UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                           For the fiscal year ended:    December 31, 2000
                                                       -------------------
                                       or
[    ]   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: 0-10489
                                                 -------

                               CENTENNIAL BANCORP
                (Name of registrant as specified in its charter)

                                                           93-0792841
               Oregon                                   (I.R.S. Employer
      (State of incorporation)                         Identification No.)

                            One S. W. Columbia Street
                             Portland, Oregon 97258
                    (Address of principal executive offices)

                  Registrant's telephone number: (503) 973-5556

       Securities registered under Section 12(b) of the Exchange Act: None

     Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, without par value
                                (Title of class)

     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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ X ]

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
$145,130,611 aggregate market value as of February 28, 2001, based on the price
at which the stock was sold.

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 22,910,978 shares of
Common Stock on February 28, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part II incorporates information by reference from the issuer's Annual Report to
Shareholders for the fiscal year ended December 31, 2000. Part III incorporates
information by reference from the issuer's definitive proxy statement for the
annual meeting of shareholders to be held on May 2, 2001.


                                       1
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                               CENTENNIAL BANCORP
                                    FORM 10-K
                                  ANNUAL REPORT
                                TABLE OF CONTENTS
                                -----------------


PART I                                                                                                       PAGE
------                                                                                                       ----

<S>              <C>                                                                                        <C>
Item 1.           DESCRIPTION OF BUSINESS                                                                      3
Item 2.           DESCRIPTION OF PROPERTIES                                                                   26
Item 3.           LEGAL PROCEEDINGS                                                                           26
Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS                                             26

PART II
-------

                  (Items 5 through 8 are incorporated by reference from
                   Centennial Bancorp's Annual Report to Shareholders)

Item 5.           MARKET FOR BANCORP'S COMMON STOCK AND
                      RELATED SHAREHOLDER MATTERS                                                             26
Item 6.           SELECTED FINANCIAL DATA                                                                     26
Item 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                           26
Item 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES
                      ABOUT MARKET RISK                                                                       26
Item 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                 26

PART III
--------

                  (Items 9 through 12 are incorporated by reference from
                   Centennial Bancorp's definitive proxy statement for the
                   annual meeting of shareholders to be held on May 2, 2001)

Item 9.           DIRECTORS AND EXECUTIVE OFFICERS OF BANCORP                                                 27
Item 10.          EXECUTIVE COMPENSATION                                                                      27
Item 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                      OWNERS AND MANAGEMENT                                                                   27
Item 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                              27

PART IV
-------

Item 13.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                      REPORTS ON FORM 8-K                                                                     28

SIGNATURES                                                                                                    31
----------


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                                     PART I

                  THIS ANNUAL REPORT CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS, WHICH ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. STATEMENTS THAT EXPRESSLY OR
IMPLICITLY PREDICT FUTURE RESULTS, PERFORMANCE OR EVENTS ARE FORWARD-LOOKING. IN
ADDITION, THE WORDS "ANTICIPATE," "BELIEVE," "INTEND," "EXPECT" AND SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE ANTICIPATED. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: (1) POTENTIAL
DELAYS OR OTHER PROBLEMS IN IMPLEMENTING BANCORP'S GROWTH AND EXPANSION
STRATEGY; (2) THE ABILITY TO ATTRACT NEW DEPOSITS AND LOANS; (3) INTEREST RATE
FLUCTUATIONS; (4) COMPETITIVE FACTORS AND PRICING PRESSURES; (5) GENERAL
ECONOMIC CONDITIONS, EITHER NATIONALLY OR REGIONALLY, THAT COULD RESULT IN
INCREASED LOAN LOSSES; (6) CHANGES IN LEGAL AND REGULATORY REQUIREMENTS; (7)
CHANGES IN TECHNOLOGY; AND (8) OTHER FACTORS DESCRIBED IN THIS AND OTHER BANCORP
REPORTS AND STATEMENTS, INCLUDING, BUT NOT LIMITED TO, EXHIBIT 99.1 TO BANCORP'S
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000, WHICH IS INCORPORATED HEREIN BY
REFERENCE. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. BANCORP DOES
NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

ITEM 1.  DESCRIPTION OF BUSINESS
         -----------------------

GENERAL

         Centennial Bancorp, an Oregon corporation, was organized under the name
Valley West Bancorp in 1981 to become a bank holding company. In 1982,
Centennial Bank and Valley State Bank, both Oregon state-chartered banks, merged
and continued business as Centennial Bank. Immediately following the merger,
Valley West Bancorp acquired all the common stock of Centennial Bank. In 1990,
Valley West Bancorp changed its name to Centennial Bancorp.

         Centennial Bancorp has two wholly owned  subsidiaries:  Centennial Bank
and Centennial Mortgage Co. ("Centennial Mortgage").  Unless the context clearly
suggests  otherwise,  references in this Annual Report on Form 10-K to "Bancorp"
include Centennial Bancorp and its subsidiaries.

         All share and per-share information in this Annual Report has been
restated to give retroactive effect to a 10% common stock split declared in
January 2000, a 5% common stock split declared in July 2000, a 10% common stock
split declared in January 2001, and for various stock splits and stock dividends
declared in prior years.

         CENTENNIAL BANK

         Centennial Bank is a full-service commercial bank organized under the
Oregon Bank Act. Centennial Bank provides a broad range of depository and
lending services to commercial, industrial, and agricultural enterprises,
financial institutions, governmental entities and individuals. Deposit-taking
and lending activities are primarily directed to the communities in which
offices are located. Centennial Bank's primary marketing focus is on small- to
medium-sized businesses and on professionals in those communities. Centennial
Bank does not provide trust services.

         At December 31, 2000, based on total assets, Centennial Bank was the
second largest commercial bank headquartered in Oregon. At that date, the Bank
had 20 branches: three full-service and five limited-service branches in
Portland, Oregon; one full-service branch each in Beaverton, Clackamas and
Tigard, suburbs of Portland; two full-service branches in Vancouver, Washington,
including the Mill Plain Office that opened in February 2000; one full-service
branch in Salem, Oregon; four full-service branches in Eugene; one full-service
branch in adjacent Springfield; and one full-service branch in Cottage Grove,
Oregon. During February 2001, the Bank opened a sixth limited-service branch in
the Mary's Woods retirement community near Lake Oswego, Oregon, also a suburb of
Portland.


                                       3
<PAGE>

         At December 31, 2000, the Bank operated six commercial banking centers
with one each in Portland, Eugene, Salem, Tigard, Clackamas and Vancouver. The
Clackamas and Vancouver offices opened during 2000. In February 2001, the Bank
also opened a center in Beaverton.

         Centennial Bank provides personalized, quality financial services to
its customers and believes this dedication to service has enabled it to maintain
a stable and relatively low-cost retail deposit base, while generating a
substantial volume of loans. Total deposits increased from $573 million at
December 31, 1999 to $696 million at December 31, 2000. Net loans and loans held
for sale increased from $594 million at December 31, 1999 to $705 million at
December 31, 2000.

         Deposit accounts at Centennial Bank are insured up to applicable limits
by the Federal Deposit Insurance Corporation (the "FDIC"). The Bank is not a
member of the Federal Reserve System.

         CENTENNIAL MORTGAGE

         Centennial Mortgage began operations in 1987, originating conventional
and federally insured residential mortgage loans for sale in the secondary
market. Centennial Mortgage originated $142.0 million, $152.5 million and $213.9
million of mortgages in 2000, 1999 and 1998, respectively. Mortgage loans
generally are sold without recourse or retention of servicing rights but may be
subject to repurchase under certain circumstances. Centennial Mortgage also
originates and administers loans for the acquisition, development and
construction of commercial and residential real estate. Loans originated by
Centennial Mortgage are generally funded by and booked as assets of Centennial
Bank.

         At December 31, 2000, Centennial Mortgage operated five offices
including two in Portland, two in Eugene and a new office in downtown Salem
which opened in July 2000.

         A trend of rising interest rates which started in 1999 continued into
2000. Increases in interest rates can adversely affect demand for real estate
acquisition, development and construction loans as well as the repayment of
those loans from the sale of completed properties. Rising interest rates can
also have a significant negative effect on residential mortgage lending
activity.

NET INTEREST INCOME

         For most financial institutions, including Bancorp, the primary
component of earnings is net interest income. Net interest income is the
difference between interest income, principally from loans and investment
securities portfolios, and interest expense, principally on customer deposits
and borrowings. Changes in net interest income relate to changes in "volume,"
"spread" and "margin." Volume refers to the dollar level of interest-earning
assets and interest-bearing liabilities. Spread refers to the difference between
the yield on interest-earning assets and the cost of interest-bearing
liabilities. Margin refers to net interest income divided by average
interest-earning assets and is influenced by the level and relative mix of
interest-earning assets and interest-bearing liabilities. During 2000, 1999 and
1998, Bancorp's average interest-earning assets were $737 million, $578 million
and $483 million, respectively. During these same years, Bancorp's net interest
margin on a tax-equivalent basis was 6.84%, 7.15% and 7.22%, respectively.

         AVERAGE BALANCES AND AVERAGE RATES EARNED AND PAID

         The following table sets forth for 2000, 1999 and 1998 information with
regard to average balances of assets and liabilities, as well as total dollar
amounts of interest income from interest-earning assets and interest expense on
interest-bearing liabilities, resultant average yields or rates, net interest
income, net interest spread, net interest margin and the ratio of average
interest-earning assets to average interest-bearing liabilities for Bancorp.


                                       4

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Year ended December 31,                       2000                               1999                              1998
                               ---------------------------------  -------------------------------- ---------------------------------
                                           Interest    Average                Interest    Average               Interest    Average
                                 Average   income or  yield or    Average     income or  yield or   Average     income or  yield or
                               balance(1)   expense     rates     balance(1)   expense     rates   balance(1)    expense      rates
                               ---------- ----------  ----------  ---------- ----------- --------- ----------  ----------  ---------
ASSETS:                                                                   (Dollars in thousands)
<S>                          <C>          <C>          <C>       <C>         <C>          <C>     <C>         <C>          <C>
Interest-bearing deposits
 with banks                   $      106   $       8     7.55%    $     104    $     8      7.69%  $    264    $     14      5.30%
Investment securities -
 taxable                          36,699       2,268     6.18        41,954      2,612      6.23     48,554       3,096      6.38
Investment securities -
 non-taxable (2)                  27,569       2,197     7.97        28,155      2,172      7.71     33,508       2,574      7.68
Federal funds sold                   971          61     6.28         5,937        280      4.72     13,253         691      5.21
Loans and loans held for
 sale (3)                        671,877      74,848    11.14       502,272     54,134     10.78    387,914      44,348     11.43
                              ----------    --------               --------   --------             --------     -------
   Total interest-earning
   assets/interest income (2)    737,222      79,382    10.77       578,422     59,206     10.24    483,493      50,723     10.49
Allowance for loan losses         (7,657)                            (5,399)                         (3,882)
Cash and due from banks           34,969                             31,440                          28,351
Premises and equipment, net       15,652                             13,993                          11,407
Other assets                      20,146                             16,547                           5,848
                              ----------                          ---------                       ---------
   Total assets               $  800,332                          $ 635,003                       $ 525,217
                              ==========                          =========


