|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 June 30, 2002

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                  
|(State of Incorporation)
|                        

|Benjamin Franklin PlazaOne S.W. Columbia St., Suite 900
Portland, Oregon 97258
(Address of principal executive offices)

(503) 973-5556(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: 24,621,697 shares as
of August 8, 2002.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- 1 -
|-----

|CENTENNIAL BANCORPFORM 10-Q
JUNE 30, 2002


INDEX
|-------------------------------------------------

|                                                                                        |               
|--------------------------------------------------------------------------------------- | --------------
|PART I - FINANCIAL INFORMATION                                                          | Page Reference
|                                                                                        |               
|Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001         | 3             
|                                                                                        |               
|Condensed Consolidated Statements of Income for the six months and the quarter ended   
|June 30, 2002 and 2001                                                                  | 4             
|                                                                                        |               
|Condensed Consolidated Statements of Changes in Shareholders Equity for the year ended
|December 31, 2001 and the six months ended June 30, 2002                                | 5             
|                                                                                        |               
|Condensed Consolidated Statements of Cash Flows for the six months ended               
|June 30, 2002 and 2001                                                                  | 6             
|                                                                                        |               
|Notes to Condensed Consolidated Financial Statements                                    | 7             
|                                                                                        |               
|Managements Discussion and Analysis of Financial Condition and Results of Operations: 
|Overview                                                                                | 11            
|Material Changes in Financial Condition                                                 | 11            
|Material Changes in Results of Operations                                               | 12            
|Market Risk                                                                             | 13            
|Liquidity and Capital Resources                                                         | 13            
|                                                                                        |               
|PART II - OTHER INFORMATION                                                            
|                                                                                        |               
|Item 4  Submission of Matters to a Vote of Security Holders                            | 15            
|                                                                                        |               
|Item 6  Exhibits and Reports on Form 8-K                                               | 15            
|                                                                                        |               
|Signatures                                                                              | 16            

|- 2 -
|-----

|CENTENNIAL BANCORPCONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|-------------------------------------------------------------------

|                                                        |  |  |              |            
|------------------------------------------------------- |  |  | ------------ | -----------
|                                                        |  |  | June 30,2002 |            
|                                                        |  |  |              |            
|ASSETS                                                  |  |  |              |            
|Cash and cash equivalents:                              |  | 
|Cash and due from banks                                 |  |  | $            | 55,396,387 
|Federal funds sold                                      |  |  |              | 20,000,000 
|                                                        |  |  |              |            
|Total cash and cash equivalents                         |  |  |              | 75,396,387 
|                                                        |  |  |              |            
|Securities available-for-sale                           |  |  |              | 91,945,885 
|Mortgage loans held for sale                            |  |  |              | 10,263,289 
|Loans, net                                              |  |  |              | 599,508,158
|Federal Home Loan Bank Stock                            |  |  |              | 6,431,100  
|Premises and equipment, net                             |  |  |              | 15,108,240 
|Intangible assets, net                                  |  |  |              | 7,131,240  
|Other assets                                            |  |  |              | 14,738,064 
|                                                        |  |  |              |            
|                                                        |  |  | $            | 820,522,363
|                                                        |  |  |              |            
|                                                        |  |  |              |            
|LIABILITIES AND SHAREHOLDERS EQUITY                    |  | 
|Liabilities:                                           
|Deposits:                                               |  | 
|Noninterest-bearing demand                              |  |  | $            | 128,910,327
|Interest-bearing demand                                 |  |  |              | 249,311,574
|Savings                                                 |  |  |              | 91,881,306 
|Time certificates                                       |  |  |              | 227,939,623
|                                                        |  |  |              |            
|Total deposits                                          |  |  |              | 698,042,830
|                                                        |  |  |              |            
|Borrowings                                              |  |  |              | 17,161,640 
|Accrued interest and other liabilities                  |  |  |              | 4,845,101  
|                                                        |  |  |              |            
|Total liabilities                                       |  |  |              | 720,049,571
|                                                        |  |  |              |            
|Shareholders equity:                                  
|Common stock, 24,621,697 and 24,876,907 shares issued   |  | 
|and outstanding at June 30, 2002 and December 31, 2001, |  | 
|respectively                                            |  |  |              | 25,070,055 
|Retained earnings                                       |  |  |              | 74,703,478 
|Accumulated other comprehensive income                  |  |  |              | 699,259    
|                                                        |  |  |              |            
|Total shareholders equity                              |  |  |              | 100,472,792
|                                                        |  |  |              |            
|                                                        |  |  | $            | 820,522,363
|                                                        |  |  |              |            
|                                                        |  |  |              |            
|See accompanying notes.                                 |  |  |              |            

