<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER, dated as of September 14, 1999 (as
amended, supplemented or otherwise modified from time to time, this
"Agreement"), is entered into by and among COWLITZ BANCORPORATION, a Washington
corporation ("Cowlitz"), COWLITZ BANK, a corporation chartered under the banking
laws of the State of Washington ("Cowlitz Bank"), and NORTHERN BANK OF COMMERCE,
a corporation chartered under the banking laws of the State of Oregon
("Northern").

     The respective Boards of Directors of each of Cowlitz, Cowlitz Bank and
Northern have determined that it is in the best interests of their respective
companies and the stockholders to consummate the business combination
transaction provided for herein and have approved and adopted this Agreement. It
is the intention of the parties to this Agreement that the business combination
contemplated hereby be treated, if it so qualifies, as a "reorganization" and
that this Agreement be treated as a "plan of reorganization" within the meaning
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").

     Therefore, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:

     1.       DEFINITIONS

     1.1 DEFINED TERMS. The following terms shall have the meanings defined for
such terms in the Sections set forth below:

<TABLE>
<CAPTION>
                Term                                                    Section
                ----                                                    -------
<S>                                                                     <C>
                Agreement                                               Preamble
                Aggregate Cash Consideration                            3.1
                Articles of Merger                                      2.2
                Base Value                                              2.6(e)
                BIF                                                     4.1
                Business Day                                            2.4
                Cash Consideration                                      2.6(a)
                Capitalization Adjustment Fraction                      2.6(b)
                Change of Control                                       9.1(h)
                Closing                                                 2.4
                Closing Date                                            2.4
                Closing Escrow Amount                                   3.2(b)
                Code                                                    Preamble
                Committee                                               3.2(b)
                Common Certificates                                     2.5(b)
                Confidentiality Agreement                               7.2(b)


<PAGE>

                Cowlitz                                                 Preamble
                Cowlitz Bank                                            Preamble
                Cowlitz Common Stock                                    2.5(c)
                Cowlitz Disclosure Schedule                             5.2
                Cowlitz Bank Members                                    3.2(b)
                Cowlitz Preferred Stock                                 5.2
                Cowlitz Reports                                         5.10
                Cowlitz Y2K Plan                                        5.14
                CRA                                                     4.27
                Dissenting Shares                                       2.5(d)
                DPC Shares                                              2.5(c)
                Effective Date                                          2.2
                Effective Time                                          2.2
                Environmental Laws                                      4.21
                Equity Adjustment Amount                                2.6(b)
                ERISA                                                   4.11(a)
                ERISA Affiliate                                         4.11(a)
                Escrow                                                  3.2(b)
                Escrow Agent                                            3.2(b)
                Escrow Agreement                                        3.2(b)
                Escrow Expiration Date                                  3.2(b)
                Escrowed Funds                                          3.2(b)
                Exchange Act                                            4.6
                Exchange Agent                                          3.1
                FDIC                                                    4.1
                GAAP                                                    2.6(d)
                Governmental Entity                                     4.4
                Identified Loans                                        2.6(a)
                Injunction                                              8.1(e)
                Liens                                                   4.3(b)
                Loan Adjustment Factor                                  3.2(b)
                Loan File                                               4.24(d)
                Loans                                                   4.24(a)
                Material Adverse Effect (Northern)                      4.1
                Material Adverse Effect (Cowlitz)                       5.1(a)
                Merger                                                  2.1
                Merger Consideration                                    2.6(a)
                Nasdaq                                                  4.4
                Northern                                                Preamble
                Northern Automated Systems                              4.28
                Northern Common Stock                                   2.5(a)
                Northern Contract                                       4.14(a)
                Northern Disclosure Schedule                            4.2(a)


                                       2
<PAGE>

                Northern Members                                        3.2(b)
                Northern Reports                                        4.12
                Northern Stock Option Plan                              2.8
                Northern Y2K Plan                                       4.28
                Orders                                                  6.2(o)
                Oregon Articles of Merger                               2.2
                Oregon Director                                         2.2
                PBGC                                                    4.11(c)
                Plans                                                   4.11(a)
                Proxy Statement/Prospectus                              4.4
                Regulatory Agreement                                    4.15
                Reimbursable Losses                                     3.2(b)
                REO                                                     4.19(a)
                Representatives                                         6.2(f)
                Requisite Regulatory Approvals                          8.1(c)
                S-4                                                     4.4
                SEC                                                     4.4
                Securities Act                                          4.12
                Stock Consideration                                     2.6(a)
                Stock Exchange Fund                                     3.1
                Stock Option Agreement                                  2.12
                Subsidiary                                              2.5(a)
                Superior Proposal                                       9.1(h)
                Surviving Bank                                          2.1
                Takeover Proposal                                       6.2(f)
                Tax Returns                                             4.10(c)
                Taxes                                                   4.10(b)
                Threshold Amount                                        3.2(d)
                Title 30                                                2.1
                Title 53                                                2.1
                Total Stockholders' Equity                              2.6(b)
                Trust Account Shares                                    2.5(c)
                Washington Articles of Merger                           2.2
                Washington Director                                     2.2
                Washington Secretary                                    2.2
                Year 2000 Problem                                       4.28
</TABLE>

     1.2 OTHER DEFINITIONAL PROVISIONS. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms.


                                       3
<PAGE>

     2. THE MERGER

     2.1 THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with Title 30 of the Revised Code of Washington ("TITLE 30") and
Title 53 of the Oregon Revised Statutes ("TITLE 53") at the Effective Time (as
defined in Section 2.2 hereof), Northern shall merge (the "MERGER") with and
into Cowlitz Bank. Cowlitz Bank shall be the surviving bank (hereinafter
sometimes called the "SURVIVING BANK") in the Merger, and shall continue its
corporate existence under the laws of the State of Washington. The name of the
Surviving Bank shall be Cowlitz Bank. Upon consummation of the Merger, the
separate corporate existence of Northern shall terminate.

     2.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
articles of merger (the "WASHINGTON ARTICLES OF MERGER") which shall be filed
with the Director of Financial Institutions of the State of Washington (the
"WASHINGTON DIRECTOR") and the Secretary of State of the State of Washington
(the "WASHINGTON SECRETARY") and in the articles of merger (the "OREGON ARTICLES
OF MERGER") which shall be filed with the Director of the Department of Consumer
and Business Services of the State of Oregon (the "OREGON DIRECTOR"), on the
Closing Date (as defined in Section 2.4(b) hereof). The term "EFFECTIVE TIME"
shall mean the date (the "EFFECTIVE DATE") and time when the Merger becomes
effective, as set forth in the Articles of Merger . The term "ARTICLES OF
MERGER" shall mean the "WASHINGTON ARTICLES OF MERGER" and the "OREGON ARTICLES
OF MERGER". The filed Articles of Merger shall include this Agreement.

     2.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Chapter 49 of Title 30 and Chapter 711 of
Title 53.

     2.4 CLOSING OF THE MERGER. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "CLOSING") will take place at 10:00
a.m. Pacific time, on a date to be specified by the parties, which shall be the
first Business Day following the later of (i) the date which is at least five
Business Days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Section 8 hereof, other than
conditions which by their terms are to be satisfied at Closing or (ii) in the
case that holders of more than 5% of the outstanding shares of Northern Common
Stock have sent or delivered a notice of dissent or voted against the Merger, 35
days following the meeting of the Northern Stockholders to be held pursuant to
Section 7.3, or such other date or time as the parties may mutually agree (the
"CLOSING DATE"). For purposes of this Agreement, a "BUSINESS DAY" shall mean any
day that is not a Saturday, a Sunday or other day on which the office of the
Washington Director, the Washington Secretary or the Oregon Director is closed.

     2.5 CONVERSION OF NORTHERN COMMON STOCK. At the Effective Time, without any
action on the part of Cowlitz, Cowlitz Bank, Northern or the holder of any of
the shares of common stock of Northern, the Merger shall be effected in
accordance with the following terms:

          (a) Subject to Section 2.5(d), each share of the common stock, par
value $1.00 per share, of Northern (the "Northern Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of
Northern Common Stock held (x) in Northern's treasury or (y) directly or
indirectly by Cowlitz or any of its Subsidiaries (as


                                       4
<PAGE>

defined below) (except for Trust Account Shares and DPC Shares, as such terms
are defined below)), shall be converted into the right to receive the Merger
Consideration as provided below, without interest thereon. For purposes of this
Agreement, "SUBSIDIARY" means, with respect to any person, any corporation,
partnership, joint venture, limited liability company or other entity controlled
by such person directly or indirectly through one or more intermediaries.

          (b) All of the shares of Northern Common Stock converted into the
right to receive the Merger Consideration pursuant to this Section 2 shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist as of the Effective Time, and each certificate (each a "COMMON
CERTIFICATE") previously representing any such shares shall thereafter represent
solely the right to receive the Merger Consideration. Common Certificates
previously representing shares of Northern Common Stock shall be exchanged for
the Merger Consideration upon the surrender of such Common Certificates in
accordance with Section 3.2 hereof, without any interest thereon.

          (c) At the Effective Time, all shares of Northern Common Stock that
are owned by Northern as treasury stock and all shares of Northern Common Stock
that are owned directly or indirectly by Cowlitz, Northern or a Subsidiary of
Cowlitz (other than shares of Northern Common Stock held directly or indirectly
in trust accounts, managed accounts and the like or otherwise held in a
fiduciary or nominee capacity that are beneficially owned by third parties (any
such shares, and shares of common stock, no par value per share, of Cowlitz
("COWLITZ COMMON STOCK") which are similarly held, whether held directly or
indirectly by Cowlitz, Northern or a Subsidiary of Cowlitz, as the case may be,
being referred to herein as "TRUST ACCOUNT SHARES") and other than any shares of
Northern Common Stock held by Cowlitz, Northern or any a Subsidiary of Cowlitz
in respect of a debt previously contracted (any such shares of Northern Common
Stock, and shares of Cowlitz Common Stock which are similarly held, whether held
directly or indirectly by Cowlitz, Northern or any a Subsidiary of Cowlitz,
being referred to herein as "DPC SHARES")) shall be canceled and shall cease to
exist and no Merger Consideration shall be delivered in exchange therefor.

          (d) Notwithstanding anything in this Agreement to the contrary, shares
of Northern Common Stock issued and outstanding immediately prior to the
Effective Time held by holders (if any) who have voted against the Merger or
sent or delivered notices of dissent and who are eligible to and who have
demanded appraisal rights with respect thereto in accordance with Sections
711.175-.185 of Title 53 and, as of the Effective Time, shall not have failed to
perfect or shall not have effectively withdrawn or lost their rights to
appraisal and payment under Sections 711.175-.185 of Title 53 (the "DISSENTING
SHARES") shall not be converted into the right to receive the Merger
Consideration as described in Section 2.5(a), but holders of such shares shall
instead be entitled to receive payment of the fair value of such Dissenting
Shares in accordance with the provisions of Sections 711.175-.185 of Title 53,
except that any Dissenting Shares held by a holder which shall have failed to
perfect or shall have effectively withdrawn or lost its right to appraisal and
payment under Sections 711.175-.185 of Title 53 shall thereupon be deemed to
have been converted into the right to receive the Merger Consideration as
described in Section 2.5(a), without interest thereon. Northern shall give
Cowlitz (i) prompt notice of any written demands for appraisal of any shares,
attempted withdrawals of such demands, and any


                                       5
<PAGE>

other instruments served pursuant to Sections 711.175-.185 of Title 53 received
by Northern relating to stockholders' rights of appraisal and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under Sections 711.175-.185 of Title 53. Northern shall not,
except with the prior written consent of Cowlitz, voluntarily make any payment
with respect to any demands for appraisals of capital stock of Northern, offer
to settle or settle any such demands or approve any withdrawal of any such
demands.

     2.6 MERGER CONSIDERATION.

          (a) For purposes of this Agreement and subject to the provisions
hereof, the "MERGER CONSIDERATION" shall be $7.05 per share of Northern Common
Stock and shall consist of two components: the Stock Consideration and the Cash
Consideration. The "STOCK CONSIDERATION" shall be $5.42 per share of Northern
Common Stock and shall consist of Cowlitz Common Stock valued at $6.563. The
"CASH CONSIDERATION" shall be $1.63 per share of Northern Common Stock, but
shall be subject to certain loss indemnification provisions described in Section
3.2(b). In addition, the Merger Consideration, the Stock Consideration and the
Cash Consideration are subject to possible adjustment at the Effective Time
pursuant to this Section 2.6.

          (b) If the Base Value of Northern, as calculated in accordance with
Section 2.6(e) is less than $4,707,139 but at least $1,150,000, then the Merger
Consideration and Stock Consideration shall be adjusted as of the Effective Time
as follows:

               (i) the Merger Consideration shall be reduced by an amount (the
     "EQUITY ADJUSTMENT AMOUNT") equal to the product of (A) 1.75 and (B) a
     fraction the numerator of which is the difference between $4,707,139 and
     the Base Value and the denominator of which is the number of issued and
     outstanding shares of Northern Common Stock as of the date of this
     Agreement; and

               (ii) the Stock Consideration shall be reduced by the Equity
     Adjustment Amount.

     In such event, there shall be no adjustment made to the Cash Consideration.

          (c) If the total number of issued and outstanding shares of Northern
Common Stock as of the Effective Time is greater than the total number of issued
and outstanding shares of Northern Common Stock as of the date of this
Agreement, then the Merger Consideration, Stock Consideration and Cash
Consideration (after making any adjustments required under (b) above, if
applicable) shall be adjusted as of the Effective Time as follows:

               (i) the Merger Consideration shall be the amount per share equal
     to the amount calculated pursuant to 2.6(a) and (b) multiplied by a
     fraction (the "CAPITALIZATION ADJUSTMENT FRACTION"), the numerator of which
     is equal to the total number of issued and outstanding shares of Northern
     Common Stock as of the date of this Agreement and the denominator of which
     is equal to the total number of issued and outstanding shares of Northern
     Common Stock as of the Effective Time;


                                       6
<PAGE>

               (ii) the Stock Consideration shall be the amount per share equal
     to the amount calculated pursuant to 2.6(a) and (b) multiplied by the
     Capitalization Adjustment Fraction; and

               (iii) the Cash Consideration shall be the amount per share equal
     to $1.63 per share multiplied by the Capitalization Adjustment Fraction.

          (d) No later than the date which Cowlitz, Cowlitz Bank and Northern in
good faith estimate to be forty-five (45) days prior to the Effective Time.
Cowlitz and Cowlitz Bank shall, at their expense, engage a Loan Examiner to
identify in writing the loans of Northern which in such Loan Examiner's
good-faith judgment should under standard commercial banking practice be
classified as Special Mention, Substandard, Doubtful or Loss (each as defined on
Annex 2.6(d) hereto). The identification and classification of such loans (the
"Identified Loans") shall be delivered by such Loan Examiner to Cowlitz, Cowlitz
Bank and Northern no later than fifteen (15) business days after his engagement.
If Northern does not deliver written notice to Cowlitz of Northern's objection
to such identification and classification of Identified Loans within three (3)
business days after receipt thereof, then such identification and classification
shall be deemed final and binding on the parties. If Northern timely delivers
written notice of its objection, then Northern, Cowlitz and Cowlitz Bank shall
negotiate in good faith for up to three (3) business days thereafter to resolve
such dispute. If such dispute remains unresolved after such period, Northern,
Cowlitz and Cowlitz Bank shall promptly agree on another Loan Examiner to
resolve such dispute. The decision of such other Loan Examiner shall be final
and binding on the parties. The loans established as classified loans pursuant
to this Section 2.6(d) are sometimes herein referred to as the "Identified
Loans." As used herein, Loan Examiner shall mean Fred Singer or any loan
examiner, loan reviewer or loan auditor (other than a current employee, officer
or director of Cowlitz, Cowlitz Bank or Northern) with at least ten (10) years
experience in commercial lending, banking and/or bank examining, including at
least two (2) years as a loan examiner, loan reviewer or loan auditor. Northern
agrees to provide access for the Loan Examiners as provided in Section 7.2(a)
hereof. To the extent permitted by United States generally accepted accounting
principles ("GAAP"), Northern agrees that it will have provided on its books
prior to the Effective Time a reserve for each Identified Loan at least equal to
(A) 5% of the principal amount of each Identified Loan classified as Special
Mention, (B) 15% of the principal amount of each Identified Loan classified as
Substandard, (C) 50% of the principal amount of each Identified Loan classified
as Doubtful and (D) 100% of each Identified Loan classified as Loss, as well as
a general reserve equal to 1 1/2% of the aggregate principal amounts of all
outstanding loans (including without limitation all Identified Loans). Nothing
in the immediately preceding sentence shall be deemed to preclude Northern from
establishing, to the extent permitted by GAAP, reserves allocated to specific
loans in amounts greater than set forth in such preceding sentence.

