SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q


(Mark One)

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

For the quarterly period ended September 30, 1997
                               ------------------

                                 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
             (Exact name of registrant as specified in its charter)


               OREGON                             93-0792841
       (State of Incorporation)      (I.R.S. Employer Identification Number)


                                 675 Oak Street
                              Eugene, Oregon 97401
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (541) 342-3970
              (Registrant's telephone number, including area code)


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes  /X/    No / /

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

7,228,223 shares as of October 31, 1997.

<PAGE>

                        CENTENNIAL BANCORP

                            FORM 10-Q

                        SEPTEMBER 30, 1997

                              INDEX
                              -----

Page
PART I - FINANCIAL INFORMATION                        Reference
------------------------------                        ---------

Condensed  Consolidated  Balance  Sheets as of            4
     September 30, 1997 and December 31, 1996.

Condensed Consolidated Statements of Income for           5
     the nine months and the quarter ended
     September 30, 1997 and 1996.

Condensed  Consolidated  Statements  of Cash Flows        6
     for the nine months ended 
     September 30, 1997 and 1996.

Notes to Condensed Consolidated Financial Statements      7 - 12

Management's Discussion and Analysis of Financial
     Condition and Results of Operations:
          Overview                                        13 - 14
          Material Changes in Financial Condition         14 - 15
          Material Changes in Results of Operations       15 - 18
          Loan Loss Provision                             18
          Liquidity and Capital Resources                 19

PART II - OTHER INFORMATION
---------------------------

Item 6 - Exhibits and Reports on Form 8-K.                20

Signatures                                                21




                                             -3-
<PAGE>


                               CENTENNIAL BANCORP
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   September 30,             December 31,
                                                                       1997                     1996
                                                                   -------------            -------------
<S>                                                                <C>                      <C>
ASSETS
------
Cash and cash equivalents:
     Cash and due from banks                                        $ 30,470,873            $ 26,827,505
     Interest-bearing balances due from banks                          3,500,000              11,570,000
                                                                    ------------            ------------
          Total cash and cash equivalents                             33,970,873              38,397,505
Securities available-for-sale                                         84,430,094              82,654,422
Loans held for sale                                                    5,785,901               3,537,996
Loans receivable, net                                                326,940,667             262,491,991
Federal Home Loan Bank stock                                           4,618,000               4,365,800
Accrued interest receivable                                            3,448,057               3,309,363
Premises and equipment, net                                           10,178,195               9,346,825
Other assets                                                           2,626,196               3,081,702
                                                                    ------------            ------------
                                                                    $471,997,983            $407,185,604
                                                                    ============            ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
     Deposits:
          Demand                                                    $ 94,666,335            $ 74,350,639
          Interest-bearing demand                                    155,701,664             130,659,749
          Savings                                                     18,028,637              13,746,547
          Time                                                       133,541,568             121,198,310
                                                                    ------------            ------------
               Total deposits                                        401,938,204             339,955,245
     Short-term borrowings                                             8,203,543              12,315,583
     Accrued interest and other liabilities                            3,010,721               3,568,917
     Long-term debt                                                   10,000,000              10,000,000
                                                                    ------------            ------------
               Total liabilities                                     423,152,468             365,839,745
Shareholders' equity:
     Preferred stock, $5.00 par value; none issued
          Non-voting, 5,000,000 shares authorized                             --                      --
          Voting, 5,000,000 shares authorized                                 --                      --
     Common stock, $2.00 par value; 10,000,000 shares
          authorized, 7,228,223 issued and outstanding
          (6,535,447 at December 31, 1996)                            14,456,446              13,070,894
     Additional paid-in capital                                        9,976,096              11,137,171
     Retained earnings                                                23,869,463              17,171,984
     Unrealized gains (losses) on securities available-for-
          sale, net of related taxes                                     543,510                 (34,190)
                                                                    ------------            ------------
               Total shareholders' equity                             48,845,515              41,345,859
                                                                    ------------            ------------
                                                                    $471,997,983            $407,185,604
                                                                    ============            ============
</TABLE>
See accompanying notes.