LIABILITIES AND SHAREHOLDERS'
 EQUITY:
Savings and interest-bearing
 demand                       $  300,119      11,045     3.68     $ 260,240      7,865      3.02  $ 211,896       6,889      3.25
Time deposits                    233,335      13,772     5.90       167,702      8,597      5.13    145,387       8,185      5.63
Short-term borrowings             63,690       4,164     6.54        26,356      1,405      5.33     10,016         489      4.88
Long-term debt                         -           -                      -          -                5,945         273      4.59
                              ----------   ---------              ---------  ---------            ---------    --------
   Total interest-bearing
     liabilities/interest
     expense                     597,144      28,981     4.85       454,298     17,867      3.93    373,244      15,836      4.24
Demand deposits                  115,545                            106,317                          90,166
Other liabilities                  4,836                              4,948                           5,095
                              ----------                          ---------                       ---------
   Total liabilities             717,525                            565,563                         468,505
Shareholders' equity              82,807                             69,440                          56,712
                              ----------   ---------              ---------  ---------            ---------    --------
   Total liabilities
   and shareholders' equity   $  800,332                          $ 635,003                         525,217
                              ==========                          =========                       =========
Net interest income (2)                    $  50,401                         $  41,339                           34,887
                                           =========                         =========                         ========
Net interest spread (2)                                  5.92%                              6.31%                            6.25%
                                                         =====                              =====                           ======
Net interest margin (2)                                  6.84%                              7.15%                            7.22%
Net interest income to
    average shareholders'
    equity (2)                                  0.87%                            59.53%                           61.52%
Average interest-earning
    assets to average
    interest-bearing
    liabilities                      123%                               127%                            130%




---------------------------------------
(1)  Average balances are based on daily averages.
(2)  Average yield on non-taxable securities, interest income, net interest income, net interest spread, net interest margin
     and net interest income to average shareholders' equity have been computed on a 34% tax-equivalent basis.
(3)  Nonaccrual loans have been included in the computation of average loans and loans held for sale. Loan fees recognized
     and included in interest income totaled $6,963,575, $7,282,948 and $6,855,866 in 2000, 1999 and 1998, respectively.
</TABLE>


                                       5
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ANALYSIS OF CHANGES IN INTEREST RATE DIFFERENTIAL

         The following table shows the dollar amount of the increase (decrease) in Bancorp's interest income and interest expense
for the years indicated, on a tax-equivalent basis, and attributes such dollar amounts to changes in volume and changes in interest
rates. Changes attributable to the combined effect of volume and interest rate changes, which were immaterial, have been allocated
equally between interest rate and volume.

                                                             2000 vs. 1999                              1999 vs. 1998
                                                               Change in                                  Change in
                                                      net interest income due to                   net interest income due to
                                                --------------------------------------       ---------------------------------------
                                                 Volume          Rate         Total            Volume         Rate          Total
                                                ----------    ----------    ----------       ----------     ----------    ---------
                                                                                  (In thousands)
<S>                                            <C>          <C>            <C>              <C>           <C>              <C>
Interest income:
         Balances due from banks                $       -     $       -     $       -        $     (10)    $        4     $     (6)
         Investment securities - taxable             (326)          (18)         (344)            (416)           (68)        (484)
         Investment securities - non-taxable          (46)           71            25             (412)            10         (402)
         Federal funds sold                          (273)           54          (219)            (363)           (48)        (411)
         Loans and loans held for sale             18,587         2,127        20,714           12,700         (2,914)       9,786
                                                ---------     ---------     ---------        ---------     ----------     --------
              Total interest income                17,942         2,234        20,176           11,499         (3,016)       8,483

Interest expense:
         Deposits:
              Savings and interest-bearing
                demand                              1,336         1,844         3,180            1,516           (540)         976
              Time                                  3,619         1,556         5,175            1,200           (788)         412
         Short-term borrowings                      2,216           543         2,759              834             82          916
         Long-term debt                                 -             -             -             (273)             -         (273)
                                                ---------     ---------     ---------        ---------     ----------     --------
              Total interest expense                7,171         3,943        11,114            3,277         (1,246)       2,031
                                                ---------     ---------     ---------        ---------     ----------     --------
Net interest income                             $  10,771     $  (1,709)    $   9,062        $   8,222     $   (1,770)    $  6,452
                                                =========     ==========    =========        =========     ==========     ========

</TABLE>


                                       6
<PAGE>


MARKET AREAS

         The greater Portland area, where Centennial Bank has eight full-service
and six limited-service branches and five commercial banking centers and where
Centennial Mortgage has two offices, is one of Bancorp's two principal market
areas. The metropolitan area, including Vancouver, Washington, has a
diversified, growing economy and a population of approximately 1.9 million. The
Portland area continues to provide excellent growth opportunity and also allows
dilution of loan portfolio risk due to the area's economic diversity.

         Bancorp's other principal market area, with five full-service bank
branches, a commercial banking center and two mortgage lending offices, is the
Eugene/Springfield area at the southern end of Oregon's Willamette Valley. The
combined population of Eugene and Springfield is approximately 190,000. The
area's economy depends primarily upon federal, state and local governments,
educational institutions, forest products, general manufacturing (especially
small manufacturing and high-technology industries) and health care.

         Bancorp has a bank branch, a commercial banking center and a mortgage
lending office in downtown Salem, Oregon. Salem is the state capitol with a
population of approximately 130,000 and is located in the Willamette Valley
about midway between Portland and Eugene. The area economy is highly dependent
on the state government although educational institutions, federal and local
governments, healthcare and food processing are also very significant.

         Centennial Bank has a branch office in Cottage Grove, Oregon, located
approximately 20 miles south of Eugene and Springfield. The population of
Cottage Grove is approximately 8,000. Its economy depends primarily upon forest
products, general manufacturing and agriculture.

LENDING ACTIVITIES

         GENERAL

         Bancorp provides a broad range of commercial and real estate lending
services. The primary focus of Bancorp's lending activities is to provide
commercial loans to small- to medium-sized businesses with annual revenues up to
$100 million, and to professionals. Commercial and residential real estate
construction lending, as well as residential mortgage loan origination and
sales, are also important aspects of Bancorp's lending activities. Bancorp makes
consumer loans, primarily to accommodate existing customers, but does not
actively pursue such business. Most of Bancorp's loans are made to customers in
branch office trade areas.

         Bancorp maintains sound loan underwriting standards with written loan
policies, conservative individual lending limits and, depending on the size of
the credit request, reviews by Centennial Bank's Senior Loan Committee and the
Asset/Liability Committee of the Board of Directors. Underwriting standards are
designed to achieve a high-quality loan portfolio, compliance with lending
regulations and the desired mix of loan maturities and industry concentrations.
Management further seeks to minimize credit losses by closely monitoring the
financial condition of its borrowers and the value of collateral. In-house legal
counsel assists in loan documentation and collections.

         LOAN PORTFOLIO COMPOSITION

         The following table sets forth information with respect to the
composition of Bancorp's loan portfolio (loans and loans held for sale) by type
of loan at December 31 for each of the last five years:


                                       7
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                                                                   December 31,
                                ----------------------------------------------------------------------------------
                                    2000             1999              1998              1997               1996
                                ----------        ----------       ----------         ----------        ----------
                                                                  (In thousands)
<S>                            <C>               <C>              <C>                <C>              <C>
Commercial                      $  273,867        $  219,588       $  163,577         $  146,594        $  116,656
Real estate - construction         261,727           227,388          150,816             88,842            66,001
Real estate - mortgage             147,737           129,221           94,475             87,357            79,870
Installment                          9,379             8,409            7,073              6,603             6,425
Loans held for sale                 10,890             6,155           11,039              5,585             3,538
Lease financing                      4,607             4,868            1,897              3,649             3,775
Other                                5,563             4,199            3,137              1,995             2,365
                                ----------        ----------       ----------         ----------        ----------
     Total loans and
     loans held for sale           713,770           599,828          432,014            340,625           278,630
Less allowance for loan
     losses                         (9,150)           (6,165)          (4,451)            (3,349)           (2,600)
                                ----------        ----------       ----------         ----------        ----------
Loans receivable, net           $  704,620        $  593,663       $  427,563         $  337,276        $  266,030
                                ==========        ==========       ==========         ==========        ==========

</TABLE>

         The following table presents the aggregate maturities of loans in each
major category of Bancorp's loan portfolio at December 31, 2000. Actual
maturities may differ from the contractual maturities shown below as a result of
renewals and prepayments.

<TABLE>
<CAPTION>

                                                                                                  Total
                                           Due within    Due after one but    Due after         loans by
       Loan category                        one year     within five years   five years         category
       -------------                      ----------    -----------------    -----------       ----------
                                                                   (In thousands)
<S>                                      <C>               <C>              <C>               <C>
Commercial                                $  166,858       $   74,772        $   32,237        $  273,867
Real estate - construction                   216,534           37,584             7,609           261,727
Real estate - mortgage                        21,699           47,975            78,063           147,737
Installment                                    1,621            7,434               324             9,379
Loans held for sale                                -                -            10,890            10,890
Lease financing                                  178            4,429                 -             4,607
Other                                          2,723            2,647               193             5,563
                                          ----------       ----------        ----------        -----------
Total loans by maturity                   $  409,613       $  174,841        $  129,316        $  713,770
                                          ==========       ==========        ==========        ===========

</TABLE>

         Of Bancorp's $304 million of loans that mature after one year, a total
of $199 million (approximately 65%) are fixed-rate loans, and a total of $105
million (approximately 35%) are variable-rate loans.

         At December 31, 2000, $221 million of Bancorp's loans (approximately
31%) had fixed interest rates, and $493 million (approximately 69% of its loan
portfolio) had variable interest rates.


         COMMERCIAL LOANS

         Commercial loans that are not secured by real estate are Bancorp's
largest category of loans. Bancorp's areas of emphasis include, but are not
limited to, loans to small- to medium-sized businesses and to professionals.
Bancorp provides a wide range of commercial business loans, including lines of
credit for working capital and term loans for the acquisition of equipment and
other purposes. Collateral generally includes equipment, accounts receivable and
inventory. Where warranted by the overall financial condition of the borrower,
loans may be made on an unsecured basis.

         At December 31, 2000, approximately 73% of Bancorp's commercial loans
had floating or adjustable interest rates; the remaining 27% had fixed interest
rates. Operating lines of credit are payable on demand and subject to annual
renewal. Term loan maturities generally range from one to five years. Commercial
loans outstanding at December 31, 2000 were $273.9 million, compared to $219.6
million at December 31, 1999 and $163.6 million at December 31, 1998. Loan
growth in 2000 and 1999 was primarily the result of Centennial Bank's business
development program, expansion through new commercial banking centers and branch
offices, and continuing favorable economic conditions during most of the period.
Non-accrual loans in this


                                       8
<PAGE>

category  totaled  $1,199,000  at December  31, 2000  ($579,000  at December 31,
1999). There were no restructured loans in this category at December 31, 2000 or
1999.