          (e) As used in this Agreement, "Base Value" shall mean difference
between (i) total stockholders' equity of Northern immediately prior to the
Effective Time as calculated in accordance with GAAP applied on a consistent
basis and (ii) an amount equal to the after-tax reduction in such equity that
would be necessary to reflect additional losses or reserves (to the extent not
taken by Northern prior to the Effective Time) so that, for each Identified
Loan,


                                       7
<PAGE>

Northern would have a reserve at the Effective Time equal to (A) 5% of the
principal amount of each Identified Loan classified as Special Mention, (B) 15%
of the principal amount of each Identified Loan classified as Substandard, (C)
50% of the principal amount of each Identified Loan classified as Doubtful and
(D) 100% of the principal amount of each Identified Loan classified as Loss, as
well as a general reserve of 1 1/2% equal to the aggregate principal amounts of
all outstanding loans (including without limitation all Identified Loans).

          (f) If prior to the Effective Time the outstanding shares of Northern
Common Stock shall, with the prior written consent of Cowlitz required by
Section 6.2, have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in Northern Common Stock's
capitalization, then an appropriate and proportionate adjustment shall be made
to the Merger Consideration.

     2.7 COWLITZ STOCK; COWLITZ BANK STOCK. At and after the Effective Time,
each share of Cowlitz Common Stock and each share of any preferred stock of
Cowlitz issued and outstanding immediately prior to the Effective Time shall
remain an issued and outstanding share of common stock or preferred stock, as
the case may be, of Cowlitz and shall not be affected by the Merger. Each of the
issued and outstanding shares of common stock of Cowlitz Bank immediately prior
to the Effective Time shall remain issued and outstanding after the Merger as
shares of the Surviving Bank, which shall thereafter constitute all of the
issued and outstanding shares of common stock of the Surviving Bank. No capital
stock of Cowlitz Bank will be issued or used in the Merger. The amount of
capital of the Surviving Bank, the number of shares of the Surviving Bank's
capital stock and the par value thereof are set forth on Annex 2.7.

     2.8 OPTIONS. The parties acknowledge and agree that Section 7.1.1 of the
Northern 1994 Stock Option Plan (the "NORTHERN STOCK OPTION PLAN") governs with
respect to the effect of the Merger on each option granted thereunder by
Northern to purchase shares of Northern Common Stock. In accordance with the
Northern Stock Option Plan, holders of such options shall have the right
immediately prior to the Effective Time to exercise such option to the extent
the vesting requirements set forth in the option agreement with respect to such
option have been satisfied. At the Effective Time, each option (vested or
unvested) granted by Northern to purchase shares of Northern Common Stock,
whether under the Northern Stock Option Plan or otherwise, which is outstanding
and unexercised immediately prior thereto shall cease to represent a right to
acquire shares of Northern Common Stock, shall automatically terminate and no
Merger Consideration or any other consideration shall be delivered in exchange
therefor.

     2.9 CHARTER. At the Effective Time, the Charter of Cowlitz Bank, as in
effect at the Effective Time, shall be the Charter of the Surviving Bank, until
thereafter amended in accordance with applicable law.

     2.10 BYLAWS. At the Effective Time, the Bylaws of Cowlitz Bank, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Bank until thereafter amended in accordance with applicable law.


                                       8
<PAGE>

     2.11 BOARD OF DIRECTORS. At the Effective Time, Cowlitz and Cowlitz Bank
shall take all action necessary to appoint William Spicer to the Surviving
Bank's Board of Directors. Except for such appointment, the directors of Cowlitz
Bank immediately prior to the Effective Time shall continue to be the directors
of the Surviving Bank, each to hold office in accordance with the Charter and
Bylaws of the Surviving Bank, until their respective successors are duly elected
or appointed (as the case may be) and qualified. The names and addresses of the
directors of Cowlitz Bank, as well as the address of Mr. Spicer, are set forth
on Annex 2.11

     2.12 OFFICERS. The officers of Cowlitz Bank immediately prior to the
Effective Time shall continue to be officers of the Surviving Bank, each to hold
office in accordance with the Charter and Bylaws of the Surviving Bank and the
terms of their appointment by the Board of Directors. The names and addresses of
the senior officers of Cowlitz Bank are set forth on Annex 2.12.

     2.13 OFFICES. The name and location of each office of Cowlitz Bank and
Northern are set forth on Annex 2.13. These will become offices of the Surviving
Bank at the Effective Time. The principal office of Cowlitz Bank will be the
principal office of the Surviving Bank.

     2.14 STOCK OPTION AGREEMENT. As an inducement to Cowlitz to continue to
pursue the transactions contemplated by this Agreement, Northern will grant to
Cowlitz an option pursuant to the Stock Option Agreement, substantially in the
form of Exhibit 2.14 hereto (the "STOCK OPTION AGREEMENT")

     2.15 TAX CONSEQUENCES. It is intended that, to the extent they so qualify,
the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code and this Agreement shall constitute a "plan of
reorganization" as that term is used in Section 354 of the Code.

     3. EXCHANGE OF SHARES

     3.1 COWLITZ TO MAKE SHARES AVAILABLE. At or prior to the Effective Time,
Cowlitz shall deposit, or shall cause to be deposited, with a bank or trust
company of recognized standing, or Cowlitz's transfer agent (the "EXCHANGE
AGENT"), for the benefit of the holders of Common Certificates, for exchange in
accordance with this Section 3, (i) certificates representing the shares of
Cowlitz Common Stock and an estimated amount of cash that may be payable in lieu
of any fractional shares (such cash, and certificates for shares of Cowlitz
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "STOCK EXCHANGE FUND") to be issued
pursuant to Section 2.5 and paid pursuant to Section 3.2(a) in exchange for
outstanding shares of Northern Common Stock and (ii) cash in an amount (the
"AGGREGATE CASH CONSIDERATION") equal to the product of the Cash Consideration
and the number of shares of Northern Common Stock outstanding at the Effective
Time to be paid pursuant to and in the manner set forth in Section 3.2(b) in
exchange for outstanding shares of Northern Common Stock.

     3.2 EXCHANGE OF CERTIFICATES.


                                       9
<PAGE>

          (a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Common Certificate or
Certificates a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Common Certificates shall
pass, only upon delivery of the Common Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Common Certificates in
exchange for the Merger Consideration, into which the shares of Northern Common
Stock represented by such Common Certificate or Certificates shall have been
converted pursuant to this Agreement. Subject to Section 2.5(d), upon proper
surrender of a Common Certificate for exchange and cancellation to the Exchange
Agent, together with such properly completed letter of transmittal, duly
executed, the holder of such Common Certificate shall be entitled to receive in
exchange therefor, as applicable, (i) a certificate representing that number of
shares of Cowlitz Common Stock to which such holder of Northern Common Stock
shall have become entitled pursuant to the provisions of Section 2 hereof, and
(ii) a check representing the amount of cash payable in lieu of fractional
shares of Cowlitz Common Stock, if any, which such holder has the right to
receive in respect of the Common Certificate surrendered pursuant to the
provisions of this Section 3, and the Common Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash payable
in lieu of fractional shares.

          (b) ESCROW.

               (i) In order to ensure that Cowlitz Bank shall be properly
     reimbursed for certain losses, the Exchange Agent shall, promptly upon
     receipt of the Aggregate Cash Consideration, deliver an amount (the
     "ESCROWED FUNDS") equal to the product of (A) the Cash Consideration and
     (B) the total number of issued and outstanding shares of Northern Common
     Stock as of the Effective Time (excluding all Dissenting Shares), to an
     escrow agent (the "ESCROW AGENT") to be held in escrow (the "ESCROW")
     pursuant to an escrow agreement in substantially the form attached hereto
     as Exhibit 3.2, with such changes as may be reasonably requested by the
     Escrow Agent and subject to the addition of Schedule 2 to the Escrow
     Agreement in accordance with this Section 3.2(b) (the "ESCROW AGREEMENT").
     The Escrow Agent shall be a bank, trust company or other entity mutually
     agreed upon by Cowlitz and Northern.

               (ii) A committee (the "COMMITTEE") shall be appointed by Northern
     and Cowlitz Bank to deliver instructions to the Escrow Agent with respect
     to the disbursement of the Escrowed Funds. Northern hereby appoints John
     Walrod and Kurt Wollenberg to serve on the Committee as representatives of
     the holders of Northern Common Stock (the "NORTHERN MEMBERS") and Cowlitz
     Bank hereby appoints Charles Jarrett and Larry Ellis to serve on the
     Committee as representatives of Cowlitz Bank (the "COWLITZ BANK MEMBERS").
     Cowlitz Bank shall have the right, from time to time and in its sole
     discretion, to appoint a substitute Cowlitz Bank Member upon written notice
     to the Escrow Agent and the Northern Members. If a Northern Member should
     prior to the Effective Time become unable or unwilling to serve on the
     Committee, such Northern Member shall give Northern and Cowlitz prompt
     prior written notice thereof, and Northern shall have the right, in its
     sole discretion, to appoint a substitute Northern Member no later than the
     earlier of (A) the Effective Time or (B) five (5) business days


                                       10
<PAGE>

     after delivery of such notice. If a Northern Member should after the
     Effective Time become unable or unwilling to continue to serve on the
     Committee after the Effective Time, such Northern Member shall give Cowlitz
     Bank prior written notice thereof, and within five (5) business days after
     delivery of such notice, the remaining Northern Member shall have the
     right, in his or her sole discretion, to appoint a substitute Northern
     Member; PROVIDED, that such Substitute Northern Member (x) must have been a
     Stockholder at the Effective Time , (y) (1) must have been a director or
     officer of Northern at the Effective Time or (2) in the remaining Northern
     Member's reasonable judgment, must be a sophisticated financial investor
     and (z) is not a director, officer or employee of Cowlitz or Cowlitz Bank.
     The parties agree that no Northern Member or Cowlitz Bank Member shall have
     any liability to any party hereto or any holder of Northern Common Stock
     with respect to acts or omissions in his or her capacity as a member of the
     Committee, unless it is established in a final judicial determination by
     clear and convincing evidence that any decision or action was undertaken
     with deliberate intent to injure the holders of Northern Common Stock or
     with reckless disregard for the best interest of such holders, and in any
     event, the liability shall be limited to actual, proximate, quantifiable
     damages.

               (iii) The purpose of the Escrow shall be to ensure that Cowlitz
     Bank is reimbursed for losses relating to the Identified Loans. Schedule 2
     to the Escrow Agreement shall be completed prior to the Effective Time by
     listing thereon each Identified Loan (as determined pursuant to Section
     2.6(d)) and the Threshold Amount for each Identified Loan. Except as
     provided in the immediately succeeding sentence, the "Threshold Amount"
     shall mean for each Identified Loan the lesser of (A) the difference
     between (i) the reserve for such Identified Loan on the books of Northern
     immediately prior to the Effective Time (excluding any portion of the
     general reserve for all oustanding loans) and (ii) the Loan Adjustment
     Factor and (B) (i) 5% of the outstanding principal amount if the Identified
     Loan is classified as Special Mention pursuant to the procedure set forth
     in Section 2.6(d), less the Loan Adjustment Factor, (ii) 15% of the
     principal amount if the Identified Loan is classified as Substandard, less
     the Loan Adjustment Factor, (iii) 50% of the principal amount if the
     Identified Loan is classified as Doubtful, less the Loan Adjustment Factor,
     and (iv) 100% of the principal amount if the Identified Loan is classified
     as Loss, less the Loan Adjustment Factor. Notwithstanding the preceding
     sentence, if the Base Value exceeds $4,707,139 and the amount determined
     pursuant to clause (A) of the preceding sentence for an Identified Loan
     exceeds the amount determined pursuant to clause (B) for such Identified
     Loan, then the Threshold Amount for such Identified Loan shall equal the
     amount determined pursuant to clause (A) above. "Loan Adjustment Factor"
     will be $0 if Northern has on its books immediately prior to the Effective
     Time a general reserve equal to at least 1 1/2% of the aggregate principal
     amounts of all outstanding loans (including without limitation all
     Identified Loans). If such general reserve is less than 1 1/2%, then the
     Loan Adjustment Factor will equal the different between (i) 1 1/2% and (ii)
     the percentage of the remaining general reserve that would be applicable to
     the Identified Loans after moving sufficient general reserves to the
     non-Identified Loans so that all non-Identified Loans would have a general
     reserve of 1 1/2%.


                                       11
<PAGE>

               (iv) Reimbursements shall be made only for such losses identified
     during the period from the Effective Date to the date (the "ESCROW
     EXPIRATION DATE") which is 24 months after the Effective Date. Cowlitz Bank
     shall be entitled to be reimbursed for any loss on an Identified Loan to
     the extent that such loss exceeds the Threshold Amount for such Identified
     Loan ("REIMBURSABLE LOSSES"); PROVIDED, HOWEVER, that the aggregate of all
     of such reimbursements shall not exceed the Escrowed Funds. The amount of
     Reimbursable Losses shall be calculated in the manner set forth in the
     Escrow Agreement. Interest earned on the Aggregate Cash Consideration while
     held in the Escrow shall remain in the Escrow and shall not be available to
     reimburse Cowlitz Bank for Reimbursable Losses. Fees and any other amounts
     owed to the Escrow Agent shall be paid, first, out of the interest earned
     on the Escrowed Funds and, second, out of the Escrowed Funds.

               (v) The Escrow shall terminate upon the later to occur of (x) the
     Escrow Expiration Date and (y) the proper reimbursement to Cowlitz Bank of
     the Reimbursable Losses. Upon termination of the Escrow, the Escrow Agent
     shall deliver all amounts then in Escrow (after deduction for expenses and
     costs) to the Exchange Agent (the "CLOSING ESCROW AMOUNT"). Subject to
     Section 2.5(d), the Exchange Agent shall promptly pay, to each holder of
     record of a Common Certificate who has properly surrendered such Common
     Certificate as provided in Section 3.2(a), an amount for each share of
     Northern Common Stock represented by such Common Certificate equal to (A)
     the Closing Escrow Amount divided by (B) the number of shares of Northern
     Common Stock outstanding at the Effective Time

               (vi) The Cowlitz Members shall not have any duty to represent the
     interests of shareholders of Northern and shall have no liability
     whatsoever to such shareholders. The Northern Members will represent the
     interests of shareholders of Northern, but no Northern Member shall have
     any liability to any holder of Northern Common Stock with respect to his or
     her capacity as a member of the Committee, unless it is established in a
     final judicial determination by clear and convincing evidence that any
     decision or action was undertaken with deliberate intent to injure the
     holders of Northern Common Stock or with reckless disregard for the best
     interests of such holders, and in any event, the liability shall be limited
     to actual, proximate, quantifiable damages.

          (c) No dividends or other distributions with a record date after the
Effective Time with respect to Cowlitz Common Stock shall be paid to the holder
of any unsurrendered Common Certificate entitled to receive shares of Cowlitz
Common Stock hereunder until the holder thereof shall surrender such Common
Certificate in accordance with this Section 3. After the surrender of a Common
Certificate in accordance with this Section 3, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Cowlitz Common Stock represented by such Common Certificate.

          (d) If any certificate representing shares of Cowlitz Common Stock is
to be issued in the name of or cash is to be paid to a person other than the
registered holder of the


                                       12
<PAGE>

Common Certificate surrendered in exchange therefor, it shall be a condition of
the issuance thereof that the Common Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing shares of
Cowlitz Common Stock in the name of and payment of cash to any person other than
the registered holder of the Common Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.

