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, 1998
                               -------------

                                 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:

15,291,316 shares as of July 31, 1998.


                                       -2-
<PAGE>


                               CENTENNIAL BANCORP

                                    FORM 10-Q

                                  JUNE 30, 1998

                                      INDEX
                                      -----


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

Condensed Consolidated Balance Sheets as of                        3 
     June 30, 1998 and December 31, 1997.

Condensed Consolidated Statements of Income for                    4
     the six months and the quarter ended
     June 30, 1998 and 1997.

Condensed Consolidated Statements of Cash Flows                    5 
     for the six months ended June 30, 1998 and 1997.

Notes to Condensed Consolidated Financial Statements               6 - 10

Management's Discussion and Analysis of Financial
     Condition and Results of Operations:
          Overview                                                 11 - 12
          Material Changes in Financial Condition                  12
          Material Changes in Results of Operations                13
          Market Risk                                              14
          Loan Loss Provision                                      14
          Liquidity and Capital Resources                          14 - 15
          Effects of the Year 2000                                 15 - 16

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

Item 4 - Submission of Matters to a Vote                           17
         of Security Holders.

Item 6 - Exhibits and Reports on Form 8-K.                         18

Signatures                                                         19

                                       -3-


<PAGE>


                               CENTENNIAL BANCORP
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                      June 30,               December 31,
                                                                       1998                     1997
                                                                   -------------            -------------
                                                                    (Unaudited)
<S>                                                                <C>                      <C>
ASSETS
------
Cash and cash equivalents:
     Cash and due from banks                                        $ 36,889,165            $ 26,269,239
     Federal funds sold                                               16,724,000              23,800,000
                                                                    ------------            ------------
          Total cash and cash equivalents                             53,613,165              50,069,239
Securities available-for-sale                                         70,753,144              83,904,253
Loans held for sale                                                    8,333,388               5,584,947
Loans receivable, net                                                368,331,472             331,691,399
Federal Home Loan Bank stock                                           4,893,800               4,711,100
Accrued interest receivable                                            3,838,875               3,618,596
Premises and equipment, net                                           11,280,374              10,486,892
Other assets                                                           3,077,518               2,506,985
                                                                    ------------            ------------
                                                                    $524,121,736            $492,573,411
                                                                    ============            ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
     Deposits:
          Demand                                                    $ 96,842,101            $ 97,262,856
          Interest-bearing demand                                    188,374,345             173,583,239
          Savings                                                     19,510,665              13,751,676
          Time                                                       143,997,506             134,684,313
                                                                    ------------            ------------
               Total deposits                                        448,724,617             419,282,084
     Short-term borrowings                                             4,627,657               7,715,783
     Accrued interest and other liabilities                            3,601,742               3,765,386
     Long-term debt                                                   10,000,000              10,000,000
                                                                    ------------            ------------
               Total liabilities                                     466,954,016             440,763,253
Shareholders' equity:
     Preferred stock                                                          --                      --
     Common stock, 15,291,316 issued and outstanding
          (14,515,676 at December 31, 1997)                           29,148,795              29,031,352
     Retained earnings                                                27,446,685              22,082,696
     Unrealized gains on securities available-for-
          sale, net                                                      572,240                 696,110
                                                                    ------------            ------------
               Total shareholders' equity                             57,167,720              51,810,158
                                                                    ------------            ------------
                                                                    $524,121,736            $492,573,411
                                                                    ============            ============
</TABLE>
See accompanying notes.