         REAL ESTATE CONSTRUCTION LOANS

         Real estate construction loans are Bancorp's second largest category of
loans. This category includes loans which finance land acquisition, residential
lot development, construction of single-family and multi-family residential
properties, and the development and construction of a wide range of commercial
real estate projects. Land acquisition and lot development loans generally have
maturities of 12 to 18 months while residential construction loans generally
have maturities of 12 months. Commercial construction loans normally have 12 to
18 month maturities with extension options when justified. At December 31, 2000,
89% of the outstanding loans in this category had variable interest rates with
the remaining 11% having fixed rates.

         Construction financing is generally considered to involve a higher
degree of risk than long-term financing on improved, occupied real estate. The
risk of loss on construction loans depends largely upon the accuracy of the
initial estimate of the property's value at completion of construction or
development and the estimated cost (including interest) of construction. If the
estimate of construction costs proves to be inaccurate, Bancorp might have to
advance funds beyond the amount originally committed to permit completion of the
project and to protect its security position. Bancorp might also be confronted,
at or prior to maturity of the loan, with a project of insufficient value to
ensure full repayment, particularly if demand for the type of property being
built decreases during the construction period. Bancorp's underwriting,
monitoring and disbursement practices with respect to construction financing are
intended to ensure that sufficient funds are available to complete construction
projects. Bancorp endeavors to limit its risk through its underwriting
procedures by using only approved, qualified appraisers, by dealing only with
qualified builders/borrowers, and by closely monitoring the construction
projects through the process of completion and sale.

         At December 31, 2000, real estate construction loans had increased to
$261.7 million from $227.4 million at December 31, 1999 and $150.8 million at
December 31, 1998. The increases resulted from expansion of Centennial
Mortgage's commercial real estate construction lending activity. At December 31,
2000, nonaccrual loans in this category totaled $5,733,000. The nonaccrual total
was concentrated in loans to two borrowers, which were in the process of
liquidation. The value of the real-estate collateral is believed substantially
adequate to support amounts outstanding, and loss potential is considered
nominal. There were no nonaccrual loans in this category at December 31, 1999.
At December 31, 2000 and 1999, there were no restructured loans in this
category.

         REAL ESTATE MORTGAGE LOANS

         Real estate mortgage loans represent Bancorp's third largest category
of loans. Of the $147.7 million of real estate mortgage loans outstanding at
December 31, 2000, $127.8 million consisted of income property and commercial
loans secured by real estate. Income property loans and commercial loans secured
by real estate typically involve large balances to single borrowers or groups of
related borrowers. These borrowers may be more sensitive to changes in economic
conditions than residential mortgage loan customers.

         At December 31, 2000, approximately 68% of Bancorp's real estate
mortgage loans had fixed interest rates; the other 32% had floating or
adjustable interest rates. Maturities of the real estate mortgage loans retained
by Bancorp usually range from one to ten years. Real estate mortgage loans
outstanding increased to $147.7 million at December 31, 2000 from $129.2 million
at December 31, 1999 and $94.5 million at December 31, 1998. Growth during 2000
and 1999 was primarily due to strategic emphasis on developing the income
property and commercial real estate portion of the portfolio. At December 31,
2000, nonaccrual loans in this category totaled $336,000. There were no
nonaccrual loans in this category at December 31, 1999. At December 31, 2000 and
1999, there were no restructured loans in this category.


                                       9
<PAGE>

         Bancorp's underwriting standards specify the following maximum
loan-to-value ratios for real estate loans: 85% for loans secured by
owner-occupied residences, and 80% for other residential loans, construction
loans and commercial real estate loans.

         Bancorp originates SBA real estate loans on owner-occupied properties
where the maturities may be up to 20 years, and the loan-to-value ratio may
reach 90% of appraised value or cost, whichever is lower. Up to 90% of the
amount of these loans is guaranteed or insured by an agency of the U.S.
Government. The guaranteed portion of these loans is frequently sold to
secondary-market investors. At December 31, 2000, the amount of the
non-guaranteed portion of these loans retained by Bancorp was not material.

         INSTALLMENT LOANS

         Bancorp does not actively solicit consumer loans, but makes such loans
primarily as a convenience to existing customers. Bancorp includes in its
installment loan category personal lines of credit, as well as consumer
installment loans (such as for automobile purchases). Consumer loans may be
secured or unsecured. Collections depend principally on the borrower's financial
condition or cash flow.

         Installment loans were $9.4 million at December 31, 2000 compared to
$8.4 million at December 31, 1999 and $7.1 million at December 31, 1998. These
modest levels of installment loans to individuals were primarily due to
Bancorp's focus on lending to businesses and professionals and significant
competition for consumer loans from the many credit unions, banks and finance
companies in the market areas served by Bancorp. At December 31, 2000 and 1999,
there were no non-accrual or restructured loans in this category.

         COMMITMENTS AND CONTINGENT LIABILITIES

         In the ordinary course of business, Bancorp enters into various types
of transactions that include commitments to extend credit and standby letters of
credit as described in Note 7 to Bancorp's Consolidated Financial Statements,
which are incorporated by reference from Bancorp's 2000 Annual Report to
Shareholders. Bancorp applies the same credit standards to these commitments as
it uses in all its lending processes and includes these commitments in its
lending risk evaluations. Collateral for these commitments may include cash,
accounts receivable, inventory, equipment, securities and/or real estate.

         CREDIT AUTHORITY AND LOAN LIMITS

         All Bancorp loans and other credit facilities are subject to credit and
collateral approval procedures and loan amount limitations. Loan officers and
lending unit managers have individual authority to approve loans in amounts up
to established limits, ranging from $25,000 to $750,000. Credit requests in
excess of those limits, or not in conformance with lending policies, are
reviewed by successive levels of approval authority according to the total
amounts involved. These authority levels include, by ascending approval limits,
Credit Administration officers, the Senior Loan Committee and the
Asset/Liability Committee of the Board of Directors. The Senior Loan Committee
consists entirely of Bancorp senior management. The Asset/Liability Committee
has eight members including five non-employee directors, Bancorp's Board
Chairman, the President and CEO of Bancorp and the Bank, and the Bank's Senior
Credit Officer. All loans in excess of $25,000 to executive officers and
directors of Bancorp or any of its subsidiaries must be approved by the
Asset/Liability Committee and ratified by Centennial Bank's Board of Directors.

         Under Oregon law, permissible loans from a financial institution to one
borrower are generally limited to 15% of the institution's Tier 1 and Tier 2
capital, as defined by regulation. However, loans and other obligations up to an
additional 10% of the institution's capital may be made to the borrower if the
obligations are secured by a first lien on real estate, and the obligation does
not exceed 80% of the fair market value of the real estate as determined by an
independent appraisal. At December 31, 2000, Centennial Bank's legal lending
limit was $12.5 million (or $20.9 million if secured by a first lien on real
estate). However, for internal policy purposes, Centennial Bank's lending limit
is set at $7.0 million (or $9.0 million if secured by a first lien on real
estate).


                                       10
<PAGE>

         Loan pricing decisions are based on an evaluation of credit risk, cost
of funds, operating and administrative costs, an allowance for loan losses,
desired profit margin and other factors. Bancorp uses a computer-based pricing
model that analyzes a borrower's contribution to net earnings and return on
assets.

         Centennial Bank sells loan participations to accommodate borrowers
whose financing needs exceed Centennial Bank's lending limits, to diversify risk
and manage liquidity. Centennial Bank occasionally purchases participations in
loans from correspondent banks. Centennial Bank's policies prohibit aggregate
purchased participations in excess of 10% of Centennial Bank's loan portfolio.

NON-PERFORMING ASSETS
         Non-performing assets consist of loans past due 90 days or more,
nonaccrual loans, troubled debt restructurings ("restructured loans") and other
real estate owned ("OREO"). The following table sets forth information
concerning Bancorp's non-performing assets at the end of each of the last five
years:
<TABLE>
<CAPTION>

                                                                            December 31
                                                 -------------------------------------------------------------
                                                   2000         1999          1998         1997         1996
                                                 ---------    ---------    ---------    ---------    ---------
                                                                      (Dollars in thousands)
<S>                                            <C>           <C>          <C>          <C>          <C>
Non-performing loans:
   Loans past due 90 days or more                $     481    $   2,163    $   1,043    $     402    $     420
   Nonaccrual loans                                  7,268          579        3,841          873        1,480
   Restructured loans                                    -            -            -            -            -
                                                 ---------    ---------    ---------    ---------    ---------
     Total non-performing loans                      7,749        2,742        4,884        1,275        1,900
   Other real estate owned                             602          413          105            -            -
                                                 ---------    ---------    ---------    ---------    ---------
     Total non-performing assets                 $   8,351    $   3,155    $   4,989    $   1,275    $   1,900
                                                 =========    =========    =========    =========    =========

Allowance for loans losses                       $   9,150    $   6,165    $   4,451    $   3,349    $   2,600
Ratio of total non-performing assets
   to total assets                                     .98%         .43%         .87%         .26%         .47%
Ratio of total non-performing loans
   to total loans                                     1.09%         .46%        1.13%         .38%         .71%
Ratio of allowance for loan losses
   to total non-performing loans                      1.18%         225%          91%         263%         137%

</TABLE>

         The accrual of interest on a loan is discontinued when, in management's
judgment, the future collection of principal or interest 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. When a loan is placed on
nonaccrual status, Bancorp's policy is to reverse, and charge against current
income, interest previously accrued but uncollected. The interest on these loans
is accounted for on the cash-basis or cost-recovery method until qualifying for
return to accrual status. Loans are returned to accrual status when all the
principal and interest amounts contractually due are brought current and future
payments are reasonably assured. If interest on nonaccrual loans had been
accrued, such income would have been approximately $1,226,000 in 2000, $97,000
in 1999 and $273,000 in 1998. Total interest income of $318,000, $27,500 and
$141,600 was recognized on nonaccrual loans during 2000, 1999 and 1998,
respectively. See "Real Estate Construction Loans" above for a discussion of the
increase in nonaccrual loans in 2000.

         Restructured loans occur when Bancorp, for economic or legal reasons
related to a borrower's financial difficulties, grants a concession that would
not otherwise be considered. Such concessions include reduction of the interest
rate for the remainder of the contract term, extension of the maturity date at
an interest rate less than the market rate for new debt of similar risk, and
forgiveness of accrued interest and/or principal. Bancorp had no restructured
loans at December 31, 2000, 1999 or 1998.

         OREO consists of real estate acquired by Bancorp through foreclosure or
by a deed in lieu of foreclosure. Properties in OREO are carried at the lower of
net realizable value or the principal balance of the related loan. Any excess of
the loan balance over fair value of the property is charged to the allowance for


                                       11
<PAGE>

loan losses. At December 31, 2000, OREO totaled $602,000 and consisted of two
properties, one commercial and one residential. At December 31, 1999, OREO
consisted of one commercial property and totaled $413,100.

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

         The allowance for loan losses represents management's estimate of the
losses inherent in the loan portfolio. The allowance is based primarily on
management's evaluation of the overall quality and risk characteristics of
Bancorp's loan portfolio, which is dependent upon numerous interrelated factors
including present non-performing and delinquent loans, borrowers' perceived
abilities to repay, value of collateral, general and local economic conditions
and historical loan loss experience.

