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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K



|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2001
|--- |  | --------------------------------------------------------------------------------------------------------------------------------

or



|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from  to
|----- |  | --------------------------------------------------------------------------------------------------------------------

Commission file number: 0-27938

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

|                         |  |                    
|------------------------ |  | -------------------
|                         |  | 93-1193156         
|Oregon                   |  | (I.R.S. Employer   
|(State of incorporation) |  | Identification No.)

420 East Third Street, Suite 200
The Dalles, Oregon 97058
(Address of principal executive offices)

Registrants telephone number: (541) 298-6649

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common stock,
no par value

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. YesX         No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [    ]

The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of February 5, 2002 was $75,020,307.

The number of shares outstanding of each of the issuers classes of common
equity as of the latest practicable date: 8,076,532 shares of no par value
common stock on March 1, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants proxy statement dated March 11, 2002 for the
2002 Annual Meeting of Stockholders (Proxy Statement), and the 2001 Annual
Report to Stockholders are incorporated by reference in Part II and III hereof.





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TABLE OF CONTENTS



|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I       
|              | ITEM 1. DESCRIPTION OF BUSINESS                                                              
|              | ITEM 2. PROPERTIES                                                                           
|              | ITEM 3. LEGAL PROCEEDINGS                                                                    
|              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|Part II      
|              | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|              | ITEM 6. SELECTED FINANCIAL DATA                                                              
|              | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|              | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           
|              | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III     
|              | ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                   
|              | ITEM 11 EXECUTIVE COMPENSATION AND REPORT OF COMPENSATION COMMITTEE                          
|              | ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                       
|              | ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                       
|Part IV      
|              | ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                     
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 10.1 
|EX-10.2      
|EXHIBIT 10.3 
|EXHIBIT 10.4 
|EXHIBIT 13.1 
|EXHIBIT 21.1 



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COLUMBIA BANCORP
FORM 10-K
TABLE OF CONTENTS

|                                                |  |                                                                                                 |   |  |       |      |       | 
|----------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | - |  | ----- | ---- | ----- | 
|                                                |  |                                                                                                 |   |  |       | PAGE
|                                                |  |                                                                                                 |   |  |       |     
|Disclosure Regarding Forward
Looking Statements |  |                                                                                                 | 3 | 
|PART I                                          |  |                                                                                                 |   |  |       |      |       | 
|Item 1                                          |  | Business                                                                                        |   |  | 3-14  |     
|Item 2                                          |  | Properties                                                                                      |   |  | 14-15 |     
|Item 3                                          |  | Legal Proceedings                                                                               |   |  | 16    |     
|Item 4                                          |  | Submission of Matters to a Vote of Security
          Holders                                   |   |  | 16    |     
|PART II                                         |  |                                                                                                 |   |  |       |     
|                                                |  | (Portions of Items 5, 6, 7 and 8 are
          incorporated by reference from                   |   |  |       |     
|                                                |  | Columbia Bancorp's 2001 Annual Report
          to Stockholders)                                |   |  |       |     
|Item 5                                          |  | Market for Registrant's Common Equity
          and Related Stockholder Matters                 |   |  | 16    |     
|Item 6                                          |  | Selected Financial Data                                                                         |   |  | 16-17 |     
|Item 7                                          |  | Management's Discussion and Analysis
          of Financial Condition and Results of Operations |   |  | 18-34 |     
|Item 7A                                         |  | Quantitative and Qualitative Disclosures
          about Market Risk                            |   |  | 34-35 |     
|Item 8                                          |  | Financial Statements and Supplementary
          Data                                           |   |  | 36    |     
|Item 9                                          |  | Changes In and Disagreements with Accountants
          on Accounting and Financial Disclosure  |   |  | 36    |     
|PART III                                        |  |                                                                                                 |   |  |       |     
|                                                |  | (Items 10 through 13 are incorporated
          by reference from Columbia Bancorp's            |   |  |       |     
|                                                |  | definitive proxy statement for the Annual
          Meeting of Stockholders to be held on       |   |  |       |     
|                                                |  | April 25, 2002)                                                                                 |   |  |       |     
|Item 10                                         |  | Directors, Executive Officers of the
          Registrant                                       |   |  | 37    |     
|Item 11                                         |  | Executive Compensation and Report of
          Compensation Committee                           |   |  | 37    |     
|Item 12                                         |  | Security Ownership of Certain Beneficial
          Owners and Management                        |   |  | 37    |     
|Item 13                                         |  | Certain Relationships and Related Transactions                                                  |   |  | 37    |     
|PART IV                                         |  |                                                                                                 |   |  |       |      |       | 
|Item 14                                         |  | Exhibits, Financial Statement Schedules,
          and Reports on Form 8-K                      |   |  | 37-38 |     
|SIGNATURES                                      |  |                                                                                                 |   |  |       |      | 39-40 | 

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking statements with respect to the financial condition,
results of operations and the business of Columbia are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those set forth in such statements. These include, without limitation, the
impact of competition and interest rates on revenues and margins, and other
risks and uncertainties, including statements relating to the year 2002, as may
be detailed from time to time in Columbias public announcements and filings
with the Securities and Exchange Commission (SEC). Forward-looking
statements can be identified by the use of forward-looking terminology, such as
may, will, should, expect, anticipate, estimate, continue,
plans, intends, or other similar terminology. Columbia does not intend to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this press release, other than in its
periodic filings with the SEC, or to reflect the occurrence of unanticipated
events.




Part I




ITEM 1. DESCRIPTION OF BUSINESS

General

Columbia Bancorp (Columbia) is a financial holding company headquartered
in The Dalles, Oregon, with one subsidiary, Columbia River Bank (CRB). CRB
is a 16 branch, state-chartered institution authorized to provide banking
services by the states of Oregon and Washington. Columbia offers a broad range
of financial services to its customers, primarily small and medium sized
businesses, farmers, and individuals. Columbias 14 Oregon branches serve the
northern and eastern Oregon communities of The Dalles, Hood River, Pendleton
and Hermiston, the central Oregon communities of Madras, Redmond, and Bend, and
the communities of McMinnville, Canby and Newberg in the Willamette Valley.
Columbias two south central Washington branches serve the communities of
Goldendale and White Salmon.

As of December 31, 2001, Columbia had total assets of $482.21 million,
total deposits of $394.64 million, and stockholders equity of $46.45 million.
Columbias net income for the year ended December 31, 2001, was $7.37 million,
which was Columbias 14th consecutive year of increasingly higher net income.
For the year ended December 31, 2001, Columbias return on average assets was
1.64% and return on average equity was 16.76%. Since the year ended December
31, 1997, Columbia has increased earnings by an average of 17.74% per year and
achieved an average return on average assets of 1.62%. During the same period,
Columbia has achieved an average return on average equity of 16.31% while
sustaining strong asset quality.

From its origins as a one-branch bank in The Dalles, Oregon, Columbia has
grown as a result of merger and acquisition activity, new branch openings, the
introduction of new business lines and the expansion and cross-marketing of its
existing products and community-bank lending expertise. In 1995, CRB merged
with Juniper Banking Company. In 1996, Columbia was formed as CRBs holding
company and Columbia acquired Washington-based Klickitat Valley Bank
(Klickitat).

In 1997, Columbia created a division of CRB to originate conventional
residential mortgage loans for the primary purpose of selling to the secondary
market. The division, known as the Columbia River Bank Mortgage Group
(Mortgage Group), has grown its business substantially since its inception.
The Mortgage Group operates its primary retail loan operations from branch
facilities in Bend, Oregon, but also offers its products at all of Columbias
Oregon and Washington branches. It also offers wholesale mortgage loan
services directly to other Oregon banks. Further growth in 1997 came
from CRBs Bend branch opening.

In 1998, CRB opened a new branch in Hermiston, Oregon and Columbia
completed the acquisition of Valley Community Bank (VCB). During 1999, CRB
opened new branches in Pendleton and Newberg, Oregon, and opened a second Bend,
Oregon branch. In April 2000, Columbia River BankNet, CRBs Internet-based
banking product, was introduced. In 2001, CRB opened a new branch in Canby,
Oregon and a limited banking facility located in a McMinnville, Oregon
retirement community as well as a mortgage lending office in Newport, Oregon.
Collectively, these growth and acquisition activities have enabled Columbia to
diversify its loan portfolio and its

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operating risks over several market areas and local economies.

The markets in which Columbia operates are economically diverse, and
therefore pose both opportunities and challenges to a community bank operating
in all of these economies. Columbias approach to meeting the challenge is to
staff its branches and business groups with managers who are established in
their communities and have developed a loyal customer following. Columbias
senior management, in conjunction with the branch managers, reviews the
operations of each branch to determine which products and services are best
suited to that geographic region. The diverse economies also provide
opportunities to limit Columbias exposure to adverse market conditions in any
one economic sector.

Business Strategy

Columbias strategy is to continue building on its position as a leading
community-based provider of financial services in Oregon and south central
Washington. The key to the success of this strategy, in Columbias view, is to
continue to provide exceptional personal service to the communities it now
serves, and to successfully expand into new communities by identifying and
meeting their unique financial services needs. Columbias target branch
locations are in non-metropolitan regions, where it aims to deliver prompt and
friendly personal banking services. The components of Columbias business
strategy are outlined below.

Successfully operate in non-metropolitan regions.In direct contrast to
the present strategies of certain major regional banks which have closed
branches and reduced service levels in Columbias service areas, Columbia
believes that the key to profitably operating in non-metropolitan communities
is to: (i) provide a high level of service to the customer; (ii) staff branches
with employees who have established ties to the community; (iii) attract and
retain a highly skilled management team; and, (iv) allow branch personnel the
flexibility to emphasize products and services which best fit their local
economy. In addition, by decentralizing a portion of the management function
to the branch level, Columbia believes it can make business decisions regarding
customers more quickly and with more knowledge than its major banking
competitors. Columbia believes it is able to profitably attract and retain
customers by providing and delivering products and services tailored to their
individual needs, and by delivering them with a high degree of personal
attention.

Maintain high asset quality.Columbia seeks to maintain high asset quality
through a program that includes prompt and strict adherence to established
credit policies combined with training and supervision of lending officers.
Additionally, Columbia uses incentives to maintain high asset quality,
including tying a portion of its loan officers compensation to the quality of
the loans they originate. Columbia also believes that its commitment to hire
branch managers with long-term ties to their communities is of significant
assistance in determining the quality of loan transactions. The variety of
economies in which Columbias branches are located increases the
diversification and, in Columbias opinion, the strength of the overall loan
portfolio.

Merger and acquisition opportunities.In 1995, CRB merged with Juniper
Banking Company (Juniper) of central Oregon. In 1996 Columbia acquired
Klickitat Valley Bank of south central Washington, and in November 1998,
Columbia acquired McMinnville-based Valley Community Bancorp (Valley). After
these transactions, Columbia was able to provide the same or improved levels of
community banking products and services in these new market areas.

Continue to expand through new branches and new products.Columbia has
grown through the establishment of five new branches in the past three years.
In addition, Columbias banking products, services and delivery channels are
designed to be responsive to the needs of local community businesses and
individual customers. For example, in the year 2001 Columbia expanded its
services in the Willamette Valley by opening a new branch in Canby, Oregon and
a limited banking facility located in a McMinnville, Oregon retirement
community. In addition, Columbia recognized an opportunity to provide
additional mortgage lending services by opening a mortgage lending office in
Newport, Oregon. Columbias products and services are designed to both
increase its customer base and to enhance cross-selling opportunities.

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Growth History

Columbias Origins and Activities Through 1994. Columbias subsidiary,
CRB, was incorporated and chartered in Oregon in 1976 and opened for business
in 1977. CRB developed and grew as a one-branch community bank in The Dalles.
Collectively, Columbias five-member senior management team has,
on average, over 21 years of banking experience, much of it
gained through years of service at CRB.

CRBs first branch expansion was a satellite branch facility that opened
in 1986 west of The Dalles city center. Two years later, Columbia opened a
branch in the small Oregon community of Maupin. Management subsequently
determined that the Maupin branch was unprofitable, and the branch was closed
in May 1998.

In 1992 CRB purchased land adjacent to a newly established Wal-Mart store
in nearby Hood River, on which it built and opened its second branch outside of
The Dalles. The Hood River Branch opened for business in May 1993.

Activities in 1995. On January 1, 1995 CRB merged with Juniper, a
community bank in central Oregon with branches in Madras and Redmond, Oregon.
Following this merger, CRBs full service branches increased from three to
five, and its assets increased from $62 million to $92 million. CRB retained
the Juniper Banking Company name and added three experienced former Juniper
directors to its Board. Also, in 1995 CRB replaced its existing branch
facility in the western part of The Dalles with a branch facility in a newly
built Safeway supermarket west of The Dalles downtown core. This branch takes
deposits, accepts loan applications, and offers other products and services;
however, it does not process loans on-site.

Activities in 1996.In early 1996, Columbia became CRBs holding company.
In June of 1996 Columbia acquired Klickitat, a south central Washington
community bank headquartered in Goldendale, Washington with a branch in White
Salmon. As CRB did with Juniper, Columbia retained the Klickitat Valley Bank
name, and added, during 1996 and 1997, four experienced former Klickitat
directors to the Columbia Board. Klickitat was a natural acquisition candidate
for Columbia. Klickitats White Salmon branch was within a few miles of CRBs
Hood River branch across the Columbia River, and there were and are multiple
economic ties between these two communities. Klickitat was Goldendales only
community bank, and this communitys agriculture-based economy fit well with
CRBs lending expertise.

In late 1996 CRB opened its first branch in Bend, Oregon under the
Juniper Banking Company name. Bends proximity to CRBs existing Redmond and
Madras branches, and Bends economic growth and increasing population, made
this a natural branch extension for Columbia. Bend is the largest community in
which Columbia operates. Management believes that Bends population growth,
the expansion and diversity of its economic base, and its strong home
construction market afford significant opportunities for growth.

Activities in 1997.In 1997, Columbias growth came internally from
increased numbers of loans and deposits at its branches. Loan growth at the
new Bend branch was significant, with assets increasing 239% over the prior
year, from $3.3 million to $11.2 million. Further growth came from enhanced
home mortgage growth through Columbias Mortgage Group, established in
mid-1997.

Activities in 1998.

Secondary Common Stock Offering and Nasdaq Listing.During November 1998,
Columbia registered 1,000,000 shares of common stock for sale to the public at
a price of $9 per share, for an aggregate offering price of $9,000,000. All
shares were sold, resulting in net proceeds of $8,126,115, after deducting
$873,885 for underwriting discounts and commissions, legal, accounting,
printing fees, and other offering expenses. Net proceeds were used to
implement Columbias expansion plans, including the acquisition of Valley. In
connection with the offering, Columbias common stock was listed on the Nasdaq
Stock Market, where trading commenced on November 6, 1998.

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Acquisition of Valley Community Bancorp.Columbias most recent
acquisition-based expansion was its purchase of Valley on November 30, 1998 for
a cash purchase price of $15.10 million (the Acquisition). Subsequent to the
Acquisition, Valley was merged into Columbia Bancorp, and its subsidiaries,
including VCB, became wholly-owned subsidiaries of Columbia.

Columbia believes the economy in the McMinnville area affords it the
opportunity to leverage two of its core competencies: small business lending
and agricultural lending. Additionally, the acquisition became Columbias
first entrance into Oregons most populous region, the Willamette Valley.
Management believes there are significant future growth opportunities in
McMinnville, Newberg and surrounding communities.

Columbia operated VCB as a separate subsidiary under the Valley Community
Bank name until November 30, 1999 when it was merged into CRB. Columbias
management believes the combination will lower overall costs in the years ahead
and will capitalize on synergistic marketing, advertising and customer
awareness issues.

Hermiston, Umatilla County, Oregon. Columbia opened a new branch in
Hermiston, Oregon in September of 1998. Hermiston, which has a population of
over 11,000, is 100 miles east of The Dalles. The branch offers full-service
community banking services, including loans to local commercial and
agricultural-based business.

Activities in 1999.

Pendleton, Umatilla County, Oregon.In January 1999 Columbia opened a
branch in Pendleton, which is 26 miles east of Hermiston and is the largest
town in eastern Oregon. Columbia hired a branch manager who has strong ties to
the Pendleton community and 25 years experience with one of Columbias
super-regional bank competitors.

Shevlin Center Branch  Bend, Deschutes County, Oregon. Columbia opened a
second branch in Bend, Oregon in the summer of 1999. The branch is located in
the western part of Bend in the upscale Shevlin Business Park, an office park
development. The additional branch in Bend was planned in order to take
advantage of growth opportunities and to leverage existing nearby operations.
Bend is the largest city in central Oregon, and the largest single market area
in which Columbia operates. Columbia believes the second Bend branch will
allow opportunities for future growth, especially for business lending
services.

Newberg Branch, Yamhill County, Oregon.Columbia opened its first branch
in Newberg, Oregon in November 1999. The branch operates in leased space in
the Columbia River Bank Building. The Newberg branch is Columbias second
branch in Oregons rapidly growing Willamette Valley.

Name Uniformity.Following the mergers and acquisitions involving Juniper
Banking Company, Klickitat and VCB, CRB for various periods of time retained
the use of these banks names as assumed business names at select branch
facilities. However, eventually all of these assumed business names were
replaced with the Columbia River Bank name. In 1999 the last name transition
was complete when VCB merged into CRB, and the Valley Community Bank name was
retired. As of December 31, 1999 all of CRBs branches, including the most
recently opened branches, operate under the Columbia River Bank name.

Activities in 2000.

Columbia River BankNet.In April 2000 CRB introduced an Internet-based
delivery channel that allows customers the convenience of performing many
banking functions whenever and wherever they want. Accessed through CRBs web
site at www.columbiariverbank.com, BankNet services include: accessing a
summary of accounts and balances, interest detail on all accounts, account
history, transfer of funds between accounts, applying for loans, secure
messaging, and bill payment. Coupled with ATM and branch networks, and 24-hour
telephone access to account information, CRB continuously focuses on providing
choices in banking services, products and delivery channels to its clients.

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Data Processing Changes.In 2000, CRB took steps to reorganize its data
processing function. CRB previously had many of its data processing services
handled by a data processing company, Datatech of Oregon, Inc. (Datatech), of
which CRB owned 28.6% and five other community banks owned the
remainder. In September 2000, CRB acquired all of the stock of
Datatech and contracted with FISERV, a nationwide bank services
company, for day-to-day management of the operating asset. In
December 2000, CRB dissolved Datatech. Management believes these moves will allow CRB
greater control and flexibility in data processing functions at a reduced cost.

Activities in 2001.

Canby Branch, Clackamas County, Oregon.Columbia opened its first branch
in Canby, Oregon in September 2001. The branch currently operates in 1,500
square feet of leased space in the Holly Mall while construction is being
completed on a new facility in the Canby Station. Canby has a population of
13,500. The Canby branch is Columbias third branch in Oregons rapidly
growing Willamette Valley.

McMinnville Limited Banking Facility, Yamhill County, Oregon.Columbia
opened a second limited banking facility in a McMinnville, Oregon retirement
community in September 2001. This facility brings the banking convenience to
many residents of the retirement community. Columbias other limited banking
facility is also in a McMinnville, Oregon retirement community.

Mortgage Lending Expansion.Columbia expanded its mortgage lending
services by opening a mortgage lending office in Newport, Oregon. This office
operates in 1,900 square feet of leased space in the Whalers Village mini
shopping mall. The mortgage lending office is Columbias first office on the
Oregon coast.

Consumer Products and Services

Columbia offers a broad range of deposit and loan products and services
tailored to meet the banking requirements of consumers in Columbias market
areas. These include:

Deposit Products.Columbias consumer deposit products include many
noninterest-bearing checking account products priced at various levels,
interest-bearing checking and savings accounts, money market accounts, and
certificates of deposit. These interest-bearing accounts generally earn
interest or are priced at rates established by management based on competitive
market factors and managements desire to increase certain types or maturities
of deposit liabilities. Columbia strives to establish customer relations to
attract core deposits in noninterest-bearing transactional accounts, which
reduces its cost of funds.