                                       -4-


<PAGE>


                               CENTENNIAL BANCORP
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended                  Six Months Ended
                                                          June 30,                           June 30,
                                                --------------------------        --------------------------
                                                   1998             1997                1998           1997
                                                ----------      -----------       -----------     ----------
<S>                                            <C>              <C>               <C>            <C>
INTEREST INCOME
     Interest and fees on loans                $10,966,568      $8,165,583        $20,981,826    $15,803,979
     Interest on investment securities           1,199,677       1,172,384          2,441,136      2,380,160
     Other interest income                          65,468         247,188            147,916        341,556
                                               -----------      ----------        -----------    -----------
        Total interest income                   12,231,713       9,585,155         23,570,878     18,525,695
INTEREST EXPENSE
     Interest on deposits                        3,629,420       2,975,661          7,006,488      5,677,681
     Interest on short-term borrowings              93,208         145,112            180,746        345,905
     Interest on long-term debt                    117,522         153,080            240,126        304,334
                                                ----------      ----------        -----------    -----------
          Total interest expense                 3,840,150       3,273,853          7,427,360      6,327,920
                                                ----------      ----------        -----------    -----------
NET INTEREST INCOME                              8,391,563       6,311,302         16,143,518     12,197,775
     Loan loss provision                           300,000         150,000            600,000        950,000
                                                ----------      ----------        -----------    -----------
          Net interest income after
            loan loss provision                  8,091,563       6,161,302         15,543,518     11,247,775
NONINTEREST INCOME
     Service charges                               295,570         262,114            568,098        499,909
     Other                                         137,401         122,858            319,916        920,605
     Net gains on sales of loans                   425,153         267,771            730,891        367,347
     Net gains on sales of investment securities   262,004              --            407,316         29,309
                                                ----------      ----------        -----------    -----------
          Total noninterest income               1,120,128         652,743          2,026,221      1,817,170
NONINTEREST EXPENSE
     Salaries and employee benefits              3,374,468       2,238,587          6,385,155      4,327,618
     Premises and equipment                        690,704         483,209          1,281,535        974,380
     Legal and professional                        218,966         176,262            410,138        315,579
     Advertising                                   191,549         140,149            336,530        240,474
     Printing and stationery                       119,001          94,976            225,830        185,558
     Other                                         450,075         481,900            983,962        709,104
                                               -----------      ----------        -----------    -----------
          Total noninterest expense              5,044,763       3,615,083          9,623,150      6,752,713
                                               -----------      ----------        -----------    -----------

Income before income taxes                       4,166,928       3,198,962          7,946,589      6,312,232
Provision for income taxes                       1,354,200       1,039,700          2,582,600      2,051,500
                                                -----------      ----------        -----------    -----------

NET INCOME                                     $ 2,812,728      $2,159,262        $ 5,363,989    $ 4,260,732
                                               ===========      ==========        ===========    ===========

Earnings per common share:
     Basic                                     $       .18      $      .14        $       .35     $      .28
     Diluted                                   $       .17      $      .14        $       .33     $      .27

Weighted average common shares outstanding:
     Basic                                      15,282,141      15,141,373         15,272,488     15,129,519
     Diluted                                    16,030,505      15,776,903         16,027,144     15,734,756

</TABLE>
See accompanying notes.

                                                   -5-


<PAGE>

<TABLE>
<CAPTION>

                                             CENTENNIAL BANCORP
                          CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                 (Unaudited)


                                                  Three Months Ended                   Six Months Ended
                                                        June 30,                            June 30,
                                              ---------------------------        --------------------------
                                                 1998             1997                1998           1997
                                              ----------      -----------        -----------     ----------
<S>                                          <C>              <C>                <C>            <C>

Net income                                   $ 2,812,728      $2,159,262         $ 5,363,989    $ 4,260,732
                                             -----------      ----------         -----------    -----------
Unrealized gains on securities
     available for sale:
     Unrealized gains arising
        during the period                        144,664       1,014,420           1,330,296        217,489
     Reclassification adjustment for (gains)
        included in statement of income         (262,004)             --            (407,316)       (29,309)
                                             -----------      ----------         -----------    -----------
                                                (117,340)      1,014,420             922,980        188,180
     Income tax (expense)/benefit                 43,230        (385,480)           (350,740)       (71,510)
                                              ----------      ----------         -----------   ------------
        Net unrealized gains/(losses) on
           securities available for sale         (74,110)        628,940             572,240        116,670
                                             -----------      ----------         -----------    -----------
Comprehensive income                         $ 2,738,618      $2,788,202         $ 5,936,229    $ 4,377,402
                                             ===========      ==========         ===========    ===========