|- 3 -
|-----

|CENTENNIAL BANCORPCONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|-------------------------------------------------------------------------

|                                              |  |  |                            |           
|--------------------------------------------- |  |  | -------------------------- | ----------
|                                              |  |  | Three Months EndedJune 30, |           
|                                              |  |  |                            |           
|                                              |  |  | 2002                       |           
|                                              |  |  |                            |           
|INTEREST INCOME                               |  |  |                            |           
|Interest and fees on loans                    |  |  | $                          | 12,576,215
|Interest on investment securities             |  |  |                            | 1,176,252 
|Other interest income                         |  |  |                            | 120,104   
|                                              |  |  |                            |           
|Total interest income                         |  |  |                            | 13,872,571
|INTEREST EXPENSE                              |  | 
|Interest on deposits                          |  |  |                            | 3,253,948 
|Interest on short-term borrowings             |  |  |                            | 152,147   
|                                              |  |  |                            |           
|Total interest expense                        |  |  |                            | 3,406,095 
|                                              |  |  |                            |           
|NET INTEREST INCOME                           |  |  |                            | 10,466,476
|Loan loss provision                           |  |  |                            | 975,000   
|                                              |  |  |                            |           
|Net interest income after loan loss provision |  |  |                            | 9,491,476 
|                                              |  |  |                            |           
|NONINTEREST INCOME                           
|Service charges                               |  |  |                            | 638,979   
|Net gains on sales of loans                   |  |  |                            | 300,581   
|Net gains on sales of securities              |  |  |                            | 168,333   
|Other                                         |  |  |                            | 391,600   
|                                              |  |  |                            |           
|Total noninterest income                      |  |  |                            | 1,499,493 
|NONINTEREST EXPENSE                          
|Salaries and employee benefits                |  |  |                            | 3,829,238 
|Premises and equipment                        |  |  |                            | 1,102,009 
|Legal and professional                        |  |  |                            | 315,101   
|Advertising                                   |  |  |                            | 283,164   
|Data Processing                               |  |  |                            | 193,445   
|Amortization of intangible assets             |  |  |                            | 154,103   
|Other                                         |  |  |                            | 833,125   
|                                              |  |  |                            |           
|Total noninterest expense                     |  |  |                            | 6,710,185 
|                                              |  |  |                            |           
|Income before income taxes                    |  |  |                            | 4,280,784 
|Provision for income taxes                    |  |  |                            | 1,630,979 
|                                              |  |  |                            |           
|                                              |  |  |                            |           
|NET INCOME                                    |  |  | $                          | 2,649,805 
|                                              |  |  |                            |           
|                                              |  |  |                            |           
|Earnings per share of common stock:          
|Basic                                         |  |  | $                          | 0.11      
|Diluted                                       |  |  | $                          | 0.11      
|                                              |  |  |                            |           
|Weighted average shares outstanding:          |  | 
|Basic                                         |  |  |                            | 24,733,163
|Diluted                                       |  |  |                            | 25,221,316
|                                              |  |  |                            |           
|See accompanying notes.                       |  | 

|- 4 -
|-----

|CENTENNIAL BANCORPCONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited)
|--------------------------------------------------------------------------------------------------

