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                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
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PARTIES:                   CENTENNIAL BANCORP ("Company")

                           RICHARD C. WILLIAMS ("Executive").

EFFECTIVE DATE:            December 1, 1997

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This First Amendment is made in respect of the following facts:

                    A.  The parties entered into an Employment Agreement dated
                        October 1, 1995 (the "Agreement") respecting Executive's
                        employment by Company for a term ending December 31,
                        2001.

                    B.  The parties have agreed to amend the Agreement as
                        provided in and subject to the conditions stated in this
                        First Amendment.

AGREEMENT:

Section 3.1.3 of the Agreement is amended to provide as follows:

                  3.1.3    $300,000 for the year beginning December 1, 1997 and
                           ending November 30, 1998, and amounts approved by
                           Company's board of directors for periods after
                           November 30, 1998, but not less than $300,000 for
                           each 12 months.

The following Sections 7.3 and 7.4 are added to the Agreement:

            7.3 UPON OR FOLLOWING CHANGE IN CONTROL. In the event of any Change
              in Control (as defined in Section 7.3.3) of Company or Bank,
              Company and Executive shall each have the elective right to
              terminate the Employment Period, effective at the closing of the
              event resulting in the Change in Control.

                  7.3.1     TERMINATION UPON CHANGE IN CONTROL. If the
                            Employment Period is so terminated upon a Change in
                            Control, Company's only obligations to Executive
                            shall be: (a) to pay a lump-sum cash payment in an
                            amount equal to two and one-half (2.5) times
                            Executive's "Final Compensation," being the greater
                            of: (i) Executive's Base Salary and Cash Bonus for
                            the most recently ended calendar year, or (ii)
                            Executive's Base Salary for the current calendar
                            year; (b) to pay Deferred Compensation; (c) to
                            provide Post-Retirement Medical Coverage as
<PAGE>

                            described in Section 6.2; and (d) to provide
                            Employee Group Benefits until December 31, 2001;
                            provided, however, Company's obligation to provide
                            Employee Group Benefits to Executive shall exist
                            only so long as Executive meets the eligibility
                            requirements for participation in the insurance,
                            plans and programs maintained or provided by Company
                            for its employees or executive officers generally.
                            Company shall be obligated to use its best efforts
                            to maintain Executive's eligibility to participate
                            in such insurance, plans and programs.

                  7.3.2     TERMINATION FOLLOWING A CHANGE IN CONTROL. If the
                            Employment Period is not so terminated upon a Change
                            in Control, then any subsequent termination of the
                            Employment Period shall be governed by the other
                            provisions of this Agreement; provided, however, if
                            the Employment Period continues after a Change in
                            Control, and if the Employment Period is
                            subsequently terminated other than by reason of
                            Executive's death or disability (by either Company
                            or Executive, with or without cause or good reason)
                            within 36 months after the Change in Control and
                            before December 31, 2001, then Company shall pay to
                            Executive a lump-sum cash payment in an amount equal
                            to two and one-half (2.5) times Executive's Final
                            Compensation, and shall pay or provide the other
                            amounts and benefits described in subsections (b),
                            (c), and (d) of Section 7.3.1.

                  7.3.3     DEFINITION OF "CHANGE IN CONTROL". For purposes of
                            this Agreement, "Change in Control" shall occur if
                            during the Employment Period:

                               (a) Any individual, entity or group, within the
                               meaning of Sections 13(d) and 14(d) of the
                               Securities Exchange Act of 1934, as amended (the
                               "Exchange Act") (other than Company or Bank, any
                               trustee or other fiduciary holding securities
                               under an employee benefit plan of Company or
                               Bank, or any corporation owned, directly or
                               indirectly, by the stockholders of Company or
                               Bank in substantially the same proportions as
                               their ownership of stock of Company or Bank), is
                               or becomes the "beneficial owner" (as defined in
                               Rule 13d-3 under the Exchange Act), directly or
                               indirectly, or securities representing thirty
                               percent (30%) or more of the combined voting
                               power of Company's or Bank's then outstanding
                               voting securities; or