                                                   -4-


<PAGE>


                               CENTENNIAL BANCORP
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                   The Quarter Ended                 The Nine Months Ended
                                                     September 30,                        September 30,
                                              ---------------------------         --------------------------
                                                 1997             1996                  1997           1996
                                              ----------      -----------         -----------     ----------
<S>                                           <C>              <C>                <C>             <C>
INTEREST INCOME
     Interest and fees on loans               $8,770,014      $6,889,129          $24,573,993    $18,872,009
     Interest on investment securities         1,164,621       1,247,320            3,544,781      3,743,115
     Other interest income                       398,980         224,890              740,536        453,674
                                              ----------      ----------          -----------    -----------
        Total interest income                 10,333,615       8,361,339           28,859,310     23,068,798
INTEREST EXPENSE
     Interest on deposits                      3,362,955       2,576,664            9,040,636      6,841,053
     Interest on short-term borrowings            78,774         199,687              424,679        695,371
     Interest on long-term debt                  154,762         238,063              459,096        579,934
                                              ----------      ----------          -----------    -----------
          Total interest expense               3,596,491       3,014,414            9,924,411      8,116,358
                                              ----------      ----------          -----------    -----------
NET INTEREST INCOME                            6,737,124       5,346,925           18,934,899     14,952,440
     Loan loss provision                         150,000         300,000            1,100,000        585,000
                                              ----------      ----------          -----------    -----------
          Net interest income after
            loan loss provision                6,587,124       5,046,925           17,834,899     14,367,440
NONINTEREST INCOME
     Service charges on deposit accounts         266,565         247,498              766,474        726,424
     Other                                       156,287         130,040            1,076,892        372,567
     Gains on sales of loans                     265,027         186,961              632,374        472,490
     Gains on sales of investment securities       5,015              --               34,324          6,595
                                               ---------      ----------          -----------    -----------
          Total noninterest income               692,894         564,499            2,510,064      1,578,076
NONINTEREST EXPENSE
     Salaries and employee benefits            2,328,895       1,953,054            6,656,513      5,549,668
     Premises and equipment                      501,462         479,496            1,475,842      1,420,489
     Legal and professional                      216,916         179,877              532,495        413,106
     Advertising                                 135,996         131,095              376,470        374,181
     Printing and stationery                     118,684          75,457              304,242        228,514
     Other                                       367,418         333,289            1,076,522      1,028,192
                                              ----------      ----------          -----------    -----------
          Total noninterest expense            3,669,371       3,152,268           10,422,084      9,014,150
                                              ----------      ----------          -----------    -----------

Income before income taxes                     3,610,647       2,459,156            9,922,879      6,931,366
Provision for income taxes                     1,173,900         799,300            3,225,400      2,252,700
                                              ----------      ----------          -----------    -----------

NET INCOME                                    $2,436,747      $1,659,856          $ 6,697,479    $ 4,678,666
                                              ==========      ==========          ===========    ===========

Earnings per common share:
     Primary                                  $      .32      $      .26          $       .89     $      .74
     Fully diluted                            $      .32      $      .24          $       .89     $      .69

Weighted average common shares outstanding:
     Primary                                   7,578,584       6,458,666            7,521,670      6,365,198
     Fully diluted                             7,578,584       7,361,481            7,521,670      7,268,013

</TABLE>
See accompanying notes.

                                                   -5-


<PAGE>


                               CENTENNIAL BANCORP
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                     The Nine Months Ended
                                                                                          September 30,
                                                                                  --------------------------
                                                                                       1997          1996
                                                                                  ------------  ------------
<S>                                                                               <C>           <C>

Net cash provided by operating activities                                         $ 5,424,653   $ 4,584,485

Cash flows from investing activities:
     Net increase in loans                                                        (65,548,676)  (60,371,903)
     Investment security purchases                                                (14,974,773)  (19,806,395)
     Proceeds from investment securities:
          Maturities                                                                3,152,782     3,861,855
          Sales                                                                    11,020,078     6,304,169
     Purchases of premises and equipment                                           (1,596,092)     (615,289)
                                                                                  -----------    -----------
          Net cash used by investing activities                                   (67,946,681)  (70,627,563)

