SECURITIES AND EXCHANGE COMMISSION
                    Washington, D. C.  20549

                          FORM 10-Q


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

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

                                 OR

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

For the transition period from            to
                               ----------    ----------

Commission File Number   0-10489
                       -----------


                     CENTENNIAL BANCORP
     (Exact name of registrant as specified in its charter)


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


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

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


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

Yes  /X/    No / /

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

7,212,309 shares as of July 31, 1997.

<PAGE>


                        CENTENNIAL BANCORP

                           FORM 10-Q

                          JUNE 30, 1997

                              INDEX
                              -----


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

Condensed  Consolidated  Balance  Sheets as of              3
     June 30, 1997 and  December 31, 1996.

Condensed Consolidated Statements of Income for             4
     the six months and the quarter ended
     June 30, 1997 and 1996.

Condensed Consolidated  Statements of Cash Flows            5
     for the six months ended June
     30, 1997 and 1996.

Notes to Condensed Consolidated Financial Statements        6 - 11

Management's Discussion and Analysis of Financial
     Condition and Results of Operations:
          Overview                                          12 - 13
          Material Changes in Financial Condition           13 - 14
          Material Changes in Results of Operations         14 - 17
          Loan Loss Provision                               17
          Liquidity and Capital Resources                   187- 18

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

Item 4 - Submission of Matters to a Vote                     19
         of Security Holders.

Item 6 - Exhibits and Reports on Form 8-K.                   19

Signatures                                                   20

Exhibit Index                                                21


<PAGE>


                               CENTENNIAL BANCORP
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                      June 30,               December 31,
                                                                       1997                     1996
                                                                   -------------            -------------
<S>                                                                <C>                      <C>
ASSETS
------
Cash and cash equivalents:
     Cash and due from banks                                        $ 29,662,215            $ 26,827,505
     Interest-bearing balances due from banks                         13,653,000              11,570,000
     Federal funds sold                                               10,330,000                      --
                                                                    ------------            ------------
          Total cash and cash equivalents                             53,645,215              38,397,505
Securities available-for-sale                                         74,994,042              82,654,422
Loans held for sale                                                    3,577,737               3,537,996
Loans receivable, net                                                278,848,124             262,491,991
Federal Home Loan Bank stock                                           4,526,800               4,365,800
Accrued interest receivable                                            3,108,553               3,309,363
Premises and equipment, net                                            9,126,050               9,346,825
Other assets                                                           3,075,222               3,081,702
                                                                    ------------            ------------
                                                                    $430,901,743            $407,185,604
                                                                    ============            ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
     Deposits:
          Demand                                                    $ 86,721,845            $ 74,350,639
          Interest-bearing demand                                    143,261,893             130,659,749
          Savings                                                     14,262,728              13,746,547
          Time                                                       124,253,577             121,198,310
                                                                    ------------            ------------
               Total deposits                                        368,500,043             339,955,245
     Short-term borrowings                                             3,843,754              12,315,583
     Accrued interest and other liabilities                            2,660,190               3,568,917
     Long-term debt                                                   10,000,000              10,000,000
                                                                    ------------            ------------
               Total liabilities                                     385,003,987             365,839,745
Shareholders' equity:
     Preferred stock, $5.00 par value; none issued
          Non-voting, 5,000,000 shares authorized                             --                      --
          Voting, 5,000,000 shares authorized                                 --                      --
     Common stock, $2.00 par value; 10,000,000 shares
          authorized, 7,212,309 issued and outstanding
          (6,535,447 at December 31, 1996)                            14,424,618              13,070,894
     Additional paid-in capital                                        9,923,752              11,137,171
     Retained earnings                                                21,432,716              17,171,984
     Unrealized gains (losses) on securities available-for-
          sale, net of related taxes                                     116,670                 (34,190)
                                                                    ------------            ------------
               Total shareholders' equity                             45,897,756              41,345,859
                                                                    ------------            ------------
                                                                    $430,901,743            $407,185,604
                                                                    ============            ============
</TABLE>
See accompanying notes.


