---

---



U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---

FORM 10-Q

[X]
	
	Quarterly report Pursuant to section 13 or 15(d) of the Securities and Exchange act of 1934For the quarter ended March 31, 2004[  ]
	
	Transition report pursuant to section 13 or 15(d) of the Securities and Exchange act of 1934For the transition period from ________________ to ________________


Commission file number 0-23881

---

COWLITZ BANCORPORATION(Exact name of registrant as specified in its charter)

---



Washington
	
	91-1529841(State or other jurisdiction
	
	(I.R.S. Employerof incorporation or organization)
	
	Identification No.)


927 Commerce Ave., Longview, Washington 98632
(Address of principal executive offices) (Zip Code)

(360) 423-9800
(Registrant's telephone number, including area code)

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

Yes [X] No [ ]

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Act) 
Yes[ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value on April 30, 2004: 3,913,152 shares.

1

---



COWLITZ BANCORPORATION AND SUBSIDIARY 
TABLE OF CONTENTS

PAGEPart I
	
	FINANCIAL INFORMATIONItem 1.
	
	Financial StatementsConsolidated Statements of Condition -
	
	3March 31, 2004 and December 31, 2003Consolidated Statements of Income -
	
	4Three months ended March 31, 2004 and 2003 and year ended December 31, 2003Consolidated Statements of Changes in Shareholders' Equity -
	
	5Year ended December 31, 2003 and three months ended March 31, 2004Consolidated Statements of Cash Flows -
	
	6Three months ended March 31, 2004 and 2003Notes to Consolidated Financial Statements
	
	7-13Item 2.
	
	Management's Discussion and Analysis of Financial Condition
	
	14-23And Results of OperationsItem 3.
	
	Quantitative and Qualitative Disclosures About Market Risk
	
	23-24Item 4.
	
	Controls and Procedures
	
	24Part II
	
	OTHER INFORMATIONItem 1.
	
	Legal Proceedings
	
	25Item 2.
	
	Changes in Securities and Use of Proceeds
	
	25Item 3.
	
	Defaults upon Senior Securities
	
	25Item 4.
	
	Submission of Matters to a Vote of Security Holders
	
	25Item 5.
	
	Other Information
	
	25Item 6.
	
	Exhibits and Reports on Form 8-K
	
	25Signatures
	
	26Certification of Chief Executive Officer and Chief Financial Officer
	
	27-29


Forward-Looking Statements

Management's discussion and the information in this document and the accompanying financial statements contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by words such as "expect", "believe", "intend", "anticipate", "estimate" or similar
expressions, and are subject to risks and uncertainties that could cause actual results to differ materially from those stated. Examples of such risks and uncertainties that could have a material adverse effect on the operations and future prospects
of the Company, and could render actual results different from those expressed in the forward-looking statements, include, without limitation: changes in general economic conditions, competition for financial services in the market area of the
Company, the level of demand for loans, quality of the loan and investment portfolio, deposit flows, legislative and regulatory initiatives, and monetary and fiscal policies of the U.S. Government affecting interest rates. The reader is advised that
this list of risks is not exhaustive and should not be construed as any prediction by the Company as to which risks would cause actual results to differ materially from those indicated by the forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements.

2

---

Part I. FINANCIAL INFORMATION Item 1. Financial Statements

COWLITZ BANCORPORATION
      AND SUBSIDIARYCONSOLIDATED STATEMENTS
      OF CONDITION(dollars in thousands)March 31,
      
      December 31,ASSETS
      
      
      
      2004
      
      2003Cash and cash
      equivalents
      
      
      $
      26,663
      $
      24,527Investment securities:Available-for-sale (at fair value, cost of $49,796 and $46,658
      atMarch 31, 2004 and December 31, 2003, respectively)
      
      
      
      50,716
      
      47,000Held-to-maturity (at amortized cost, fair value of $100 and
      $8,270at
      March 31, 2004 and December 31, 2003, respectively)
      
      
      
      100
      
      8,144Total investment securities
      
      
      
      50,816
      
      55,144Federal Home Loan Bank
      stock, at cost
      
      
      
      1,966
      
      1,974Loans held-for-sale
      
      
      
      -
      
      8,360Loans, net of deferred
      loan fees
      
      
      
      165,929
      
      163,490Allowance for loan
      losses
      
      
      
      (4,003)
      
      (3,968)Total loans,
      net
      
      
      
      161,926
      
      159,522Cash surrender value of
      bank-owned life insurance
      
      
      
      8,303
      
      8,170Premises and equipment,
      net of accumulated depreciation of $4,455 and$4,350 at
      March 31, 2004 and December 31, 2003, respectively
      
      
      
      4,079
      
      4,171Goodwill, net of
      impairment adjustments and accumulated amortizationof $1,987 at
      March 31, 2004 and December 31, 2003, respectively
      
      
      
      852
      
      852Intangible assets, net
      of accumulated amortization of $1,800 and$1,734 at
      March 31, 2004 and December 31, 2003, respectively
      
      
      
      170
      
      236Accrued interest
      receivable and other assets
      
      
      
      4,929
      
      5,843TOTAL ASSETS
      
      
      $
      259,704
      $
      268,799LIABILITIESDeposits:Non-interest-bearing demand
      
      
      $
      52,956
      $
      60,572Savings and
      interest-bearing demand
      
      
      
      86,363
      
      86,375Certificates
      of deposit
      
      
      
      81,141
      
      79,533Total deposits
      
      
      
      220,460
      
      226,480Federal funds purchased
      
      
      
      2,125
      
      225Federal Home Loan Bank
      borrowings
      
      
      
      608
      
      5,653Other borrowings
      
      
      
      1,950
      
      2,739Accrued interest
      payable and other liabilities
      
      
      
      1,906
      
      1,900TOTAL LIABILITIES
      
      
      
      227,049
      
      236,997SHAREHOLDERS' EQUITYPreferred stock, no par
      value; 5,000,000 shares authorized; no sharesissued and
      outstanding at March 31, 2004 and December 31, 2003
      
      
      
      -
      
      -Common stock, no par
      value; 25,000,000 shares authorized; with 3,913,152and 3,898,652
      shares issued and outstanding at March 31, 2004 andDecember 31,
      2003, respectively
      
      
      
      18,031
      
      17,957Additional paid-in
      capital
      
      
      
      1,609
      
      1,609Retained earnings
      
      
      
      12,408
      
      12,011Accumulated other
      comprehensive income, net of taxes
      
      
      
      607
      
      225TOTAL SHAREHOLDERS'
      EQUITY
      
      
      
      32,655
      
      31,802TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
      
      
      $
      259,704
      $
      268,799See accompanying
      notes




3

---



COWLITZ BANCORPORATION
      AND SUBSIDIARYCONSOLIDATED STATEMENTS
      OF INCOME(dollars in thousands,
      except per share amounts)Three Months EndedMarch 31
      
      
      Year EndedDecember 31,2004
      
      2003
      
      
      2003INTEREST
      INCOMEInterest and fees on loans
      
      
      $
      3,058
      
      
      $
      4,233
      
      
      $
      14,586Interest on taxable investment securities
      
      
      
      461
      
      
      
      250
      
      
      
      1,089Interest on non-taxable investment securities
      
      
      
      80
      
      
      
      3
      
      
      
      102Other interest and dividend income
      
      
      
      21
      
      
      
      173
      
      
      
      505Total interest income
      
      
      
      3,620
      
      
      
      4,659
      
      
      
      16,282INTEREST
      EXPENSESavings and interest-bearing demand
      
      
      
      184
      
      
      
      324
      
      
      
      1,141Certificates of deposit
      
      
      
      497
      
      
      
      1,003
      
      
      
      3,117Federal funds purchased
      
      
      
      3
      
      
      
      7
      
      
      
      16Federal Home Loan Bank borrowings
      
      
      
      19
      
      
      
      140
      
      
      
      460Other borrowings
      
      
      
      51
      
      
      
      57
      
      
      
      228Total interest expense
      
      
      
      754
      
      
      
      1,531
      
      
      
      4,962Net interest income before (benefit) provision for
      loan losses
      
      
      
      2,866
      
      
      
      3,128
      
      
      
      11,320(BENEFIT) PROVISION FOR LOAN LOSSES
      
      
      
      (13)
      
      
      
      523
      
      
      
      237Net interest income after (benefit) provision for loan
      losses
      
      
      
      2,879
      
      
      
      2,605
      
      
      
      11,083NON-INTEREST INCOMEService charges on deposit accounts
      
      
      
      188
      
      
      
      246
      
      
      
      858Gains on loans sold
      
      
      
      172
      
      
      
      1,749
      
      
      