Cash flows from financing activities:
     Net increase in deposits                                                      61,982,959    54,699,568
     Net decrease in short-term borrowings                                         (4,112,040)     (213,366)
     Proceeds from long-term debt                                                          --    10,000,000
     Proceeds from issuance of common stock                                           224,477       237,021
                                                                                  -----------   -----------
          Net cash provided by financing activities                                58,095,396    64,723,223
                                                                                  -----------   -----------

Net decrease in cash and cash equivalents                                          (4,426,632)   (1,319,855)

Cash and cash equivalents at beginning of period                                   38,397,505    36,721,459
                                                                                  -----------   -----------

Cash and cash equivalents at end of period                                        $33,970,873   $35,401,604
                                                                                  ===========   ===========



Supplemental Disclosure of Cash Flow Information:

Noncash investing and financing activities:
     Conversion of debentures to common stock                                     $        --   $ 1,876,000
     Net costs attributable to debentures converted                                        --      (130,655)
     Cash paid in lieu of issuance of fractional shares                                    --          (159)
                                                                                   ----------   -----------
                                                                                  $        --   $ 1,745,186
                                                                                   ===========  ===========




</TABLE>
See accompanying notes.


                                                         -6-
<PAGE>


                               CENTENNIAL BANCORP
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   Basis of Presentation
     ---------------------

     The  interim  condensed   consolidated  financial  statements  include  the
     accounts of Centennial Bancorp, a bank holding company ("Bancorp"), and its
     wholly owned subsidiaries, Centennial Bank ("Bank") and Centennial Mortgage
     Co.  ("Mortgage  Co.").  The Bank is an Oregon state-  chartered bank which
     provides commercial banking services.  Mortgage Co. originates  residential
     mortgage loans for resale in the secondary market.

     The interim condensed consolidated financial statements are unaudited,  but
     include all adjustments,  consisting only of normal accruals, which Bancorp
     considers  necessary for a fair  presentation  of the results of operations
     for such interim periods.

     All significant intercompany balances and transactions have been eliminated
     in consolidation.

     The balance  sheet data as of December  31, 1996 was derived  from  audited
     financial  statements,  but does not include all  disclosures  contained in
     Bancorp's 1996 Annual Report to Shareholders.

     The interim condensed  consolidated  financial statements should be read in
     conjunction with the consolidated financial statements, including the notes
     thereto, included in Bancorp's 1996 Annual Report to Shareholders.

     Certain  amounts for 1996 have been  reclassified  to conform with the 1997
     presentation.





                               -7-
<PAGE>

2.   Loans and Reserve for Loan Losses
     ---------------------------------

     The composition of the loan portfolio was as follows:

                                      September 30,  December 31,
                                          1997          1996
                                     ------------   ------------
     Real estate -- mortgage         $ 81,667,417   $ 70,126,798
     Real estate -- construction       86,545,798     66,243,687
     Commercial                       151,637,816    116,815,814
     Installment                        6,337,945      6,425,215
     Lease financing                    3,474,606      3,774,748
     Other                              1,331,365      2,634,659
                                     ------------   ------------
                                      330,994,947    266,020,921
     Reserve for loan losses           (3,179,472)    (2,599,653)
     Less deferred loan fees             (874,808)      (929,277)
                                     ------------   ------------
                                     $326,940,667   $262,491,991
                                     ============   ============


     Loans held for sale of $5,785,901  and $3,537,996 at September 30, 1997 and
     December 31, 1996,  respectively,  represent  real estate  mortgage  loans.
     These loans are recorded at cost which approximates market.