|                              |                      |  |                  |            |              | 
|----------------------------- | -------------------- |  | ---------------- | ---------- | ------------ | 
|                              | Comprehensive Income |  | Number of Shares |            | Common Stock | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|Balances at December 31, 2000 |                      |  |                  |            |              | 
|                              |                      | 
|Comprehensive income:         |                      | 
|Net income                    |                      |  | $                | 14,206,351 |              | 
|Other comprehensive income:   |                      | 
|unrealized gains on           |                      | 
|investment securities, net    |                      | 
|of income taxes               |                      |  |                  | 217,622    |              | 
|                              |                      |  |                  |            |              | 
|Comprehensive income          |                      |  | $                | 14,423,973 |              | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|Stock options exercised       |                      |  |                  |            |              | 
|Tax benefit of stock options 
|exercised                     |                      |  |                  |            |              | 
|Cash dividends declared       |                      | 
|($.08 per share)              |                      |  |                  |            |              | 
|Repurchases of common stock   |                      |  |                  |            |              | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|Balances at December 31, 2001 |                      |  |                  |            |              | 
|                              |                      | 
|Comprehensive income:        
|Net income                    |                      |  | $                | 4,759,390  |              | 
|Other comprehensive income:  
|unrealized gains on          
|investment securities, net   
|of income taxes               |                      |  |                  | 661,022    |              | 
|                              |                      |  |                  |            |              | 
|Comprehensive income          |                      |  | $                | 5,420,412  |              | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|Stock options exercised       |                      |  |                  |            |              | 
|Tax benefit of stock options  |                      | 
|exercised                     |                      |  |                  |            |              | 
|Cash dividends declared      
|($.08 per share)              |                      |  |                  |            |              | 
|Repurchases of common stock   |                      |  |                  |            |              | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|Balances at June 30, 2002     |                      |  |                  |            |              | 
|                              |                      |  |                  |            |              | 
|                              |                      | 
|See accompanying notes.       |                      | 

|- 5 -
|-----

|CENTENNIAL BANCORPCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|-----------------------------------------------------------------------------

|                                                    |                           | 
|--------------------------------------------------- | ------------------------- | 
|                                                    | Six Months Ended June 30, | 
|                                                    |                           | 
|                                                    |                           | 
|                                                    |                           | 
|Cash flows from operating activities:               |                           | 
|Net income                                          |                           | 
|Adjustments to reconcile net income to net cash    
|provided by operating activities:                  
|Gains on sales of mortgage loans and                |                           | 
|investment securities, net                          |                           | 
|Dividends on Federal Home Loan Bank stock           |                           | 
|Loan loss provision                                 |                           | 
|Deferred income taxes                               |                           | 
|Depreciation and amortization                       |                           | 
|Proceeds from sales of mortgage loans              
|held for sale, net                                  |                           | 
|Changes in certain assets and liabilities:          |                           | 
|Accrued interest and other assets                   |                           | 
|Accrued interest and other liabilities              |                           | 
|                                                    |                           | 
|Net cash provided by operating activities           |                           | 
|                                                    |                           | 
|Cash flows from investing activities:               |                           | 
|Net decrease in loans                               |                           | 
|Investment securities available-for-sale:           |                           | 
|Purchases                                           |                           | 
|Maturities/calls/principal reductions               |                           | 
|Sales                                               |                           | 
|Purchases of premises and equipment                 |                           | 
|                                                    |                           | 
|Net cash provided by investing activities           |                           | 
|                                                    |                           | 
|Cash flows from financing activities:               |                           | 
|Net increase in deposits                            |                           | 
|Net increase (decrease) in short-term borrowings    |                           | 
|Proceeds from issuance of common stock              |                           | 
|Payment of cash dividend                            |                           | 
|Repurchases of common stock                         |                           | 
|                                                    |                           | 
|Net cash provided by (used in) financing activities |                           | 
|                                                    |                           | 
|                                                    |                           | 
|Net increase in cash and cash equivalents           |                           | 
|                                                    |                           | 
|Cash and cash equivalents at beginning of period    |                           | 
|                                                    |                           | 
|Cash and cash equivalents at end of period          |                           | 
|                                                    |                           | 
|                                                    |                           | 
|See accompanying notes.                             |                           | 