      4,404Mortgage brokerage fees
      
      
      
      105
      
      
      
      843
      
      
      
      1,992Escrow fees
      
      
      
      -
      
      
      
      337
      
      
      
      961Credit card income
      
      
      
      138
      
      
      
      153
      
      
      
      633Fiduciary income
      
      
      
      101
      
      
      
      90
      
      
      
      320Increase in cash surrender value of bank-owned life insurance
      
      
      
      133
      
      
      
      -
      
      
      
      170Net losses on sales of investment securities available-for-sale
      
      
      
      -
      
      
      
      -
      
      
      
      (9)Net (losses) gains on sale of repossessed assets
      
      
      
      (80)
      
      
      
      33
      
      
      
      (13)Other income
      
      
      
      51
      
      
      
      43
      
      
      
      90Total non-interest income
      
      
      
      808
      
      
      
      3,494
      
      
      
      9,406NON-INTEREST EXPENSESalaries and employee benefits
      
      
      
      1,662
      
      
      
      2,624
      
      
      
      9,478Net occupancy and equipment expense
      
      
      
      435
      
      
      
      647
      
      
      
      2,564Professional fees
      
      
      
      160
      
      
      
      467
      
      
      
      1,527Goodwill impairment
      
      
      
      -
      
      
      
      -
      
      
      
      1,472Business taxes
      
      
      
      55
      
      
      
      133
      
      
      
      12FDIC assessment
      
      
      
      104
      
      
      
      138
      
      
      
      505Credit card expense
      
      
      
      130
      
      
      
      155
      
      
      
      616Data processing and communications
      
      
      
      78
      
      
      
      129
      
      
      
      454Loan expense
      
      
      
      15
      
      
      
      113
      
      
      
      746Postage and freight
      
      
      
      62
      
      
      
      103
      
      
      
      426Travel and education
      
      
      
      36
      
      
      
      71
      
      
      
      288Stationery and supplies
      
      
      
      37
      
      
      
      61
      
      
      
      233Temporary help
      
      
      
      4
      
      
      
      134
      
      
      
      377Amortization of intangible assets
      
      
      
      66
      
      
      
      66
      
      
      
      265Expenses relating to other real estate owned
      
      
      
      19
      
      
      
      27
      
      
      
      196Other expenses
      
      
      
      310
      
      
      
      237
      
      
      
      1,251Total non-interest expense
      
      
      
      3,173
      
      
      
      5,105
      
      
      
      20,410Income before provision for income taxes
      
      
      
      514
      
      
      
      994
      
      
      
      79INCOME
      TAX PROVISION (BENEFIT)
      
      
      
      117
      
      
      
      351
      
      
      
      (38)NET
      INCOME
      
      
      $
      397
      
      
      $
      643
      
      
      $
      117BASIC
      EARNINGS PER SHARE OF COMMON STOCK
      
      
      $
      0.10
      
      
      $
      0.17
      
      
      $
      0.03DILUTED
      EARNINGS PER SHARE OF COMMON STOCK
      
      
      $
      0.10
      
      
      $
      0.16
      
      
      $
      0.03WEIGHTED-AVERAGE SHARES OUTSTANDING - BASIC
      
      
      
      3,906,379
      
      
      
      3,819,424
      
      
      
      3,854,253WEIGHTED-AVERAGE SHARES OUTSTANDING - DILUTED
      
      
      
      4,135,912
      
      
      
      3,918,460
      
      
      
      4,004,502See
      accompanying notes




4

---



COWLITZ BANCORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY(dollars in thousands)AccumulatedAdditional
	
	
	
	Other
	
	TotalCommon stock
	
	Paid-in
	
	Retained
	
	Comprehensive
	
	Shareholders'
	
	ComprehensiveShares
	
	Amount
	
	Capital
	
	Earnings
	
	Income
	
	Equity
	
	IncomeBALANCE, December 31, 2002
	
	3,818,272
	$
	17,491
	$
	1,538
	$
	11,894
	$
	340
	$
	31,263Comprehensive income:Net income
	
	-
	
	-
	
	-
	
	117
	
	-
	
	117
	$
	117Net changes in unrealized gains oninvestments available-for-sale,net of deferred taxes of $42
	
	-
	
	-
	
	-
	
	-
	
	(115)
	
	(115)
	
	(115)Comprehensive income
	
	
	
	
	
	
	
	
	
	
	
	
	$
	2Proceeds from the exercise ofstock options
	
	80,380
	
	466
	
	-
	
	-
	
	-
	
	466Tax benefit from the exerciseof stock options
	
	-
	
	-
	
	71
	
	-
	
	-
	
	71BALANCE, December 31, 2003
	
	3,898,652
	
	17,957
	
	1,609
	
	12,011
	
	225
	
	31,802Comprehensive income:Net income
	
	-
	
	-
	
	-
	
	397
	
	-
	
	397
	$
	397Net unrealized gains on investmentsreclassified from held-to-maturityto available-for-sale, net ofdeferred taxes of $(134)
	
	-
	
	-
	
	-
	
	-
	
	261
	
	261
	
	261Net changes in unrealized gains oninvestments available-for-sale,net of deferred taxes of $(63)
	
	-
	
	-
	
	-
	
	-
	
	121
	
	121
	
	121Comprehensive income
	
	
	
	
	
	
	
	
	
	
	
	
	$
	779Proceeds from the exercise ofstock options
	
	14,500
	
	74
	
	-
	
	-
	
	-
	
	74BALANCE, March 31, 2004
	
	3,913,152
	$
	18,031
	$
	1,609
	$
	12,408
	$
	607
	$
	32,655See accompanying notes


5

---



COWLITZ BANCORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in thousands)Three Months EndedMarch 31,2004
	
	2003CASH FLOWS FROM OPERATING ACTIVITIESNet income from operations
	$
	397
	$
	643Adjustments to reconcile net income to net cash from operating activities:Deferred tax expense (benefit)
	
	163
	
	(769)Depreciation and amortization
	
	179
	
	217(Benefit) provision for loan losses
	
	(13)
	
	523Increase in cash surrender value of bank-owned life insurance
	
	(133)
	
	-Federal Home Loan Bank stock dividends
	
	(19)
	
	(38)Net amortization of investment security premiums and accretion of discounts
	
	91
	
	70Net losses (gains) on sales of foreclosed assets
	
	80
	
	(33)Net (gains) losses on the sale and disposal of premises and equipment
	
	(2)
	
	10Net gains on loans sold
	
	(172)
	
	(1,749)Origination of loans held-for-sale
	
	(3,019)
	
	(125,069)Proceeds from loan sales
	
	10,663
	
	153,308Decrease in accrued interest receivable and other assets
	
	74
	
	365Increase in accrued interest payable and other liabilities
	
	6
	
	328Net cash from operating activities
	
	8,295
	
	27,806CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities and sales of investment securities available-for-sale
	
	4,816
	
	6,097Purchases of available-for-sale investment securitiesPurchases of available-for-sale investment securities
	
	-
	
	(8,117)Proceeds from redemption of Federal Home Loan Bank stock
	
	27
	
	42Net (increase) decrease in loans
	
	(1,568)
	
	14,220Proceeds from sale of foreclosed assets
	
	465
	
	711Purchases of premises and equipment
	
	(21)
	
	(11)Proceeds from the sale of premises and equipment
	
	2
	
	4Net cash from investment activities
	
	3,721
	
	12,946CASH FLOWS FROM FINANCING ACTIVITIESNet decrease in savings, noninterest-bearing and interest-bearing demand deposits
	
	(7,628)
	
	(6,277)Net increase (decrease) in certificates of deposit
	
	1,608
	
	(22,193)Net increase in federal funds purchased
	
	1,900
	
	1,150Proceeds from Federal Home Loan Bank borrowings
	
	10,000
	
	-Repayment of Federal Home Loan Bank borrowings
	
	(15,045)
	
	(8,045)Repayment of other borrowings
	
	(789)
	
	(34)Proceeds from the exercise of stock options
	
	74
	
	29Net cash from financing activities
	
	(9,880)
	
	(35,370)Net increase in cash and cash equivalents
	
	2,136
	
	5,382CASH AND CASH EQUIVALENTS, be ginning of period
	
	24,527
	
	43,691CASH AND CASH EQUIVALENTS, end of period
	$
	26,663
	$
	49,073See accompanying notes


6

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

1. Nature of Operations

Cowlitz Bancorporation (the "Company") was organized in 1991 under Washington law to become the holding company for Cowlitz Bank (the "Bank"), a Washington state chartered bank that commenced operations in 1978. The
principal executive offices of the Company are located in Longview, Washington. Cowlitz Bank operates four branches in Cowlitz County in southwest Washington. Outside of Cowlitz County, the Bank does business under the name Bay Bank with branches in
Bellevue, Washington, and Portland, Oregon, a loan production office in Vancouver, Washington, and a limited service branch in a retirement center in Wilsonville, Oregon. The Oregon branches of Bay Bank were previously operated under the name
Northern Bank of Commerce (NBOC). Cowlitz Bank also provides mortgage banking services through its Bay Mortgage division with offices in Longview and Vancouver, Washington. During much of 2003, the Company also operated Bay Mortgage and Bay Escrow
offices in Bellevue and Seattle, Washington. As part of a strategy to consolidate resources into commercial banking, and reduce reliance on mortgage lending activities, those offices were closed during the fourth quarter of 2003 and the first
quarter of 2004.