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

                                         1997           1996
                                     -----------     -----------
     Balance at beginning of period  $2,599,653      $1,928,372
     Provision charged to operations  1,100,000         585,000
     Recoveries                          37,352          39,680
     Loans charged off                 (557,533)        (48,082)
                                     ----------      ----------
     Balance at end of period        $3,179,472      $2,504,970
                                     ==========      ==========



                               -8-
<PAGE>

     At  September  30,  1997 and  December  31,  1996,  Bancorp  had two  loans
     requiring a specific  valuation  allowance in accordance  with Statement of
     Financial  Accounting  Standards  ("SFAS")  No. 114, as amended by SFAS No.
     118. The specific valuation  allowance was $150,000 on loans with remaining
     principal  outstanding  of $732,000 at  September  30, 1997  ($300,000  and
     $1,100,000,  respectively,  at December 31, 1996). Each loan with a current
     outstanding  principal  balance of less than  $100,000 is grouped  into one
     homogenous pool when considering the valuation allowance.

     It is Bancorp's  policy to place loans on  nonaccrual  status  whenever the
     collection  of all or a part of the  principal  balance is in doubt.  Loans
     placed on nonaccrual status may or may not be contractually past due at the
     time of such  determination,  and may or may not be secured by  collateral.
     Loans on nonaccrual status at September 30, 1997 and December 31, 1996 were
     approximately $777,000 and $1,480,000, respectively.

     Loans  past  due 90 days  or more on  which  Bancorp  continued  to  accrue
     interest  were   approximately   $1,248,000  at  September  30,  1997,  and
     approximately  $420,000 at December 31, 1996.  There were no loans on which
     the interest rate or payment  schedule  were  modified from their  original
     terms to accommodate a borrower's  weakened financial position at September
     30, 1997 or December 31, 1996.


3.   Earnings Per Common Share
     -------------------------

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

     Fully  diluted  earnings per share for 1996 is  calculated  by dividing net
     income plus after-tax interest incurred on the 7% Convertible Debentures by
     common shares outstanding,


                               -9-
<PAGE>

     common share  equivalents  attributable to outstanding  stock options,  and
     shares  assumed to be issued on conversion of the  Convertible  Debentures.
     The  Convertible  Debentures  were  issued  in 1994  and were  redeemed  in
     December 1996.

     The weighted  average  number of shares and common share  equivalents  have
     been  adjusted  to give  retroactive  effect to an  11-for-10  stock  split
     declared July 16, 1997, and stock splits and stock dividends declared prior
     to that date.

4.   Financial Accounting Standards Board
     ------------------------------------

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

     SFAS No. 125
     ------------

     On June 28, 1996,  FASB issued SFAS No. 125,  "Accounting for Transfers and
     Servicing  of  Financial  Assets and  Extinguishment  of  Liabilities,"  as
     amended  by SFAS  No.  127,  "Deferral  of the  Effective  Date of  Certain
     Provisions of FASB Statement No. 125." This Statement  provides  accounting
     and reporting standards for transfers and servicing of financial assets and
     extinguishment  of  liabilities  based  on  consistent   application  of  a
     financial-components approach that focuses on control. Bancorp adopted SFAS
     No.  125 on  January  1, 1997  with no  material  impact  on its  financial
     statements.

     SFAS No. 128
     ------------

     In February 1997, FASB adopted SFAS No. 128, "Earnings per Share," which is
     effective for financial statements issued for periods ending after December
     15, 1997. SFAS No. 128  establishes  standards for computing and presenting
     earnings per share,  supersedes the prior standards and makes the standards
     comparable to  international  standards for the computation of earnings per
     share.

                               -10-
<PAGE>

     SFAS No. 128 replaces the presentation of primary earnings per share with a
     presentation of basic earnings per share. Basic earnings per share excludes
     dilution   and  is  computed  by  dividing   income   available  to  common
     shareholders  by the weighted  average number of common shares  outstanding
     for the period.  SFAS No. 128 also requires dual  presentation of basic and
     diluted earnings per share on the income  statement for certain  companies,
     and requires a reconcilement  of the numerator and denominator of the basic
     earnings per share to the numerator and denominator of the diluted earnings
     per share computation.  SFAS No. 128 also requires restatement of all prior
     period earnings-per-share data presented.