Real Estate Mortgage Loans.Real estate loans are available for
construction, purchase and refinancing of residential owner occupied and
non-owner occupied properties. Borrowers can choose from a variety of fixed
and adjustable rate options and terms.

Investment Products.Through arrangements with Primevest Financial
Services, Inc., (Primevest) a registered securities broker-dealer, Columbia
offers a wide range of financial products and services to consumers. These
include stocks, mutual funds, traditional and Roth IRAs, SEPs, tax-sheltered
annuities, life insurance, and other financial products. Representatives also
offer retirement planning services. Columbia receives a portion of the
commissions generated from financial product sales.

Technology-Based Products and Services. Columbia uses both traditional
and new technology to support its focus on personal service. These
include a VISA credit and check card (debit card) program, ATMs at
each of Columbia's full-service branches, including 13 drive-up ATMs
and four off-site ATMs, a telephone banking service that allows
customers to speak directly with a customer service representative
during normal banking hours, and 24-hour telephone access to their
accounts. In addition, Columbia, through its web
site, offers BankNet, its Internet banking service, allowing access to account
information and services in an on-line, real-time environment.

Consumer Loans. Columbia provides loans to individual borrowers for a
variety of purposes, including secured and unsecured personal loans, home
equity and personal lines of credit, and motor vehicle loans.

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Senior Customer Services. Since a significant portion of Columbias
consumers are senior citizens, Columbia offers a reduced rate checking account
product. In addition, Columbia markets retirement planning products and
investments to the senior customer group through Primevest.

Loan Products for Commercial, Agricultural, and Other Business Customers

Columbia has an experienced lending staff, who have special expertise in
small business agricultural and real estate lending. Columbias loan officers
emphasize continuing contact with business customers after loans are made.
Columbia believes that its business customers appreciate the ongoing
relationship they develop with their local lending officer. Such
relationship-based banking is an important aspect of Columbias continuous
effort to maintain high asset quality.

Commercial Loans. Columbia offers to its commercial customers customized
loans including equipment and inventory financing, operational lines of credit,
SBA loans for qualified businesses, and accounts receivable financing. A
significant portion of Columbias loan portfolio consists of commercial loans.
For regulatory reporting purposes, a portion of Columbias commercial loans are
designated as real estate loans because they are secured by real property,
although these loans may finance accounts receivable, equipment and inventory
purchases, or other commercial activities. Lending decisions are based on
careful evaluation of the financial strength, management, and credit history of
the borrower and the quality of the collateral securing the loan. Commercial
loans secured by real property are generally limited to 75% of the value of the
collateral. Columbia typically requires personal guarantees and relies on the
identification of secondary sources of repayment.

Agricultural Loans. Columbia provides loans including production lines of
credit, equipment financing, and term loans for capital improvements and other
business purposes to agricultural businesses. Agricultural loans are generally
secured by crops, equipment, and inventory, as well as real estate.
Agricultural lending can require significant follow-up time, as farmers request
budgeting assistance and other financial advice. Columbia employs both an
agricultural loan consultant with decades of farm lending experience and an
experienced agricultural representative, who is a full-time Columbia employee,
to assist its loan officers in loan processing and administration. Columbias
loan officers, many of whom are graduates of the Western Agricultural School in
Pullman, Washington, make frequent visits to farming operation sites, attend
regular agricultural lending programs and seminars, and actively participate in
growers associations and other agricultural-based organizations.

Real Estate Loans. Real estate loans are available for the construction,
purchasing, and refinancing of commercial and rental properties. Borrowers can
choose from a variety of fixed and adjustable rate options and terms.

Columbias real estate loans are in large part loans to commercial
customers, farmers, and ranchers, and are secured by the properties used in
their businesses. The majority of these loans have a variable rate feature
with adjustment periods varying from one to five years. Columbia often
requires a government guaranty as additional
collateral support. Insofar as payments on real estate loans depend on the
successful operation and management of the businesses and properties securing
the loans, repayment can be affected by local real estate market and economic
conditions. Fluctuating land values and local economic conditions can make
loans secured by real property difficult to evaluate and monitor.

Government-Assisted Loan Programs.Columbias loan officers make loans to
small businesses and to farmers that are supported by guarantees issued by
various state and federal government agencies. Columbia is active in the SBA
7-A and 504 programs, and in similar programs offered by the Farm Services
Agency (formerly the Farmers Home Administration) and by Oregons state
government. Columbia has utilized these programs to serve customers who are
expanding their operations, venturing into new product lines, or constructing
special use real estate. The government guarantees a portion of these loans,
which reduces risk in Columbias loan portfolio.

Services to Non-Profits and Public Entities.Columbia offers a general
array of loan products to borrowers in the non-profit and public entity sector,
including city and county governments, together with special programs, such as
jumbo CDs and low-cost loan programs. Columbia also offers consumer services
to nonprofit and public sector employees, such as Columbia VISA card enrollment
and direct deposit services.

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For all of its loans, Columbia at all times seeks to maintain sound loan
underwriting standards with written loan policies, appropriate individual and
branch limits, and loan committee reviews. In the case of particularly large
loan commitments or loan participations, loans are reviewed by a loan committee
at the Board of Directors level of CRB. Underwriting standards are designed to
achieve a high-quality loan portfolio, compliance with lending regulations and
the desired mix of loan maturities and industry concentrations. Management
seeks to minimize credit losses by closely monitoring the financial condition
of its borrowers and the value of collateral.

Other Products and Services for Business Customers

Deposit and Related Products.Columbias business deposit products
include basic, regular, and interest-bearing checking accounts, merchant VISA
programs, and business money market and sweep accounts. Columbia also offers
check verification services to merchants allowing them the ability to
determine, on a 24-hour basis, whether a check drawn on an account has
sufficient funds to cover the amount drawn.

Investment Products.Columbias affiliation with Primevest allows it to
offer financial products and services to Columbias business customers as well
as to consumers. These include insurance and annuity products, and employee
retirement plan products such as SEPs, IRAs and 401(k) plans.

Staff Training and Education  Web-Based Training

Columbia has several staff training and education programs. All new
employees undergo a one-day orientation program during which they meet senior
management and become familiar with Columbias history, customer service goals,
and culture. In 2001, Columbia established a web-based continuing education
program with a third party vendor for employees. Under this program, employees
are given a curriculum and asked to complete employment-related educational
courses on a regular basis consistent with the employees career goals and
needs. In addition, employees are encouraged to attend classes offered by
banking schools and associations. Columbias management believes that such
continuing training and education programs are important to maintaining
organizational cohesion and consistently high quality customer service.

Marketing

Columbia accepts deposits at its branches in Wasco, Hood River, Jefferson,
Deschutes, Clackamas, Yamhill and Umatilla Counties in Oregon and Klickitat
County in Washington. Columbia makes loans in all of these counties and in
adjacent counties including Sherman, Gilliam, and Crook counties in Oregon and
Skamania County in Washington. Many of its products and services, including
investment products and mortgages through Columbias Mortgage Group, are
offered and sold throughout Oregon and south central Washington. Columbias
ability to increase its market share in the communities it serves is driven by
a marketing plan consisting of several key components. A principal objective
is to create and foster a sales culture in each office. Employees are trained
to cross-sell, offering appropriate products and services to existing customers
and attempting to increase the business relationships Columbia shares with
these customers. Columbia regularly examines the desirability and
profitability of adding new products and services to those currently offered.
Columbia also promotes specific products by media advertising, but relies
primarily on referrals and direct contacts for new business. Columbia
recognizes the importance of community service and supports employee
involvement in community activities. This participation allows Columbia to
make a contribution to the communities it serves, which management believes
increases Columbias visibility in its markets and thereby increases business
opportunities.

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Columbia does business in many different non-metropolitan communities.
Management believes the diverse assortment of customers, communities, and
economic sectors that Columbia serves is a source of strength. In addition, as
a community banking organization Columbia has certain competitive advantages
because of its local focus. However, Columbia is also more reliant on the
local economies in its market areas than are super-regional and national banks.

Competition

The market for banking services, including deposit and loan products, is
highly competitive. The major commercial bank competitors are super-regional
institutions headquartered outside the state of Oregon. Deposits held by
super-regionals were approximately 61.64% of statewide commercial bank deposits
as of June 30, 2001, which is the most recent date for which this information
is available. These major banks have the advantage of offering their customers
services and statewide banking facilities that Columbia does not offer.

Columbias competitors for deposits are commercial banks, savings and loan
associations, credit unions, money market funds, issuers of corporate and
government securities, insurance companies, brokerage firms, mutual funds, and
other financial intermediaries. These competitors may offer rates greater than
Columbia is willing to offer. Columbia competes for deposits by offering a
variety of deposit accounts at rates generally competitive with financial
institutions in the area.

Columbias competition for loans comes principally from commercial banks,
savings and loan associations, mortgage companies, finance companies, insurance
companies, credit unions, and other institutional lenders. An important
competitor for agricultural loans is Farm Credit Services, formerly known as
the Production Credit Association. Columbia competes for loan originations
through the level of interest rates and loan fees charged, its array of
commercial and mortgage loan products, and the efficiency and quality of
services provided to borrowers. Lending activity can also be affected by the
availability of lendable funds, local and national economic conditions, current
interest rate levels, and loan demand. As described above, Columbia competes
with the larger commercial banks by emphasizing a community bank orientation
and efficient personal service to customers.

Competition from other single or multi-branch community banks, of which
there are many in Oregon and Washington, presents a special competitive
threat. These other community banks can open new branches in the communities
Columbia serves, competing directly for customers who desire the high level of
service that a community bank can offer. Therefore, these banks directly
target the loan and deposit customers that Columbia seeks. Other community
banks also compete for the same management personnel and the same potential
acquisition and merger candidates that would be of interest to Columbia. New
community bank start-ups present similar competitive threats.

A potential new source of competition is the array of on-line banking
services offered by traditional commercial banks and other financial service
providers, and by newly formed companies that use the Internet to advertise and
sell competing products. Columbia offers many on-line banking services to its
customers, and management believes that, for the foreseeable future, its
customers will continue to prefer the personal, locally based services that it
offers.

SUPERVISION AND REGULATION

General

Columbia is extensively regulated under federal and state law. These laws
and regulations are primarily intended to protect depositors, not stockholders.
The discussion below describes and summarizes certain statutes and
regulations. These descriptions and summaries are qualified in their entirety
by reference to the particular statute or regulation. Changes in applicable
laws or regulations may have a material effect on the business and prospects of
Columbia. The operations of Columbia may also be affected by changes in the
policies of banking and other government regulators. Columbia cannot
accurately predict the nature or extent of the effects on its business and
earnings that fiscal or monetary policies, or new federal or state laws, may
have in the future.

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Gramm-Leach-Bliley Financial Services Modernization Act

In 1999 Congress passed the Gramm-Leach-Bliley Financial Services
Modernization Act (the FSMA). This new legislation repealed certain
provisions of the Glass-Steagall Act that had required the separation of the
banking, insurance and securities businesses. It also created a new business
structure known as a financial services holding company. Under this new law,
banks will have broader opportunities to affiliate with insurance and
securities companies. Banks could also become tempting acquisition targets, as
insurance and securities companies seek such affiliations themselves. The FSMA
may also encourage local jurisdictions to enact tighter bank privacy
provisions. The enactment and implementation of the FSMA will result in new
competitive challenges and opportunities for community banks in the coming
years.

Columbia is a financial services holding company under the FSMA and is
therefore subject to supervision of, and regulation by, the Board of Governors
of the Federal Reserve System (Federal Reserve). Columbia is examined by,
must file annual reports with, and provide the Federal Reserve with any
additional information as it may require. Financial holding companies are bank
holding companies that satisfy certain criteria and are permitted to engage in
activities that traditional bank holding companies are not.

Holding Company Bank Ownership. The Bank Holding Company Act of 1956
(the BHCA) requires every bank holding company to obtain the prior approval
of the Federal Reserve before (i) acquiring, directly or indirectly, ownership
or control of any voting shares of another bank or bank holding company if,
after such acquisition, it would own or control more than 5% of such shares,
(ii) acquiring all or substantially all of the assets of another bank or bank
holding company, or (iii) merging or consolidating with another bank or bank
holding company.

Holding Company Control of Nonbanks.With some exceptions, the BHCA also
prohibits a bank holding company from acquiring or retaining direct or indirect
ownership or control of more than 5% of the voting shares of any company which
is not a bank or bank holding company, or from engaging directly or indirectly
in activities other than those of banking, managing, or controlling banks, or
providing services for its subsidiaries. The principal exceptions to these
prohibitions involve certain nonbank activities which, by statute or by Federal
Reserve regulation or order, have been identified as activities closely related
to the business of banking or of managing or controlling banks. In making this
determination, the Federal Reserve considers whether the performance of such
activities by a bank holding company can be expected to produce benefits to the
public such as greater convenience, increased competition, or gains in the
efficient use of resources, which can be expected to outweigh the risks of
possible adverse effects such as decreased or unfair competition, conflicts of
interest, or unsound banking practices. The Economic Growth and Regulatory
Reduction Act of 1996 amended the BHCA to eliminate the requirement that bank
holding companies seek prior Federal Reserve approval before engaging in
certain permissible nonbanking activities if the holding company is well
capitalized and meets certain other specific criteria.

Transactions with Affiliates.Subsidiary banks of a bank holding company
are subject to restrictions imposed by the Federal Reserve Act on extensions of
credit to the holding company or its subsidiaries, on investments in their
securities, and on the use of their securities as collateral for loans to any
borrower. These regulations and restrictions may limit Columbias ability to
obtain funds from CRB for its cash needs, including funds for payment of
dividends, interest, and operational expenses.

Tying Arrangements.Under the Federal Reserve Act and certain regulations
of the Federal Reserve, a bank holding company and its subsidiaries are
prohibited from engaging in certain tying arrangements in connection with any
extension of credit, lease or sale of property, or furnishing of services. For
example, CRB may not generally require a customer to obtain other services from
it or from Columbia, and may not require that the customer promise not to
obtain other services from a competitor as a condition to an extension of
credit to the customer.

Federal and State Bank Regulation

General.CRB is an Oregon stock bank with deposits insured by the Federal
Deposit Insurance Corporation (FDIC), and is subject to the supervision and
regulation of the Oregon Director of Banks and the FDIC. CRB is also subject to
the supervision and regulation the Washington Department of Financial
Institutions. These agencies

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have the authority to prohibit banks from engaging in what they believe
constitute unsafe or unsound banking practices.

CRA.The Community Reinvestment Act (the CRA) requires that, in
connection with examinations of financial institutions within their
jurisdiction, the Federal Reserve or the FDIC evaluates the record of the
financial institutions in meeting the credit needs of their local communities,
including low and moderate income neighborhoods, consistent with the safe and
sound operation of those banks. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or
facility.

Insider Credit Transactions.Banks are also subject to certain
restrictions imposed by the Federal Reserve Act on extensions of credit to
executive officers, directors, principal stockholders, or any related interests
of such persons. Extensions of credit (i) must be made on substantially the
same terms, including interest rates and collateral, and follow credit
underwriting procedures that are not less stringent than those prevailing at
the time for comparable transactions with persons not covered above and who are
not employees; and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features. Banks are also subject to certain
lending limits and restrictions on overdrafts to such persons. A violation of
these restrictions may result in the assessment of substantial civil monetary
penalties on the affected bank or any officer, director, employee, agent, or
other person participating in the conduct of the affairs of that bank; the
imposition of a cease and desist order; and other regulatory sanctions.

FDICIA.Under the Federal Deposit Insurance Corporation Improvement Act
(the FDICIA), each federal banking agency has prescribed, by regulation,
noncapital safety and soundness standards for institutions under its authority.
These standards cover internal controls, information systems, and internal
audit systems, loan documentation, credit underwriting, interest rate exposure,
asset growth, compensation, fees and benefits, such other operational and
managerial standards as the agency determines to be appropriate, and standards
for asset quality, earnings and stock valuation. An institution which fails to
meet these standards must develop a plan acceptable to the agency, specifying
the steps that the institution will take to meet the standards. Failure to
submit or implement such a plan may subject the institution to regulatory
sanctions. Management believes that CRB meets all such standards and,
therefore, does not believe that these regulatory standards materially affect
Columbias business operations.

Interstate Banking and Branching

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the Interstate Act) permits nationwide interstate banking and branching
under certain circumstances. This legislation generally authorizes interstate
branching and relaxes federal law restrictions on interstate banking.
Currently, financial holding companies may purchase banks in any state, and
states may not prohibit such purchases. Additionally, banks are permitted to
merge with banks in other states as long as the home state of neither merging
bank has opted out. The Interstate Act requires regulators to consult with
community organizations before permitting an interstate institution to close a
branch in a low-income area.

Under recent FDIC regulations, banks are prohibited from using their
interstate branches primarily for deposit production. The FDIC has accordingly
implemented a loan-to-deposit ratio screen to ensure compliance with this
prohibition.

Oregon and Washington each enacted opting in legislation in accordance
with the Interstate Act provisions allowing banks to engage in interstate
merger transactions subject to certain aging requirements. In both states,
branches may not be acquired or opened separately in the home state by an
out-of-state bank, but once an out-of-state bank has acquired a bank within the
state, either through merger or acquisition of all or substantially all of the
banks assets, the out-of-state bank may open additional branches within the
home state.

Deposit Insurance

The deposits of CRB are currently insured to a maximum of $100,000 per
depositor through the Bank Insurance Fund (BIF) administered by the FDIC.
CRB is required to pay semi-annual deposit insurance premium

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assessments to the FDIC.

The FDICIA included provisions to reform the Federal Deposit Insurance
System, including the implementation of risk-based deposit insurance premiums.
The FDICIA also permits the FDIC to make special assessments on insured
depository institutions in amounts determined by the FDIC to be necessary to
give it adequate assessment income to repay amounts borrowed from the U.S.
Treasury and other sources, or for any other purpose the FDIC deems necessary.
The FDIC has implemented a risk-based insurance premium system under which
banks are assessed insurance premiums based on how much risk they present to
the BIF. Banks with higher levels of capital and a low degree of supervisory
concern are assessed lower premiums than banks with lower levels of capital or
a higher degree of supervisory concern.

Dividends

The principal source of Columbias cash revenues is dividends received
from its subsidiary. The payment of dividends is subject to government
regulation, in that regulatory authorities may prohibit banks and financial
holding companies from paying dividends which would constitute an unsafe or
unsound banking practice. In addition, a bank may not pay cash dividends if
that payment could reduce the amount of its capital below that necessary to
meet minimum applicable regulatory capital requirements. Also, under the
Oregon Bank Act, the Oregon Director of Banks may suspend the payment of
dividends if it is determined that the payment would cause a banks remaining
stockholders equity to be inadequate for the safe and sound operation of the
bank. Other than the laws and regulations noted above, which apply to all
banks and financial holding companies, neither Columbia nor CRB is currently
subject to any regulatory restrictions on their dividends.

Capital Adequacy

Federal bank regulatory agencies use capital adequacy guidelines in the
examination and regulation of financial holding companies and banks. If
capital falls below minimum guideline levels, the holding company or bank may
be denied approval to acquire or establish additional banks or nonbank
businesses or to open new facilities.

The FDIC and Federal Reserve use risk-based capital guidelines for banks
and financial holding companies. These are designed to make such capital
requirements more sensitive to differences in risk profiles among banks and
financial holding companies, to account for off-balance sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance sheet
items are assigned to broad risk categories, each with appropriate weights.
The resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items. The guidelines are minimums,
and the Federal Reserve has noted that financial holding companies
contemplating significant expansion programs should not allow expansion to
diminish their capital ratios and should maintain ratios well in excess of the
minimum. The current guidelines require all financial holding companies and
federally regulated banks to maintain a minimum risk-based total capital ratio
equal to 8%, of which at least 4% must be Tier I capital.