The Company offers or makes available a broad range of financial services to its customers, primarily small and medium-sized businesses, professionals, and retail customers. The Bank's commercial and personal banking
services include commercial and real estate lending, consumer lending, and trust services. The Company's goals are to offer exceptional customer service and to invest in the markets it serves through its business practices and community service.

2. Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany transactions and balances have been eliminated.

The interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required
by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals necessary for fair presentation of results of
operations for the interim periods included herein have been made. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of results to be anticipated for the year ending December 31, 2004.

3. Cash and Cash Equivalents

For the purpose of presentation in the statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Federal funds sold generally mature the day following
purchase.

4. Use of Estimates in the Preparation of Financial Statements

Preparation of the consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make certain estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates include the
allowance for loan losses and the carrying value of the Company's goodwill. Actual results could differ from those estimates.

5. Earnings Per Share

The following table reconciles the denominator of the basic and diluted earnings per share computations:

Three Months Ended
	
	Year EndedMarch 31,
	
	December 31,2004
	
	2003
	
	2003Weighted-average shares - basic
	
	3,906,379
	
	3,819,424
	
	3,854,253Effect of assumed conversion of stock options
	
	229,533
	
	99,036
	
	150,249Weighted-average shares - diluted
	
	4,135,912
	
	3,918,460
	
	4,004,502


Options to purchase 239,966 shares of common stock with exercise prices ranging from $10.99 to $12.00, with an average price of $11.66, were outstanding at March 31, 2004 but were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the average market price of the common shares for the three month period ended March 31, 2004. These options expire from 2009-2014.

Options to purchase 279,566 shares of common stock with exercise prices ranging from $7.00 to $12.00, with an average price of $11.02, were outstanding at March 31, 2003 but were not included in the computation of diluted
earnings per share because the

7

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

options' exercise price was greater than the average
market price of the common shares for the three month period ended March 31,
2003. These options expire from 2008-2012.

Options to purchase 536,966 shares of common stock with exercise prices ranging from $8.75 to $12.00, with an average price of $11.12, were outstanding at December 31, 2003 but were not included in the computation of
diluted earnings per share because the options' exercise price was greater than the average market price of the common shares for the year ended December 31, 2003. These options expire from 2009-2013.

6. Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities. It defined a variable interest entity ("VIE") as a corporation, partnership, trust,
or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. This
interpretation will require a VIE to be consolidated or deconsolidated by a company if that company is subject to a majority of the risk of loss from the VIE's activities or entitled to receive a majority of the entity's residual return. In December
2003, FASB made revisions and delayed implementation of certain provisions of FIN 46. The Company is now required to apply FIN 46 to all unconsolidated variable interest entities no later than March 31, 2004. The Company does not have any VIEs and,
accordingly, the implementation of this Interpretation did not impact its consolidated financial statements.

In April 2003, FASB issued Statement of Financial Accounting Standards (SFAS) No. 149, "Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities." This Statement amends and clarifies financial
accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement is effective for contracts entered into or modified after June 30, 2003. Adoption of this statement did not impact the Company's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of these financial
instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and was otherwise effective at the beginning of the first interim period beginning after June 15,
2003. Adoption of this statement did not impact the Company's consolidated financial statements.

8

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

7. Stock-Based Compensation

SFAS No. 123, "Accounting for Stock-Based Compensation," requires disclosure about stock-based compensation arrangements regardless of the method used to account for them. As permitted by SFAS No. 123, the Company has
decided to apply the accounting provisions of Accounting Principles Board (APB) Opinion No. 25, and therefore discloses the difference between compensation cost included in net income and the related cost measured by the fair value-based method
defined by SFAS No. 123, including tax effects, that would have been recognized in the statement of income if the fair value method had been used. Under APB Opinion No. 25, no compensation cost has been recognized for the Company's stock option
plans. Had compensation cost for these plans been determined consistent with SFAS No. 123 and recognized over the vesting period, the Company's net income (loss) and earnings (loss) per share would have been reduced to the following pro forma
amounts:

Three Months Ended
	
	Three Months Ended
	
	Year EndedMarch 31, 2004
	
	March 31, 2003
	
	December 31, 2003As
	
	Pro
	
	As
	
	Pro
	
	As
	
	ProReported
	
	Forma
	
	Reported
	
	Forma
	
	Reported
	
	Forma(dollars in thousands, except for share amounts)Net income (loss)
	$
	397
	$
	355
	$
	643
	$
	505
	$
	117
	$
	(506)Basic earnings (loss) per share
	$
	0.10
	$
	0.09
	$
	0.17
	$
	0.13
	$
	0.03
	$
	(0.13)Diluted earnings (loss) per share
	$
	0.10
	$
	0.09
	$
	0.16
	$
	0.13
	$
	0.03
	$
	(0.13)


The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for March 31, 2004 and 2003 and for December 31, 2003.

Three Months Ended
	
	Year EndedMarch 31,
	
	December 31,2004
	
	2003
	
	2003Dividend yield
	
	0.00%
	
	0.00%
	
	0.00%Expected life (years)
	
	4.26
	
	4.17
	
	4.17 - 4.26Expected volatility
	
	38.40%
	
	52.11%
	
	48.31% - 52.11%Risk-free rate
	
	2.98%
	
	2.98%
	
	2.87% - 2.98%


9

---

COWLITZ BANCORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

8. Comprehensive Income

For the Company, comprehensive income includes net income reported on the statements of income and changes in the fair value of its available-for-sale investments reported as a component of shareholders'
equity.

The components of comprehensive income (loss) for the three months ended March 31, 2004 and 2003 and the twelve months ended December 31, 2003, are as follows:

Three Months EndedMarch 31,
	
	
	
	Twelve Months
Ended
December 31,2004
	
	2003
	
	
	
	2003(dollars in thousands)Unrealized gain (loss) arising during the period, net of tax
	
	
	$
	382
	$
	(75)
	
	
	$
	(121)Less reclassification adjustment for net realized losseson securities available-for-sale included in netincome during the year, net of tax
	
	
	
	-
	
	-
	
	
	
	(6)Net unrealized gain (loss) included inother comprehensive income
	
	
	$
	382
	$
	(75)
	
	
	$
	(115)


9. Segments of an Enterprise and Related Information

The Company is principally engaged in community banking activities through its branches and corporate offices. Community banking activities include accepting deposits, providing loans and lines of credit to local
individuals, businesses and governmental entities, investing in investment securities and money market instruments, and holding or managing assets in a fiduciary agency capacity on behalf of its customers and their beneficiaries. The mortgage
banking segment, Bay Mortgage, offers a full line of residential lending products including FHA and VA loans, construction loans, and bridge loans.

The community banking and mortgage banking activities are monitored and reported by Company management as separate operating segments. Despite the closure of Bay Escrow and the Bellevue and Seattle offices of Bay Mortgage
during the fourth quarter of 2003, mortgage lending activities in the remaining locations will continue to be reported as a separate operating segment.

The accounting policies for the Company's segment information provided in the following tables are the same as those described for the Company in the summary of significant accounting policies footnote included in the
Company's 2003 annual report, except that some operating expenses and the results of discontinued operations are not allocated to segments.