|- 6 -
|-----

|CENTENNIAL BANCORPNOTES 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, and its wholly owned
subsidiary, Centennial Bank (Centennial) (collectively referred to
as Bancorp).
All significant intercompany
balances and transactions have been eliminated in consolidation.
The
interim condensed consolidated financial statements are prepared by Bancorp
without audit and in conformity with accounting principles generally accepted in
the United States for interim financial statements. Accordingly, certain
financial information and footnotes have been condensed or omitted. In
managements opinion, the condensed consolidated financial statements
include all necessary adjustments (which are of a normal and recurring nature)
for a fair presentation of the results for the interim periods
presented.
          These
financial statements should be read in conjunction with the consolidated
financial statements, including the notes thereto, included in Bancorps
2001 Annual Report to Shareholders.
Certain amounts for
2001 have been reclassified to conform to the 2002
presentation.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Securities Available-for-Sale
Securities available-for-sale
consisted of the following at June 30, 2002 and December 31,
2001:
|-- | ------------------------------------------------------------------------------------------------------------------------------

| |  |  |                                     |  | 
| |  |  | ----------------------------------- |  | 
| |  |  |                                     |  | 
| |  |  |                                     |  | 
| |  | 
| |  |  | June 30, 2002:                      |  | 
| |  | 
| |  |  | U.S. Government and                 |  | 
| |  |  | agency securities                   |  | 
| |  |  | Obligations of states and political | 
| |  |  | subdivisions                        |  | 
| |  |  | Corporate bonds                     |  | 
| |  |  | Mortgage-backed securities          |  | 
| |  |  | Other                               |  | 
| |  |  |                                     |  | 
| |  |  | Total                               |  | 
| |  |  |                                     |  | 
| |  | 
| |  |  | December 31, 2001:                  |  | 
| |  | 
| |  |  | U.S. Government and                 | 
| |  |  | agency securities                   |  | 
| |  |  | Obligations of state and political  |  | 
| |  |  | subdivisions                        |  | 
| |  |  | Corporate bonds                     |  | 
| |  |  | Mortgage-backed securities          |  | 
| |  |  | Other                               |  | 
| |  |  |                                     |  | 
| |  |  | Total                               |  | 
| |  |  |                                     |  | 

|- 7 -
|-----

|3. | Loans and Allowance for Loan Losses
Loans consisted of the following at June 30, 2002 and December 31, 2001:
|-- | ------------------------------------------------------------------------------------------------------------

| |  |  |                           
| |  |  | --------------------------
| |  |  |                           
| |  |  |                           
| |  |  |                           
| |  |  | Real estate  mortgage    
| |  |  | Real estate  construction
| |  |  | Commercial                
| |  |  | Installment               
| |  |  | Lease financing           
| |  |  | Other                     
| |  |  |                           
| |  |  |                           
| |  |  | Allowance for loan losses 
| |  |  |                           
| |  |  |                           
| |  |  |                           
| |  |  |                           

| | Transactions in the allowance for
loan losses were as follows for the six months ended June 30, 2002 and
2001:
| | --------------------------------------------------------------------------------------------------------------

| |  |  |                                
| |  |  | -------------------------------
| |  |  |                                
| |  |  |                                
| |  |  |                                
| |  |  | Balance at beginning of period 
| |  |  | Provision charged to operations
| |  |  | Recoveries                     
| |  |  | Loans charged off              
| |  |  |                                
| |  |  | Balance at end of period       
| |  |  |                                
| |  |  |                                

| | At
June 30, 2002 and December 31, 2001, Bancorp had
approximately $25,231,000 and $23,716,000, respectively,
in impaired loans. The specific valuation allowance related to these loans was
approximately $5,025,000 and $3,744,000 at June 30,
2002 and December 31, 2001, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | It
is Bancorps policy to place loans on nonaccrual status when repayment of
principal and 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 by collateral. Loans on nonaccrual status at June 30,
2002 and December 31, 2001 were approximately
$11,609,000 and $7,694,000, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Loans
past due 90 days or more on which Bancorp continued to accrue interest were
approximately $166,000 at June 30, 2002 (none at December
31, 2001). Bancorp had no restructured loans at June 30,
2002 or December 31, 2001.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Borrowings
Borrowings consisted of
the following at June 30, 2002 and December 31, 2001:
|-- | ----------------------------------------------------------------------------------------