          (e) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Northern of the shares of Northern Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Common Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of Cowlitz Common Stock and payment of cash as
provided in this Section 3.

          (f) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Cowlitz Common Stock
shall be issued upon the surrender for exchange of Common Certificates, no
dividend or distribution with respect to Cowlitz Common Stock shall be payable
on or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
stockholder of Cowlitz. In lieu of the issuance of any such fractional share,
Cowlitz shall pay to each former holder of Northern Common Stock who otherwise
would be entitled to receive such fractional share an amount in cash determined
by multiplying (i) the Market Value of Cowlitz Common Stock as of the Effective
Date by (ii) the fraction of a share of Cowlitz Common Stock to which such
holder would otherwise be entitled to receive pursuant to Section 2.5 hereto.
For purposes of determining any such fractional share interests, all shares of
Northern Common Stock owned by any Northern stockholder shall be combined so as
to calculate the maximum number of shares of Cowlitz Common Stock issuable to
such holder of Northern Common Stock and no such holder shall receive cash in an
amount equal to or greater than the Stock Consideration per share.

          (g) Any portion of the Stock Exchange Fund that remains unclaimed by
the stockholders of Northern for twelve months after the Effective Time shall be
paid, at the request of Cowlitz, to Cowlitz. Any stockholders of Northern who
have not theretofore complied with this Section 3 shall thereafter look only to
Cowlitz for payment of the shares of Cowlitz Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on the Cowlitz Common
Stock deliverable in respect of each share of Northern Common Stock held by such
stockholder at the Effective Time as determined pursuant to this Agreement, in
each case, without any interest thereon. After the Exchange Agent has received
the Closing Escrow Amount and made the payments to former holders of Northern
Common Stock as required by Section 3(b), any unpaid amounts shall promptly be
delivered by the Exchange Agent to Cowlitz. Any holders of Northern Common Stock
who have not theretofore complied with this Section 3 shall thereafter look only
to Cowlitz for payment of the Cash Consideration (as adjusted by the amounts
paid to Cowlitz Bank from the Escrow with respect to Reimbursable Losses) to
which


                                       13
<PAGE>

they are entitled pursuant to this Agreement, without any additional interest
thereon. Notwithstanding anything to the contrary contained herein, none of
Cowlitz, Northern, the Exchange Agent or any other person shall be liable to any
former holder of shares of Northern Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.

          (h) In the event any Common Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Common Certificate to be lost, stolen or destroyed and, if
required by Cowlitz, the posting by such person of a bond in such amount as
Cowlitz may determine is reasonably necessary as indemnity against any claim
that may be made against it with respect to such Common Stock Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Common
Certificate the shares of Cowlitz Common Stock and cash (including cash in lieu
of fractional shares) deliverable in respect thereof pursuant to this Agreement.

     4. REPRESENTATIONS AND WARRANTIES OF NORTHERN

     Northern hereby represents and warrants to Cowlitz and Cowlitz Bank as
follows:

     4.1 CORPORATE ORGANIZATION. Northern is a banking corporation duly
organized and validly existing under the laws of the State of Oregon. Northern
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have nor
reasonably be expected to have a Material Adverse Effect (as defined below) on
Northern. As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" means,
with respect to Northern, a material adverse effect on the business, results of
operations, financial condition or prospects of Northern or a material adverse
effect on Northern's ability to consummate the transactions contemplated hereby
on a timely basis; PROVIDED, HOWEVER, that a Material Adverse Effect on Northern
shall not be deemed to have occurred as a result of (i) any changes in laws,
regulations or GAAP or (ii) any changes in general economic conditions affecting
commercial banking businesses generally. The deposits of Northern are insured by
the Federal Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund (the "BIF") to the fullest extent permitted by law. The copies of
the Charter and Bylaws of Northern which have previously been made available to
Cowlitz are true, complete and correct copies of such documents as in effect as
of the date of this Agreement. Northern has no Subsidiaries.

     4.2 CAPITALIZATION.

          (a) The authorized capital stock of Northern consists of 10,000,000
shares of Northern Common Stock and no shares of preferred stock. At the close
of business on August 31, 1999, there were 1,225.597 shares of Northern Common
Stock outstanding and no shares of Northern Common Stock held in Northern's
treasury. As of September 13, 1999, no shares of Northern Common Stock were
reserved for issuance, except for 868,032 shares of Northern


                                       14
<PAGE>

Common Stock reserved for issuance upon the exercise of stock options pursuant
to the Northern Stock Option Plan, 738,211 shares of Northern Common Stock
reserved for issuance upon exercise of the stock options set forth in Section
4.2(a) of the disclosure schedule of Northern delivered to Cowlitz concurrently
herewith (the "NORTHERN DISCLOSURE SCHEDULE"), and 243,893 shares of Northern
Common Stock reserved for issuance upon exercise of the Option (as defined in
the Stock Option Agreement). All of the issued and outstanding shares of
Northern Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except (i)
as set forth in Section 4.2(a) of the Northern Disclosure Schedule, (ii) the
Option and (iii) as set forth elsewhere in this Section 4.2(a), Northern does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Northern Common Stock or Northern Preferred Stock or
any other equity securities of Northern or any securities representing the right
to purchase or otherwise receive any shares of Northern Common Stock or Northern
Preferred Stock. Except as set forth in Section 4.2(a) of the Northern
Disclosure Schedule, since August 31, 1999, Northern has not issued any shares
of its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than the exercise of employee stock options
granted prior to such date and as disclosed in Section 4.2(a) of the Northern
Disclosure Schedule. Northern has no stockholder rights plan, anti-takeover
plan, "poison pill" or other similar plan.

          (b) Except as disclosed in Section 4.2(b) of the Northern Disclosure
Schedule, Northern does not beneficially own or control, directly or indirectly,
any shares of stock or other equity interest in any depository institution (as
defined in 12 U.S.C. Sections 1813(c)), corporation, firm, partnership, joint
venture or other entity.

     4.3 AUTHORITY; NO VIOLATION.

          (a) Northern has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Northern. The Board of Directors of Northern has
directed that this Agreement and the Merger be submitted to Northern's
stockholders for approval at a meeting of such stockholders and, except for the
approval of this Agreement and the Merger by the affirmative vote of the holders
of two-thirds of the voting power represented by the outstanding shares of
Northern Common Stock, no other corporate proceedings on the part of Northern
are necessary to approve this Agreement or the Stock Option Agreement or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Stock Option Agreement have been duly and validly executed and delivered by
Northern and (assuming due authorization, execution and delivery by Cowlitz and
Cowlitz Bank) each constitutes a valid and binding obligation of Northern,
enforceable against Northern in accordance with its terms, except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy,


                                       15
<PAGE>

insolvency, fraudulent transfer, receivership, or conservatorship and similar
laws affecting creditors' rights and remedies generally.

          (b) Except as set forth in Section 4.3(b) of the Northern Disclosure
Schedule, neither the execution and delivery of this Agreement or the Stock
Option Agreement by Northern nor the consummation by Northern of the
transactions contemplated hereby or thereby, nor compliance by Northern with any
of the terms or provisions hereof or thereof, will (i) violate any provision of
the Charter or Bylaws of Northern or (ii) assuming that the consents and
approvals referred to in Section 4.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Northern or any of its properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any liens, charges, pledges, encumbrances, mortgages,
adverse rights or claims, or security interests whatsoever ("LIENS") upon any of
the properties or assets of Northern under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Northern is a party,
or by which Northern or any of its properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
will not have and would not reasonably be expected to have a Material Adverse
Effect on Northern.

     4.4 CONSENTS AND APPROVALS. Except for (i) the approval of this Agreement
and the Merger by the FDIC, the Washington Director and the Oregon Director,
(ii) approval of the listing of Cowlitz Common Stock to be issued in the Merger
on The Nasdaq National Market ("NASDAQ"), (iii) the filing with the Securities
and Exchange Commission (the "SEC") and the FDIC of a proxy statement in
definitive form relating to the meetings of Northern's and Cowlitz's
stockholders to be held to vote on approval of this Agreement and the Merger
(the "PROXY STATEMENT/PROSPECTUS") and the filing and declaration of
effectiveness of the registration statement on Form S-4 (the "S-4") in which the
Proxy Statement/Prospectus will be included as a prospectus and any filings or
approvals under applicable state securities laws, (iv) the filing of the
Articles of Merger with the Washington Director, the Washington Secretary and
the Oregon Director, (v) the approval of this Agreement and the Merger by the
requisite votes of the stockholders of Northern, the approval of the issuance of
the shares of Cowlitz Common Stock in the Merger by the shareholders of Cowlitz
and the approval of this Agreement and the Merger by the sole shareholder of
Cowlitz Bank, (vi) the consents and approvals set forth in Section 4.4 of the
Northern Disclosure Schedule, and (vii) the consents and approvals of third
parties which are not Governmental Entities (as defined below), the failure of
which to obtain will not have and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect, no consents or
approvals of, or filings or registrations with, any court, administrative agency
or commission or other governmental authority or instrumentality or
self-regulatory organization (each a "GOVERNMENTAL ENTITY") or with any third
party are necessary in connection with (A) the execution and delivery by
Northern of this Agreement and (B) the consummation by Northern of the Merger
and the other transactions contemplated hereby.


                                       16
<PAGE>

     4.5 REPORTS. Northern has timely filed all material reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file since January 1, 1996 with any
Governmental Entity and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Governmental
Entity in the regular course of the business of Northern or as set forth in
Section 4.5 of the Northern Disclosure Schedule, no Governmental Entity has
initiated any proceeding or, to the best knowledge of Northern, threatened an
investigation into the business or operations of Northern since January 1, 1996.
Except as set forth in Section 4.5 of the Northern Disclosure Schedule, there is
no material unresolved violation, criticism or exception by any Governmental
Entity with respect to any report or statement relating to any examinations of
Northern.

     4.6 FINANCIAL STATEMENTS. Northern has previously made available to Cowlitz
copies of (a) the balance sheets of Northern, as of December 31, for the fiscal
years 1997 and 1998, and the related statements of operations, stockholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in Northern's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 filed with the FDIC under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), in each case accompanied by the audit report of
Moss Adams LLP, independent auditors with respect to Northern, (b) the unaudited
balance sheets of Northern as of June 30, 1998 and June 30, 1999 and the related
unaudited statements of operations, stockholders, equity and cash flows for the
three-month periods then ended, as reported in Northern's Quarterly Report on
Form 10-QSB for the period ended June 30, 1999 filed with the FDIC under the
Exchange Act and (c) the amended and restated financial statements on and for
the period ended June 30, 1999 as reported in Northern's Amended Quarterly
Report on Form 10-QSB/A filed with the FDIC under the Exchange Act. Each of the
financial statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present, and the financial statements referred
to in Section 7.11 hereof (including the related notes, where applicable) will
fairly present (subject, in the case of the unaudited statements, to normal
recurring adjustments, none of which are expected to be material in nature or
amount), the results of the operations and changes in stockholders' equity and
financial position of Northern for the respective fiscal periods or as of the
respective dates therein set forth. Each of such financial statements (including
the related notes, where applicable) complies, and the financial statements
referred to in Section 7.11 hereof (including the related notes, where
applicable) will comply, in all material respects with applicable accounting
requirements and with the published rules and regulations of the FDIC with
respect thereto and each of such financial statements (including the related
notes, where applicable) has been, and the financial statements referred to in
Section 7.11 (including the related notes, where applicable) will be, prepared
in accordance with GAAP consistently applied during the periods involved, except
in each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-QSB. The books and records
of Northern have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.

     4.7 BROKER'S FEES. Except as set forth in Section 4.7 of the Northern
Disclosure Schedule, neither Northern nor any of its officers or directors has
employed any broker or finder


                                       17
<PAGE>

or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement. Copies
of all agreements with each broker or finder listed in Section 4.7 of the
Northern Disclosure Schedule have previously been furnished to Cowlitz.

     4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.

          (a) Except as publicly disclosed in the Northern Reports (as defined
in Section 4.12) filed prior to the date hereof, or as set forth in Section
4.8(a) of the Northern Disclosure Schedule, since December 31, 1998, no event
has occurred which has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Northern.

          (b) Except as publicly disclosed in the Northern Reports filed prior
to the date hereof, or as set forth in Section 4.8(b) of the Northern Disclosure
Schedule, since December 31, 1998, Northern has carried on its business in all
material respects in the ordinary course of business, and Northern has not (i)
except for normal increases in the ordinary course of business consistent with
past practice and except as required by applicable law, increased the wages,
salaries, compensation, pension or other fringe benefits or perquisites payable
to any officer or director, other than persons newly hired for or promoted to
such position, from the amount thereof in effect as of December 31, 1998, or
granted any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus, in each case to any
such officer or director, other than pursuant to preexisting agreements,
arrangements or bonus plans, or (ii) suffered any strike, work stoppage,
slow-down or other labor disturbance.

     4.9 LEGAL PROCEEDINGS.

          (a) Except as set forth in Section 4.9(a) of the Northern Disclosure
Schedule, Northern is not a party to any, and there are no pending or, to the
best of Northern's knowledge, threatened legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against Northern or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is a significant
possibility of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have or reasonably be expected to have
a Material Adverse Effect on Northern.

          (b) Except as set forth in Section 4.9(b) of the Northern Disclosure
Schedule, there is no injunction, order, judgment, decree or regulatory
restriction specifically imposed upon Northern or its assets which has had, or
would reasonably be expected to have, a Material Adverse Effect on Northern or
the Surviving Bank.

     4.10 TAXES.

          (a) Except as set forth in Section 4.10(a) of the Northern Disclosure
Schedule: (i) Northern has (A) duly and timely filed (including pursuant to
applicable extensions


                                       18
<PAGE>

granted without penalty) all Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns are true, correct
and complete, and (B) paid in full on a timely basis, or established an adequate
reserve (excluding reserves for deferred taxes) in the financial statements of
Northern (in accordance with GAAP) for all Taxes (as hereinafter defined) with
respect to items or periods covered by such Tax Returns (whether or not shown or
reportable on such Tax Returns); (ii) no deficiencies for any Taxes (as
hereinafter defined) have been proposed, asserted or assessed against or with
respect to Northern and no audit by any taxing authority is in process, pending
or threatened ; (iii) there are no liens for Taxes upon the assets of Northern
except for statutory liens for current Taxes not yet due; (iv) Northern is not
and has never been a party to any tax sharing agreement; (v) Northern has not
waived any statute of limitations with respect to any Taxes or Tax Returns or
agreed to any extension of time with respect to the assessment of Taxes or
deficiencies; (vi) Northern has withheld and paid over all Taxes required to
have been withheld and paid over and complied with all information reporting and
backup withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party; and (vii) Northern has
never been a member of an "affiliated group" within the meaning of Section 1504
of the Code filing a consolidated federal income Tax Return (other than a group
the common parent of which was Northern) or has any liability for the Taxes of
any other person (other than Northern) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor, by contract or otherwise.

          (b) For purposes of this Agreement, "TAXES" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign taxing authority, including, but not limited to income,
excise, property, sales, transfer, franchise, payroll, withholding, social
security or other similar taxes, including any interest or penalties, additions
to tax or additional amounts attributable thereto.

          (c) For purposes of this Agreement, "TAX RETURN" shall mean any
return, report, information return or other document (including any related or
supporting information) with respect to Taxes, including without limitation all
information returns or reports with respect to backup withholding and other
payments to third parties.

          (d) Northern has not filed a consent to the application of Section
341(f) of the Code.

          (e) Northern has made available to Cowlitz true and complete copies of
all income tax audit reports and closing or other agreements related to Taxes
and all federal and state income or franchise tax returns Northern has filed
since its inception.

          (f) Northern does not do business in or derive income from any state,
local, territorial or foreign taxing jurisdiction other than those for which all
Tax Returns have been furnished.

          (g) Northern is not and has never been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.