10

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except number of shares and per share amounts)

Summarized financial information for the three months ended March 31, 2004 and 2003, and the year ended December 31, 2003 concerning the Company's reportable segments is shown in the following tables:

Three Months Ended March 31, 2004Banking
	
	Mortgage
Banking
	
	
	
	Holding
Company
	
	
	
	Intersegment
	
	
	
	Consolidated(unaudited)Interest income
	
	
	$
	4,071
	$
	107
	
	
	$
	3
	
	
	$
	(561)
	
	
	$
	3,620Interest expense
	
	
	
	1,173
	
	92
	
	
	
	50
	
	
	
	(561)
	
	
	
	754Net interest income
	
	
	
	2,898
	
	15
	
	
	
	(47)
	
	
	
	-
	
	
	
	2,866Provision (benefit) for loan losses
	
	
	
	150
	
	-
	
	
	
	(163)
	
	
	
	-
	
	
	
	(13)Noninterest income
	
	
	
	531
	
	277
	
	
	
	-
	
	
	
	-
	
	
	
	808Noninterest expense
	
	
	
	2,519
	
	484
	
	
	
	170
	
	
	
	-
	
	
	
	3,173Income (loss) before provision(benefit) for income taxes
	
	
	
	760
	
	(192)
	
	
	
	(54)
	
	
	
	-
	
	
	
	514Provision (benefit) for income taxes
	
	
	
	200
	
	(66)
	
	
	
	(17)
	
	
	
	-
	
	
	
	117Net income (loss)
	
	
	$
	560
	$
	(126)
	
	
	$
	(37)
	
	
	$
	-
	
	
	$
	397Depreciation and amortization
	
	
	$
	162
	$
	17
	
	
	$
	-
	
	
	$
	-
	
	
	$
	179Total assets
	
	
	$
	257,633
	$
	2,009
	
	
	$
	34,609
	
	
	$
	(34,547)
	
	
	$
	259,704


Compared to quarterly segment information reported during 2003, the mortgage banking segment experienced significantly lower activity during the first quarter of 2004. In December 2003 and the first quarter of 2004, the
Company began reducing the size of its mortgage banking operations by closing its Bay Mortgage offices in Bellevue and Seattle. Management believes that the net loss reported for the mortgage banking segment during the three months ended March 31,
2004 could have been significantly higher if the segment had continued to operate as it had during 2003. Reduced demand for mortgage refinance loans and a desire to concentrate resources on the core banking segment were the factors leading to the
decision to scale back the mortgage banking segment. The credit to the provision for loan losses on the Holding Company segment was generated from the recovery of a previously charged-off loan.

11

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

Three Months Ended March 31, 2003Banking
	
	
	Mortgage
Banking
	
	Holding
Company
	
	Intersegment
	
	Consolidated(unaudited)Interest income
	
	
	$
	4,282
	
	
	$
	944
	$
	8
	
	
	$
	(575)
	
	
	$
	4,659Interest expense
	
	
	
	1,525
	
	
	
	525
	
	56
	
	
	
	(575)
	
	
	
	1,531Net interest income
	
	
	
	2,757
	
	
	
	419
	
	(48)
	
	
	
	-
	
	
	
	3,128Provision (benefit) for loan losses
	
	
	
	(751)
	
	
	
	-
	
	1,274
	
	
	
	-
	
	
	
	523Noninterest income
	
	
	
	565
	
	
	
	2,929
	
	-
	
	
	
	-
	
	
	
	3,494Noninterest expense
	
	
	
	2,735
	
	
	
	2,307
	
	63
	
	
	
	-
	
	
	
	5,105Income (loss) before provision(benefit) for income taxes
	
	
	
	1,338
	
	
	
	1,041
	
	(1,385)
	
	
	
	-
	
	
	
	994Provision (benefit) for income taxes
	
	
	
	468
	
	
	
	359
	
	(476)
	
	
	
	-
	
	
	
	351Net income (loss)
	
	
	$
	870
	
	
	$
	682
	$
	(909)
	
	
	$
	-
	
	
	$
	643Depreciation and amortization
	
	
	$
	189
	
	
	$
	28
	$
	-
	
	
	$
	-
	
	
	$
	217Total assets
	
	
	$
	308,376
	
	
	$
	54,156
	$
	34,707
	
	
	$
	(86,549)
	
	
	$
	310,690


The segment information for the three months ended March 31, 2003 includes a reclassification between the Banking and Holding Company segments of $901,000 for the provision for loan losses. This reclassification does not
affect the consolidated results of operation or earnings per share, but has resulted in a benefit to the Banking segment presentation above.

12

---

COWLITZ BANCORPORATION AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(amounts in thousands, except number of shares and per share amounts)

|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|------------------------------------ |  |  | - | ---------------------------- | - | ---------------- | - | --------------- |  |  | - | ------------ |  |  | - | ------------
|                                     |  |  |   | Year Ended December 31, 2003
|                                     |  |  |   | Banking                      |   | Mortgage
Banking |   | Holding
Company |  |  |   | Intersegment |  |  |   | Consolidated
|                                    
|(dollars in thousands)               |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|Interest income                      |  |  | $ | 16,224                       | $ | 2,525            | $ | 21              |  |  | $ | (2,488)      |  |  | $ | 16,282      
|Interest expense                     |  |  |   | 5,859                        |   | 1,367            |   | 224             |  |  |   | (2,488)      |  |  |   | 4,962       
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                    
|Net interest income                  |  |  |   | 10,365                       |   | 1,158            |   | (203)           |  |  |   | -            |  |  |   | 11,320      
|                                    
|Provision for loan losses            |  |  |   | (426)                        |   | -                |   | 663             |  |  |   | -            |  |  |   | 237         
|Non-interest income                  |  |  |   | 2,031                        |   | 7,358            |   | 17              |  |  |   | -            |  |  |   | 9,406       
|Non-interest expense                 |  |  |   | 10,797                       |   | 9,257            |   | 356             |  |  |   | -            |  |  |   | 20,410      
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                    
|Income (loss) before provision       |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|(benefit) for income taxes           |  |  |   | 2,025                        |   | (741)            |   | (1,205)         |  |  |   | -            |  |  |   | 79          
|                                    
|Provision (benefit) for income taxes |  |  |   | 599                          |   | (256)            |   | (381)           |  |  |   | -            |  |  |   | (38)        
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                    
|Net income (loss)                    |  |  | $ | 1,426                        | $ | (485)            | $ | (824)           |  |  | $ | -            |  |  | $ | 117         
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                    
|Depreciation and amortization        |  |  | $ | 679                          | $ | 111              | $ | -               |  |  | $ | -            |  |  | $ | 790         
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                    
|Total assets                         |  |  | $ | 266,970                      | $ | 14,947           | $ | 34,547          |  |  | $ | (47,665)     |  |  | $ | 268,799     
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             
|                                     |  |  |   |                              |   |                  |   |                 |  |  |   |              |  |  |   |             

The segment information for the year ended December 31, 2003 includes a reclassification between the Banking and Holding Company segments of $901,000 for the provision for loan losses. This reclassification does not affect
the consolidated results of operation or earnings per share, but has resulted in a benefit to the Banking segment presentation above. The net loss reported for the mortgage banking segment is primarily due to costs associated with the closure of
that segment's Bellevue and Seattle offices recorded during the forth quarter of 2003.

13

---

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended March 31, 2004 and 2003

During the first quarter of 2004 the Company's net income was $397,000, or $0.10 per diluted share, compared to net income of $643,000, or $0.16 per diluted share, during the first quarter of 2003. Net interest income was
$262,000 lower for the three months ended March 31, 2004 when compared to the same period of 2003, but the Company benefited from a reduction in the provision for loan losses of $536,000. The first quarter of 2004 includes a credit to the provision
for loan losses of $13,000, the result of a $163,000 recovery by the Holding Company of a previously charged-off loan, while the Banking segment recorded a provision for loan losses of $150,000 for the first quarter of 2004. Non-interest income and
non-interest expenses were $2.7 million and $1.9 million lower, respectively comparing the first quarters of 2004 and 2003. These decreases primarily resulted from reductions in the Company's mortgage operations.

Financial Condition as of March 31, 2004 and December 31, 2003

At March 31, 2004, total assets were $259.7 million and total liabilities were $227.0 million. Total assets have decreased $9.1 million or 3.4% from $268.8 million at December 31, 2003 and liabilities have decreased $9.9
million or 4.2% from $237.0 million at December 31, 2003.

The decline in total assets is primarily due to a reduction in loans held-for-sale since December 31, 2003. At December 31, 2003, the loans held-for-sale were $8.4 million but as of March 31, 2004, the entire balance had
been sold into the secondary market. As part of the strategy to curtail the mortgage operations, the Company will no longer originate loans for sale into the secondary market. Although the Company has ceased its secondary market function and closed
its Bellevue and Seattle, Washington Bay Mortgage offices, mortgage lending products will continue to be offered to the Company's customers in its remaining Bay Mortgage locations in Longview and Vancouver, Washington.