         Centennial Bank's Asset/Liability Committee reviews the adequacy of the
allowance for loan losses quarterly. Although determination of the adequacy of
the allowance involves substantial subjective judgment based on the Committee's
analysis of the risk characteristics of the entire loan portfolio, the Committee
also uses two quantitative methods to analyze the adequacy of the allowance.

         The first method uses credit risk ratings (from one through eight) and
related loss factor multipliers (from .10% for loans in the lowest risk category
up to 100% for loans in the highest risk category) to calculate an amount of
potential losses.

         The second method is in accordance with the requirements of Statements
of Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" ("SFAS 114") and No. 5, "Accounting for Contingencies"
("SFAS 5"). A loan is considered impaired when, based on current information and
events, it is probable that Bancorp will be unable to collect all amounts due
(both principal and interest) according to the contractual terms of the loan
agreement. When a loan is impaired, SFAS 114 requires measurement of the
impairment and a specific valuation allowance for potential loss. SFAS 114
excludes certain categories of loans including large groups of homogeneous loans
that are collectively evaluated, loans measured at the lower of cost or fair
value, and leases. Bancorp specifically determines the amount of impairment for
all loans of $100,000 or more that are identified as impaired and not excluded
under SFAS 114. All collateral-dependent loans are measured for impairment based
on the estimated fair value of the collateral. The measurement of other impaired
loans is based on the present value of expected future cash flows discounted at
the historical effective interest rate. Loans not subject to SFAS 114 are
analyzed under SFAS 5 by applying loss factor multipliers according to risk
ratings. Credit contingencies, including letters of credit and commitments, are
also analyzed under SFAS 5 by applying loss factor multipliers according to
contingency type.

         The amounts calculated by the quantitative methods are then compared by
the Committee to the allowance for loan losses in evaluating the adequacy of the
allowance.

         Management believes that Bancorp's allowance for loan losses is
adequate to cover anticipated losses and is in accordance with accounting
principles generally accepted in the United States. There can be no assurance,
however, that management will not decide to increase the allowance for loan
losses or that regulators will not require Bancorp to increase the allowance,
either of which events could adversely affect Bancorp's results of operations.
Further, there can be no assurance that Bancorp's actual loan losses will not
exceed its allowance.

         The following table sets forth information regarding changes in
Bancorp's allowance for loan losses for each of the last five years:


                                       12
<PAGE>
<TABLE>
<CAPTION>

                                                       At or for the year ended December 31,
                                 -------------------------------------------------------------------------------
                                    2000             1999              1998             1997              1996
                                 ---------         ---------         --------         ---------         --------
                                                              (Dollars in thousands)
<S>                            <C>                <C>              <C>               <C>               <C>
Loans and loans held for sale
   at year-end                   $ 713,770         $ 599,828         $432,014         $ 340,625         $268,630
                                 =========         =========         ========         =========         ========
Average loans and
   loans held for sale           $ 671,877         $ 502,272         $387,914         $ 299,976         $226,965
                                 =========         =========         ========         =========         ========
Allowance for loan losses,
   beginning of year             $   6,165         $   4,451         $  3,349         $   2,600         $  1,928
Charge-offs:
   Commercial and other               (649)             (559)            (370)             (556)             (89)
   Real estate - construction         (200)                -                -                 -                -
   Real estate - mortgage                -              (110)               -                 -                -
   Installment                         (58)               (3)             (82)               (2)             (20)
                                 ---------         ---------         --------         ---------         --------
     Total charge-offs                (907)             (672)            (452)             (558)            (109)
                                 ---------         ---------         --------         ---------         --------
Recoveries:
   Commercial and other                 91                43               43                55               24
   Real estate - construction            -                 -                -                 -                -
   Real estate - mortgage                -                 -                -                 -               20
   Installment                           1                43               11                 2                2
                                 ---------         ---------         --------         ---------         --------
     Total recoveries                   92                86               54                57               46
                                 ---------         ---------         --------         ---------         --------
Net loans charged off                 (815)             (586)            (398)             (501)             (63)
Loan loss provision                  3,800             2,300            1,500             1,250              735
                                 ---------         ---------         --------         ---------         --------
Allowance for loan losses
   at year-end                   $   9,150         $   6,165         $  4,451         $   3,349         $  2,600
                                 =========         =========         ========         =========         ========

Ratio of net loans charged off
   to average loans outstanding     (.12)%            (.12)%           (.10)%            (.17)%           (.03)%
Ratio of allowance for loan losses
   to loans at year-end              1.28%             1.03%            1.04%             .98%              .97%
</TABLE>

         Anticipated loan losses are charged against the allowance for loan
losses when, in management's opinion, ultimate recovery is unlikely or when bank
examiners require a charge-off. As the actual amount of loss with respect to
specific loans is often dependent upon future events (including liquidation of
collateral), Bancorp cannot accurately predict precisely what losses, if any,
will be sustained with respect to specific loans. Historical experience has also
shown that, at any particular time, loan losses may exist in a loan portfolio
that have not yet been identified. For these reasons, although management
analyzes specific loans in determining the adequacy of its allowance for loan
losses, it does not normally allocate the allowance to specific groups or
categories of loans. Management estimates, however, that the allocation of the
allowance for loan losses by loan category at the end of each of the last five
years was as set forth in the following tables:

                                            Amount of             Loans in
                                            allowance           category as a
                                               for              percentage of
                                              loan               total gross
                                             losses                 loans
                                            ---------          -------------
                                                 (Dollars in thousands)
December 31, 2000
Commercial and other                        $  5,500                39.8%
Real estate - construction                     2,750                36.7
Real estate - mortgage                           650                22.2
Installment                                      150                 1.3
Unallocated                                      100                   -
                                            --------               -----
   Total                                    $  9,150               100.0%
                                            ========               =====


                                       13
<PAGE>


                                            Amount of             Loans in
                                            allowance           category as a
                                               for              percentage of
                                              loan               total gross
                                             losses                 loans
                                            ---------          -------------
                                                (Dollars in thousands)
December 31, 1999
Commercial and other                        $  3,700                38.1%
Real estate - construction                     1,850                37.9
Real estate - mortgage                           450                22.6
Installment                                      100                 1.4
Unallocated                                       65                   -
                                            --------               -----
   Total                                    $  6,165               100.0%
                                            ========               =====

December 31, 1998
Commercial and other                        $  2,701                39.1%
Real estate - construction                     1,350                34.9
Real estate - mortgage                           275                24.4
Installment                                       75                 1.6
Unallocated                                       50                   -
                                            --------               -----
   Total                                    $  4,451               100.0%
                                            ========               =====

December 31, 1997
Commercial and other                        $  1,999                45.2%
Real estate - construction                     1,000                26.6
Real estate - mortgage                           250                26.2
Installment                                       50                 2.0
Unallocated                                       50                   -
                                            --------               -----
   Total                                    $  3,349               100.0%
                                            ========               =====

December 31, 1996
Commercial and other                        $  1,500                46.5%
Real estate - construction                       750                25.0
Real estate - mortgage                           250                26.5
Installment                                       50                 2.0
Unallocated                                       50                   -
                                            --------               -----
   Total                                    $  2,600               100.0%
                                            ========               =====

         The following table details the carrying value of Bancorp's impaired
loans, in accordance with SFAS 114, by type of loan at December 31, 2000 and
1999:
<TABLE>
<CAPTION>

                                                                                                         Net
                                                      Recorded                Valuation               Carrying
                                                       Amount                 Allowance                 Value
                                                   -------------           -------------           -------------
<S>                                               <C>                    <C>                     <C>
December 31, 2000
Commercial                                         $   7,783,400           $  1,554,400            $   6,229,000
Real estate - construction                             5,812,700                425,800                5,386,900
Real estate - mortgage                                 1,617,400                273,000                1,344,400
                                                   -------------           ------------            -------------
   Total                                           $  15,213,500           $  2,253,200            $  12,960,300
                                                   =============           ============            =============

December 31, 1999
Commercial                                         $   5,170,200           $    389,100            $   4,781,100
Real estate - construction                               662,700                 75,500                  587,200
                                                   -------------           ------------            -------------
   Total                                           $   5,832,900           $    464,600            $   5,368,300
                                                   =============           ============            =============
</TABLE>


                                       14
<PAGE>

         The above impaired loans were measured based on the fair value of the
loan's collateral. The allowance for loan losses for all other loans is
determined based on the methodology discussed above.

INVESTMENT ACTIVITIES

         Bancorp's investment portfolio consists of U.S. government securities,
municipal securities, mortgage-backed securities, corporate bonds and equity
securities.
         Bancorp's primary investment objectives are to maintain liquidity and
to generate after-tax profits consistent with the risk guidelines established by
the Board of Directors. At December 31, 2000, Voyageur Asset Management, Inc. of
Minneapolis, Minnesota advised Bancorp with respect to the investment portfolio.
Bancorp has no other relationship with Voyageur Asset Management, Inc. The
services of Bancorp's previous advisor, Blount Investment Group of Eugene,
Oregon, were discontinued in mid-2000.

         All of the securities held in the investment portfolio were classified
as available for sale at December 31, 2000 and 1999. Those securities will be
sold as necessary to provide liquidity and to respond to interest rate changes.
Because these securities are carried at their market value, fluctuations in
interest rates could affect the carrying value of these securities and,
therefore, the reported shareholders' equity of Bancorp.

         The following table provides the carrying values of Bancorp's
investment portfolio at the end of each of the last three years. See Note 2 to
Bancorp's Consolidated Financial Statements for more information about
investment securities held at December 31, 2000, 1999 and 1998.
<TABLE>
<CAPTION>

                                                                       2000             1999              1998
                                                                     --------         ---------         --------
                                                                                   (In thousands)
<S>                                                                 <C>              <C>               <C>
U.S. Treasury securities                                             $    500         $  1,399          $  1,435
U.S. Government agencies                                               37,816           26,534            39,263
States and political subdivisions                                      16,259           27,316            29,578
Corporate bonds                                                         2,033            2,205             2,311
Mortgage-backed securities                                              3,199            1,905             4,206
Equity securities                                                         556                -                 -
                                                                     --------         --------          --------
   Total investment securities                                       $ 60,363         $ 59,359          $ 76,793
                                                                     ========         ========          ========
</TABLE>

         The following table provides the carrying values, principal amounts,
maturities and weighted average yields of Bancorp's investment securities at
December 31, 2000, all of which are classified as available for sale:

<TABLE>
<CAPTION>

                                                                                                       Weighted
                                                                  Carrying value      Principal         average
      Type and maturity                                         (fair market value)    amount            yield
      -----------------                                         -------------------   ---------        --------
                                                                               (Dollars in thousands)
<S>                                                                <C>              <C>                <C>
U.S. Treasuries
   Due within 1 year,                                                $    500         $     500          5.62%

U.S. Government agencies
   Due after 1 but within 5 years                                      28,088            28,167          5.71
   Due after 5 but within 10 years                                      9,728             9,990          5.95
                                                                     --------         ---------
     Total U.S. Government agencies                                    37,816            38,157          5.77


                                       15
<PAGE>
                                                                                                       Weighted
                                                                  Carrying value      Principal         average
      Type and maturity                                         (fair market value)    amount            yield
      -----------------                                         -------------------   ---------        --------
                                                                               (Dollars in thousands)
States and political subdivisions
   Due within 1 year                                                 $  2,276         $   2,268          4.83%
   Due after 1 but within 5 years                                       2,999             2,961          5.42
   Due after 5 but within 10 years                                      1,079             1,056          5.45
   Due after 10 years                                                   9,905             9,931          5.07
                                                                     --------         ---------
     Total states and political subdivisions                           16,259            16,216          5.13

Corporate bonds
   Due after 1 but within 5 years                                       2,033             2,062          6.18

Mortgage-backed securities
   Due after 10 years                                                   3,199             3,203          6.80

Equity securities                                                         556               513           N/A
                                                                     --------         ---------

     Total investment securities                                     $ 60,363         $  60,651          5.66% (1)
                                                                     ========         =========
</TABLE>
------------------------------------
(1) Excludes equity securities.