| |  |  |                                              
| |  |  | ---------------------------------------------
| |  |  |                                              
| |  |  |                                              
| |  |  |                                              
| |  |  | FHLB borrowings under promissory notes       
| |  |  | Securities sold under agreement to repurchase
| |  |  |                                              
| |  |  |                                              
| |  |  |                                              
| |  |  |                                              

|- 8 -
|-----

|5. | Earnings per Share of Common Stock
A
reconciliation of the weighted average shares used to compute basic and diluted
earnings per share is as follows for the three months and six
months ended June 30, 2002 and 2001:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                               | 
| |  | --------------------------------------------- | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  | Weighted average shares outstanding  basic   | 
| |  | Additional shares from stock options          | 
| |  |                                               | 
| |  | Weighted average shares outstanding  diluted | 
| |  |                                               | 
| | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  |                                               | 
| |  | Weighted average shares outstanding  basic   | 
| |  | Additional shares from stock options          | 
| |  |                                               | 
| |  | Weighted average shares outstanding  diluted | 
| |  |                                               | 
| | 

| | The
weighted average number of common shares outstanding used to calculate earnings
per share of common stock and the number of shares outstanding in the
accompanying condensed consolidated statements of changes in shareholders
equity reflects the retroactive effect of stock splits and stock dividends.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Commitments and Contingencies
From
time to time, Bancorp is involved in various claims and legal actions in the
normal course of business. Bancorp maintains insurance coverage
against potential claims in amounts that it believes to be adequate. Management
believes that it is not presently a party to any litigation, the
outcome of which would have a material adverse effect on Bancorps
business, financial condition, results of operations or cash flows.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Adoption of New Accounting Standards
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 discontinues the practice of amortizing goodwill and requires that goodwill be continually evaluated
for impairment and be written-down when appropriate. SFAS No. 142 also requires that other intangible assets that have been separately
identified and accounted for continue to be amortized over a determinable useful life. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001. Bancorps adoption of SFAS No. 142 did not have a material effect on its consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting obligations associated with the retirement of long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002. Bancorp does not expect that adoption of SFAS No. 143 will have a material effect on Bancorps
consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of and provides guidance on the classification and
accounting for such assets when held for sale or abandonment. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
Bancorps adoption of SFAS No. 144 did not have a material effect on its consolidated financial statements.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- 9 -
|-----

|7. | Adoption of New Accounting Standards (continued)
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements related to gains and losses from
the extinguishment of debt, and is effective immediately. Bancorps adoption of SFAS No. 145 did not have a material effect on its
consolidated financial statements.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Subsequent Event
On
July 23, 2002 Bancorp announced it had signed a definitive agreement to be
acquired by Umpqua Holdings Corporation (Umpqua). The
proposed transaction, which is subject to regulatory and shareholder
approvals, is structured as a tax-free reorganization (with the effect
that no income will be recognized by Bancorp shareholders to the extent
they exchange Bancorp stock for stock of Umpqua) and is to be
accounted for as a purchase by Umpqua. The proposed transaction is expected
to close in the fourth quarter of 2002.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- 10 -
|------

|MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|-------------------------------------------------------------------------------------

|This Quarterly 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)
general economic conditions, either nationally or regionally, that could result
in increased loan losses; (2) the ability to attract new deposits and
loans; (3) interest rate fluctuations; (4) competitive factors and
pricing pressures; (5) potential delays or other problems in implementing
Bancorps growth and expansion strategy; (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, 2001, 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, an Oregon
corporation, was organized in 1981 as a bank holding company and has one wholly
owned subsidiary, Centennial Bank (Centennial). Effective May 31,
2001, Centennial Mortgage Co., a wholly owned subsidiary of Centennial Bancorp
at that date, was merged into Centennial. Unless the context clearly suggests
otherwise, references in this Quarterly Report to Bancorp include
Centennial Bancorp and Centennial. Bancorp primarily serves the Portland,
Oregon, and Eugene, Oregon metropolitan markets.


At June 30, 2002,
Centennial operated 16 full-service and seven
limited-service branches, including nine full-service and
seven limited-service branches in the Portland area, four
full-service branches in Eugene, and one full-service branch each in
Springfield, Salem and Cottage Grove, Oregon.