Tier I capital for financial holding companies includes common
stockholders equity, qualifying perpetual preferred stock (up to 25% of total
Tier I capital, if cumulative, although under a Federal Reserve Rule,
redeemable perpetual preferred stock may not be counted as Tier I capital
unless the redemption is subject to the prior approval of the Federal Reserve),
and minority interests in equity accounts of consolidated subsidiaries, less
intangibles, except as described above. Tier II capital includes: (i) the
allowance for loan losses of up to 1.25% of risk-weighted assets; (ii) any
qualifying perpetual preferred stock which exceeds the amount which may be
included in Tier I capital; (iii) hybrid capital instruments; (iv) perpetual
debt; (v) mandatory convertible securities; and (vi) subordinated debt and
intermediate term preferred stock of up to 50% of Tier I capital. Total
capital is the sum of Tier I and Tier II capital, less reciprocal holdings of
other banking organizations, capital instruments, and investments in
unconsolidated subsidiaries.

The assets of banks and financial holding companies receive risk-weights
of 0%, 20%, 50%, and 100%. In addition, certain off-balance sheet items are
given credit conversion factors to convert them to asset equivalent amounts to
which an appropriate risk-weight will apply. These computations result in
total risk-weighted assets.

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Most loans are assigned to the 100% risk category, except for first
mortgage loans fully secured by residential property which carry a 50% rating.
Most investment securities are assigned to the 20% category, except for
municipal or state revenue bonds which have a 50% risk-weight, and direct
obligations of, or obligations guaranteed by, the United States Treasury or
agencies of the federal government which have 0% risk-weight. In converting
off-balance sheet items, direct credit substitutes, including general
guarantees and standby letters of credit backing financial obligations, are
given a 100% conversion factor. Transaction related contingencies such as bid
bonds, other standby letters of credit and undrawn commitments, including
commercial credit lines with an initial maturity of more than one year, have a
50% conversion factor. Short-term, self-liquidating trade contingencies are
converted at 20%, and short-term commitments have a 0% factor.

The Federal Reserve also employs a leverage ratio, which is Tier I capital
as a percentage of total assets less intangibles, to be used as a supplement to
risk-based guidelines. The principal objective of the leverage ratio is to
constrain the maximum degree to which a financial holding company may leverage
its equity capital base. The Federal Reserve requires a minimum leverage ratio
of 3%. However, for all but the most highly rated financial holding companies
and for financial holding companies seeking to expand, the Federal Reserve
expects an additional cushion of at least 1% to 2%.

The FDICIA created a statutory framework of supervisory actions indexed to
the capital level of the individual institution. Under regulations adopted by
the FDIC, an institution is assigned to one of five capital categories
depending on its total risk-based capital ratio, Tier I risk-based capital
ratio, and leverage ratio, together with certain subjective factors.
Institutions which are deemed to be undercapitalized, depending on the
category to which they are assigned, are subject to certain mandatory
supervisory corrective actions. Columbia does not believe that these
regulations have any material effect on its operations.

Effects of Government Monetary Policy

The earnings and growth of Columbia are affected not only by general
economic conditions but also by the fiscal and monetary policies of the federal
government, particularly the Federal Reserve. The Federal Reserve can and does
implement national monetary policy for such purposes as curbing inflation and
combating recession, but its open market operations in U.S. government
securities, control of the discount rate applicable to borrowings from the
Federal Reserve, and establishment of reserve requirements against certain
deposits, influence the growth of bank loans, investments and deposits, and
also affect interest rates charged on loans or paid on deposits. The nature
and impact of future changes in monetary policies and their impact on Columbia
cannot be predicted with certainty.

Changes in Banking Laws and Regulations

The laws and regulations that affect banks and financial holding companies
frequently undergo significant changes at the federal and state levels. Bills
are introduced from time to time in the United States Congress that contain
proposals to alter the structure, regulation, and competitive relationships of
the nations financial institutions. Any changes in laws and regulations could
have the effect of increasing or decreasing the cost of doing business,
limiting or expanding permissible activities (including activities in the
insurance and securities fields), or affecting the competitive balance among
banks, savings associations, and other financial institutions. Such changes
could also reduce the extent of federal deposit insurance, broaden the powers
or the geographical range of operations of financial holding companies, alter
the extent to which banks could engage in securities activities, alter the
taxation of banks, financial holding companies and other financial services
organizations, and change the structure and jurisdiction of various financial
institution regulatory agencies. Such ongoing changes in laws and regulations,
and the extent to which the business of Columbia might be affected thereby,
cannot be predicted with certainty.




ITEM 2. PROPERTIES

Nine of Columbias facilities in Hood River, The Dalles, Redmond, Bend,
McMinnville and Madras, Hermiston and Pendleton Oregon, as well as its two
full-service branch facilities in south central Washington, are housed in
properties owned by Columbia. Columbia leases the space for its Canby and
Newberg branches, both McMinnville branches in retirement communities, as well
as its in-store facility in the Safeway store in The Dalles.

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All of Columbias presently owned full-service branches have drive-up
facilities and automated teller machines. Columbias Mortgage Group operates
from the second floor of Columbias Bend branch, as well as leased office space
in The Dalles. The following sets forth certain information regarding
Columbias branch facilities.

|                                                        |  |                            |  |      |        |          |  |           |      |           |        |  |  |  |  | 
|------------------------------------------------------- |  | -------------------------- |  | ---- | ------ | -------- |  | --------- | ---- | --------- | ------ |  |  |  |  | 
|                                                        |  |                            |  |      |        |          |  |           |      | Date      |        |  |  | 
|                                                        |  |                            |  |      |        | Square   |  | Opened or |      | Occupancy
|City and County                                         |  | Address                    |  | Feet |        | Acquired |  | Status   
|                                                        |  |                            |  |      |        |          |  |          
|Oregon
          Branches                               |  |                            |  |      |        |          |  |           |      |           |        |  |  |  |  | 
|The Dalles
          (Main Branch), Wasco County        |  | 316 East Third Street      |  |      | 8,000  |          |  |           | 1977 |           | Owned 
|The Dalles
          (Westside Branch), Wasco County(1) |  | 520 Mt. Hood Street        |  |      | 430    |          |  |           | 1986 |           | Leased
|Hood River
          Branch, Hood River County          |  | 2650 Cascade Avenue        |  |      | 6,255  |          |  |           | 1993 |           | Owned 
|Madras
          Branch, Jefferson County               |  | 624 SW Fourth Street       |  |      | 7,400  |          |  |           | 1995 |           | Owned 
|Redmond
          Branch, Deschutes County              |  | 434 North Fifth Street     |  |      | 4,700  |          |  |           | 1995 |           | Owned 
|Bend Branch,
          Deschutes County                 |  | 1701 NE Third Street       |  |      | 8,306  |          |  |           | 1996 |           | Owned 
|Shevlin
          Center Branch,(2) Deschutes County    |  | 925 SW Emkay Drive         |  |      | 15,000 |          |  |           | 1999 |           | Owned 
|Hermiston
          Branch, Umatilla County             |  | 1033 South Highway 395     |  |      | 4,700  |          |  |           | 1998 |           | Owned 
|Pendleton
          Branch, Umatilla County             |  | 2101 SW Court Place        |  |      | 4,700  |          |  |           | 1999 |           | Owned 
|McMinnville
          Branch,(2) Yamhill County         |  | 723 N Baker                |  |      | 9,600  |          |  |           | 1998 |           | Owned 
|McMinnville
          Limited Facility, Yamhill County  |  | 900 NW Hill Rd             |  |      | 60     |          |  |           | 1998 |           | Leased
|McMinnville
          Limited Facility, Yamhill County  |  | 300 NW Hillside Pkwy       |  |      | 60     |          |  |           | 2001 |           | Leased
|Canby
          Branch, Clackamas County                |  | 249 NW 2nd Ave             |  |      | 1,500  |          |  |           | 2001 |           | Leased
|Newberg
          Branch, Yamhill County                |  | 901 N Brutscher St., Ste A |  |      | 3,900  |          |  |           | 1999 |           | Leased
|                                                        |  |                            |  |      |        |          |  |           |      |           |        |  |  |  |  | 
|Washington
          Branches                           |  |                            |  |      |        |          |  |           |      |           |        |  |  |  |  | 
|White
          Salmon Branch, Klickitat County         |  | 390 NE Tohomish Street     |  |      | 5,500  |          |  |           | 1996 |           | Owned 
|Goldendale
          Branch, Klickitat County           |  | 202 West Main Street       |  |      | 6,105  |          |  |           | 1996 |           | Owned 



---

|(1) |  | Leased space in a Safeway supermarket. Lease term expires December 2005.                      
|--- |  | ----------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Branch operations are located on the first floor. The second floor is
leased to other parties.

Columbia maintains its administrative offices in leased office space in
The Dalles, and is currently nearing the completion of a renovation project on
newly leased space across the street from its current offices. This space will
allow for all of the administrative staff to be accommodated in the same
location. Columbia purchased property in the Columbia River Center in The
Dalles for future branch or administrative operations expansion. Columbia is
committed to keeping its administrative headquarters in The Dalles.

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Employees

As of December 31, 2001, Columbia had a total of 273 full-time equivalent
employees. This number of employees, which compares to 242 at December 31,
2000, has increased due to increased staffing in branch, administrative
functions, and expansion of the Mortgage Group. None of the employees are
subject to a collective bargaining agreement. Columbia considers its
relationships with its employees to be good.




ITEM 3. LEGAL PROCEEDINGS

Management is not presently aware of any pending or threatened claims
against Columbia that would have a material affect on its operations or
performance. In the normal course of its business, Columbia is a party to
various debtor-creditor legal actions. These include cases filed as a
plaintiff in collection and foreclosure cases, and the enforcement of
creditors rights in bankruptcy proceedings.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of securities holders of Columbia
during the quarter ended December 31, 2001.




Part II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information called for by this item is contained in Columbias Annual
Report to Stockholders for the year ended December 31, 2001, portions of which
are attached hereto as Exhibit 13.1.




ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain information concerning the
consolidated financial condition, operating results, and key operating ratios
for Columbia at the dates and for the periods indicated. This information does
not purport to be complete, and should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of
Operations, and the Consolidated Financial Statements of Columbia and Notes
thereto.

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|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |         |        |        | 
|-------------------------------------------- | --------------------------------------------------- | ------------------------ | ------------------- | ------- | ------------------------------------------ | ------ | ---- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | 
|                                             |                                                     |                          |                     |         | As of and For The Years Ended December 31,
|                                             |                                                     |                          |                     |         |                                           
|(dollars in thousands except per share data) |                                                     | 2001                     |                     | 2000    |                                            | 1999   |      | 1998    |        | 1997  
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |       
|Income Statement Data                        |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Interest income                                     |                          | $                   | 35,078  |                                            |        | $    | 33,367  |        |        | $    | 26,883  |        |        | $    | 21,328  |        |        | $    | 18,144  |       
|                                             | Interest expense                                    |                          |                     | 11,583  |                                            |        |      | 12,256  |        |        |      | 8,568   |        |        |      | 7,205   |        |        |      | 6,270   |       
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             |                                                     |                          | Net interest income |         |                                            | 23,495 |      |         |        | 21,111 |      |         |        | 18,315 |      |         |        | 14,123 |      |         |        | 11,874 | 
|                                             | Loan loss provision                                 |                          |                     | 1,450   |                                            |        |      | 1,697   |        |        |      | 1,005   |        |        |      | 1,000   |        |        |      | 581     |       
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Net interest income after
provision for loan losses |                          |                     | 22,045  |                                            |        |      | 19,414  |        |        |      | 17,310  |        |        |      | 13,123  |        |        |      | 11,293  |       
|                                             | Noninterest income                                  |                          |                     | 9,677   |                                            |        |      | 6,767   |        |        |      | 5,542   |        |        |      | 4,678   |        |        |      | 2,481   |       
|                                             | Noninterest expense                                 |                          |                     | 19,971  |                                            |        |      | 17,252  |        |        |      | 14,734  |        |        |      | 10,633  |        |        |      | 8,092   |       
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Income before provision for
income taxes            |                          |                     | 11,751  |                                            |        |      | 8,929   |        |        |      | 8,118   |        |        |      | 7,168   |        |        |      | 5,682   |       
|                                             | Provision for income taxes                          |                          |                     | 4,377   |                                            |        |      | 3,305   |        |        |      | 3,105   |        |        |      | 2,450   |        |        |      | 1,795   |       
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             |                                                     |                          | Net income          |         | $                                          | 7,374  |      |         | $      | 5,624  |      |         | $      | 5,013  |      |         | $      | 4,718  |      |         | $      | 3,887  | 
|                                             |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|Dividends                                    |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Cash dividends declared                             |                          | $                   | 2,570   |                                            |        | $    | 2,326   |        |        | $    | 1,999   |        |        | $    | 1,587   |        |        | $    | 842     |       
|                                             | Ratio of dividends declared to net income           |                          |                     | 34.85   | %                                          |        |      | 41.36   | %      |        |      | 39.88   | %      |        |      | 33.64   | %      |        |      | 21.67   | %     
|Per Share Data                               |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|Earnings Per Share                           |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |       
|                                             | Basic earnings per common share                     |                          | $                   | 0.92    |                                            |        | $    | 0.70    |        |        | $    | 0.63    |        |        | $    | 0.67    |        |        | $    | 0.57    |       
|                                             | Diluted earnings per common share                   |                          | $                   | 0.89    |                                            |        | $    | 0.70    |        |        | $    | 0.62    |        |        | $    | 0.65    |        |        | $    | 0.55    |       
|Book value per common share                  |                                                     | $                        | 5.78                |         |                                            | $      | 5.15 |         |        | $      | 4.66 |         |        | $      | 4.37 |         |        | $      | 3.35 |        
|Weighted average shares outstanding          |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Basic                                               |                          |                     | 8,033   |                                            |        |      | 8,017   |        |        |      | 7,985   |        |        |      | 7,066   |        |        |      | 6,813   |       
|                                             | Diluted                                             |                          |                     | 8,244   |                                            |        |      | 8,080   |        |        |      | 8,090   |        |        |      | 7,238   |        |        |      | 7,013   |       
|Balance Sheet Data                           |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Investment securities                               |                          | $                   | 43,532  |                                            |        | $    | 60,544  |        |        | $    | 62,333  |        |        | $    | 47,894  |        |        | $    | 48,804  |       
|                                             | Loans, net                                          |                          | $                   | 380,283 |                                            |        | $    | 299,881 |        |        | $    | 246,975 |        |        | $    | 206,552 |        |        | $    | 155,219 |       
|                                             | Total assets                                        |                          | $                   | 482,207 |                                            |        | $    | 416,859 |        |        | $    | 361,241 |        |        | $    | 342,413 |        |        | $    | 231,827 |       
|                                             | Total deposits                                      |                          | $                   | 394,636 |                                            |        | $    | 346,427 |        |        | $    | 310,910 |        |        | $    | 295,680 |        |        | $    | 201,568 |       
|                                             | Stockholders equity                                |                          | $                   | 46,445  |                                            |        | $    | 41,326  |        |        | $    | 37,322  |        |        | $    | 34,756  |        |        | $    | 22,987  |       
|Key Financial Ratios                         |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Return on average assets                            |                          |                     | 1.64    | %                                          |        |      | 1.41    | %      |        |      | 1.44    | %      |        |      | 1.83    | %      |        |      | 1.77    | %     
|                                             | Return on average equity                            |                          |                     | 16.76   | %                                          |        |      | 14.40   | %      |        |      | 13.90   | %      |        |      | 18.10   | %      |        |      | 18.37   | %     
|                                             | Total loans to total deposits                       |                          |                     | 96.36   | %                                          |        |      | 86.56   | %      |        |      | 79.44   | %      |        |      | 69.86   | %      |        |      | 77.00   | %     
|                                             | Net interest margin (1)                             |                          |                     | 5.92    | %                                          |        |      | 6.05    | %      |        |      | 6.17    | %      |        |      | 6.19    | %      |        |      | 6.15    | %     
|                                             | Efficiency ratio                                    |                          |                     | 60.20   | %                                          |        |      | 62.17   | %      |        |      | 62.14   | %      |        |      | 56.56   | %      |        |      | 56.37   | %     
|Asset Quality Ratios                         |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Reserve for loan losses to:                         |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |         |       
|                                             |                                                     | Nonperforming assets (2) |                     |         | 392.82                                     | %      |      |         | 355.95 | %      |      |         | 553.45 | %      |      |         | 108.82 | %      |      |         | 112.65 | %     
|                                             |                                                     | Total loans              |                     |         | 1.38                                       | %      |      |         | 1.50   | %      |      |         | 1.32   | %      |      |         | 1.13   | %      |      |         | 1.04   | %     
|                                             | Nonperforming assets to
total assets                |                          |                     | 0.28    | %                                          |        |      | 0.31    | %      |        |      | 0.16    | %      |        |      | 0.64    | %      |        |      | 0.63    | %     
|                                             | Net loan charge-offs (recoveries)
to average loans  |                          |                     | 0.21    | %                                          |        |      | 0.14    | %      |        |      | 0.04    | %      |        |      | 0.38    | %      |        |      | (0.04   | )%    
|Capital Ratios                               |                                                     |                          |                     |         |                                            |        |      |         |        |        |      |         |        |        |      |         |        |        |      |        
|                                             | Average stockholders equity to
average assets      |                          |                     | 9.77    | %                                          |        |      | 9.80    | %      |        |      | 10.40   | %      |        |      | 10.12   | %      |        |      | 9.62    | %     
|                                             | Tier I capital ratio (3)                            |                          |                     | 9.32    | %                                          |        |      | 9.78    | %      |        |      | 10.17   | %      |        |      | 10.90   | %      |        |      | 13.70   | %     
|                                             | Total risk-based capital ratio (4)                  |                          |                     | 10.61   | %                                          |        |      | 11.03   | %      |        |      | 11.32   | %      |        |      | 11.90   | %      |        |      | 14.70   | %     
|                                             | Leverage ratio (5)                                  |                          |                     | 8.61    | %                                          |        |      | 8.14    | %      |        |      | 8.26    | %      |        |      | 8.90    | %      |        |      | 10.60   | %     



---

|(1) |  | Per share data reflects retroactive restatement for stock splits in 1998
(3-for-2 and 2-for-1).                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Nonperforming assets consist of nonaccrual loans, loans contractually
past due 90 days or more, and other real estate owned.
|   
|   
|   
|   
|(3) |  | Tier I capital divided by risk-weighted assets.                                                                             
|   
|   
|   
|   
|(4) |  | Total capital divided by risk-weighted assets.                                                                              
|   
|   
|   
|   
|(5) |  | Tier I capital divided by average total assets.                                                                             

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

From its origins as a one-branch bank in The Dalles, Oregon, Columbia has
grown as a result of merger and acquisition activity, new branch openings, the
introduction of new business lines, and the expansion and cross-marketing of
its existing products and community-bank lending expertise. In 1995, Columbia
River Bank (CRB) merged with Juniper Banking Company. In 1996, Columbia was
formed as CRBs holding company, and Columbia acquired Washington-based
Klickitat Valley Bank. In 1998, CRB opened a new branch in Hermiston,
Oregon and Columbia completed the acquisition of Valley Community Bank. During
1999, CRB opened new branches in Pendleton, Oregon and Newberg, Oregon, and
opened a second Bend branch. In April 2000 Columbia River BankNet, CRBs
Internet based banking product, was introduced, and in September, CRB completed
its acquisition of Datatech of Oregon, Inc., a bank data processing company.
In 2001, the Canby, Oregon branch and a limited banking facility located in a
McMinnville, Oregon retirement community, as well as a mortgage lending office
in Newport, Oregon were opened. Collectively, these growth and acquisition
activities have enabled Columbia to diversify its portfolio and its operating
risk over several market areas and local economies.