                                       19
<PAGE>

          (h) Northern has not entered into any agreement that would require it
to make any payment that is not deductible pursuant to Section 280G, 404 or 162
of the Code.

          (i) Northern has not executed a power of attorney with respect to
Taxes.

          (j) Northern has not agreed, and is not required to make, any
adjustment under Section 481 of the Code by reason of a change in accounting
method.

     4.11 EMPLOYEES; EMPLOYEE BENEFIT PLANS.

          (a) Section 4.11(a) of the Northern Disclosure Schedule sets forth a
true and complete list of each material employee benefit plan, arrangement or
agreement and any amendments or modifications thereof (including, without
limitation, all stock purchase, stock option, severance, employment,
change-in-control, health/welfare and Code Section 125 plans, fringe benefit,
bonus, incentive, deferred compensation and other agreements, programs, policies
and arrangements, whether or not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is maintained as of the date of
this Agreement (the "PLANS") by Northern or by any trade or business, whether or
not incorporated (an "ERISA AFFILIATE"), all of which together with Northern
would be deemed a "single employer' within the meaning of Section 4001 of ERISA.

          (b) Northern has previously made available to Cowlitz true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial reports for each Plan (if applicable) for each
of the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for each Plan.

          (c) Except as set forth in Section 4.11(c) of the Northern Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined to be so qualified
by the Internal Revenue Service or will be submitted for such determination
within the applicable remedial amendment period, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accrued benefits, (iv) no
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Northern or any ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable law, (x) death benefits
or retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Northern or any ERISA Affiliates or (z) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary), (v) to the best knowledge of Northern no liability under Title IV
of ERISA has been incurred by Northern or any ERISA Affiliate that has not been
satisfied in full (other than payment of premiums not yet due to the Pension
Benefit Guaranty Corporation (the "PBGC")), and no condition exists that
presents a


                                       20
<PAGE>

material risk to Northern or any ERISA Affiliate of incurring a material
liability thereunder, (vi) no Plan is a "multi-employer pension plan," as such
term is defined in Section 3(37) of ERISA, (vii) to the best knowledge of
Northern all contributions or other amounts payable by Northern as of the
Effective Time with respect to each Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) to the best knowledge of Northern neither Northern nor any ERISA
Affiliate has engaged in a transaction in connection with which Northern or any
ERISA Affiliate could be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of Northern
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans or any trusts
related thereto which would, individually or in the aggregate, have or be
reasonably expected to have a Material Adverse Effect on Northern.

          (d) Except as set forth in Section 4.11(d) of the Northern Disclosure
Schedule, no Plan exists which provides for or could result in the payment to
any Northern employee of any money or other property or rights or accelerate the
vesting or payment of such amounts or rights to any Northern employee as a
result of the transactions contemplated by this Agreement, including the Merger,
whether or not such payment or acceleration would constitute a parachute payment
within the meaning of Code Section 280G. Except as set forth in Section 4.11(d)
of the Northern Disclosure Schedule, since December 31, 1998, Northern has not
taken any action that would result in the payment of any amounts, or the
accelerated vesting of any rights or benefits, under any Plan set forth in
Section 4.11(d) of the Northern Disclosure Schedule.

          (e) To the best knowledge of Northern, except as set forth in Section
4.11(e) of the Northern Disclosure Schedule, Northern is not a party to and is
not bound by any contract, arrangement or understanding (whether written or
oral) (i) with any consultants receiving in excess of $50,000 annually or (ii)
with respect to the term of employment or compensation of any employees. To the
best knowledge of Northern, except as provided under the Plans set forth in
Sections 4.11(d) and (e) of the Northern Disclosure Schedule and other
agreements or arrangements set forth in Sections 4.11(d) and (e) of the Northern
Disclosure Schedule, consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from Northern to any officer or employee thereof. Northern has
previously delivered or made available to Cowlitz true and complete copies of
all consulting agreements calling for payments in excess of $50,000 annually and
employment and deferred compensation agreements (or forms thereof) that are in
writing to which Northern is a party.

          (f) Except as set forth in Section 4.11(f) of the Northern Disclosure
Schedule, no current employee of Northern received aggregate remuneration
(bonus, salary and commission) in excess of $100,000 for 1998 or would
reasonably be expected to receive aggregate remuneration (excluding severance or
other payments which, pursuant to an agreement or arrangement set forth in
Section 4.11(e) of the Northern Disclosure Schedule, are made as a


                                       21
<PAGE>

result of consummation of the transactions contemplated by this Agreement,
either alone or upon the occurrence of any additional acts or events) in excess
of $100,000 in 1999.

     4.12 FDIC REPORTS. Northern has previously made available to Cowlitz an
accurate and complete copy of each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 and
prior to the date hereof by Northern or any of its Subsidiaries with the FDIC
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Exchange Act (the "NORTHERN REPORTS"), and no such registration statement,
offer circular, prospectus, report, schedule or proxy statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Northern has timely filed all Northern Reports and other documents required to
be filed by them under the Securities Act and the Exchange Act, and, as of their
respective dates, all Northern Reports complied in all material respects with
the published rules and regulations of the FDIC with respect thereto.

     4.13 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in Section 4.13 of
the Northern Disclosure Schedule, Northern holds, and has at all times held, all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business under and pursuant to all, and has complied with and is
not in violation in any material respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Northern, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or violation would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Northern, and Northern does not know of, and has not
received notice of, any violations of any of the above which, individually or in
the aggregate, would have or would reasonably be expected to have a Material
Adverse Effect on Northern.

     4.14 CERTAIN CONTRACTS.

          (a) Except as publicly disclosed in the Northern Reports filed prior
to the date hereof or as set forth in Section 4.14(a) of the Northern Disclosure
Schedule, Northern is not a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement, (ii) which limits the freedom of
Northern to compete in any line of business, in any geographic area or with any
person, or (iii) with or to a labor union or guild (including any collective
bargaining agreement). Each contract, arrangement, commitment or understanding
of the type described in this Section 4.14(a), whether or not publicly disclosed
in the Northern Reports filed prior to the date hereof or set forth in Section
4.14(a) of the Northern Disclosure Schedule, is referred to herein as a
"NORTHERN CONTRACT," and Northern does not know of, and has not received notice
of, any violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have or would reasonably be expected to
have a Material Adverse Effect on Northern. Northern has made available all
contracts which involved payments by Northern in fiscal year 1998 of more


                                       22
<PAGE>

than $100,000 or which could reasonably be expected to involve payments during
fiscal year 1999 of more than $100,000.

          (b) Except as set forth in Section 4.14(b) of the Northern Disclosure
Schedule, each Northern Contract is valid and binding and in full force and
effect, (ii) Northern has in all material respects performed all obligations
required to be performed by it to date under each Northern Contract, and (iii)
no event or condition exists which constitutes or, after notice or lapse of time
or both, would constitute a material default on the part of Northern under any
such Northern Contract, except, in each case, where such invalidity, failure to
be binding, failure to so perform or default, individually or in the aggregate,
would not have or reasonably be expected to have a Material Adverse Effect on
Northern.

     4.15 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in Section
4.15 of the Northern Disclosure Schedule, Northern is not subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has adopted any board resolutions at the request of (each,
whether or not set forth in Section 4.15 of the Northern Disclosure Schedule, a
"REGULATORY AGREEMENT"), any Governmental Entity that restricts the conduct of
its business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Northern been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.

     4.16 UNDISCLOSED LIABILITIES. Except (i) for those liabilities that are
fully reflected or reserved against on the balance sheet of Northern included in
the Northern Form 10-KSB for the year ended December 31, 1998, (ii) for
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1998, or (iii) for those liabilities set forth in
Section 4.16 of the Northern Disclosure Schedule, Northern has not incurred any
liability of any nature whatsoever (whether absolute, accrued or contingent or
otherwise and whether due or to become due) that, either alone or when combined
with all the liabilities not described in clause (i), (ii) or (iii), has had, or
would be reasonably expected to have, a Material Adverse Effect on Northern.

     4.17 ANTI-TAKEOVER PROVISIONS. The Board of Directors of Northern has taken
all necessary action so that any applicable provisions of the takeover laws of
any state do not and will not apply to this Agreement, the Merger or the
transactions contemplated hereby, the Stock Option Agreement or the exercise of
the Option, including without limitation, the adoption by the Board of Directors
of Northern of resolutions specifically approving this Agreement, the Merger and
the transactions contemplated hereby, the Stock Option Agreement and the
exercise of the Option.

     4.18 NORTHERN INFORMATION. The information relating to Northern and its
Subsidiaries to be provided by Northern for inclusion in the Proxy
Statement/Prospectus and the S-4, or in any other document filed with any other
Governmental Entity in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary


                                       23
<PAGE>

to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Proxy Statement/Prospectus (except for such portions
thereof as relate only to Cowlitz or any of its Subsidiaries) will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.

     4.19 TITLE TO PROPERTY.

          (a) REAL PROPERTY. Section 4.19(a) of the Northern Disclosure Schedule
contains a description of all interests in real property (other than real
property security interests received in the ordinary course of business or real
property acquired through foreclosure or deed in lieu thereof or other
realization proceedings ("REO")), whether owned, leased or otherwise claimed,
including a list of all leases of real property, in which Northern thereof has
or claims in interest as of the date of this Agreement and any guarantees of any
such leases by any of such parties. True and complete copies of such leases have
previously been delivered or made available to Cowlitz, together with all
amendments, modifications, agreements or other writings related thereto which
are in the possession of Northern. Except as disclosed on Section 4.19(a) of the
Northern Disclosure Schedule, to the best knowledge of Northern, each such lease
is valid and binding as between Northern and the other party or parties thereto,
and the occupant is a tenant or possessor in good standing thereunder, free of
any default or breach whatsoever (except as otherwise disclosed on Section
4.19(a) of the Northern Disclosure Schedule) and quietly enjoys the premises
provided for therein. Except as disclosed on Section 4.19(a) of the Northern
Disclosure Schedule, Northern has owner's policies of title insurance insuring
it to be the owner of all real property owned by it on the date of this
Agreement, free and clear of all Liens, except Liens for current taxes not yet
due and payable and other standard exceptions commonly found in title policies
in the jurisdiction where such real property is located, and such encumbrances
and imperfections of title, if any, as do not materially detract from the value
of the properties and do not materially interfere with the present or proposed
use of such properties or otherwise materially impair such operations. All real
property and fixtures material to the business, operations of financial
condition of Northern are in substantially good condition and repair.

          (b) PERSONAL PROPERTY. Northern has good, valid and marketable title
to all tangible personal property owned by it on the date hereof, free and clear
of all Liens, except as publicly disclosed in the Northern Reports filed prior
to the date hereof or as disclosed on Section 4.19(b) of the Northern Disclosure
Schedule. With respect to personal property used in the business of Northern
which is leased rather than owned, Northern is not in default under the terms of
any such lease the loss of which would have a Material Adverse Effect on
Northern.

     4.20 INSURANCE. Section 4.20 of the Northern Disclosure Schedule contains a
true and complete list and a brief description (including name of insurer,
agent, coverage, premium and expiration date) of all insurance policies in force
on the date hereof with respect to the business and assets of the Northern
(other than insurance policies under which Northern thereof is named as a loss
payee, insured or additional insured as a result of its position as a secured
lender on specific Loans and mortgage insurance policies on specific Loans).
Northern is in compliance with all of the material provisions of their insurance
policies and are not in default under any of the material terms thereof. Each
such policy is outstanding and in full force and


                                       24
<PAGE>

effect and, except as set forth on Section 4.20 of the Northern Disclosure
Schedule, Northern is the sole beneficiary of such policies. All premiums and
other payments due under any such policy have been paid.

     4.21 ENVIRONMENTAL LIABILITY. Except as set forth in Section 4.21 of the
Northern Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to result in the
imposition of, on Northern any liability or obligation arising under common law
standards relating to environmental protection, human health or safety, or
arising under any local, state or federal environmental statute, regulation or
ordinance, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (collectively, the
"ENVIRONMENTAL LAWS"), pending or, to the knowledge of Northern, threatened
against Northern, which liability or obligation would have or would reasonably
be expected to have a Material Adverse Effect on Northern. To the knowledge of
Northern, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
would have or would reasonably be expected to have a Material Adverse Effect on
Northern. To the knowledge of Northern, during or prior to the period of (i) its
ownership or operation of any of their respective current properties, (ii) its
participation in the management of any property, or (iii) its holding of a
security interest or other interest in any property, there were no releases or
threatened releases of hazardous, toxic, radioactive or dangerous materials or
other materials regulated under Environmental Laws in, on, under or affecting
any such property which would reasonably be expected to have a Material Adverse
Effect on Northern. Northern is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or obligation
pursuant to or under any Environmental Law that would have or would reasonably
be expected to have a Material Adverse Effect on Northern.

     4.22 OPINION OF FINANCIAL ADVISOR. Northern has received the opinion of
D.A. Davidson & Co., dated September 10, 1999, to the effect that, as of such
date, the Merger Consideration is fair from a financial point of view to the
holders of Northern Common Stock. A true and complete copy of such opinion has
been delivered to Cowlitz on or prior to the date of this Agreement.

     4.23 PATENTS, TRADEMARKS, ETC. Northern owns or possesses all legal rights
to use all proprietary rights, including without limitation all trademarks,
trade names, service marks and copyrights, that are material to the conduct of
its existing business. Except for the agreements listed on Section 4.23 of the
Northern Disclosure Schedule, Northern is not bound by or a party to any
options, licenses or agreements of any kind with respect to any trademarks,
service marks or trade names which it claims to own. Northern has not received
any communications alleging that it has violated or would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity.


                                       25
<PAGE>

     4.24 LOAN MATTERS.

          (a) All evidences of indebtedness ("LOANS") reflected as assets on the
books and records of Northern were, as of June 30, 1999 and will be as of the
Closing Date, in all respects legal, valid and binding obligations of the
respective obligors named therein and no such indebtedness is subject to any
defenses which have been or may be asserted, except for defenses arising from
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and general principles of equity.

          (b) Except as disclosed in Section 4.24(b) of the Northern Disclosure
Schedule, each Loan outstanding at any time since January 1, 1996 and each
commitment to extend credit has been solicited and originated and is
administered and serviced in all material respects in accordance with the
relevant loan documents, Northern's underwriting standards and in material
compliance with all applicable requirements of federal, state and local laws,
regulations and rules.

          (c) Except as disclosed in Section 4.24(c) of the Northern Disclosure
Schedule, no loan, all or any part of which is an asset of Northern was, as of
June 30, 1999, more than 30 days delinquent as to principal or interest.

          (d) Except as disclosed in Section 4.24(d) of the Northern Disclosure
Schedule, to the knowledge of Northern, the documentation for each loan (the
"LOAN FILE") is correct and complete to the extent that all Loan Files contain
those documents necessary for Northern to enforce the loans and realize upon the
security, if any, therefor, including but not limited to properly executed notes
or credit agreements and security documents. In addition, Except as disclosed in
Section 4.24(d) of the Northern Disclosure Schedule, the Loan Files for all
loans secured primarily by real property also contain evidence of property
casualty insurance (or are covered by a mortgage protection policy) and, where
required by the FDIC or other governmental regulators, appraisals, policies of
title insurance (or, in the case of loans closed within the past three months,
commitments therefor) and policies of flood insurance.

          (e) Except as disclosed on Section 4.24(e) of the Northern Disclosure
Schedule, none of the loans Northern has sold or in which Northern has sold
participation interests has any buy-back or guarantee obligations. The
percentage of interest retained by Northern in any sold participation interest
is not subordinated to the percentage of interest sold.

          (f) There are no employee, officer, director or other affiliate loans
on which the borrower is paying a rate other than that reflected on the note or
the relevant credit agreement.

          (g) With respect to loans secured by commercial real estate, Northern
has a Phase I environmental study in its files in those instances where prudent
lending practice would require a lender to have such a study, and each such
Phase I environmental study shows the property to be free of any underground
storage tanks, asbestos, ureaformaldehyde, uncontained polychlorinated
biphenyls, or releases of hazardous substances as such terms are defined by any
applicable federal, state or local environmental protection laws and
regulations, or if such Phase I


                                       26
<PAGE>

environmental study shows the property to contain any underground storage tanks,
asbestos, ureaformaldehyde, uncontained polychlorinated biphenyls, or releases
of hazardous substances, then such Phase I environmental study affirmatively
recommends that no Phase II environmental study or further investigation is
necessary.