     Management  has  calculated  that,  if the  provisions of SFAS No. 128 were
     adopted as of January 1, 1997, Bancorp's primary earnings per share of $.89
     and $.32 for the nine  months and the quarter  ended  September  30,  1997,
     respectively,  would  change to basic  earnings per share of $.93 and $.34,
     respectively. Bancorp's primary earnings per share of $.74 and $.26 for the
     nine months and the quarter ended September 30, 1996,  respectively,  would
     change to basic  earnings per share of $.77 and $.27,  respectively.  There
     would be no effect on diluted earnings per share as reported.

     SFAS No. 129
     ------------

     In February  1997,  FASB issued SFAS No. 129,  "Disclosures  of Information
     about Capital Structure." This Statement,  which establishes  standards for
     disclosing  information about an entity's capital  structure,  is effective
     for financial  statements for periods ending after December 15, 1997.  This
     statement is not expected to have a material impact on Bancorp's  financial
     statements.

     SFAS No. 130
     ------------

     In June 1997, FASB issued SFAS No. 130, "Reporting  Comprehensive  Income."
     SFAS No. 130  establishes  requirements  for  disclosure  of  comprehensive
     income and

                               -11-
<PAGE>

     becomes  effective  for  Bancorp  for the year ending  December  31,  1998.
     Comprehensive  income includes such items as foreign  currency  translation
     adjustments    and    unrealized    gains   and   losses   on    securities
     available-for-sale  that are  currently  being  included as a component  of
     shareholders'  equity.  Bancorp  does  not  expect  this  pronouncement  to
     materially impact Bancorp's financial condition or results of operations.

     SFAS No. 131
     ------------

     In June 1997, FASB issued SFAS No. 131,  "Disclosures  about Segments of an
     Enterprise and Related  Information."  SFAS No. 131 requires  publicly-held
     companies   to   report   financial   and  other   information   about  key
     revenue-producing  segments  of the entity for which  such  information  is
     available and is utilized by the chief operation  decision-maker.  Specific
     information to be reported for individual segments includes profit or loss,
     certain  revenue and expense items and total assets.  A  reconciliation  of
     segment  financial   information  to  amounts  reported  in  the  financial
     statements will be required.  SFAS No. 131 is effective for Bancorp in 1998
     and it has not been determined whether Bancorp will be required to make any
     additional disclosure.


                               -12-

<PAGE>


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


     THIS REPORT CONTAINS  CERTAIN  FORWARD-LOOKING  STATEMENTS,  WHICH ARE MADE
PURSUANT TO THE SAFE HARBOR  PROVISIONS  OF THE  PRIVATE  SECURITIES  LITIGATION
REFORM ACT OF 1995. WHEN USED IN THIS REPORT, THE WORDS "ANTICIPATE,"  "BELIEVE"
AND "EXPECT," AND WORDS OR PHRASES OF SIMILAR  IMPORT,  ARE INTENDED TO IDENTIFY
FORWARD-LOOKING  STATEMENTS.  SUCH  STATEMENTS  ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES  THAT COULD CAUSES ACTUAL RESULTS TO DIFFER  MATERIALLY FROM THOSE
ANTICIPATED. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE:
CHANGES IN GENERAL  BUSINESS AND ECONOMIC  CONDITIONS,  PARTICULARLY  IN OREGON;
CHANGES  IN  THE  INTEREST  RATE  ENVIRONMENT;  COMPETITIVE  FACTORS,  INCLUDING
INCREASED  COMPETITION  AND INTEREST  RATE  PRESSURES;  CHANGES IN REGULATORY OR
OTHER EXTERNAL FACTORS;  AND OTHER FACTORS LISTED FROM TIME TO TIME IN BANCORP'S
SEC REPORTS,  INCLUDING BUT NOT LIMITED TO,  EXHIBIT 99.1 TO BANCORP'S FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996, 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.