Columbias goal is to grow its earning assets while maintaining a high
return on equity and high asset quality. The key to this, in Columbias view,
is to emphasize personal, quality banking products and services for its
customers, to hire and retain competent branch management and administrative
personnel, and to respond quickly to customer demand and growth opportunities.
Columbia also intends to increase its market penetration in its existing
markets, and to expand into new markets through further suitable acquisitions
and through new branch openings.

As of December 31, 2001, Columbia had total assets of $482.21 million,
total deposits of $394.64 million, and stockholders equity of $46.45 million.
Columbias net income for the year ended December 31, 2001, was $7.37 million,
which was Columbias 14th consecutive year of increasing net income. For the
year ended December 31, 2001, Columbias return on average assets was 1.64% and
return on average equity was 16.76%. During the past five years, Columbia has
achieved an average return on average equity of 16.31% and an average return on
average assets of 1.62%.

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Return on average daily assets and equity and certain other ratios for the
periods indicated are presented below:

|                                             |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                             |  | Years Ended December 31,
|                                             |  |                         
|(dollars in thousands except per share data) |  | 2001                     |         | 2000 |  | 1999 |         | 1998 |  | 1997
|                                             |  |                          |         |      |  |      |         |      |  |     
|Net income                                   |  | $                        | 7,374   |      |  | $    | 5,624   |      |  | $    | 5,013   |   |  | $ | 4,718   |   |  | $ | 3,887   |  
|Average assets                               |  |                          | 450,262 |      |  |      | 398,422 |      |  |      | 347,003 |   |  |   | 257,664 |   |  |   | 219,905 |  
|RETURN ON AVERAGE ASSETS                     |  |                          | 1.64    | %    |  |      | 1.41    | %    |  |      | 1.44    | % |  |   | 1.83    | % |  |   | 1.77    | %
|Net income                                   |  | $                        | 7,374   |      |  | $    | 5,624   |      |  | $    | 5,013   |   |  | $ | 4,718   |   |  | $ | 3,887   |  
|Average equity                               |  |                          | 43,990  |      |  |      | 39,062  |      |  |      | 36,075  |   |  |   | 26,069  |   |  |   | 21,157  |  
|RETURN ON AVERAGE EQUITY                     |  |                          | 16.76   | %    |  |      | 14.40   | %    |  |      | 13.90   | % |  |   | 18.10   | % |  |   | 18.37   | %
|Cash dividends declared and paid per share   |  | $                        | 0.32    |      |  | $    | 0.29    |      |  | $    | 0.25    |   |  | $ | 0.22    |   |  | $ | 0.12    |  
|Basic earnings per common share              |  |                          | 0.92    |      |  |      | 0.70    |      |  |      | 0.63    |   |  |   | 0.67    |   |  |   | 0.57    |  
|DIVIDEND PAYOUT RATIO                        |  |                          | 34.85   | %    |  |      | 41.36   | %    |  |      | 39.88   | % |  |   | 33.64   | % |  |   | 21.67   | %
|Average equity                               |  | $                        | 43,990  |      |  | $    | 39,062  |      |  | $    | 36,075  |   |  | $ | 26,069  |   |  | $ | 21,157  |  
|Average assets                               |  |                          | 450,262 |      |  |      | 398,422 |      |  |      | 347,003 |   |  |   | 257,664 |   |  |   | 219,905 |  
|AVERAGE EQUITY TO ASSET RATIO                |  |                          | 9.77    | %    |  |      | 9.80    | %    |  |      | 10.40   | % |  |   | 10.12   | % |  |   | 9.62    | %

Results of Operations

Net Interest Income

For financial institutions, the primary component of earnings is net
interest income. Net interest income is the difference between interest
income, principally from loan and investment security portfolios, and interest
expense, principally on customer deposits. Changes in net interest income
result from changes in volume, spread and margin. Volume refers to the dollar
level of interest-earning assets and interest-bearing liabilities. Spread
refers to the difference between the yield on interest-earning assets and the
cost of interest-bearing liabilities. Net interest margin is the ratio of net
interest income to total average interest-earning assets and is influenced by
the relative level of interest-earning assets and interest-bearing liabilities.

Average Balances and Average Rates Earned and Paid.The following table
shows average balances and interest income or interest expense, with the
resulting average yield or rates by category of earning assets or
interest-bearing liabilities:

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|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |       |      |      | 
|------------------------------------------- | ---------------------------------------------- | ------------------------- | ------------------------------------------ | ------- | ---------------------------- | ------- | ---------------------------- | ------ | ---------------------------- | ------ | ------- | ---- | --------- | ---- | --------- | ------- | -------- | ------- | --------- | ------ | --------- | ------ | ---- | ----- | -------- | ---- | ------- | ------- | ------ | ------- | ------ | ------ | ----- | ------ | ---- | ----- | ---- | ---- | 
|                                            |                                                |                           |                                            |         | Year Ended December 31, 2001 |         | Year Ended December 31, 2000 |        | Year Ended December 31, 1999
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                             
|                                            |                                                |                           |                                            |         |                              |         |                              |        | Interest                     |        | Average |      |           |      |           |         | Interest |         | Average   |        |           |        |      |       | Interest |      | Average
|                                            |                                                |                           |                                            |         | Average                      |         | Income or                    |        | Yields or                    |        | Average |      | Income or |      | Yields or |         | Average  |         | Income or |        | Yields or
|                                            |                                                |                           |                                            |         | Balance                      |         | Expense                      |        | Rates                        |        | Balance |      | Expense   |      | Rates     |         | Balance  |         | Expense   |        | Rates    
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |          
|                                            |                                                |                           |                                            |         | (dollars in thousands)      
|Interest-earning assets:                    |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            | Loans (1)                                      |                           | $                                          | 348,239 |                              |         | $                            | 32,135 |                              |        |         | 9.23 | %         |      | $         | 288,058 |          |         | $         | 29,473 |           |        |      | 10.23 | %        |      | $       | 222,276 |        |         | $      | 22,495 |       |        |      | 10.12 | %   
|                                            | Investment securities                          |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |       |     
|                                            |                                                | Taxable securities        |                                            |         | 29,049                       |         |                              |        | 1,615                        |        |         |      | 5.56      |      |           |         | 40,641   |         |           |        | 2,403     |        |      |       | 5.91     |      |         |         | 38,434 |         |        |        | 2,195 |        |      |       | 5.71 |     
|                                            |                                                | Nontaxable securities (2) |                                            |         | 18,375                       |         |                              |        | 1,320                        |        |         |      | 7.18      |      |           |         | 19,157   |         |           |        | 1,374     |        |      |       | 7.17     |      |         |         | 20,895 |         |        |        | 1,519 |        |      |       | 7.27 |     
|                                            | Interest-earning balances due
from banks       |                           |                                            | 7,560   |                              |         |                              | 417    |                              |        |         | 5.52 |           |      |           | 7,221   |          |         |           | 474    |           |        |      | 6.58  |          |      |         | 6,533   |        |         |        | 362    |       |        |      | 5.54  |     
|                                            | Federal funds sold                             |                           |                                            | 1,101   |                              |         |                              | 40     |                              |        |         | 3.64 |           |      |           | 1,729   |          |         |           | 110    |           |        |      | 6.35  |          |      |         | 17,149  |        |         |        | 829    |       |        |      | 4.83  |     
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            |                                                |                           | Total interest-earning
assets (3)          |         |                              | 404,324 |                              |        |                              | 35,527 |         |      |           | 8.79 |           |         |          | 356,806 |           |        |           | 33,834 |      |       |          | 9.48 |         |         |        | 305,287 |        |        |       | 27,400 |      |       |      | 8.98 | 
|                                            | Cash and due from banks                        |                           |                                            | 16,621  |                              |         |                              |        |                              |        |         |      |           |      |           | 16,785  |          |         |           |        |           |        |      |       |          |      |         | 18,505  |        |         |        |        |       |        |      |       |     
|                                            | Premises and equipment, net                    |                           |                                            | 13,696  |                              |         |                              |        |                              |        |         |      |           |      |           | 13,407  |          |         |           |        |           |        |      |       |          |      |         | 9,738   |        |         |        |        |       |        |      |       |     
|                                            | Loan loss allowance                            |                           |                                            | (5,090  | )                            |         |                              |        |                              |        |         |      |           |      |           | (4,074  | )        |         |           |        |           |        |      |       |          |      |         | (2,961  | )      |         |        |        |       |        |      |       |     
|                                            | Other assets                                   |                           |                                            | 20,711  |                              |         |                              |        |                              |        |         |      |           |      |           | 15,498  |          |         |           |        |           |        |      |       |          |      |         | 16,434  |        |         |        |        |       |        |      |       |     
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            |                                                |                           | Total assets                               |         | $                            | 450,262 |                              |        |                              |        |         |      |           |      |           |         | $        | 398,422 |           |        |           |        |      |       |          |      |         |         | $      | 347,003 |        |        |       |        |      |       |      |      | 
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Interest-bearing liabilities:               |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            | Interest-bearing checking and
savings accounts |                           | $                                          | 158,286 |                              |         | $                            | 3,318  |                              |        |         | 2.10 | %         |      | $         | 153,540 |          |         | $         | 5,056  |           |        |      | 3.29  | %        |      | $       | 153,609 |        |         | $      | 4,148  |       |        |      | 2.70  | %   
|                                            | Time deposit & IRAs                            |                           |                                            | 118,758 |                              |         |                              | 6,386  |                              |        |         | 5.38 |           |      |           | 99,657  |          |         |           | 5,727  |           |        |      | 5.75  |          |      |         | 75,619  |        |         |        | 3,886  |       |        |      | 5.14  |     
|                                            | Borrowed Funds                                 |                           |                                            | 34,238  |                              |         |                              | 1,880  |                              |        |         | 5.49 |           |      |           | 24,123  |          |         |           | 1,473  |           |        |      | 6.11  |          |      |         | 9,418   |        |         |        | 534    |       |        |      | 5.67  |     
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            |                                                |                           | Total interest-bearing liabilities         |         |                              | 311,282 |                              |        |                              | 11,584 |         |      |           | 3.72 |           |         |          | 277,320 |           |        |           | 12,256 |      |       |          | 4.42 |         |         |        | 238,646 |        |        |       | 8,568  |      |       |      | 3.60 | 
|                                            | Noninterest-bearing deposits                   |                           |                                            | 91,731  |                              |         |                              |        |                              |        |         |      |           |      |           | 79,895  |          |         |           |        |           |        |      |       |          |      |         | 70,000  |        |         |        |        |       |        |      |       |     
|                                            | Other liabilities                              |                           |                                            | 3,259   |                              |         |                              |        |                              |        |         |      |           |      |           | 2,145   |          |         |           |        |           |        |      |       |          |      |         | 2,282   |        |         |        |        |       |        |      |       |     
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            |                                                |                           | Total liabilities                          |         |                              | 406,272 |                              |        |                              |        |         |      |           |      |           |         |          | 359,360 |           |        |           |        |      |       |          |      |         |         |        | 310,928 |        |        |       |        |      |       |      |      | 
|                                            | Shareholders equity                           |                           |                                            | 43,990  |                              |         |                              |        |                              |        |         |      |           |      |           | 39,062  |          |         |           |        |           |        |      |       |          |      |         | 36,075  |        |         |        |        |       |        |      |       |     
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|                                            |                                                |                           | Total liabilities and
shareholders equity |         | $                            | 450,262 |                              |        |                              |        |         |      |           |      |           |         | $        | 398,422 |           |        |           |        |      |       |          |      |         |         | $      | 347,003 |        |        |       |        |      |       |      |      | 
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Net interest income                         |                                                |                           |                                            |         |                              | $       | 23,943                       |        |                              |        |         |      |           |      |           |         |          | $       | 21,578    |        |           |        |      |       |          |      |         |         |        | $       | 18,832 |        |       |        |      |      
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Net interest spread                         |                                                |                           |                                            |         |                              |         |                              |        |                              |        | 5.07    | %    |           |      |           |         |          |         |           |        |           |        | 5.06 | %     |          |      |         |         |        |         |        |        |       |        | 5.38 | %    
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Average yield on average earning
assets (1) |                                                |                           |                                            |         |                              |         |                              |        |                              |        | 9.77    | %    |           |      |           |         |          |         |           |        |           |        | 9.48 | %     |          |      |         |         |        |         |        |        |       |        | 8.98 | %    
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Interest expense to average earning
assets  |                                                |                           |                                            |         |                              |         |                              |        |                              |        | 2.86    | %    |           |      |           |         |          |         |           |        |           |        | 3.44 | %     |          |      |         |         |        |         |        |        |       |        | 2.81 | %    
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      
|Net interest margin (3)                     |                                                |                           |                                            |         |                              |         |                              |        |                              |        | 5.92    | %    |           |      |           |         |          |         |           |        |           |        | 6.05 | %     |          |      |         |         |        |         |        |        |       |        | 6.17 | %    
|                                            |                                                |                           |                                            |         |                              |         |                              |        |                              |        |         |      |           |      |           |         |          |         |           |        |           |        |      |       |          |      |         |         |        |         |        |        |       |        |      |      



---

|(1) |  | Nonaccrual loans are included in the average balance.                                           
|--- |  | ------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Tax-exempt income has been adjusted to a tax-equivalent basis at 34%.                           
|   
|   
|   
|   
|(3) |  | Net interest margin is computed by dividing net interest income by total
average earning assets.

Analysis of Changes in Interest Differential.The following table shows
the dollar amount of the increase (decrease) in Columbias net interest income
and expense and attributes such dollar amounts to changes in volume as well as
changes in rates. Rate and volume variances have been allocated proportionally
between rate and volume changes:

20



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##### Table of Contents



|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |       |     |       | 
|---------------------------------------------- | ---------------------------------------------- | --------------------- | ----- | ----- | -------------------------- | ----- | -------------------------- | ------ | -------------------------- | ------ | ------ | ------ | ---- | ----- | ------ | ----- | ------ | ----- | ------ | --- | ------ | ----- | ----- | ----- | ---- | ----- | ----- | ----- | --- | ----- | --- | ---- | --- | ---- | ----- | ----- | --- | ----- | 
|                                               |                                                |                       |       |       | 2001 over 2000             |       | 2000 over 1999             |        | 1999 over 1998            
|                                               |                                                |                       |       |       |                            |       |                            |        |                           
|                                               |                                                |                       |       |       | Increase (Decrease) due to |       | Increase (Decrease) due to |        | Increase (Decrease) due to
|                                               |                                                |                       |       |       |                            |       |                            |        |                           
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        | Net  |       |        |       |        |       |        |     |        |       | Net   |       |      |       |       |       |     |       |     |      | Net
|                                               |                                                |                       |       |       | Volume                     |       | Rate                       |        | Change                     |        | Volume |        | Rate |       | Change |       | Volume |       | Rate   |     | Change
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |       
|(dollars in thousands)                         |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|Interest-earning assets:                       |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|                                               | Loans                                          |                       | $     | 6,157 |                            |       | $                          | (3,495 | )                          |        | $      | 2,662  |      |       | $      | 6,657 |        |       | $      | 321 |        |       | $     | 6,978 |      |       | $     | 4,770 |     |       | $   | (214 | )   |      | $     | 4,556 |    
|                                               | Investment securities                          |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |       |    
|                                               |                                                | Taxable securities    |       |       | (685                       | )     |                            |        | (102                       | )      |        |        | (787 | )     |        |       | 126    |       |        |     | 82     |       |       |       | 208  |       |       |       | 403 |       |     |      | (98 | )    |       |       | 305 |      
|                                               |                                                | Nontaxable securities |       |       | (56                        | )     |                            |        | 2                          |        |        |        | (54  | )     |        |       | (126   | )     |        |     | (19    | )     |       |       | (145 | )     |       |       | 311 |       |     |      | (76 | )    |       |       | 235 |      
|                                               | Balances due from banks                        |                       |       | 22    |                            |       |                            | (80    | )                          |        |        | (58    | )    |       |        | 38    |        |       |        | 74  |        |       |       | 112   |      |       |       | 170   |     |       |     | 33   |     |      |       | 203   |    
|                                               | Federal funds sold                             |                       |       | (40   | )                          |       |                            | (30    | )                          |        |        | (70    | )    |       |        | (745  | )      |       |        | 26  |        |       |       | (719  | )    |       |       | 558   |     |       |     | (221 | )   |      |       | 337   |    
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|                                               |                                                |                       | Total |       |                            | 5,398 |                            |        |                            | (3,705 | )      |        |      | 1,693 |        |       |        | 5,950 |        |     |        | 484   |       |       |      | 6,434 |       |       |     | 6,212 |     |      |     | (576 | )     |       |     | 5,636 | 
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|Interest-bearing liabilities:                  |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|                                               | Interest-bearing checking
and savings accounts |                       |       | 156   |                            |       |                            | (1,894 | )                          |        |        | (1,738 | )    |       |        | (2    | )      |       |        | 910 |        |       |       | 908   |      |       |       | 1,195 |     |       |     | (618 | )   |      |       | 577   |    
|                                               | Time deposits                                  |                       |       | 1,098 |                            |       |                            | (439   | )                          |        |        | 659    |      |       |        | 1,236 |        |       |        | 605 |        |       |       | 1,841 |      |       |       | 944   |     |       |     | (253 | )   |      |       | 691   |    
|                                               | Borrowed funds                                 |                       |       | 618   |                            |       |                            | (212   | )                          |        |        | 406    |      |       |        | 833   |        |       |        | 106 |        |       |       | 939   |      |       |       | 82    |     |       |     | 13   |     |      |       | 95    |    
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|                                               |                                                |                       | Total |       |                            | 1,872 |                            |        |                            | (2,545 | )      |        |      | (673  | )      |       |        | 2,067 |        |     |        | 1,621 |       |       |      | 3,688 |       |       |     | 2,221 |     |      |     | (858 | )     |       |     | 1,363 | 
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      
|Net increase (decrease) in
net interest income |                                                | $                     | 3,526 |       |                            | $     | (1,160                     | )      |                            | $      | 2,366  |        |      | $     | 3,883  |       |        | $     | (1,137 | )   |        | $     | 2,746 |       |      | $     | 3,991 |       |     | $     | 282 |      |     | $    | 4,273 |      
|                                               |                                                |                       |       |       |                            |       |                            |        |                            |        |        |        |      |       |        |       |        |       |        |     |        |       |       |       |      |       |       |       |     |       |     |      |     |      |       |      

Net interest income, before provision for loan losses, for the year ended
December 31, 2001 was $23.50 million, an increase of 11.29% compared to net
interest income of $21.11 million in 2000, an increase of 15.23% compared to
net interest income of $18.32 million in 1999. The overall tax-equivalent
earning asset yield was 8.79% in 2001 compared to 9.48% in 2000 and 8.98% in
1999. For the same years, rates on interest-bearing liabilities were 3.72%,
4.42% and 3.60%, respectively. The net interest spread for year 2001 increased
one-hundredth of a percent, over year 2000.

Total interest-earning assets averaged $404.32 million for the year ended
December 31, 2001, compared to $356.81 million for the corresponding period in
2000. Most of the increase occurred in the loan category. Increases in the
loan portfolio are attributed to favorable interest rates and the execution of
Columbias strategy to provide personal, quality banking products and services,
to hire experienced lending personnel in strategic branch locations and
administrative capacities, and to continue marketing strategies.

Interest-bearing liabilities averaged $311.28 million for the year ended
December 31, 2001 compared to $277.32 million during the same period in 2000.
Interest cost, as a percentage of earning assets, decreased to 2.81% in 2001,
compared to 3.44% in 2000 and 2.81% in 1999.

Average loans, which generally carry a higher yield than investment
securities and other earning assets, comprised 86.13% of average earning assets
during 2001, compared to 80.73% in 2000 and 72.81% in 1999. During the same
periods, average yields on loans were 9.23% in 2001, 10.23% in 2000, and 10.12%
in 1999. Average investment securities comprised 11.73% of average earning
assets in 2001, which was down from 16.76% in 2000 and 19.43% in 1999. Tax
equivalent interest yields on investment securities have ranged from 6.19% in
2001 to 6.32% in 2000 and 6.27% in 1999.