Reductions in the volumes of non-interest-bearing demand deposits and Federal Home Loan Bank (FHLB) borrowings, account for the majority of the decline in total liabilities from December 31, 2003 to March 31, 2004. The
balance in these accounts was uncharacteristically high at December 31, 2003 at $60.6 million but had declined to $53.0 at March 31, 2004. The average balance of non-interest-bearing demand deposits for the first quarter of 2004 was $54.9 million,
which compares favorably to an average of $53.3 million during the fourth quarter of 2003. The Company had $18.6 million in brokered deposits at March 31, 2004, or 8.4% of the $220.5 million total deposits compared to $10.4 million or 4.6% of $226.5
million of total deposits at December 31, 2003. FHLB borrowings were $5.0 million lower at March 31, 2004 than at December 31, 2003.

Critical Accounting Policies

The Company's most critical accounting policy is related to the allowance for loan losses. The Company utilizes both quantitative and qualitative considerations in establishing an allowance for loan losses believed to be
appropriate as of each reporting date. Quantitative factors include:

- the volume and severity of non-performing loans and adversely classified credits,
- the level of net charge-offs experienced on previously classified loans,
- the nature and value of collateral securing the loans,
- the trend in loan growth and the percentage of change,
- the level of geographic and/or industry concentration,
- the relationship and trend over the past several years of recoveries in relation to charge-offs, and
- other known factors regarding specific loans.

Qualitative factors include:

- the effectiveness of credit administration,
- the adequacy of loan review,
- the adequacy of loan operations personnel and processes,
- the effect of competitive issues that impact loan underwriting and structure
- the impact of economic conditions, and
- the introduction of new loan products or specific marketing efforts.

Changes in the above factors could significantly effect the determination of the adequacy of the allowance for loan losses. Management performs a full analysis, no less often than quarterly, to ensure that changes in
estimated loan loss levels are adjusted on a timely basis. For further discussion of this significant management estimate, see "Allowance for Loan Losses."

14

---

Another critical accounting policy for the Company is that related to the carrying value of goodwill. Goodwill was recognized from the excess of cost over the fair value of net assets acquired from the purchase of Bay
Mortgage, and Bay Bank, formerly Northern Bank of Commerce. Goodwill was amortized by the straight-line method over a 15-year period until December 31, 2001.

Effective January 1, 2002, pursuant to Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," the Bank ceased amortization of goodwill and completed its first of ongoing
assessments of goodwill impairment in March 2002. Goodwill impairment is deemed to exist if the net book value of a reporting unit, considered by the Bank to represent its operating segments, exceeds its estimated fair value. Based on the Company's
initial assessment of impairment in 2002, goodwill associated with Bay Mortgage operations was determined to be impaired. Accordingly, an impairment charge resulted in a $1.2 million write-down of goodwill and the recognition of an expense, recorded
as the cumulative effect of a change in accounting principle of $791,000, net of $417,000 in related taxes. Continued analysis of this and other goodwill components indicated that no additional impairment existed at December 31, 2002. In 2003, with
the Bank's realignment of its mortgage banking operations, management determined all remaining goodwill associated with the acquisition of Bay Mortgage to be fully impaired which resulted in a charge to 2003 pre-tax earnings of $1.5 million.

Analysis of Net Interest Income

The primary component of the Company's earnings is net interest income. Net interest income is the difference between interest income, principally from loans and the investment securities portfolio, and interest expense,
principally on customer deposits and borrowings. Changes in net interest income result from changes in "volume," "spread," and "margin." Volume refers to the dollar level of interest-earning assets and interest-bearing liabilities. Spread refers to
the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. Net interest margin is the ratio of net interest income to total interest-earning assets and is influenced by the level and relative mix of
interest-earning assets and interest-bearing liabilities.

Three months ended March 31, 2004 and 2003

Interest income from certain of the Company's earning assets is non-taxable. The following table presents interest income and expense, including adjustments for non-taxable interest income, and the resulting tax adjusted
yields earned, rates paid, interest rate spread, and net interest margin for the periods indicated.

Three Months Ended(unaudited)
	
	March 31,
	
	Increase(dollars in thousands)
	
	2004
	
	2003
	
	(Decrease)
	
	ChangeInterest income
	$
	3,620
	$
	4,659
	$
	(1,039)
	
	-22.3%Tax effect of non-taxable interest income
	
	38
	
	8
	
	30
	
	375.0%Tax equivalent interest income
	
	3,658
	
	4,667
	
	(1,009)
	
	-21.6%Interest expense
	
	754
	
	1,531
	
	(777)
	
	-50.8%Net interest income
	$
	2,904
	$
	3,136
	$
	(232)
	
	-7.4%Average interest earning assets
	$
	234,075
	$
	304,488
	$
	(70,413)
	
	-23.1%Average interest bearing liabilities
	$
	169,536
	$
	242,167
	$
	(72,631)
	
	-30.0%Average yields earned (1)
	
	6.25%
	
	6.13%
	
	0.12%Average rates paid (1)
	
	1.78%
	
	2.53%
	
	-0.75%Net interest spread (1)
	
	4.47%
	
	3.60%
	
	0.87%Net interest margin (1)
	
	4.96%
	
	4.12%
	
	0.84%


(1) Ratios for the three months ended March 31, 2004 and 2003 have been annualized

Comparing the quarter ended March 31, 2004 to the quarter ended March 31, 2003, interest income declined $1.0 million, interest expense declined $777,000, and net interest income decreased $262,000. The Company's average
interest-earning assets and interest-bearing liabilities each declined over $70.0 million under the same comparison. The overall tax-equivalent average earning asset yield was 6.25%	 for the quarter ended March 31, 2004 compared to 6.13%	 for the
quarter ended March 31, 2003. An increase in average non-taxable municipal bonds caused the increase in tax equivalent interest income comparing the two periods. Under the same comparison, the average rates paid on interest-bearing liabilities
declined substantially. Because of the decline in rates paid, both the interest spread and interest margin were higher during the quarter ended March 31, 2004 compared to the same period of 2003.

Reductions in the average balances of loans and loans held-for-sale account for the majority of the total interest-earning asset decline between the first quarter of 2003 and the first quarter of 2004. Excluding loans
held-for-sale, average total loans declined $21.6

15

---

million from $186.9 million during the first quarter of 2003 to $165.3 million during the first quarter of 2004. Loans held-for-sale averaged $35.5 million during the quarter ended March 31, 2003 compared to only $2.4
million during the same period of 2004. The decline in average rates paid on interest-bearing liabilities is primarily attributable to higher rate long-term certificates of deposit maturing during 2003 and early 2004, which either did not renew or
re-priced at current, lower rates. Certificates of deposit averaged $127.3 million during the first quarter of 2003, but declined to an average of $77.9 million during the first quarter of 2004. In addition, the Company paid off $5.0 million in FHLB
borrowings and re-borrowed $5.0 million at a lower rate.

Provision for Loan Losses

The amount of the allowance for loan losses is analyzed by management on a regular basis to ensure that it is adequate to absorb losses inherent in the loan portfolio as of the reporting date. When a provision for loan
losses is recorded, the amount is based on past charge-off experience, a careful analysis of the current loan portfolio, the level of non-performing and impaired loans, evaluation of future economic trends in the Company's market area, and other
factors relevant to the loan portfolio. The quarterly provision recorded as an increase to the allowance for loan losses is based upon estimates of probable losses inherent in the loan portfolio. The loss amount actually realized for these loans can
vary significantly from the estimated amounts. See the "Allowance for Loan Losses" discussion for additional detail.

Three months ended March 31, 2004 and 2003

The Company recognized a benefit for loan losses of $13,000 for the quarter ended March 31, 2004 compared to an expense, or provision for loan losses, of $523,000 for the same period of 2003. During the first quarter of
2004, the Banking segment recognized a provision for loan losses of $150,000, while the Holding Company recovered $163,000 of a loan previously charged-off. Because the Holding Company does not currently have any loans or an allowance for loan
losses, any recovery of previously charged-off amounts flow through the income statement as a credit, or benefit, to the provision expense.

16

---

Non-Interest Income

Three months ended March 31, 2004 and 2003

Non-interest income consists of the following components:

Three Months Ended(unaudited)
	
	March 31,(dollars in thousands)
	
	2004
	
	
	
	2003Service charge on deposit accounts
	$
	188
	
	
	$
	246Gains on loans sold
	
	172
	
	
	
	1,749Mortgage brokerage fees
	
	105
	
	
	
	843Fiduciary income
	
	101
	
	
	
	90Increase in cash surrender value of bank-owned life insurance
	
	133
	
	
	
	-Escrow fees
	
	-
	
	
	
	337Credit Card income
	
	138
	
	
	
	153ATM income
	
	12
	
	
	
	13Safe deposit box fees
	
	24
	
	
	
	25(Loss) gain on sale of repossessed assets
	
	(80)
	
	
	
	33Other miscellaneous fees and income
	
	15
	
	
	
	5Total non-interest income
	$
	808
	
	
	$
	3,494


Non-interest income was $808,000 for the quarter ended March 31, 2004, a decline of $2.7 million from $3.5 million for the same period of 2003. Non-interest income generated by the mortgage banking segment has declined
substantially due to the reorganization of that segment. Gains on loans sold and escrow fees will no longer be generated under the current structure, and mortgage brokerage fees will be significantly lower than in past periods.