<PAGE>


                               CENTENNIAL BANCORP
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                   The Quarter Ended                  The Six Months Ended
                                                       June 30,                             June 30,        
                                              ---------------------------         --------------------------
                                                 1997             1996                  1997           1996
                                              ----------      -----------         -----------     ----------
<S>                                           <C>              <C>                <C>             <C>
INTEREST INCOME
     Interest and fees on loans               $8,165,583      $6,265,594          $15,803,979    $11,982,880
     Interest on investment securities         1,172,384       1,289,922            2,380,160      2,495,795
     Other interest income                       247,188          72,287              341,556        228,784
                                              ----------      ----------          -----------    -----------
        Total interest income                  9,585,155       7,627,803           18,525,695     14,707,459
INTEREST EXPENSE
     Interest on deposits                      2,975,661       2,203,233            5,677,681      4,264,389
     Interest on short-term borrowings           145,112         275,309              345,905        495,684
     Interest on long-term debt                  153,080         167,054              304,334        341,871
                                              ----------      ----------          -----------    -----------
          Total interest expense               3,273,853       2,645,596            6,327,920      5,101,944
                                              ----------      ----------          -----------    -----------
NET INTEREST INCOME                            6,311,302       4,982,207           12,197,775      9,605,515
     Loan loss provision                         150,000         135,000              950,000        285,000
                                              ----------      ----------          -----------    -----------
          Net interest income after
            loan loss provision                6,161,302       4,847,207           11,247,775      9,320,515
NONINTEREST INCOME
     Service charges on deposit accounts         262,114         243,462              499,909        478,926
     Other                                       122,858         116,020              920,605        242,527
     Gains on sales of loans                     267,771         149,748              367,347        285,529
     Gains on sales of investment securities          --           6,595               29,309          6,595
                                               ---------      ----------          -----------    -----------
          Total noninterest income               652,743         515,825            1,817,170      1,013,577
NONINTEREST EXPENSE
     Salaries and employee benefits            2,238,587       1,841,441            4,327,618      3,596,614
     Premises and equipment                      483,209         499,691              974,380        940,993
     Legal and professional                      176,262         135,031              315,579        233,229
     Advertising                                 140,149         132,562              240,474        243,086
     Printing and stationery                      94,976          84,528              185,558        153,057
     Other                                       481,900         350,087              709,104        694,903
                                              ----------      ----------          -----------    -----------
          Total noninterest expense            3,615,083       3,043,340            6,752,713      5,861,882
                                              ----------      ----------          -----------    -----------

Income before income taxes                     3,198,962       2,319,692            6,312,232      4,472,210
Provision for income taxes                     1,039,700         753,800            2,051,500      1,453,400
                                              ----------      ----------          -----------    -----------

NET INCOME                                    $2,159,262      $1,565,892          $ 4,260,732    $ 3,018,810
                                              ==========      ==========          ===========    ===========

Earnings per common share:
     Primary                                  $      .29      $      .25          $       .57     $      .48
     Fully diluted                            $      .29      $      .23          $       .57     $      .45

Weighted average common shares outstanding:
     Primary                                   7,512,811       6,415,851            7,492,741      6,427,951
     Fully diluted                             7,512,811       7,367,585            7,492,741      7,269,685

</TABLE>
See accompanying notes.


<PAGE>


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

Net cash provided by operating activities                                         $ 4,769,547   $ 3,117,820

Cash flows from investing activities:
     Net increase in loans                                                        (17,306,133)  (39,624,314)
     Investment security purchases                                                 (4,974,773)  (14,825,926)
     Proceeds from investment securities:
          Maturities                                                                1,889,786     3,376,914
          Sales                                                                    11,020,078     6,304,169
     Purchases of premises and equipment                                             (364,069)     (587,910)
                                                                                  -----------    -----------
          Net cash used by investing activities                                    (9,735,111)  (45,357,067)

Cash flows from financing activities:
     Net increase in deposits                                                      28,544,798    20,392,917
     Net increase (decrease) in short-term borrowings                              (8,471,829)    7,475,548
     Proceeds from issuance of common stock                                           140,305       168,334
                                                                                  -----------   -----------
          Net cash provided by financing activities                                20,213,274    28,036,799
                                                                                  -----------   -----------

Net increase (decrease) in cash and cash equivalents                               15,247,710   (14,202,448)

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

Cash and cash equivalents at end of period                                        $53,645,215   $22,519,011
                                                                                  ===========   ===========



Supplemental Disclosure of Cash Flow Information:

Noncash investing and financing activities:
     Conversion of debentures to common stock                                     $        --   $ 1,479,000
     Net costs attributable to debentures converted                                        --      (106,219)
     Cash paid in lieu of issuance of fractional shares                                    --           (90)
                                                                                   ----------   -----------
                                                                                  $        --   $ 1,372,691
                                                                                   ===========  ===========




</TABLE>
See accompanying notes.