          (h) To Northern's knowledge, there are no loans outstanding to
individuals who are not residents of the United States except for loans secured
by collateral located in the United States with a current fair market value
equal to 100 percent of the loan amount. There are no loans outstanding to
corporations or other entities headquartered outside of the United States except
for loans that are either (a) guaranteed by individuals who are residents of the
United States, or (b) secured by collateral located in the United Sates with a
current fair market value equal to 100 percent of the loan amount. To Northern's
knowledge, there are no commitments outstanding to nonresident individuals or
entities to make loans or advances which, when made, would not be in compliance
with the preceding two sentences.

     4.25 POWERS OF ATTORNEY. Northern has no powers of attorney outstanding
other than those issued pursuant to the requirements of regulatory authority or
in the ordinary course of business with respect to routine matters.

     4.26 BENEFIT PLANS INVESTED IN COMMON STOCK. No shares of Northern Common
Stock are available to individuals, directly or indirectly, through any Benefit
Plan, and no Benefit Plan is invested in Northern Common Stock.

     4.27 COMMUNITY REINVESTMENT ACT COMPLIANCE. Northern is in substantial
compliance with the applicable provisions of the Community Reinvestment Act of
1977 and the regulations promulgated thereunder (collectively, "CRA"). Northern
has not been advised of the existence of any fact or circumstance or set of
facts or circumstances which, if true, would cause Northern to fail to be in
substantial compliance with such provisions or to have its current rating
lowered. Any change in the current rating which would prohibit the Merger from
being consummated shall be a Material Adverse Effect on Northern.

     4.28 YEAR 2000 COMPLIANCE. Northern has completed an assessment of
Northern's computerized application programs, files, databases and computer and
computer communication services (collectively, the "NORTHERN AUTOMATED
SYSTEMS"), and has implemented a plan to resolve issues arising or expected to
arise in connection with the deficient processing by the Northern Automated
Systems of date-related information containing dates on, during and after
January 1, 2000 (each such deficiency, a "YEAR 2000 PROBLEM"). Northern's Year
2000 plan (the "NORTHERN Y2K PLAN") consists of assessing, testing for, and
implementing all steps necessary to preclude material Year 2000 Problems. As of
the date of this Agreement, Northern has substantially completed the necessary
assessment and testing processes and is conducting follow-up activities as a
result of Year 2000 Problems identified as of such date. Northern has no reason
to believe that any Year 2000 Problem, individually or in the aggregate, would
have or would reasonably be expected to have a Material Adverse Effect on
Northern.

     4.29 LABOR MATTERS. Northern is not a party to and is not bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor


                                       27
<PAGE>

organization, nor is Northern the subject of a proceeding asserting that it has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel Northern to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other material labor dispute or disputes involving it pending, or to Northern's
knowledge, threatened, nor is Northern aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.

     5. REPRESENTATIONS AND WARRANTIES OF COWLITZ

     Cowlitz hereby represents and warrants to Northern as follows:

     5.1 CORPORATE ORGANIZATION.

          (a) Cowlitz is a corporation duly organized and validly existing under
the laws of the State of Washington. Cowlitz has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have or reasonably be expected to have a
Material Adverse Effect (as defined below) on Cowlitz. As used in this
Agreement, the term "MATERIAL ADVERSE EFFECT" means, with respect to Cowlitz, a
material adverse effect on the business, results of operations, financial
condition or prospects of Cowlitz and its Subsidiaries taken as a whole or a
material adverse effect on Cowlitz's ability to consummate the transactions
contemplated hereby on a timely basis; PROVIDED, HOWEVER, that a Material
Adverse Effect on Cowlitz shall not be deemed to have occurred as a result of
(i) any changes in laws, regulations or GAAP or (ii) any changes in general
economic conditions affecting banks, savings associations or their holding
companies generally. Cowlitz is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended. The copies of the Articles of
Incorporation and Bylaws of Cowlitz which have previously been made available to
Northern are true, complete and correct copies of such documents as in effect as
of the date of this Agreement. Cowlitz's only Subsidiaries are Cowlitz Bank and
Business Finance Corporation.

          (b) Cowlitz Bank is a bank duly chartered and validly existing under
the laws of the State of Washington. All of the issued and outstanding capital
stock of Cowlitz Bank is owned free and clear of all liens by Cowlitz. Deposits
in Cowlitz Bank are insured by the FDIC through the BIF to the fullest extent
permitted by law. Cowlitz Bank has no Subsidiaries.

     5.2 CAPITALIZATION. The authorized capital stock of Cowlitz consists of
25,000,000 shares of Cowlitz Common Stock and 5,000,000 shares of preferred
stock, no par value ("COWLITZ PREFERRED STOCK"). At the close of business on
July 30, 1999, there were 4,154,070 shares of Cowlitz Common Stock outstanding
and no shares of Cowlitz Preferred Stock outstanding. As of August 1, 1999,
783,829 shares of Cowlitz Common Stock or Cowlitz Preferred Stock were reserved
for issuance. All of the issued and outstanding shares of Cowlitz Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of


                                       28
<PAGE>

the date of this Agreement, except (i) as set forth in Section 5.2(a) of the
disclosure schedule of Cowlitz delivered to Northern concurrently herewith (the
"COWLITZ DISCLOSURE SCHEDULE"), and (ii) as set forth elsewhere in this Section
5.2(a), Cowlitz does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Cowlitz Common Stock or Cowlitz
Preferred Stock or any other equity securities of Cowlitz or any securities
representing the right to purchase or otherwise receive any shares of Cowlitz
Common Stock or Cowlitz Preferred Stock. The shares of Cowlitz Common Stock to
be issued pursuant to the Merger will be duly authorized and validly issued and,
at the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof.

     5.3 AUTHORITY; NO VIOLATION.

          (a) Cowlitz has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby (including the issuance of the Cowlitz Common
Stock constituting Merger Consideration) and thereby have been duly and validly
approved by the Board of Directors of Cowlitz. The Board of Directors of Cowlitz
will direct that the issuance of shares of Cowlitz Common Stock in the Merger be
submitted to Cowlitz's shareholders for approval at a meeting of such
shareholders and, except for the approval of such issuance by the affirmative
vote of a majority of the votes cast at such a meeting, no other corporate
proceedings on the part of Cowlitz are necessary to approve this Agreement or
the Stock Option Agreement or to consummate the transactions contemplated hereby
and thereby. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Cowlitz and (assuming due authorization,
execution and delivery by Northern) each constitutes a valid and binding
obligation of Cowlitz, enforceable against Cowlitz in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.

          (b) Cowlitz Bank has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly and validly approved by the Board
of Directors of Cowlitz Bank and will be duly and validly approved by the sole
shareholder of Cowlitz Bank, and, upon such approval, no other corporate
proceeding on the part of Cowlitz Bank will be necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Cowlitz Bank and (assuming due authorization,
execution and delivery by Northern) constitutes a valid and binding obligation
of Cowlitz Bank, enforceable against Cowlitz Bank in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency,
fraudulent transfer, receivership, conservatorship and similar laws affecting
creditors' rights and remedies generally.


                                       29
<PAGE>

          (c) Except as set forth in Section 5.3(c) of the Cowlitz Disclosure
Schedule, neither the execution and delivery of this Agreement or the Stock
Option Agreement by Cowlitz or Cowlitz Bank, nor the consummation by Cowlitz or
Cowlitz Bank of the transactions contemplated hereby or thereby, nor compliance
by Cowlitz or Cowlitz Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Articles of Incorporation or
Bylaws of Cowlitz or any of the similar governing documents of any of its
Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 5.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Cowlitz or
any of its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, result in the termination of
or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of Cowlitz or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Cowlitz or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults which
either individually or in the aggregate will not have and would not reasonably
be expected to have a Material Adverse Effect on Cowlitz.

     5.4 CONSENTS AND APPROVALS. Except for (i) the approval of this Agreement
and the Merger by the FDIC, the Washington Director and the Oregon Director,
(ii) approval of the listing of the Cowlitz Common Stock to be issued in the
Merger on Nasdaq, (iii) the filing with the FDIC and the SEC of the Proxy
Statement/Prospectus and the filing and declaration of effectiveness of the S-4,
(iv) the filing of the Articles of Merger with the Washington Secretary, the
Washington Director and the Oregon Director, (v) the approval of this Agreement
and the Merger by the requisite votes of the stockholders of Northern, the
approval of the issuance of shares of Cowlitz Common Stock in the Merger by
shareholders of Cowlitz and the approval of this Agreement and the Merger by the
sole shareholder of Cowlitz Bank, (vi) the consents and approvals set forth in
Section 5.4 of the Cowlitz Disclosure Schedule, and (vii) the consents and
approvals of third parties which are not Governmental Entities, the failure of
which to obtain will not have and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect, no consents or
approvals of, or filings or registrations with, any Governmental Entity or any
third party are necessary in connection with (A) the execution and delivery by
Cowlitz of this Agreement and (B) the consummation by Cowlitz of the Merger and
the other transactions contemplated hereby.

     5.5 REPORTS. Cowlitz and each of its Subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 1997 with any Governmental Entities, and have paid all fees and
assessments due and payable in connection therewith. Except as set forth in
Section 5.5 of the Cowlitz Disclosure Schedule and except for normal
examinations conducted by a Governmental Entity in the regular course of the
business of Cowlitz and its Subsidiaries, no Governmental Entity has initiated
any proceeding or, to the best


                                       30
<PAGE>

knowledge of Cowlitz, investigation into the business or operations of Cowlitz
or any of its Subsidiaries since January 1, 1997. There is no material
unresolved violation, criticism, or exception by any Government Entity with
respect to any report or statement relating to any examinations of Cowlitz or
any of its Subsidiaries.

     5.6 FINANCIAL STATEMENTS. Cowlitz has previously made available to Northern
copies of (a) the consolidated balance sheets of Cowlitz and its Subsidiaries,
as of December 31, for the fiscal years 1997 and 1998, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1996 through 1998, inclusive, as reported in
Cowlitz's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of Arthur Andersen LLP, independent public accountants with respect to
Cowlitz, and (b) the unaudited consolidated balance sheets of Cowlitz and its
Subsidiaries as of June 30, 1998 and June 30, 1999 and the related unaudited
consolidated statements of income, cash flows and changes in stockholders'
equity for the three-month periods then ended, as reported in Cowlitz's
Quarterly Report on Form 10-Q for the period ended June 30, 1999 filed with the
SEC under the Exchange Act. Each of the financial statements referred to in this
Section 5.6 (including the related notes, where applicable) fairly present, and
the financial statements referred to in Section 7.11 hereof (including the
related notes, where applicable) will fairly present (subject, in the case of
the unaudited statements, to normal recurring adjustments, none of which are
expected to be material in nature and amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Cowlitz and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth. Each of such financial statements
(including the related notes, where applicable) complies, and the financial
statements referred to in Section 7.11 hereof (including the related notes,
where applicable) will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such financial statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 7.11 (including the related notes, where applicable) will be,
prepared in accordance with GAAP consistently applied during the periods
involved, except in each case as indicated in such statements or in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q. The
books and records of Cowlitz and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.

     5.7 BROKER'S FEES. Except as set forth in Section 5.7 of the Cowlitz
Disclosure Schedule, neither Cowlitz nor any Subsidiary thereof nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement.

     5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as publicly disclosed in
Cowlitz Reports (as defined in Section 5.10) filed prior to the date hereof or
as set forth in Section 5.8 of the Cowlitz Disclosure Schedule, since June 30,
1999, no event has occurred


                                       31
<PAGE>

which has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Cowlitz.

     5.9 LEGAL PROCEEDINGS.

          (a) Neither Cowlitz nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best of Cowlitz's knowledge, threatened legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Cowlitz or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement as to which there is a significant possibility of
an adverse determination and which, if adversely determined, would, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Cowlitz.

          (b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Cowlitz, any of its Subsidiaries or the assets of
Cowlitz or any of its Subsidiaries which has had, or would reasonably be
expected to have, a Material Adverse Effect on Cowlitz or the Surviving Bank.

     5.10 SEC REPORTS. Cowlitz has previously made available to Northern an
accurate and complete copy of each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1998 and
prior to the date hereof by Cowlitz with the SEC pursuant to the Securities Act
or the Exchange Act (the "COWLITZ REPORTS"), and no such registration statement,
prospectus, report, schedule or proxy statement contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Cowlitz has timely filed
all Cowlitz Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Cowlitz Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.

     5.11 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in Section 5.11 of
the Cowlitz Disclosure Schedule, Cowlitz and each of its Subsidiaries hold, and
have at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Cowlitz or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Cowlitz, and neither Cowlitz nor any of its Subsidiaries knows of, or
has received notice of, any material violations of any of the above which,
individually or in the aggregate, would have or reasonably be expected to have a
Material Adverse Effect on Cowlitz.

     5.12 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in Section
5.12 of the Cowlitz Disclosure Schedule, neither Cowlitz nor any of its
Subsidiaries is subject to any Regulatory Agreement that restricts the conduct
of its business or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has Cowlitz or any of its


                                       32
<PAGE>

Subsidiaries been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.

     5.13 COWLITZ INFORMATION. The information relating to Cowlitz and its
Subsidiaries to be provided by Cowlitz to be contained in the Proxy
Statement/Prospectus and the S-4, or in any other document filed with any other
Governmental Entity in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Proxy Statement/Prospectus (except for such portions thereof
that relate only to Northern) will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.

     5.14 YEAR 2000 COMPLIANCE. Cowlitz has completed an assessment of Cowlitz's
computerized application programs, files, databases and computer and computer
communication services, and has implemented a plan (the "COWLITZ Y2K PLAN") to
resolve issues arising or expected to arise in connection with any Year 2000
Problems. The Cowlitz Y2K Plan consists of assessing, renovating, validating and
implementing all steps necessary to preclude material Year 2000 Problems. As of
the date of this Agreement, Cowlitz has completed the assessment, renovation and
validation phases and is currently in the implementation phase of the Cowlitz
Y2K Plan. Cowlitz has no reason to believe that any Year 2000 Problem,
individually or in the aggregate, would have or would reasonably be expected to
have a Material Adverse Effect on Cowlitz.

     5.15 OPINION OF FINANCIAL ADVISOR. Cowlitz has received the opinion of Sage
Capital LLC, dated September 14, 1999, to the effect that, as of such date, the
Merger Consideration is fair from a financial point of view to the holders of
Cowlitz Common Stock. A true and complete copy of such opinion has been
delivered to Northern on or prior to the date of this Agreement


                                       33
<PAGE>

     6. COVENANTS RELATING TO CONDUCT OF BUSINESS

     6.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME.

          (a) Except as set forth in Section 6.1 or 6.2 of the Northern
Disclosure Schedule, as expressly contemplated or permitted by this Agreement,
or as required by applicable law, rule or regulation, during the period from the
date of this Agreement to the Effective Time, Northern shall (i) conduct its
business in the usual, regular and ordinary course consistent with past
practice, (ii) use reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships and
retain the services of its officers and key employees and (iii) take no action
which would reasonably be expected to adversely affect or delay its ability to
obtain any approvals of any Governmental Entity required to consummate the
transactions contemplated hereby or to consummate the transactions contemplated
hereby.

          (b) Northern shall file (or cause to be filed) at its own expense, on
or before the due date thereof, all Tax Returns required to be filed for all Tax
periods ending on or before the Effective Time provided, however, that Northern
shall not file any such Tax Return, or other returns, elections, claims for
refund or information statements with respect to any liabilities for Taxes
(other than federal, state or local sales, use, property, withholding or
employment Tax Returns) for any Tax period until Cowlitz has had a reasonable
opportunity to review such Tax Returns. Northern shall provide Cowlitz with a
copy of appropriate workpapers, schedules, drafts and final copies of each
federal and state income tax return of Northern (including returns of all Plans)
at least ten (10) days before filing such Tax Return and shall reasonably
cooperate with any request by Cowlitz in connection therewith.