Provision for Loan Losses

The provision for loan losses represents charges made to earnings to
maintain an adequate allowance for

21



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##### Table of Contents



loan losses. The allowance is maintained at an amount believed to be
sufficient to absorb losses in the loan portfolio. Factors considered in
establishing an appropriate allowance include a careful assessment of the
financial condition of the borrower; a realistic determination of the value and
adequacy of underlying collateral; the condition of the local economy and the
condition of the specific industry of the borrower; a comprehensive analysis of
the levels and trends of loan categories; and a review of delinquent and
classified loans. Columbia applies a systematic process for determining the
adequacy of the allowance for loan losses, including an internal loan review
function and a quarterly analysis of the adequacy of the allowance. The
quarterly analysis includes determination of specific potential loss factors on
individual classified loans, historical potential loss factors derived from
actual net charge-off experience and trends in nonperforming loans, and
potential loss factors for other loan portfolio risks such as loan
concentrations, the condition of the local economy, and the nature and volume
of loans.

The recorded values of loans actually removed from the consolidated
balance sheets are referred to as charge-offs and, after netting out recoveries
on previously charged-off loans, become net charge-offs. Columbias policy is
to charge off loans when, in managements opinion, the loan or a portion
thereof is deemed uncollectible, although concerted efforts are made to
maximize recovery after the charge-off. When a provision for loan loss is
recorded, the amount is based on past charge-off experience, a careful analysis
of the current portfolio, and an evaluation of economic trends in Columbias
market areas. Management will continue to closely monitor the loan quality of
new and existing relationships through stringent review and evaluation
procedures and by making loan officers accountable for collection efforts.

For the year ended December 31, 2001, loan charge-offs exceeded recoveries
by $716,000 as compared to 2000 and 1999, when loan charge-offs exceeded
recoveries by $418,000 and $87,000, respectively.

Noninterest Income

Total noninterest income increased from 1999 through year-end 2001. Over
this three-year period, noninterest income has increased from $5.54 million in
1999, to $6.77 million in 2000, and to $9.68 million in 2001. Noninterest
income is primarily derived from service charges and related fees, as well as
mortgage origination, servicing rights and processing fees. Such income
increased $2.91 million, or 43.00% for the year ended December 31, 2001,
compared to the year ended December 31, 2000. The increase, in part, was the
result of increasing deposit volumes and related service fees. Service charges
and fees were $3.01 million for the year ended December 31, 2001, compared to
$2.60 million for the year ended December 31, 2000, and $2.19 million for the
year ended December 31, 1999. Management attributes this 16.08% increase to
additional customers served at all of Columbias branches. The increase in
noninterest income was also a result of income generated by Columbias Mortgage
Group, which for the year ended 2001, generated $4.26 million in income from
originating, processing, servicing, and selling mortgage loans. The remainder
of the increase in noninterest income is primarily attributable to improved
revenues received from credit card discounts and fees, investment fee income
provided by Columbias financial services department, and other noninterest
fees and charges.

Noninterest Expense

Noninterest expenses consist principally of employees salaries and
benefits, occupancy costs, data processing expenses and other noninterest
expenses. A measure of Columbias ability to control noninterest expenses is
the efficiency ratio. For the year ended December 31, 2001, the efficiency
ratio was 60.20%, as compared to 62.17% in 2000 and 62.14% in 1999.

Noninterest expense for 2001 was $19.97 million, as compared to $17.25
million for 2000 and $14.73 million for 1999. The increases in noninterest
expense are the result of rising personnel expenses, occupancy expense, and
other noninterest expenses. The additional increases relate primarily to costs
associated with growth in operations and continued investment in technology and
communication systems.

Income Taxes

The provision for income taxes was $4.38 million in 2001, $3.31 million in
2000 and $3.11 million in 1999. The provision resulted in effective combined
federal and state tax rates of 37.20% in 2001, 37.01% in 2000, and 38.25% in
1999. The effective tax rates differ from combined estimated statutory rates
of 38% principally due

22



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##### Table of Contents



to the effects of nontaxable interest income, which is recognized for book but
not for tax purposes.

Financial Condition

Summary Balance Sheets

|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |       |       |  
|---------------------- | ---------------------------- | ------------------------------------------ | ------ | ------------ | ------- | ------------------- | ------ | ------------------- | ------- | ------------------- | ------ | ------- | ------- |  | ------ | ------- | ------ |  | ----- | ------ | ----- | - | ------ | ------ | ------ |  | ------ | ----- | ----- | -
|                       |                              |                                            |        | December 31, |         | Increase (Decrease)
|                       |                              |                                            |        |              |         |                    
|(dollars in thousands) |                              | 2001                                       |        | 2000         |         | 1999                |        | 12/31/00  12/31/01 |         | 12/31/99  12/31/00
|                       |                              |                                            |        |              |         |                     |        |                     |         |                    
|ASSETS                 |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       | Federal funds sold           |                                            | $      | 1,525        |         |                     | $      | 1,141               |         |                     | $      | 680     |         |  | $      | 384     |        |  |       | 33.65  | %     |   | $      | 461    |        |  |        | 67.79 | %    
|                       | Investments                  |                                            |        | 43,532       |         |                     |        | 60,544              |         |                     |        | 62,333  |         |  |        | (17,012 | )      |  |       | (28.10 | )%    |   |        | (1,789 | )      |  |        | (2.87 | )%   
|                       | Loans                        |                                            |        | 380,283      |         |                     |        | 299,881             |         |                     |        | 246,975 |         |  |        | 80,402  |        |  |       | 26.81  | %     |   |        | 52,906 |        |  |        | 21.42 | %    
|                       | Other assets (1)             |                                            |        | 56,867       |         |                     |        | 55,293              |         |                     |        | 51,253  |         |  |        | 1,574   |        |  |       | 2.85   | %     |   |        | 4,040  |        |  |        | 7.88  | %    
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       |                              | Total assets                               |        | $            | 482,207 |                     |        | $                   | 416,859 |                     |        | $       | 361,241 |  |        | $       | 65,348 |  |       |        | 15.68 | % |        | $      | 55,618 |  |        |       | 15.40 | %
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|LIABILITIES            |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       | Noninterest-bearing
deposits |                                            | $      | 108,522      |         |                     | $      | 87,824              |         |                     | $      | 74,889  |         |  | $      | 20,698  |        |  |       | 23.57  | %     |   | $      | 12,935 |        |  |        | 17.27 | %    
|                       | Interest-bearing deposits    |                                            |        | 286,113      |         |                     |        | 258,603             |         |                     |        | 236,021 |         |  |        | 27,510  |        |  |       | 10.64  | %     |   |        | 22,582 |        |  |        | 9.57  | %    
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       |                              | Total deposits                             |        |              | 394,635 |                     |        |                     | 346,427 |                     |        |         | 310,910 |  |        |         | 48,208 |  |       |        | 13.92 | % |        |        | 35,517 |  |        |       | 11.42 | %
|Other liabilities (2)  |                              |                                            | 41,127 |              |         |                     | 29,106 |                     |         |                     | 13,009 |         |         |  | 12,021 |         |        |  | 41.30 | %      |       |   | 16,097 |        |        |  | 123.74 | %    
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       |                              | Total liabilities                          |        |              | 435,762 |                     |        |                     | 375,533 |                     |        |         | 323,919 |  |        |         | 60,229 |  |       |        | 16.04 | % |        |        | 51,614 |  |        |       | 15.93 | %
|SHAREHOLDERS EQUITY   |                              |                                            | 46,445 |              |         |                     | 41,326 |                     |         |                     | 37,322 |         |         |  | 5,119  |         |        |  | 12.39 | %      |       |   | 4,004  |        |        |  | 10.73  | %    
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      
|                       |                              | Total liabilities and
shareholders equity |        | $            | 482,207 |                     |        | $                   | 416,859 |                     |        | $       | 361,241 |  |        | $       | 65,348 |  |       |        | 15.68 | % |        | $      | 55,618 |  |        |       | 15.40 | %
|                       |                              |                                            |        |              |         |                     |        |                     |         |                     |        |         |         |  |        |         |        |  |       |        |       |   |        |        |        |  |        |      



|(1) |  | Includes cash and due from banks, property and equipment, and accrued
interest receivable.
|--- |  | ------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes accrued interest payable and other liabilities.                                  

Investments

A year-to-year comparison shows that Columbias investment securities at
December 31, 2001, totaled $43.53 million, compared to $60.54 million at
December 31, 2000, and $62.33 million at December 31, 1999. This represents a
decrease of 28.11% between 2000 and 2001 and a decrease of 2.87% between 1999
and 2000. Increases or decreases in the investment portfolio are primarily a
function of loan demand and changes in Columbias deposit structure. On
December 31, 2001, investments in federal funds sold (an overnight investment)
were $1.53 million and investments in restricted stock were $2.07 million. The
balance of federal funds sold is influenced by cash demands, customer deposit
levels, loan activity, and other investment transactions.

Columbia follows a financial accounting principle which requires that
investment securities be identified as held-to-maturity or available-for-sale.
Held-to-maturity securities are those that Columbia has the intent and ability
to hold until they mature or are called. Available-for-sale securities are
those that management may sell if liquidity requirements dictate or if
alternative investment opportunities arise. The mix of available-for-sale and
held-to-maturity investment securities is determined by management, based on
Columbias asset-liability policy, managements assessment of the relative
liquidity of Columbia, and other factors.

At December 31, 2001, the investment portfolio, excluding restricted
equity securities, consisted of 45.36% available-for-sale securities and 54.65%
held-to-maturity securities. At December 31, 2000, the portfolio consisted of
66.87% available-for-sale securities and 33.13% held-to-maturity securities.
At December 31, 1999, Columbias

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investment portfolio, excluding restricted equity securities, consisted of
67.14% available-for-sale securities and 32.68% held-to-maturity securities.

At December 31, 2001, Columbias investment portfolio had total net
unrealized gains of approximately $707,000. This compares to net unrealized
gains of approximately $5,000 at December 31, 2000 and net unrealized losses of
$1.58 million at December 31, 1999. Unrealized gains and losses reflect
changes in market conditions and do not represent the amount of actual profits
or losses Columbia may ultimately realize. Actual realized gains and losses
occur at the time investment securities are sold or redeemed.

Federal funds sold are short-term investments that mature on a daily
basis. Columbia invests in these instruments to provide for additional
earnings on excess available cash balances. Because of their short maturities,
the balance of federal funds sold fluctuates dramatically on a day-to-day
basis. The balance on any one day is influenced by cash demands, customer
deposit levels, loan activity and other investment transactions. Investments
in federal funds sold totaled $1.53 million at December 31, 2001, compared to
$1.14 million at December 31, 2000, and $680,000 at December 31, 1999.

The following table provides the carrying value of Columbias portfolio of
investment securities as of December 31, 2001, 2000, and 1999, respectively.

|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |        |        | 
|------------------------------- | ------------------------------------------------ | --------------------------- | ------ | ------------ | ------ | ------------ | ------ | -------- | ------ |  | ------ | ------ | ------ | 
|                                |                                                  |                             |        | December 31, |        | December 31, |        | December
|                                |                                                  |                             |        | 2001         |        | 2000         |        | 1999    
|                                |                                                  |                             |        |              |        |              |        |         
|(dollars in thousands)          |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|Investments available-for-sale: |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|                                | U.S. Treasury securities                         |                             | $      | 1,016        |        |              | $      | 1,015    |        |  | $      | 1,610  |       
|                                | U.S. Government obligations                      |                             |        | 14,208       |        |              |        | 34,532   |        |  |        | 36,205 |       
|                                | Corporate debt securities                        |                             |        | 1,281        |        |              |        | 1,230    |        |  |        | 532    |       
|                                | Corporate equity securities                      |                             |        | 300          |        |              |        | 300      |        |  |        | 300    |       
|                                | Municipal securities                             |                             |        | 1,997        |        |              |        | 2,311    |        |  |        | 2,464  |       
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|                                |                                                  |                             | 18,802 |              |        |              | 39,388 |          |        |  | 41,111 |       
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|Investments held-to-maturity:   |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|                                | Obligations of states and political subdivisions |                             |        | 15,742       |        |              |        | 16,328   |        |  |        | 17,586 |       
|                                | Mortgage-backed securities                       |                             |        | 6,916        |        |              |        | 3,190    |        |  |        | 2,539  |       
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|                                |                                                  |                             | 22,658 |              |        |              | 19,518 |          |        |  | 20,125 |       
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|Restricted equity securities    |                                                  |                             | 2,072  |              |        |              | 1,638  |          |        |  | 1,097  |       
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       
|                                |                                                  | Total investment securities |        | $            | 43,532 |              |        | $        | 60,544 |  |        | $      | 62,333 | 
|                                |                                                  |                             |        |              |        |              |        |          |        |  |        |       

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Investment securities at the dates indicated consisted of the following:

|                                                  |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |      |      |  
|------------------------------------------------- | ----------------- | --------------------- | ----- | ----------------- | ------ | ----------------- | ----- | ----------------- | ------ | --------- |  | ---------- | ---- | ------ | ----- | --------- | ------ | ---------- | ----- | ------ | ------ |  |  | ---- | ---- | - | ----- | ------ | ------ |  | ----- | ------ | ------ |  |  | ---- | ---- | -
|                                                  |                   |                       |       | December 31, 2001 |        | December 31, 2000 |       | December 31, 1999
|                                                  |                   |                       |       |                   |        |                   |       |                  
|                                                  |                   |                       |       | Amortized         |        | Estimated         |       | %                 |        | Amortized |  | Estimated  |      | %      |       | Amortized |        | Estimated  |       | %     
|                                                  |                   |                       |       | Cost              |        | Fair Value        |       | Yield*            |        | Cost      |  | Fair Value |      | Yield* |       | Cost      |        | Fair Value |       | Yield*
|                                                  |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |       
|(in thousands)                                    |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|U.S. Treasuries and
agencies:                     |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  | One year or less  |                       | $     | 1,004             |        |                   | $     | 1,016             |        |           |  | 1.88       | %    |        | $     |          |        |            | $     |       |        |  |  | 0.00 | %    |   | $     | 600    |        |  | $     | 601    |        |  |  | 5.67 | %   
|                                                  | One to five years |                       |       |                   |        |                   |       |                   |        |           |  | 0.00       | %    |        |       | 1,018     |        |            |       | 1,015  |        |  |  | 5.41 | %    |   |       | 1,031  |        |  |       | 1,009  |        |  |  | 6.21 | %   
|U.S. Government
agencies:                         |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  | One year or less  |                       |       | 7,479             |        |                   |       | 7,592             |        |           |  | 3.80       | %    |        |       | 2,913     |        |            |       | 2,902  |        |  |  | 6.18 | %    |   |       | 628    |        |  |       | 619    |        |  |  | 6.42 | %   
|                                                  | One to five years |                       |       | 11,808            |        |                   |       | 12,127            |        |           |  | 4.11       | %    |        |       | 32,913    |        |            |       | 32,813 |        |  |  | 6.03 | %    |   |       | 38,079 |        |  |       | 37,105 |        |  |  | 6.76 | %   
|                                                  | Five to ten years |                       |       | 1,428             |        |                   |       | 1,433             |        |           |  | 5.87       | %    |        |       | 2,004     |        |            |       | 2,002  |        |  |  | 6.20 | %    |   |       | 995    |        |  |       | 1,000  |        |  |  | 5.47 | %   
|Obligations of states
and political
subdivisions: |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  | One year or less  |                       |       | 1,260             |        |                   |       | 1,281             |        |           |  | 3.39       | %    |        |       | 1,210     |        |            |       | 1,215  |        |  |  | 6.42 | %    |   |       | 2,304  |        |  |       | 2,324  |        |  |  | 8.81 | %   
|                                                  | One to five years |                       |       | 5,133             |        |                   |       | 5,257             |        |           |  | 5.18       | %    |        |       | 5,294     |        |            |       | 5,342  |        |  |  | 6.56 | %    |   |       | 6,350  |        |  |       | 6,337  |        |  |  | 7.20 | %   
|                                                  | Five to ten years |                       |       | 4,299             |        |                   |       | 4,336             |        |           |  | 6.87       | %    |        |       | 4,418     |        |            |       | 4,418  |        |  |  | 6.82 | %    |   |       | 3,493  |        |  |       | 3,365  |        |  |  | 7.78 | %   
|                                                  | Over ten years    |                       |       | 6,993             |        |                   |       | 7,022             |        |           |  | 7.23       | %    |        |       | 7,695     |        |            |       | 7,772  |        |  |  | 7.16 | %    |   |       | 7,927  |        |  |       | 7,489  |        |  |  | 8.14 | %   
|Corporate and other debt
securities:              |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  | One year or less  |                       |       |                  |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  | 0.00 | %    |   |       |       |        |  |       |       |        |  |  | 0.00 | %   
|                                                  | One to five years |                       |       | 1,234             |        |                   |       | 1,281             |        |           |  | 4.25       | %    |        |       | 1,239     |        |            |       | 1,230  |        |  |  | 6.74 | %    |   |       | 557    |        |  |       | 532    |        |  |  | 7.19 | %   
|                                                  |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  |                   | Total debt securities |       |                   | 40,638 |                   |       |                   | 41,345 |           |  |            | 4.99 | %      |       |           | 58,704 |            |       |        | 58,709 |  |  |      | 6.31 | % |       |        | 61,964 |  |       |        | 60,381 |  |  |      | 7.07 | %
|Corporate equity securities                       |                   |                       | 300   |                   |        |                   | 300   |                   |        |           |  |            |      |        | 300   |           |        |            | 300   |        |        |  |  |      |      |   | 300   |        |        |  | 300   |        |        |  |  |     
|Restricted equity securities                      |                   |                       | 2,072 |                   |        |                   | 2,072 |                   |        |           |  |            |      |        | 1,638 |           |        |            | 1,638 |        |        |  |  |      |      |   | 1,097 |        |        |  | 1,097 |        |        |  |  |     
|                                                  |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     
|                                                  |                   | Total securities      |       | $                 | 43,010 |                   |       | $                 | 43,717 |           |  |            |      |        |       | $         | 60,642 |            |       | $      | 60,647 |  |  |      |      |   |       | $      | 63,361 |  |       | $      | 61,778 |  |  |      |      |  
|                                                  |                   |                       |       |                   |        |                   |       |                   |        |           |  |            |      |        |       |           |        |            |       |        |        |  |  |      |      |   |       |        |        |  |       |        |        |  |  |     



---

|* |  | Weighted average yields are stated on a federal tax-equivalent basis at a 34%
rate, and have been annualized, where appropriate.
|- |  | --------------------------------------------------------------------------------------------------------------------------------

Loans

Columbias loan policies and procedures establish the basic guidelines
governing its lending operations. Generally, the guidelines address the types
of loans that it seeks, target markets, underwriting and collateral
requirements, terms, interest rate and yield considerations, and compliance
with laws and regulations. All loans or credit lines are subject to approval
procedures and amount limitations. These limitations apply to the borrowers
total outstanding indebtedness to CRB, including the indebtedness of any
guarantor. The policies are reviewed and approved at least annually by the
Board of Directors of CRB.

Bank officers are charged with loan origination in compliance with
underwriting standards overseen by the loan administration department and in
conformity with established loan policies. On an annual basis, the Board of
Directors determines the lending authority of the President, who then delegates
lending authority to the Chief Credit Officer and other lending officers. Such
delegated authority may include authority related to loans, letters of credit,
overdrafts, uncollected funds, and such other authority as determined by the
Board or the President within the Presidents delegated authority.