</TABLE>

                                             CENTENNIAL BANCORP
                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                       Six Months Ended
                                                                                           June 30,
                                                                                  --------------------------
                                                                                       1998          1997
                                                                                  ------------  ------------
<S>                                                                               <C>           <C>
Net cash provided by operating activities                                         $ 2,549,841   $ 4,769,547
                                                                                  -----------   -----------
Cash flows from investing activities:
     Net increase in loans                                                        (37,240,073)  (17,306,133)
     Purchases of investment securities                                            (1,996,719)   (4,974,773)
     Proceeds from investment securities:
          Maturities                                                                9,428,809     1,889,786
          Sales                                                                     5,933,057    11,020,078
     Purchases of premises and equipment                                           (1,602,839)     (364,069)
                                                                                  -----------    ----------
          Net cash used in investing activities                                   (25,477,765)   (9,735,111)

Cash flows from financing activities:
     Net increase in deposits                                                      29,442,533    28,544,798
     Net decrease in short-term borrowings                                         (3,088,126)   (8,471,829)
     Proceeds from issuance of common stock                                           117,443       140,305
                                                                                  -----------   -----------
          Net cash provided by financing activities                                26,471,850    20,213,274
                                                                                  -----------   -----------
Net increase in cash and cash equivalents                                           3,543,926    15,247,710
Cash and cash equivalents at beginning of period                                   50,069,239    38,397,505
                                                                                  -----------   -----------
Cash and cash equivalents at end of period                                        $53,613,165   $53,645,215
                                                                                  ===========   ===========
</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, 1997 was derived from audited
     financial statements, but does not include all disclosures contained in
     Bancorp's 1997 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 1997 Annual Report to Shareholders.

     Certain amounts for 1997 have been reclassified to conform with the 1998
     presentation.








                               -7-


<PAGE>


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

     The composition of the loan portfolio was as follows:

                                        June 30,    December 31,
                                          1998          1997
                                     ------------   ------------
     Real estate -- mortgage         $ 89,090,971   $ 87,631,611
     Real estate -- construction      116,720,461     89,119,688
     Commercial                       156,154,087    147,052,433
     Installment                        6,155,223      6,602,690
     Lease financing                    2,667,325      3,648,728
     Other                              2,400,664      1,994,689
                                     ------------   ------------
                                      373,188,731    336,049,839
     Reserve for loan losses           (3,935,368)    (3,348,914)
     Less deferred loan fees             (921,891)    (1,009,526)
                                     ------------   ------------
                                     $368,331,472   $331,691,399
                                     ============   ============


     Loans held for sale of $8,333,388 and $5,584,947 at June 30, 1998 and
     December 31, 1997, 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 six
     months ended June 30:

                                         1998           1997
                                     -----------     -----------
     Balance at beginning of period  $3,348,914      $2,599,653
     Provision charged to operations    600,000         950,000
     Recoveries                          28,271          13,199
     Loans charged off                  (41,817)       (443,149)
                                     ----------      ----------
     Balance at end of period        $3,935,368      $3,119,703
                                     ==========      ==========

     At June 30, 1998, Bancorp had eight loans requiring a specific valuation
     allowance in accordance with SFAS No. 114, as amended by SFAS No. 118 (two
     loans at December 31, 1997). The specific valuation allowance was $830,000
     on loans with remaining principal outstanding of $5,276,000 at June 30,
     1998 ($150,000 and $718,000, respectively, at December 31, 1997). Each loan
     with a current outstanding principal balance of less than $100,000 is 
     grouped into one homogenous pool when considering the valuation allowance.

                               -8-

<PAGE>


     No specific valuation allowance was deemed necessary for loans in this
     group of smaller loans. The increase in the specific valuation allowance at
     June 30, 1998 was primarily attributable to one borrower for which the
     specific valuation allowance was $241,000 on loans with remaining principal
     outstanding of $2,403,700.

     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 June 30, 1998 and December 31, 1997 were
     approximately $1,701,000 and $873,000, respectively.

     Loans past due 90 days or more on which Bancorp continued to accrue
     interest were approximately $865,000 at June 30, 1998, and approximately
     $402,000 at December 31, 1997. 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 June 30, 1998 or
     December 31, 1997.