OVERVIEW
--------

     Centennial  Bancorp  reported  net income of $6.7 million or $.89 per share
(primary),  for the nine months ended September 30, 1997. This represented a 43%
increase in net income and a 20%  increase in earnings per share  (primary),  as
compared to $4.7 million, or $.74 per share, for the nine months ended September
30, 1996. Net income of $2.4 million,  or $.32 per share,  for the quarter ended
September 30, 1997 similarly  represented a 47% increase in net income and a 23%
increase in earnings per share (primary),  as compared to $1.7 million,  or $.26
per share,  for the quarter  ended  September 30, 1996.  The increased  earnings
during the nine  months and the  quarter  ended  September  30,  1997  reflected
primarily the expansion of Bancorp's  interest-earning  assets and increased net
interest income. At September 30, 1997,

                               -13-
<PAGE>

Bancorp  recognized  a 22%  increase in both total  assets and  interest-earning
assets as compared to September 30, 1996.

     The net income added to shareholders' equity during the nine months and the
third  quarter of 1997 was  augmented  by an increase in the value of  Bancorp's
securities  available-for-sale.  This increase in value resulted from a decrease
in interest rates which caused bond prices to increase.

MATERIAL CHANGES IN FINANCIAL CONDITION
---------------------------------------

     Material changes in financial condition for the nine months ended September
30,  1997  include  an  increase  in  total  assets,   primarily  in  securities
available-for-sale  and loans and loans held for sale,  which was offset in part
by a  decrease  in cash and cash  equivalents.  Funds  were  provided  for these
increases by an increase in total  deposits,  maturities and sales of securities
available-for-sale, and earnings. The funds provided for the increases in assets
were offset in part by a reduction in short-term borrowings.

         At September 30, 1997,  total assets were $472.0 million,  representing
an increase of 15.9%, or $64.8 million,  over total assets at December 31, 1996.
The  increase in total  assets  includes an increase in loans and loans held for
sale of $64.9 million,  primarily due to increased  commercial  loan activity of
the Bank,  and also due to an  increase  in real  estate  construction  and real
estate mortgage lending.

     Securities  available-for-sale  increased $1.8 million (or 2%) at September
30,  1997  as  compared  to  December  31,  1996.  The  increase  in  securities
available-for-sale  resulted from purchases of U.S. Treasury and U.S. Government
agency securities of $15.0 million and sales or maturities of $14.2 million.

         Cash and cash equivalents  decreased $4.4 million (or 11%) at September
30, 1997 as  compared  to  December  31,  1996.  Cash and cash  equivalents  can
fluctuate  significantly  on a day-to-day basis and are subject to disbursements
of loans  proceeds to borrowers,  payment of loans by  borrowers,  submission of
checks deposited by customers to other banks for payment and payment to

                               -14-
<PAGE>

other banks by Bancorp for checks drawn against customer accounts.

     Total  deposits  increased  $62.0 million (or 18%) at September 30, 1997 as
compared to December  31, 1996.  The majority of the increase in total  deposits
was experienced in demand deposits and interest-bearing demand deposits. Bancorp
actively solicits demand and interest-bearing demand deposit accounts due to the
lower costs associated with those deposit categories.  Bancorp will also solicit
time deposits when needed to provide funds for expansion of the loan  portfolio.
However,  time deposits are the most costly  category of deposits for Bancorp to
maintain due to interest rate competition.

     Short-term borrowings decreased $4.1 million (or 33%) at September 30, 1997
as compared to December 31, 1996.  This decrease  resulted from the maturity and
repayment of  borrowings  from the Federal  Home Loan Bank of Seattle  ("FHLB"),
which was offset in part by an increase in  securities  sold under  agreement to
repurchase.  Management elected to repay the FHLB loan due to Bancorp's increase
in total deposits  experienced  during the second quarter,  which provided ample
liquidity to satisfy the obligation and provide funds for the growth experienced
in loans.

     All other changes experienced in asset and liability  categories during the
first nine months of 1997 were comparatively modest.