<PAGE>


                        CENTENNIAL BANCORP
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)


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

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

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

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

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

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

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


<PAGE>

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

     The composition of the loan portfolio was as follows:

                                        June 30,    December 31,
                                          1997          1996
                                     ------------   ------------
     Real estate -- mortgage         $ 73,582,728   $ 70,126,798
     Real estate -- construction       69,558,556     66,243,687
     Commercial                       126,839,039    116,815,814
     Installment                        6,471,532      6,425,215
     Lease financing                    3,970,189      3,774,748
     Other                              2,382,223      2,634,659
                                     ------------   ------------
                                      282,804,267    266,020,921
     Reserve for loan losses           (3,119,703)    (2,599,653)
     Less deferred loan fees             (836,440)      (929,277)
                                     ------------   ------------
                                     $278,848,124   $262,491,991
                                     ============   ============


     Loans  held for sale of  $3,577,737  and  $3,537,996  at June 30,  1997 and
     December 31, 1996,  respectively,  represent  real estate  mortgage  loans.
     These loans are recorded at cost which approximates market.

     Transactions  in the  reserve  for loan  losses were as follows for the six
     months ended June 30:

                                         1997           1996
                                     -----------     -----------
     Balance at beginning of period  $2,599,653      $1,928,372
     Provision charged to operations    950,000         285,000
     Recoveries                          13,199           4,722
     Loans charged off                 (443,149)         (9,086)
                                     ----------      ----------
     Balance at end of period        $3,119,703      $2,209,008
                                     ==========      ==========


<PAGE>


     At June 30,  1997,  Bancorp had five loans  requiring a specific  valuation
     allowance in accordance  with Statement of Financial  Accounting  Standards
     ("SFAS")  No. 114,  as amended by SFAS No. 118 (two loans at  December  31,
     1996).  The  specific  valuation  allowance  was  $200,000  on  loans  with
     remaining  principal  outstanding  of $1,816,000 at June 30, 1997 ($300,000
     and  $1,100,000,  respectively,  at December  31,  1996).  Each loan with a
     current outstanding principal balance of less than $100,000 is grouped into
     one homogenous pool when considering the valuation allowance.

     It is Bancorp's  policy to place loans on  nonaccrual  status  whenever the
     collection  of all or a part of the  principal  balance is in doubt.  Loans
     placed on nonaccrual status may or may not be contractually past due at the
     time of such  determination,  and may or may not be secured by  collateral.
     Loans on  nonaccrual  status at June 30,  1997 and  December  31, 1996 were
     approximately $795,000 and $1,480,000, respectively.

     Loans  past  due 90 days  or more on  which  Bancorp  continued  to  accrue
     interest were  approximately  $351,000 at June 30, 1997, and  approximately
     $420,000 at December  31,  1996.  There were no loans on which the interest
     rate or  payment  schedule  were  modified  from  their  original  terms to
     accommodate a borrower's  weakened  financial  position at June 30, 1997 or
     December 31, 1996.


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

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

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

<PAGE>


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

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

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

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

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

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

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

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


<PAGE>


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

     Management  has  calculated  that,  if the  provisions of SFAS No. 128 were
     adopted as of January 1, 1997, Bancorp's primary earnings per share of $.57
     and  $.29  for  the six  months  and  the  quarter  ended  June  30,  1997,
     respectively,  would  change to basic  earnings per share of $.59 and $.30,
     respectively. Bancorp's primary earnings per share of $.48 and $.25 for the
     six months and the quarter ended June 30, 1996, respectively,  would change
     to basic earnings per share of $.50 and $.26, respectively.  There would be
     no effect on diluted earnings per share as reported.

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

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

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

     In June 1997, FASB issued SFAS No. 130, "Reporting  Comprehensive  Income."
     SFAS No. 130  establishes  requirements  for  disclosure  of  comprehensive
     income and becomes effective for Bancorp for the year ending December
<PAGE>

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

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

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

<PAGE>


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


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


OVERVIEW
--------

     Centennial  Bancorp  reported  net income of $4.3 million or $.57 per share
(primary),  for the six  months  ended June 30,  1997.  This  represented  a 41%
increase in net income and a 19%  increase in earnings per share  (primary),  as
compared to $3.0 million,  or $.48 per share,  for the six months ended June 30,
1996. Net income of $2.2 million,  or $.29 per share, for the quarter ended June
30, 1997  similarly  represented a 38% increase in net income and a 16% increase
in earnings per share (primary),  as compared to $1.6 million, or $.25 per share
for the quarter  ended June 30,  1996.  The  increased  earnings  during the six
months and the quarter ended June 30, 1997 reflected  primarily the expansion of
Bancorp's interest-earning assets and increased net interest income. At June 30,
1997,   Bancorp   recognized   a  24%   increase   in  both  total   assets  and
interest-earning assets as compared to June 30, 1996.
<PAGE>

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

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

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

         At June 30, 1997,  total assets were $430.9  million,  representing  an
increase of 5.8%, or $23.7 million,  over total assets at December 31, 1996. The
increase in total  assets  includes an increase in loans and loans held for sale
of $16.4  million,  primarily due to commercial  loan activity of the Bank,  and
also due to an  increase in real estate  construction  and real estate  mortgage
lending.