At June 30, 2002,
Centennial also operated seven commercial banking centers located in
full-service branches, including five in the Portland area, one in Eugene and
one in Salem, Oregon. In addition, Centennial also operated
four mortgage offices, including two in the Portland area
and two in Eugene.


On July 23, 2002, Bancorp
announced the signing of a definitive agreement to be acquired by Umpqua
Holdings Corporation (Umpqua) in a tax-free reorganization (with the
effect that no income will be recognized by Bancorp shareholders to the extent
they exchange Bancorp stock for Umpqua stock). In the aggregate, Bancorp
shareholders will receive 65% Umpqua stock and 35% cash for their Bancorp stock.
The merger will be accounted for under the purchase accounting method. Upon
completion of the merger, which is expected in the fourth quarter of 2002 and is
subject to regulatory and shareholder approvals, all Centennial offices will
operate under the Umpqua Bank name.



Material Changes In Financial Condition



Material changes in financial
condition for the six months ended June 30, 2002 included increased
cash and cash equivalents and securities available-for-sale, reduced
loan totals, increased deposits, and continued earnings-driven equity growth.


Cash and cash equivalents,
including cash and due from banks and federal funds sold, increased $35.1
million to $75.4 million at June 30, 2002 as compared to $40.3 million at
December 31, 2001, substantially due to the combination of decreasing loans and
increasing deposits. In addition, cash and due from banks can fluctuate
significantly on a daily basis due to normal loan and deposit activity, funds
transfers and inter-bank clearing of cash items. Federal funds sold represents
excess funds, which are sold overnight to other financial institutions, and
their levels can also fluctuate significantly on a daily basis.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Securities available-for-sale
increased $15.4 million, or 20.2%, to $91.9 million at June 30, 2002 as compared
to $76.5 million at December 31, 2001. The increase was substantially due to the
investment of available funds from the reduction in loans and the increase in
deposits.


Loans and loans held for sale
of $609.8 million at June 30, 2002 decreased $45.9 million, or 7.0%, as compared
to $655.7 million at December 31, 2001, primarily due to weaker business
activity with the middle-market and small business customers in the Pacific
Northwest.


Total deposits increased $4.9
million, or .7%, to $698.0 million at June 30, 2002 as compared to $693.1
million at December 31, 2001. The increase, centered in time certificates and
savings accounts, was somewhat offset by a decrease in demand deposits. Time
certificates increased primarily due to increased marketing efforts, while
savings deposit totals increased primarily due to the balance fluctuations
typical of certain escrow accounts.


Remaining asset and liability
category changes during the first half of 2002 were comparatively modest.


June 30, 2002
shareholders equity was $100.5 million, a $1.3 million increase over
December 31, 2001. The net income and unrealized gains on investment securities,
which increased shareholders equity during the first six months of 2002,
were offset, in part, by dividends declared and stock repurchases.



Material Changes In Results Of Operations



Total interest income
decreased $10.0 million, or 26.1%, for the six months ended June 30, 2002 as
compared to the six months ended June 30, 2001, and decreased $4.7 million, or
25.2% for the quarter ended June 30, 2002 as compared to the same period in
2001. This decrease was mainly due to reduced yields on interest-earning assets,
which was compounded by slowing loan activity.


Total interest expense
decreased $7.7 million, or 52.8%, for the six months ended June 30, 2002 as
compared to the six months ended June 30, 2001, and decreased $3.3 million, or
49.1%, for the three months ended June 30, 2002 as compared to the same period
in 2001. This decrease was primarily due to reduced rates paid on
interest-bearing liabilities, and to the decrease in Bancorps deposits
since June 30, 2001.


The decrease in interest
earned, partially offset by the decrease in interest expense, resulted in a
decrease of net interest income of $2.4 million, or 9.8%, for the six-month
period ended June 30, 2002, over the comparable period in 2001, and a decrease
of $1.4 million, or 11.7%, during the second quarter of 2002 as compared to the
second quarter of 2001. Net interest margin decreased from 6.22% for the
six-month period ended June 30, 2001 to 5.82% for the six-month period ended
June 30, 2002, reflecting the re-pricing of renewed loans in a lower rate
environment, and the shift in the earning asset mix to lower yielding assets.