During the first quarter 2004, income of $133,000 was generated by the increase in cash surrender value of bank-owned life insurance. Write-downs of the carrying value of certain repossessed assets generated a loss of
$80,000 during the period. These losses were generated from expenditures to prepare certain assets for resale, but did not increase the carrying value of the asset, so were recognized as a loss when incurred.

17

---

Non-Interest Expense

Three months ended March 31, 2004 and 2003

Non-interest expense consists of the following components:

(unaudited)
	
	Three Months Ended  March 31,(dollars in thousands)
	
	2004
	
	2003Salaries and employee benefits
	$
	1,662
	$
	2,624Net occupancy and equipment
	
	435
	
	647Amortization of intangible assets
	
	66
	
	66Net cost of operation of other real estate owned
	
	19
	
	27Business taxes
	
	55
	
	133Data processing and communications
	
	78
	
	129Stationery and supplies
	
	37
	
	61Credit card expense
	
	130
	
	155Travel and education
	
	36
	
	71Loan expense
	
	15
	
	113Advertising
	
	21
	
	17Professional fees
	
	160
	
	467Postage and freight
	
	62
	
	103Temporary help
	
	4
	
	134FDIC insurance
	
	104
	
	138Other miscellaneous expenses
	
	289
	
	220Total non-interest expense
	$
	3,173
	$
	5,105


Total non-interest expenses declined $1.9 million to $3.2 million for the quarter ended March 31, 2004 compared to $5.1 million for the quarter ended March 31, 2003. The majority of this decline is attributable to the
reorganization of the Company's mortgage segment. Salaries and employee benefits, net occupancy and equipment, business taxes, data processing and communications, stationery and supplies, professional fees, postage and freight, and temporary help
are all lower due to the closure of the Bellevue and Seattle mortgage offices and the cessation of the mortgage loan secondary marketing function.

At March 31, 2004, the Company had 106 full-time equivalent employees compared to 179 at March 31, 2003. The mortgage segment reorganization accounted for 67 of the reduction of 73 full-time equivalent employees. Also
included in salary expenses are ordinary annual wage increases for many existing employees.

Net occupancy and equipment expenses consist of depreciation on premises and equipment, lease costs, parking, maintenance and repair expenses, utilities and related expenses. The Company's net occupancy expense was reduced
by $212,000 when comparing the three months ended March 31, 2004 to the same period of 2003.

Although the FDIC insurance premium rate remains unchanged at $.17 per $100 of domestic deposits when comparing the quarters ended March 31, 2004 and 2003, the total expense has declined due to a reduction in deposit
volume. The FDIC sets deposit insurance premiums based upon the risks a particular bank or savings association poses to the deposit insurance funds. This system bases an institution's risk category partly upon whether the institution is well
capitalized, adequately capitalized or less than adequately capitalized. Each insured depository institution is also assigned to one of three "supervisory" categories based on reviews by regulators, statistical analysis of financial statements and
other relevant information. An institution's assessment rate depends upon the capital category and supervisory category to which it is assigned. Annual assessment rates currently range from zero per $100 of domestic deposits for the highest rated
institution to $0.27 per $100 of domestic deposits for an institution in the lowest category. Under legislation enacted in 1996 to recapitalize the Savings Association Insurance Fund, the FDIC is authorized to collect assessments against insured
deposits to be paid to the Financing Corporation ("FICO") to service FICO debt incurred in the 1980's. The current FICO assessment rate for insured deposits is $0.0162	 per $100 of deposits per year. Any increase in deposit insurance of FICO
assessments could have an adverse effect on Cowlitz Bank's earnings.

Professional fees include exam and audit expenses, accounting, consulting and legal fees, and other professional fees. These expenses declined to $160,000 for the three months ended March 31, 2004 from $467,000 for the same
period of 2003. Professional fees for the first quarter 2003 included approximately $79,000 for the State of Washington Department of Financial Institutions examination conducted in 2002. The professional fees recorded during the first quarter 2003
included consultation to establish or improve internal controls and regulatory reporting, and also included expenses for employee placement services.

18

---

Temporary help expenses have been reduced dramatically when comparing the first quarter of 2004 to the first quarter of 2003. Contracted temporary employees were utilized during 2003 to assist management on various special
projects and to help during the transition of new management. Business taxes are based on adjusted revenues, and the expense has declined when comparing the first quarter of 2004 to the first quarter of 2003 as overall revenues, specifically from
the mortgage segment, have declined.

Income Taxes

Three months ended March 31, 2004 and 2003

During the first quarter of 2004 the provision for income taxes was $117,000 compared to $351,000 for the first quarter of 2003. These provisions resulted in an effective tax rate of 22.8% and 35.3% for the quarters ended
March 31, 2004 and 2003, respectively. Non-taxable income generated from increased investment in non-taxable municipal bonds and from the $8.0 million of bank-owned life insurance resulted in the reduced effective tax rate for the first quarter of
2004.

Loans

Total loans outstanding were $165.9 million and $163.5 million at March 31, 2004 and December 31, 2003, respectively. Unfunded loan commitments such as home equity and other lines of credit, unused available credit on
credit cards, and letters of credit, were $43.7 million at March 31, 2004 and $42.4 million at December 31, 2003.

The following table presents the composition of the Company's loan portfolio at the dates indicated:

(unaudited)
	
	March 31, 2004
	
	December 31, 2003(dollars in thousands)
	
	Amount
	
	Percent
	
	Amount
	
	PercentCommercial
	$
	38,105
	
	22.90%
	$
	38,793
	
	23.63%Real estate construction
	
	18,929
	
	11.37%
	
	18,305
	
	11.15%Real estate commercial
	
	77,107
	
	46.34%
	
	77,412
	
	47.17%Real estate mortgage
	
	28,406
	
	17.07%
	
	25,530
	
	15.55%Consumer and other
	
	3,869
	
	2.32%
	
	4,103
	
	2.50%166,416
	
	100.00%
	
	164,143
	
	100.00%Deferred loan fees
	
	(487)
	
	
	
	(653)Total loans
	
	165,929
	
	
	
	163,490Allowance for loan losses
	
	(4,003)
	
	
	
	(3,968)Total loan, net
	$
	161,926
	
	
	$
	159,522


19

---

Allowance for Loan Losses

The allowance for loan losses represents management's estimate of potential losses as of the date of the financial statements. The loan portfolio is regularly reviewed to evaluate the adequacy of the allowance for loan
losses. In determining the level of the allowance, the Company evaluates the amount necessary for specific non-performing loans and estimates losses inherent in other loans. An important element in determining the adequacy of the allowance for loan
losses is an analysis of loans by loan risk-rating categories. At a loan's inception, management evaluates the credit risk by using a risk-rating system. This grading system currently includes eleven levels of risk. Risk ratings range from "1" for
the strongest credits to "10" for the weakest. A "10" rated loan would normally represent a loss. All loans rated 7-10 are collectively the Company's "Watch List". The specific grades from 7-10 are "watch list" (risk-rating 7), "special mention"
(risk-rating 7.5), "substandard" (risk-rating 8), "doubtful" (risk-rating 9), and "loss" (risk-rating 10). When indicators such as operating losses, collateral impairment or delinquency problems show that a credit may have weakened, the credit will
be downgraded as appropriate. Similarly, as borrowers bring loans current, show improved cash flows, or improve the collateral position of a loan, the credits may be upgraded. Management reviews all credits periodically for changes in such factors.
The result is an allowance with four components, specific allowance, general allowance, special allowance, and an unallocated allowance.

Specific Allowance.Loans on the Company's Watch List, as described above, are specifically reviewed and analyzed. Management considers in its analysis expected future cash flows, the
value of collateral and other factors that may impact the borrower's ability to pay. When significant conditions or circumstances exist on an individual loan indicating greater risk, specific reserves may be allocated in addition to the general
reserve percentage for that particular risk-rating.

General Allowance.All loans are risk-rated 1 to 10. Those that do not require a specific allocation are subject to a general allocation based upon historic loss factors. Management
determines these factors by analyzing the volume and mix of the existing loan portfolio, in addition to other factors. Management also analyzes the following:

- the volume and severity of non-performing loans and adversely classified credits;
- the level of net charge-offs experienced on previously classified loans;
- the nature and value of collateral securing the loans; and
- the relationship and trend over the past several years of recoveries in relation to charge-offs.