The President has authority to approve loans up to a lending limit set by
the Board of Directors. All loans above the lending limit of the President and
up to a certain limit are reviewed for approval by an internal loan committee.
Loans which exceed this limit but are less than pre-established lending limits
must be conditionally approved by an internal loan committee, and are subject
to the approval of the Boards loan committee up to pre-established lending
limits. Minutes from Board loan committee meetings are reviewed by the full
Board at regularly

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scheduled monthly meetings. All loans above the lending limit up to Columbias
statutory loan-to-one-borrower limitation (also known as the legal lending
limit) require approval of the full Board of Directors. Columbias unsecured
legal lending limit was $7.73 million at December 31, 2001. Columbia seldom
makes loans for an amount approaching its unsecured legal lending limit.

Net outstanding loans totaled $380.28 million at December 31, 2001,
representing an increase of $80.40 million, or 26.81% compared to $299.88
million as of December 31, 2000. Loan commitments grew to $133.91 million as
of December 31, 2001, representing an increase of $31.50 million over year-end
2000.

Columbias net loan portfolio at December 31, 2001, includes loans secured
by real estate (60.90%), commercial loans (17.50%), agricultural loans
(14.90%), and consumer loans (6.70%). The largest category is concentrated in
real estate loans. This is primarily due to the significant growth of mortgage
and commercial real estate loan activity. Mortgage loans usually are
temporarily financed on the balance sheet before being sold to the secondary
market. Some loans in this category are secured by real estate, but are used
for purposes other than financing the purchase of real property such as
inventory financing and equipment purchases, where real property serves as
collateral for the loan.

This table presents the composition of Columbias loan portfolio at the
dates indicated:

|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |       |        |  
|---------------------------- | ------------------- | ----------------- | ------- | ----------------- | ------- | ----------------- | ------ | ----------------- | ------ | ---------- | ------- | ------ | ------- | ---------- | ------ | ----- | ------ | - | ------- | ------ | ------- |  | ------ | ----- | ------ | -
|                             |                     |                   |         | December 31, 2001 |         | December 31, 2000 |        | December 31, 1999
|                             |                     |                   |         |                   |         |                   |        |                  
|                             |                     |                   |         | Amount            |         | Percentage        |        | Amount            |        | Percentage |         | Amount |         | Percentage
|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |           
|(dollars in thousands)       |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      
|Commercial                   |                     | $                 | 64,163  |                   |         |                   | 17.76  | %                 |        | $          | 70,790  |        |         |            | 23.61  | %     |        | $ | 60,869  |        |         |  | 24.65  | %    
|Agricultural                 |                     |                   | 54,934  |                   |         |                   | 15.20  | %                 |        |            | 44,299  |        |         |            | 14.77  | %     |        |   | 37,775  |        |         |  | 15.30  | %    
|Real estate secured loans:   |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      
|                             | Commercial property |                   |         | 80,092            |         |                   |        | 22.17             | %      |            |         | 58,411 |         |            |        | 19.48 | %      |   |         | 43,469 |         |  |        | 17.59 | %     
|                             | Farmland            |                   |         | 25,292            |         |                   |        | 7.00              | %      |            |         | 20,723 |         |            |        | 6.91  | %      |   |         | 13,270 |         |  |        | 5.37  | %     
|                             | Construction        |                   |         | 70,474            |         |                   |        | 19.50             | %      |            |         | 41,374 |         |            |        | 13.80 | %      |   |         | 33,780 |         |  |        | 13.68 | %     
|                             | Residential         |                   |         | 44,512            |         |                   |        | 12.32             | %      |            |         | 45,612 |         |            |        | 15.21 | %      |   |         | 40,051 |         |  |        | 16.22 | %     
|                             | Home equity lines   |                   |         | 3,309             |         |                   |        | 0.92              | %      |            |         | 3,393  |         |            |        | 1.13  | %      |   |         | 3,027  |         |  |        | 1.23  | %     
|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      
|                             |                     | Total real estate |         |                   | 223,679 |                   |        |                   | 61.91  | %          |         |        | 169,513 |            |        |       | 56.53  | % |         |        | 133,597 |  |        |       | 54.09  | %
|Consumer                     |                     |                   | 19,802  |                   |         |                   | 5.48   | %                 |        |            | 19,195  |        |         |            | 6.40   | %     |        |   | 18,096  |        |         |  | 7.33   | %    
|Other                        |                     |                   | 5,251   |                   |         |                   | 1.45   | %                 |        |            | 1,690   |        |         |            | 0.56   | %     |        |   | 827     |        |         |  | 0.33   | %    
|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      
|                             |                     | Total loans       |         |                   | 367,829 |                   |        |                   | 101.80 | %          |         |        | 305,487 |            |        |       | 101.87 | % |         |        | 251,164 |  |        |       | 101.70 | %
|Less deferred loan fees      |                     |                   | (1,194  | )                 |         |                   | (0.33  | )%                |        |            | (1,028  | )      |         |            | (0.34  | )%    |        |   | (891    | )      |         |  | (0.36  | )%   
|Less reserve for loan losses |                     |                   | (5,312  | )                 |         |                   | (1.47  | )%                |        |            | (4,578  | )      |         |            | (1.53  | )%    |        |   | (3,298  | )      |         |  | (1.34  | )%   
|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      
|Loans receivable, net        |                     | $                 | 361,323 |                   |         |                   | 100.00 | %                 |        | $          | 299,881 |        |         |            | 100.00 | %     |        | $ | 246,975 |        |         |  | 100.00 | %    
|                             |                     |                   |         |                   |         |                   |        |                   |        |            |         |        |         |            |        |       |        |   |         |        |         |  |        |      

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The following table sets forth Columbias loan portfolio maturities on
fixed rate loans and repricing dates on variable loans for the periods
indicated:

|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |        |         | 
|---------------------------------- | ------------------- | ----------------------- | ------ | ----------------- | ------- | ----------------- | ------ | -------- | ------- | ------- | ----- | ---------- | ------ | ---------- | ------- | ------ | ------- | ----- | ------ | ------ | ------- | -------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------ | ------- | 
|                                   |                     |                         |        | December 31, 2001 |         | December 31, 2000
|                                   |                     |                         |        |                   |         |                  
|                                   |                     |                         |        |                   |         |                   |        | One year |         |         |       |            |        |            |         |        |         |       |        |        |         | One year |        |        |        |   |        |        |        |  
|                                   |                     |                         |        | One year          |         | through           |        | After    |         | Total   |       | One year   |        | through    |         | After  |         | Total
|(dollars in thousands)             |                     | or less                 |        | five years        |         | five years        |        | loans    |         | or less |       | five years |        | five years |         | loans 
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |       
|Commercial loans                   |                     | $                       | 32,333 |                   |         | $                 | 22,111 |          |         | $       | 9,720 |            |        | $          | 64,164  |        |         | $     | 35,978 |        |         | $        | 22,070 |        |        | $ | 12,742 |        |        | $ | 70,790  |       
|Agricultural loans                 |                     |                         | 45,772 |                   |         |                   | 7,566  |          |         |         | 1,595 |            |        |            | 54,933  |        |         |       | 37,978 |        |         |          | 5,182  |        |        |   | 1,139  |        |        |   | 44,299  |       
|Real estate secured loans:         |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       
|                                   | Commercial property |                         |        | 7,424             |         |                   |        | 43,019   |         |         |       | 29,650     |        |            |         | 80,093 |         |       |        | 6,092  |         |          |        | 30,927 |        |   |        | 21,392 |        |   |         | 58,411 |        
|                                   | Farmland            |                         |        | 4,456             |         |                   |        | 7,873    |         |         |       | 12,962     |        |            |         | 25,291 |         |       |        | 4,892  |         |          |        | 4,867  |        |   |        | 10,964 |        |   |         | 20,723 |        
|                                   | Construction        |                         |        | 58,632            |         |                   |        | 9,770    |         |         |       | 2,072      |        |            |         | 70,474 |         |       |        | 31,864 |         |          |        | 5,353  |        |   |        | 4,157  |        |   |         | 41,374 |        
|                                   | Residential         |                         |        | 11,509            |         |                   |        | 7,064    |         |         |       | 25,939     |        |            |         | 44,512 |         |       |        | 10,738 |         |          |        | 10,509 |        |   |        | 24,365 |        |   |         | 45,612 |        
|                                   | Home equity lines   |                         |        | 2,814             |         |                   |        | 137      |         |         |       | 357        |        |            |         | 3,308  |         |       |        | 3,194  |         |          |        | 113    |        |   |        | 86     |        |   |         | 3,393  |        
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       
|                                   |                     | Total real estate loans |        |                   | 84,835  |                   |        |          | 67,863  |         |       |            | 70,980 |            |         |        | 223,678 |       |        |        | 56,780  |          |        |        | 51,769 |   |        |        | 60,964 |   |         |        | 169,513 | 
|Consumer                           |                     |                         | 6,607  |                   |         |                   | 10,141 |          |         |         | 3,054 |            |        |            | 19,802  |        |         |       | 9,043  |        |         |          | 8,157  |        |        |   | 1,995  |        |        |   | 19,195  |       
|Other                              |                     |                         | 4,116  |                   |         |                   | 138    |          |         |         | 998   |            |        |            | 5,252   |        |         |       | 718    |        |         |          | 208    |        |        |   | 764    |        |        |   | 1,690   |       
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       
|                                   |                     | Total loans             |        | $                 | 173,663 |                   |        | $        | 107,819 |         |       | $          | 86,347 |            |         | $      | 367,829 |       |        | $      | 140,497 |          |        | $      | 87,386 |   |        | $      | 77,604 |   |         | $      | 305,487 | 
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       
|Loans with fixed interest rates    |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        | $          | 194,522 |        |         |       |        |        |         |          |        |        |        |   |        |        |        | $ | 137,098 |       
|Loans with floating interest rates |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            | 173,307 |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   | 168,389 |       
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        | $          | 367,829 |        |         |       |        |        |         |          |        |        |        |   |        |        |        | $ | 305,487 |       
|                                   |                     |                         |        |                   |         |                   |        |          |         |         |       |            |        |            |         |        |         |       |        |        |         |          |        |        |        |   |        |        |        |   |         |       

Loan Losses and Recoveries

The reserve for loan losses is established through a provision for loan
losses charged to expenses. Loans are charged against the reserve for loan
losses when management believes that the collectibility of the principal or a
portion thereof is unlikely. The reserve is an amount that management believes
will be adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and prior
loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans and current economic conditions that
may affect the borrowers ability to pay. Accrual of interest is discontinued
on a loan when management believes, after considering economic and business
conditions, collection efforts and collateral position, that the borrowers
financial condition is such that collection of interest is doubtful.

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The following table shows Columbias loan loss experience for the periods
indicated:

|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |     |     |  
|----------------------------------------------------------------------- | -------------------------------- | ----------------------- | ------- | ------------------------ | ---- | ---- | ------- | ---- | ---- | ---- | ------- | ---- | ---- | - | ------- | ---- | ---- | - | ------- | --- | --- | -
|                                                                        |                                  |                         |         | Years Ended December 31,
|                                                                        |                                  |                         |         |                         
|                                                                        |                                  |                         |         | 2001                     |      | 2000 |         | 1999 |      | 1998 |         | 1997
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |     
|(dollars in thousands)                                                  |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Loans outstanding at end of period, net of
unearned interest income (1) |                                  | $                       | 385,595 |                          |      | $    | 304,459 |      |      | $    | 250,274 |      |      | $ | 208,932 |      |      | $ | 156,858 |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Average loans outstanding for the period                                |                                  | $                       | 348,239 |                          |      | $    | 288,058 |      |      | $    | 222,276 |      |      | $ | 175,588 |      |      | $ | 140,891 |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Reserve for loan losses balance, beginning of year                      |                                  | $                       | 4,578   |                          |      | $    | 3,298   |      |      | $    | 2,380   |      |      | $ | 1,639   |      |      | $ | 995     |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Loans charged off:                                                      |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|                                                                        | Commercial                       |                         |         | (587                     | )    |      |         | (139 | )    |      |         | (41  | )    |   |         | (219 | )    |   |         | (7  | )  
|                                                                        | Real estate                      |                         |         | (56                      | )    |      |         | (14  | )    |      |         | (15  | )    |   |         | (51  | )    |   |         |    |    
|                                                                        | Agriculture                      |                         |         | (79                      | )    |      |         | (256 | )    |      |         | (26  | )    |   |         | (369 | )    |   |         |    |    
|                                                                        | Installment loans                |                         |         | (20                      | )    |      |         | (8   | )    |      |         | (57  | )    |   |         | (77  | )    |   |         | (19 | )  
|                                                                        | Credit card and related accounts |                         |         | (57                      | )    |      |         | (42  | )    |      |         | (43  | )    |   |         | (51  | )    |   |         | (14 | )  
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|                                                                        |                                  | Total loans charged off |         |                          | (799 | )    |         |      | (459 | )    |         |      | (182 | ) |         |      | (767 | ) |         |     | (40 | )
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Recoveries:                                                             |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|                                                                        | Commercial                       |                         |         | 71                       |      |      |         | 6    |      |      |         | 32   |      |   |         | 40   |      |   |         | 21  |    
|                                                                        | Real estate                      |                         |         | 1                        |      |      |         |     |      |      |         |     |      |   |         |     |      |   |         |    |    
|                                                                        | Agriculture                      |                         |         |                         |      |      |         | 30   |      |      |         | 48   |      |   |         | 49   |      |   |         | 80  |    
|                                                                        | Installment loans                |                         |         | 5                        |      |      |         | 3    |      |      |         | 3    |      |   |         | 1    |      |   |         | 1   |    
|                                                                        | Credit card and related accounts |                         |         | 6                        |      |      |         | 3    |      |      |         | 12   |      |   |         | 8    |      |   |         | 1   |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|                                                                        |                                  | Total recoveries        |         |                          | 83   |      |         |      | 42   |      |         |      | 95   |   |         |      | 98   |   |         |     | 103 |  
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Net (charge-offs) recoveries                                            |                                  |                         | (716    | )                        |      |      | (417    | )    |      |      | (87     | )    |      |   | (669    | )    |      |   | 63      |    
|Provision charged to operations                                         |                                  |                         | 1,450   |                          |      |      | 1,697   |      |      |      | 1,005   |      |      |   | 1,000   |      |      |   | 581     |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Acquisition of Valley Community Bancorp                                 |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   | 410     |      |      |   |         |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Reserve for loan losses balance, end of period                          |                                  | $                       | 5,312   |                          |      | $    | 4,578   |      |      | $    | 3,298   |      |      | $ | 2,380   |      |      | $ | 1,639   |    
|                                                                        |                                  |                         |         |                          |      |      |         |      |      |      |         |      |      |   |         |      |      |   |         |    
|Ratio of net loans charged off (recovered) to
average loans outstanding |                                  |                         | 0.21    | %                        |      |      | 0.14    | %    |      |      | 0.04    | %    |      |   | 0.38    | %    |      |   | (0.04   | )% 
|Ratio of reserve for loan losses to loans at
end of period              |                                  |                         | 1.38    | %                        |      |      | 1.50    | %    |      |      | 1.32    | %    |      |   | 1.13    | %    |      |   | 1.04    | %  



---

|(1) |  | Includes loans held-for-sale
|--- |  | ----------------------------

The adequacy of the reserve for loan losses should be measured in the
context of several key ratios: (1) the ratio of the reserve to total
outstanding loans; (2) the ratio of total nonperforming loans to total loans;
and, (3) the ratio of net charge-offs (recoveries) to average loans
outstanding. Since 1997, Columbias ratio of the reserve for loan losses to
total loans has ranged from 1.04% to 1.50%. The amounts provided by these
ratios have been sufficient to fund Columbias charge-offs, which have not been
historically significant, and to provide for potential losses as the loan
portfolio has grown. These ratios have also been consistent with the level of
nonperforming loans to total loans. From December 31, 1997 through December
31, 2001, nonperforming loans to total loans have ranged from a low of 0.24% to
a high of .93%. This experience tracks with changes in the ratio of the
reserve for loan losses to total loans and with the actual balances maintained
in the reserve account. Finally, Columbias historical ratio of net
charge-offs (recoveries) to average outstanding loans illustrates its favorable
loan charge-off and recovery experience. In one of the five years from 1997 to
2001, annual loan recoveries actually exceeded charge-offs. For the remaining
four years between December 31, 1997 and 2001, net charge-offs ranged from
0.04% to 0.38% of average loans. Management believes Columbias loan
underwriting policies and its loan officers knowledge of their customers are
significant contributors to Columbias success in limiting loan losses.

During the year ended December 31, 2001, Columbia recognized $799,000 in
loan losses and $83,000 in recoveries. Charge-offs recorded in 2001 were
consistent with Columbias historical experience in view of the growth in its
loan portfolio.

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The following table presents information with respect to nonperforming
loans and other assets:

|                                                                 |                            |   |              |       |      |   |        |       |      |   |        |     |  |   |        |       |  |   |        |       | 
|---------------------------------------------------------------- | -------------------------- | - | ------------ | ----- | ---- | - | ------ | ----- | ---- | - | ------ | --- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                 |                            |   | December 31,
|                                                                 |                            |   |             
|                                                                 |                            |   | 2001         |       | 2000 |   | 1999   |       | 1998 |   | 1997  
|                                                                 |                            |   |              |       |      |   |        |       |      |   |       
|(dollars in thousands)                                           |                            |   |              |       |      |   |        |       |      |   |        |     |  |   |        |       |  |   |        |      
|Loans on nonaccrual status                                       |                            | $ | 890          |       |      | $ | 1,163  |       |      | $ | 394    |     |  | $ | 1,082  |       |  | $ | 1,041  |      
|Loans past due  greater than 90 days                            |                            |   |             |       |      |   | 7      |       |      |   |       |     |  |   |       |       |  |   | 414    |      
|Restructured loans                                               |                            |   | 113          |       |      |   | 116    |       |      |   | 202    |     |  |   | 825    |       |  |   |       |      
|                                                                 |                            |   |              |       |      |   |        |       |      |   |        |     |  |   |        |       |  |   |        |      
|                                                                 | Total nonperforming loans  |   |              | 1,003 |      |   |        | 1,286 |      |   |        | 596 |  |   |        | 1,907 |  |   |        | 1,455 | 
|Other real estate owned                                          |                            |   | 349          |       |      |   |       |       |      |   |       |     |  |   | 281    |       |  |   |       |      
|                                                                 |                            |   |              |       |      |   |        |       |      |   |        |     |  |   |        |       |  |   |        |      
|                                                                 | Total nonperforming assets |   | $            | 1,352 |      |   | $      | 1,286 |      |   | $      | 596 |  |   | $      | 2,188 |  |   | $      | 1,455 | 
|                                                                 |                            |   |              |       |      |   |        |       |      |   |        |     |  |   |        |       |  |   |        |      
|Allowance for loans losses                                       |                            | $ | 5,312        |       |      | $ | 4,578  |       |      | $ | 3,298  |     |  | $ | 2,380  |       |  | $ | 1,639  |      
|Ratio of total nonperforming assets to
total assets              |                            |   | 0.28         | %     |      |   | 0.31   | %     |      |   | 0.16   | %   |  |   | 0.64   | %     |  |   | 0.63   | %    
|Ratio of total nonperforming loans to
total loans                |                            |   | 0.26         | %     |      |   | 0.43   | %     |      |   | 0.24   | %   |  |   | 0.91   | %     |  |   | 0.93   | %    
|Ratio of allowance for loan losses to
total nonperforming assets |                            |   | 392.82       | %     |      |   | 355.95 | %     |      |   | 553.45 | %   |  |   | 108.82 | %     |  |   | 112.65 | %    

Columbia has adopted a policy for placement of loans on nonaccrual status
after they become 90 days past due unless otherwise formally waived. Further,
Columbia may place loans that are not contractually past due or that are deemed
fully collateralized on nonaccrual status to promote better oversight and
review of loan arrangements. Loans on nonaccrual status at December 31, 2001
totaled approximately $890,000 compared to $1.16 million at December 31, 2000
and $394,000 at December 31, 1999.