3.   Earnings per Share of Common Stock
     ----------------------------------

     A reconcilement of the basic and diluted earnings per share computations is
     as follows:

                                          Three Months Ended
                                                June 30,
                                       ------------------------
                                          1998          1997
                                       ----------    ----------
     Net income available to common
       shareholders -- basic and
       diluted                         $2,812,728    $2,159,262
                                       ==========    ==========

     Reconciliation of Basic and Diluted Shares
     ------------------------------------------

     Weighted average shares
       outstanding - basic             15,282,141    15,141,373
     Incremental shares from
       stock options                      748,364       635,530
                                       ----------    ----------
     Weighted average shares
       outstanding - diluted           16,030,505    15,776,903
                                       ==========    ==========

                               -9-
<PAGE>

                                           Six Months Ended
                                                June 30,
                                       ------------------------
                                          1998          1997
                                       ----------    ----------
     Net income available to common
       shareholders -- basic and
       diluted                         $5,363,989    $4,260,732
                                       ==========    ==========

     Reconciliation of Basic and Diluted Shares
     ------------------------------------------

     Weighted average shares
       outstanding - basic             15,272,488    15,129,519
     Incremental shares from
       stock options                      754,656       605,237
                                       ----------    ----------
     Weighted average shares
       outstanding - diluted           16,027,144    15,734,756
                                       ==========    ==========


     The weighted average number of common shares outstanding reflects the
     effect of stock splits and stock dividends, including an 11-for-10 stock
     split declared July 15, 1998.


4.   Equity
     ------

     Effective May 20, 1998, shareholders approved an amendment to Bancorp's
     Restated Articles of Incorporation to eliminate the par value of common
     stock. Additionally, shareholders also approved an amendment to Bancorp's
     Restated 1995 Stock Incentive Plan increasing the number of shares issuable
     under the Plan from 559,020 to 1,100,000.

5.   Financial Accounting Standards Board
     ------------------------------------

     On January 1, 1998, Bancorp adopted Statement of Financial Accounting
     Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which
     requires reporting of comprehensive income in general purpose financial
     statements. Comprehensive income is defined as the change in equity during
     the period from transactions and other events and circumstances from
     nonowner sources, which for Bancorp consists of net income and unrealized
     gains or losses on securities available for sale, net of related income
     taxes.

                               -10-
<PAGE>

     In February 1998, FASB issued SFAS No. 132, "Employers'
     Disclosures about Pensions and Other Postretirement Benefit
     - an amendment of FASB Statements No. 87, 88 and 106," which
     revises and standardizes employers' disclosures about
     pension and other postretirement benefit plans.  SFAS No.
     132 is effective for Bancorp in 1998.  Management does not
     anticipate significant disclosure changes as a result of
     adoption of SFAS No. 132.

     In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
     Instruments and Hedging Activities," which establishes accounting and
     reporting standards for derivative instruments and for hedging activities.
     It requires that an entity recognize all derivatives as either assets or
     liabilities in the statement of financial position and measure those
     instruments at fair value. The accounting for changes in the fair value of
     a derivative (that is, gains and losses) depends on the intended use of the
     derivative and the resulting designation. SFAS No. 133 is effective for
     Bancorp in 2000.  The impact on Bancorp's financial statements has not been
     determined.



                               -11-

<PAGE>


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


     WHEN USED IN THE FOLLOWING DISCUSSION, THE WORD "EXPECTS," "BELIEVES,"
"ANTICIPATES" AND OTHER SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS, WHICH ARE MADE PURSUANT TO THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SPECIFIC
RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, GENERAL BUSINESS AND
ECONOMIC CONDITIONS, 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 UNDERTAKES NO
OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF.