         Cash and cash equivalents  increased $15.2 million (or 40%) at June 30,
1997 as compared to December 31, 1996.  Cash and cash  equivalents can fluctuate
significantly  on a day-to-day  basis and are subject to  disbursements of loans
proceeds  to  borrowers,  payment of loans by  borrowers,  submission  of checks
deposited  by customers to other banks for payment and payment to other banks by
Bancorp for checks drawn against customer accounts.

     Total deposits increased $28.5 million (or 8%) at June 30, 1997 as compared
to December  31,  1996.  The  majority of the  increase  in total  deposits  was
experienced in demand deposits and

<PAGE>

interest-bearing   demand  deposits.   Bancorp  actively   solicits  demand  and
interest-bearing  demand deposit accounts due to the lower costs associated with
those deposit categories. Bancorp will also solicit time deposits when needed to
provide funds for expansion of the loan  portfolio.  However,  time deposits are
the most costly  category of  deposits  for Bancorp to maintain  due to interest
rate competition.

     In most prior years,  Bancorp has experienced a decrease in deposits during
all or part of the first quarter of the year, with deposit  activity  increasing
significantly  the  remainder  of each year.  During the first  quarter of 1997,
Bancorp experienced a modest increase of $249,000 in total deposits.  Because of
its  limited  growth  in  deposits,   management  liquidated  $11.0  million  of
securities  available-for-sale  during the first quarter of 1997 to  accommodate
the increase in loans being experienced at that time.

     Short-term  borrowings  decreased $8.5 million (or 69%) at June 30, 1997 as
compared to December  31, 1996.  This  decrease  resulted  from the maturity and
repayment of borrowings  from the Federal Home Loan Bank of Seattle.  Management
elected  to  repay  this  loan  due to  Bancorp's  increase  in  total  deposits
experienced during the second quarter, which provided ample liquidity to satisfy
the obligation and provide funds for the growth experienced in loans.

     All other changes experienced in asset and liability  categories during the
first six months of 1996 were comparatively modest.


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

     Total  interest  income  increased $3.8 million (or 26%) for the six months
and $2.0 million  (also 26%) for the quarter  ended June 30, 1997 as compared to
the same periods in 1996.  These  increases  were  primarily due to increases in
loans and loans held for sale  during 1997 as  compared  to 1996.  Bancorp  also
recognized modest increases in other interest income for the six

<PAGE>

months and the quarter  ended June 30,  1997 as compared to the same  periods in
1996,  but these  increases  were  primarily  offset by decreases in interest on
securities available-for-sale.

     Total interest  expense  similarly  increased $1.2 million (or 24%) for the
six  months  and  $628,000  (also 24%) for the  quarter  ended June 30,  1997 as
compared to the comparable  1996 periods.  These increases were primarily due to
the increase in deposits held during 1997 as compared to 1996, which were offset
in part by decreases in interest expense on short-term  borrowings and long-term
debt during the 1997 periods.

     The  increases  in  interest  earned,  offset in part by the  increases  in
interest paid, served to increase  Bancorp's net interest income by $2.6 million
(or 27%) for the  six-month  period,  and $1.3 million (also 27%) for the second
quarter of 1997, over the comparable periods in 1996.

     Noninterest  income  increased  $804,000  (or 79%) for the six  months  and
$137,000  (or 27%)  for the  quarter  ended  June 30,  1997 as  compared  to the
comparable  1996 periods.  The increase for the  six-month  period was primarily
attributable  to receipt of a  settlement  payment for a claim the Bank  brought
against former legal  counsel.  The increase for the quarter ended June 30, 1997
was  primarily  attributable  to an  increase  in gains  recognized  on sales of
residential  mortgage  loans due to the more stable  interest  rate  environment
experienced  during the second  quarter of 1997 which resulted in an increase in
residential mortgage loan activity.

     Noninterest  expense  increased  $891,000 (or 15%) for the six months ended
June 30, 1997 as compared to the comparable 1996 periods. Approximately $572,000
of the increase in  noninterest  expense was incurred  during the quarter  ended
June 30, 1997.  The increases  for the six-month and the quarterly  periods were
primarily attributable to increases in salaries and employee benefits, legal and
professional fees and other noninterest expense.