During the six- and
three-month periods ended June 30, 2002, Bancorp charged a $3.8 million and a
$975,000 loan loss provision to operations, respectively, as compared to $1.9
million and $975,000 during the same periods in 2001. The six-month 2002 amount
included an added provision of $1.8 million, as a result of the current
Northwest economic recession and challenging business environment, and the
continued review of the loan portfolio. The allowance for loan losses as a
percent of loans increased from 1.6% at December 31, 2001 to 2.0% at June 30,
2002, as the ratio of non-performing assets to total assets increased from 1.1%
at December 31, 2001 to 1.6% at June 30, 2002.


At June 30, 2002,
Bancorps allowance for loan losses was $12.2 million, as compared to $10.5
million and $10.2 million at December 31, 2001 and June 30, 2001, respectively.
Management believes that the allowance is adequate for estimated loan losses,
based 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. Loans
are actively managed to minimize loss potential, and current expectations are
that actual charge-offs will not have a material adverse effect on
Bancorps financial condition or results of operations. The allowance is
based on estimates, and actual losses may vary from those currently estimated.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Noninterest income increased
$329,000, or 11.2%, for the six months ended June 30, 2002 as compared to the
same period in 2001. The increase during the six-month period was primarily
driven by the increasing service charge income produced by Bancorps
deposit base. Noninterest income decreased $50,000, or 3.2%, for the three
months ended June 30, 2002, as compared to the same period in 2001, due to
several factors, including decreases in gains on sales of loans and gains on
sales of securities, offset by an increase in service charge income.


As a result of continuing
emphasis on expense control, noninterest expense for the six-month period ended
June 30, 2002 decreased by $593,000, or 4.2%, as compared to the same period in
2001, and decreased $534,000, or 7.4%, during the second quarter of 2002 as
compared to the second quarter of 2001.


During the six months and
three months ended June 30, 2002, the provision for income taxes was $3.0
million and $1.6 million, respectively, a decrease of $1.2 million and $381,000
over the provision during the comparable periods ended June 30, 2001. The
decrease was commensurate with Bancorps decreased pre-tax income.



Market Risk


Market risk is the risk of loss
from adverse changes in market prices and rates. Bancorps primary market
risk is the interest rate risk associated with its investing, lending, deposit
and borrowing activities. Other types of market risk, such as foreign currency
exchange rate risk and commodity price risk, do not materially affect or are not
part of Bancorps normal business activities. Management actively monitors
and manages Bancorps interest rate risk with the overall objective of
achieving satisfactory and consistent profitability while maintaining interest
rate sensitivity within formal policy guidelines established by the Board of
Directors.



Bancorp did not experience a
material change in market risk at June 30, 2002, as Bancorps portfolio
remained primarily liability sensitive to rate changes, which generally enhances
earnings when interest rates fall but erodes earnings when interest rates rise.
This sensitivity is a change from Bancorps asset sensitivity at June 30,
2001 because, as a result of the Federal Reserves rapid and substantial
easing of market rates during 2001, a large amount of Centennials
variable-rate loans are at floor rates above current market rates, causing them
to react like fixed-rate loans within a positive rate-change environment.



Liquidity And Capital Resources



Bancorp has adopted
policies to maintain a relatively liquid position to enable it to respond to
changes in the Banks needs and financial environment. Currently,
Bancorps main sources of liquidity are customer deposits,
short-term borrowings, loan repayments, sales of loans, sales and repayments of
investment securities, 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.


Bancorp maintains, on
an unsecured basis, federal funds lines with correspondent banks as a back-up
source of temporary liquidity. At June 30, 2002, Bancorp
had federal funds lines totaling $49.0 million, with no borrowings
outstanding. Bancorp also maintains a cash management advance
line of credit with the Federal Home Loan Bank of Seattle, which allows
temporary borrowings for liquidity. At June 30, 2002, Bancorp had a
borrowing limit of $38.9 million with $10.0 million outstanding. In addition,
Bancorp has a secured line of credit at the Federal Reserve Bank discount
window, which, at June 30, 2002, had a borrowing limit of $19.6 million with no
borrowings outstanding.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Bancorps Tier 1 capital
ratio and total risk-based capital ratio under the Federal Reserve Boards
(FRB) risk-based capital guidelines, and Bancorps
capital-to-assets ratio under leverage ratio guidelines, were as follows.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |               |                   
|------------------------------ | ------------- | ------------------
|                               | June 30, 2002 | Minimum Guidelines
|                               |               |                   
|                               |               |                   
|Tier 1 capital ratio           | 12.73%        | 4%                
|Total risk-based capital ratio | 13.98%        | 8%                
|Capital-to-assets ratio        | 11.34%        | 3%                
|                               |               |                   