In 1998, Columbia adopted procedures to identify and monitor loans that
have had their original terms restructured to accommodate borrowers financial
needs. Loan revisions and modifications are provided to meet the credit needs
of borrowers in weakened financial condition and to enhance ultimate
collection. As of December 31, 2001, Columbia identified loans totaling
$113,000 that had been classified as restructured. All of these loans are
currently performing in accordance with their restructured terms. However,
management will continue to monitor these loans for any changes or
deterioration in performance.

At December 31, 2001, Columbia had $349,000 in assets in the other real
estate owned (OREO) category, which represents assets held through loan
foreclosure or recovery activities. There was no OREO at December 31, 2000 or
December 31, 1999.

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Deposits

The following table sets forth the average balances of Columbias
interest-bearing deposits, interest expense, and average rates paid for the
periods indicated:

|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |      |  
|------------------------- | ------------------------------------------------------- | - | ----------------------- | ------- | ----------------------- | - | ----------------------- | ----- | ------- |  | -------- | ---- | ------- | - | ------- | ------- | -------- | - | ------- | ------ |  |  | ---- | ---- | - | - | ------- | ------- |  | - | ----- | ----- |  |  | ---- | ---- | -
|                          |                                                         |   | Year Ended December 31, |         | Year Ended December 31, |   | Year Ended December 31,
|                          |                                                         |   | 2001                    |         | 2000                    |   | 1999                   
|                          |                                                         |   |                         |         |                         |   |                        
|                          |                                                         |   | Average                 |         | Interest                |   | Average                 |       | Average |  | Interest |      | Average |   | Average |         | Interest |   | Average
|                          |                                                         |   | Balance                 |         | Expense                 |   | Rate                    |       | Balance |  | Expense  |      | Rate    |   | Balance |         | Expense  |   | Rate   
|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |        
|(dollars in thousands)    |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |     
|Interest-bearing checking |                                                         | $ | 132,493                 |         |                         | $ | 2,885                   |       |         |  | 2.18     | %    |         | $ | 130,819 |         |          | $ | 4,419   |        |  |  | 3.38 | %    |   | $ | 128,207 |         |  | $ | 3,563 |       |  |  | 2.78 | %   
|Savings                   |                                                         |   | 25,794                  |         |                         |   | 433                     |       |         |  | 1.68     | %    |         |   | 26,534  |         |          |   | 861     |        |  |  | 3.24 | %    |   |   | 29,395  |         |  |   | 821   |       |  |  | 2.79 | %   
|Time deposits             |                                                         |   | 118,758                 |         |                         |   | 6,386                   |       |         |  | 5.38     | %    |         |   | 95,845  |         |          |   | 5,503   |        |  |  | 5.74 | %    |   |   | 71,626  |         |  |   | 3,650 |       |  |  | 5.10 | %   
|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |     
|                          | Total interest-bearing
deposits                         |   |                         | 277,045 |                         |   | $                       | 9,704 |         |  |          | 3.50 | %       |   |         | 253,198 |          |   | $       | 10,783 |  |  |      | 4.26 | % |   |         | 229,228 |  |   | $     | 8,034 |  |  |      | 3.51 | %
|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |     
|                          | Total noninterest-bearing
deposits                      |   |                         | 91,731  |                         |   |                         |       |         |  |          |      |         |   |         | 79,895  |          |   |         |        |  |  |      |      |   |   |         | 70,000  |  |   |       |       |  |  |      |      |  
|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |     
|                          | Total interest-bearing and
noninterest-bearing
deposits |   | $                       | 368,776 |                         |   |                         |       |         |  |          |      |         |   | $       | 333,093 |          |   |         |        |  |  |      |      |   |   | $       | 299,228 |  |   |       |       |  |  |      |      |  
|                          |                                                         |   |                         |         |                         |   |                         |       |         |  |          |      |         |   |         |         |          |   |         |        |  |  |      |      |   |   |         |         |  |   |       |       |  |  |      |     

At December 31, 2001, total deposits were $394.64 million, an increase of
$48.21 million or 13.92%, from total deposits of $346.43 million at December
31, 2000. Total deposits in 2000 increased by 11.42% over 1999. Deposit
growth in 2000 and 2001 was due to a combination of pricing strategies,
increased marketing, and increased emphasis on implementing a sales culture
within the branches. The growth in deposit accounts in 2001 has primarily been
in time deposits and noninterest-bearing demand accounts. Noninterest-bearing
demand deposits, also called core deposits, continued to be a significant
portion of Columbias deposit base. To the extent Columbia can fund operations
with core deposits, net interest spread, which is the difference between
interest income and interest expense, will improve. At December 31, 2001, core
deposits accounted for 27.50% of total deposits, up from 25.35% as of December
31, 2000.

Interest-bearing deposits consist of money market, savings, and time
certificate accounts. Interest-bearing account balances tend to grow or
decline as Columbia adjusts its pricing and product strategies based on market
conditions, including competing deposit products. At December 31, 2001, total
interest-bearing deposit accounts were $286.11 million, an increase of $27.51
million, or 10.64%, from December 31, 2000. Increases in time deposits and in
interest-bearing deposits offset a decline in savings accounts.
Interest-bearing demand accounts increased $3.50 million, or 2.62%, from
December 31, 2000 to 2001, after increasing $3.32 million, or 2.55%, from 1999
to 2000.

Columbia is not dependent on brokered deposits or high-priced time
deposits. At December 31, 2001, time certificates of deposits in excess of
$100,000 totaled $30.07 million, or 7.62% of total outstanding deposits,
compared to $27.40 million, or 7.91%, of total outstanding deposits at December
31, 2000, and $19.18 million, or 6.17%, of total outstanding deposits at
December 31, 1999. The following table sets forth, by time remaining to
maturity, all time certificates of deposit accounts outstanding at December 31,
2001:

|               |                                       |   |         |        | 
|-------------- | ------------------------------------- | - | ------- | ------ | 
|(in thousands) |                                       |   |         |       
|               | Three months or less                  |   | $       | 29,115 | 
|               | Over three through six months         |   |         | 23,537 | 
|               | Over six months through twelve months |   |         | 31,612 | 
|               | Over twelve months                    |   |         | 32,645 | 
|               |                                       |   |         |       
|               |                                       | $ | 116,909 |       
|               |                                       |   |         |       

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##### Table of Contents



Short-Term Borrowings

The following table sets forth certain information with respect to
Columbias Federal Home Loan Bank of Seattle borrowings.

|                                                                |  |              |        |      |  |      |        |      |  |      |        |   |  |   |       |   |  |   |       |  
|--------------------------------------------------------------- |  | ------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ----- | - |  | - | ----- | -
|                                                                |  | December 31,
|                                                                |  |             
|(dollars in thousands)                                          |  | 2001         |        | 2000 |  | 1999 |        | 1998 |  | 1997
|                                                                |  |              |        |      |  |      |        |      |  |     
|Amount outstanding at end of period                             |  | $            | 35,454 |      |  | $    | 25,520 |      |  | $    | 10,598 |   |  | $ | 7,300 |   |  | $ | 4,600 |  
|Weighted average interest rate at end of
period                 |  |              | 4.00   | %    |  |      | 6.39   | %    |  |      | 5.83   | % |  |   | 5.41  | % |  |   | 5.89  | %
|Maximum amount outstanding at any
month-end and during the year |  | $            | 39,172 |      |  | $    | 29,053 |      |  | $    | 10,605 |   |  | $ | 7,600 |   |  | $ | 4,600 |  
|Average amount outstanding during the
period                    |  | $            | 32,626 |      |  | $    | 22,490 |      |  | $    | 8,801  |   |  | $ | 6,933 |   |  | $ | 2,781 |  
|Average weighted interest rate during
the period                |  |              | 5.26   | %    |  |      | 6.34   | %    |  |      | 5.33   | % |  |   | 5.53  | % |  |   | 5.80  | %

Stockholders Equity and Regulatory Capital

Stockholders equity increased $5.12 million during 2001. Stockholders
equity at December 31, 2001 was $46.45 million compared to $41.33 million at
December 31, 2000. This increase reflects net income and comprehensive income
of $7.80 million and $307,000 in exercised stock options. These additions to
equity were partially offset by cash dividends paid or declared of $2.57
million.

The Federal Reserve Board and the Federal Deposit Insurance Corporation
have established minimum requirements for capital adequacy for financial
holding companies and member banks. The requirements address both risk-based
capital and leveraged capital. The regulatory agencies may establish higher
minimum requirements if, for example, a corporation has previously received
special attention or has a high susceptibility to interest rate risk. The
following reflects Columbias various capital ratios at December 31, 2001, and
December 31, 2000, as compared to regulatory minimums for capital adequacy
purposes:

|                         |  |                   |       |                   |  |            |       |   |  |  |      |  
|------------------------ |  | ----------------- | ----- | ----------------- |  | ---------- | ----- | - |  |  | ---- | -
|                         |  |                   |       |                   |  | Regulatory
|                         |  | December 31, 2001 |       | December 31,
2000 |  | Minimum   
|                         |  |                   |       |                   |  |           
|Tier I capital           |  |                   | 9.40  | %                 |  |            | 9.80  | % |  |  | 4.00 | %
|Total risk-based capital |  |                   | 10.60 | %                 |  |            | 11.00 | % |  |  | 8.00 | %
|Leverage ratio           |  |                   | 8.60  | %                 |  |            | 8.10  | % |  |  | 4.00 | %

Liquidity

Columbia has adopted policies to maintain a relatively liquid position to
enable it to respond to changes in the financial environment and ensure
sufficient funds are available to meet customers needs for borrowing and
deposit withdrawals. Generally, Columbias major sources of liquidity are
customer deposits, sales and maturities of investment securities, the use of
borrowings from the Federal Home Loan Bank of Seattle and correspondent banks,
and net cash provided by operating activities. As of December 31, 2001 the
unused and available line of credit totaled $36.81 million. Scheduled loan
repayments are a relatively stable source of funds, while deposit inflows and
unscheduled loan prepayments are not as stable because they are influenced by
general interest rate levels, competing interest rates available on other
investments, market competition, economic conditions, and other factors.
Liquid asset balances include cash, amounts due from other banks, federal funds
sold, and securities available-for-sale and securities held-to-maturity with
maturities occurring in the next three months. At December 31, 2001, these
liquid assets totaled $41.47 million or 8.60% of total assets as compared to
$66.04 million or 15.87% of total assets at December 31, 2000. Liquidity has
declined during the year 2001 as a result of a declining interest rate
environment that stimulated strong loan growth that exceeded deposit growth.
Columbia has met liquidity needs primarily from maturing and called investment
securities and other borrowings.

The analysis of liquidity also includes a review of the changes that
appear in the consolidated statements of cash flows for the year ended December
31, 2001. The statement of cash flows includes operating, investing, and
financing categories. Operating activities include net income of $7.37
million, which is adjusted for non-cash items

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and increases or decreases in cash due to changes in certain assets and
liabilities. Investing activities consist primarily of both proceeds from and
purchases of securities and the impact of the net growth in loans. Financing
activities present the cash flows associated with deposit accounts and reflect
dividends paid to stockholders.

At December 31, 2001, Columbia had outstanding commitments to make loans
of $133.91 million. Nearly all of these commitments represented unused
portions of credit lines available to consumers under credit card and other
arrangements and to businesses. Many of these credit lines will not be fully
drawn upon and, accordingly, the aggregate commitments do not necessarily
represent future cash requirements. Management believes that Columbias
sources of liquidity are sufficient to meet likely calls on outstanding
commitments, although there can be no assurance in this regard.

Mortgage Group

|                                                     |  |           |             |          |  |              |            |  |  |   |             | 
|---------------------------------------------------- |  | --------- | ----------- | -------- |  | ------------ | ---------- |  |  | - | ----------- | 
|                                                     |  | Community |             | Mortgage |  |              |            | 
|                                                     |  | Banking   |             | Banking  |  | Consolidated
|                                                     |  |           |             |          |  |             
|December 31, 2001                                    |  |           |             |          |  |              |            |  |  |   |             | 
|Net interest income before provision for loan losses |  | $         | 22,639,245  |          |  | $            | 855,905    |  |  | $ | 23,495,150  | 
|Noninterest income                                   |  |           | 5,413,313   |          |  |              | 4,263,441  |  |  |   | 9,676,754   | 
|Depreciation and amortization                        |  |           | 1,694,496   |          |  |              | 468,857    |  |  |   | 2,163,353   | 
|Impairment of mortgage servicing rights              |  |           |            |          |  |              | 917,729    |  |  |   | 917,729     | 
|Income before provision for income taxes             |  |           | 9,949,154   |          |  |              | 1,801,375  |  |  |   | 11,750,529  | 
|Total assets                                         |  |           | 452,259,925 |          |  |              | 29,946,780 |  |  |   | 482,206,705 | 
|December 31, 2000                                    |  |           |             |          |  |              |            |  |  |   |             | 
|Net interest income before provision for loan losses |  | $         | 20,744,407  |          |  | $            | 366,374    |  |  | $ | 24,407,781  | 
|Noninterest income                                   |  |           | 3,972,470   |          |  |              | 2,794,835  |  |  |   | 6,767,305   | 
|Depreciation and amortization                        |  |           | 1,559,997   |          |  |              | 220,287    |  |  |   | 1,780,284   | 
|Income before provision for income taxes             |  |           | 8,161,401   |          |  |              | 767,631    |  |  |   | 8,929,032   | 
|Total assets                                         |  |           | 401,089,595 |          |  |              | 15,769,420 |  |  |   | 416,859,015 | 
|December 31, 1999                                    |  |           |             |          |  |              |            |  |  |   |             | 
|Net interest income before provision for loan losses |  | $         | 17,503,651  |          |  | $            | 811,418    |  |  | $ | 18,315,069  | 
|Noninterest income                                   |  |           | 4,021,985   |          |  |              | 1,520,692  |  |  |   | 5,542,677   | 
|Depreciation and amortization                        |  |           | 1,280,903   |          |  |              | 144,268    |  |  |   | 1,425,171   | 
|Income before provision for income taxes             |  |           | 7,684,002   |          |  |              | 434,577    |  |  |   | 8,118,579   | 
|Total assets                                         |  |           | 353,165,666 |          |  |              | 8,075,001  |  |  |   | 361,240,667 | 

The Mortgage Group has increased total assets during the last three years
to $29.95 million at year-ending 2001. Assets were $15.77 million and $8.08
million for years ending 2000 and 1999, respectively. Assets of the Mortgage
Group are primarily comprised of real estate loans in the portfolio, real
estate loans held for sale, mortgage servicing asset, accrued interest
receivable, furniture and equipment. The mortgage servicing asset for years
ending 1999, 2000 and 2001, was valued at $1.48 million, $2.76 million and
$4.75 million, respectively. CRB uses a servicing portfolio valuation model
system in order to comply with Statement of Accounting Standard (SFAS) 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. The servicing portfolio valuation model determines the value
of the mortgage servicing asset by calculating the results from data input into
the system; discount rate, inflation rate, effective tax rate annual servicing
cost, servicing premium, stratified loans by term, weighted average term to
maturity, weighted average coupon, number of loans serviced and constant
prepayment rate. The mortgage servicing asset is then amortized in proportion
to and over the period of the estimated life of the servicing income.

Total income before provision for income taxes increased over the prior
three years from 1999 to 2001. Over this three-year period, income before
provision for income taxes has increased from $435 thousand in 1999, to $768
thousand in 2000, and to $1.80 million in 2001. The growth in earnings is due
to a number of factors, including strong demand for mortgages, especially in
the Bend area, a falling interest rate environment and an aggressive sales
culture.

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Derivative Management

The Mortgage Group accepts loan
applications that typically do not fund and close for 30 to 60 days.
During this time, the loan is considered to be in the open
mortgage pipeline. Once the loan is either funded or closed,
it is then removed from the open mortgage pipeline. The loans that
comprise the open mortgage pipeline have been priced locked to the
borrower; therefor, interest rate fluctuations may result in gains
and/or losses from the sale of loans to the secondary market. The
risk of price fluctuations to the open mortgage pipeline is managed
by the use of derivatives; forward contracts and put options. The
underlying securities of the derivatives are mortgage-backed
securities, which generally correspond with the composition of the
open mortgage pipeline. The structure of the derivatives is intended
to serve as a hedge against the impact of rising and falling interest
rates. The gain or loss on the hedged item attributable to the hedged
risk is recognized in earnings in the same period, as required by
Statement of Financial Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities. As of
December 31, 2001, there were $22.04 million in interest
rate locked mortgage loans contained in the open mortgage pipeline
and the notional amount of the derivatives totaled
$19.00 million in forward contract and put option hedges. The
difference in amount between the loans in the open mortgage pipeline
and the notional amount of the derivatives is due to the risk
management practices for anticipating loan fall-out. Loan fall-out
occurs when a locked loan in the open mortgage pipeline is closed for
reasons other than having been funded by Mortgage Group; the two most
common occurrences of fall-out are either when the borrower does  not
fulfill the real estate purchase contract or the borrower closed
their loan with a competing provider of mortgage loans. The risk of
fall-out does expose CRB to the changes in value of the derivatives
that would be covering non-existent loans in the open mortgage
pipeline. This risk is usually greater during periods of falling
interest rates when borrowers take advantage of market conditions to
shop for lowest mortgage rates amongst competing mortgage loan
providers. CRB does monitor this risk and adjusts the derivative
coverage over the open mortgage pipeline in order to minimize the
risk of losses from fall-out. However, there can be no assurance that
fluctuations in interest rates and changes in loan fall-out will not
have a material adverse impact on earnings.

Factors That May Affect Future Results of Operations.

In addition to the other information contained in this report, the
following risks may affect Columbia. If any of these risks occurs, our
business, financial condition or operating results could be adversely affected.

Growth and Management.Our financial performance and profitability will
depend on our ability to manage recent and possible future growth. Although
management believes that it has substantially integrated the business and
operations of recent acquisitions, there can be no assurance that unforeseen
issues relating to the acquisitions will not adversely affect us. In addition,
any future acquisitions and continued growth may present operating and other
problems that could have an adverse effect on our business, financial condition
and results of operations. Accordingly, there can be no assurance that we will
be able to execute our growth strategy or maintain the level of profitability
that we have recently experienced.

Changes in Market Interest Rates.Our earnings are impacted by changing
interest rates. Changes in interest rates affect the demand for new loans, the
credit profile of existing loans, the rates received on loans and securities,
and rates paid on deposits and borrowings. The relationship between the rates
received on loans and securities and the rates paid on deposits and borrowings
is known as interest rate spread. Given our current volume and mix of
interest-bearing liabilities and interest-earning assets, our interest rate
spread could be expected to increase during times of rising interest rates and,
conversely, to decline during times of falling interest rates. Exposure to
interest rate risk is managed by monitoring the re-pricing frequency of CRBs
rate-sensitive assets and rate-sensitive liabilities over any given period.
Although we believe our current level of interest rate sensitivity is
reasonable, significant fluctuations in interest rates may have an adverse
affect on our business, financial condition and results of operations.

Geographic Factors.Economic conditions in the communities we serve could
adversely affect our operations. As a result of Columbias community bank
focus, our results depend largely upon economic and business conditions in our
service areas. A deterioration in economic and business conditions in our
market areas, particularly in the agricultural and real estate industries on
which some of these areas depend, could have a material adverse impact on the
quality of our loan portfolio and the demand for our products and services,
which in turn may have a material adverse effect on our results of operations.
Further, a downturn in the national economy might further exacerbate local
economic conditions. The extent of the future impact of these events on
economic and business conditions cannot be predicted.

Regulation.We are subject to government regulation that could limit or
restrict our activities, which in turn could adversely impact our operations.
The financial services industry is regulated extensively. Federal and state
regulation is designed primarily to protect the deposit insurance funds and
consumers, and not to benefit our stockholders. These regulations can
sometimes impose significant limitations on our operations. In addition, these
regulations are constantly evolving and may change significantly over time.
Significant new laws or changes in

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existing laws or repeal of existing laws may cause our results to differ
materially. Further, federal monetary policy, particularly as implemented
through the Federal Reserve System, significantly affects credit conditions for
us.