          (c) Northern shall use its reasonable best efforts to sell all or part
of its obligations under its accounts receivable financing program under the
name of Business Manager prior to the Effective Time.

          (d) Northern hereby agrees to obtain Cowlitz's prior written approval
with respect to those matters set forth in Sections 6.1 and 6.2 of the Northern
Disclosure Schedule that expressly require Cowlitz's prior written approval

          (e) In the event that Northern's dispute with Fiserv Solutions, Inc.
described in Section 4.9(a) of the Northern Disclosure Schedule has not been
resolved prior to the Effective Time, Northern agrees to establish prior to the
Effective Time a reasonable reserve for such dispute. In the event that
Northern's dispute with Albina State Bank described in Section 4.9(a) of the
Northern Disclosure Schedule has not been resolved prior to the Effective Time,
Northern agrees to establish prior to the Effective Time a reasonable reserve
for such dispute.

     6.2 NORTHERN FORBEARANCES. Except as set forth in Section 6.2 of the
Northern Disclosure Schedule, as expressly contemplated or permitted by this
Agreement, or as required by applicable law, rule or regulation, during the
period from the date of this Agreement to the Effective Time, Northern shall not
without the prior written consent of Cowlitz:


                                       34
<PAGE>

          (a) adjust, split, combine or reclassify any capital stock; set any
record or payment dates for the payment of any dividends or distributions on its
capital stock except in the ordinary and usual course of business consistent
with past practice; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock, or except
as otherwise permitted by this paragraph (a) grant any stock appreciation rights
or grant any individual, corporation, joint venture or other entity any right to
acquire any shares of its capital stock; or issue any additional shares of
capital stock except pursuant to the exercise of stock options outstanding as of
the date hereof;

          (b) incur any indebtedness for borrowed money, other than deposit
liabilities and short-term borrowings pursuant to credit facilities in effect on
the date of this Agreement or any replacement facilities with commercially
reasonable terms as credit facilities existing as of the date hereof, or sell,
transfer, mortgage, encumber or otherwise dispose of any of its assets or
properties to any individual, corporation or other entity, or cancel, release or
assign any indebtedness to any such person or any claims held by any such
person, in each case that is material to such party, except (i) in the ordinary
course of business consistent with past practice or (ii) as expressly required
by the terms of any contracts or agreements in force at the date of this
Agreement and set out in Section 6.2 of the Northern Disclosure Schedule;

          (c) form any Subsidiary, or make any acquisition or investment,
whether by purchase or other acquisition of stock or other equity interests, by
merger, consolidation or other business combination, or by contributions to
capital, or make any property transfers or material purchases of any property or
assets, in or from any other individual, corporation, joint venture or other
entity;

          (d) enter into, renew or terminate any contract or agreement, other
than loans made in the ordinary course of business, that calls for aggregate
annual payments of $50,000 and which is not either (i) terminable at will on 60
days or less notice without payment of a penalty in excess of $20,000 or (ii)
has a term of less than one year; or make any material change in any of its
leases or contracts, other than renewals of contracts or leases for a term of
one year or less without material adverse changes to the terms thereof;

          (e) other than general salary increases consistent with past practices
for employees other than executive officers, increase in any material respect
the compensation or fringe benefits of any of its employees or pay any pension
or retirement allowance not required by any existing plan or agreement to any
such employees or become a party to, amend (other than amendments required by
law) or commit itself to any pension, retirement, profit-sharing or welfare
benefit plan or agreement or employment agreement with or for the benefit of any
employee or accelerate the vesting of any stock options or other stock-based
compensation;

          (f) authorize or permit any of its officers, directors, employees,
representatives or agents (collectively, "REPRESENTATIVES") to directly or
indirectly solicit, initiate or encourage any inquiries relating to or that may
reasonably be expected to lead to, or the


                                       35
<PAGE>

making of any proposal which constitutes, a Takeover Proposal (as defined
below), or recommend or endorse any Takeover Proposal, or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such Takeover Proposal or otherwise facilitate any
effort or attempt to make or implement a Takeover Proposal; PROVIDED, HOWEVER,
that, at any time prior to the time its stockholders shall have voted to approve
this Agreement and the Merger, Northern may, and may authorize and permit its
Representatives to, provide third parties with nonpublic information and
participate in discussions and negotiations with any third party in response to
a Takeover Proposal which was not solicited subsequent to the date hereof, if
Northern's Board of Directors, based on the advice of its financial advisers and
outside counsel, has determined in its reasonable good faith judgment that the
failure to do so would constitute a breach of its fiduciary duties. Northern
shall (i) advise Cowlitz orally (within one day) and in writing (as promptly as
practicable) of the receipt after the date hereof of any Takeover Proposal by it
or any of its Representatives and (ii) unless its Board of Directors, based on
the advice of its financial advisers and outside counsel, has determined in its
reasonable good faith judgment that such action would constitute a breach of its
fiduciary duties, inform Cowlitz orally and in writing, as promptly as
practicable after the receipt thereof, of the material terms and conditions of
any such Takeover Proposal (including the identity of the party making such
inquiry or proposal) and shall keep Cowlitz informed of the status (including
any changes in the material terms and conditions) thereof. Northern shall not
furnish any nonpublic information to any other party pursuant to this Section
6.2(f) except pursuant to the terms of a confidentiality agreement containing
terms substantially identical to the terms contained in the Confidentiality
Agreement (as defined in Section 7.2(b) hereof). Northern will immediately cease
and cause to be terminated any activities, discussions or negotiations conducted
prior to the date of this Agreement with any parties other than Cowlitz with
respect to any Takeover Proposal and require the return (or if permitted by the
terms of the applicable confidentiality agreement, the certified destruction) of
all confidential information previously provided to such parties. As used in
this Agreement, "TAKEOVER PROPOSAL" shall mean any inquiry, proposal or offer
relating to any tender or exchange offer, proposal for a merger, consolidation
or other business combination involving Northern or the acquisition in any
manner of 25% or more of the voting stock or equity, or a substantial portion of
the assets, of Northern, other than the transactions contemplated by this
Agreement;

          (g) make any capital expenditures in excess of (A) $50,000 per project
or related series of projects or (B) $50,000 in the aggregate, other than
expenditures necessary to maintain existing assets in good repair;

          (h) except in the ordinary course of business, make application for
the opening, relocation or closing of any, or open, relocate or close any,
branch, office or loan production or servicing facility;

          (i) make or acquire any loan or issue a commitment for any loan except
for loans and commitments that are made in the ordinary course of business
consistent with past practice at rates not less than the prevailing market
rates, or issue or agree to issue any letters of credit or otherwise guarantee
or agree to guarantee the obligations of any other persons except for letters of
credit issued in the ordinary course of business consistent with past practice;


                                       36
<PAGE>

          (j) except as otherwise expressly permitted elsewhere in this Section
6.2, engage or participate in any material transaction or incur or sustain any
material obligation not in the ordinary course of business;

          (k) except as otherwise expressly permitted hereby, foreclose upon or
otherwise acquire (whether by deed in lieu of foreclosure or otherwise) any real
property (other than 1-to-4 family residential properties in the ordinary course
of business);

          (l) settle any claim, action or proceeding involving monetary damages,
except in the ordinary course of business consistent with past practice, or
agree or consent to the issuance of any injunction, decree, order or judgment
restricting its business or operations;

          (m) amend its charter, bylaws or similar governing documents;

          (n) except in the ordinary course of business consistent with past
practice, materially change its investment securities portfolio policy, or the
manner in which the portfolio is classified or reported;

          (o) except as expressly required to comply with the Consent to Entry
of Order to Cease and Desist and Order to Cease and Desist between the FDIC and
Northern dated July 19, 1999, and the Order to Cease and Desist between the
Oregon Department of Financial Institutions and Northern dated July 19, 1999
(collectively, the "Orders"), make any material changes in its policies and
practices with respect to (i) underwriting, pricing, originating, acquiring,
selling, servicing, or buying or selling rights to service loans, (ii) hedging
its loan positions or commitments or (iii) any other material banking policies;

          (p) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Section 8
not being satisfied or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable law;

          (q) take any action (other than permitted herein) that would prevent
the Merger from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code, make any changes in its accounting methods, practices or
policies, except as may be required under law, rule, regulation or GAAP, in each
case as concurred in by Northern's independent public accountants;

          (r) except as expressly required to comply with the Orders, increase
the number of full-time equivalent employees of Northern from the number as of
June 30, 1999; or

          (s) except as expressly required to comply with the Orders, agree to,
or make any commitment to, take any of the actions prohibited by this Section
6.2.

     6.3 NO FUNDAMENTAL COWLITZ CHANGES. Except as expressly contemplated or
permitted by this Agreement, or as required by applicable law, rule or
regulation, during the


                                       37
<PAGE>

period from the date of this Agreement to the Effective Time, Cowlitz shall not,
without the prior written consent of Northern, amend its articles of
incorporation or bylaws in a manner that would materially and adversely affect
the economic benefits of the Merger to the holders of Northern Common Stock, or
agree to, or make any commitment to, take any such action.

     7. ADDITIONAL AGREEMENTS

     7.1 REGULATORY MATTERS.

          (a) Cowlitz and Northern shall promptly prepare and file with the FDIC
and SEC the Proxy Statement/Prospectus and the S-4, in which the Proxy
Statement/Prospectus will be included as a prospectus. Each of Cowlitz and
Northern shall use all reasonable efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing, and
Northern and Cowlitz shall thereafter mail the Proxy Statement/Prospectus to
their respective stockholders.

          (b) Subject to the other provisions of this Agreement, the parties
hereto shall cooperate with each other and use reasonable best efforts to
promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger) and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such third parties and
Governmental Entities.

          (c) Cowlitz and Northern shall, upon request, furnish each other with
all information concerning themselves, their respective Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement/Prospectus, the S-4 or any
other statement, filing, notice or application made by or on behalf of Cowlitz,
Northern or any of their respective Subsidiaries to any Governmental Entity in
connection with the merger and the other transactions contemplated by this
Agreement.

          (d) Cowlitz and Northern shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (as defined in Section 8.1(c)
below) will not be obtained or that the receipt of any such approval will be
materially delayed.

     7.2 ACCESS TO INFORMATION.

          (a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, Northern shall afford access to the officers,
employees, accountants, counsel and other Representatives of Cowlitz and any
Loan Examiners appointed pursuant to Section 2.6(d), during normal business
hours during the period prior to the Effective Time, to all


                                       38
<PAGE>

its properties, books, contracts, commitments and records, and to its officers,
employees, accountants, counsel and other representatives and, during such
period, Northern shall make available to Cowlitz (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of Federal securities laws or
Federal or state banking, mortgage lending, real estate or consumer finance or
protection laws (other than reports or documents which Northern is not permitted
to disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Northern shall not be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.

          (b) Cowlitz shall hold all information furnished by Northern or any of
its Representatives pursuant to Section 7.2(a) in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Agreement dated May 13, 1999, between Cowlitz and Northern (the "CONFIDENTIALITY
AGREEMENT").

          (c) No investigation by Cowlitz or its Representatives shall affect
the representations, warranties, covenants or agreements of Northern set forth
herein.

          (d) No investigation by Northern or its Representatives shall affect
the representations, warranties, covenants or agreements of Cowlitz set forth
herein.

     7.3 STOCKHOLDER APPROVAL. Each of Northern and Cowlitz shall duly call,
give notice of, convene and hold a meeting of its stockholders to be held as
soon as practicable following the date hereof for the purpose of obtaining the
requisite stockholder approval required in connection with this Agreement and
the Merger. Northern shall, through its Board of Directors, recommend to its
stockholders approval of the Merger and Cowlitz shall, through its Board of
Directors, recommend to its shareholders approval of the issuance of the shares
of Cowlitz Common Stock in the Merger as required by Nasdaq; PROVIDED, HOWEVER,
that this Section 7.3 shall not prohibit accurate disclosure by Northern of
information that is required in the Proxy Statement/Prospectus or any other
document required to be filed with the SEC (including without limitation a
disclosure statement on Schedule 14D-9) or otherwise required by applicable law
or regulation or the rules of Nasdaq to be publicly disclosed.

     7.4 LEGAL CONDITIONS TO MERGER.

          (a) Subject to the terms and conditions of this Agreement, each of
Cowlitz and Northern shall, and shall cause its Subsidiaries to, use their
reasonable best efforts (i) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party or its Subsidiaries with respect to the
Merger and, subject to the conditions set forth in Section 8 hereof, to
consummate the transactions contemplated by this Agreement and (ii) to obtain
(and to cooperate with the other party to


                                       39
<PAGE>

obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by Northern or Cowlitz or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.

          (b) Subject to the terms and conditions of this Agreement, each of
Cowlitz and Northern agrees to use reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, as soon as practicable
after the date of this Agreement, the transactions contemplated hereby,
including, without limitation, using reasonable best efforts to (i) modify or
amend any contracts, plans or arrangements to which Cowlitz or Northern is a
party (to the extent permitted by the terms thereof) if necessary in order to
satisfy the conditions to closing set forth in Section 8 hereof, (ii) lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
and (iii) defend any litigation seeking to enjoin, prevent or delay the
consummation of the transactions contemplated hereby or seeking material
damages.

     7.5 AFFILIATES. Northern shall use its reasonable best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of Northern to deliver to
Cowlitz, as soon as practicable after the date of this Agreement, and in any
event prior to the date of the stockholders meeting called by Northern pursuant
to Section 7.3 hereof, a written agreement, in the form and substance reasonably
satisfactory to Cowlitz, relating to required transfer restrictions on the
Cowlitz Common Stock received by them in the Merger.

     7.6 STOCK LISTING. Cowlitz shall use its best efforts to cause the shares
of Cowlitz Common Stock to be issued in the Merger to be approved for listing on
Nasdaq, subject to official notice of issuance, prior to the Effective Time.

     7.7 EMPLOYEES; EMPLOYEE BENEFIT PLANS.

          (a) Cowlitz shall, from and after the Effective Time, (i) comply with
the Plans in accordance with their terms, (ii) provide former employees of
Northern who remain as employees of Cowlitz or its Subsidiaries credit for years
of service with Northern prior to the Effective Time for the purpose of
eligibility and vesting and (iii) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Plans) and eligibility waiting periods under group
health plans of Cowlitz to be waived with respect to former employees of
Northern who remain as employees of Cowlitz or its Subsidiaries (and their
eligible dependents) and who become participants in such group health plans.
Nothing in this Section 7.7 shall be interpreted as preventing Cowlitz or its
Subsidiaries from amending, modifying or terminating any Plans or other
contracts, arrangements, commitments or understandings, in a manner consistent
with their terms and applicable law.

          (b) Northern agrees to amend its 401(k) plan prior to the Effective
Time so that participant loans are no longer available.


                                       40
<PAGE>

          (c) If in the reasonable opinion of Cowlitz's outside counsel it is
necessary under the SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, SEC No-Action
Letter, Fed. Sec. L. Rep. (CCH) P. 77,515 (Jan. 12, 1999), for Cowlitz's Board
of Directors to approve the Merger to permit the acquisition of Cowlitz Common
Stock and options to purchase Cowlitz Common Stock by directors, officers or
employees of Northern who become directors or officers of Cowlitz following the
Effective Time to be exempt from Section 16(b) of the Exchange Act pursuant to
Rule 16b-3(d), then Cowlitz's Board of Directors shall adopt appropriate
resolutions prior to the Effective Time.