DEPOSITS

         Centennial Bank offers a variety of accounts for depositors designed to
attract short-term and long-term deposits. These accounts include certificates
of deposit ("CDs"), savings accounts, money market accounts, checking and
interest checking accounts and individual retirement accounts. These accounts
generally earn interest at rates established by management based on competitive
market factors and management's desire to increase or decrease certain types or
maturities of deposits.

         Centennial Bank offers a special account for customers age 50 or older
called the "50+ Account." The 50+ Account is designed to attract customers in
this age group who generally have higher than average deposits and favorable
ability to repay borrowings. Centennial Bank also markets to small- to
medium-sized businesses and to professionals in its commercial lending program.
These types of customers also create substantial deposits, resulting in low-cost
funds being available for Centennial Bank's lending activities.

         The following table presents the average balances for each major
category of deposits and the weighted average interest rates paid for
interest-bearing deposits for the years ended December 31, 2000, 1999 and 1998:
<TABLE>
<CAPTION>

                                              2000                      1999                      1998
                                    ----------------------    ----------------------    ------------------------
                                             Average                   Average                   Average
                                    ----------------------    ----------------------    ------------------------
                                     Balance        Rate       Balance         Rate       Balance          Rate
                                     -------        ----       -------         ----       -------          ----
                                                                (Dollars in thousands)
<S>                                <C>            <C>        <C>              <C>      <C>                <C>
Noninterest-bearing demand          $115,545         N/A      $ 106,317         N/A     $  90,166           N/A
Interest-bearing demand              252,620        3.46%       231,861        2.99%      192,356          3.30%
Savings                               47,499        4.85         28,379        3.26        19,540          2.79
CDs                                  233,335        5.90        167,702        5.13       145,387          5.63
                                    --------                  ---------                  --------
Total                               $648,999        3.82      $ 534,259        3.08      $447,449          3.37
                                    ========                  =========                  ========

</TABLE>

                                       16
<PAGE>

         The following table shows the dollar amount of CDs that had balances of
$100,000 or more at December 31, 2000 and 1999:
<TABLE>
<CAPTION>

                                                                                       December 31,
                                                                                -----------------------
                                                                                2000               1999
                                                                                ----               ----
                                                                                      (In thousands)
<S>                                                                         <C>                <C>
CDs $100,000 or over with remaining maturity:
   Three months or less                                                      $  59,076           $  20,043
   Over three months through twelve months                                      53,489              44,043
   Over one year through three years                                            14,057              15,100
   Over three years                                                                238                 239
                                                                             ---------           ---------
     Total                                                                   $ 126,860           $  79,425
                                                                             =========           =========
</TABLE>

SHORT-TERM BORROWINGS

         At December 31, 2000, Bancorp's short-term borrowings consisted of $4.1
million of securities sold under agreements to repurchase, $9.0 million of
federal funds purchased, and $46.5 million of Federal Home Loan Bank of Seattle
advances. Securities sold under agreement to repurchase are due on demand, but
generally range in duration from one to eighty-nine days.

         At December 31, 1999, Bancorp's short-term borrowings consisted of $8.2
million of securities sold under agreements to repurchase, $19.6 million of
federal funds purchased, and $46.7 million of Federal Home Loan Bank of Seattle
advances.

         At December 31, 1998, Bancorp's short-term borrowings consisted of
$16.1 million of securities sold under agreements to repurchase, $1.0 million of
federal funds purchased, and $3.5 million of Federal Home Loan Bank of Seattle
advances.

         The following table sets forth certain information with respect to
Bancorp's short-term borrowings at December 31 and during each of 2000, 1999 and
1998:
<TABLE>
<CAPTION>

                                                                                    December 31,
                                                                     -------------------------------------------
                                                                       2000             1999              1998
                                                                     --------         ---------         --------
                                                                               (Dollars in thousands)
<S>                                                                 <C>              <C>               <C>
Amount outstanding at year-end                                       $ 59,634         $  74,554         $ 20,600
Weighted average interest rate at year-end                               6.30%             5.42%            4.55%
Maximum amount outstanding at any month-end during the year          $ 98,935         $  74,554         $ 20,500
Daily average amount outstanding during the year                     $ 63,690         $  26,356         $ 10,016
Average weighted interest rate during the year                           6.54%             5.33%            4.88%


</TABLE>

LONG-TERM DEBT

         At December 31, 2000, 1999 and 1998, Bancorp had no long-term debt.


                                       17
<PAGE>


RETURN ON EQUITY AND ASSETS



         The following table sets forth Bancorp's return on daily average assets
and equity for 2000, 1999 and 1998:
<TABLE>
<CAPTION>

                                                                       2000             1999              1998
                                                                     --------         ---------         --------
                                                                               (Dollars in thousands)

<S>                                                                 <C>              <C>               <C>
Net income                                                           $ 14,203         $  12,106         $ 11,435
Average total assets                                                  800,332           635,003          525,217
Return on average assets                                                 1.77%             1.91%            2.18%

Net income                                                           $ 14,203         $  12,106         $ 11,435
Average equity                                                         82,807            69,440           56,712
Return on average equity                                                17.15%            17.43%           20.16%

Average total equity                                                 $ 82,807         $  69,440         $ 56,712
Average total assets                                                  800,332           635,003          525,217
Average total equity to assets ratio                                    10.35%            10.94%           10.80%
</TABLE>

CHANGES IN ACCOUNTING PRINCIPLES

         The Financial Accounting Standards Board ("FASB") has issued the
following accounting pronouncements, which Bancorp adopted in 2000 or will be
required to adopt in future fiscal reporting periods.

         In June 1999, FASB issued Statement of Financial Accounting Standards
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement 133" (SFAS 137), an amendment of SFAS 133,
which establishes accounting and reporting standards for derivative instruments
and hedging activities and requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. In June 2000, FASB issued SFAS 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an amendment of SFAS
133." SFAS 133, as amended by SFAS 137 and SFAS 138, is effective for all
quarterly and annual financial statements of fiscal years beginning after June
15, 2000. Bancorp had no significant derivatives as of December 31, 2000, nor
does Bancorp engage in any hedging activities. Accordingly, Bancorp does not
anticipate that the adoption of SFAS 133, as amended by SFAS 137 and SFAS 138,
will have a material effect on its consolidated financial position or results of
operations.

COMPETITION

         Commercial banking in Oregon is highly competitive with respect to both
loans and deposits. Centennial Bank competes principally with other commercial
banks, savings and loan associations, credit unions, mortgage companies, and
other financial institutions with respect to the scope and type of services
offered, interest rates paid on deposits and pricing of loans, among other
factors. Many of these competitors have substantially greater resources than
Centennial Bank and have branches in more locations. Certain of these
competitors have larger lending capabilities due to their greater size and
provide other services that Centennial Bank does not offer.

         In previous years, Bancorp capitalized on the marketing opportunities
created by the consolidation of the banking industry as the larger institutions
were perceived to de-emphasize the small- to medium-size business and
professional market, which is Bancorp's primary focus. Several banks, which
focus on the same types of customers, have been formed in Bancorp's market areas
during the last few years. This growing number of community banks and a new
emphasis by larger institutions on this market segment has intensified
competition.



                                     18
<PAGE>

         In addition, the Gramm-Leach-Bliley Act, enacted in November 1999 (the
"GLB Act"), eliminated several barriers to affiliation among providers of
financial services and has intensified the competitive environment in which
Bancorp operates. The GLB Act permits certain business combinations between
banks, insurance companies, securities firms, and other financial service
providers that were not permitted previously. Using the "financial holding
company" structure created by the GLB Act, insurance companies and securities
firms compete more directly with banks and bank holding companies, and may
acquire existing financial institutions.

         Bancorp will continue to compete for loans and deposits principally
through the range and quality of the services it provides. Management believes
Bancorp's emphasis on high-quality, personal attention to customers and on
providing services specific to the needs of its customers enables it to compete
effectively with other financial institutions. To serve customers whose
borrowing requirements exceed its lending limits, Centennial Bank arranges
participations with other lenders.

EMPLOYEES

         Centennial Bancorp has no employees other than its executive officers,
who are also employees of Centennial Bank. At December 31, 2000, Centennial Bank
and Centennial Mortgage had 253 and 47 full-time equivalent employees,
respectively. Bancorp places a high priority on selective hiring and development
of staff. Staff development involves training in customer service, marketing and
regulatory compliance. Bancorp has adopted extensive incentive programs for
employees that focus and are dependent on the achievement of certain of
Bancorp's financial, service and marketing goals.

         None of Bancorp's employees is covered by collective bargaining
agreements, and management believes that Bancorp's relationship with its
employees is good.

                           SUPERVISION AND REGULATION

         Bancorp and Centennial Bank are extensively regulated under federal and
Oregon law. These laws and regulations are primarily intended to protect
depositors and the deposit insurance fund, not shareholders of Bancorp. The
following information is qualified in its entirety by reference to applicable
statutory and regulatory provisions. Any change in applicable laws, regulations
or regulatory policies may have a material effect on the business, operations
and prospects of Bancorp and its subsidiaries.

         Various laws and regulations are enacted from time to time at the state
or federal level, which may change the operating environment of Bancorp in
substantial and unpredictable ways. The GLB Act, enacted by Congress in November
1999, is having a significant impact on the banking industry. (See "The
Gramm-Leach-Bliley Act" below.) Several regulatory agencies and state
legislatures are in the process of responding to changes required or suggested
by the GLB Act. Bancorp cannot determine the ultimate effect that the GLB Act,
or the regulations implemented and legislation enacted as a result of that act,
will have on the operating structure, financial condition or results of
operations of Bancorp.

THE GRAMM-LEACH-BLILEY ACT

         In November 1999, Congress enacted the GLB Act, also known as the
Financial Services Modernization Act. The GLB Act made substantial changes that
directly affect the banking industry. The GLB Act removed several state and
federal barriers to affiliation among banks, insurance companies, securities
firms, and other financial services providers, and created an entity known as a
"financial holding company" ("FHC"). A bank holding company may elect to become
an FHC and, as an FHC, engage in a broader range of financial and other
activities than is permissible for the traditional bank holding company.