OVERVIEW
--------

     Centennial Bancorp reported net income of $5.4 million, or $.35 per share
(basic), for the six months ended June 30, 1998. This represented a 25.9%
increase in net income and a 25.0% increase in earnings per share (basic), as
compared to $4.3 million, or $.28 per share, for the six months ended June 30,
1997. Net income of $2.8 million, or $.18 per share, for the quarter ended June
30, 1998 similarly represented a 30.3% increase in net income and a 28.6%
increase in earnings per share (basic), as compared to $2.2 million, or $.14 per
share for the quarter ended June 30, 1997. The increased earnings during the six
months and the quarter ended June 30, 1998 primarily reflects the expansion of
Bancorp's interest-earning assets and increased net interest income. At June 30,
1998, Bancorp recognized a 21.6% increase in both total assets and
interest-earning assets as compared to June 30, 1997.

     The net income recognized during the six months and the second quarter of
1998 increases Bancorp's shareholders' equity. The increases in shareholders'
equity was offset in part by a modest decrease in the value of Bancorp's
securities available-


                               -12-
<PAGE>

for-sale. This decrease in value resulted from the recognition of gains on sales
of $5.9 million of Bancorp's securities available for sale.

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

     Material changes in financial condition for the six months ended June 30,
1998 included an increase in total assets, primarily in loans and loans held for
sale, which was offset in part by a decrease in securities available-for-sale.
This increase was funded by an increase in total deposits, maturities and sales
of securities available-for-sale, and earnings from operations, offset in part
by a reduction in short-term borrowings.

         At June 30, 1998, total assets were $524.1 million, representing an
increase of 6.4%, or $31.5 million, over total assets at December 31, 1997. The
increase in total assets includes an increase in loans and loans held for sale
of $40.0 million, primarily due to heightened real estate construction and
commercial loan activity of the Bank and to an increase in real estate mortgage
lending.

     Securities available-for-sale decreased $13.2 million (or 15.7%) at June
30, 1998 as compared to December 31, 1997. The decrease resulted from the
maturity or early call for redemption of $9.4 million and the sale of $5.9
million of securities available-for-sale, offset in part by purchases of $2.0
million of securities available-for-sale. Securities available-for-sale were
sold during the six months ended June 30, 1998 to fund strong loan demand during
a period of slow deposit growth.

     Total deposits increased $29.4 million (or 7.0%) at June 30, 1998 as
compared to December 31, 1997. The increase in total deposits was concentrated
in the interest-bearing demand deposits, savings and time deposit categories,
primarily occurring towards the end of the quarter ended June 30, 1998.

     Bancorp actively solicits demand and interest-bearing demand deposit
accounts due to the lower costs associated with these deposit categories.
Bancorp also solicits time deposits, when needed, to provide funds for expansion
of the loan portfolio.

     Short-term borrowings decreased $3.1 million (or 40.0%) at June 30, 1998 as
compared to December 31, 1997. This decrease resulted from decreased sales of
securities under agreement to repurchase

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

                               -13-
<PAGE>

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

     Total interest income increased $5.0 million (or 27.2%) for the six months
and $2.7 million (or 27.6%) for the quarter ended June 30, 1998 as compared to
the same periods in 1997. These increases were primarily due to increases in
loans and loans held for sale during 1998 as compared to 1997 and fee income
earned for origination of residential mortgage loans by Mortgage Co. during the
1998 periods. These increases were offset in part by modest decreases in other
interest income for the six months and the quarter ended June 30, 1998 as
compared to the same periods in 1997.

     Total interest expense increased $1.1 million (or 17.4%) for the six months
and $566,000 (or 17.3%) for the quarter ended June 30, 1998 as compared to
comparable 1997 periods. These increases were primarily due to increases in
deposits held during 1998 as compared to 1997, which were offset in part by
decreases in interest expense on short-term borrowings and long-term debt during
the 1998 periods.

     The increases in interest earned, offset in part by the increases in
interest paid, served to increase Bancorp's net interest income by $3.9 million
(or 32.3%) for the six-month period, and $2.1 million (or 33.0%) for the second
quarter of 1998, over the comparable periods in 1997.

     Noninterest income increased $209,000 (or 11.5%) for the six months and
$467,000 (or 71.6%) for the quarter ended June 30, 1998 as compared to the
comparable 1997 periods. The increases for the six-month period and the quarter
were primarily attributable to gains recognized on the sale of loans and gains
on sales of securities available-for-sale. These increases were offset in part
by a decrease during the six months ended June 30, 1998 as compared to June 30,
1997 in other noninterest income, due to the nonrecurring settlement receipt for
a claim against former legal counsel.