     7.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Cowlitz shall
cooperate with the persons serving as officers and officers and directors of
Northern so that such persons are, to the extent available, covered by the
directors' and officers' liability insurance policy maintained by Northern (or a
replacement policy therefor) that serves to reimburse such officers and
directors with respect to claims against such officers and directors from facts
or events occurring at or prior to the Effective Time, which insurance shall
contain at least substantially the same coverage and amounts, and contain terms
and conditions substantially no less advantageous, as that coverage currently
provided by Northern; PROVIDED, HOWEVER, that in no event will Cowlitz be
required to expend in any one year an amount in excess of 100% of the annual
premiums currently paid by Northern for such insurance as set forth in Section
4.20 of the Northern Disclosure Schedule (the "INSURANCE AMOUNT") to maintain or
procure such coverage or pay for premiums with respect to any period more than
three years after the Effective Time unless, in either case, a policy providing
lifetime coverage is available for an amount not to exceed $20,000; PROVIDED
FURTHER, that if the parties are unable to maintain or obtain the insurance
called for by this Section 7.8, they shall use its reasonable best efforts to
obtain as much comparable insurance as is available for the Insurance Amount;
PROVIDED FURTHER, that such officers and directors of Northern may be required
to make application and provide customary representations and warranties to
Cowlitz's insurance carrier for the purpose of obtaining such insurance. Neither
Cowlitz nor Cowlitz Bank shall have an obligation to indemnify any of such
officers and directors except to the extent of such insurance coverage.

     7.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Cowlitz and Northern) or to vest the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by Cowlitz.

     7.10 ADVICE OF CHANGES. Cowlitz and Northern shall promptly advise the
other party of any change or event which, individually or in the aggregate with
other such changes or events, has a Material Adverse Effect on it or which it
believes would or would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.


                                       41
<PAGE>

     7.11 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.

          (a) As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth quarter of a fiscal
year) or 90 days after the end of each fiscal year ending after the date of this
Agreement, each party will deliver to the other party its Quarterly Report on
Form 10-QSB or Form 10-Q or its Annual Report on Form 10-KSB or Form 10-K, as
the case may be, as filed with the FDIC or the SEC under the Exchange Act.

          (b) As soon as reasonably practicable and as soon as they are
available, but in no event more than 30 days, after the end of each calendar
month ending after the date of this Agreement, Northern shall furnish to Cowlitz
(i) financial statements (including balance sheet, statement of operations and
stockholders' equity) of Northern as of and for such month then ended, (ii)
servicing reports regarding cash flows, delinquencies and foreclosures on asset
pools serviced or master serviced by Northern, and (iii) any internal management
reports relating to the foregoing. All information furnished by Northern to
Cowlitz pursuant to this Section 7.11(b) shall be held in confidence by Cowlitz
to the extent required by, and in accordance with, the provisions of the
Confidentiality Agreement.

     7.12 DISCLOSURE SUPPLEMENTS.

          (a) On the date five (5) business days prior to the Effective Date,
Northern shall supplement or amend the Northern Disclosure Schedule with respect
to any matter existing or known to Northern which (i) if existing, occurring or
known at the date of this Agreement would have been required to be set forth or
described in the Northern Disclosure Schedule or (ii) is necessary to correct
any information therein which has been rendered inaccurate thereby so that the
Northern Disclosure Schedule is accurately supplemented or amended as of the
Effective Date. For the purpose of this Section 7.12(a), each reference to the
date of this Agreement or an earlier date, as the case may be, in the
representations and warranties of Northern contained in this Agreement shall be
deemed to refer to the Effective Date. Notwithstanding this provision, no
supplement or amendment to the Northern Disclosure Schedule shall be deemed to
modify any representation or warranty for the purpose of determining
satisfaction of the conditions set forth in Sections 8.2(a) and (b).

          (b) On the date five (5) business days prior to the Effective Date,
Cowlitz shall supplement or amend the Cowlitz Disclosure Schedule with respect
to any matter existing or known to Cowlitz which (i) if existing, occurring or
known at the date of this Agreement would have been required to be set forth or
described in the Cowlitz Disclosure Schedule or (ii) is necessary to correct any
information therein which has been rendered inaccurate thereby so that the
Cowlitz Disclosure Schedule is accurately supplemented or amended as of the
Effective Date. For the purpose of this Section 7.12(b), each reference to the
date of this Agreement or an earlier date, as the case may be, in the
representations and warranties of Cowlitz contained in this Agreement shall be
deemed to refer to the Effective Date. Notwithstanding this provision, no
supplement or amendment to the Cowlitz Disclosure Schedule shall be deemed to
modify any


                                       42
<PAGE>

representation or warranty for the purpose of determining satisfaction of the
conditions set forth in Section 8.3(a).

     8. CONDITIONS PRECEDENT

     8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:

          (a) STOCKHOLDER APPROVALS. The Merger and this Agreement shall have
been approved and adopted by the requisite affirmative vote of the stockholders
of Northern entitled to vote thereon. The issuance of the shares of Cowlitz
Common Stock in the Merger shall have been approved by the requisite affirmative
vote of the shareholders of Cowlitz entitled to vote thereon. The Merger and
this Agreement shall have been approved by the sole shareholder of Cowlitz Bank.

          (b) NASDAQ LISTING. The shares of Cowlitz Common Stock which shall be
issued to the stockholders of Northern upon consummation of the Merger shall
have been authorized for listing on Nasdaq, subject to official notice of
issuance.

          (c) OTHER APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof,
shall have expired or been terminated (all such approvals and the expiration or
termination of all such waiting periods being referred to herein as the
"REQUISITE REGULATORY APPROVALS").

          (d) S-4 EFFECTIVENESS. The S-4 shall have become effective under the
Securities Act, no stop order suspending the effectiveness of the S-4 shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.

          (e) NO INJUNCTIONS OR RESTRAINTS; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "INJUNCTION") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or makes illegal the consummation of the Merger.

     8.2 CONDITIONS TO OBLIGATIONS OF COWLITZ. The obligations of Cowlitz to
effect the Merger are also subject to the satisfaction or waiver by Cowlitz at
or prior to the Effective Time of the following conditions:

          (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Northern set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; PROVIDED, HOWEVER, that for
purposes of determining the satisfaction of this condition, no effect shall be
given to any


                                       43
<PAGE>

exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and PROVIDED, FURTHER, that, for purposes of this
condition, such representations and warranties (other than the representations
and warranties contained in Section 4.2(a), which shall be true and correct in
all material respects) shall be deemed to be true and correct in all respects
unless the failure or failures of such representations and warranties to be so
true and correct, individually or in the aggregate, results or would reasonably
be expected to result in a Material Adverse Effect on Northern. Cowlitz shall
have received a certificate signed on behalf of Northern by the Chief Executive
Officer and Chief Financial Officer of Northern to the foregoing effect.

          (b) PERFORMANCE OF OBLIGATIONS OF NORTHERN. Northern shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Cowlitz shall have
received a certificate signed on behalf of Northern by the Chief Executive
Officer and the Chief Financial Officer of Northern to such effect.

          (c) BURDENSOME CONDITION. There shall not be any action taken, or any
statute, rule, regulation, order, directive, memorandum of understanding or
similar restriction enacted, entered, enforced or deemed applicable to Northern
or the transactions contemplated by this Agreement, by any Governmental Entity,
in connection with the grant of a Requisite Regulatory Approval or otherwise,
which imposes any restriction or condition which would be reasonably likely to
have or result in a Material Adverse Effect on the Surviving Bank or Cowlitz or
prevent the Surviving Bank or Cowlitz from realizing substantially all of the
contemplated benefits of the transactions contemplated by this Agreement.

          (d) DIRECTOR RESIGNATIONS. Cowlitz shall have received resignations
from each director of Northern, except to the extent otherwise requested by
Cowlitz.

          (e) EMPLOYMENT AGREEMENT. The employment agreement entered into at the
date of this Agreement between Cowlitz Bank and the Northern executive set forth
on Annex 8.2(e) shall be in full force and effect and there shall have been no
default by such employee thereunder.

          (f) NONCOMPETITION AGREEMENTS; OPTION AGREEMENTS. Each of the
noncompetition agreements and option agreements entered into at the date of this
Agreement between Cowlitz and the Northern directors set forth on Annex 8.2(f)
shall be in full force and effect and there shall have been no default by any
employee thereunder.

          (g) DISSENTERS. The number of shares of Northern Common Stock with
respect to which dissenters' rights have been perfected and not withdrawn shall
not exceed 5% of the total outstanding shares of Northern Common Stock.

          (h) LEGAL PROCEEDINGS. There shall not be any pending or threatened
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Northern,
Cowlitz or any Subsidiary of Cowlitz or challenging the validity or propriety of
the transactions contemplated by this Agreement as to


                                       44
<PAGE>

which there is a significant possibility of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Northern, Cowlitz or
the Surviving Bank.

          (i) ORDERS. Cowlitz or Cowlitz Bank shall have received oral or
written assurances, in form and substance reasonably satisfactory to Cowlitz,
from the FDIC and/or the Oregon Director that the Orders shall not be applicable
to the Surviving Bank.

          (j) YEAR 2000 PROBLEMS. Northern shall have addressed all Year 2000
Problems identified in the Northern Y2K Plan on or before December 31, 1999 and
as of the Closing Date, no Year 2000 Problem shall have occurred which,
individually or in the aggregate, have or would reasonably be expected to have a
Material Adverse Effect on Northern.

          (k) DEPOSITS. At the Effective Time, Northern shall have total
deposits in an amount no less than 80% of the total deposits as of June 30,
1999, and such deposits shall bear substantially the same interest rates and be
in substantially the same mix as the deposits as of June 30, 1999, other than
such changes in the interest rates and/or mix that reflect changes affecting
commercial banking businesses generally.

          (l) STOCKHOLDERS' EQUITY. The Total Stockholders' Equity of Northern
as of the Effective Time is at least $1,150,000.

          (m) AUDITOR'S OPINION. Cowlitz shall have received an opinion of
Arthur Andersen LLP, dated as of the Effective Date, in a form and substance
reasonably satisfactory to Cowlitz, to the effect that amounts received by
Cowlitz Bank from the Escrow with respect to Reimbursable Losses will be treated
as income which would offset the relevant loss applicable to such Reimbursable
Losses.

          (n) DIRECTORS' AND OFFICERS' INSURANCE. Cowlitz shall have received,
in a form and substance reasonably satisfactory to Cowlitz, the written
agreement of each of the persons serving as officers and directors of Polar
Beach immediately prior to the Effective Time to the terms and conditions set
forth in Section 7.8.

     8.3 CONDITIONS TO OBLIGATIONS OF NORTHERN. The obligation of Northern to
effect the Merger is also subject to the satisfaction or waiver by Northern at
or prior to the Effective Time of the following conditions:

          (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Cowlitz set forth in this Agreement shall be true and correct in all respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; PROVIDED, HOWEVER, that for purposes of
determining the satisfaction of this condition, no effect shall be given to any
exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and PROVIDED, FURTHER, that, for purposes of this
condition, such representations and warranties shall be deemed to be true and
correct in all respects unless the failure or failures of such representations
and warranties to be so true and correct, individually or in the aggregate,


                                       45
<PAGE>

results or would reasonably be expected to result in a Material Adverse Effect
on Cowlitz and its Subsidiaries taken as a whole. Northern shall have received a
certificate signed on behalf of Cowlitz by the Chief Executive Officer and the
Chief Financial Officer of Cowlitz to the foregoing effect.

          (b) PERFORMANCE OF OBLIGATIONS OF COWLITZ. Cowlitz shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Northern shall have
received a certificate signed on behalf of Cowlitz by the Chief Executive
Officer and the Chief Financial Officer of Cowlitz to such effect.

          (c) LEGAL PROCEEDINGS. There shall not be any pending or threatened
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Cowlitz or any
Subsidiary of Cowlitz or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is a significant
possibility of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have or reasonably be expected to have
a Material Adverse Effect on Cowlitz or the Surviving Bank.

     9. TERMINATION AND AMENDMENT

     9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:

          (a) by mutual consent of Cowlitz and Northern in a written instrument,
if the Board of Directors of each so determines;

          (b) by either Cowlitz or Northern if (i) any Governmental Entity which
must grant a Requisite Regulatory Approval has denied approval of the Merger and
such denial has become final and nonappealable or (ii) any Governmental Entity
of competent jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;

          (c) by either Cowlitz or Northern if the Effective Time shall not have
occurred on or before March 31, 2000, unless the failure of the Effective Time
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein; PROVIDED, HOWEVER, if the failure of the Effective
Time to occur by March 31, 2000 is solely due to the failure to satisfy the
condition set forth in Section 8.1(c), then the termination right set forth in
this Section 9.1(c) shall not be exercisable until June 30, 2000;

          (d) by either Cowlitz or Northern (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if the other party shall have breached (i) any
of the covenants or agreements made by such other party herein or (ii) any of
the representations or warranties made by such other party herein, and in either
case, such breach (x) is not cured within 30 days following written notice to
the party committing such breach, or which breach, by its nature, cannot be
cured prior to the


                                       46
<PAGE>

Closing and (y) would entitle the non-breaching party not to consummate the
transactions contemplated hereby under Section 8 hereof;

          (e) by either Cowlitz or Northern if any approval of the stockholders
of Northern contemplated by this Agreement shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof;

          (f) by the Board of Directors of Cowlitz, if the Board of Directors of
Northern shall have withdrawn, modified or changed in a manner adverse to
Cowlitz its approval or recommendation of this Agreement and the transactions
contemplated hereby or if a Change of Control (as defined below) of Northern
shall have occurred;

          (g) by either Cowlitz or Northern if any approval of the shareholders
of Cowlitz contemplated by this Agreement shall not have been obtained by reason
of the failure to obtain the required vote at a duly held meeting of
shareholders or at any adjournment or postponement thereof;

          (h) by the Board of Directors of Northern, if the Board of Directors
of Cowlitz shall have withdrawn, modified or changed in a manner adverse to
Northern its approval or recommendation of the issuance of Cowlitz Common Stock
in the Merger

          (i) by the Board of Directors of Cowlitz if a tender offer or exchange
offer for 25% or more of the outstanding shares of Northern Common Stock is
commenced (other than by Cowlitz or a Subsidiary thereof), and the Board of
Directors of Northern recommends that the stockholders of Northern tender their
shares in such tender or exchange offer or otherwise fails to recommend that
such stockholders reject such tender offer or exchange offer within 10 Business
Days after the commencement thereof (which, in the case of an exchange offer,
shall be the effective date of the registration statement relating to such
exchange offer);

          (j) by the Board of Directors of Northern prior to the date on which
the stockholders of Northern shall have voted to approve this Agreement and the
Merger, if (i) any person or entity shall have made (and shall not have
withdrawn) a Takeover Proposal that is determined by the Northern Board of
Directors to constitute a Superior Proposal (as defined below), and (ii) the
Northern Board of Directors determines in its good faith reasonable judgment,
after consultation with outside counsel, that failure to terminate this
Agreement in order to accept the Superior Proposal would constitute a breach of
fiduciary duty; PROVIDED, HOWEVER, that Northern may not terminate this
Agreement pursuant to this Section 9.1(j) unless it has given Cowlitz 10
Business Days prior written notice of its intention to so terminate this
Agreement (which notice must specify all material terms and conditions of such
Superior Proposal and the identity of the person or persons (or entity or
entities, as the case may be) making such Superior Proposal and must be
accompanied by a copy of the agreements setting forth such Superior Proposal)
and has offered Cowlitz the opportunity to amend the terms and conditions of
this Agreement so that the failure of the Northern Board of Directors to
terminate this Agreement, as so amended, in order to accept the Superior
Proposal would not constitute a breach of fiduciary duty; and PROVIDED, FURTHER,
that the Northern Board of Directors may not


                                       47
<PAGE>

terminate this Agreement pursuant to this Section 9.1(j) unless simultaneously
with such termination Northern pays to Cowlitz the amounts specified in Section
9.2(b) and enters into a definitive acquisition, merger or similar agreement to
effect and consummate such Superior Proposal with the person or entity making
such Superior Proposal.