         In order to qualify as an FHC, each depository institution subsidiary
of the bank holding company must be rated as "well capitalized" and "well
managed." Also, in order to commence any of the new activities authorized by the
GLB Act or acquire control of a company engaged in such activities, the holding
company


                                       19
<PAGE>

must qualify as an FHC and each depository institution subsidiary of the
FHC or its affiliates must have received at least a "satisfactory" rating in its
most recent examination under the Community Reinvestment Act of 1977 (the
"CRA").

         FHCs are permitted to engage in activities defined by the GLB Act as
"financial in nature" including, among others, insurance underwriting and agency
activities, investment advisory services, merchant banking, investment banking
and underwriting activities, and dealing or making a market in securities. Bank
holding companies that do not qualify for, or have not elected, FHC status are
limited to those non-banking activities determined by the Board of Governors of
the Federal Reserve System (the "FRB") to be "so closely related to banking as
to be a proper incident thereto" prior to adoption of the GLB Act. FHCs that do
not continue to meet all of the requirements for FHC status may not be able to
undertake new activities or acquisitions that are "financial in nature," or
could lose their ability to continue activities that are not generally
permissible for bank holding companies.

         In addition, the GLB Act provides for expanded activities for
"financial subsidiaries" of national banks. Financial subsidiaries may engage in
financial activities except for insurance underwriting, real estate development
or investment, and merchant banking, all of which may only be engaged in by a
subsidiary of an FHC. In order to have a financial subsidiary, the national bank
and each of its depository institution affiliates must be "well capitalized" and
"well managed," and the total assets of all financial subsidiaries may not
exceed the lesser of 45% of the consolidated total assets of the parent bank or
$50 billion. In addition, the national bank must meet certain rating
requirements if it is one of the 100 largest insured banks and engages in
financial activities as a principal.

         Insured state banks may control or hold an interest in a subsidiary
that engages in activities as a principal that would only be permissible for a
national bank to conduct through a financial subsidiary, so long as the bank and
all insured depository affiliates are "well capitalized" after meeting certain
capital deduction and financial statement disclosure requirements. In addition,
an insured state bank may retain its interests in subsidiaries controlled or
acquired before the enactment of the GLB Act. Oregon law permits commercial
banks chartered by the state to engage in any activity permissible for national
banks, so Centennial Bank may form subsidiaries to engage in financial
activities to the same extent as a national bank.

         At December 31, 2000, Centennial Bank was "well capitalized."
Therefore, Bancorp qualifies to become an FHC, and Centennial Bank qualifies to
control or hold an interest in a new financial subsidiary. Management expects
the Bank to continue to be "well capitalized" at March 31, 2001. If so,
Bancorp's management intends to elect to become an FHC within the next few
months.

PRIVACY PROVISIONS

         The GLB Act also includes extensive consumer privacy provisions. These
provisions mandate full disclosure by all financial institutions to consumers of
the institution's policies and practices regarding the sharing of non-public
information with both affiliates and other third parties. Consumers must receive
notice of and an opportunity to "opt out" of disclosure of non-public personal
information to non-affiliated third parties. Disclosures of an institution's
privacy policy is required at the time a customer relationship is established,
and at least annually for so long as the relationship continues.

CENTENNIAL BANCORP

         GENERAL

         Bancorp is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), and is subject to regulation,
supervision and examination by the FRB. Bancorp is required to file an annual
report and such other reports as the FRB may require.


                                       20
<PAGE>

         ACQUISITIONS

         As a bank holding company, Bancorp is required to obtain the prior
approval of the FRB before: (1) acquiring direct or indirect ownership or
control of any voting shares of any bank or bank holding company, if after such
acquisition, Bancorp would own or control, directly or indirectly, more than 5%
of the voting shares of the bank or bank holding company; (2) merging or
consolidating with another bank holding company; or (3) acquiring substantially
all of the assets of any other bank. The FRB may not approve any acquisition,
merger or consolidation that would have a substantial anti-competitive result,
unless the anti-competitive effects of the proposed transaction are outweighed
by a greater public interest in meeting the needs and convenience of the public.
The FRB also considers managerial, capital and other financial factors in acting
on acquisition or merger applications. Bancorp also is required to obtain the
prior approval of the Director of the Oregon Department of Consumer and Business
Services (the "Oregon Director") before acquiring direct or indirect ownership
or control of 25% or more of the voting shares of an Oregon state-chartered bank
or bank holding company.

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Banking Act") allows adequately capitalized and managed bank
holding companies to acquire banks in any state. Such acquisitions must comply
with any applicable state law requiring a bank to be in existence for a minimum
period of time before the acquisition. Oregon law allows such acquisitions with
respect to banks that have been providing banking services for at least three
years. Therefore, Bancorp and Centennial Bank could be acquired by a bank
holding company or an FHC located outside Oregon following receipt of necessary
regulatory approvals. Under the Interstate Banking Act, Bancorp could acquire
banks or bank holding companies in other states.

         PERMISSIBLE ACTIVITIES

         A bank holding company may not engage in, or acquire direct or indirect
control of more than 5% of the voting shares of any company engaged in, a
non-banking activity, unless the activity was determined by the FRB to be
closely related to banking or managing banks prior to the enactment of the GLB
Act. The FRB has identified certain non-banking activities in which a bank
holding company may engage with notice to, or prior approval by, the FRB.
Management believes that all activities conducted by Centennial Mortgage are
permitted non-banking activities.

         CAPITAL ADEQUACY

         The federal bank regulatory agencies monitor the capital adequacy of
bank holding companies and have adopted risk-based capital adequacy guidelines
to evaluate bank holding companies and banks. If an institution's capital falls
below the minimum levels established by these guidelines, the bank holding
company may be denied approval to acquire or establish additional banks or
non-bank businesses. The guidelines require a minimum ratio of total capital to
risk-weighted assets of 8%. At December 31, 2000, Bancorp's ratio of total
capital to risk-weighted assets was 11.0%.

         The FRB also uses a leverage ratio to evaluate the capital adequacy of
bank holding companies. The leverage ratio is the ratio of "Tier 1" capital
(generally, tangible common shareholders' equity, perpetual preferred stock and
minority interests in consolidated subsidiaries) to adjusted average total
assets. The FRB requires a minimum leverage ratio of 3%. However, for all but
the most highly rated bank holding companies and for bank holding companies
seeking to expand, the FRB expects an additional cushion of at least 1% to 2%.
Bancorp's leverage ratio at December 31, 2000 was 9.9%.

         If Bancorp fails to meet capital guidelines, the FRB may institute
appropriate supervisory or enforcement actions. As discussed below, Centennial
Bank is also subject to capital adequacy requirements. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), Bancorp could be
required to guarantee the capital restoration plan of Centennial Bank, should
Centennial Bank become undercapitalized.


                                       21
<PAGE>


CENTENNIAL BANK

         GENERAL

         Centennial Bank is an Oregon state-chartered bank, the deposits of
which are insured by the FDIC. Accordingly, Centennial Bank files financial and
other reports periodically with, and is regularly examined by, both the Oregon
Director and the FDIC. Centennial Bank is not a member of the Federal Reserve
System.

         PERMISSIBLE ACTIVITIES

         Under FDICIA, no state bank may engage in any activity not permitted
for national banks, unless the institution complies with applicable capital
requirements and the FDIC determines that the activity poses no significant risk
to the insurance fund. This limitation should not affect Centennial Bank, since
management believes that Centennial Bank is not presently involved in any such
activities.

         BRANCHING AND ACQUISITIONS

         Banks are permitted to conduct business through branches after
application to and approval of the FDIC and the Oregon Director, if they make
certain findings regarding the financial history and condition of the bank and
the appropriateness of the branch in the community to be served. Prior to
opening a new branch in Washington, Centennial Bank must receive approval from
the FDIC, the Oregon Director and the Director of the Department of Financial
Institutions in the state of Washington (the "Washington Director"). Centennial
Bank currently has 21 branches, the most recent of which opened in February
2001.

         Acquisitions of Oregon banks and bank holding companies by out-of-state
banks, holding companies and other financial institutions are permitted if the
bank being acquired has been providing banking services for a period of at least
three years prior to the effective date of the acquisition and upon receipt of
the approval of the Oregon Director. Other conditions set forth in Oregon law
also must be satisfied. Approval of the FRB and/or the FDIC is also required.

         The Interstate Banking Act permits banks to merge with banks across
state lines, thereby creating out-of-state branches, without regard to whether
such transactions are prohibited under the law of any state. Oregon permits
interstate bank mergers. Banks are able to establish branches in other states
only through interstate mergers, as described above, unless the state where the
branch is proposed to be opened has opted in to DE NOVO interstate branching.
Neither Oregon nor Washington has opted in to DE NOVO branching.

         COMMUNITY REINVESTMENT ACT

         Enacted in 1977, the federal Community Reinvestment Act (the "CRA") has
become increasingly important to financial institutions, including their holding
companies. Under the GLB Act, a satisfactory CRA rating for each depository
institution is required before a bank holding company may elect to be one of the
newly created FHCs. The CRA allows regulators to reject an application to make
an acquisition or establish a branch unless the applicant has performed
satisfactorily under the CRA. Citizens and interest groups have standing before
the FRB to assert noncompliance with the CRA. Satisfactory performance means
adequately meeting the credit needs of the communities the applicant serves,
including low- and moderate-income neighborhoods, consistent with the safe and
sound operation of the institution. The applicable federal regulators now
regularly conduct CRA examinations to assess the performance of financial
institutions. Centennial Bank has received satisfactory ratings in its most
recent CRA examinations.

         TRANSACTIONS WITH AFFILIATES

         Centennial Bank is subject to certain FRB restrictions on transactions
among related parties. The Federal Reserve Act limits the amount of certain
transactions, including loans to and investments in affiliates


                                       22
<PAGE>

of Centennial Bank, requires certain levels of collateral for such loans, and
limits the amount of advances to third parties that may be collateralized by the
securities of Bancorp or its subsidiaries.

         The Federal Reserve Act also requires that certain transactions between
Centennial Bank and its affiliates be on terms substantially the same, or at
least as favorable to Centennial Bank, as those prevailing at the time for
comparable transactions with or involving nonaffiliated companies or, in the
absence of comparable transactions, on terms and under circumstances, including
credit standards, that in good faith would be offered to or would apply to
nonaffiliated companies.

         In addition, the Federal Reserve Act requires that the aggregate amount
of an institution's loans to officers, directors and principal shareholders (and
their affiliates) is limited to the amount of its unimpaired capital and
surplus, unless the FDIC determines that a lesser amount is appropriate.

         A violation of any of the foregoing restrictions may result in the
assessment of civil fines on a bank or a person participating in the conduct of
the affairs of such bank or the imposition of a cease and desist order.