     Salaries and employee benefits increased $731,000 during the six months and
$397,000 during the quarter ended June 30, 1997 as compared to the 1996 periods.
These increases were due to
<PAGE>

additions to the Bank's and Mortgage Co.'s staffs to accommodate their increased
business activities and to operate the additional branch office of the Bank that
opened in the Portland area in January 1997.  The increases were also due to the
addition of staff to manage a future  branch  office of the Bank  located in the
Tanasbourne  area of  Portland.  Management  intends  to open  the  branch  in a
temporary  facility during the third quarter of 1997 during  construction of the
permanent building.

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

     Premises and  equipment  expense  increased  $33,000  during the six months
ended June 30, 1997 as compared to the 1996 period, but decreased $17,000 during
the 1997 quarter as compared to the 1996 quarter. The increase was primarily the
result of opening the additional  full-service branch in Portland and additional
depreciation for data processing equipment.

     Legal and professional  expenses  increased  $82,000 for the six months and
$41,000  for the quarter  ended June 30,  1997 as compared to the 1996  periods.
These increases were due to legal expenses associated with ongoing litigation in
the normal  course of  Bancorp's  business,  and to fees  charged for  personnel
acquisition services.

     Other  noninterest  expense  increased  $14,000  during  the six months and
$132,000  during the quarter  ended June 30, 1997 as compared to the  comparable
1996  periods.  The  increase  for the  second  quarter  of 1997  was  primarily
attributable to Bancorp's  increased operating levels. The increase for the 1997
six-month  period was offset in part by the recapture of a  contingency  reserve
during the first quarter of 1997, which management deemed no longer necessary.

<PAGE>

     The provision for income taxes increased for the six months and the quarter
ended June 30,  1997 by 41%,  commensurate  with  Bancorp's  increase  in income
before income  taxes.  Bancorp's  effective  tax rate remained at  approximately
32.5%,  primarily  due to the amount of  nontaxable  interest  income  earned on
securities issued by states and political subdivisions.


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

     During the six months ended June 30, 1997,  Bancorp charged a $950,000 loan
loss  provision to  operations,  as compared to $285,000  charged during the six
months ended June 30, 1996. Loans charged off, net of recoveries, during the six
months  ended June 30, 1997 were  $429,950,  as compared to net  charge-offs  of
$4,364  for the 1996  six-month  period.  The  increase  in the  amount of loans
charged  off, net of  recoveries,  during the six months ended June 30, 1997 was
primarily attributable to management's  determination that portions of two loans
on which a specific  valuation  allowance  in  accordance  with SFAS No. 114 had
previously been established were uncollectible.

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


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

<PAGE>

activities.  Scheduled loan repayments are a relatively  stable source of funds,
while deposit inflows and unscheduled loan prepayments,  which are influenced by
general  interest rate levels,  interest rates  available on other  investments,
competition, economic conditions and other factors, are not.

     Along with  federal  funds  lines,  the Bank  maintains  a cash  management
advance  with the Federal  Home Loan Bank,  Seattle,  Washington,  which  allows
temporary borrowings for liquidity.

     At June 30, 1997,  Bancorp's  Tier 1 and total  risk-based  capital  ratios
under the Federal  Reserve Board's ("FRB")  risk-based  capital  guidelines were
approximately  11.0%  and  11.8%,  respectively.  The FRB's  minimum  risk-based
capital  ratio  guidelines  for  Tier  1  and  total  capital  are  4%  and  8%,
respectively.

     At June 30, 1997,  Bancorp's  capital-to-assets  ratio under leverage ratio
guidelines was  approximately  8.6%. The FRB's current minimum  leverage capital
ratio guideline is 3%.

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

<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 21, 1997.
At the meeting, Dan Giustina,  Cordy H. Jensen, Robert L. Newburn, Brian B. Obie
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             4,988,912     25,331         -0-
     Cordy H. Jensen          4,987,129     27,114         -0-
     Robert L. Newburn        4,989,548     24,695         -0-
     Brian B. Obie            4,984,776     29,467         -0-
     Richard C. Williams      4,988,842     25,401         -0-




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

(a)  Exhibits

     27     Financial Statement Schedule


(b)  Reports on Form 8-K

     None

<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, 1997       /s/ Richard C. Williams
                              ----------------------------------- 
                              Richard C. Williams
                              President & Chief Executive Officer




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


<PAGE>
                                   FORM 10-Q

                                 EXHIBIT INDEX
                                 -------------


EXHIBIT                                                     PAGE
-------                                                     ----

(27)      Financial Data Schedule                            21