MATERIAL CHANGES IN RESULTS OF OPERATIONS
-----------------------------------------

     Total interest  income  increased $5.8 million (or 25%) for the nine months
and $2.0 million (or 24%) for the quarter  ended  September 30, 1997 as compared
to the same periods in 1996.  These increases were primarily due to increases in
loans and loans held for sale  during 1997 as  compared  to 1996.  Bancorp  also
recognized modest increases in other interest income for the nine months and the
quarter ended  September  30, 1997 as compared to the same periods in 1996,  but
these  increases  were offset in part by  decreases  in  interest on  securities
available-for-sale.


                               -15-
<PAGE>


     Total interest  expense  similarly  increased $1.8 million (or 22%) for the
nine months and $582,000 (or 19%) for the quarter  ended  September  30, 1997 as
compared to the comparable  1996 periods.  These increases were primarily due to
the increase in deposits held during 1997 as compared to 1996, which were offset
in part by decreases in interest expense on short-term  borrowings and long-term
debt during the 1997 periods.

     The  increases  in  interest  earned,  offset in part by the  increases  in
interest paid, served to increase  Bancorp's net interest income by $4.0 million
(or 27%) for the  nine-month  period,  and $1.4  million  (or 26%) for the third
quarter of 1997, over the comparable periods in 1996.

     Noninterest  income  increased  $932,000  (or 59%) for the nine  months and
$128,000 (or 23%) for the quarter  ended  September  30, 1997 as compared to the
comparable  1996 periods.  The increase for the nine-month  period was primarily
attributable  to receipt of a  settlement  payment for a claim the Bank  brought
against former legal counsel.  The increase for the quarter ended  September 30,
1997 was primarily  attributable to an increase in gains  recognized on sales of
residential  mortgage  loans due to the more stable  interest  rate  environment
experienced  during the second and third  quarters of 1997 which  resulted in an
increase in residential mortgage loan activity.

     Noninterest expense increased $1.4 million (or 16%) for the nine months and
$517,000 (also 16%) for the quarter ended  September 30, 1997 as compared to the
comparable  1996 periods.  The increases  for the  nine-month  and the quarterly
periods  were  primarily  attributable  to  increases  in salaries  and employee
benefits, legal and professional fees and printing and stationery expense.

     Salaries  and employee  benefits  increased  $1.1  million  during the nine
months and $376,000  during the quarter ended  September 30, 1997 as compared to
the 1996 periods.  These  increases were due to additions to Bank's and Mortgage
Co.'s staffs to accommodate their increased  business  activities and to operate
the  additional  branch  office of the Bank that opened in the Portland  area in
January 1997.  The increases  were also due to the addition of staff to manage a
future branch office of the Bank to be located in the Tanasbourne area of


                               -16-
<PAGE>

Portland.  Management intended to open the branch in a temporary facility during
the  third  quarter  of 1997  during  construction  of the  permanent  building.
However, delays in obtaining permits to site the temporary facility deferred its
opening until the fourth quarter of 1997. Construction of the permanent building
was begun during the quarter ended September 30, 1997.

     During the quarter ended  September  30, 1997,  the Bank opened four branch
offices located in Portland area retirement centers. These four branches offer a
full range of deposit  services to the residents of the  retirement  facilities,
but are operated on a limited-hour  basis.  Management  does not anticipate that
overhead  expenses of operating these retirement center branches will materially
impact Bancorp's  salary and employee benefit or premises and equipment  expense
categories.

     Premises and equipment expense increased $55,000 and $22,000, respectively,
during the nine months and the quarter  ended  September 30, 1997 as compared to
the 1996  periods.  These  increases  were  primarily  the result of opening the
additional  full-service branch in Portland and additional depreciation for data
processing equipment.

     Legal and professional  expenses increased $119,000 for the nine months and
$37,000  for the  quarter  ended  September  30,  1997 as  compared  to the 1996
periods.  These  increases  were due to legal expenses  associated  with ongoing
litigation in the normal course of Bancorp's  business,  and to fees charged for
personnel acquisition services.

     Printing and stationery  expense  increased  $76,000 during the nine months
and $43,000 during the quarter ended  September 30, 1997 as compared to the 1996
periods.  These increases were due primarily to the additional branch offices of
the Bank and Mortgage  Co., but were also due to  Bancorp's  increased  business
activity.