Special Allowance.From time to time, special reserves will be established to facilitate a change in the Bank's strategy and other factors. Special allocations are to take into
consideration various factors that include, but are not limited to:

- Effectiveness of credit administration;
- Adequacy of loan review;
- Loan operations;
- The trend in loan growth and the percentage of change;
- Concentrations both geographic and industry;
- Competitive issues that impacts loan underwriting/structure;
- Economic conditions; and
- Any special marketing or introduction of various loan products.

Unallocated Allowance.Management also attempts to ensure that the overall allowance appropriately reflects a margin for the imprecision necessarily inherent in estimates of expected
loan losses.

The quarterly analysis of specific, general, and special allocations of the allowance is the principal method relied upon by management to ensure that changes in estimated loan loss levels are adjusted on a timely basis.
The inclusion of historical loss factors in the process of determining the general component of the allowance also acts as a self-correcting mechanism of management's estimation process, as loss experience more remote in time is replaced by more
recent experience. In its analysis of the specific, the general, and special allocations of the allowance, management also considers regulatory guidance in addition to the Company's own experience.

Loans and other extensions of credit deemed uncollectable are charged to the allowance. Subsequent recoveries, if any, are credited to the allowance. Actual losses may vary from current estimates and the amount of the
provision may be either greater than or less than actual net charge-offs when and if they occur. The related provision for loan losses that is charged to income is the amount necessary to adjust the allowance to the level determined through the
above process.

20

---

Management's evaluation of the loan portfolio resulted in total allowances for loan losses of $4.0 million at both March 31, 2004 and December 31, 2003. The allowance, as a percentage of total loans, was also relatively
unchanged at 2.41%	 at March 31, 2004 and 2.43%	 at December 31, 2003. Management believes the allowance for loan losses at both March 31, 2004 and December 31, 2003 is adequate to absorb current potential or anticipated losses.

The following table shows the components of the allowance for loan loss for the periods indicated:

(unaudited)
	
	March 31, 2004
	
	December 31, 2003(dollars in thousands)
	
	Amount
	
	Percent
	
	Amount
	
	PercentGeneral
	$
	2,222
	
	55.51%
	$
	2,362
	
	59.53%Specific
	
	93
	
	2.32%
	
	456
	
	11.49%Special
	
	1,273
	
	31.80%
	
	709
	
	17.87%Unallocated
	
	415
	
	10.37%
	
	441
	
	11.11%$
	4,003
	
	100.00%
	$
	3,968
	
	100.00%


The specific portion of the allowance has declined during the first quarter of 2004. Based on Management's assessment of the watch list loans, a lower volume of loans require specific reserves in addition to the risk rating
reserve levels. The special reserves have increased from December 31, 2003 to March 31, 2004 based upon a more in-depth analysis of potential risk factors including underwriting and servicing loans, competitive pressures, geographic and industry
concentrations, and economic conditions.

The allowance for loan losses is based upon estimates of probable losses inherent in the loan portfolio. The amount actually observed for these losses can vary significantly from the estimated amounts. The following table
shows the Company's loan loss performance for the periods indicated.

Three Months Ended
	
	Year Ended(balances exclude amounts from discontinued operations)
	
	
	
	March 31,
	
	December 31,(dollars in thousands)
	
	
	
	2004
	
	2003
	
	2003Loans outstanding at end of period, net of deferred fees (1)
	
	
	$
	165,929
	
	
	$
	178,809
	
	
	$
	163,490Average loans outstanding during the period
	
	
	$
	165,277
	
	
	$
	186,876
	
	
	$
	173,966Allowance for loan losses, beginning of period
	
	
	$
	3,968
	
	
	$
	6,150
	
	
	$
	6,150Loans charged off:Commercial
	
	
	
	67
	
	
	
	470
	
	
	
	1,409Real Estate
	
	
	
	24
	
	
	
	180
	
	
	
	1,671Consumer
	
	
	
	-
	
	
	
	43
	
	
	
	83Credit Cards
	
	
	
	53
	
	
	
	18
	
	
	
	61Total loans charged-off
	
	
	
	144
	
	
	
	711
	
	
	
	3,224Recoveries:Commercial
	
	
	
	164
	
	
	
	6
	
	
	
	504Real Estate
	
	
	
	22
	
	
	
	-
	
	
	
	237Consumer
	
	
	
	2
	
	
	
	-
	
	
	
	56Credit Cards
	
	
	
	4
	
	
	
	2
	
	
	
	8Total recoveries
	
	
	
	192
	
	
	
	8
	
	
	
	805Provision for loan losses
	
	
	
	(13)
	
	
	
	523
	
	
	
	237Allowance for loan losses, end of period
	
	
	$
	4,003
	
	
	$
	5,970
	
	
	$
	3,968Net loans charged-off during the period
	
	
	
	(48)
	
	
	
	703
	
	
	
	2,419Ratio of net loans charged-off to average loans outstanding
	
	
	
	-0.03%
	
	
	
	0.38%
	
	
	
	1.39%Ratio of allowance for loan losses to loans at end of period
	
	
	
	2.41%
	
	
	
	3.34%
	
	
	
	2.43%(1) Excludes loans held-for-sale


21

---

Impaired Loans

The Company, during its normal loan review procedures, considers a loan to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.
A loan is not considered to be impaired during a period of minimal delay (less than 90 days) unless available information strongly suggests impairment. The Company measures impaired loans based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair market value of the collateral if the loan is collateral dependent. Impaired loans are charged to the allowance when
management believes that, after considering economic and business conditions, collection efforts, and collateral position, the borrower's financial condition indicates that collection of principal is not probable. Generally, no interest is accrued
on loans when factors indicate collection of interest is doubtful or when principal or interest payments become 90 days past due, unless collection of principal and interest are anticipated within a reasonable period of time and the loans are well
secured. For such loans, previously accrued but uncollected interest is charged against current earnings, and income is only recognized to the extent payments are subsequently received and collection of the remaining recorded principal balance is
considered probable.

Non-Performing Assets

Non-performing loans include all loans greater than 90 days past due with respect to either principal or interest, and all loans to which the accrual of interest has been suspended. These loans, combined with repossessed
real estate and other repossessed assets, are collectively considered to be non-performing assets. The following table presents information on all non-performing assets:

(unaudited) 
(dollars in thousands)
	
	
	
	March 31,
2004
	
	
	
	December 31,
2003Loans on non-accrual status
	
	
	$
	2,505
	
	
	$
	1,856Loans past due greater than 90 days but not on non-accrual status
	
	
	
	5
	
	
	
	17Other real estate owned
	
	
	
	842
	
	
	
	1,352Other repossessed assets
	
	
	
	-
	
	
	
	-Total non-performing assets
	
	
	$
	3,352
	
	
	$
	3,225Total assets
	
	
	$
	259,704
	
	
	$
	268,799Percentage of non-performing assets to total assets
	
	
	
	1.29%
	
	
	
	1.20%


At March 31, 2004 non-performing assets were $3.4 million or 1.29%	 of total assets compared to $3.2 million or 1.20%	 of total assets at December 31, 2003. The increase in non-accrual loans from $1.9 million at December
31, 2003 to $2.5 million at March 31, 2004 is attributable to a single $1.4 million real estate loan added to non-accrual during March. The loan is secured by real estate with an appraised value of $2.8 million, and no loss is expected. Excluding
this single loan, total non-performing assets declined by $1.2 million during the first quarter of 2004. Other real estate owned was $842,000 at March 31, 2004, a decrease of $510,000 compared to $1.4 million at December 31, 2003. During the first
three months of 2004, eight properties were sold or had a reduction in their carrying value resulting in a $546,000 decline in the balance of other real estate owned. During the same time period of 2004, $36,000 of properties were repossessed and
added to the carrying value of other real estate owned.

Liquidity

Liquidity represents the ability to meet deposit withdrawals and fund loan demand, while retaining the flexibility to take advantage of business opportunities. The Company's primary sources of funds have been customer and
brokered deposits, loan payments, sales or maturities of investments, sales of loans or other assets, borrowings, and the use of the federal funds market.

Historically the Company has utilized borrowings from the FHLB as an important source of funding for its growth. The Company has an established borrowing line with the FHLB that permits it to borrow up to 15% of the Bank's
assets, subject to collateral limitations. Advances from the FHLB have original maturity periods ranging from 10 years through 15 years and at March 31, 2004, bear interest at rates ranging from 6.11%	 to 8.62%	. At December 31, 2003, $5.7 million
in advances were outstanding from the FHLB, and at March 31, 2004 had been reduced to $608,000. These borrowings mature from 2005 to 2009.