         DIVIDEND RESTRICTIONS

         Dividends paid by Centennial Bank provide substantially all Bancorp's
cash flow. FDICIA provides that a bank cannot pay a dividend if it will reduce
the bank's capital ratios below the regulatory minimums required to be
considered "adequately capitalized". Under Oregon law, Centennial Bank is
subject to restrictions on the payment of cash dividends to its shareholder
(i.e., to Bancorp). An Oregon state-chartered bank may not pay a cash dividend
in an amount greater than the bank's unreserved retained earnings, after first
deducting to the extent not already charged against earnings or reflected in a
reserve, (1) all bad debts, which are debts on which interest is unpaid and past
due at least six months, unless the debt is fully secured and in the process of
collection; (2) all other assets charged off as required by the Oregon Director
or a state or federal examiner; and (3) all accrued expenses, interest and taxes
of the bank.

         EXAMINATIONS

         The FDIC, the Oregon Director and the Washington Director periodically
examine and evaluate Centennial Bank. Based upon such evaluations, the examining
regulator may revalue the assets of an insured institution and require that it
charge off or reduce the carrying value of specific assets or establish a
specific allowance to compensate for the difference between the value determined
by the regulator and the book value of such assets.

         CAPITAL ADEQUACY

         Federal regulations establish minimum requirements for the capital
adequacy of depository institutions. The regulators may establish higher minimum
requirements if, for example, a bank has previously received special attention
or has a high susceptibility to interest rate risk. Banks with capital ratios
below the required minimums are subject to certain administrative actions,
including prompt corrective action, the termination of deposit insurance upon
notice and hearing, or a temporary suspension of insurance without a hearing.

         The federal risk-based capital guidelines for banks require a ratio of
Tier 1 or core capital to total risk-weighted assets of 4% and a ratio of total
capital to total risk-weighted assets of 8%. The leverage capital guidelines
require that banks maintain Tier 1 capital of no less than 4% of total adjusted
average assets, except in the case of certain highly rated banks for which the
minimum requirement is 3% of total adjusted assets. At December 31, 2000,
Centennial Bank's leverage ratio, Tier 1 capital to risk-weighted assets ratio
and total capital to risk-weighted assets ratio were 9.1%, 9.0% and 10.1%,
respectively.

         FDICIA requires federal banking regulators to take "prompt corrective
action" with respect to a capital-deficient institution, including requiring a
capital restoration plan and restricting certain growth


                                       23
<PAGE>

activities of the institution. Bancorp could be required to guarantee any such
capital restoration plan required of Centennial Bank. Bancorp's maximum
liability under such guarantee would be the lesser of 5% of Centennial Bank's
total assets at the time it became undercapitalized or the amount necessary for
Centennial Bank to be considered "adequately capitalized."

         As an institution's capital decreases, the powers of the federal
regulators increase, which can include mandated capital-raising activities,
restrictions on interest rates paid, restrictions on transactions with
affiliates, and removal of management. In addition, an institution generally is
prohibited from paying dividends or management fees to control persons if the
institution would be undercapitalized after any such payment.

         Pursuant to FDICIA, regulations were adopted defining five capital
levels: well capitalized, adequately capitalized, undercapitalized, severely
undercapitalized and critically undercapitalized. Under the regulations,
Centennial Bank is considered "well capitalized."

         INTERNAL OPERATING REQUIREMENTS

         Bancorp and Centennial Bank are subject to federal regulations
addressing, among other things: (1) internal controls, information systems and
internal audit systems; (2) loan documentation; (3) credit underwriting; (4)
interest rate exposure; (5) asset growth; (6) ratio of classified assets to
capital; (7) minimum earnings; and (8) compensation and benefit standards for
management officials. These regulations add further to the cost of compliance
and impose record-keeping requirements on Centennial Bank and Bancorp.

         The consumer lending activities of Centennial Bank are also regulated
by numerous laws and regulations that impose race, sex, age, marital status and
other specified classifications and impose other restrictions on credit and
collection practices.

         REAL ESTATE LENDING EVALUATIONS

         Federal regulators have adopted uniform standards for evaluating loans
secured by real estate or made to finance improvements to real estate. Banks are
required to establish and maintain written internal real estate lending policies
consistent with safe and sound banking practices and appropriate to the size of
the institution and the nature and scope of its operations. The regulations
establish loan-to-value ratio limitations on real estate loans, which are equal
to or higher than the loan-to-value limitations established by Centennial Bank
and Centennial Mortgage.

         DEPOSIT INSURANCE PREMIUMS

         As an FDIC-insured institution and member of the Bank Insurance Fund
("BIF"), Centennial Bank is subject to quarterly deposit insurance premium
assessments. The FDIC uses a risk-related premium system that applies premium
rates according to an institution's risk category. Capital ratios and
examination ratings are the primary determinants of risk category assignments.
The FDIC sets rate schedules semi-annually based on an analysis of several
factors including probable fund losses, operating needs and the impact of
assessments on BIF members. At December 31, 2000, Centennial Bank's BIF
annualized assessment rate was three basis points of assessable deposits.

         In addition to the BIF assessment, Centennial Bank is also subject to
an additional assessment, which helps support the FSLIC Resolution Fund ("FRF").
The FRF was established in 1989 to liquidate the remaining Federal Savings &
Loan Insurance Corporation assets and liabilities resulting from thrift failures
prior to that date. The assessment is one-fifth of the assessment rate imposed
on Savings Association Insurance Fund members for the same purpose. At December
31, 2000, the annualized assessment rate was 1.96 basis points of assessable
deposits.

         Bancorp's FDIC insurance assessment expenses totaled $303,000 in 2000
and $60,000 in 1999. The significant increase in 2000 occurred primarily because
Centennial Bank's capital level according to regulatory


                                       24
<PAGE>

standards changed from "well capitalized" to "adequately capitalized" as a
result of the goodwill associated with the acquisition of the Hazel Dell branch
in April 1999. When "well capitalized," Centennial Bank was not subject to a BIF
assessment but, as "adequately capitalized," became subject to the BIF
assessment rate discussed above. The change in capitalization did not affect
Centennial Bank's FDIC assessment until 2000 because of the lag time that is a
normal Part of the FDIC's assessment rate and risk classification review
process. As a result of continuing strong earnings performance and equity
growth, by the end of 2000 the Bank was once again "well capitalized" according
to regulatory standards. Management expects a favorable risk classification
adjustment by mid-2001 that will significantly reduce FDIC insurance assessment
expenses during the second half of 2001.

CENTENNIAL MORTGAGE

         Centennial Mortgage is, by definition of the Department of Housing and
Urban Development, a non-supervised lender. Because Centennial Mortgage is a
member of Bancorp's consolidated group, its accounts and activities are reviewed
by the FRB in conjunction with its periodic examinations of Bancorp. Centennial
Mortgage, like Centennial Bank, is indirectly affected by the monetary policies
of the FRB, which may have a material adverse effect on its business and
earnings.

         Oregon law requires the licensing of certain persons engaged in
mortgage brokering transactions. Centennial Mortgage is exempt from these
requirements as a wholly owned subsidiary of a regulated bank holding company.

CHANGING REGULATORY STRUCTURE

         The laws and regulations affecting banks and bank holding companies are
evolving. (See "The Gramm-Leach-Bliley Act" above.) The rules and the regulatory
agencies in the banking area have changed significantly over recent years, and
there is reason to expect that similar changes will occur in the future. It is
difficult to predict the outcome of these changes.

         One of the major additional burdens imposed on the banking industry by
FDICIA is the increased authority of federal agencies to regulate the activities
of federal and state banks and their holding companies. The FRB, the FDIC, the
Oregon Director and the Washington Director have extensive enforcement authority
to police unsafe or unsound practices by depository institutions and their
holding companies and to penalize them for violating applicable laws and
regulations. FDICIA and other laws have expanded the agencies' authority in
recent years, and the agencies have not yet fully tested the limits of their
powers.

EFFECT OF ECONOMIC ENVIRONMENT

         The policies of regulatory authorities, including the monetary policies
of the FRB, have a significant effect on the operating results of FHCs, bank
holding companies and their subsidiaries. Among the means available to the FRB
to affect the money supply are open-market operations in U.S. Government
securities, changes in the discount rate on member bank borrowings, and changes
in reserve requirements against member bank deposits. These means are used in
varying combinations to influence overall growth and distribution of bank loans,
investments and deposits, and their use may affect interest rates charged on
loans or paid for deposits.

         FRB monetary policies have materially affected the operating results of
commercial banks in the past and are expected to continue to do so in the
future. The nature of future monetary policies and the effect of such policies
on the business and earnings of Bancorp and its subsidiaries cannot be
predicted.


                                       25
<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTIES
         -------------------------

         The primary properties owned by Bancorp include a four-story, 36,000
square foot office building in Eugene, Oregon and a three-story, 21,000 square
foot office building in Tigard, Oregon. Each building houses one bank branch and
one commercial banking center as well as various administrative and operational
support functions. The Tigard building is subject to a 50-year ground lease that
is renewable for two additional 10-year periods. Bancorp also owns six other
properties that house bank branches. One property, the Springfield Office, is
also subject to a ground lease.

         All other Bancorp facilities occupy leased space. See Note 9 to
Bancorp's Consolidated Financial Statements for summary information concerning
payments and future obligations under non-cancelable operating leases.

         Management considers all Bancorp facilities adequate for current and
anticipated future use.

ITEM 3.  LEGAL PROCEEDINGS
         -----------------

         Periodically, and in the ordinary course of business, various claims
and lawsuits are brought by and against Bancorp, such as claims to enforce
liens, condemnation proceedings on properties in which Bancorp holds security
interests, claims involving the making and servicing of real property loans, and
other issues incident to Bancorp's business.

         As of the date of this Annual Report, Bancorp was not a party to any
legal proceedings management believes are material.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
         -----------------------------------------------

         None.

         The information called for by Items 5, 6, 7, 7A, 8 and 9 of Part II is
included in Centennial Bancorp's Annual Report to Shareholders for the year
ended December 31, 2000, and is incorporated herein by reference as follows:
<TABLE>
<CAPTION>

                                                                                        Centennial Bancorp
                                                                                           Annual Report
                                                                                          to Shareholders
                                                                                             Page No.
                                                                                       --------------------

<S>              <C>                                                                           <C>
ITEM 5.           MARKET FOR BANCORP'S COMMON STOCK
                  AND RELATED SHAREHOLDER MATTERS                                                32
                  -------------------------------

ITEM 6.           SELECTED FINANCIAL DATA                                                        32
                  -----------------------

ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF FINANCIAL CONDITION AND RESULTS
                  OF OPERATIONS                                                                  26
                  -------------

ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES
                  ABOUT MARKET RISK                                                              30
                  -----------------

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                     9
                  -------------------------------------------


</TABLE>



                                       26
<PAGE>


                                    PART III
                                    --------


ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF BANCORP
                  -------------------------------------------

         The information called for by this item will be contained in Centennial
Bancorp's definitive proxy statement for the annual meeting of shareholders to
be held on May 2, 2001, and is incorporated herein by reference.

ITEM 10.          EXECUTIVE COMPENSATION
                  ----------------------

         The information called for by this item will be contained in Centennial
Bancorp's definitive proxy statement for the annual meeting of shareholders to
be held on May 2, 2001, and is incorporated herein by reference.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  --------------------------------------------------------------

         The information called for by this item will be contained in Centennial
Bancorp's definitive proxy statement for the annual meeting of shareholders to
be held on May 2, 2001, and is incorporated herein by reference.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                  ----------------------------------------------

         The information called for by this item will be contained in Centennial
Bancorp's definitive proxy statement for the annual meeting of shareholders to
be held on May 2, 2001, and is incorporated herein by reference.