     Noninterest expense increased $2.9 million (or 42.5%) for the six months
and $1.4 million (or 39.6%) for the quarter ended June 30, 1998 as compared to
the comparable 1997 periods. These increases were primarily attributable to
increases in salaries and employee benefits and premises and equipment expenses
due to the operation of additional branch sites.

     The provision for income taxes increased for the six months and the quarter
ended June 30, 1998, commensurate with Bancorp's increase in income before
income taxes. Bancorp's effective tax rate remained at approximately 32.5%.


                               -14-
<PAGE>

MARKET RISK
-----------

     Market risk is the risk of loss from adverse changes in market prices and
rates. Bancorp's market risk arises principally from interest rate risk in its
lending, deposit and borrowing activities. Management actively monitors and
manages its interest rate risk exposure. Although Bancorp manages other risks,
as in credit quality and liquidity risk, in the normal course of business,
management considers interest rate risk to be a significant market risk which
could have the largest material effect on Bancorp's financial condition and
results of operations. Other types of market risks, such as foreign currency
exchange rate risk and commodity price risk, do not arise in the normal course
of Bancorp's business activities.

     Bancorp did not experience a material change in market risk at June 30,
1998 as compared to December 31, 1997.

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

     During the six months ended June 30, 1998, Bancorp charged a $600,000 loan
loss provision to operations, as compared to $950,000 charged during the six
months ended June 30, 1997. Loans charged off, net of recoveries, during the six
months ended June 30, 1998 were $13,500, as compared to net charge-offs of
$429,950 for the 1997 six-month period.

     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.

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.


                               -15-
<PAGE>

     Along with federal funds lines, the Bank maintains a cash management
advance with the Federal Home Loan Bank, Seattle, Washington, which allows
temporary borrowings for liquidity. At June 30, 1998, Bancorp did not have any
borrowings outstanding from the Federal Home Loan Bank of Seattle under the cash
management advance line.

     At June 30, 1998, Bancorp's Tier 1 and total risk-based capital ratios
under the Federal Reserve Board's ("FRB") risk-based capital guidelines were
approximately 11.5% and 12.3%, respectively. The FRB's minimum risk-based
capital ratio guidelines for Tier 1 and total capital are 4% and 8%,
respectively.

     At June 30, 1998, Bancorp's capital-to-assets ratio under leverage ratio
guidelines was approximately 11.1%. The FRB's current minimum leverage capital
ratio guideline is 3%.

     Bancorp's $10.0 million bank advance from the FHLB matures August 6, 1998.
Currently, it is management's intent to repay the loan in full and not to incur
additional or new debt. However, if customer loan demand continues to remain as
robust as that demand experienced during the six months ended June 30, 1998,
management may reconsider use of long-term borrowings to ensure liquidity.

EFFECTS OF THE YEAR 2000
------------------------

     The Year 2000 may pose unique challenges to all businesses due to the
inability of some computers and computer software programs to accurately
recognize, for years after 1999, dates which are often expressed as a two digit
number. This inability to recognize date information accurately could
potentially affect computer operations and calculations, or could cause computer
systems to not operate at all.

     The federal banking regulators have issued several statements providing
guidance to financial institutions on the steps the regulators expect financial
institutions to take to become Year 2000 compliant. Each of the federal banking
regulators is also examining the financial institutions under its jurisdiction
to assess each institution's compliance with the outstanding guidance. If an
institution's progress in addressing the Year 2000 problem is deemed by its
primary federal regulator to be less than satisfactory, the institution will be
required to enter into a memorandum of understanding with the regulator which
will, among other things, require the institution to promptly develop and submit
an acceptable plan for becoming Year 2000 compliant and to provide periodic
reports describing the

                               -16-
<PAGE>

institution's progress in implementing the plan. Failure to satisfactorily
address the Year 2000 problem may also expose a financial institution to other
forms of enforcement action that its primary federal regulator deems appropriate
to address the deficiencies in the institution's Year 2000 remediation program.