Brokered certificates of deposit is another funding source the Company utilizes to provide additional liquidity as necessary. At March 31, 2004, the Company's broker certificate of deposit balance was $18.6 million compared
to $10.4 million at December 31, 2003.

In order to maintain the ability to access cash through sale of securities, during the first quarter of 2004, $8.0 million of held-to-maturity investments were reclassified as available-for-sale. Accordingly, the fair value
of these investment securities was recognized within Accumulated Other Comprehensive Income upon their reclassification.

22

---

Regulatory Capital

The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and
possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on Cowlitz Bancorporation's and Cowlitz Bank's financial statements. Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, Cowlitz Bancorporation and Cowlitz Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting
practices. Cowlitz Bancorporation's and Cowlitz Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The following table presents selected capital information for the Company and the Bank as of March 31, 2004 and December 31, 2003:

To Be Well-CapitalizedUnder PromptFor Capital Adequacy
	
	Corrective ActionActual
	
	Purposes
	
	ProvisionAmount
	
	Ratio
	
	
	
	Amount
	
	Ratio
	
	
	
	Amount
	
	RatioMarch 31, 2004Total risk-based capital:Consolidated
	
	
	$
	33,207
	
	16.81%
	
	
	$
	15,806
	
	>8.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	34,106
	
	17.27%
	
	
	$
	15,801
	
	>8.00%
	
	
	$
	19,751
	
	>10.00%Tier 1 risk-based capital:Consolidated
	
	
	$
	30,718
	
	15.55%
	
	
	$
	7,903
	
	>4.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	31,618
	
	16.01%
	
	
	$
	7,900
	
	>4.00%
	
	
	$
	11,851
	
	>6.00%Tier 1 (leverage) capital:Consolidated
	
	
	$
	30,718
	
	11.95%
	
	
	$
	10,285
	
	>4.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	31,618
	
	12.30%
	
	
	$
	10,282
	
	>4.00%
	
	
	$
	12,853
	
	>5.00%December 31, 2003Total risk-based capital:Consolidated
	
	
	$
	32,679
	
	16.38%
	
	
	$
	15,962
	
	>8.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	33,614
	
	16.85%
	
	
	$
	15,956
	
	>8.00%
	
	
	$
	19,946
	
	>10.00%Tier 1 risk-based capital:Consolidated
	
	
	$
	30,166
	
	15.12%
	
	
	$
	7,981
	
	>4.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	31,102
	
	15.59%
	
	
	$
	7,978
	
	>4.00%
	
	
	$
	11,967
	
	>6.00%Tier 1 (leverage) capital:Consolidated
	
	
	$
	30,166
	
	11.39%
	
	
	$
	10,597
	
	>4.00%
	
	
	$
	N/A
	
	N/ABank
	
	
	$
	31,102
	
	11.75%
	
	
	$
	10,591
	
	>4.00%
	
	
	$
	13,239
	
	>5.00%


Quantitative measures established by regulation to ensure capital adequacy require Cowlitz Bancorporation and Cowlitz Bank to maintain minimum amounts and ratios (set forth in the tables above) of Tier 1 capital to average
assets, and Tier 1 and total risk-based capital to risk-weighted assets (all as defined in the regulations). Management believes that as of March 31, 2004 and December 31, 2003, Cowlitz Bancorporation and Cowlitz Bank met or exceeded all relevant
capital adequacy requirements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Credit Risk

The Company, like other lenders, is subject to credit risk, which is the risk of losing principal and interest due to customers' failure to repay loans in accordance with their terms. Although the Company has established
lending criteria and an adequate allowance for loan losses to help mitigate credit risk, a continued downturn in the economy or the real estate market or a rapid increase in interest rates could have a negative effect on collateral values and
borrowers' ability to repay. The Company's targeted customers are small to medium-size businesses, professionals and retail customers that may have limited capital resources to repay loans during a prolonged economic downturn.

23

---

Interest Rate Risk

The Company's earnings are largely derived from net interest income, which is interest income and fees earned on loans and investment income, less interest expense paid on deposits and other borrowings. Interest rates are
highly sensitive to many factors that are beyond the control of the Company's management, including general economic conditions, and the policies of various governmental and regulatory authorities. As interest rates change, net interest income is
affected. With fixed rate assets (such as fixed rate loans) and liabilities (such as certificates of deposit), the effect on net interest income depends on the maturities of the assets and liabilities. The Company's primary objective in managing
interest rate risk is to minimize the adverse impact of changes in interest rates on the Company's net interest income and capital, while structuring the Company's asset/liability position to obtain the maximum yield-cost spread on that structure.
Interest rate risk is managed through the monitoring of the Company's gap position and sensitivity to interest rate risk by subjecting the Company's balance sheet to hypothetical interest rate shocks. In a falling rate environment, the spread
between interest yields earned and interest rates paid, may narrow, depending on the relative level of fixed and variable rate assets and liabilities. In a stable or increasing rate environment the Company's variable rate loans will remain steady or
increase immediately with changes in interest rates, while fixed rate liabilities, particularly certificates of deposit will only re-price as the liability matures.

Item 4. Controls and Procedures

As of March 31, 2004, the Company evaluated, under the supervision and the participation of Management, including the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of
disclosure controls and procedures. Based on that evaluation, Management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective.

There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation.

24

---

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company from time to time enters into routine litigation resulting from the collection of secured and unsecured indebtedness as part of its business of providing financial services. In some cases, such litigation will
involve counterclaims or other claims against the Company. Such proceedings against financial institutions sometimes also involve claims for punitive damages in addition to other specific relief. The Company is not a party to any litigation other
than in the ordinary course of business. In the opinion of management, the ultimate outcome of all pending legal proceedings will not individually or in the aggregate have a material adverse effect on the financial condition or the results of
operations of the Company.

Item 2.   Changes in Securities and Use of Proceeds

Not applicable

Item 3.   Defaults upon Senior Securities

Not applicable

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

Not applicable

Item 5.   Other Information

Not applicable

Item 6.   Exhibits and Reports on Form 8-K



(a)
      Exhibits. The
      following constitutes the exhibit index.3.1*
      Restated and Amended Articles of
      Incorporation of Registrant3.2*
      Bylaws of Registrant31.1
      Certification of Chief Executive
      Officer31.2
      Certification Chief Financial
      Officer32
      Certification of Chief Executive
      Officer and Chief Financial Officer* Incorporated by reference from Registration
Statement on Form S-1, Reg. No. 333-44355(b)
      During the quarter ended March 31, 2004, the Company
      filed a Current Report on Form 8-K on March 8, 2004, under item 5, and the
      Company furnished information under Item 12 of Form 8-K on February 4, 2004.




25

---

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 14, 2004Cowlitz Bancorporation(Registrant)By:/s/ Richard J. FitzpatrickRichard J. Fitzpatrick, President and Chief Executive Officer/s/ Donna P. GardnerDonna P. Gardner, Vice-President, Chief Financial Officer


26

---

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard J. Fitzpatrick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cowlitz Bancorporation;

2. Based on my knowledge, this quarterly report does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements,
and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I
are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

c) disclosed in this quarterly report any change in
the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially affected, or is
likely to materially affect the registrant's internal control over financial
reporting;

5. The registrant's other certifying officers and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.

Date: May 14, 2004/s/ Richard J. FitzpatrickRichard J. Fitzpatrick, Chief Executive OfficerCowlitz Bancorporation


27

---

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Donna P. Gardner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cowlitz Bancorporation;

2. Based on my knowledge, this quarterly report does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements,
and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I
are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

c) disclosed in this quarterly report any change in
the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially affected, or is
likely to materially affect the registrant's internal control over financial
reporting;

5. The registrant's other certifying officers and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



|                   |                                          
|------------------ | -----------------------------------------
|Date: May 14, 2004 |                                          
|                   |                                          
|                   | /s/ Donna P. Gardner                     
|                   | Donna P. Gardner, Chief Financial Officer
|                   | Cowlitz Bancorporation                   

28

---

Exhibit 32

CERTIFICATION OF 
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

This certification is given by the undersigned Chief Executive Officer and Chief Financial Officer of Cowlitz Bancorporation
(the "Registrant") pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Each of the undersigned hereby certifies, with respect to the Registrant's
quarterly report of Form 10-Q for the period ended March 31, 2004 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and result of
operations of the Company.

/s/ Richard J. Fitzpatrick  	 	 
Richard J. Fitzpatrick 
Chief Executive Officer 
Cowlitz Bancorporation

/s/ Donna P. Gardner 	 	 	 
Donna P. Gardner 
Chief Financial Officer 
Cowlitz Bancorporation

May 14, 2004

29

---