     Other  noninterest  expense  increased  $48,000  during the nine months and
$34,000  during  the  quarter  ended  September  30,  1997  as  compared  to the
comparable  1996  periods.   These  increases  were  similarly  attributable  to
Bancorp's increased operating levels.

                               -17-
<PAGE>

The increase for the 1997 nine-month  period was offset in part by the recapture
of a  contingency  reserve  during the first quarter of 1997,  which  management
deemed no longer necessary.

     The  provision  for  income  taxes  increased  for the nine  months and the
quarter ended September 30, 1997 by 43% and 47%, respectively, commensurate with
Bancorp's increase in income before income taxes.  Bancorp's  effective tax rate
remained  at  approximately  32.5%,  primarily  due to the amount of  nontaxable
interest   income   earned  on   securities   issued  by  states  and  political
subdivisions.


LOAN LOSS PROVISION
-------------------

     During the nine months ended  September  30, 1997,  Bancorp  charged a $1.1
million  loan loss  provision  to  operations,  as compared to $585,000  charged
during the nine months  ended  September  30,  1996.  Loans  charged off, net of
recoveries,  during the nine months ended  September 30, 1997 were $520,000,  as
compared  to net  charge-offs  of $8,000  for the 1996  nine-month  period.  The
increase in the amount of loans charged off, net of recoveries,  during the nine
months ended  September  30, 1997 was  primarily  attributable  to  management's
determination that portions of two loans on which a specific valuation allowance
in  accordance  with  SFAS  No.  114  had  previously  been   established   were
uncollectible.

     The  loan  loss  provision  was  increased  to  provide  coverage  for  the
significant  increase in loans.  Management  believes  that the reserve for loan
losses is adequate for potential loan losses,  based on management's  assessment
of various factors,  including present delinquent and non-performing loans, past
history of industry loan loss  experience,  and present and  anticipated  future
economic trends impacting the areas and customers served by Bancorp.


                               -18-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

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

     Along with  federal  funds  lines,  the Bank  maintains  a cash  management
advance with the FHLB which allows temporary borrowings for liquidity.

     At September 30, 1997, Bancorp's Tier 1 and total risk-based capital ratios
under the Federal  Reserve Board's ("FRB")  risk-based  capital  guidelines were
approximately  11.8%  and  12.6%,  respectively.  The FRB's  minimum  risk-based
capital  ratio  guidelines  for  Tier  1  and  total  capital  are  4%  and  8%,
respectively.

     At September 30, 1997,  Bancorp's  capital-to-assets  ratio under  leverage
ratio  guidelines was  approximately  10.4%.  The FRB's current minimum leverage
capital ratio guideline is 3%.

     During the quarter ended  September 30, 1997, the Bank received  regulatory
approval to open a full service office in the Tanasbourne area of Portland,  and
spent $1.2 million to acquire land at that site. The Bank intends to construct a
14,000  square foot facility at the site.  Management  has projected the cost of
the facility to be $1.5 million,  and  anticipates  that furniture and equipment
will  cost  between  $200,000  and  $300,000.  Management  intends  to fund  the
construction  of the facility and the  furniture  and  equipment  costs  through
internal cash flow.


                               -19-
<PAGE>


                   PART II - OTHER INFORMATION


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

(a)  Exhibits

     10.17  Employment Agreement dated July 29, 1997 between
            Thaddeus (Ted) R. Winnowski and Centennial Bank.

     27     Financial Statement Schedule


(b)  Reports on Form 8-K

     None



                               -20-


<PAGE>


                            SIGNATURES
                            ----------



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                              CENTENNIAL BANCORP



Dated:  November 13, 1997     /s/ Richard C. Williams
                              -----------------------------------
                                Richard C.Williams
                                President & Chief Executive Officer




Dated:  November 13, 1997     /s/ Michael J. Nysingh
                              -----------------------------------
                              Michael J. Nysingh
                              Chief Financial Officer



                               -21-