Competition.Competition may adversely affect our performance. The
financial services business in our market areas is highly competitive. It is
becoming increasingly competitive due to changes in regulation, technological
advances, and the accelerating pace of consolidation among financial services
providers. We face competition both in attracting deposits and in making
loans. We compete for loans principally through the interest rates and loan
fees we charge and the efficiency and quality of services we provide.
Increasing levels of competition in the banking and financial services
industries may reduce our market share or cause the prices we charge for our
services to fall. Our results may differ in future periods depending upon the
nature or level of competition.

Credit Risk.A source of risk arises from the possibility that losses
will be sustained if a significant number of our borrowers, guarantors and
related parties fail to perform in accordance with the terms of their loans.
We have adopted underwriting and credit monitoring procedures and credit
policies, including the establishment and review of the allowance for credit
losses, that management believes are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying our credit portfolio. These policies and procedures, however, may
not prevent unexpected losses that could materially affect our results of
operations.




ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Asset-Liability Management and Interest Rate Sensitivity

Columbias results of operations depend substantially on its net interest
income. Interest income and interest expense are affected by general economic
conditions and by competition in the marketplace. Columbias interest and
pricing strategies are driven by its asset-liability management analysis and by
local market conditions.

Columbia seeks to manage its assets and liabilities to generate a stable
level of earnings in response to changing interest rates and to manage its
interest rate risk. Columbia further strives to serve its communities and
customers through deployment of its resources on a corporate-wide basis so that
qualified loan demands may be funded wherever necessary in its branch banking
system. Asset/liability management involves managing the relationship between
interest rate sensitive assets and interest rate sensitive liabilities. If
assets and liabilities do not mature or reprice simultaneously, and in equal
amounts, the potential for exposure to interest rate risk exists, and an
interest rate gap is said to be present.

Rising and falling interest rate environments can have various effects on
a banks net interest income depending on the interest rate gap, the relative
changes in interest rates that occur when assets and liabilities are repriced,
unscheduled repayments of loans, early withdrawals of deposits and other
factors.

The following table sets forth the dollar amount of maturing
interest-earning assets and interest-bearing liabilities at December 31, 2001,
and the difference between them for the maturing or repricing periods
indicated. The amounts in the table are derived from Columbias internal data,
which varies from amounts classified in its financial statements, and, although
the information may be useful as a general measure of interest rate risk, the
data could be significantly affected by external factors such as prepayments of
loans or early withdrawals of deposits. Each of these may greatly influence
the timing and extent of actual repricing of interest-earning assets and
interest-bearing liabilities.

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Estimated Maturity or Repricing at December 31, 2001

|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |         |  
|------------------------------------ | ------------------------------------------------------------- | ---------- | - | ----------- | - | --------- | - | ------------ | - | ------ | - | ------- | -- |  | - | ------ | -- |  | - | ------- | -
|(Dollars in thousands)               |                                                               | 0-3 Months |   | 4-12 Months |   | 1-5 Years |   | Over 5 Years |   | Totals
|                                     |                                                               |            |   |             |   |           |   |              |   |       
|Interest-Rate-Sensitive Assets:      |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Interest earning balance due from banks                       |            | $ | 1,275       |   |           | $ |              |   |        | $ |         |    |  | $ |        |    |  | $ | 1,275   |  
|                                     | Federal funds sold                                            |            |   | 1,525       |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   | 1,525   |  
|                                     | Investments available for sale(1)(2)                          |            |   | 4,128       |   |           |   | 4,714        |   |        |   | 11,564  |    |  |   | 469    |    |  |   | 20,875  |  
|                                     | Investments held to maturity (2)                              |            |   | 50          |   |           |   | 910          |   |        |   | 4,314   |    |  |   | 17,384 |    |  |   | 22,658  |  
|                                     | Loans held for sale                                           |            |   | 18,960      |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   | 18,960  |  
|                                     | Loans, net of allowance for loan losses
an unearned loan fees |            |   | 167,521     |   |           |   | 25,371       |   |        |   | 111,184 |    |  |   | 57,247 |    |  |   | 361,323 |  
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Total Interest-Rate-Sensitive Assets                          |            |   | 193,459     |   |           |   | 30,995       |   |        |   | 127,061 |    |  |   | 75,100 |    |  |   | 426,615 |  
|Interest-Rate-Sensitive Liabilities: |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Savings and interest demand deposits (3)                      |            |   | 53,091      |   |           |   | 43,026       |   |        |   | 157,626 |    |  |   | 23,982 |    |  |   | 277,727 |  
|                                     | Certificates of deposit                                       |            |   | 29,115      |   |           |   | 55,149       |   |        |   | 31,579  |    |  |   | 1,065  |    |  |   | 116,908 |  
|                                     | Borrowings                                                    |            |   | 5,451       |   |           |   | 13,500       |   |        |   | 15,816  |    |  |   | 1,138  |    |  |   | 35,905  |  
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Total Interest-Rate-Sensitive Liabilities                     |            |   | 87,657      |   |           |   | 111,675      |   |        |   | 205,021 |    |  |   | 26,185 |    |  |   | 430,540 |  
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Periodic GAP                                                  |            | $ | 105,801     |   |           | $ | (80,681      | ) |        | $ | (77,960 | )  |  | $ | 48,915 |    |  | $ | (3,925  | )
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Cumulative Gap                                                |            | $ | 105,801     |   |           | $ | 25,120       |   |        | $ | (52,840 | )  |  | $ | (3,925 | )  |  |   |         |  
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        
|                                     | Cumulative Gap as a percentage
of assets                      |            |   | 21.94       | % |           |   | 5.21         | % |        |   | (10.96  | )% |  |   | (0.81  | )% |  |   |         |  
|                                     |                                                               |            |   |             |   |           |   |              |   |        |   |         |    |  |   |        |    |  |   |        



---

|(1) |  | Equity investments have been placed in the 0-3 month category.
|--- |  | --------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Repricing is based on contractual maturities.                 
|   
|   
|   
|   
|(3) |  | Repricing is based on estimated average lives                 

The overall cumulative gap position is slightly negative since more
liabilities than assets reprice during the next year. However, there are
certain shortcomings inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities and periods of repricing, they may react differently to
changes in market interest rates. Also, interest rates on assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other assets and liabilities may follow changes in market
interest rates. Given these shortcomings, management believes that the above
information should not be solely relied upon for measuring the sensitivity of
assets and liabilities. It represents one of the tools used by management to
assist in the process of understanding the potential impact of interest rate
movements on the net interest margin.

Management also utilizes an interest rate risk model that simulates the
effect of interest rate changes on the net interest margin and equity. The
most recent asset/liability model analysis indicated that Columbia has some
interest rate risk and is deemed to be asset-sensitive. The effect of an
asset-sensitive position is that the net interest margin should increase during
periods of rising interest rates. However, there can be no assurance that
fluctuations in interest rates will not have a material adverse impact on
Columbia.

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ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |        |        | 
|------------------------------------ | --------------------------------------------------- | ------------------- | - | ----------------------------- | ----- | ------- | - | ------- | ----- | ------ | - | ----- | ----- |  | - | ----- | ----- |  | - | ------ | ------ | 
|                                     |                                                     |                     |   | 2001 Quarterly Financial Data
|                                     |                                                     |                     |   |                              
|                                     |                                                     |                     |   | First                         |       | Second  |   | Third   |       | Fourth |   |       |       | 
|(In thousands except per share data) |                                                     | Quarter             |   | Quarter                       |       | Quarter |   | Quarter |       | Total 
|                                     |                                                     |                     |   |                               |       |         |   |         |       |       
|Income Statement Data                |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Interest income                                     |                     | $ | 8,539                         |       |         | $ | 8,711   |       |        | $ | 8,946 |       |  | $ | 8,882 |       |  | $ | 35,078 |       
|                                     | Interest expense                                    |                     |   | 3,262                         |       |         |   | 3,063   |       |        |   | 2,995 |       |  |   | 2,263 |       |  |   | 11,583 |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     |                                                     | Net interest income |   |                               | 5,277 |         |   |         | 5,648 |        |   |       | 5,951 |  |   |       | 6,619 |  |   |        | 23,495 | 
|                                     | Loan loss provision                                 |                     |   | 250                           |       |         |   | 375     |       |        |   | 250   |       |  |   | 575   |       |  |   | 1,450  |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Net interest income after
provision for loan losses |                     |   | 5,027                         |       |         |   | 5,273   |       |        |   | 5,701 |       |  |   | 6,044 |       |  |   | 22,045 |       
|                                     | Noninterest income                                  |                     |   | 1,959                         |       |         |   | 2,911   |       |        |   | 2,058 |       |  |   | 2,749 |       |  |   | 9,677  |       
|                                     | Noninterest expense                                 |                     |   | 4,575                         |       |         |   | 4,869   |       |        |   | 5,101 |       |  |   | 5,427 |       |  |   | 19,972 |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Income before provision for
income taxes            |                     |   | 2,411                         |       |         |   | 3,315   |       |        |   | 2,658 |       |  |   | 3,366 |       |  |   | 11,750 |       
|                                     | Provision for income taxes                          |                     |   | 898                           |       |         |   | 1,262   |       |        |   | 939   |       |  |   | 1,277 |       |  |   | 4,376  |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     |                                                     | Net income          |   | $                             | 1,513 |         |   | $       | 2,053 |        |   | $     | 1,719 |  |   | $     | 2,089 |  |   | $      | 7,374  | 
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|Earnings Per Share                   |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       | 
|                                     | Basic earnings per common share                     |                     | $ | 0.19                          |       |         | $ | 0.25    |       |        | $ | 0.21  |       |  | $ | 0.26  |       |  | $ | 0.92   |       
|                                     | Diluted earnings per common share                   |                     | $ | 0.19                          |       |         | $ | 0.25    |       |        | $ | 0.21  |       |  | $ | 0.25  |       |  | $ | 0.89   |       

|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |        |        | 
|------------------------------------ | --------------------------------------------------- | ------------------- | - | ----------------------------- | ----- | ------- | - | ------- | ----- | ------ | - | ----- | ----- |  | - | ----- | ----- |  | - | ------ | ------ | 
|                                     |                                                     |                     |   | 2000 Quarterly Financial Data
|                                     |                                                     |                     |   |                              
|                                     |                                                     |                     |   | First                         |       | Second  |   | Third   |       | Fourth |   |       |       | 
|(In thousands except per share data) |                                                     | Quarter             |   | Quarter                       |       | Quarter |   | Quarter |       | Total 
|                                     |                                                     |                     |   |                               |       |         |   |         |       |       
|Income Statement Data                |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Interest income                                     |                     | $ | 7,525                         |       |         | $ | 8,165   |       |        | $ | 8,720 |       |  | $ | 8,957 |       |  | $ | 33,367 |       
|                                     | Interest expense                                    |                     |   | 2,631                         |       |         |   | 3,066   |       |        |   | 3,292 |       |  |   | 3,267 |       |  |   | 12,256 |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     |                                                     | Net interest income |   |                               | 4,894 |         |   |         | 5,099 |        |   |       | 5,428 |  |   |       | 5,690 |  |   |        | 21,111 | 
|                                     | Loan loss provision                                 |                     |   | 399                           |       |         |   | 454     |       |        |   | 464   |       |  |   | 380   |       |  |   | 1,697  |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Net interest income after
provision for loan losses |                     |   | 4,495                         |       |         |   | 4,645   |       |        |   | 4,964 |       |  |   | 5,310 |       |  |   | 19,414 |       
|                                     | Noninterest income                                  |                     |   | 1,347                         |       |         |   | 1,716   |       |        |   | 1,831 |       |  |   | 1,873 |       |  |   | 6,767  |       
|                                     | Noninterest expense                                 |                     |   | 3,775                         |       |         |   | 4,233   |       |        |   | 4,529 |       |  |   | 4,715 |       |  |   | 17,252 |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Income before provision for
income taxes            |                     |   | 2,067                         |       |         |   | 2,128   |       |        |   | 2,266 |       |  |   | 2,468 |       |  |   | 8,929  |       
|                                     | Provision for income taxes                          |                     |   | 791                           |       |         |   | 778     |       |        |   | 847   |       |  |   | 889   |       |  |   | 3,305  |       
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     |                                                     | Net income          |   | $                             | 1,276 |         |   | $       | 1,350 |        |   | $     | 1,419 |  |   | $     | 1,579 |  |   | $      | 5,624  | 
|                                     |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|Earnings Per Share                   |                                                     |                     |   |                               |       |         |   |         |       |        |   |       |       |  |   |       |       |  |   |       
|                                     | Basic earnings per common share                     |                     | $ | 0.16                          |       |         | $ | 0.17    |       |        | $ | 0.18  |       |  | $ | 0.20  |       |  | $ | 0.70   |       

Additional information called for by this item is contained in Columbia
Bancorps Annual Report to Stockholders for the year ended December 31, 2001,
and is incorporated herein by reference.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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PART III




ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for by this item is contained in Columbias
definitive proxy statement for the annual meeting of stockholders to be held
April 25, 2002, and is incorporated herein by reference.




ITEM 11 EXECUTIVE COMPENSATION AND REPORT OF COMPENSATION COMMITTEE

The information called for by this item is contained in Columbias
definitive proxy statement for the annual meeting of stockholders to be held
April 25, 2002, and is incorporated herein by reference.




ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information called for by this item is contained in Columbias
definitive proxy statement for the Annual Meeting of Stockholders to be held
April 25, 2002, and is incorporated herein by reference.




ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by this item is contained in Columbias
definitive proxy statement for the Annual Meeting of Stockholders to be held
April 25, 2002, and is incorporated herein by reference.




Part IV




ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  Exhibits.

Pursuant to Item 601 of Regulation S-K, the following exhibits are
attached hereto or are incorporated herein by reference.

(Note: The per share earnings computation statement required by Item
601(b)(11) of Regulation S-K is contained in Note 19 to the Consolidated
Financial Statements included in Columbias 2001 Annual Report to Stockholders.
A copy of this 2001 Annual Report is attached hereto as an exhibit.)





| | 1. |  | Articles of Incorporation and Bylaws.
(Regulation S-K, Item 601, Exhibit Table Item (3)).
Columbias Articles of Incorporation, as amended, are
attached as Exhibit 3 (i) to Columbias Form 10-Q for
the period ended June 30, 1999 and incorporated herein
by reference. Columbias Bylaws are attached as
Exhibit 15.5 to Columbias Annual Report on Form 10-KSB
for the year ended December 31, 1998 and incorporated
herein by reference.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Material Contracts. (Regulation S-K, Item 601, Exhibit Table Item
(10)).                                                                                                                                                                                                                                                                                                                                                                       

| |      |  |  |                                                                                                                              |  | 
| | ---- |  |  | ---------------------------------------------------------------------------------------------------------------------------- |  | 
| | 10.1 |  |  | Employment
Agreement of January 26, 2001 between Roger Christensen and
Columbia Bancorp, a copy of which is attached hereto.
|
| | 10.2 |  |  | Employment
Agreement of June 15, 2001 between Greg Spear and Columbia
Bancorp, a copy of which is attached hereto.          

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##### Table of Contents



| |      |  |  |                                                                                                                                                                                                                                                                 |  | 
| | ---- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
| | 10.3 |  |  | Employment
Agreement of April 1, 2000 between James McCall and
Columbia River Bank, a copy of which is attached hereto.                                                                                                                                        
| | 10.4 |  |  | Employment
Agreement of April 1, 2000 between Craig Ortega and Columbia
River Bank, a copy of which is attached hereto.                                                                                                                                        
| | 10.5 |  |  | Deferred
Compensation Agreement of April 1, 1999 between Terry L.
Cochran and Columbia Bancorp, a copy of which is attached as
Exhibit 10.2 to Columbias Annual Report on Form 10-K for
the year ended December 31, 1999 and incorporated herein by
reference.
| | 10.6 |  |  | Columbia
Bancorp Restated Employee Stock Ownership Plan and Trust Agreement
(1999 Restatement), a copy of which is attached as Exhibit 10.4 to
Columbias Annual Report on Form 10-K for the year ended
December 31, 1999 and incorporated herein by
reference.



| | 3. |  | Annual Report to Stockholders. (Regulation S-K, Item 601,
Exhibit Table Item (13)). A copy of Columbias 2001 Annual Report
to Stockholders is attached hereto.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4. |  | List of Subsidiaries. (Regulation S-K, Item 601, Exhibit Table Item
(21)). Attached hereto is a list of Columbias subsidiaries as of December 31, 2001.       

(b)  Reports on Form 8-K.

No reports on Form 8-K were filed during the year ended December 31, 2001.

Upon written request to Columbias Chief Financial Officer, Greg B. Spear,
P.O. Box 1050, The Dalles, Oregon 97058, a copy of any exhibit referenced
herein will be provided to the requesting party upon payment of Columbias
reasonable copying expense of $.25 per page.

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##### Table of Contents






SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                      |  |  |                  |                                                            
|--------------------- |  |  | ---------------- | -----------------------------------------------------------
|                      |  |  | COLUMBIA BANCORP
|                     
|DATED: March 29, 2002 |  |  | By:              |                                                            
|                      |  |  |                  |                                                            
|                      |  |  |                  | Roger C. Christensen, President & C.E.O.  Columbia and CRB

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                      |  |  |                                          |                                                                                       
|--------------------- |  |  | ---------------------------------------- | --------------------------------------------------------------------------------------
|                      |  |  | PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR
|                     
|DATED: March 29, 2002 |  |  | By:                                      |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Roger C. Christensen, President & C.E.O.  Columbia and CRB                           
|                     
|                      |  |  | CHIEF FINANCIAL OFFICER                 
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Greg B. Spear, Chief Financial Officer and Chief
Accounting Officer  Columbia and CRB
|                     
|                      |  |  | DIRECTORS:                              
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Donald T. Mitchell, Director and Chairman                                             
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Robert L. R. Bailey, Director                                                         
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Charles F. Beardsley, Director                                                        
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Richard E. Betz, Director                                                             
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | William A. Booth, Director                                                            
|                     
|DATED: March 29, 2002 |  |  | By                                       |                                                                                       
|                      |  |  |                                          |                                                                                       
|                      |  |  |                                          | Dennis L. Carver, Director                                                            

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SIGNATURES
(Continued)

|                      |  |  |    |                            
|--------------------- |  |  | -- | ---------------------------
|DATED: March 29, 2002 |  |  | By |                            
|                      |  |  |    |                            
|                      |  |  |    | Terry, L. Cochran, Director
|                     
|DATED: March 29, 2002 |  |  | By |                            
|                      |  |  |    |                            
|                      |  |  |    | James J. Doran, Director   
|                     
|DATED: March 29, 2002 |  |  | By |                            
|                      |  |  |    |                            
|                      |  |  |    | Jane F. Lee, Director      
|                     
|DATED: March 29, 2002 |  |  | By |                            
|                      |  |  |    |                            
|                      |  |  |    | Jean S. McKinney, Director 

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EXHIBIT INDEX

|        |  |                                                                                          |  |      |  | 
|------- |  | ---------------------------------------------------------------------------------------- |  | ---- |  | 
|EXHIBIT |  |                                                                                          |  | PAGE
|        |  |                                                                                          |  |     
|10.1    |  | Employment Agreement of January 25, 2001 between Roger Christensen
and Columbia Bancorp.
|10.2    |  | Employment Agreement of June 15, 2001 between Greg Spear and
Columbia Bancorp.          
|10.3    |  | Employment Agreement of April 1, 2000 between James McCall and
Columbia River Bank.     
|10.4    |  | Employment Agreement of April 1, 2000 between Craig Ortega and
Columbia River Bank.     
|13.1    |  | 2001 Annual Report to Stockholders.                                                     
|21.1    |  | Columbias subsidiaries as of December 31, 2001.                                        

41