     Bancorp is heavily reliant on computers for accounting for customer records
and transactions, as well as operating performance. Recognizing the risks of the
Year 2000 problem, management organized a task force in early 1997 to identify
and address all issues related to the Year 2000. In addition, management
organized and sponsored seminars for commuinity attendance in the Eugene and
Portland-area markets to elevate public awareness of the potential Year 2000
problems.

     To date, Bancorp's Year 2000 task force has identified all computer
hardware and software utilized, as well as mechanical systems which may be
dependent upon computer components, and contacted vendors seeking their
certification of Year 2000 compliance (Bancorp does not utilize any proprietary
computer hardware or software). The task force has retained computer consultants
to assist with testing of all computer hardware and software and testing has
already begun. Initial testing of Bancorp's computer system used to account for
customer accounts have been successful. Management estimates that computer
hardware, software and connectivity to external processor testing will be
completed during the third quarter of 1999.

    Management of Bancorp has also required that lending personnel ascertain
borrowing clients' awareness and intent to timely comply with the Year 2000.

     At the present time, management has budgeted $100,000 for Year 2000
compliance expenses for the year 1998, of which $27,800 has been expended thus
far. Management has not established a budget estimate for Year 2000 compliance
expenses for the year 1999. Management believes that its efforts to comply with
the Year 2000, and the effects of the Year 2000, will not have a material effect
on operations. Although Bancorp believes the actions being taken at this time
are suitable and appropriate to address the Year 2000 issue, there can be no
assurance that such measures will be sufficient or that the Year 2000 effect
will not have an adverse impact, at least temporarily, on operations. Specific
factors which could affect Bancorp's ability to effect the transition into the
21st century include the ability to locate and correct all relevant systems, the
ability of consultants to complete their testing on schedule, the compliance of
third-party vendors and service providers upon whom Bancorp relies, and similar
uncertainties.



                               -17-


<PAGE>


                   PART II - OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------

     Centennial Bancorp held its annual meeting of shareholders on May 20, 1998.
At the meeting, Dan Giustina, Cordy H. Jensen, Robert L. Newburn, Brian B. Obie,
Ted Winnowski and Richard C. Williams were reelected to the Board of Directors
for one-year terms. Voting on the election of directors was as follows:

                                Votes        Votes       Broker
                                 For       Withheld     Non-Votes
                             ----------    --------     ---------

     Dan Giustina            12,206,770     30,402         -0-
     Cordy H. Jensen         12,205,634     31,538         -0-
     Robert L. Newburn       12,206,687     30,485         -0-
     Brian B. Obie           12,202,586     34,586         -0-
     Ted Winnowski           12,208,620     28,552         -0-
     Richard C. Williams     12,206,937     30,235         -0-


     In addition to the election of the Board of Directors, shareholders also
approved an amendment to Bancorp's Restated Articles of Incorporation to
eliminate the par value of Bancorp's authorized capital stock. A reconcilement
of the shares voted for the amendment is as follows:

     For                                         11,820,393
     Against                                        130,137
     Abstain                                        162,290
     Broker non-votes                               124,352

     At the meeting, shareholders also approved an amendment to Bancorp's
Restated 1995 Stock Incentive Plan increasing the number of shares issuable
under the Plan from 559,020 to 1,100,000. A reconcilement of the shares voted
for the amendment to the Plan is as follows:

     For                                         11,534,163
     Against                                        567,719
     Abstain                                        135,290
     Broker non-votes                                   -0-







                               -18-

<PAGE>

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

(a)  Exhibits

          
         10.9   Amended and Restated 1995 Stock Incentive Plan, as amended on
                March 18, 1998.

         27     Financial Data Schedule


(b)      Reports on Form 8-K

         None



                               -19-


<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:  August 13, 1998       /s/ Richard C. Williams
                              -----------------------------------
                              Richard C. Williams
                              President & Chief Executive Officer




Dated:  August 13, 1998        /s/ Michael J. Nysingh
                              -----------------------------------
                              Michael J. Nysingh
                              Chief Financial Officer









                               -20-