVE RECORDS. Each party having responsibility for any
Plan administration function under the Plan shall keep such records as shall be
appropriate for the orderly and efficient performance of such functions, and
shall permit any other party having Plan administration responsibility to
examine any of such records which are appropriate to the latter's functions.

          7.07 EXCHANGE OF INFORMATION. The Administrator shall furnish the
Company all facts necessary or pertinent to the proper administration of the
Plan, including the names of all Participants and beneficiaries who shall, from
time to time, be entitled to benefits under the Plan, the amounts payable to
each, and the dates of payment.

          7.08 ACTIONS BINDING. Any and all rules, interpretations, decisions,
determinations, computations and other such actions of the Administration shall
be binding and conclusive on all interested persons.

          7.09 COMPANY RECORDs. The records of the Company shall be conclusive
evidence as to all matters forming the basis for participation in the Plan and
for the calculation of benefits thereunder. The Administrator shall be entitled
to rely upon a certificate of an officer of the Company as to the number of
years of service rendered by any Employee, as to the age of such Employee, as to
his average earnings, as to cause for the termination of his services, and as to
any other information pertinent to the calculation or determination of his
interest under the Plan.

          7.10 DUTIES OF PARTICIPANT. The Administrator may require a
Participant to furnish to it such information and instruments or documents as it
may deem necessary in the administration of the Plan. Compliance with such
requirements shall be a condition of a Participant's receipt of benefits.

<PAGE>

          7.11 ADMINISTRATOR EXPENSes. The Administrator, and any person
delegated under the provisions hereof to carry out any responsibilities under
the Plan, shall serve without compensation but shall be entitled to
reimbursement from the Company for any reasonable expenses actually and properly
incurred by them in the performance of its duties.

          7.12 ADMINISTRATOR INDEMNIFIED. The Company shall indemnify the
Administrator, and any person delegated under the provisions hereof to carry out
any fiduciary or other responsibilities under the Plan, and hold them harmless
from the effects, consequences, expenses, attorneys' fees and damages of their
acts or conduct in their capacity as Administrator members, except to the extent
that such consequences are the result of their own willful misconduct or breach
of good faith. Such indemnification shall be in addition to any other rights
each may have as a matter of law, or by reason of any insurance or other
indemnification.

          7.13 LIMITATION OF LIABILITY. No Company Employee, or person acting
under authority of the Company or Administrator, shall be liable personally,
either individually or jointly:

               7.13-1 For any debts, obligations, undertakings or benefit
payments authorized by him in performing Plan functions, but the same shall be
paid solely and exclusively by the Company;

               7.13-2 For acts or omissions of any other person or entity having
responsibility for administrative functions hereunder, except to the extent he
may be liable for the selection and supervision of such person or entity.


ARTICLE VIII.  CLAIMS AND REVIEW PROCEDURE

          8.01 CLAIMS FOR BENEFITS AND INQUIRIES. Any Participant or beneficiary
may file a written claim for benefits or inquiry concerning the Plan, or
concerning present or future rights to benefits under the Plan, with the
Administrator. Applications for benefits must be made on the forms prescribed by
the Administrator, signed by the Participant or beneficiary, as applicable, and
submitted to the Administrator.

          8.02 DENIAL OF CLAIMS. In the event any claim for benefits is denied,
in whole or in part, the Administrator shall notify the applicant of such denial
in writing and shall advise the applicant of the right to a review thereof.

               8.02-1 CONTENT OF NOTICE. Such notice shall be written in a
manner calculated to be understood by the applicant and set forth the following:

               (a) The specific reason for denial.

<PAGE>

               (b) The specific reference to the Plan provisions upon which the
     denial is based.

               (c) A description of any additional information which is
     necessary to perfect the claim and why this information is necessary.

               (d) An explanation of the review procedure described in 8.03
     below.

               8.02-2 TIMING OF NOTICE. Such written notice shall be given to
the applicant within 90 days after the Administrator receives the application,
unless special circumstances require an extension of time of up to an additional
90 days for processing the application. If such an extension is required,
written notice of the extension shall be furnished to the applicant prior to the
termination of the initial 90-day period. This notice of extension shall
indicate the special circumstances requiring the extension of time and the date
by which the Administrator expects to render its decision on the application for
benefits. If written notice of denial of the application for benefits is not
furnished within the time specified in this paragraph 8.02(b), the application
shall be deemed denied.

               8.03 REVIEW OF DENIED CLAIMS. Any applicant whose claim for
benefits is denied (or deemed denied) in whole or in part, or such applicant's
authorized representative, may appeal from such denial by submitting to the
Administrator a written requires for a review of the application within sixty
(60) days after receipt of denial of the notice (or, in the case of a deemed
denial, 60 days after the application is deemed denied). The Administrator shall
give the applicant or such representative an opportunity to review pertinent
documents (other than legally privileged documents) in preparing the request for
review. The request for review shall be in writing and shall be addressed as
follows:

        Administrator for the Centennial Bank Deferred Compensation Plan
                         675 Oak Street, P. O. Box 1560
                                Eugene, OR 97440

The request for a review shall set forth all grounds on which it is based, all
facts and documents in support of the request and any other matters which the
applicant deems pertinent. The Administrator may require the applicant to submit
such additional facts, documents or other material as it may deem necessary or
appropriate in making its decision on review.