                               (b) Company or Bank effects a merger,
                               consolidation, share exchange or other corporate
                               reorganization of Company or Bank with any other
                               corporation, other than (i) a merger,
                               consolidation, share exchange or other corporate
                               reorganization which would result in the voting
                               securities of Company or Bank outstanding
                               immediately prior thereto continuing to represent
                              (either by remaining outstanding or by being
                               converted into voting securities of the surviving
                               entity) more than seventy percent (70%) of the
                               combined voting power of the voting securities of
                               Company or Bank or such surviving entity
                               outstanding immediately after such merger,
                               consolidation, share exchange or other corporate
                               reorganization, or (ii) a merger, consolidation,
                               share exchange or other corporate reorganization
                               effected to implement a recapitalization of
                               Company or Bank (or similar transaction) in which
                               no individual, entity or group acquires more than
                               thirty percent (30%) of the combined voting power
                               of Company's or Bank's then outstanding voting
                               securities; or
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                               (c) Company or Bank effects complete liquidation
                               of Company or Bank or the sale or disposition of
                               all or substantially all of Company's or Bank's
                               assets.

                  7.3.4     LIMITATIONS ON CHANGE IN CONTROL PAYMENTS. In the
                            event that any payment or benefit to be received by
                            Executive in connection with a Change in Control of
                            Company or Bank, whether payable pursuant to the
                            terms of this Agreement or any other plan,
                            arrangement or agreement with Company, would not be
                            deductible (in whole or in part) as a result of
                            Section 280G of the Internal Revenue Code of 1986,
                            as amended (the "Code"), the payment under Section
                            7.3.1 shall be reduced until Section 280G of the
                            Code does not limit the deductibility of the
                            payment. If the payment under Section 7.3.1 is
                            completely eliminated on account of the preceding
                            sentence, no other payments or benefits shall be
                            reduced, even if such payments or benefits are
                            non-deductible as a result of Section 280G. For this
                            purpose, (1) no payment or benefit, which Executive
                            has effectively waived in writing prior to the date
                            of payment, shall be taken into account; (2) no
                            portion of any payment or benefit which, in the
                            opinion of tax counsel selected by Company's
                            independent auditors and acceptable to Executive,
                            does not constitute a "parachute payment" within the
                            meaning of Section 280G(b)(2) of the Code shall be
                            taken into account; (3) the payment under Section
                            7.3.1 shall be reduced only to the extent necessary
                            so that such payment, together with all other
                            compensation paid by Company to Executive,
                            represents reasonable compensation for services
                            actually rendered within the meaning of Section
                            280G(b)(4) of the Code, in the opinion of such tax
                            counsel; and (4) the value of any non-cash benefit
                            or any deferred payment or benefit shall be
                            determined by Company's independent auditors in
                            accordance with the principles of Section 280G(d)(3)
                            and (4) of the Code.

Section 9.4.3 of the Agreement is entirely deleted, and shall be of no further
effect.

EFFECT OF AMENDMENT

Except as expressly modified by this First Amendment, all terms, conditions, and
provisions of the Agreement, and all rights and obligations of the parties
thereunder, shall continue in full force and effect.
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LEGAL COUNSEL AND EXPENSES

The parties acknowledge and agree that: (a) the law firm of Gleaves Swearingen
Larsen Potter Scott & Smith LLP ("GSLPSS") has acted as legal counsel to
Company, Bank, and Executive, respectively, on various matters in the past; (b)
GSLPSS represents Executive only, and not Company or Bank, in connection with
this First Amendment; (c) neither Company nor Bank has sought or relied on any
advice from GSLPSS in connection with the Agreement or this First Amendment; (d)
prior to executing this First Amendment, Company and Bank have obtained and
relied upon review by, and advice from their general legal counsel, Tonkon Torp
Galen Marmaduke & Booth, concerning Company's and Bank's rights and obligations
under the Agreement as modified by this First Amendment. Company shall reimburse
Executive the amount of legal fees incurred by Executive in having this First
Amendment prepared by GSLPSS.

NOTICES TO EXECUTIVE

Section 17 of the Agreement is amended to provide that, until changed in the
manner provided in the Agreement, Executive's address for receiving any notice
under the Agreement shall be: Richard C. Williams, 3336 Bardell Avenue, Eugene,
Oregon 97401.

EXECUTION

The parties have executed this First Amendment to be effective at the date
appearing in the caption on page 1.

COMPANY                                              EXECUTIVE

CENTENNIAL BANCORP

By /s/ Cordy H. Jensen                       /s/ Richard C. Williams
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   Cordy H. Jensen                           Richard C. Williams
   Director and Secretary