For purposes of this Agreement, (A) a "SUPERIOR PROPOSAL" shall mean any BONA
FIDE Takeover Proposal made by an unaffiliated third party that the Northern
Board of Directors determines in its good faith reasonable judgment (based on
the advice of an independent financial advisor) represents superior value to the
holders of Northern Common Stock than the transactions contemplated by this
Agreement and for which any required financing is either committed or is, in the
good faith reasonable judgment of Northern's Board of Directors (based on the
advice of such independent financial advisor), reasonably capable of being
obtained on a timely basis by the person making such Takeover Proposal; and (B)
a "CHANGE OF CONTROL" shall mean the acquisition, directly or indirectly, by any
person or entity, together with its affiliates (as defined in Rule 12b-2 under
the Exchange Act), or any other group (as defined in Section 13(d) of the
Exchange Act), including through the formation of any such group or the
affiliation of any such persons or entities, of, or of the right to acquire or
direct the exercise of, 30% or more of the voting power of the capital stock of
Northern entitled to approve this Agreement and the Merger or to elect directors
of Northern; or

          (k) by Cowlitz if a Subsequent Triggering Event (as defined in the
Stock Option Agreement) has occurred.

         9.2      EFFECT OF TERMINATION.

          (a) In the event of termination of this Agreement by either Cowlitz or
Northern as provided in Section 9.1, this Agreement shall forthwith become void
and have no effect, and none of Cowlitz, Northern, any of their respective
Subsidiaries or any of the officers or directors of any of them shall have any
liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) Sections 7.2(b), 9.2, and 10.2
shall survive any termination of this Agreement and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither Cowlitz nor
Northern shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.

          (b) If this Agreement is terminated (i) by Cowlitz pursuant to Section
9.1(f) or (i), (ii) by Cowlitz or Northern pursuant to Section 9.1(e) because of
a failure to obtain the required approval of the stockholders of Northern after
a Takeover Proposal for Northern shall have been publicly disclosed, or any
person or entity shall have publicly disclosed an intention (whether or not
conditional) to make a Takeover Proposal, (iii) by Northern pursuant to Section
9.1(j), (iv) by Cowlitz pursuant to Section 9.1(k) or (v) by Cowlitz pursuant to
Section 9.1(d) if the breach giving rise to such termination was willful and, at
or prior to such termination, a Takeover Proposal shall have been made known to
Northern or shall have been publicly disclosed to Northern's stockholders, or
any person or entity shall have made known to Northern or otherwise publicly
disclosed an intention (whether or not conditional) to make a Takeover


                                       48
<PAGE>

Proposal, and regardless of whether such Takeover Proposal shall have been
rejected by Northern or withdrawn prior to the time of such termination, then in
any such case Northern shall (A) pay to Cowlitz a termination fee of $425,000
and (B) in addition to such termination fee, reimburse Cowlitz and Cowlitz Bank
for their documented and reasonable out-of-pocket expenses incurred by each of
them in connection with this Agreement and the transactions contemplated hereby
(including without limitation, filing fees, printing costs and fees and expenses
of legal, accounting and financial advisors). In the event Cowlitz has exercised
all or any part of the Option, then Cowlitz shall not be entitled to the
termination fee set forth in (A) above, but Northern shall nonetheless pay any
reimbursement amounts due to Cowlitz and Cowlitz Bank in accordance with (B)
above.

          (c) Any termination fee and/or reimbursement amount that becomes
payable pursuant to Section 9.2(b) shall be paid by wire transfer of immediately
available funds to an account designated by Cowlitz within one Business Day
following the termination of this Agreement, except that any termination fee or
reimbursement amount that is payable as a result of the termination of this
Agreement pursuant to Section 9.1(i) or Section 9.1(j) shall be paid
simultaneously with such termination. Notwithstanding the foregoing, in no event
shall Northern be obligated to pay any such fees to Cowlitz if immediately prior
to the termination hereof Northern was entitled to terminate this Agreement
pursuant to Section 9.1(d).

          (d) Northern and Cowlitz agree that the agreements contained in
paragraphs (b) and (c) above are an integral part of the transactions
contemplated by this Agreement, that without such agreements Cowlitz would not
have entered into this Agreement, and that such amounts do not constitute a
penalty. If Northern fails to pay Cowlitz the amounts due under paragraph (b)
above within the time periods specified in paragraph (c) above, Northern shall
pay the costs and expenses (including legal fees and expenses) incurred by
Cowlitz in connection with any action, including the filing of any lawsuit,
taken to collect payment of such amounts, together with interest on the amount
of any such unpaid amounts at the publicly announced prime rate of The Chase
Manhattan Bank from the date such amounts were required to be paid.

     9.3 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of Northern;
PROVIDED, HOWEVER, that after any approval of the transactions contemplated by
this Agreement by Northern's stockholders, there may not be, without further
approval of such stockholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to the Northern
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.

     9.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto


                                       49
<PAGE>

and (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.

     10. GENERAL PROVISIONS

     10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time.

     10.2 EXPENSES. Except as provided in Section 9.2 hereof, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense; PROVIDED,
HOWEVER, that notwithstanding anything to the contrary contained in this
Agreement, neither Cowlitz nor Northern shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.

     10.3 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):

          (a)      if to Cowlitz or Cowlitz Bank, to:

          Cowlitz Bancorporation
          927 Commerce Avenue
          Longview, Washington  98632
          Fax: (360) 423-5461
          Attn:  Charles W. Jarrett, President & COO

          and:

          Cowlitz Bank
          927 Commerce Avenue
          Longview, Washington  98632
          Fax: (360) 423-5461
          Attn:  Charles W. Jarrett, President & CEO


                                       50
<PAGE>

          with a copy to:

          Heller Ehrman White & McAuliffe
          6100 Columbia Center
          701 Fifth Avenue
          Seattle, WA  98104
          Fax:  (206) 447-0849
          Attn: Bernard L. Russell

          (b)      if to Northern, to:

          Northern Bank of Commerce
          1001 Southwest Fifth Avenue
          Suite 250
          Portland, Oregon  97204
          Fax: (503) 306-5407
          Attn:  William Spicer, Chairman

          with a copy to:

          Davis Wright Tremaine LLP
          Suite 2300
          1300 SW Fifth Avenue
          Portland, OR  97201
          Fax (503) 778-5299
          Attn: David C. Baca

     10.4 INTERPRETATION. The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Article and
Section references are to this Agreement unless otherwise specified. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. No provision of this Agreement shall be construed to require
Northern, Cowlitz or any of their respective Subsidiaries or affiliates to take
any action which would violate or conflict with any applicable law (whether
statutory or common), rule or regulation.

     10.5 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.

     10.6 ENTIRE AGREEMENT. This Agreement (together with the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior


                                       51
<PAGE>

agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, other than the Confidentiality Agreement.

     10.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Washington, without regard to any
applicable conflicts of law.

     10.8 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.

     10.9 PUBLICITY. Cowlitz and Northern shall consult with each other before
issuing any press release with respect to the Merger or this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
PROVIDED, HOWEVER, that a party may, without the prior consent of the other
party (but after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public statement as may
upon the advice of outside counsel be required by law or the rules and
regulations of Nasdaq. Without limiting the reach of the preceding sentence,
Cowlitz and Northern shall cooperate to develop all public announcement
materials and make appropriate management available at presentations related to
the transactions contemplated by this Agreement as reasonably requested by the
other party. In addition, Northern and its Subsidiaries shall (a) consult with
Cowlitz regarding communications with customers, stockholders, prospective
investors and employees related to the transactions contemplated hereby, (b)
provide Cowlitz with stockholder lists of Northern and (c) allow and facilitate
Cowlitz contact with stockholders of Northern and other prospective investors.

     10.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations of any party hereunder shall be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and permitted assigns. Except as
otherwise specifically provided in Section 7.8 hereof, this Agreement (including
the documents and instruments referred to herein) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.


                                       52
<PAGE>

         IN WITNESS WHEREOF, Cowlitz, Cowlitz Bank and Northern have caused this
Agreement to be executed by their respective officers hereunto duly authorized
as of the date first above written.
                                  COWLITZ BANCORPORATION

                                  By:
                                     ----------------------------------------
                                  Name:
                                       --------------------------------------
                                  Title:
                                        -------------------------------------

                                  COWLITZ BANK

                                  By:
                                     ----------------------------------------
                                  Name:
                                       --------------------------------------
                                  Title:
                                        -------------------------------------

                                  NORTHERN BANK OF COMMERCE

                                  By:
                                     ----------------------------------------
                                  Name:
                                       --------------------------------------
                                  Title:
                                        -------------------------------------


                                       53
<PAGE>

                                  ANNEX 2.6(d)

Classification                     Description
--------------                     -----------
Special Mention     Marginally acceptable business credit; some potential
                    weakness. Generally undesirable business constituting an
                    undue and unwarranted credit risk but not to the point of
                    justifying a Substandard classification. While the asset is
                    currently protected, it is potentially weak. No loss of
                    principal or interest is envisioned. Potential weaknesses
                    might include a weakening financial condition, an
                    unrealistic repayment program, inadequate sources of funds,
                    or lack of adequate collateral, credit information, or
                    documentation. Company is undistinguished and mediocre.

Substandard         Unacceptable business credit, normal repayment in jeopardy.
                    While no loss of principal or interest is envisioned, there
                    is a positive and well-defined weakness which jeopardizes
                    collection of debt. The asset is inadequately protected by
                    the current sound net worth and paying capacity of the
                    obligor or pledged collateral. There may already have been a
                    partial loss of interest.

Doubtful            Full payment questionable. Serious problems exist to the
                    point where a partial loss of principal is likely.
                    Weaknesses are so pronounced that on the basis of current
                    information, conditions and values, collection is highly
                    improbable.

Loss                Expected total loss. An uncollectible asset or one of such
                    little value it does not warrant classification as an active
                    asset. Such an asset may, however, have recovery or salvage
                    value, but not to the point where a write-off should be
                    deferred, even though a partial recovery may occur in the
                    future.


<PAGE>

                                  ANNEX 8.2(e)

                    EMPLOYMENT AGREEMENT UNDER SECTION 8.2(e)

John Holloway, Jr.


                                       2
<PAGE>

                                  ANNEX 8.2(f)

            NONCOMPETITION AND OPTION AGREEMENTS UNDER SECTION 8.2(f)

John Holloway, Jr.
William Spicer
Chris Brown
John Walrod
Kurt Wollenberg


                                       3
<PAGE>

                          AGREEMENT AND PLAN OF MERGER


                                  By and Among

                             COWLITZ BANCORPORATION,

                                  COWLITZ BANK

                                       and

                            NORTHERN BANK OF COMMERCE


                         Dated as of September 14, 1999


<PAGE>

<TABLE>
<S>                                                                          <C>
1. DEFINITIONS................................................................1
         1.1 Defined Terms....................................................1
         1.2 Other Definitional Provisions....................................3
2. THE MERGER.................................................................4
         2.1 The Merger.......................................................4
         2.2 Effective Time...................................................4
         2.3 Effects of the Merger............................................4
         2.4 Closing of the Merger............................................4
         2.5 Conversion of Northern Common Stock..............................4
         2.6 Merger Consideration.............................................6
         2.7 Cowlitz Stock; Cowlitz Bank Stock................................8
         2.8 Options..........................................................8
         2.9 Charter..........................................................8
         2.10 Bylaws..........................................................8
         2.11 Board of Directors..............................................9
         2.12 Officers........................................................9
         2.13 Offices.........................................................9
         2.14 Stock Option Agreement..........................................9
         2.15 Tax Consequences................................................9
3. EXCHANGE OF SHARES.........................................................9
         3.1 Cowlitz to Make Shares Available.................................9
         3.2 Exchange of Certificates.........................................9
4. REPRESENTATIONS AND WARRANTIES OF NORTHERN................................14
         4.1 Corporate Organization..........................................14
         4.2 Capitalization..................................................14
         4.3 Authority; No Violation.........................................15
         4.4 Consents and Approvals..........................................16
         4.5 Reports.........................................................17
         4.6 Financial Statements............................................17
         4.7 Broker's Fees...................................................17
         4.8 Absence of Certain Changes or Events............................18
         4.9 Legal Proceedings...............................................18
         4.10 Taxes..........................................................18
         4.11 Employees; Employee Benefit Plans..............................20
         4.12 FDIC Reports...................................................22
         4.13 Compliance with Applicable Law.................................22
         4.14 Certain Contracts..............................................22


                                       i
<PAGE>

         4.15 Agreements with Regulatory Agencies............................23
         4.16 Undisclosed Liabilities........................................23
         4.17 Anti-takeover Provisions.......................................23
         4.18 Northern Information...........................................23
         4.19 Title to Property..............................................24
         4.20 Insurance......................................................24
         4.21 Environmental Liability........................................25
         4.22 Opinion of Financial Advisor...................................25
         4.23 Patents, Trademarks, Etc.......................................25
         4.24 Loan Matters...................................................26
         4.25 Powers of Attorney.............................................27
         4.26 Benefit Plans Invested in Common Stock.........................27
         4.27 Community Reinvestment Act Compliance..........................27
         4.28 Year 2000 Compliance...........................................27
         4.29 Labor Matters..................................................27
5. REPRESENTATIONS AND WARRANTIES OF COWLITZ.................................28
         5.1 Corporate Organization..........................................28
         5.2 Capitalization..................................................28
         5.3 Authority; No Violation.........................................29
         5.4 Consents and Approvals..........................................30
         5.5 Reports.........................................................30
         5.6 Financial Statements............................................31
         5.7 Broker's Fees...................................................31
         5.8 Absence of Certain Changes or Events............................31
         5.9 Legal Proceedings...............................................32
         5.10 SEC Reports....................................................32
         5.11 Compliance with Applicable Law.................................32
         5.12 Agreements with Regulatory Agencies............................32
         5.13 Cowlitz Information............................................33
         5.14 Year 2000 Compliance...........................................33
         5.15 Opinion of Financial Advisor...................................33
6. COVENANTS RELATING TO CONDUCT OF BUSINESS.................................34
         6.1 Conduct of Businesses Prior to the Effective Time...............34
         6.2 Northern Forbearances...........................................34
         6.3 No Fundamental Cowlitz Changes..................................37
7. ADDITIONAL AGREEMENTS.....................................................38
         7.1 Regulatory Matters..............................................38
         7.2 Access to Information...........................................38
         7.3 Stockholder Approval............................................39


                                       ii
<PAGE>

         7.4 Legal Conditions to Merger......................................39
         7.5 Affiliates......................................................40
         7.6 Stock Listing...................................................40
         7.7 Employees; Employee Benefit Plans...............................40
         7.8 Indemnification; Directors'and Officers'Insurance...............41
         7.9 Additional Agreements...........................................41
         7.10 Advice of Changes..............................................41
         7.11 Subsequent Interim and Annual Financial Statements.............42
         7.12 Disclosure Supplements.........................................42
8. CONDITIONS PRECEDENT......................................................43
         8.1 Conditions to Each Party's Obligation to Effect the Merger......43
         8.2 Conditions to Obligations of Cowlitz............................43
         8.3 Conditions to Obligations of Northern...........................45
9. TERMINATION AND AMENDMENT.................................................46
         9.1 Termination.....................................................46
         9.2 Effect of Termination...........................................48
         9.3 Amendment.......................................................49
         9.4 Extension; Waiver...............................................49
10. GENERAL PROVISIONS.......................................................50
         10.1 Nonsurvival of Representations, Warranties and Agreements......50
         10.2 Expenses.......................................................50
         10.3 Notices........................................................50
         10.4 Interpretation.................................................51
         10.5 Counterparts...................................................51
         10.6 Entire Agreement...............................................51
         10.7 Governing Law..................................................52
         10.8 Severability...................................................52
         10.9 Publicity......................................................52
         10.10 Assignment; Third Party Beneficiaries.........................52
</TABLE>
EXHIBITS
         Exhibit 2.14 - Stock Option Agreement
         Exhibit 3.2 - Escrow Agreement
ANNEXES
         Annex 2.6(d) - Loan Classifications
         Annex 2.7 - Surviving Bank's Capital
         Annex 2.11 - Surviving Bank's Directors
         Annex 2.12 - Surviving Bank's Officers
         Annex 2.13 - Surviving Bank's Offices


                                       iii
<PAGE>

         Annex 8.2(e) - Employment Agreement under Section 8.2(e)
         Annex 8.2(f) - Noncompetition and Option Agreements under
                        Section 8.2(f)


                                       iv