          8.04 DECISION ON REVIEW. After receiving the application for review,
the Administrator will review the claim and decide the final disposition of the
claim. The decision of the Administrator shall be binding on all parties.

<PAGE>

               8.04-1 TIMING OF REVIEW. The decision should be reached within
sixty (60) days after receipt of the application for review, although special
circumstances may delay the review decision up to one hundred twenty (120) days.
If such an extension is required, written notice of the extension shall be
furnished to the applicant prior to the end of the initial 60-day period.


               8.04-2 NOTICE OF DECISION. In the event the Administrator
confirms the denial of the application for benefits in whole or in part, such
notice shall set forth, in a manner calculated to be understood by the
applicant, the specific reasons for such denial and specific references to the
Plan provisions on which the decision is based. In the event that the
Administrator determines that the application for benefits should not have been
denied in whole or in part, the Administrator shall direct the Company to take
appropriate remedial action as soon as reasonably practicable. If written notice
of the Administrator's decision is not given to the applicant within the time
period prescribed in 8.04-1, the application will be deemed denied on review.

          8.05 RULES AND PROCEDURES ON REVIEW. The Administration shall
establish such rules and procedures, consistent with the Plan and with ERISA, as
it may deem necessary or appropriate in carrying out its responsibilities in
reviewing a denied claim. The Administrator may require an applicant who wishes
to submit additional information in connection with an appeal to do so at the
applicant's own expense. The Administrator may convene a hearing if it
determines that sufficient cause is shown.

          8.06 EXHAUSTION OF REMEDIES. No legal action for benefits under the
Plan shall be brought unless and until the applicant has (i) submitted a written
claim for benefits in accordance with 8.01; (ii) been notified by the
Administrator that the application is denied (or the application is deemed
denied) as provided in 8.02; (iii) filed a written request for a review of the
application in accordance with 8.03; and (iv) been notified in writing that the
Administrator has affirmed the denial of the application (or the application is
deemed denied) on review as provided in 8.04.


ARTICLE IX.  AMENDMENT AND TERMINATION OF THE PLAN

          9.01 FUTURE OF THE PLAN. The Company expects to continue the Plan
indefinitely. Future conditions, however, cannot be foreseen, and the Company
reserves the right to amend or terminate the Plan at any time.

          9.02 COMPANY RIGHT TO AMEND OR TERMINATE THE PLAN. The Company
reserves the right, from time to time, to modify, alter or amend this Plan, as
well as any Trust herein provided for; provided, however, that no such action
shall be taken without the affected participant's consent which will reduce the
benefit payable under the Plan prior to such Plan amendment, nor shall any Plan
amendment reduce the benefit to be paid with respect to a person who is a
Participant on the date of such Plan amendment below the amount which such
Participation would have received if his employment had terminated on the day
before such Plan amendment.

<PAGE>

          9.03 COMPANY RIGHT TO TERMINATE THE PLAN. Subject to 9.02, the Company
may terminate this Plan at any time, and the Plan shall in any case be
considered o have terminated if the Company shall go out of existence, unless
prior to such event the Plan shall be adopted and continued by a successor.

          9.04 PROCEDURE FOR PLAN AMENDMENT OR TERMINATION. The amendment and
termination powers reserved in this Article IX shall be executed by the Company
pursuant to due authorization as expressed in a written resolution adopted by
its Board of Directors.

          9.05 REORGANIZATION. The Company shall not merge or consolidate into
or with another corporation, or reorganize, or sell substantially all of its
assets to another corporation, firm, or person unless and until such succeeding
or continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement. Upon the occurrence of such
event, the term "Company" as used in this Agreement shall be deemed to refer to
such succeeding or continuing company, firm or person.


ARTICLE X.  MISCELLANEOUS

          10.01 COMPANY RIGHT TO TERMINATE EMPLOYMENT. Nothing herein contained
shall be construed as giving any Employee of the Company the right to be
retained as an Employee or as impairing the right of the Company to terminate
his service.

          10.02 PARTICIPATION IN OTHER PLANS. Nothing herein contained shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of the Participant to participate in and be covered by any pension, profit
sharing, group insurance, bonus or similar employee plans which the Company may
now or hereafter maintain; provided, however, that this Plan shall be the sole
and exclusive means of providing nonqualified deferred compensation and, as set
forth in each Participation Agreement, supersedes and replaces all other
promises or arrangements of the Company for such deferred compensation.

          10.03 ALIENABILITY. Neither the Participant nor any Beneficiary under
this Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of
the benefits payable hereunder, nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony, or separate
maintenance owed by the Employee or his beneficiary or any of them, to be
transferable by operation of law in the event of bankruptcy, insolvency, or
otherwise. In the event the Participant or any beneficiary attempts assignment,
commutation, hypothecation, transfer, or disposal of the benefit hereunder, the
Company's liabilities shall forthwith cease and terminate. Notwithstanding the
foregoing, the Plan will comply with the terms of any "Qualified Domestic
Relations Order" (as that term is defined in the Code and ERISA), but only to
the extent such order meets the requirements of Code ss. 206(d)(3).

<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Plan to be duly
executed by its President and its Corporate seal affixed at Eugene, Oregon the
day and year first above written.




                                   CENTENNIAL BANCORP



                                   By: /s/ Richard C. Williams
                                      ------------------------
                                      Richard C. Williams
                                           (President)


ATTEST



By: /s/Cordy H. Jensen
   -------------------
       (Secretary)