|In January 2002,
Bancorps Board of Directors authorized the repurchase of up to an
aggregate of 5% of Bancorps then outstanding common stock over a two-year
period. The new repurchase program was adopted following the completion of the
2000 repurchase program. During the first six months of 2002, Bancorp
repurchased 310,053 shares at a cost of approximately $2.4 million. During all
of 2001, Bancorp repurchased 512,182 shares at a cost of approximately $3.7
million.


On January 16, 2002, Bancorp
declared a 21-for-20 (5%) stock split, payable on February 22, 2002 to
shareholders of record on February 1, 2002. On March 13, 2002, Bancorp declared
a cash dividend of $0.04 per share, payable on May 1, 2002 to shareholders of
record on April 15, 2002. Additionally, on June 19, 2002, Bancorp declared a
cash dividend of $0.04 per share, payable on August 1, 2002 to shareholders of
record on July 15, 2002.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|------

|PART II  OTHER INFORMATION
|---------------------------

|Item 4.    Submission of Matters to a Vote of Security Holders
Centennial Bancorp held its annual meeting of shareholders on April 24, 2002. At the meeting, Dan Giustina, Cordy H. Jensen, Brian B. Obie,
Richard C. Williams and Ted R. Winnowski were reelected to the Board of Directors for one-year terms. Voting on the election of directors was as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    |            |               
|------------------- | ---------- | --------------
|                    | Votes For  | Votes Withheld
|                    |            |               
|                   
|Dan Giustina        | 21,511,838 | 95,205        
|Cordy H. Jensen     | 21,515,874 | 91,169        
|Brian B. Obie       | 21,484,230 | 122,813       
|Richard C. Williams | 21,064,897 | 542,146       
|Ted R. Winnowski    | 21,021,999 | 585,044       
|

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

|(a) | Exhibits |                                                                                                                                                                                                                                                                                    
|--- | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 10.24*   | Severance Agreement dated as of May 15, 2002 between Steven D. Rice and Centennial Bancorp                                                                                                                                                                                         
|    | 10.25*   | Form of
First Addendum to Severance Agreement dated June 3, 2002 between the following
executive officers and Centennial Bancorp: 
      Collin L. Alspach
      Jesse D. Averette
      Dennis P. Huserik
      Neal T. McLaughlin
      Loretta J. Morse
      Steven L. Philpott
|    | 99.1     | Certification signed by Ted R. Winnowski pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                                                                   
|    | 99.2     | Certification signed by Neal T. McLaughlin pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                                                                 

|(b) | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | On April 25, 2002, Bancorp filed a Form 8-K, which announced the initiation of a search for a new President and Chief Executive Officer, to
succeed Ted R. Winnowski. Mr. Winnowskis current employment agreement expires December 31, 2002.                                                                                                                                                                                                                 
|    | On
July 23, 2002, Bancorp filed a Form 8-K, which contained the press release
announcing Centennial Bancorp and Umpqua Holdings Corporation had
entered into an Agreement and Plan of Reorganization, together with their
respective wholly owned banking subsidiaries, Centennial Bank and
Umpqua Bank, pursuant to which Centennial Bancorp will merge with and into
Umpqua Holdings Corporation, with Umpqua Holdings Corporation the
surviving corporation

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

|- 15 -
|------

|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: August 9, 2002 | /s/ Ted R. WinnowskiTed R. Winnowski
President & Chief Executive Officer                                             
|Dated: August 9, 2002 | /s/ Neal T. McLaughlinNeal T. McLaughlin
Executive Vice President & Chief Financial Officer;
Chief Accounting Officer

|- 16 -
|------