                                       27
<PAGE>


                                     PART IV
                                     -------


ITEM 13.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                  FORM 8-K
                  -------------------------------------------------------

         (a)      The following documents are filed as Part of this Annual
                  Report on Form 10-K.

                  (1)      Financial Statements.

                           The financial statements required in this Annual
                           Report are listed below and are included in
                           Centennial Bancorp's Annual Report to Shareholders
                           for the year ended December 31, 2000, and are
                           incorporated herein by reference:
<TABLE>
<CAPTION>

                                                                                              Annual
                                                                                             Report to
                                                                                           Shareholders
                                                                                            Page Number
                                                                                            -----------
                        <S>                                                                    <C>
                           Report of Independent Auditors                                         8

                           Consolidated balance sheets at
                               December 31, 2000 and 1999                                         9

                           For the three years ended December 31, 2000
                               Consolidated statements of income                                 10

                           Consolidated statements of shareholders' equity                       11

                           Consolidated statements of cash flows                                 12

                           Notes to consolidated financial statements                            13
</TABLE>

                  (2)      Financial Statement Schedules.

                           All financial statement schedules are omitted since
                           the required information is not present or not
                           present in amounts sufficient to require submission
                           of the schedule or because the information required
                           is included in the consolidated financial statements
                           or notes thereto.

                  (3)      Exhibits.

                           3.1      Restated Articles of Incorporation (filed as
                                    Exhibit 3.1 to registrant's Form 10-K Report
                                    for the year ended December 31, 1998, and
                                    incorporated herein by reference)

                           3.2      Bylaws, as restated

                           10.1*    Registrant's 1993 Incentive Stock Option
                                    Plan, restated as of April 13, 1994 (filed
                                    as Exhibit B to registrant's Proxy Statement
                                    for the 1994 annual shareholder meeting,
                                    filed April 29, 1994, and incorporated
                                    herein by reference)



                                       28
<PAGE>

                           10.2*    Registrant's Nonemployee Director's Stock
                                    Option Plan (filed as Exhibit 10.2 to
                                    registrant's Form 10-K Report for the year
                                    ended December 31, 1991, and incorporated
                                    herein by reference)

                           10.3*    Registrant's 1993 Stock Option Plan for
                                    Nonemployee Directors, restated as of April
                                    13, 1994 (filed as Exhibit A to registrant's
                                    Proxy Statement for the 1994 annual
                                    shareholder meeting, filed April 29, 1994,
                                    and incorporated herein by reference)

                           10.4*    Restated 1995 Stock Incentive Plan (filed as
                                    Exhibit A to registrant's Proxy Statement
                                    for the 1998 annual shareholder meeting,
                                    filed April 13, 1998, and incorporated
                                    herein by reference)

                           10.5*    Nonstatutory (Nonqualified) Stock Option
                                    Agreement dated November 22, 1995, between
                                    registrant and Richard C. Williams (filed as
                                    Exhibit 10.10 to registrant's Form 10-K for
                                    the year ended December 31, 1995, and
                                    incorporated herein by reference) (This
                                    option agreement has been amended to permit
                                    the exercise of vested options at any time
                                    during the term of the option
                                    notwithstanding the termination of Mr.
                                    Williams employment with registrant)

                           10.6     Ground Lease, dated as of February 10, 1994,
                                    between registrant and Pacific Realty
                                    Associates, L.P. (filed as Exhibit 10.10 to
                                    registrant's Registration Statement on SB-2,
                                    filed March 28, 1994, and incorporated
                                    herein by reference)

                           10.7     Advances, Security and Deposit Agreement,
                                    dated February 5, 1999, between Centennial
                                    Bank and the Federal Home Loan Bank of
                                    Seattle (filed as Exhibit 10.7 to
                                    registrant's Form 10-K for the year ended
                                    December 31, 1999, and incorporated herein
                                    by reference)

                           10.8*    Centennial Bank Deferred Compensation Plan,
                                    dated effective January 1, 1996 (filed as
                                    Exhibit 10.13 to registrant's Form 10-K for
                                    the year ended December 31, 1996, and
                                    incorporated herein by reference)

                           10.9*    Participation Agreement for use with
                                    Centennial Bank Deferred Compensation Plan
                                    (filed as Exhibit 10.14 to registrant's Form
                                    10-K for the year ended December 31, 1996,
                                    and incorporated herein by reference)

                           10.10*   Employment Agreement dated July 29, 1997
                                    between Thaddeus (Ted) Winnowski and
                                    Centennial Bank (filed as Exhibit 10.17 to
                                    registrant's Form 10-Q Report for the
                                    quarter ended September 30, 1997, and
                                    incorporated herein by reference)

                           10.11*   Employment Agreement dated October 1, 1995,
                                    between Richard C. Williams and registrant
                                    (filed as Exhibit 10.3 to registrant's Form
                                    10-K for the year ended December 31, 1995,
                                    and incorporated herein by reference)

                           10.12*   First Amendment to Employment Agreement
                                    dated December 1, 1997, between Richard C.
                                    Williams and registrant (filed as Exhibit
                                    10.18 to registrant's Form 10-K for the year
                                    ended December 31, 1997, and incorporated
                                    herein by reference)



                                       29
<PAGE>

                           10.13    Pledge, Security and Safekeeping Agreement
                                    dated September 30, 1997, between Centennial
                                    Bank and the Federal Home Loan Bank of
                                    Seattle (filed as Exhibit 10.13 to
                                    registrant's Form 10-K for the year ended
                                    December 31, 1999, and incorporated herein
                                    by reference)

                           10.14    Letter of Agreement for a
                                    Borrower-in-Custody dated May 4, 2000,
                                    between Centennial Bank and the Federal
                                    Reserve Bank of San Francisco

                           10.15*   Second Amendment to Employment Agreement
                                    dated May 5, 2000, between Richard C.
                                    Williams and registrant (filed as Exhibit 10
                                    to registrant's Form 10-Q Report for the
                                    quarter ended June 30, 2000, and
                                    incorporated herein by reference)

                           10.16*   Incentive Stock Option Agreement dated
                                    January 20, 1998 between Thaddeus (Ted)
                                    Winnowski and registrant

                           10.17*   Nonstatutory Stock Option Agreement dated
                                    January 20, 1998, between Thaddeus (Ted)
                                    Winnowski and registrant

                           10.18*   Nonstatutory Stock Option Agreement dated
                                    January 20, 1999, between Thaddeus (Ted)
                                    Winnowski and registrant

                           10.19*   Nonstatutory Stock Option Agreement dated
                                    January 20, 1999, between Thaddeus (Ted)
                                    Winnowski and registrant

                           10.20*   Incentive Stock Option Agreement dated
                                    January 3, 2000, between Thaddeus (Ted)
                                    Winnowski and  registrant

                           11.1     Earnings per Share Computation

                           13.1     Portions of 2000 Annual Report to
                                    Shareholders (which are incorporated by
                                    reference in this Form 10-K Annual Report)

                           20.1     Portions of definitive proxy statement for
                                    2001 annual shareholder meeting (to be filed
                                    with the Securities and Exchange Commission
                                    within 120 days after the end of the fiscal
                                    year covered by this Annual Report)

                           21.1     Subsidiaries of registrant (filed as
                                    Exhibit 21.1 to registrant's Form 10-K for
                                    the year ended  December 31, 1995, and
                                    incorporated herein by reference)

                           23.1     Consent of Symonds, Evans & Company, P.C.,
                                    Independent Auditors

                           99.1     Certain Factors to Consider in Connection
                                    with Forward-Looking Statements

---------------------------------------
* Management contract or compensatory plan or arrangement.

         Upon written request to Michael J. Nysingh, Chief Financial Officer,
Centennial Bancorp, Post Office Box 1560, Eugene, Oregon, 97440, shareholders
will be furnished a copy of any exhibit, upon payment of $.25 per page, which
represents Centennial Bancorp's reasonable expenses in furnishing the exhibit
requested.

         (b)      On October 6, 2000, Bancorp filed a Form 8-K, which updated
                  the description of its common stock.



                                       30
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Sections 13 or 15(d) 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.

                                        CENTENNIAL BANCORP

DATED:      March 28, 2001               By /s/ Ted R. Winnowski
                                         ---------------------------------------
                                            Ted R. Winnowski, President,
                                            Chief Executive Officer and Director


                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.


                                        PRINCIPAL EXECUTIVE OFFICER
                                        AND DIRECTOR

DATED:      March 28, 2001               By /s/ Ted R. Winnowski
                                         ---------------------------------------
                                            Ted R. Winnowski, President,
                                            Chief Executive Officer and Director


                                        CHIEF FINANCIAL OFFICER

DATED:      March 28, 2001               By /s/ Michael J. Nysingh
                                           -------------------------------------
                                            Michael J. Nysingh
                                            Chief Financial Officer


                                        DIRECTORS:

DATED:      March 28, 2001               By /s/ Dan Giustina
                                           -------------------------------------
                                            Dan Giustina, Director

DATED:      March 28, 2001               By /s/ Cordy H. Jensen
                                          --------------------------------------
                                            Cordy H. Jensen, Director

DATED:      March 28, 2001               By /s/ Robert L. Newburn
                                           -------------------------------------
                                            Robert L. Newburn, Director

DATED:      March 28, 2001               By /s/ Brian B. Obie
                                            ------------------------------------
                                            Brian B. Obie, Director

DATED:      March 28, 2001               By /s/ Richard C. Williams
                                            ------------------------------------
                                            Richard C. Williams, Director



                                       31
<PAGE>


                                  EXHIBIT INDEX


Exhibit*
--------

3.2           Bylaws, as restated

10.14         Letter of Agreement for a Borrower-in-Custody dated May 4, 2000,
              between Centennial Bank and the Federal Reserve Bank of San
              Francisco

10.16         Incentive Stock Option Agreement dated January 20, 1998 between
              Thaddeus (Ted) Winnowski and registrant

10.17         Nonstatutory Stock Option Agreement dated January 20, 1998,
              between Thaddeus (Ted) Winnowski and registrant

10.18         Nonstatutory Stock Option Agreement dated January 20, 1999,
              between Thaddeus (Ted) Winnowski and registrant

10.19         Nonstatutory Stock Option Agreement dated January 20, 1999,
              between Thaddeus (Ted) Winnowski and registrant

10.20         Incentive Stock Option Agreement dated January 3, 2000,
              between Thaddeus (Ted) Winnowski and registrant

11.1          Earnings per Share Computation

13.1          Portions of 2000 Annual Report to Shareholders (which are
              incorporated by reference into this Form 10-K Annual Report)

23.1          Consent of Symonds, Evans & Company, P.C., Independent Auditors

99.1          Certain Factors to Consider in Connection with Forward-Looking
              Statements

-----------------------------------
*         See Item 14(a)(3) of this Annual Report for a list of all exhibits,
including those incorporated by reference.